EX-10.1 2 v081433_ex10-1.txt ================================================================================ $40,000,000 REVOLVING LOAN AGREEMENT by and among CAPITAL LEASE FUNDING, INC., AND PREFCO II LIMITED PARTNERSHIP, as Borrower, and WACHOVIA BANK NATIONAL ASSOCIATION, in its respective capacities as Initial Lender and as Administrative Agent Dated as of July 17, 2007 ================================================================================
TABLE OF CONTENTS Page ARTICLE I DEFINITIONAL PROVISIONS 1 Section 1.01 Definitions 1 Section 1.02 Other Definitional Provisions 8 Section 1.03 Accounting Terms 8 Section 1.04 Computation of Time Periods 9 ARTICLE II THE LOANS; AMOUNT AND TERMS 9 Section 2.01 Loans 9 Section 2.02 Payments to Collection Account 10 Section 2.03 Prepayments 10 Section 2.04 Default Rate and Payment Dates 10 Section 2.05 Computation of Interest and Fees 11 Section 2.06 Pro Rata Treatment and Payments 11 Section 2.07 Non-Receipt of Funds by the Administrative Agent 12 Section 2.08 Inability to Determine Interest Rate 12 Section 2.09 Illegality 12 Section 2.10 Requirements of Law 13 Section 2.11 Indemnity 13 Section 2.12 Taxes 13 ARTICLE III CONDITIONS PRECEDENT 14 Section 3.01 Conditions 14 Section 3.02 Conditions to All Extensions of Credit 16 ARTICLE IV REPRESENTATIONS AND WARRANTIES 17 Section 4.01 Representations and Warranties 17 ARTICLE V COVENANTS 19 Section 5.01 Intentionally Omitted 19 Section 5.02 Mortgaged Assets 19 Section 5.03 Financial Covenants 19 Section 5.04 Certificates; Other Information 19 Section 5.05 No Negative Pledge 20 Section 5.06 Intentionally omitted 20 Section 5.07 Intentionally Omitted 20 Section 5.08 Compliance with Laws 20 Section 5.09 Taxes 20 Section 5.10 Books and Records 20 Section 5.11 Preservation of Existence 20 Section 5.12 Maintenance of Collateral 20 Section 5.13 Intentionally Omitted 21 Section 5.14 Further Assurances 21 Section 5.15 Ownership 21
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TABLE OF CONTENTS (continued) Page Section 5.16 Appraisals 21 Section 5.17 Indebtedness 21 Section 5.18 Liens 21 Section 5.19 Liquidations, Mergers, Consolidations, Acquisitions 21 Section 5.20 Changes in Organizational Documents; Name 21 Section 5.21 Enforceability of Loan Documents 21 Section 5.22 Reporting Requirements 21 Section 5.23 Future Disclosure 22 Section 5.24 Ground Lease 22 ARTICLE VI EVENTS OF DEFAULT 23 Section 6.01 Events of Default 23 Section 6.02 Acceleration; Remedies 24 Section 6.03 Notice of Default 24 Section 6.04 Non-Reliance on Administrative Agent and Other Lenders 24 Section 6.05 Indemnification 24 Section 6.06 The Administrative Agent in Its Individual Capacity 24 Section 6.07 Successor Administrative Agent 24 Section 6.08 Other Agents 26 ARTICLE VII THE ADMINISTRATIVE AGENT 26 Section 7.01 Appointment 26 Section 7.02 Delegation of Duties 26 Section 7.03 Exculpatory Provisions 26 Section 7.04 Reliance by Administrative Agent 26 ARTICLE VIII RECOURSE 27 Section 8.01 Full Recourse Obligations 27 ARTICLE IX MISCELLANEOUS 27 Section 9.01 Amendments, Waivers and Release of Collateral 27 Section 9.02 Survival of Representations and Warranties 28 Section 9.03 Successors and Assigns; Participations; Purchasing Lenders 28 Section 9.04 Adjustments 30 Section 9.05 Indemnification and Expenses 30 Section 9.06 Notices and Other Communications 30 Section 9.07 Entire Agreement; Severability 31 Section 9.08 GOVERNING LAW 31 Section 9.09 SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL 31 Section 9.10 Periodic Due Diligence Review 32 Section 9.11 Intentionally Omitted 32 Section 9.12 Legal Matters 32 Section 9.13 Confidentiality 32
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TABLE OF CONTENTS (continued) Page Section 9.14 Right of Set-off 33 Section 9.15 Treatment of Certain Information 33
-iii- SCHEDULES Schedule 1.01(B) Lenders and Commitments Schedule 3.01(h) Organizational Chart of the Borrower EXHIBITS Exhibit A Form of Revolving Note Exhibit B Form of Commitment Transfer Supplement Exhibit C Intentionally Omitted Exhibit D Form of Mortgage and Security Agreement Exhibit E Form of Closing Certificate Exhibit F Form of Deposit Account Control Agreement Exhibit G Form of Solvency Certificate Exhibit H Form of Compliance Certificate Exhibit I Intentionally Omitted Exhibit J Form of Notice of Borrowing Exhibit K Form of 2.12 Certificate -iv- REVOLVING LOAN AGREEMENT THIS REVOLVING LOAN AGREEMENT, dated as of July 17, 2007 (this "Agreement"), between CAPITAL LEASE FUNDING, INC., a Maryland corporation ("Caplease"), PREFCO II LIMITED PARTNERSHIP, a Connecticut limited partnership ("Owner" and, together with Caplease, "Borrower") and WACHOVIA BANK NATIONAL ASSOCIATION, in its capacity as the initial Lender ("Initial Lender") and as administrative agent for the financial institutions and banks ("Lenders") party hereto from time to time (in such capacity, the "Administrative Agent" or the "Agent"). WITNESSETH: WHEREAS, the Borrower has requested, and the Initial Lender has agreed, to extend certain credit facilities to the Borrower on the terms and conditions set forth herein; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties hereby agree as follows: ARTICLE I DEFINITIONAL PROVISIONS Section 1.01 Definitions. (a) As used herein, the following terms shall have the following meanings (all terms defined in this Section 1.01 or in other provisions of this Agreement in the singular shall have the same meanings when used in the plural and vice versa). "Adjustment Event": With respect to the Eligible Asset, the occurrence of any of the following (each of which shall be deemed to adjust the Fair Market Value of the Eligible Asset by such amount as may be determined by Agent exercising reasonable discretion): (a) any theft, loss, physical destruction or damage, taking, condemnation or similar event; (b) the Fair Market Value of the Eligible Asset is not supported or validated pursuant to a FIRREA standard appraisal, as determined by the Agent in its sole discretion exercised in good faith; (c) any violation or noncompliance, or claim or allegation of violation of or noncompliance with, any Environmental Laws, including, without limitation, by any Person or Governmental Authority; (d) any default in or nonperformance of any material obligations by Borrower as landlord, or by any tenant leasing a material portion of the Eligible Asset or the termination of any such tenant's lease; or (e) any default in or nonperformance of material obligations by any Person arising out of or in connection with any construction, capital improvement or similar projects or undertakings, including, without limitation, material cost overruns (solely to the extent included by the Agent and/or the Initial Lender in evaluating the initial Purchase Price of such Eligible Asset and extending credit upon the terms and conditions set forth in this Agreement). Agent and Lenders shall only be entitled to obtain an appraisal of the Eligible Asset for purposes of clause (b) above following the occurrence of an event which such Agent or Lenders reasonably believe will have a material adverse effect on the Fair Market Value of the Eligible Asset. "Advance Rate": 70%. "Affiliate": As to any Person, an "Affiliate" of such Person, as such term is defined in the Bankruptcy Code. "Agreement": This Agreement, as amended, restated, amended and restated and supplemented from time to time. "ALTA": The American Land Title Association. "Alternate Base Rate": The per annum rate of interest equal to the greater of (a) the prime rate or (b) the federal funds rate plus one half of one percent (0.5%). Any change in the Alternate Base Rate resulting from a change in the prime rate or the federal funds rate shall become effective as of 12:01 a.m. on the Business Day on which each such change occurs. The Alternate Base Rate is a reference rate used by the Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged by the Agent or any other Lender on any extension of credit to Borrower. "Alternate Base Rate Loans": Loans the rate of interest applicable to which is based on the Alternate Base Rate. "Anti-Money Laundering Laws": The meaning specified in Section 4.01(r). "Applicable Premium": 125 basis points (1.25%). "Approved Fund": With respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is managed by the same investment advisor as such Lender or by an affiliate of such investment advisor. "Bankruptcy Code": The United States Bankruptcy Code of 1978, as amended from time to time. "Borrower": As defined in the Recitals. "Borrowing Date": In respect of any Loan, the date such Loan is made. "Business Day": Any day other than a (i) Saturday or Sunday or (ii) day on which banks in the State of North Carolina, the State of New York, the District of Columbia, or the state in which any of the Agent or the Borrower is located is authorized or obligated by law or executive order to be closed. "Caplease": As defined in the Recitals. "Cash and Cash Equivalents": (i) cash, (ii) direct obligations of the United States Government, including without limitation, treasury bills, notes and bonds, (iii) interest bearing or discounted obligations of Federal agencies and government sponsored entities or pools of such instruments offered by approved banks and dealers, including without limitation, Federal Home Loan Mortgage Corporation participation sale certificates, Government National Mortgage Association modified pass through certificates, Federal National Mortgage Association bonds and notes, and Federal Farm Credit System securities, (iv) time deposits, domestic and Eurodollar certificates of deposit, bankers' acceptances, commercial paper rated at least A-1 by S&P and P-1 by Moody's and/or guaranteed by a Person with an Aa1 rating by Moody's, an AA- rating by S&P or better rated credit, floating rate notes, other money market instruments and letters of credit each issued by approved banks (provided that the same shall cease to be a "Cash or Cash Equivalent" if at any time any such bank shall cease to be an approved bank), (v) obligations of domestic corporations, including, without limitation, commercial paper, bonds, debentures and loan participations, each of which is rated at least AA- by S&P and/or Aa1 by Moody's and/or guaranteed by a Person with an Aa1 rating by Moody's and/or a AA- rating by S&P or better rated credit, (vi) obligations issued by states and local governments or their agencies, rated at least MIG-1 by Moody's and/or SP-1 by S&P and/or guaranteed by an irrevocable letter of credit of an approved bank (provided that the same shall cease to be a "Cash or Cash Equivalent" if at any time any such bank shall cease to be an approved bank), (vii) repurchase agreements with major banks and primary government security dealers fully secured by the U.S. government or agency collateral equal to or exceeding the principal amount on a daily basis and held in safekeeping, and (viii) real estate loan pool participations, guaranteed by a Person with an AA- rating given by S&P or Aa1 rating given by Moody's or better rated credit. "Change of Control": (a) any Person or two or more Persons acting in concert shall have acquired "beneficial ownership," directly or indirectly, of, or shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of, or control over, Voting Interests of the Borrower (or other securities convertible into such Voting Interests) representing more than 50% of the combined voting power of all Voting Interests of Borrower, (b) Continuing Directors shall cease for any reason to constitute a majority of the members of the board of directors of the Borrower then in office, (c) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Borrower and its Subsidiaries taken as a whole to any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Act of 1934) or (d) the adoption by the equity holders of the Borrower of a plan or proposal for the liquidation or dissolution of the Borrower. As used herein, "beneficial ownership" shall have the meaning provided in Rule 13d-3 of the Securities and Exchange Commission under the Securities Act of 1934. "Closing Certificate": A Closing Certificate, substantially in the form attached hereto as Exhibit E, including all attachments and exhibits thereto, which shall include a copy of: (a) a recorded copy of all deeds evidencing title to and ownership of the Eligible Asset in recordable form; (b) any HUD-1 (or equivalent) settlement statements in respect of such Eligible Asset acquisition; and (c) such other documentation as the Administrative Agent may reasonably request. "Closing Date": The date of this Agreement. "Code": The Internal Revenue Code of 1986, as amended from time to time. "Collateral": A collective reference to the collateral which is identified in, and at any time covered by, the Security Documents or such other collateral in which a security interest may be granted in favor of the Agent to secure the Loans. "Collection Account": The meaning given to such term in Section 2.02. "Commitment Fee": The meaning given to such term in Section 2.13. "Commitment Period": The period of time commencing on the date hereof and ending on the Business Day preceding the Termination Date. "Commitment Transfer Supplement": A Commitment Transfer Supplement, in substantially the form of Exhibit B. -2- "Compliance Certificate": A Compliance Certificate, in substantially the form of Exhibit H, demonstrating compliance by the Borrower and its Subsidiaries as of the date of delivery thereof with the financial covenants contained in Section 5.03 hereof and such other matters as are set forth therein, in each case for the periods specified therein. "Consolidated Tangible Net Worth" At any time, Consolidated Total Assets less Consolidated Total Liabilities. "Consolidated Total Assets": At any time, all amounts which would be included as assets on a consolidated balance sheet of the Borrower other than (i) amounts owing to Borrower from Affiliates, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with Borrower or its Affiliates, (ii) intangible assets (including, without limitation, synthetic or derivative products and/or positions) other than intangible assets arising from the allocation of the purchase price on real property acquisitions, (iii) prepaid taxes and/or expenses (which shall not include, for the avoidance of doubt, purchase price, mortgage loan and other deposits and escrows), and (iv) assets which have not yet been acquired but are consolidated under FIN 46. For the avoidance of doubt, "Consolidated Total Assets" shall not be reduced by "accumulated depreciation and amortization" on real estate investments. "Consolidated Total Liabilities": At any time, without duplication, all amounts which would be included as liabilities on a consolidated balance sheet of the Borrower, plus all Contingent Liabilities less any liabilities under which the Borrower or any Subsidiary are not obligated but are consolidated under FIN 46. "Contingent Liabilities": Without duplication, all items that would constitute "Contingent Obligations" as such term is defined under GAAP or pursuant to the reporting requirements of Sections 13 and 15 of the Securities Exchange Act of 1934, as amended. "Continuing Director": Means (i) an individual who is a member of the Borrower's Board of Directors on the date hereof or (ii) any new director whose appointment was approved by a majority of the persons who were already Continuing Directors at the time of such appointment, election or approval. "Costs": Any and all claims, damages, losses, liabilities, costs and expenses (including, without limitation, attorneys' fees and disbursements). "Default": Any of the events specified in Section 7.01, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Default Rate": The meaning given to such term in Section 2.04. "Deposit Account Control Agreement": The Deposit Account Control Agreement, in substantially the form - attached hereto as Exhibit F. "Dollars" and "$": Lawful money of the United States of America. "Due Diligence Review": The performance by the Agent of any or all of the reviews permitted under Section 9.10 with respect to the Eligible Asset, as reasonably desired by the Agent from time to time. "Eligible Asset": The leasehold interest in real estate asset located at 1301 Atwood Avenue, Johnston, Rhode Island (also referred to herein as the "FM Global Building") pursuant to the terms of the Ground Lease, together with any other real estate asset that is accepted by the Agent in its sole and absolute discretion hereunder. "Eligible Asset Disposition": A (i) bona fide sale, transfer or other disposition of the Eligible Asset to a Person who is not an Affiliate of Borrower, or (ii) refinancing or encumbering of the Eligible Asset. "Eligible Asset File": All documents, records, files, data, information and correspondence in respect of the subject Eligible Asset as maintained by the Borrower or its Subsidiaries. "Environmental Indemnity Agreement": The Environmental Indemnity Agreement, executed on the date hereof by the Borrower in favor of the Agent. "Environmental Laws": Any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or requirements of law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect. "Equity Interest": With respect to any Person, any share of capital stock of (or other ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person, any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests) and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination. "ERISA": The Employee Retirement Income Security Act of 1974, as amended from time to time. -3- "ERISA Affiliate": Any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which Borrower is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which Seller is a member. "Eurodollar Reserve Percentage": For any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Federal Reserve Board (or any successor) for determining the maximum reserve requirement (including without limitation any basic, supplemental or emergency reserves) in respect of Eurocurrency liabilities, as defined in Regulation D of such Board as in effect from time to time, or any similar category of liabilities for a member bank of the Federal Reserve System in New York City. "Event of Default": The meaning specified in Section 7.01. "Extension of Credit": As to any Lender, the making of a Loan by such Lender. "Fair Market Value": With respect to (a) a security listed on a national securities exchange or recognized automated quotation system, the price of such security as reported on such exchange by any widely recognized reporting method customarily relied upon by financial institutions; (b) with respect to any other property, including realty, other than Eligible Asset, the price which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction and (c) Eligible Asset, the price which could be negotiated in an arm's-length free market transaction, for cash for such Eligible Asset, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction, in each case, as determined by Agent in its sole discretion exercised in good faith. "Federal Funds Effective Rate": The meaning set forth in the definition of "Alternate Base Rate". "Federal Funds Rate": For any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/1000 of 1%) equal to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such Business Day, the Federal Funds Rate for such day shall be the average of the quotations for such day for such transactions received by the Agent from three Federal funds brokers of recognized standing and reputation reasonably selected by the Agent. "Fee Letter": That certain Fee Letter, dated as of the date hereof, among the Borrower and the Agent, as the same may be amended, supplemented or otherwise modified from time to time. "GAAP": Generally accepted accounting principles in effect in the United States of America applied on a consistent basis, subject, however, in the case of determination of compliance with the financial covenants set out in Section 5.03 to the provisions of Section 1.03. "Governmental Authority": Any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Ground Lease": That certain Ground Lease dated as of July 2, 1984 between Factory Mutual Insurance Company (formerly known as Allendale Mutual Insurance Company), as lessor, and PREFCO II Limited Partnership (as successor to Johnston Associates), as lessee. "Guarantee": As to any Person, any obligation of such Person directly or indirectly guaranteeing any indebtedness of any other Person or in any manner providing for the payment of any indebtedness of any other Person or otherwise protecting the holder of such indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well another Person, to purchase assets, goods, securities or services, or to agree to take-or-pay arrangement or otherwise). The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have correlative meanings. "Indebtedness": Without duplication, all items that would constitute "Indebtedness" as such term is defined under GAAP or pursuant to the reporting requirements of Sections 13 and 15 of the Securities Exchange Act of 1934, as amended, but including in any event (i) any mandatory redeemable Equity Interests, any trust preferred Equity Interests (to the extent owned directly or beneficially by the Borrower or any of its Subsidiaries) and any Contingent Liabilities and (ii) without duplication, any and all of the Borrower's or any of its Affiliates' obligations under or in connection with Interest Rate Protection Agreements. "Indemnified Party": The meaning set forth in Section 9.05. "Initial Lender": As defined in the Recitals. -4- "Interest Payment Date": The eleventh (11th) day of each calendar month, provided that if such day is not a Business Day, the Interest Payment Date shall occur on the immediately succeeding Business Day. "Interest Period": With respect to any LIBOR Rate Loan, initially, the period commencing on the applicable Borrowing Date and ending as of the next succeeding Interest Payment Date; and thereafter, each period commencing on the last day of the immediately preceding Interest Period applicable to such LIBOR Rate Loan and ending on the earlier to occur of (x) the next occurring Interest Payment Date or (y) the Termination Date. "Interest Rate Protection Agreement": Any futures contract, options related contract, short sale of US treasury securities or any interest rate swap, cap, floor or collar agreement or any other similar arrangement providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies and acceptable to the Agent. "Lender": The meaning given to such term in the preamble to this Agreement. "Leverage Ratio": The ratio of Consolidated Total Liabilities to Consolidated Total Assets. "LIBOR": For any LIBOR Rate Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "LIBOR" shall mean, for any LIBOR Rate Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). If, for any reason, neither of such rates is available, then "LIBOR" shall mean the rate per annum at which, as determined by the Administrative Agent, Dollars in an amount comparable to the Loans then requested are being offered to leading banks at approximately 11:00 A.M. London time, two (2) Business Days prior to the commencement of the applicable Interest Period for settlement in immediately available funds by leading banks in the London interbank market for a period equal to the Interest Period selected. "LIBOR Lending Office": Initially, the office of each Lender designated in writing as such Lender's LIBOR Lending Office and thereafter, such other office of such Lender as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office of such Lender at which the LIBOR Rate Loans of such Lender are to be made. "LIBOR Rate": A rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula: LIBOR LIBOR Rate = -------------------------------- 1.00 - Eurodollar Reserve Percentage "LIBOR Rate Loan": Loans the rate of interest applicable to which is based on the LIBOR Rate. "Lien": Any mortgage, lien, pledge, charge, security interest or similar encumbrance. "Loan": The meaning set forth in Section 2.01(a). "Loan Documents": This Agreement, each Revolving Note, the Security Documents, the Environmental Indemnity Agreement, the Deposit Account Control Agreement and all other agreements, documents, certificates and instruments delivered to the Administrative Agent or any Lender by Borrower or its Subsidiaries in connection herewith (other than any agreement, document, certificate or instrument related to any Interest Rate Protection Agreement). "Material Adverse Effect": A material adverse effect on (a) the properties, business, operations, financial condition or prospects of the Borrower, (b) the ability of the Borrower to perform its obligations under any of the Loan Documents to which it is a party, (c) the validity or enforceability of any of the Loan Documents, (d) the rights and remedies of the Agent under any of the Loan Documents, (e) the timely payment of any amounts payable under the Loan Documents and (f) the Fair Market Value of the Eligible Asset. "Material Contracts": (a) any contract or other agreement, written or oral, of the Borrower or any of its Subsidiaries involving in the aggregate a monetary liability of or to any such Person in excess of $5,000,000 (or, solely with respect to the Borrower and not in respect of its Subsidiaries, in an amount in excess of $2,000,000) and (b) any other contract, agreement, written or oral, of the Borrower or any of its Subsidiaries the failure to comply with which could reasonably be expected to have a Material Adverse Effect. -5- "Moody's": Moody's Investors Service, Inc. "Mortgage and Security Agreement": The Mortgage and Security Agreement, made by Owner in favor of the Initial Lender, in the form of Exhibit D attached hereto, as amended, restated, supplemented or, otherwise modified and in effect from time to time. "Multiemployer Plan": A multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been or are required to be made by the Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA. "Net Proceeds": With respect to any Equity Issuance or Debt Issuance by a Person, the aggregate amount of all cash and the Fair Market Value of all other property received by such Person in respect of such Equity Issuance or Debt Issuance net of investment banking fees, legal fees, accountants' fees, underwriting discounts and commissions and other customary fees and expenses actually incurred by such Person in connection with such Equity Issuance. "Non-Recourse Indebtedness": With respect to a Person, Indebtedness for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, and other similar exceptions to non-recourse liability) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness. "Notice of Borrowing": A request for a Loan borrowing pursuant to Section 2.01(b)(i). "Obligations": Without duplication, (i) all of the obligations (including principal, interest, fees, reimbursements, indemnification obligations and other amounts) of the Borrower to the Lenders (including the Initial Lender) and the Administrative Agent, whenever arising, under this Agreement, the Notes or any of the other Loan Documents (including, but not limited to, any interest accruing after the occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code with respect to Borrower or its Subsidiaries, regardless of whether such interest is an allowed claim under the Bankruptcy Code), (ii) all liabilities and obligations, whenever arising, owing from Borrower or its Subsidiaries arising under any Interest Rate Protection Agreement, and (iii) all liabilities and obligations, whenever arising, owing from Borrower or its Subsidiaries to the Lenders (including the Initial Lender), the Agent or any of their Affiliates. "Owner": As defined in the Recitals. "Participant": The meaning set forth in Section 9.03(b). "PBGC": The Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Permitted Exception": Those exceptions to title with respect to the Eligible Asset approved by Agent in its sole discretion. "Person": Any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof). "Plan": An employee benefit or other plan established or maintained by any Seller or any ERISA Affiliate and covered by Title N of ERISA, other than a Multiemployer Plan, "Preferred Securities": With respect to any Person, Equity Interests in such Person that are entitled to preference or priority over any other Equity Interest in such Person or the Indebtedness in respect of any payments on such preferred Equity Interests, including but not limited to, the payment (or accrual) of dividends or distribution of assets upon liquidation, or both. "Property": Any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. "Purchase Price": The Fair Market Value of aggregate consideration given, whether in the form of cash, property or other assets, by Borrower, to acquire the Eligible Asset. "Recovery Event": Receipt by the Borrower of any cash insurance proceeds or condemnation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to the Eligible Asset, other than obsolete property or assets no longer used or useful in the business of the Borrower. "Regulations T, U and X": Regulations T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time. "REIT": A "real estate investment trust" within the meaning of the Code. "Reportable Event": Any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under Sections .21, -22, .23, .26, .27 or .28 of PBGC Reg. 3-4043. -6- "Repurchase Agreement": The Master Repurchase Agreement, dated as of September 22, 2004, as amended, among Initial Lender, as buyer, Caplease, LP and certain special purpose entity subsidiaries of Caplease, LP as Sellers, and Borrower as guarantor. "Requirement of Law": As to any Person, the certificate of incorporation and bylaws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Requisite Lenders": As of any date, Lenders holding Revolving Commitment Percentages totaling at least 66-2/3%, provided, that any Lender that is in default hereunder shall not be included in calculating such Revolving Commitment Percentages. "Responsible Officer": As to any Person, the chief executive officer, the president, the chief financial officer, the chief investment officer or the general counsel of such Person. "Revolving Commitment": With respect to each Lender, the commitment of such Lender to make Loans in an aggregate principal amount at any time outstanding up to such Lender's Revolving Commitment as specified in Schedule 1.01(B), as such amount may be reduced from time to time in accordance with the provisions hereof. "Revolving Commitment Percentage": For each Lender, the percentage identified as its Revolving Commitment Percentage on Schedule 1.01(B), as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 9.03(c). "Revolving Commitment Amount": The meaning set forth in Section 2.01(a). "Revolving Note": That Revolving Note, in substantially the form attached hereto as Exhibit A. "S&P": Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. "SEC": The Securities and Exchange Commission, or any successor thereto. "Security Documents": The Mortgage and Security Agreement, the Deposit Account Control Agreement, and such other documents executed and delivered in connection with the granting, attachment and perfection of the Administrative Agent's security interests and liens arising thereunder, including, without limitation, UCC financing statements. "Subsidiary": With respect to any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership, limited liability company or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. "Tax Laws": The meaning given to such term in Section 2.12. "Taxes": The meaning given to such term in Section 2.12. "Termination Date": The third (3rd) anniversary of the Closing Date, subject to earlier termination upon any breach by the Borrower hereunder. "Transfer Effective Date": The meaning set forth in each Commitment Transfer Supplement. "Trust Preferred Indebtedness": All Indebtedness issued pursuant to the Junior Subordinated Indenture between Caplease, LP and JPMorgan Chase Bank, National Association, as trustee, dated December 13, 2005, and the Parent Guarantee Agreement between Capital Lease Funding, Inc. and JPMorgan Chase Bank, National Association, as guarantee trustee, dated December 13, 2005. "2.12 Certificate": The meaning set forth in Section 2.12. "UCC Financing Statement": A financing statement on Form UCC-1 or the proper national UCC form, naming Initial Lender as "Secured Party" and Borrower as "Debtor" and describing the Collateral. "Uniform Commercial Code" or "UCC": The Uniform Commercial Code as in effect on the date hereof in the State of New York; provided that if by reason of mandatory provisions of law, the perfection, the effect of perfection or nonperfection, or the priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or nonperfection, or priority. -7- "Unused Facility Fee": The meaning given to such term is Section 2.13. "USA PATRIOT Act": The USA PATRIOT Act, Title III of Pub. L. 107-56, signed into law October 26, 2001. "Voting Interests": With respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency. "Wachovia Bridge": The Credit Agreement in aggregate principal amount of $211,000,000, dated as of April 17, 2007, among Caplease, LP, as borrower, the Borrower and certain domestic subsidiaries of the Borrower as guarantors, the lenders party thereto, and the Initial Lender as administrative agent. "Wachovia Indebtedness": All Indebtedness of Borrower provided by the Initial Lender or any of its Affiliates, and shall include, without limitation, Indebtedness arising under the Wachovia Bridge, the WBNA Facility, the WIH Facility, the Repurchase Agreement and any Wachovia Interest Rate Protection Agreements. "Wachovia Interest Rate Protection Agreements": Any and all of the Borrower's or any of its Affiliates' obligations arising under, or in connection with, any Interest Rate Protection Agreements to which the Initial Lender or any of its Affiliates is a counterparty thereto. "WIH Facility": The Revolving Loan Agreement in aggregate principal amount of $25,000,000, dated as of August 26, 2005, as amended, among the Borrower and others and Wachovia Investment Holdings, LLC, in its respective capacities as initial Lender and as administrative agent for lenders party thereto from time to time and all accompanying documentation associated therewith. "WBNA Facility": The Revolving Loan Agreement in aggregate principal amount of $75,000,000, dated as of August 26, 2005, as amended, among the Borrower and others and Wachovia Bank, National Association, in its respective capacities as initial Lender and as administrative agent for lenders party thereto from time to time and all accompanying documentation associated therewith. Section 1.02 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Revolving Notes or other Loan Documents or any certificate or other document made or delivered pursuant hereto. (b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. (c) The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The words "include," "includes" and "including" shall be deemed to be followed by "without limitation" whether or not they are in fact followed by such words or words of like import. (e) The words "writing," "written" and comparable terms shall refer to printing, typing, computer disk, e-mail and other means of reproducing words in a visible form. (f) References to any agreement or contract are to such agreement or contract as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of such Person. Section 1.03 Accounting Terms. (a) Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP applied on a basis consistent with the most recent audited consolidated financial statements of Borrower delivered to the Lenders. (b) Borrower shall deliver to the Administrative Agent and each Lender at the same time as the delivery of any periodic financial statements, to the extent not disclosed in such periodic financial statements, (i) a description in reasonable detail of any material change in the application of accounting principles employed in the preparation of such financial statements from those applied in the most recently preceding periodic financial statements and (ii) a reasonable estimate of the effect on the financial statements on account of such changes in application. -8- Section 1.04 Computation of Time Periods. All time references in this Agreement and the other Loan Documents shall be to Charlotte, North Carolina time unless otherwise indicated. For purposes of computation of periods of time hereunder, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding." ARTICLE II THE LOANS; AMOUNT AND TERMS Section 2.01 Loans. (a) Revolving Commitment. During the Commitment Period, subject to the terms and conditions hereof, the Initial Lender agrees initially and, upon an assignment of any portion of the Revolving Commitment to one or more Lenders, all Lenders, including, without limitation, the Initial Lender, severally, agree to make revolving credit loans (each a "Loan" and collectively the "Loans") to the Borrower from time to time for the purposes hereinafter set forth; provided, however, that (i) in the event of an assignment of any portion of the Revolving Commitment Amount to one or more Lenders, with regard to each Lender individually, the sum of such Lender's share of outstanding Loans shall not exceed such Lender's Revolving Commitment Percentage of the aggregate Revolving Commitment Amount, and (ii) with regard to the Lenders collectively, the sum of the aggregate amount of outstanding Loans shall not exceed the aggregate Revolving Commitment Amount then in effect. For purposes hereof, the aggregate amount available hereunder shall be FORTY MILLION DOLLARS ($40,000,000) (the "Revolving Commitment Amount"). Loans shall consist of LIBOR Rate Loans and may be repaid and reborrowed in accordance with the provisions hereof. LIBOR Rate Loans shall be made by each Lender at its LIBOR Lending Office. The Revolving Commitment Amount may be increased above $40,000,000 in the event Borrower proposes, and Agent accepts, in its sole and absolute discretion, additional real estate collateral as security for the Loans. Agent may condition the acceptance of any such additional collateral on such terms and conditions as Agent, in its sole discretion determines. (b) Revolving Loan Borrowings. (i) The Borrower shall request a Loan borrowing by written notice (or telephonic notice promptly confirmed in writing which confirmation may be by fax) to the Agent in the form of the Notice of Borrowing attached as Exhibit J not later than 11:00 a.m. on or before one (1) Business Day prior to the date of the requested borrowing (unless a shorter notice period is approved by the Agent). Each such request for borrowing shall be irrevocable and shall specify (A) that a Loan is requested, (B) the date of the requested borrowing (which shall be a Business Day) and (C) the aggregate principal amount to be borrowed. The Administrative Agent shall give notice to each Lender promptly upon receipt of each Notice of Borrowing, the contents thereof and each such Lender's share thereof. Subject to satisfaction of the applicable conditions set forth in Article III for the applicable Loan, the Agent will make commercially reasonable efforts to initiate the wire of the proceeds of the requested borrowing to the Borrower no later than 2:00 p.m. on the date and to the account specified by the Borrower in such Notice of Borrowing. (ii) Intentionally Omitted. (iii) Minimum Amounts. Each Loan shall be in a minimum aggregate amount of $2,000,000 (or the remaining amount of the - Revolving Commitment Amount, if less). (iv) Advances. Each Lender will make its Revolving Commitment Percentage of each approved Loan borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent identified in the signature page to this Agreement, or at such other office as the Administrative Agent may designate in writing, upon reasonable advance notice by 1:00 P.M. on the date specified in the applicable Notice of Borrowing, in Dollars and in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent by crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent. (c) Use and Repayment of Loan Proceeds. The proceeds of all Loans may be used for any general corporate purpose, including to fund investments or to repay other indebtedness; provided, however, that Loan proceeds with respect to an Eligible Asset may not exceed the product of the (x) the lesser of (i) the Fair Market Value of such Eligible Asset or (ii) the Purchase Price of such Eligible Asset times (y) the Advance Rate for such Eligible Asset. Lender agrees that, unless and until an Adjustment Event has occurred, Borrower shall be entitled to borrow the Full Revolving Commitment Amount hereunder. Amounts repaid hereunder may be reborrowed in accordance with the terms hereof. (d) Intentionally Omitted. (e) Interest. Subject to the provisions of Section 2.04, Loans shall be comprised of LIBOR Rate Loans and each such LIBOR Rate Loan shall bear interest at a per annum rate equal to the sum of the LIBOR Rate plus the Applicable Premium. Interest on Loans shall be payable in arrears on each Interest Payment Date. -9- (f) Revolving Notes. The Borrower's obligation to pay each Lender's Loans shall be evidenced by a Revolving Note made payable to such Lender in substantially the form of Exhibit A, if requested by such Lender. Section 2.02 Payments to Collection Account. Upon the delivery of one (1) Business Day's written notice from the Administrative Agent, Borrower shall pay all amounts received from the Eligible Asset on or after receipt of the notice into the collection account established pursuant to the terms of the Deposit Account Control Agreement (the "Collection Account"). Any failure to make such a mandatory payment into the Collection Account within one (1) Business Day as set forth above, shall be an Event of Default pursuant to Section 6.01(a). Notwithstanding the foregoing mandatory payment obligation, all other payment obligations arising under the Loan Documents may, at the option of the Borrower, also be deposited into the Collection Account. Section 2.03 Prepayments. (a) Optional Prepayments. Borrower shall have the right to make optional prepayments hereunder from time to time upon the delivery of two (2) Business Days' irrevocable notice; provided, however, that each optional prepayment of Loans shall be in a minimum principal amount of $2,000,000. Amounts prepaid under this Section 2.03(a) shall be applied to the repayment of amounts outstanding under this Agreement (pro rata with respect to advances under this Agreement); provided, that each Lender shall receive its pro rata share of any such prepayment based on its Revolving Commitment Percentage. All prepayments under this Section 2.03(a) shall be subject to Section 2.11. All prepayments under this facility shall be accompanied by any breakage costs incurred by Lenders as result of such prepayment. Interest on the principal amount prepaid shall be due and payable on any date that a prepayment is made hereunder through the date of prepayment. Amounts prepaid on the Loans may be reborrowed in accordance with the terms hereof. (b) Mandatory Prepayments. (i) Revolving Commitment Amount. If at any time after the Closing Date, the sum of the aggregate principal amount of outstanding Loans shall exceed the aggregate Revolving Commitment Amount then in effect, the Borrower immediately shall prepay the Loans in an amount sufficient to eliminate such excess. (ii) Eligible Asset Dispositions. Contemporaneously with any Eligible Asset Disposition, the Borrower shall prepay the Loans in an aggregate amount equal to 100% of the net proceeds derived from such Eligible Asset Disposition. (iii) Intentionally Omitted. (iv) Recovery Event. Promptly upon receipt, the Borrower shall prepay the Loans in an aggregate amount equal to 100% of the net proceeds received in connection with a Recovery Event. (v) Adjustment Event. Immediately upon the occurrence and continuation of an Adjustment Event, the Borrower shall repay to Agent an amount sufficient to reduce borrowings outstanding hereunder to an amount equal to the product of the (a) adjusted Fair Market Value for the Eligible Asset resulting therefrom and (b) the Advance Rate. Application of Mandatory Prepayments. All amounts required to be paid pursuant to Section 2.03(b) shall be applied pro rata to the then-outstanding Loans. All amounts (A) required to be paid pursuant to Section 2.03(b) and (B) in excess of amounts used to repay Loans as provided in the immediately preceding sentence and all other amounts due hereunder or under the other Loan Documents, if any, shall be applied to whoever may be lawfully entitled to receive such surplus. All prepayments under Section 2.03(b) shall be subject to Section 2.11 and be accompanied by interest on the principal amount prepaid through the date of prepayment. Section 2.04 Default Rate and Payment Dates. (a) (i) If all or a portion of the principal amount of any Loan shall not be paid when due, such overdue amount shall bear interest at a rate per annum which is equal to the rate that would otherwise be applicable thereto plus 2.5% (the "Default Rate"), or (ii) if any interest payable on the principal amount of any Loan or any fee or other amount, including the principal amount of any Loan, payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is equal to the Default Rate, in each case from the date of such non-payment until such amount is paid in full (after as well as before judgment). Upon the occurrence, and during the continuance, of any other Event of Default hereunder, the principal of and, to the fullest extent permitted by law, interest on the Loans and any other amounts owing hereunder or under the other Loan Documents shall bear interest, payable on demand, at a per annum rate which is (A) in the case of principal, the rate that would otherwise be applicable thereto plus 2.5% or (B) in the case of interest, fees or other amounts, the Default Rate (after as well as before judgment). The Requisite Lenders shall have the right to revoke the imposition of any default interest imposed under this Section 2.04(a). (b) Interest on each Loan shall be payable in arrears on each Interest Payment Date; provided that interest accruing pursuant to paragraph (a) of this Section 2.04 shall be payable from time to time on demand. -10- Section 2.05 Computation of Interest and Fees. (a) All fees, interest and all other amounts payable hereunder shall be calculated on the basis of a 360 day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a LIBOR Rate on the Business Day of the determination thereof. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the computations used by the Administrative Agent in determining any interest rate. (c) It is the intent of the Lenders and the Borrower to conform to and contract in strict compliance with applicable usury law from time to time in effect. All agreements between the Lenders and the Borrower are hereby limited by the provisions of this paragraph which shall override and control all such agreements, whether now existing or hereafter arising and whether written or oral. In no way, nor in any event or contingency (including but not limited to prepayment or acceleration of the maturity of any Obligation), shall the interest taken, reserved, contracted for, charged, or received under this Agreement, under the Revolving Notes or otherwise, exceed the maximum nonusurious amount permissible under applicable law. If, from any possible construction of any of the Loan Documents or any other document, interest would otherwise be payable in excess of the maximum nonusurious amount, any such construction shall be subject to the provisions of this paragraph and such interest shall be automatically reduced to the maximum nonusurious amount permitted under applicable law, without the necessity of execution of any amendment or new document. If any Lender shall ever receive anything of value which is characterized as interest on the Loans under applicable law and which would, apart from this provision, be in excess of the maximum nonusurious amount, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on the Loans and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal amount of the Loans. The right to demand payment of the Loans or any other Indebtedness evidenced by any of the Loan Documents does not include the right to receive any interest which has not otherwise accrued on the date of such demand, and the Lenders do not intend to charge or receive any unearned interest in the event of such demand. All interest paid or agreed to be paid to the Lenders with respect to the Loans shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of the Loans so that the amount of interest on account of such indebtedness does not exceed the maximum nonusurious amount permitted by applicable law. Section 2.06 Pro Rata Treatment and Payments. (a) Allocation of Payments Before Event of Default. Each borrowing of Loans shall be made pro rata by the Lenders according to the respective Revolving Commitment Percentages of the Lenders. Each payment under this Agreement or any Revolving Note shall be applied, first, to any fees then due and owing by the Borrower under this Agreement, second, to interest then due and owing hereunder and under the Revolving Notes and, third, to principal then due and owing hereunder and under the Revolving Notes. Each payment on account of any fees shall be made pro rata in accordance with the respective amounts due and owing. Each payment (other than prepayments) by the Borrower on account of principal of and interest on the Loans shall be applied to such Loans in accordance with the terms of Section 2.06(b) hereof. Except to the extent provided in Section 2.03, each mandatory prepayment on account of principal of the Loans shall be applied in accordance with Section 2.06(b). All payments (including prepayments) to be made by the Borrower on account of principal, interest and fees shall be made without defense, set-off or counterclaim (except as provided in Section 2.12(b)) and shall be made to the Administrative Agent for the account of the Lenders at the Administrative Agent's office specified on signature page hereto in Dollars and in immediately available funds not later than 1:00 P.M. on the date when due. The Administrative Agent shall distribute such payments to the Lenders entitled thereto promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. (b) Allocation of Payments After Exercise of Remedies. Notwithstanding any other provisions of this Agreement to the contrary, after the Revolving Commitments shall have been terminated, and the Loans and all other amounts under the Loan Documents shall have become due and payable in accordance with the terms of Section 6.02 hereof, all amounts collected or received by the Administrative Agent or any Lender on account of the Borrower's obligations under the Loan Documents or any other amounts outstanding under any of the Loan Documents or in respect of the Collateral shall be paid over or delivered as follows: FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation reasonable attorneys' fees) of the Administrative Agent in connection with enforcing the rights of the Lenders under the Loan Documents and any protective advances made by the Administrative Agent with respect to the Collateral under or pursuant to the terms of the Security Documents; SECOND, to payment of any fees owed to the Administrative Agent; THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation, reasonable attorneys' and consultants' fees) of each of the Lenders in connection with enforcing its rights under the Loan Documents or otherwise with respect to the obligations of the Borrower owing to such Lender; FOURTH, to the payment of all of the obligations of the Borrower under the Loan Documents consisting of accrued interest; -11- FIFTH, to the payment of the outstanding principal amount of the obligations of the Borrower under the Loan Documents; SIXTH, to all other obligations of the Borrower which shall have become due and payable under the Loan Documents or otherwise and not repaid pursuant to clauses "FIRST" through "FIFTH" above; SEVENTH, to the payment of any Obligations of the Borrower then outstanding in the priorities, if any, set forth in this Agreement until fully paid and discharged; and EIGHTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus. In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category and (ii) each of the Lenders shall receive an amount equal to its pro rata share (based on its Revolving Commitment Percentage) of amounts available to be applied pursuant to clauses "THIRD," "FOURTH," "FIFTH" and "SIXTH" above. Section 2.07 Non-Receipt of Funds by the Administrative Agent. (a) Unless the Administrative Agent shall have been notified in writing by a Lender prior to the date a Loan is to be made by such Lender (which notice shall be effective upon receipt) that such Lender does not intend to make the proceeds of such Loan available to the Administrative Agent, the Administrative Agent may assume that such Lender has made such proceeds available to the Administrative Agent on such date, and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent, the Administrative Agent shall be able to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent will promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover from the Lender 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 Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent at a per annum rate equal to (i) from the Borrower at the applicable rate for the applicable borrowing pursuant to the Notice of Borrowing and (ii) from a Lender at the Federal Funds Effective Rate. (b) Unless the Administrative Agent shall have been notified in writing by the Borrower, prior to the date on which any payment is due from it hereunder (which notice shall be effective upon receipt) that the Borrower does not intend to make such payment, the Administrative Agent may assume that Borrower has made such payment when due, and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to each Lender on such payment date an amount equal to the portion of such assumed payment to which such Lender is entitled hereunder, and if the Borrower has not in fact made such payment to the Administrative Agent, such Lender shall, on demand, repay to the Administrative Agent the amount made available to such Lender. If such amount is repaid to the Administrative Agent on a date after the date such amount was made available to such Lender, such Lender shall pay to the Administrative Agent on demand interest on such amount in respect of each day from the date such amount was made available by the Administrative Agent to such Lender to the date such amount is recovered by the Administrative Agent at a per annum rate equal to the Federal Funds Effective Rate. (c) A certificate of the Administrative Agent submitted to the Borrower or any Lender with respect to any amount owing under this Section 2.07 shall be conclusive in the absence of manifest error. Section 2.08 Inability to Determine Interest Rate. Notwithstanding any other provision of this Agreement, if (i) the Administrative Agent shall reasonably determine on an institutional basis for all LIBOR based loans (including the Loans) made by such Requisite Lenders (which determination shall be conclusive and binding absent manifest error) that, by reason of circumstances affecting the relevant market, reasonable and adequate means do not exist for ascertaining LIBOR for such Interest Period, or (ii) the Requisite Lenders shall reasonably determine (which determination shall be conclusive and binding absent manifest error) that the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders of funding all such LIBOR based loans (including the Loans), the Administrative Agent shall forthwith give telephone notice of such determination, confirmed in writing, to the Borrower and the Lenders at least two Business Days prior to the first day of such Interest Period. Unless the Borrower shall have notified the Administrative Agent upon receipt of such telephone notice that it wishes to rescind or modify its request regarding such Loans, any Loans that were requested to be made as LIBOR Rate Loans shall be made as Alternate Base Rate Loans. Until any such notice has been withdrawn by the Administrative Agent, no further Loans shall be made as or continued as LIBOR Rate Loans for the Interest Periods so affected. Section 2.09 Illegality. Notwithstanding any other provision of this Agreement, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by the relevant Governmental Authority to any Lender shall make it unlawful for such Lender or its LIBOR Lending Office to make or maintain LIBOR Rate Loans as contemplated by this Agreement or to obtain in the interbank eurodollar market through its LIBOR Lending Office the funds with which to make such Loans, (a) such Lender shall promptly notify the Administrative Agent and the Borrower thereof, (b) the commitment of such Lender hereunder to make LIBOR Rate Loans or continue LIBOR Rate Loans as such shall forthwith be suspended until the Administrative Agent shall give notice that the condition or situation which gave rise to the suspension shall no longer exist, and (c) such Lender's Loans then outstanding as LIBOR Rate Loans, if any, shall be converted on the last day of the Interest Period for such Loans or within such earlier period as required by law as Alternate Base Rate Loans. The Borrower hereby agrees promptly to pay any Lender, upon its demand, any additional amounts necessary to compensate such Lender for actual and direct costs (but not including anticipated profits) reasonably incurred by such Lender in order to make or maintain its LIBOR Rate Loans hereunder. A certificate as to any additional amounts payable pursuant to this Section (which certificate must be delivered to the Administrative Agent within 10 Business Days of the change in law) submitted by such Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. Each Lender agrees to use reasonable efforts (including reasonable efforts to change its LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be payable pursuant to this Section; provided, however, that such efforts shall not cause the imposition on such Lender of any additional costs or legal or regulatory burdens deemed by such Lender in its sole discretion to be material. -12- Section 2.10 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject such Lender to any tax of any kind whatsoever with respect to any LIBOR Rate Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for changes in the rate of tax on the overall net income of such Lender); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the LIBOR Rate hereunder; or (iii) shall impose on such Lender any other condition; and the result of any of the foregoing is to increase the cost to such Lender of making or maintaining LIBOR Rate Loans or to reduce any amount receivable hereunder or under any Revolving Note, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such additional cost or reduced amount receivable which such Lender reasonably deems to be material as determined by such Lender with respect to its LIBOR Rate Loans. A certificate as to any additional amounts payable pursuant to this Section (which certificate must be delivered to the Administrative Agent within 10 Business Days of the change in law) submitted by such Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. Each Lender agrees to use reasonable efforts (including reasonable efforts to change its LIBOR Lending Office) to avoid or to minimize any amounts which might otherwise be payable pursuant to this paragraph of this Section; provided, however, that such efforts shall not cause the imposition on such Lender of any additional costs or legal or regulatory burdens deemed by such Lender to be material. (b) If any Lender shall have reasonably determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any person controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any central bank or Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on such Lender's or such person's capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such person's policies with respect to capital adequacy) by an amount reasonably deemed by such Lender to be material, then from time to time, within fifteen (15) days after demand by such Lender, the Borrower shall pay to such Lender such additional amount as shall be certified by such Lender as being required to compensate it for such reduction. Such a certificate as to any additional amounts payable under this Section submitted by a Lender (which certificate shall include a description of the basis for the computation), through the Administrative Agent, to the Borrower shall be conclusive absent manifest error. Section 2.11 Indemnity. The Borrower hereby agrees to indemnify each Lender and to hold such Lender harmless from any funding loss or expense which such Lender may sustain or incur as a consequence of (a) the failure by the Borrower to pay the principal amount of or interest on any Loan by such Lender in accordance with the terms hereof, (b) the failure of the Borrower to accept a borrowing after the Borrower has given a notice in accordance with the terms hereof (unless revoked in accordance with Section 2.01(b)(i)) and/or (c) the failure of the Borrower to make any prepayment after the Borrower has given a notice in accordance with the terms hereof, in each case including, but not limited to, any such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain its Loans hereunder. A certificate as to any additional amounts payable pursuant to this Section 2.11 submitted by any Lender, through the Administrative Agent, to the Borrower (which certificate must be delivered to the Administrative Agent within thirty (30) days following such default, prepayment or conversion) shall be conclusive in the absence of manifest error. The agreements in this Section 2.11 shall survive termination of this Agreement and payment of the Revolving Notes and all other amounts payable hereunder. Section 2.12 Taxes. (a) All payments made by the Borrower hereunder or under any Revolving Note will be, except as provided in Section 2.12(b), made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed pursuant to any law, rule, regulation or other promulgation by any Governmental Authority or by any political subdivision or taxing authority thereof (collectively, "Tax Laws") or therein with respect to such payments (but excluding any tax imposed on or measured by the net income or profits of a Lender pursuant to the laws of the jurisdiction in which it is organized or the jurisdiction in which the principal office or applicable lending office of such Lender is located or any subdivision thereof or therein) and all interest, penalties or similar liabilities with respect thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any Revolving Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Revolving Note. The Borrower will furnish to the Administrative Agent as soon as practicable after the date the payment of any Taxes is due pursuant to applicable law certified copies (to the extent reasonably available and required by law) of tax receipts evidencing such payment by the Borrower. The Borrower agrees to indemnify and hold harmless each Lender, and reimburse such Lender upon its written request, for the amount of any Taxes so levied or imposed and paid by such Lender. -13- (b) Each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower and the Administrative Agent on or prior to the Closing Date, or in the case of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to Section 9.03 (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Lender, (i) if the Lender is a "bank" within the meaning of Section 881(c)(3)(A) of the Code, two accurate and complete original signed copies of Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY (or successor forms) certifying such Lender's entitlement to a complete exemption from United States withholding tax with respect to payments to be made under this Agreement and under any Revolving Note, or (ii) if the Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY as set forth in clause (i) above, or (x) a certificate in substantially the form of Exhibit K (any such certificate, a "2.12 Certificate") and (y) two accurate and complete original signed copies of Internal Revenue Service Form W-8BEN (or successor form) certifying such Lender's entitlement to an exemption from United States withholding tax with respect to payments of interest to be made under this Agreement and under any Revolving Note. In addition, each Lender agrees that it will deliver upon the Borrower's request updated versions of the foregoing, as applicable, whenever the previous certification has become obsolete or inaccurate in any material respect, together with such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in United States withholding tax with respect to payments under this Agreement and any Revolving Note. Notwithstanding anything to the contrary contained in Section 2.12(a), but subject to the immediately succeeding sentence, (x) the Borrower shall be entitled, to the extent it is required to do so by law, to deduct or withhold Taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein) from interest, fees or other amounts payable hereunder for the account of any Lender which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. federal income tax purposes to the extent that such Lender has not provided to the Borrower U.S. Internal Revenue Service Forms that establish a complete exemption from such deduction or withholding and (y) the Borrower shall not be obligated pursuant to Section 2.12(a) hereof to gross-up payments to be made to a Lender in respect of Taxes imposed by the United States if (I) such Lender has not provided to the Borrower the Internal Revenue Service Forms required to be provided to the Borrower pursuant to this Section 2.12(b) or (II) in the case of a payment, other than interest, to a Lender described in clause (ii) above, to the extent that such Internal Revenue Service Forms do not establish a complete exemption from withholding of such Taxes. Notwithstanding anything to the contrary contained in the preceding sentence or elsewhere in this Section 2.12, the Borrower agrees to pay additional amounts and to indemnify each Lender in the manner set forth in Section 2.12(a) (without regard to the identity of the jurisdiction requiring the deduction or withholding) in respect of any amounts deducted or withheld by it as described in the immediately preceding sentence as a result of any changes after the Closing Date in any applicable law, treaty, governmental rule, regulation, guideline or order, or in the interpretation thereof, relating to the deducting or withholding of Taxes. (c) Each Lender agrees to use reasonable efforts (including reasonable efforts to change its LIBOR Lending Office) to avoid or to minimize any amounts which might otherwise be payable pursuant to this Section; provided, however, that such efforts shall not cause the imposition on such Lender of any additional costs or legal or regulatory burdens deemed by such Lender in its sole discretion to be material. (d) If the Borrower pays any additional amount pursuant to this Section 2.12 with respect to a Lender, such Lender shall use reasonable efforts to obtain a refund of tax or credit against its tax liabilities on account of such payment; provided that such Lender shall have no obligation to use such reasonable efforts if either (i) it is in an excess foreign tax credit position or (ii) it believes in good faith, in its sole discretion, that claiming a refund or credit would cause adverse tax consequences to it. In the event that such Lender receives such a refund or credit, such Lender shall pay to the Borrower an amount that such Lender reasonably determines is equal to the net tax benefit obtained by such Lender as a result of such payment by the Borrower. In the event that no refund or credit is obtained with respect to the Borrower's payments to such Lender pursuant to this Section 2.12, then such Lender shall upon request provide a certification that such Lender has not received a refund or credit for such payments. Nothing contained in this Section 2.12 shall require a Lender to disclose or detail the basis of its calculation of the amount of any tax benefit or any other amount or the basis of its determination referred to in the proviso to the first sentence of this Section 2.12 to the Borrower or any other party. (e) The agreements in this Section 2.12 shall survive the termination of this Agreement and the payment of the Revolving Notes and all other amounts payable hereunder. ARTICLE III CONDITIONS PRECEDENT Section 3.01 Conditions. The obligation of the Initial Lender to make the initial Loan is subject to the satisfaction of the following conditions precedent: (a) Execution of Agreement and Loan Documents. The Administrative Agent shall have received -14- (i) counterparts of this Agreement, executed by a duly authorized officer of Borrower, (ii) a duly executed Revolving Note, (iii) a duly executed Mortgage and Security Agreement conforming to the requirements of this Agreement, and (iv) counterparts of any other Loan Document, duly executed by Borrower. (b) Authority Documents. The Administrative Agent shall have received the following: (i) Articles of Incorporation, Etc. Copies of the articles of incorporation or other charter or formation documents of Borrower certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state of its incorporation or formation, as the case may be. (ii) Resolutions. Copies of resolutions of the board of directors or other comparable managing body of Borrower approving and adopting the Loan Documents, the transactions contemplated therein and authorizing execution and delivery thereof, certified by a Responsible Officer of the Borrower, to be true and correct and in force and effect as of such date. (iii) Bylaws, Etc. A copy of the bylaws or limited partnership agreement, as applicable, of Borrower certified by a Responsible Officer of Caplease as of the Closing Date to be true and correct and in force and effect as of such date. (iv) Good Standing. Copies of certificates of good standing, existence or its equivalent with respect to Borrower certified as of a recent date by the appropriate Governmental Authorities of the state of incorporation, and each other state in which Borrower is qualified to do business. (v) Incumbency. An incumbency certificate of Borrower certified by a secretary or assistant secretary to be true and correct as of the Closing Date. (c) Documentation The Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent the following, as applicable: (i) searches of Uniform Commercial Code filings in the jurisdiction of the chief executive office and state of incorporation of Borrower and each jurisdiction where any Collateral is located or where a filing would need to be made in order to perfect the Administrative Agent's security interest in the Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist; (ii) UCC financing statements for each appropriate jurisdiction as is necessary, in the Administrative Agent's sole discretion, to perfect the Administrative Agent's security interest in the Collateral; (iii) The following documentation in respect of the Eligible Asset: (a) a Phase I (and, if applicable, Phase II) environmental report; (b) engineering reports (if applicable); (c) title policy; (d) ALTA survey; (e) an executive summary, presenting in reasonable detail, the acquisition of such Eligible Asset; (f) the name and credit rating of the tenant leasing the Eligible Asset; and (g) copies of any (i) lease and (ii) escrow or holdback agreements or arrangements entered into in connection with, or arising out of, the acquisition of such Eligible Asset. (iv) duly executed consents as are necessary, in the Administrative Agent's sole discretion, to perfect the Lenders' security interest in the Collateral. (d) Legal Opinions of Counsel. The Administrative Agent shall have received one or more opinions of counsel for the Borrower dated the Closing Date and acceptable to the Administrative Agent and the Initial Lender. (e) Fees. The Administrative Agent and the Initial Lender shall have received all fees, if any, owing pursuant to the Fee Letter. (f) Litigation. There shall not exist any pending or threatened litigation, investigation, bankruptcy or insolvency, injunction, order or claim affecting or relating to Borrower or any of its Subsidiaries, this Agreement and the other Loan Documents, that has not been settled, dismissed, vacated, discharged or terminated prior to the Closing Date which could reasonably be expected to result in a Material Adverse Effect. (g) Solvency Certificate. The Administrative Agent shall have received an officer's certificate prepared by a Responsible Officer of Caplease as to the financial condition, solvency and related matters of the Borrower, after giving effect to the initial borrowings under the Loan Documents, in substantially the form of Exhibit G hereto. (h) Corporate Structure. The corporate capital and ownership structure of Caplease and its Subsidiaries as of June 30, 2007 shall be as described in Schedule 3.01(h). -15- (i) Consents. The Administrative Agent shall have received evidence that all governmental, shareholder and material third party consents and approvals necessary in connection with the financing and other transactions contemplated hereby have been obtained. (j) Compliance with Laws. The financing and other transactions contemplated hereby shall be in compliance with all applicable laws and regulations (including all applicable securities and banking laws, rules and regulations). (k) Bankruptcy. There shall be no bankruptcy or insolvency proceedings commenced or threatened to be commenced against Caplease or any of its Subsidiaries. (l) Intentionally Omitted. (m) Financial Statements. The Administrative Agent and the Initial Lender shall have received copies of the financial statements referred to in Section 4.01(f) hereof, each in form and substance satisfactory to it. (n) No Material Adverse Change. Since March 31, 2007, there has been no material adverse change in the business, properties, prospects, operations or condition (financial or otherwise) of Caplease and its Subsidiaries taken as a whole. (o) Compliance Certificate. The Administrative Agent shall have received a Compliance Certificate in the form attached hereto as Exhibit H, duly executed by a Responsible Officer of Caplease, and satisfactory to the Administrative Agent in its sole discretion. (p) Officer's Certificate. The Administrative Agent shall have received a certificate executed by a Responsible Officer of the Borrower as of the Closing Date stating that (i) no action, suit, investigation or proceeding is pending or, to the knowledge of the Borrower, threatened in any court or before any arbitrator or governmental instrumentality that purports to affect the Borrower or any other transaction contemplated by the Loan Documents, if such action, suit, investigation or proceeding could reasonably be expected to have a Material Adverse Effect and (ii) immediately after giving effect to this Agreement (including any initial Extensions of Credit hereunder), the other Loan Documents, and all the transactions contemplated therein or thereby to occur on such date, (A) no Default or Event of Default exists and (B) all representations and warranties contained herein and in the other Loan Documents are true and correct in all material respects. (q) Maximum Leverage Ratio. The Leverage Ratio of Caplease and its Subsidiaries, after giving effect to any initial borrowings under the Loan Documents, is not greater than .85 to 1.00 as of the Closing Date. (r) Intentionally Omitted. (s) Intentionally Omitted. (t) USA PATRIOT Act. The Borrower shall have provided to the Administrative Agent, for benefit of the Administrative Agent and the Initial Lender, the necessary information required by the USA PATRIOT Act including, without limitation, the identity of the Borrower and its Subsidiaries, the name and address of the Borrower and its Subsidiaries and other information that will allow the Administrative Agent or the Initial Lender, as applicable, to identify the Borrower and its Subsidiaries in accordance with the USA PATRIOT Act. (u) Additional Matters. All other documents and legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel. Section 3.02 Conditions to All Extensions of Credit. The obligation of the Initial Lender and any other Lender to make any Extension of Credit hereunder is subject to the satisfaction of the following conditions precedent on the date of making such Extension of Credit: (a) Representations and Warranties. The representations and warranties made by the Borrower herein, in the Loan Documents or which are contained in any certificate furnished at any time under or in connection herewith shall be true and correct in all material respects on and as of the date of such Extension of Credit as if made on and as of such date (except for those which expressly relate to an earlier date). (b) No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Extension of Credit to be made on such date unless such Default or Event of Default shall have been waived in accordance with this Agreement. (c) Compliance with Commitments. Immediately after giving effect to the making of any such Extension of Credit (and the application of the proceeds thereof), the sum of the aggregate principal amount of outstanding Loans shall not exceed the lesser of (i) the Revolving Commitment Amount then in effect and (ii) the amounts permitted under Section 2.01 (c). (d) Intentionally Omitted. (e) Intentionally Omitted. -16- (f) Certificates. The Administrative Agent shall have received a Closing Certificate, duly executed by a Responsible Officer of Caplease. (g) Additional Conditions to Loans. If such Loan is made pursuant to Section 2.01, all conditions set forth in such Section shall have been satisfied. Each request for an Extension of Credit and each acceptance by the Borrower of any such Extension of Credit shall be deemed to constitute a representation and warranty by the Borrower as of the date of such Extension of Credit that the applicable conditions in paragraphs (a) through (g) of this Section have been satisfied. ARTICLE IV REPRESENTATIONS AND WARRANTIES Section 4.01 Representations and Warranties. Borrower represents and warrants to the Administrative Agent that as of the date of this Agreement: (a) Solvency. The Loan Documents are not being entered into in contemplation of insolvency or with intent to hinder, delay or defraud any of the Borrower's creditors. The financing contemplated hereby is not undertaken with the intent to hinder, delay or defraud any of the Borrower's creditors. As of the date hereof, the Borrower is not insolvent within the meaning of 11 U.S.C. Section 101 (32) or any successor provision thereof and the Obligations (i) will not cause the liabilities of the Borrower to exceed the assets of the Borrower, (ii) will not result in the Borrower having unreasonably small capital, and (iii) will not result in debts that would be beyond the Borrower's ability to pay as the same mature. (b) Ability to Perform. The Borrower does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in the Loan Documents applicable to it to which it is a party. (c) No Defaults; No Material Adverse Effect. No Default or Event of Default or any Material Adverse Effect has occurred and is continuing hereunder. (d) Indebtedness of Borrower. As of the Closing Date, the Borrower's only Indebtedness other than Wachovia Indebtedness and the Trust Preferred Indebtedness, is Non-Recourse Indebtedness. (e) Legal Name; Existence; Compliance with Law. Caplease's exact legal name is Capital Lease Funding, Inc. Caplease is a REIT, duly organized, validly existing and in good standing under the laws of the State of Maryland. Owner's exact legal name is PREFCO II Limited Partnership. Owner is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Connecticut. Borrower is qualified to do business and is in good standing in all other jurisdictions in which the nature of the business conducted by it makes such qualification necessary, except where failure so to qualify could not be reasonably likely (either individually or in the aggregate) to have a Material Adverse Effect. The Borrower is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. (f) Financial Condition. Caplease has heretofore furnished to the Administrative Agent and the Initial Lender a copy of its consolidated balance sheets and its consolidated Subsidiaries, if any, as at the end of March 31, 2007 and the related consolidated statements of income and retained earnings and of cash flows for Caplease and its consolidated Subsidiaries, if any, for such period and the portion of the fiscal year through the end of such period. Such financial statements fairly present, in all material respects, the consolidated financial position of Caplease and its Subsidiaries as of such date in accordance with GAAP applied on a consistent basis. (g) Litigation. As of the date of this Agreement there are no actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or to the best of the Borrower's knowledge threatened) affecting the Borrower or affecting any of the assets or properties of the Borrower before any Governmental Authority which (i) questions or challenges the validity or enforceability of the Loan Documents or any action to be taken in connection with the Borrower's obligations under the Loan Documents, or (ii) individually or in the aggregate, if adversely determined, could reasonably be likely to have a Material Adverse Effect. (h) No Breach. Neither (a) the execution and delivery of the Loan Documents nor (b) the consummation of the transactions therein contemplated to be entered into by the Borrower in compliance with the terms and provisions thereof will conflict with or result in a breach of the organizational documents of the Borrower or any of its Subsidiaries, or any applicable law, rule or regulation, or any order, writ, injunction or decree of any Governmental Authority, or any material agreement or instrument to which the Borrower is a party or by which it or its assets or properties is bound or to which it is subject, or constitute a default under any such material agreement or instrument or result in the creation or imposition of any Lien (except for the Liens created pursuant to the Loan Documents) upon any assets or properties of the Borrower or any of its Subsidiaries, pursuant to the terms of any such agreement or instrument. (i) Action. The Borrower has all necessary corporate or other power, authority and legal right to execute, deliver and perform its obligations under each of the Loan Documents, as applicable; the execution, delivery and performance by the Borrower of each of the Loan Documents have been duly authorized by all necessary corporate action on its part; and each Loan Document has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, subject to bankruptcy, insolvency, and other limitations on creditors rights generally and to equitable principals. -17- (j) Approvals. No authorizations, approvals or consents of, and no filings or registrations with, any securities exchange, Governmental Authority or any other Person are required for the execution, delivery or performance by the Borrower of the Loan Documents except for filings and recordings in respect of the Liens created pursuant to the Loan Documents (other than such authorizations, approvals, consents, filings or registrations that have already been obtained or made, as applicable, and remain in full force and effect). (k) Margin Regulations and Use of Proceeds. Neither any Extension of Credit hereunder, nor the use of the proceeds thereof, will be used for any purpose which violates, or would be inconsistent with, the provisions of Regulation T, U or X. (l) Taxes. The Borrower and its Subsidiaries have filed all Federal income tax returns and all other material tax returns that are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by them, except for any such taxes or assessments as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of the Borrower, adequate. (m) Investment Company Act. Neither Caplease nor any of its Subsidiaries is an "Investment Company," or a company "Controlled" by an "Investment Company," within the meaning of the Investment Company Act of 1940, as amended. (n) Location of Books and Records. The location where Borrower keeps its books and records, including all computer tapes and records related to the Eligible Asset and comprising the Eligible Asset File is its chief executive office unless notified by Borrower. (o) True and Complete Disclosure. The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Borrower to the Administrative Agent and the Initial Lender in connection with the negotiation, preparation or delivery of this Agreement and the other Loan Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. There is no fact known to a Responsible Officer of the Borrower, after due inquiry, that would reasonably be expected to have a Material Adverse Effect that has not been disclosed herein, in the other Loan Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Administrative Agent and the Initial Lender for use in connection with the transactions contemplated hereby or thereby. (p) ERISA. Neither Borrower nor any of its Subsidiaries has established any Multiemployer Plan pursuant to ERISA, the Code or any other Federal or state law. Each Plan to which the Borrower or any of its Subsidiaries make direct contributions, and, to the knowledge of the Borrower, as applicable, each other Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other Federal or State law. (q) No Reliance. The Borrower has made its own independent decision to enter into the Loan Documents and as to whether the transactions contemplated thereby are appropriate and proper based upon its own judgment and upon advice from such advisors (including without limitation, legal counsel and accountants) as it has deemed necessary. The Borrower is not relying upon any advice from the Agent as to any aspect of the transactions contemplated hereby the legal, accounting or tax treatment of such transactions. (r) Compliance with Anti-Money Laundering Laws. The Borrower has complied with all applicable anti-money laundering laws and regulations, including without limitation the USA PATRIOT Act (collectively, the "Anti-Money Laundering Laws"). The Borrower has conducted the requisite due diligence in connection with the transactions contemplated hereby for purposes of the Anti-Money Laundering Laws. (s) Compliance with Financial Covenants. Caplease is in full compliance with the financial covenant set forth in Section 5.03 to the extent applicable. (t) Ground Lease. (i) Recording. The Ground Lease or a memorandum thereof has been duly recorded. The Ground Lease permits the interest of the lessee thereunder to be encumbered by the Mortgage and Security Agreement, and there has not been a material change in the terms of the Ground Lease since its recordation. (ii) No Senior Liens. Except for the Permitted Encumbrances, Owner's interest in the Ground Lease is not subject to any liens or encumbrances superior to, or of equal priority with, the Mortgage and Security Agreement. (iii) Ground Lease Assignable. Owner's interest in the Ground Lease is assignable to Lender and, as of the Closing Date, all required notices to, and/or consents from, the ground lessor under the Ground Lease have been made or obtained with respect to any such assignment to Lender. -18- (iv) Default. To the best of Borrower's knowledge, the Ground Lease is in full force and effect and no default has occurred under the Ground Lease and there is no existing condition which, but for the passage of time or the giving of notice, would result in a default under the terms of the Ground Lease. (v) Notice. Ground Lessor has agreed in writing to give notice to Lender of any default under the Ground Lease and that notice of termination given under the Ground Lease is not effective against Lender unless a copy of the notice has been delivered to Lender in the manner described in the Ground Lease. (vi) Cure. Lender is permitted an opportunity (including, where necessary, time to gain possession of the interest of Borrower under the Ground Lease) to cure any default under the Ground Lease, which is curable after the receipt of notice of the default before the sublessor thereunder may terminate the Ground Lease. (vii) Term. The Ground Lease has a term, inclusive of renewal options, which extends not less than twenty (20) years beyond the Maturity Date. (viii) New Lease. Ground Lessor has agreed in writing to enter into a new lease with Lender upon termination of the Ground Lease for any reason, including rejection of the Ground Lease in a bankruptcy proceeding, provided that Lender cures any defaults which are susceptible to being cured. ARTICLE V COVENANTS The Borrower hereby covenants and agrees that on the Closing Date, and thereafter for so long as this Agreement is in effect and until the Revolving Commitments have terminated, no Revolving Note remains outstanding and unpaid and the obligations under this Agreement, together with unpaid interest, fees and all other amounts owing to the Agent or any Lender hereunder, are paid in full, that, to the extent applicable: Section 5.01 Intentionally Omitted. Section 5.02 Mortgaged Assets. Borrower shall mortgage all Collateral in favor of the Administrative Agent and such Collateral shall be subject at all times to a first priority, perfected Lien in favor of the Administrative Agent pursuant to the terms and conditions of the Security Documents or such other security documents as the Administrative Agent shall reasonably request to be executed and delivered by the Borrower, subject only to the Permitted Exceptions. Borrower agrees not to further mortgage, lien or pledge any such Collateral to any other party for as long as such Collateral is subject to the Lien of the Security Documents. Section 5.03 Financial Covenants. (a) The Leverage Ratio of Caplease shall be less than or equal to 0.85 to 1.00; (b) Caplease shall maintain $8 million in unencumbered Cash and Cash Equivalents; (c) Caplease shall maintain a minimum Consolidated Tangible Net Worth of (i) $100,000,000 plus (ii) 75% of the aggregate proceeds received by Borrower from any Equity Issuance or receipt of capital contributions; and (d) Caplease shall make no distributions of any type during the occurrence of Event of Default. Section 5.04 Certificates; Other Information. The Borrower shall furnish to the Agent: (a) within forty-five (45) days following the end of each calendar quarter, (i) unaudited financial statements of Caplease and its consolidated Subsidiaries and (ii) a Compliance Certificate, duly executed by a Responsible Officer of Caplease, certifying as to the matters specified therein for all applicable periods specified therein; (b) within one hundred twenty (120) days of each calendar year, audited annual financial statements of Caplease and its consolidated Subsidiaries, together with a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate; (c) within three (3) Business Days after the occurrence thereof, a notice containing information regarding the amount received in connection with any Eligible Asset Dispositions or Recovery Event; -19- (d) promptly upon receipt thereof, a copy or summary of any report or "management letter" submitted or presented by independent accountants to the Borrower or any of its Subsidiaries in connection with any annual, interim or special audit of the books of such Person; (e) promptly upon their becoming available, copies of (i) all press releases and other statements made available generally by the Borrower to the public concerning material developments in the business of the Borrower and its Subsidiaries and (ii) any non-routine correspondence or official notices received by the Borrower or any of its Subsidiaries from any Governmental Authority which regulates the operations of the Borrower or its Subsidiaries which is likely to have a Material Adverse Effect; (f) promptly, any material report or material notice received by the Borrower or its Subsidiaries with respect to any Eligible Asset and such additional financial and other information as the Administrative Agent, on behalf of any Lender, may from time to time reasonably request; (g) during any time the Eligible Asset is not leased to a single tenant pursuant to a net lease which provides that the tenant is fully responsible for the maintenance and operation (including, but not limited to, the payment of all taxes and insurance) of the Eligible Asset, within thirty (30) days following the end of each calendar quarter, rent rolls (if applicable) and property operating statements for the Eligible Asset; and (h) when obtained by Borrower, any surveillance report regarding the Eligible Asset. Section 5.05 No Negative Pledge. Neither Borrower nor any of its Subsidiaries shall grant, allow or enter into any agreement or arrangement with any Person that prohibits or restricts, or purports to prohibit or restrict, the granting of any security interest, Lien or other encumbrance on any of the assets or properties of the Borrower; without written notice to Agent. Section 5.06 Intentionally omitted. Section 5.07 Intentionally Omitted. Section 5.08 Compliance with Laws. Borrower shall comply with all Requirements of Law, including but not limited to, all Environmental Laws, except where the failure to comply would not reasonably be expected to have a Material Adverse Effect, and shall comply with all Anti-Money Laundering Laws. Section 5.09 Taxes. The Borrower and its Subsidiaries shall timely file all Federal income tax returns and all other material tax returns that are required to be filed by it and pay all taxes due pursuant to such returns or pursuant to any assessment received by it or any of its Subsidiaries, except for any such taxes or assessments as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided. Section 5.10 Books and Records. Borrower shall maintain its books and records, including all computer tapes and records related to the Eligible Asset and comprising the Eligible Asset File in its chief executive office unless notified by Borrower, and shall provide Agent with reasonable access thereto. Section 5.11 Preservation of Existence. Borrower shall maintain its legal existence as a corporation and its license or qualification and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary except for any failure that would not reasonably be expected to have a Material Adverse Effect. Section 5.12 Maintenance of Collateral. Borrower shall (i) comply with and enforce the terms and conditions of any lease of the Eligible Asset, (ii) not commit waste or permit impairment or deterioration of the Collateral, (iii) not abandon any Collateral, (iv) restore or repair promptly, in a good and workmanlike manner, any damaged part of any Collateral to the equivalent of its original condition, or such other condition as Agent may approve in writing, whether or not insurance proceeds or condemnation awards are available to cover any costs of such restoration or repair (provided that Agent shall make any insurance proceeds or condemnation awards received by Agent available to Borrower for restoration and repair), (v) keep the Collateral in good repair (normal wear and tear excepted), including the replacement of any personalty and fixtures with items of equal or better function and quality, (vi) provide for professional management of the Collateral by a property manager satisfactory to Agent under a contract approved by Agent in writing, (vii) not change the use of any Collateral, (viii) give notice to Agent of and, unless otherwise directed in writing by Agent, shall appear in and defend any action or proceeding purporting to affect any Collateral, Agent's security or Agent's rights under this Agreement, (ix) make any reasonable repairs to the Collateral which are requested by Agent, and (x) not (and shall not permit any tenant or other person to) remove, demolish or alter any Collateral or any part thereof except in connection with the replacement of tangible personalty. To the extent Borrower has entered into a net lease for the entire Eligible Asset which provides for the tenant thereunder to undertake all responsibility for the maintenance and operation of the Eligible Asset, Borrower's obligations to comply with clauses (iv), (v), (vi) and (ix) in this Section 5.12 shall be abated so long as the tenant under such lease is performing all of its material obligations thereunder. Borrower shall maintain insurance coverage of the Collateral to the extent required in the Loan Documents. Borrower shall perform all Material Contracts relating to the Property to which it is a party, and cause its Subsidiaries to perform all Material Contracts relating to the Property to which they are a party if the failure to so perform would have a Material Adverse Effect. Borrower will perform under any Interest Rate Protection Agreements. -20- Section 5.13 Intentionally Omitted. Section 5.14 Further Assurances. Borrower shall, from time to time, at its expense, faithfully preserve and protect Agent's Lien on and security interest in the Collateral as a continuing first priority perfected Lien, subject only to Permitted Exceptions, and shall do such other acts and things as Agent in its sole discretion may deem necessary or advisable from time to time in order to preserve, perfect and protect the liens granted under the Loan Documents and to exercise and enforce its rights and remedies thereunder with respect to the Collateral, provided that (i) the terms and conditions of this Agreement and the other Loan Documents are not changed thereby, (ii) Agent will use its best efforts to minimize costs and expenses incurred in connection with a request under this subsection, and (iii) Borrower's obligations hereunder or under any other Loan Documents are not increased or otherwise adversely affected thereby except for incidental costs and expenses such as recording fees and reasonable attorneys' fees and expenses. Section 5.15 Ownership. Caplease shall own at all times the controlling equity interest in Owner; Owner shall at all times be the sole owner of the Eligible Asset. Section 5.16 Appraisals. Borrower shall cooperate with Agent and provide such information in its possession as Agent shall reasonably require to complete a new appraisal of the Eligible Asset as required hereunder. Section 5.17 Indebtedness. Borrower shall not, at any time create, incur, assume or suffer to exist any Indebtedness related to Collateral, except: (a) Indebtedness under the Loan Documents; and (b) Trade debt incurred in the ordinary course of business of operating the Collateral. Section 5.18 Liens. Borrower shall not, at any time create, incur, assume or suffer to exist any lien on any of the Collateral, except the Permitted Exceptions. Upon Agent's reasonable request, which request shall not be made more frequently than annually unless Agent has a reasonable suspicion of a title defect, Borrower shall promptly perform or cause to be performed, at Borrower's sole cost and expense, a title search satisfactory to Agent, demonstrating compliance with the provisions of this Section. Section 5.19 Liquidations, Mergers, Consolidations, Acquisitions. Borrower shall not dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or otherwise all or substantially all of the assets or capital stock of any other Person. Section 5.20 Changes in Organizational Documents; Name. Borrower shall not amend in any respect its certificate of incorporation (including any provisions or resolutions relating to capital stock), by-laws, or other formation agreement or other organizational documents without first sending notice to Agent and obtaining the prior written consent of Agent, which shall be granted or denied within thirty (30) Business Days of Agent's receipt of the proposed amendment, a brief explanation of its purpose and effect, and such other documents as Agent may reasonably request. Borrower shall not amend, revise or otherwise change its name in any respect, without the prior written consent of Agent. Section 5.21 Enforceability of Loan Documents. In the event that any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the party executing the same or such party's successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof (except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors' rights generally or limiting the right to specific performance) or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative or shall in any way be challenged or contested, resulting in the failure to provide the practical benefit of the respective liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby, Borrower shall use best efforts to cure any such defect(s) in such Loan Document(s), provided that if Borrower is unable to cure any such defect(s) within a reasonable time period, not to exceed thirty (30) days, Lender may in its discretion, upon ten (10) days notice to Borrower, accelerate Borrower's obligations under the Revolving Note. Section 5.22 Reporting Requirements. Borrower covenants and agrees that until the later of (i) payment in full of the Loan and satisfaction of all of Borrower's other obligations hereunder and (ii) the Termination Date, Borrower will furnish or cause to be furnished to Lender: (a) If to Borrower's knowledge an Event of Default or Default has occurred with respect to Borrower, a certificate signed by an Responsible Officer of Borrower setting forth the details of such Event of Default or Default and the actions that Borrower proposes to take with respect thereto; (b) Promptly after the commencement thereof, notice of all actions, suits, proceedings or investigations before or by any Governmental Authority or any other Person which (i) relate to the Collateral, or (ii) involve a claim or series of claims in excess of Two Million and NO/100 Dollars ($2,000,000.00) which is not covered by Borrower's insurance policies and which if adversely determined would reasonably be expected to result in a Material Adverse Effect; and -21- (c) Borrower shall promptly notify Lender of any action which has, or could reasonably be expected to result in, a Material Adverse Effect. Section 5.23 Future Disclosure. All written information furnished after the date hereof by or on behalf of the Borrower to the Administrative Agent and the Initial Lender in connection with this Agreement and the other Loan Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in all material respects, or (in the case of any projections) based on reasonable estimates, on the date as of which such information is stated or certified. Section 5.24 Ground Lease. (a) Covenants. Borrower covenants and agrees as follows: (i) Owner will promptly and faithfully to observe, perform and comply in all material respects with all of the terms, covenants and provisions of the Ground Lease applicable to it; (ii) Owner will refrain from doing anything and not do or permit any act, event or omission, as a result of which, there is likely to occur a default or breach under the Ground Lease beyond any applicable notice and cure periods; (iii) Owner will promptly give Agent notice of any default under the Ground Lease upon learning of such default and immediately deliver to Agent a copy of each notice of such default and all responses to such notice of default and all other material instruments, notices or demands received or delivered by Owner under or in connection with the Ground Lease; (iv) Owner will promptly notify Agent in writing in the event of the initiation of any litigation or arbitration proceeding affecting Owner or the Eligible Asset under or in connection with the Ground Lease; (v) within ten (10) Business Days of each request by Agent, Owner will furnish to Agent an estoppel certificate from Owner in such form as provided in the Ground Lease from time to time concerning Owner's due observance, performance and compliance in all material respects with the terms, covenants and provisions of the Ground Lease; and (vi) Owner will not voluntarily or involuntarily, directly or indirectly, assign, transfer or convey the Eligible Asset, nor surrender, terminate or cancel the Ground Lease nor, without the prior written consent of Agent, fail to exercise in a timely manner any renewal option(s) contained in the Ground Lease which arise during the term of the Loans. Any assignment, transfer, conveyance, surrender, termination, or cancellation of the Ground Lease in contravention of the foregoing shall be void and of no force and effect. (b) Additional Covenants. Borrower further covenants and agrees that Owner will not, without the prior written consent of Agent, modify, alter or amend the Ground Lease, either orally or in writing, which consent (a) with respect to monetary or material non-monetary provisions, may be granted, conditioned or withheld in Agent's sole discretion and (b) with respect to non-monetary, non-material provisions, may not be unreasonably withheld, conditioned or delayed. For the purposes of this Section 5.24(b), the phrase "material non-monetary" shall mean provisions with respect to any of the following: (i) the term of the Ground Lease, (ii) any economic matter (including costs passed through to Borrower) that would affect the rent or any other charge thereunder, (iii) any security deposit, if any, (iv) defaults, events of default and remedies, (v) termination or cancellation, (vi) disposition of casualty or condemnation proceeds, (vii) transfer of the leased premises, (viii) tenant mortgages, (ix) assignment and subletting (other than as otherwise permitted in such lease and this Agreement) or (x) options, rights of first refusal or offer and extension options. (c) Default. In the event of a default by Borrower under the Ground Lease, then, in each and every such case, Agent may (but shall not be obligated to), in its sole discretion and following notice to Borrower, cause such default or defaults by Borrower to be remedied and otherwise take or perform such other actions as Agent may reasonably deem necessary or desirable as a result thereof or in connection therewith. Borrower shall, on demand, reimburse Agent for all advances reasonably made and expenses reasonably incurred by Agent in curing any such default(s) (including, without limitation, reasonable attorneys' fees), together with interest thereon from the date if different until the same is paid in full to Agent and all such sums so advanced shall be secured hereby. The provisions of this subsection are in addition to any other right or remedy given to or allowed Agent under the Ground Lease or otherwise. (d) Intentionally Omitted. (e) No Liability. Notwithstanding anything contained herein or otherwise to the contrary (except as set forth in the next sentence), Agent shall not have any liability or obligation under the Ground Lease, by virtue of its acceptance of the Mortgage and Security Agreement. Borrower acknowledges and agrees that Agent shall be liable for the obligations of the Owner arising under the Ground Lease, as applicable, for only that period of time, if any, during which Agent is in possession of the Eligible Asset, as applicable, or has acquired, by foreclosure, power of sale or otherwise, and is holding, all of Owner's right, title and interest as tenant in the Eligible Asset. (f) Bankruptcy. Notwithstanding anything contained herein or otherwise to the contrary, Owner hereby assigns, transfers and sets over to Agent any and all rights and interests that may arise in favor of Owner in connection with or as a result of the bankruptcy or insolvency of the Ground Lessor during the term of this Agreement, as applicable, including, without limitation, all of Owner's right, title and interest in, to and under ss.365 of the Bankruptcy Code (11 U.S.C. ss.365), as the same may be amended, supplemented or modified from time to time (g) Taxes. In the event that it is claimed by any Governmental Authority or subdivision that any tax or governmental charge or imposition is due, unpaid or payable by Owner upon or in connection with the Ground Lease, (i) Borrower shall promptly either pay such tax, charge or imposition when due and deliver to Agent reasonably satisfactory proof of payment thereof or (ii) Owner shall contest such tax in accordance with the applicable provisions of this Agreement. If liability for such tax is asserted against Agent, Agent will give to Owner prompt notice of such claim, and Owner, upon complying with the provisions of this Agreement shall have full right and authority to contest such claim of taxability. -22- ARTICLE VI EVENTS OF DEFAULT Section 6.01 Events of Default. An Event of Default shall exist upon the occurrence of any of the following specified events (each an "Event of Default"): (a) Payment Default. The Borrower shall fail to pay any principal on any Loan or Revolving Note when due (whether at maturity, by reason of acceleration or otherwise) in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on any Loan or Revolving Note or any fee or other amount payable hereunder when due (whether at maturity, by reason of acceleration or otherwise) in accordance with the terms thereof or hereof. (b) Misrepresentation. Any representation or warranty made or deemed made herein, in the Security Documents or in any of the other Loan Documents or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement shall prove to have been incorrect, false or misleading in any material respect on or as of the date made or deemed made. (c) Covenant Default. (i) The Borrower shall fail to perform, comply with or observe any term, covenant or agreement applicable to it contained in Article V hereof; or (ii) the Borrower shall fail to comply with any other covenant contained in this Agreement or the other Loan Documents or any other agreement, document or instrument among the Borrower, the Administrative Agent and the Lenders or executed by the Borrower in favor of the Administrative Agent or the Lenders (other than as described in Sections 6.01(a) or 6.01(c)(i)), and such breach or failure to comply is not cured within thirty (30) days after receipt of notice thereof. (d) Debt Cross-Default. (i) (A) The occurrence of a default or an event of default under any Wachovia Indebtedness, (ii) the Borrower shall fail to pay beyond any applicable grace period (not to exceed five (5) Business Days), a matured obligation of at least $5,000,000 on any Indebtedness (other than Loans); (iii) the Borrower shall default in the observance or performance of any other agreement or condition relating to any Indebtedness (other than the Loans) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity if the aggregate amount of such Indebtedness is at least $5,000,000. (e) Other Cross-Defaults. The Borrower or any of its Subsidiaries shall default in the payment when due or in the performance or observance of any obligation or condition of any Material Contract and such failure to pay or perform or observe such other obligation or condition (i) involves the failure to pay a matured obligation of at least $5,000,000, or (ii) permits the acceleration of the maturity of obligations by any other party to or beneficiary of such contract if the aggregate amount of such obligations is at least $5,000,000, and continues unremedied for a period of five (5) Business Days after notice of the occurrence of such default. (f) Bankruptcy Default. (i) The Borrower shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to have it judged bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower shall make a general assignment for the benefit of creditors; or (ii) there shall be commenced against the Borrower any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) the Borrower shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due. (g) Judgment Default. One or more judgments, orders, decrees or arbitration awards shall be entered against the Borrower or any of its Subsidiaries (and, solely with respect to the Borrower and not in respect of its Subsidiaries, involving in the aggregate a liability (to the extent not paid when due or covered by insurance) of more than $5,000,000 (or solely with respect to any Subsidiary and not in respect of the Borrower, involving a liability of more than $2,000,000)) and all such judgments, orders, decrees or arbitration awards shall not have been paid and satisfied, vacated, discharged, stayed or bonded pending appeal within ninety (90) days from the entry thereof. (h) ERISA Default. (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower, any of its Subsidiaries or any ERISA Affiliate, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a Trustee is, in the reasonable opinion of the Requisite Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower, any of its Subsidiaries or any ERISA Affiliate shall, or in the reasonable opinion of the Requisite Lenders is likely to, incur any liability in connection with a withdrawal from, or the insolvency or reorganization of, any Multiemployer Plan or (vi) any other similar event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect. -23- (i) Change of Control. A Change of Control shall have occurred. (j) Failure of Loan Documents. This Agreement or any other Loan Document or any provision hereof or thereof shall cease to be in full force and effect or to give the Administrative Agent and/or the Lenders the security interests, liens, rights, powers and privileges purported to be created thereby, or the Borrower or any Person acting by or on behalf of the Borrower shall deny or disaffirm such Person's obligations under this Agreement or any other Loan Document. (k) REIT Status. Caplease shall at any time during the term hereof fail to maintain its status as a REIT. (l) Public Listing. Caplease shall at any time during the term hereof no longer be listed as a public company on the New York Stock Exchange. provided, however, a market disruption of conditions in the market for commercial real estate warehouse facilities or the financial, banking, or capital markets shall not independently constitute an Event of Default hereunder. -24- Section 6.02 Acceleration; Remedies. Upon the occurrence and during the continuation of an Event of Default, then, and in any such event, (a) if such event is an Event of Default specified in Section 6.01(f) above, automatically the Revolving Commitments shall immediately terminate and the Loans (with accrued interest thereon), and all other amounts under the Loan Documents shall immediately become due and payable, and (b) if such event is any other Event of Default, subject to the terms of Section 6.03, with the written consent of the Requisite Lenders, the Administrative Agent may, or upon the written request of the Requisite Lenders, the Administrative Agent shall, take any or all of the following actions: (i) by notice to the Borrower declare the Revolving Commitments to be terminated forthwith, whereupon the Revolving Commitments shall immediately terminate; (ii) by notice of default to the Borrower declare the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the Revolving Notes to be due and payable forthwith and/or (iii) exercise on behalf of the Lenders all of its other rights and remedies under this Agreement, the other Loan Documents and applicable law. Except as expressly provided above in this Section 6.02, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower. Section 6.03 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Requisite Lenders; provided, however, that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders except to the extent that this Agreement expressly requires that such action be taken, or not taken, only with the consent or upon the authorization of the Requisite Lenders, or all of the Lenders, as the case may be. Section 6.04 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its Affiliates has made any representation or warranty to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower which may come into the possession of the Administrative Agent or any of its Affiliates. Section 6.05 Indemnification. The Lenders agree to indemnify the Agent in its capacity hereunder (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Revolving Commitment Percentages in effect on the date on which indemnification is sought under this Section, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Revolving Notes be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of any Loan Document or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting from the Agent's gross negligence or willful misconduct, as determined by a court of competent jurisdiction. The agreements in this Section 6.05 shall survive the termination of this Agreement and payment of the Revolving Notes, and all other amounts payable hereunder. Section 6.06 The Administrative Agent in Its Individual Capacity. The Administrative Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though the Administrative Agent were not the Administrative Agent hereunder. With respect to the Loans made or renewed by it and any Revolving Note issued to it, the Administrative Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity. Section 6.07 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 30 days' prior written notice to the Borrower and the Lenders provided there exists at such time Lenders other than the Initial Lender. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Requisite Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders, which successor agent shall be approved by the Borrower (such approval not to be unreasonably withheld) so long as no Default or Event of Default has occurred and is continuing, whereupon such successor administrative agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term "Administrative Agent" shall mean such successor administrative agent effective upon such appointment and approval, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Revolving Notes. If no successor Administrative Agent has accepted appointment as Administrative Agent within thirty (30) days after the retiring Administrative Agent's giving notice of resignation, the retiring Administrative Agent shall have the right, on behalf of the Lenders, to appoint a successor administrative agent, which successor shall be approved by the Borrower (such approval not to be unreasonably withheld) so long as no Default or Event of Default has occurred and is continuing; provided that such successor administrative agent has minimum capital and surplus of at least $50,000,000. If no successor administrative agent has accepted appointment as Administrative Agent within sixty (60) days after the retiring Administrative Agent's giving notice of resignation, the retiring Administrative Agent's resignation shall nevertheless become effective and the Lenders shall perform all duties of the Administrative Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor administrative agent as provided for above. After any retiring Administrative Agent's resignation as Administrative Agent, the indemnification provisions of this Agreement and the other Loan Documents and the provisions of this Article VI shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. -25- Section 6.08 Other Agents. None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a "syndication agent," "documentation agent," "co-agent," "book manager," "book runner," "lead manager," "arranger," "lead arranger" or "co-arranger" shall have any right (except as expressly set forth herein), power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE VII THE ADMINISTRATIVE AGENT Section 7.01 Appointment. Each Lender hereby irrevocably designates and appoints Initial Lender as the Administrative Agent of such Lender under this Agreement, and each such Lender irrevocably authorizes Initial Lender, as the Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. Section 7.02 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. Without limiting the foregoing, the Administrative Agent may appoint one of its affiliates as its agent to perform the functions of the Administrative Agent hereunder relating to the advancing of funds to the Borrower and distribution of funds to the Lenders and to perform such other related functions of the Administrative Agent hereunder as are reasonably incidental to such functions. Section 7.03 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement (except for its or such Person's own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any of its Subsidiaries or any officer thereof contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of any of the Loan Documents or for any failure of the Borrower or any of its Subsidiaries to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance by the Borrower or any of its Subsidiaries of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrower or any of its Subsidiaries. Section 7.04 Reliance by Administrative Agent. (a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Revolving Note as the owner thereof for all purposes unless an executed Commitment Transfer Supplement has been filed with the Administrative Agent pursuant to Section 9.03(c) with respect to the Loans evidenced by such Revolving Note. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of the Requisite Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under any of the Loan Documents in accordance with a request of the Requisite Lenders or all of the Lenders, as may be required under this Agreement, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Revolving Notes. (b) For purposes of determining compliance with the conditions specified in Section 3.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender. -26- ARTICLE VIII RECOURSE Section 8.01 Full Recourse Obligations. (a) Intentionally Omitted. (b) Intentionally Omitted. (c) Intentionally Omitted. (d) Borrower waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon Borrower with respect to any amounts at any time owing to the Agent or any Lender by Borrower under the Loan Documents, other than such notices as are expressly required to be given under this Agreement or any of the other Loan Documents. Borrower understands and agrees that it shall continue to be liable under this Section 8.01 without regard to (a) the validity, regularity or enforceability of any other provision of this Agreement or any other Loan Document, any amounts at any time owing to the Agent by the Borrower under the Loan Documents, or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Borrower, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Borrower against the Agent, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for any amounts owing to the Agent by the Borrower under the Loan Documents, or of the Borrower under this Agreement, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Borrower, the Agent may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Borrower or any other Person or against any collateral security or guarantee related thereto or any right of offset with respect thereto, and any failure by the Agent to pursue such other rights or remedies or to collect any payments from the Borrower or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve the Borrower of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Agent against the Borrower. (e) The obligations hereunder are full recourse obligations to Borrower and the Borrower hereby forever waives, demises, acquits and discharges any and all defenses, and shall at no time assert or allege any defense, to the contrary. All obligations of Caplease and Owner are joint and several. ARTICLE IX MISCELLANEOUS Section 9.01 Amendments, Waivers and Release of Collateral. Neither this Agreement, nor any of the Revolving Notes, nor any of the other Loan Documents, nor any terms hereof or thereof may be amended, supplemented, waived or modified except in accordance with the provisions of this Section nor may the Borrower be released except in accordance with the provisions of this Section 9.01. The Requisite Lenders may, or, with the written consent of the Requisite Lenders, the Administrative Agent may, from time to time, (a) enter into with the Borrower written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such terms and conditions as the Requisite Lenders may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, waiver, supplement, modification or release shall: (a) reduce the amount or extend the scheduled date of maturity of any Loan or Revolving Note or any installment thereon, or reduce the stated rate of any interest or fee payable hereunder (except in connection with a waiver of interest at the increased post-default rate which shall be determined by a vote of the Requisite Lenders) or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of any Lender's Revolving Commitment, in each case without the written consent of each Lender directly affected thereby; provided that, it is understood and agreed that no waiver, reduction or deferral of a mandatory prepayment required pursuant to Section 2.03(b), nor any amendment of Section 2.03(b) or the definitions of Equity Issuance, Debt Issuance or Recovery Event, shall constitute a reduction of the amount of, or an extension of the scheduled date of, any principal installment of any Loan or Revolving Note; or (i) amend, modify or waive any provision of this Section 9.01 or reduce the percentage specified in the definition of Requisite Lenders, without the written consent of all the Lenders; or (ii) amend, modify or waive any provision of Article VIII without the written consent of the Administrative Agent; or (iii) release the Borrower or any guarantor from its obligations hereunder, without the written consent of all of the Lenders and, if applicable, any counterparty to Interest Rate Protection Agreements; or -27- (iv) release all or substantially all of the Collateral without the written consent of all of the Lenders and any counterparty to Interest Rate Protection Agreements; or (v) subordinate the Loans to any other Indebtedness without the written consent of all of the Lenders; or (vi) permit the Borrower to assign or transfer any of its rights or obligations under this Agreement or other Loan Documents without the written consent of all of the Lenders; or (vii) amend, modify or waive any provision of the Loan Documents requiring consent, approval or request of the Requisite Lenders or all Lenders without the written consent of the Requisite Lenders or all Lenders, as appropriate; or (viii) amend, modify or waive the order in which obligations are paid in Section 2.06(b) without the written consent of each Lender directly affected thereby; or (ix) without the consent of Lenders having Revolving Commitment Percentages in the aggregate more than 50% amend, modify or waive Section 3.02 or any other provision of this Agreement if the effect of such amendment or waiver is to require Lenders to make Loans when such Lenders would not otherwise be required to do so; or (x) amend or modify the definition of Obligations to delete or exclude any obligation or liability described therein without the written consent of each Lender and each counterparty to an Interest Rate Protection Agreement directly affected thereby; provided, further, that no amendment, waiver or consent affecting the rights or duties of the Administrative Agent under any Loan Document shall in any event be effective, unless in writing and signed by the Administrative Agent as applicable, in addition to the Lenders required hereinabove to take such action. Any such waiver, any such amendment, supplement or modification and any such release shall apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the Administrative Agent and all future holders of the Revolving Notes. In the case of any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the outstanding Loans and Notes and other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. Notwithstanding any of the foregoing to the contrary, the consent of the Borrower shall not be required for any amendment, modification or waiver of the provisions of Article VII; provided, however, that the Administrative Agent will provide written notice to the Borrower of any such amendment, modification or waiver. In addition, the Borrower and the Lenders hereby authorize the Administrative Agent to modify this Agreement by unilaterally amending or supplementing Schedule 1.01(B), which should contain a listing of all Lenders and their respective Commitments from time to time in the manner requested by the Borrower, the Administrative Agent or any Lender in order to reflect any assignments or transfers of the Loans as provided for hereunder; provided, however, that the Administrative Agent shall promptly deliver a copy of any such modification to the Borrower and each Lender. Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein and (y) the Requisite Lenders may consent to allow the Borrower to use cash collateral in the context of a bankruptcy or insolvency proceeding. Section 9.02 Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Revolving Notes and the making of the Loans; provided that all such representations and warranties shall terminate on the date upon which the Revolving Commitments have been terminated and all amounts owing hereunder and under any Revolving Notes have been paid in full. Section 9.03 Successors and Assigns; Participations; Purchasing Lenders. - (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Administrative Agent, all future holders of the Notes and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement or the other Loan Documents without the prior written consent of each Lender. -28- (b) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such Lender, any Revolving Note held by such Lender, any Revolving Commitment of such Lender, or any other interest of such Lender hereunder, in each case in minimum amounts of $5,000,000 (or, if less, the entire amount of such Lender's obligations, Revolving Commitments or other interests). In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Revolving Note for all purposes under this Agreement, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. No Lender shall transfer or grant any participation under which the Participant shall have rights to approve any amendment to or waiver of this Agreement or any other Loan Document except to the extent such amendment or waiver would (i) extend the scheduled maturity of any Loan or Revolving Note or any installment thereon in which such Participant is participating (it is understood and agreed that no waiver, reduction or deferral of a mandatory prepayment required pursuant to Section 2.03(b), nor any amendment of Section 2.03(b) or the definitions of Debt Issuance or Equity Issuance shall constitute a reduction of the amount of, or an extension of the scheduled date of, any principal installment of any Loan or Revolving Note), or reduce the stated rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of interest at the increased post-default rate) or reduce the principal amount thereof, or increase the amount of the Participant's participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default shall not constitute a change in the terms of such participation, and that an increase in any Revolving Commitment or Loan shall be permitted without consent of a Participant if such Participant's participation is not increased as a result thereof), (ii) release any guarantor from its obligations hereunto, (iii) release any material portion of the Collateral, or (iv) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement. In the case of any such participation, the Participant shall not have any rights under this Agreement or any of the other Loan Documents (the Participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the Participant relating thereto) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation; provided that each Participant shall be entitled to the benefits of Sections 2.10, 2.11, 2.12 and 9.04 with respect to its participation in the Revolving Commitments and the Loans outstanding from time to time; provided, that no Participant shall be entitled to receive any greater amount pursuant to such Sections than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred. (c) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time, sell or assign to any Lender or any affiliate thereof and with the consent of the Administrative Agent (which consent shall not be unreasonably withheld), to one or more additional banks, insurance companies or other financial institutions or any funds investing in bank loans ("Purchasing Lenders"), all or any part of its rights and obligations under this Agreement and the Revolving Notes in minimum amounts of $5,000,000 (or, if less, the entire amount of such Lender's obligations), pursuant to a Commitment Transfer Supplement, executed by such Purchasing Lender and such transferor Lender (and, in the case of a Purchasing Lender that is not then a Lender or an affiliate thereof, the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, the Borrower), and delivered to the Administrative Agent for its acceptance and recording in the Register; provided, however, that any sale or assignment to an existing Lender, an Affiliate of an existing Lender or an Approved Fund shall not require the consent of the Administrative Agent or the Borrower nor shall any such sale or assignment be subject to the minimum assignment amounts specified herein. Upon such execution, delivery, acceptance and recording, from and after the Transfer Effective Date specified in such Commitment Transfer Supplement, (x) the Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender hereunder with a Revolving Commitment as set forth therein, and (y) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement (and, in the case of a Commitment Transfer Supplement covering all or the remaining portion of a transferor Lender's rights and obligations under this Agreement, such transferor Lender shall cease to be a party hereto). Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of Revolving Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Revolving Notes. On or prior to the Transfer Effective Date specified in such Commitment Transfer Supplement, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent in exchange for the Revolving Notes delivered to the Administrative Agent pursuant to such Commitment Transfer Supplement new Revolving Notes to the order of such Purchasing Lender in an amount equal to the Revolving Commitment assumed by it pursuant to such Commitment Transfer Supplement and, unless the transferor Lender has not retained a Revolving Commitment hereunder, new Revolving Notes to the order of the transferor Lender in an amount equal to the Revolving Commitment retained by it hereunder. Such new Revolving Notes shall be dated the Closing Date and shall otherwise be in the form of the Revolving Notes replaced thereby. The Revolving Notes surrendered by the transferor Lender shall be returned by the Administrative Agent to the Borrower marked "canceled." (d) The Administrative Agent shall maintain at its principal office a copy of each Commitment Transfer Supplement delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the Revolving Commitment of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as the owner of the Loan recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a duly executed Commitment Transfer Supplement, together with payment to the Administrative Agent by the transferor Lender or the Purchasing Lender (except for any assignment by a Lender to an Affiliate of such Lender), as agreed between them, of a registration and processing fee of $3,500 for each Purchasing Lender listed in such Commitment Transfer Supplement and the Notes subject to such Commitment Transfer Supplement, the Administrative Agent shall (i) accept such Commitment Transfer Supplement and (ii) record the information contained therein in the Register. (f) Borrower authorizes each Lender to disclose to any Participant or Purchasing Lender (each, a "Transferee") and any prospective Transferee any and all financial information in such Lender's possession concerning the Borrower and its Affiliates which has been delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender's credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement, in each case subject to Section 9.13. -29- (g) At the time of each assignment pursuant to this Section 9.03 to a Person which is not already a Lender hereunder and which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for federal income tax purposes, the respective assignee Lender shall provide to the Borrower and the Administrative Agent the appropriate Internal Revenue Service Forms (and, if applicable, a 2.12 Certificate) described in Section 2.12. (h) Nothing herein shall prohibit any Lender from pledging or assigning any of its rights under this Agreement (including, without limitation, any right to payment of principal and interest under any Revolving Note) to any Federal Reserve Bank in accordance with applicable laws. Section 9.04 Adjustments. Each Lender agrees that if any Lender (a "Benefited Lender") shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 6.01(f), or otherwise) in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans, or interest thereon, such benefited Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loan, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Borrower agrees that each Lender so purchasing a portion of another Lender's Loans may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion. Section 9.05 Indemnification and Expenses. (a) Borrower agrees to indemnify and hold harmless Agent, Initial Lender and each other Lender and each of their respective affiliates and Subsidiaries and their present and former respective officers, directors, employees, agents, advisors and other representatives (each, an "Indemnified Party") from and against Costs that may be incurred by or asserted or awarded against any Indemnified Party, in each case relating to or arising out of this Agreement, any other Loan Document or any transaction contemplated hereby or thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, any other Loan Document or any transaction contemplated hereby or thereby, except for claims by an Indemnified Party against another Indemnified Party or to the extent such Cost is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.05 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether any transaction contemplated hereby is consummated. In any suit, proceeding or action brought by an Indemnified Party in connection with the Eligible Asset for any sum owing thereunder, or to enforce any provisions of any agreement relating to the Eligible Asset following a Default or Event of Default, Borrower will save, indemnify and hold such Indemnified Party harmless from and against all expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by Borrower of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from Borrower. Borrower also agrees to reimburse an Indemnified Party as and when billed by such Indemnified Party for all the Indemnified Party's actual and reasonable out-of-pocket costs and expenses incurred in connection with the enforcement or the preservation of the Agent's rights under this Agreement, any other Loan Document or any transaction contemplated hereby or thereby, including without limitation the reasonable fees and disbursements of its counsel. (b) Borrower shall, whether any transaction contemplated hereby is consummated: (i) pay as when billed by the Agent, and in any event within three (3) days after demand from the Agent, all reasonable out-of-pocket costs and expenses (including, without limitation, all actual and reasonable fees and disbursements of outside legal counsel) (A) of the Agent in connection with, the development, preparation, execution and delivery of, and any amendment, supplement or modification to, this Agreement, any other Loan Document or any other documents prepared in connection herewith or therewith and the documents and instruments referred to herein and therein (including, without limitation, all reasonable fees, disbursements and expenses of Dechert LLP incurred as of the date of this Agreement) and (B) of the Agent in connection with the enforcement of this Agreement and the other Loan Documents and any amendment, waiver or consent relating hereto or thereto and the documents and instruments referred to herein and therein; (ii) pay and hold the Agent harmless from and against any and all present and future stamp, documentary, issue, sales and use, value added, property and other similar taxes (other than taxes imposed on net income) with respect to the matters described in foregoing clause (i) and hold the Agent harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes; and (iii) indemnify each Indemnified Party from and hold each of them harmless against any and all Costs incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, the use of the proceeds of any transaction hereunder or the consummation of any transactions contemplated herein or in any other Loan Document, including, without limitation, any environmental liabilities with respect to any real estate or other assets held by the Borrower or any of its Affiliates (but excluding any such Costs to the extent incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified). (c) Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this Section 9.05 shall survive the repayment of all amounts owing to the Agent by the Borrower under the Loan Documents and the termination of the commitment of the Agent hereunder, for a period not to exceed, for any claim or potential claim under this Section 9.05, the applicable statute of limitations for such claim. Section 9.06 Notices and Other Communications. Except as otherwise expressly permitted by this Agreement, all notices, requests and other communications provided for herein (including without limitation any modifications of, or waivers, requests or consents under, this Agreement) shall be given or made in writing (including without limitation by email, telex or telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof or thereof); or, as to any party, at such other address as shall be designated by such party in a written notice to each other party. Except as otherwise provided in this Agreement and except for notices given under Article III (which shall be effective only on receipt), all such communications shall be deemed to have been duly given when transmitted by facsimile transmission or telecopy (upon receipt of confirmation) or personally delivered or, in the case of a mailed notice, upon receipt. -30- Section 9.07 Entire Agreement; Severability. This Agreement together with the other Loan Documents constitute the entire understanding among the Borrower, the Agent and the Initial Lender with respect to the subject matter it covers and shall supersede any existing agreements between the parties with respect to the subject matter hereto. By acceptance of this Agreement, the parties acknowledge that they have not made, and are not relying upon, any statements, representations, promises or undertakings not contained in this Agreement. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. Section 9.08 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Section 9.09 SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. - (A) ANY LEGAL ACTION OR PROCEEDING AGAINST THE BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT TO WHICH THE BORROWER IS A PARTY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS AS SHOWN ON THE SIGNATURE PAGE OF THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION. (B) BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. (C) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS, COURSE OF DEALINGS, COURSE OF CONDUCT BETWEEN THEM, OR ANY STATEMENTS (WHETHER ORAL OR WRITTEN) OR OTHER ACTIONS OF ANY PARTY, RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR THE RELATIONSHIP THAT IS BEING ESTABLISHED HEREBY, INCLUDING, WITHOUT LIMITATION, ANY ACTION OF THE AGENT RELATING TO THE ADMINISTRATION OR THE ENFORCEMENT OF THE LOAN DOCUMENTS, AND NONE OF THE PARTIES HERETO WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL, CANNOT BE OR HAS NOT BEEN WAIVED. (D) EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR THE INITIAL LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. (E) EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. -31- (F) THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO ANY TRANSACTIONS CONTEMPLATED HEREBY OR ENTERED INTO HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. Section 9.10 Periodic Due Diligence Review. Borrower acknowledges that the Agent has the right to perform continuing due diligence reviews with respect to the Eligible Asset, and the Borrower agrees that upon reasonable (but no less than three (3) Business Days) prior notice unless an Event of Default shall have occurred and be continuing, in which case no notice is required, to the Borrower, the Agent or its authorized representatives will be permitted during normal business hours to inspect any Eligible Asset and examine, inspect, and make copies and extracts of, the Eligible Asset Files and any and all documents, records, agreements, instruments or information relating to such Eligible Asset in the possession or under the control of Borrower or its Subsidiaries. Borrower also shall make available to the Agent a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Eligible Asset Files and the Eligible Asset. Section 9.11 Intentionally Omitted. Section 9.12 Legal Matters. (a) If there is any conflict between the terms of this Agreement or any other Loan Document this Agreement shall prevail. (b) This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. (c) The captions and headings appearing herein are for included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement. (d) Borrower hereby acknowledges that: (i) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents; (ii) neither the Agent nor the Initial Lender has any fiduciary relationship to Borrower; and (iii) no joint venture exists between the Agent or the Initial Lender, on the one hand, and the Borrower, on the other hand. Section 9.13 Confidentiality. Borrower and the Agent hereby acknowledge and agree that all information regarding the terms set forth in any of the Loan Documents (the "Confidential Terms") shall be kept confidential and shall not be divulged to any party without the prior written consent of such other party except to the extent that (i) it is necessary to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies or regulatory bodies or in order to comply with any applicable federal or state laws and regulations including, without limitation, federal securities laws and regulations applicable to Borrower or its respective Affiliates, (ii) any of the Confidential Terms are in the public domain other than due to a breach of this covenant, or (iii) in the event of a Default or an Event of Default, the Agent determines such information to be necessary or desirable to disclose in connection with the enforcing or exercising the Agent's rights hereunder; provided that nothing herein shall prevent any party from disclosing any such information (i) to any other party to this Agreement, (ii) to any Transferee or potential Transferee which agrees to comply with the provisions of this Section, or (iii) to its Affiliates, employees, directors, agents, attorneys, accountants and other professional advisors or other Persons deemed necessary or appropriate in the reasonable judgment of the disclosing party, in each case who are made aware of and instructed to comply with the provisions of this Section 9.13; and, provided, further that no disclosure made with respect to any Loan Document shall include a copy of such Loan Document to the extent that a summary would suffice in lieu thereof and in the event that it is necessary for a copy of any Loan Document to be disclosed, the specific terms set forth in such Loan Document with respect to fees, pricing, advance rates, financial covenants and the like shall be redacted therefrom prior to disclosure of such Loan Document unless otherwise explicitly required to comply with any laws or regulations. The provisions set forth in this section shall survive the termination of this Agreement for a period of one year following such termination. -32- Section 9.14 Right of Set-off. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of such rights, Borrower hereby grants to the Agent and the Lenders a right of offset, to secure repayment of all amounts owing to the Agent and the Lenders by the Borrower under the Loan Documents, upon any and all monies, securities, collateral or other property of Borrower and the proceeds therefrom, now or hereafter held or received by the Agent, the Lenders or any entity under the control of the Agent or the Lenders and their respective successors and assigns (including, without limitation, branches and agencies of the Agent, or Lenders wherever located), for the account of Borrower, whether for safekeeping, custody, pledge, transmission, collection, or otherwise, and also upon any and all deposits (general or specified) and credits of Borrower at any time existing. The Agent and each Lender is hereby authorized at any time and from time to time upon the occurrence and during the continuance of an Event of Default, without notice to the Borrower, to offset, appropriate, apply and enforce such right of offset against any and all items hereinabove referred to against any amounts owing to the Agent or Lenders by the Borrower under the Loan Documents, irrespective of whether the Agent or Lenders shall have made any demand hereunder and regardless of any other collateral securing such amounts. Borrower shall be deemed directly indebted to the Agent and each Lender in the full amount of all amounts owing to the Agent and the Lenders by the Borrower under this Agreement, the Notes and the other Loan Documents, and the Agent and Lenders shall be entitled to exercise the rights of offset provided for above. ANY AND ALL RIGHTS TO REQUIRE THE AGENT OR LENDERS TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE AMOUNTS OWING TO THE AGENT OR LENDERS BY THE BORROWER UNDER THE LOAN DOCUMENTS, PRIOR TO EXERCISING ITS RIGHT OF OFFSET WITH RESPECT TO SUCH MONIES, SECURITIES, COLLATERAL, DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY BORROWER. Section 9.15 Treatment of Certain Information. Notwithstanding anything to the contrary contained herein or in any related document, all Persons may disclose to any and all Persons, without limitation of any kind, the federal income tax treatment of any of the transactions contemplated by this Agreement, the other Loan Documents or any other related document, any fact relevant to understanding the federal tax treatment of such transactions and all materials of any kind (including opinions or other tax analyses) relating to such federal income tax treatment. -33- IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date set forth above. BORROWER CAPITAL LEASE FUNDING, INC. By: /s/ Robert C. Blanz ------------------------------------------- Name: Robert C. Blanz ----------------------------------------- Title: Senior Vice President ---------------------------------------- PREFCO II LIMITED PARTNERSHIP By: PREFCO II GP LLC, its sole general partner By: /s/ Robert C. Blanz ------------------------------------------- Name: Robert C. Blanz ----------------------------------------- Title: Senior Vice President ---------------------------------------- Address for Notices: 1065 Avenue of the Americas New York, NY 10018 Attn: Paul H. McDowell Facsimile No. (212) 217-6301 ADMINISTRATIVE AGENT WACHOVIA BANK, NATIONAL ASSOCIATION By: /s/ John Nelson ------------------------------------------- Name: John Nelson ----------------------------------------- Title: Director ---------------------------------------- Address for Notices: 301 South College Street Charlotte, North Carolina 28288 Attn: R. Steven Hall Facsimile No.: (704) 715-0066 INITIAL LENDER WACHOVIA BANK, NATIONAL ASSOCIATION By: /s/ John Nelson ------------------------------------------- Name: John Nelson ----------------------------------------- Title: Director ---------------------------------------- Address for Notices: 301 South College Street Charlotte, North Carolina 28288 Attn: R. Steven Hall Facsimile No.: (704) 715-0066