LOAN AGREEMENT Dated as of May 31, 2006 Between EACH OF THE PARTIES SET FORTH ON EXHIBIT A individually and collectively, as the context may require, as Borrower

Exhibit 10.3

LOAN AGREEMENT


Dated as of May 31, 2006


Between


EACH OF THE PARTIES SET FORTH ON EXHIBIT A
individually and collectively, as the context may require, as Borrower

and


BARCLAYS CAPITAL REAL ESTATE INC. and CITIGROUP GLOBAL MARKETS
REALTY CORP.,
collectively, as Lender

TABLE OF CONTENTS

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LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of May 31, 2006 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), between BARCLAYS CAPITAL REAL ESTATE INC., a Delaware corporation, having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation, having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (individually and collectively, as the context may require, “Lender”) and each of the parties set forth on Exhibit A attached hereto, each having an address at c/o Spirit Finance Corporation, at ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (individually and collectively, as the context may require, “Borrower”).

W I T N E S S E T H:

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

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

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

I.              DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1            Definitions.

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

“1.00 EBITDAR Event” shall mean the date that Lender determines, based on the financial statements delivered to Lender in accordance with the terms hereof, that for the immediately preceding twelve (12) month period, the EBITDAR Ratio for Operating Tenant is less than or equal to 1.00:1.00.

“1.10 EBITDAR Event” shall mean the date that Lender determines, based on the financial statements delivered to Lender in accordance with the terms hereof, that for the immediately preceding twelve (12) month period, the EBITDAR Ratio for Operating Tenant is less than 1.10:1:00 but greater than 1.00:1.00.

“Acceptable Accountant” shall mean a nationally recognized accounting firm reasonably acceptable to Lender.

“Account Collateral” shall mean: (i) the Accounts, and all Cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in the Accounts from time to time; (ii) any and all amounts invested in Permitted Investments; (iii) all interest, dividends, Cash, instruments and other property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing; and (iv) to the extent not covered by clauses (i) - (iii) above, all “proceeds” (as defined under the UCC as in effect in the State in which the Accounts are located) of any or all of the foregoing.

“Accounts” shall mean, collectively, the Tax Account, the Insurance Premium Account, the Replacement Reserve Account, the Required Repair Account, the Ground Rents Account, the Excess Cash Reserve Account, the Operating Expense Reserve Account, the Extraordinary Expense Reserve Account or any other escrow account established by the Loan Documents.

“Act” shall have the meaning set forth in Section 4.1.35(cc) hereof.

“Additional Indemnified Liabilities” shall have the meaning set forth in Section 10.13(b) hereof.

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

“Affiliated Manager” shall mean any property manager which is an Affiliate of, or in which Borrower, Principal, or any Guarantor or Indemnitor has, directly or indirectly, any legal, beneficial or economic interest.

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

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

“Annual Budget” shall mean the operating budget, including all planned capital expenditures for the Properties prepared by Borrower (or at Borrower’s direction, prepared by the Operating Tenant) for the applicable Fiscal Year or other period.

“Applicable Contribution” shall have the meaning set forth in Section 9.5(f) hereof.

“Applicable Laws” shall mean all existing and future federal, state and local laws, orders, ordinances, governmental rules and regulations and court orders.

“Applicable Interest Rate” shall mean 6.5875% per annum.

“Appraisal” shall mean an appraisal prepared in accordance with the requirements of FIRREA and USPAP, prepared by an independent third party appraiser holding an MAI designation, who is State licensed or State certified if required under the laws of the State where the applicable Individual Property is located, who meets the requirements of FIRREA and USPAP and who is otherwise satisfactory to Lender.

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

“Approved Annual Budget” shall have the meaning set forth in Section 5.1.10(e) hereof.

“Assignment Requirements” shall mean delivery of evidence acceptable to Lender that (i) the assignee has an investment rating of BBB or better from S&P (or an equivalent rating or shadow rating from another nationally recognized statistical rating organization), or (ii) the assignee, at the time of the proposed assignment (a) meets or exceeds a corporate EBITDAR Ratio of 1.60:1.00, (b) has a corporate GAAP net worth at least equal to $50,000,000.00 and (c) has annual aggregate corporate revenues of at least $600,000,000.00 or (iii) the assignee has a corporate GAAP net worth at least equal to $250,000,000.00; provided however, that the foregoing conditions may be satisfied by a Person that guarantees the lease obligations of the proposed assignee.

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

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

“Barclays” shall mean Barclays Capital Real Estate Inc., a Delaware corporation.

“Base Rent” shall have the meaning set forth in the Operating Leases.

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

“Benefit Amount” shall have the meaning set forth in Section 9.5(d) hereof.

“Borrower” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and assigns.

“Burlington Property” shall have the meaning set forth in Section 2.7 hereof.

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

“Business Party” shall have the meaning set forth in Section 4.1.35(z) hereof.

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

“Cash” shall mean coin or currency of the United States of America or immediately available federal funds, including such fund delivered by wire transfer.

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

“Citi” shall mean Citigroup Global Markets Realty Corp., a New York corporation.

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

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

“Collateral” shall mean the Properties, the Accounts, the Reserve Funds, the Guaranty, the Personal Property, the Rents, the Account Collateral, and all other real or personal property of Borrower that is at any time pledged, mortgaged or otherwise given as security to Lender for the payment of the Debt under the Security Instruments, this Agreement or any other Loan Document.

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

“Condemnation Proceeds” shall mean the net amount of the Award, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same.

“Contribution” shall have the meaning set forth in Section 9.5(a) hereof.

“Control” (and the correlative terms “controlled by” and “controlling”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of the business and affairs of the entity in question by reason of the ownership of beneficial interests, by contract or otherwise.

“CPI Index” shall mean the Consumer Price Index which is designated for the applicable month of determination as the United States City Average for All Urban Consumers, All Items, Not Seasonally Adjusted, with a based period equaling 100 in 1982 – 1984, as published by the United States Department of Labor’s Bureau of Labor Statistics or any successor agency.  In the event that the Consumer Price Index ceases to be published, its successor index as published by the same governmental authority which published the Consumer Price Index shall be substituted and any necessary reasonable adjustments shall be made by Lender and Borrower in order to carry out the intent of this Lease.  In the event there is no successor index, Lender shall reasonably select an alternative price index that will constitute a reasonable substitute for the Consumer Price Index.

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

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

“Debt Service” shall mean, with respect to any particular period of time, interest and principal payments due under the Note or, in the event only a portion of the Loan is subject to a Defeasance Event, the Undefeased Note for such period.

“Debt Service Account” shall have the meaning set forth in Section 3.1 hereof.

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

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (a) the Maximum Legal Rate, or (b) four percent (4%) above the Applicable Interest Rate.

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

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

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

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

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

“Determined Minimum Rent” shall mean rents for an Individual Property which shall be computed by multiplying (i) a fraction, the numerator of which will be the Allocated Loan Amount of such Individual Property and the denominator of which will be the Loan Amount, by (ii) the current Base Rent payment.

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

“EBITDAR” shall mean, with respect to any Person, for any twelve (12) month trailing period, an amount equal to (without duplication): (i) the consolidated net income of such person for such period, plus (ii) depreciation, amortization and other non-cash charges (including, but not limited to, imputed interest, deferred compensation and charges associated with impairment of goodwill pursuant to FASB 142) for such period (to the extent deducted in the computation of consolidated net income of such Person), all in accordance with GAAP, plus (iii) interest expense for such period (to the extent deducted in the computation of consolidated net income of

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such Person), plus (iv) the provision for taxes for such period (to the extent deducted in the computation of consolidated net income of such Person), plus (v) any rental amounts (excluding reimbursables for expenses such as Taxes, Insurance and maintenance) payable by such Person under any leases then in effect to which such Person is a party, utilizing the rental amounts in effect at the time of the EBITDAR calculation (collectively. “EBITDAR Rent” (to the extent such EBITDAR Rent was deducted in the computation of consolidated net income of such Person), plus (vi) non-recurring items and unusual items, as set forth in the Operating Lease, less (vii) all non-recurring income items.

“EBITDAR Ratio” shall mean, the ratio of Operating Tenant’s EBITDAR to interest and Operating Lease expenses.

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

“Eligible Institution” shall mean a depository institution or trust company, insured by the Federal Deposit Insurance Corporation, (a) the short term unsecured debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1 by ▇▇▇▇▇’▇ and F-1 by Fitch in the case of accounts in which funds are held for thirty (30) days or less, or (b) the long term unsecured debt obligations of which are rated at least AA by Fitch and S&P and Aa2 by ▇▇▇▇▇’▇ in the case of accounts in which funds are held for more than thirty (30) days.

“Eligibility Requirements” means, with respect to any Person, that such Person (i) has total assets (in name or under management) in excess of $600,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity of $250,000,000 and (ii) is regularly engaged in the business of making or owning commercial real estate loans or operating commercial mortgage properties.

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

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

“Environmental Law” shall mean any federal, State and local laws, statutes, ordinances, rules, regulations, standards, policies and other government directives or requirements, as well as common law, that, at any time, apply to Borrower and/or Indemnitor or any Property and relate

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to Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act and the Resource Conservation and Recovery Act.

“Environmental Liens” shall have the meaning set forth in Section 5.1.19(a) hereof.

“Environmental Reports” shall have the meaning set forth in Section 4.1.39 hereof.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

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

“Excess Cash” shall mean an amount equal to all funds remaining in the Lockbox Account on each Payment Date following the disbursements and application of funds pursuant to the terms of Section 3.7(b)(i) – (ix) hereof.

“Excess Cash Reserve Account” shall have the meaning set forth in Section 3.1(b)(vii) hereof.

“Excess Cash Reserve Funds” shall have the meaning set forth in Section 7.8 hereof.

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

“Exchange Act Filing” shall have the meaning set forth in Section 9.2 hereof.

“Extraordinary Expense” shall mean an operating expense or capital expenditure with respect to each Individual Property that (i) is not set forth on the Approved Annual Budget and (ii) is not subject to payment by withdrawals from an Account.

“Extraordinary Expense Reserve Account” shall have the meaning set forth in Section 3.1(b)(ix) hereof.

“Extraordinary Expense Reserve Funds” shall have the meaning set forth in Section 7.9 hereof.

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

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

“FIRREA” shall mean the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as the same may be amended from time to time.

“Fiscal Year” shall mean each twelve (12) month period commencing on a Sunday and ending on the Saturday closest to the 31st day of January of each year.

“Fitch” shall mean Fitch, Inc.

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“Flood Insurance Act” shall have the meaning set forth in Section 6.1(a)(vii) hereof.

“Full Payment” shall have the meaning set forth in Section 8.1(a)(i) hereof.

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

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

“Ground Lease” shall mean, individually and collectively, as the context may require, each ground lease described on Schedule IV attached hereto and made a part hereof as such Schedule may be amended from time to time upon the release of an Individual Property or addition of a Substitute Property, and as such Ground Lease may have been modified, extended and confirmed in any estoppel agreement executed from time to time in connection therewith.

“Ground Lease Escrow Fund” shall have the meaning set forth in Section 7.6 hereof.

“Ground Rent” shall have the meaning set forth in Section 7.6 hereof.

“Ground Rent Account” shall have the meaning set forth in Section 3.1(b)(vi) hereof.

“Guarantor” shall mean Spirit Finance Corporation, a Maryland corporation, and any other entity guaranteeing any payment or performance obligation of Borrower and executing and delivering the Guaranty or any guaranty of the Loan.

“Guaranty” shall mean that certain Guaranty of Non-Recourse Carve-Out Obligations of Borrower, dated as of the date hereof, from Guarantor to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Hazardous Materials” shall mean petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives; flammable materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or could become friable; underground or above-ground storage tanks, whether empty or containing any substance; toxic mold; any substance the presence of which on any Property is prohibited by any federal, State or local authority; any substance that requires special handling; and any other material or substance now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” “pollutant” or other words of similar import within the meaning of any Environmental Law.

“Holdback Reserve Account” shall have the meaning set forth in Section 7.5 hereof.

“Holdback Reserve Funds” shall have the meaning set forth in Section 7.5 hereof.

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“Immaterial Lease” shall mean (a) the Leases listed on Schedule VII attached hereto and (b) any similar Lease which permits the Tenant thereunder the right to license or lease space on the real or leased property or in the retail stores (these leases, include, but are not limited to leases for ATMs, firework stands, Christmas tree lots, magazine racks and other similar purposes and leases to utilize a certain amount of retail space for promotional displays); provided, however (i) the aggregate of the Immaterial Leases at each Individual Property shall not be more than ten percent (10%) of total net rentable space at such Individual Property and (ii) the Immaterial Leases shall not count towards the limitations on assignments and/or subleases contained in the Square Footage Limitations.

“Improvements” shall have the meaning set forth in Article 1 of the related Security Instrument with respect to each Individual Property.

“Indemnified Parties” shall mean Lender, any Affiliate of Lender who is or will have been involved in the origination of the Loan, any Person who is or will have been involved in the servicing of the Loan, any Person in whose name the encumbrance created by the Security Instruments is or will have been recorded, Persons who may hold or acquire or will have held a full or partial interest in the Loan, the holders of any Securities, as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties) as well as the respective directors, officers, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, Affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including but not limited to any other Person who holds or acquires or will have held a participation or other full or partial interest in the Loan or any Property, whether during the term of the Loan or as a part of or following a foreclosure of the Loan and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender’s assets and business).

“Indemnified Taxes” shall mean any present or future income, stamp or other taxes, any similar levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority relating to the Properties, the Leases, the Operating Tenants or Borrower.

“Indemnitor” shall mean Spirit Finance Corporation, a Maryland corporation.

“Independent Director” shall have the meaning set forth in Section 4.1.35(z) hereof.

“Individual Property” shall mean each parcel of real property, the Improvements thereon and all Personal Property, if any, owned by Borrower and encumbered by a Security Instrument, together with all rights pertaining to such Property and Improvements, as more particularly described on Schedule I attached hereto and in Article 1 of each Security Instrument and referred to therein as the “Property”.  For the avoidance of doubt, “Individual Property” shall not include Out-Parcels after they have been released under the terms and conditions of Section 2.5.4 hereof.

“Individual Store Capital Expenditure Schedule” shall have the meaning set forth in Section 5.1.10(b) hereof.

“Initial Deposits” shall have the meaning set forth in Section 3.6 hereof.

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“Insolvency Opinion” shall mean, that certain bankruptcy non-consolidation opinion letter delivered by counsel for Borrower in connection with the Loan and approved by Lender or the Rating Agencies, as the case may be.

“Institutional Lender” shall mean one or more of the following:

(a)           a real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, provided that any such Person referred to in this clause (a) satisfies the Eligibility Requirements;

(b)           an investment company, money management firm or “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, or an institutional “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended, provided that any such Person referred to in this clause (b) satisfies the Eligibility Requirements;

(c)           an institution substantially similar to any of the foregoing entities described in clauses (a) or (b) that satisfies the Eligibility Requirements; or

(d)           any entity Controlled by any of the entities described in clauses (a) or (c).

“Insurance Deductible Letter of Credit” shall mean a Letter of Credit in an amount equal to Four Hundred Thousand and 00/100 Dollars ($400,000.00), naming Lender as the sole beneficiary thereof.

“Insurance Premium Account” shall have the meaning set forth in Section 3.1 hereof.

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

“Insurance Proceeds” shall mean the net amount of all insurance proceeds received by Lender pursuant to Section 6.1(a)(i), (iv), (vi), (vii) and (viii) as a result of damage or destruction, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same.

“Investment Grade” shall mean a rating of at least BBB- or its equivalent by each of the Rating Agencies.

“Investor” shall have the meaning set forth in Section 5.1.10(h) hereof.

“Leases” shall have the meaning set forth in Article 1 of the Security Instrument with respect to each Individual Property, including without limitation, the Operating Lease and the Qualified Assignee Leases.

“Legal Requirements” shall mean, with respect to each Individual Property, all federal, State, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting such Individual Property or any part thereof, or the zoning, construction, use, alteration, occupancy or

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operation thereof, or any part thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting such Individual Property or any part thereof, including, without limitation, any which may (a) require repairs, modifications or alterations in or to such Individual Property or any part thereof, or (b) in any way limit the use and enjoyment thereof.

“Lender” shall mean, collectively, the entities designated in the introductory paragraph hereto, together with its successors and assigns.

“Letter of Credit” shall mean a transferable, clean, irrevocable, unconditional, standby letter of credit in an amount sufficient to satisfy Borrower’s obligations from time to time to the extent that such obligations may be satisfied by the placement of a letter of credit as set forth herein, in form and substance reasonably satisfactory to Lender in its reasonable discretion, issued or confirmed by a commercial bank (the “Issuing Bank”) with a long term debt obligation rating of “AA” or better (or a comparable long term debt obligation rating) as assigned by the Rating Agencies and otherwise satisfactory to Lender in its reasonable discretion (the “Minimum L/C Rating”).  The Letter of Credit shall be payable upon presentation of a sight draft only to the order of Lender at a New York City bank.  The Letter of Credit shall have an initial expiration date of not less than one (1) year and shall be automatically renewed for successive twelve (12) month periods for the term of the Loan and shall provide for multiple draws.  The Letter of Credit shall be transferable by Lender and its successors and assigns at a New York City bank.

“Licenses” shall have the meaning set forth in Section 4.1.21 hereof.

“Lien” shall mean, with respect to each Individual Property, any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, on or affecting Borrower, the related Individual Property, any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement purporting to ▇▇▇▇▇ ▇ ▇▇▇▇ or right in such Individual Property, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.

“LLC Agreement” shall have the meaning set forth in Section 4.1.35(bb) hereof.

“Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement and the other Loan Documents as the same may be amended or split pursuant to the terms hereof.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instruments, the Environmental Indemnity, the Guaranty and all other documents executed and/or delivered in connection with the Loan.

“Loan to Value Ratio” shall mean, as of the date of its calculation, the ratio of (i) the sum of the outstanding principal amount of the Loan as of the date of such calculation to (ii) the appraised value (according to the Appraisals delivered in connection with the closing of the Loan) of the Properties.

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“Lockbox Account” shall have the meaning set forth in Section 3.1(a) hereof.

“Lockbox Bank” shall mean any Eligible Institution selected by Lender.

“Lockbox Cash Flow Sweep Period” shall mean the period commencing on the earlier of (i) a 1.00 EBITDAR Event and (ii) a 1.10 EBITDAR Event, and ending on a Lockbox Cash Flow Sweep Period Termination Event.  The determination of whether a Lockbox Cash Flow Sweep Period exists shall be tested quarterly upon delivery of the financial statements required hereunder.

“Lockbox Cash Flow Sweep Period Termination Event” shall mean the earlier to occur of (i) payment in full of the Debt and (ii) the date that Lender determines that the EBITDAR Ratio for Operating Tenant was equal to or greater than 1.10:1.00 for two (2) consecutive fiscal quarters.

“Losses” shall mean any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement of whatever kind or nature (including but not limited to reasonable attorneys’ fees and other costs of defense).

“Madison Property” shall mean that certain Individual Property located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.

“Madison Property Option Purchase Price” shall have the meaning set forth in Section 2.5.5 hereof.

“Madison Property Option Shortfall Amount” shall have the meaning set forth in Section 2.5.5 hereof.

“Madison Property Release Price” shall have the meaning set forth in Section 2.5.5 hereof.

“Management Agreement” shall mean, with respect to any Individual Property, any management agreement entered into by and between Borrower and Manager, if any, pursuant to which the Manager is to provide management and other services with respect to such Individual Property, or, if the context requires, the Replacement Management Agreement executed in accordance with the terms and provisions of this Agreement.

“Manager” shall mean a Qualified Manager, if any, who is managing the Properties or any Individual Property in accordance with the terms and provisions of this Agreement.

“Material Adverse Effect” shall mean any event or condition (other than any “go dark” right of an Operating Tenant permitted under the Operating Leases), that has a material adverse effect on (i) the use, value, operation or possession of any of the Properties taken as a whole, (ii) the business, profits, operations or condition (financial or otherwise) of Borrower or (iii) the ability of Borrower to repay the principal and interest of the Loan as it becomes due.

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“Maturity Date” shall mean June 5, 2016 or such other date on which the final payment of the principal of the Note becomes due and payable as therein or herein provided, whether at such stated maturity date, by declaration of acceleration, or otherwise.

“Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or in the other Loan Documents, under the laws of such State or States whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.

“Member” shall have the meaning set forth in Section 4.1.35(bb) hereof.

“Mini Report” shall have the meaning set forth in Section 5.1.10(b) hereof.

“Monthly Debt Service Payment Amount” shall mean a constant monthly payment of principal and interest equal to Shopko $3,480,369.96.

“Monthly Ground Rent Deposit” shall have the meaning set forth in Section 7.6 hereof.

“Monthly Insurance Premium Deposit” shall have the meaning set forth in Section 7.2 hereof.

“Monthly Tax Deposit” shall have the meaning set forth in Section 7.2 hereof.

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

“Net Proceeds” shall mean (i) Insurance Proceeds or (ii) Condemnation Proceeds, whichever the case may be.

“Non-Recourse Carve-Out Obligations” shall mean all obligations and liabilities of Borrower for which Borrower shall be personally liable pursuant to Sections 9.4(b) and 9.4(c) hereof.

“Non-U.S. Entity” shall have the meaning set forth in Section 2.2.8 hereof.

“Note” shall mean individually and collectively as the context may require, Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note A-4 and Note A-5, Note A-6.

“Note A-1” shall mean that certain Amended and Restated Promissory Note (Note A-1) of even date herewith in the original principal amount of $100,000,000.00 made by Borrower in favor of Citi, as the same may be amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time, including any Defeased Note and Undefeased Note that may exist from time to time.

“Note A-2” shall mean that certain Amended and Restated Promissory Note (Note A-2) of even date herewith in the original principal amount of $100,000,000.00 made by Borrower in favor of Barclays, as the same may be amended, restated, replaced, extended, renewed,

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supplemented, severed, split, or otherwise modified from time to time, including any Defeased Note and Undefeased Note that may exist from time to time.

“Note A-3” shall mean that certain Amended and Restated Promissory Note (Note A-3) of even date herewith in the original principal amount of $86,413,752.50 made by Borrower in favor of Citi, as the same may be amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time, including any Defeased Note and Undefeased Note that may exist from time to time.

“Note A-4” shall mean that certain Amended and Restated Promissory Note (Note A-4) of even date herewith in the original principal amount of $86,413,752.50 made by Borrower in favor of Barclays, as the same may be amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time, including any Defeased Note and Undefeased Note that may exist from time to time.

“Note A-5” shall mean that certain Amended and Restated Promissory Note (Note A-5) of even date herewith in the original principal amount of $86,413,752.50 made by Borrower in favor of Citi, as the same may be amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time, including any Defeased Note and Undefeased Note that may exist from time to time.

“Note A-6” shall mean that certain Amended and Restated Promissory Note (Note A-6) of even date herewith in the original principal amount of $86,413,752.50 made by Borrower in favor of Barclays, as the same may be amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time, including any Defeased Note and Undefeased Note that may exist from time to time.

“Obligations” shall mean Borrower’s obligation to pay the Debt and perform its obligations under the Note, this Agreement and the other Loan Documents.

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower which is signed by a Responsible Officer of Borrower.

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

“Operating Expense Reserve Account” shall have the meaning set forth in Section 3.1(b)(viii) hereof.

“Operating Expense Reserve Funds” shall have the meaning set forth in Section 7.9 hereof.

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“Operating Lease” shall mean, that certain Master Lease dated as of the date hereof, between ShopKo Stores Operating Co., LLC, as tenant, and Borrower, as landlord, relating to the Properties.

“Operating Tenant” shall mean ShopKo Stores Operating Co., LLC.

“Other Charges” shall mean all Ground Rents, maintenance charges, impositions other than Taxes, and any other charges now or hereafter levied or assessed or imposed against such Individual Property or any part thereof.

“Out Parcel” shall mean each parcel of land shown on Schedule V attached hereto and made a part hereof.

“Out Parcel Release” shall have the meaning set forth in Section 2.5.3 hereof.

“P&L Report” shall mean a report in substantially the form attached hereto as Exhibit C for the immediately preceding twelve (12) month period.

“Payment Date” shall mean the fifth (5th) day of each calendar month during the term of the Loan or, if such day is not a Business Day, the immediately succeeding Business Day.

“Permitted Defeasance Date” shall mean the date that is the earlier of (a) four (4) years from the Closing Date or (b) two (2) years from the “startup day” within the meaning of Section 860G(a)(9) of the Code of the REMIC Trust.

“Permitted Encumbrances” shall mean, with respect to an Individual Property, collectively, (a) the Liens and security interests created by the Loan Documents, (b) all Liens, encumbrances and other matters disclosed in the Title Insurance Policy relating to such Individual Property or any part thereof, (c) Liens, if any, for Taxes imposed by any Governmental Authority not yet delinquent, (d) such other title and survey exceptions as Lender has approved or may approve in writing in Lender’s sole discretion, (e) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are either (i) not overdue or (ii) are being contested in good faith in accordance with the terms hereof or which have been fully insured over to Lender by the title company issuing the Title Policy and, if required by Lender, evidence satisfactory to Lender of the foregoing, (f) any interest of a lessor under any Lease entered into in accordance with the terms hereof, (g) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by Borrower in excess of those set forth by regulations promulgated by the Federal Reserve Board, and (ii) such deposit account is not intended by Borrower or any of its Affiliates to provide collateral to the depository institution, (h) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business, so long as any such easements, rights-of-way or other similar encumbrances affecting any Individual Property or any other real property material to the business of Borrower or any of their subsidiaries are not, in the aggregate, substantial in amount and do not in any case materially detract from the value of the Individual Property subject thereto or materially interfere with the ordinary conduct of the

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business of Borrower, any Operating Tenant, any Qualified Assignee and any Qualified Subtenant or any of their subsidiaries or which are otherwise insured over by title insurance endorsements reasonably acceptable to Lender or (i) pledges and deposits of cash after the date hereof to secure obligations under appeal bonds or as otherwise required in connection with court proceedings (including, without limitation, surety bonds, security for costs of litigation where required by law and letters of credit) or any other instruments serving a similar purpose and (iii) any judgment in connection with which such appeal bond or other instruments are required shall not constitute an Event of Default.

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

(i)               obligations of, or obligations fully guaranteed as to payment of principal and interest by, the United States or any agency or instrumentality thereof provided such obligations are backed by the full faith and credit of the United States of America including, without limitation, obligations of: the U.S. Treasury (all direct or fully guaranteed obligations), the Farmers Home Administration (certificates of beneficial ownership), the General Services Administration (participation certificates), the U.S. Maritime Administration (guaranteed Title XI financing), the Small Business Administration (guaranteed participation certificates and guaranteed pool certificates), the U.S. Department of Housing and Urban Development (local authority bonds) and the Washington Metropolitan Area Transit Authority (guaranteed transit bonds); provided, however, that the investments described in this clause must (A) have a predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity;

(ii)              Federal Housing Administration debentures;

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

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and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity;

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

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

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

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move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity;

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

(viii)           units of taxable money market funds, with maturities of not more than 365 days and which funds are regulated investment companies, seek to maintain a constant net asset value per share and invest solely in obligations backed by the full faith and credit of the United States, which funds have the highest rating available from each Rating Agency (or, if not rated by all Rating Agencies, rated by at least one Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed in writing that such investment would not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings assigned to the Securities) for money market funds; and

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

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

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

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“Personal Property” shall have the meaning set forth in Article 1 of the Security Instrument with respect to each Individual Property.  “Personal Property” shall not include any personal property owned by a Tenant under a Lease.

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

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

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

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

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

“Principal” shall have the meaning set forth in Section 4.1.35 hereof, together with its successors and assigns.

“Prohibited Person” shall mean any Person:

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

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

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

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

(xiv)           that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website,

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▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇.▇▇▇▇/▇▇▇▇▇▇.▇▇▇ or at any replacement website or other replacement official publication of such list; or

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

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

“Property” shall mean, as the context may require, the Properties or an Individual Property.

“Property Account” shall have the meaning set forth in Section 3.1(a) hereof.

“Property Account Control Agreement” shall have the meaning set forth in Section 3.1(a) hereof.

“Property Account Bank” shall mean PNC Bank, National Association, provided that it remains an Eligible Institution, and any successor Eligible Institution or other Eligible Institution selected by Borrower, subject to Lender’s approval.

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

“Qualified Assignee” shall have the meaning set forth in Section 5.1.17(b) hereof.

“Qualified Assignee Lease” shall have the meaning set forth in Section 5.1.17(b) hereof.

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

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

(a)           a real estate investment trust, investment bank, trust company, commercial credit corporation, mutual fund, investment company, money management firm, “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, institutional “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended, government plan, pension fund, pension plan, pension trust or pension account that (i) has total real estate assets of at least $600 Million and (ii) is managed by a Person who controls at least $600 Million of real estate equity assets; or

(b)           a pension fund advisor who (i) immediately prior to such transfer, controls at least $600 Million of real estate equity assets and (ii) is acting on behalf of one or more pension funds that, in the aggregate, satisfy the requirements of clause (a) of this definition; or

(c)           an insurance company which is subject to supervision by the insurance commissioner, or a similar official or agency, of a state or territory of the United States (including the District of Columbia) (i) with a net worth, as of a date no more than six (6) months prior to the date of the transfer, of at least $300 Million and (ii) who, immediately prior to such transfer, controls real estate equity assets of at least $600 Million; or

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(d)           a corporation organized under the banking laws of the United States or any state or territory of the United States (including the District of Columbia) (i) with a combined capital and surplus of at least $300 Million and (ii) who, immediately prior to such transfer, controls real estate equity assets of at least $600 Million;

(e)           any Person with a long-term unsecured debt rating from the Rating Agencies of at least Investment Grade; or

(f)            an institution substantially similar to any of the Persons described in clauses (a) through (e) of this definition.

“Qualified Manager” shall mean, if any, a reputable and experienced professional management organization (a) which manages, together with its Affiliates, a substantial number of properties of a type, quality and size similar to the Properties, exclusive of the Properties (b) approved by Lender, and for which Lender shall have received (i) written confirmation from the Rating Agencies that the employment of such manager will not result in a downgrade, withdrawal or qualification of the initial, or if higher, then current ratings issued in connection with a Securitization, or if a Securitization has not occurred, any ratings to be assigned in connection with a Securitization, and (ii) with respect to any Affiliated Manager, a revised Insolvency Opinion.

“Qualified Subtenant” shall mean a subtenant under the sublease entered into in accordance with the terms hereof which (i) has an investment rating of BBB or better from S&P (or an equivalent rating or shadow rating from another nationally recognized statistical rating organization) or (ii) at the time of the proposed sublease is a reputable, creditworthy subtenant, as determined by Lender and meets or exceeds a corporate EBITDAR Ratio of 1.25:1.00 or (iii) has a corporate GAAP net worth of at least equal to $25,000,000.00; provided, however, that the foregoing conditions may be satisfied by a Person that guarantees the lease obligations of the proposed subtenant.

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

(i)               a pension fund, pension trust or pension account that (a) has total real estate assets of at least $1 Billion and (b) is managed by a Person who controls at least $1 Billion of real estate equity assets; or

(ii)              a pension fund advisor who (a) immediately prior to such transfer, controls at least $1 Billion of real estate equity assets and (b) is acting on behalf of one or more pension funds that, in the aggregate, satisfy the requirements of clause (i) of this definition; or

(iii)             an insurance company which is subject to supervision by the insurance commissioner, or a similar official or agency, of a state or territory of the United States (including the District of Columbia) (a) with a net worth, as of a date no more than six (6) months prior to the date of the transfer, of at least $750 Million and (b) who, immediately prior to such transfer, controls real estate equity assets of at least $1 Billion;

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(iv)             a corporation organized under the banking laws of the United States or any state or territory of the United States (including the District of Columbia) (a) with a combined capital and surplus of at least $750 Million and (b) who, immediately prior to such transfer, controls real estate equity assets of at least $1 Billion;

(v)              a real estate investment trust (a) with a net worth, immediately prior to the date of the transfer, of at least $750 Million and (b) who, immediately prior to such transfer, controls real estate equity assets of at least $1 Billion; or

(vi)             any Person (a) with a long-term unsecured debt rating from the Rating Agencies of at least Investment Grade or (b) who (x) is, or, simultaneously with the applicable transfer enters into a Management Agreement with, a Qualified Manager, (y) has a net worth, as of a date no more than six (6) months prior to the date of such transfer, of at least $750 Million and (z) immediately prior to such transfer, controls real estate assets of at least $2 Billion.

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

“Reimbursement Contribution” shall have the meaning set forth in Section 9.5(c) hereof.

“Release” of any Hazardous Materials shall mean any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Materials.

“Release Price” shall mean, with respect to each Individual Property, one hundred twenty percent (120%) of the Allocated Loan Amount for such Individual Property; provided, however, with respect to a sale of the Madison Property pursuant to Section 2.5.5 hereof, the Release Price shall be equal the greater of (i) one hundred percent (100%) of the Allocated Loan Amount for the Madison Property and (ii) the Madison Property Option Purchase Price; provided that, in no event will the Release Price for the Madison Property exceed one hundred twenty percent (120%) of the Allocated Loan Amount for the Madison Property.

“Remaining Property” shall have the meaning set forth in Section 2.5.4 hereof.

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

“Rents” shall have the meaning set forth in Article 1 of the Security Instrument with respect to each Individual Property.

“Replaced Property” shall have the meaning set forth in Section 2.6 hereof.

“Replacement Management Agreement” shall mean, collectively, (a) either (i) a management agreement with a Qualified Manager substantially in the same form and substance as the Management Agreement, or (ii) a management agreement with a Qualified Manager,

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which management agreement shall be acceptable to Lender in form and substance, provided, with respect to this subclause (ii), Lender, at its option, may require that Borrower obtain confirmation from the applicable Rating Agencies that such management agreement will not result in a downgrade, withdrawal or qualification of the initial, or if higher, then current rating of the Securities or any class thereof; (b) a conditional assignment of management agreement substantially in the form of the Assignment of Management Agreement (or such other form acceptable to Lender), executed and delivered to Lender by Borrower and such Qualified Manager at Borrower’s expense and (c) if such replacement manager is an Affiliated Manager, Borrower shall have delivered, or cause to be delivered, to Lender, an updated Insolvency Opinion acceptable to Lender with respect to such Affiliated Manager.

“Replacement Rent” shall mean initial rents which are market rates, but in no event less than the Determined Minimum Rent.

“Replacement Reserve Account” shall have the meaning set forth in Section 3.1(b)(iv) hereof.

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

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

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

“Required Deposits” shall mean all rent (including, without limitation, base rent and additional rent) and all other charges due and payable to Borrower pursuant to the Leases.

“Required Excess Cash” shall mean (i) in the event (a) the Lockbox Cash Flow Sweep Period occurred as a result of a 1.00 EBITDAR Event or (b) a 1.10 EBITDAR Event has become a 1.00 EBITDAR Event, one hundred percent (100%) of all Excess Cash and (ii) in the event the Lockbox Cash Flow Sweep Period occurred as a result of a 1.10 EBITDAR Event, fifty percent (50%) of all Excess Cash.

“Required Out-Parcel Officer’s Certificate” shall have the meaning set forth in Section 2.5.3 hereof.

“Required Repair Account” shall have the meaning set forth in Section 3.1(b)(v) hereof.

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

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

“Reserve Fund Deposits” shall mean the amounts to be deposited into the Reserve Funds for any given month or at any other time as provided in this Agreement or in the other Loan Documents.

“Reserve Funds” shall mean the Tax and Insurance Escrow Funds, the Replacement Reserve Funds, the Required Repair Funds, the Excess Cash Reserve Funds, the Operating

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Expense Reserve Funds, the Extraordinary Expense Reserve Funds, the Ground Rent Escrow Fund or any other escrow funds established by the Loan Documents.

“Responsible Officer” means with respect to a Person, the chairman of the board, president, chief operating officer, chief financial officer, controller, treasurer or vice president-finance or other senior vice president of such Person.

“Restoration” shall mean the repair and restoration of an Individual Property after a Casualty or Condemnation as nearly as possible to the condition the Individual Property was in immediately prior to such Casualty or Condemnation, with such alterations as may be made pursuant to the provisions of the Operating Lease, provided that the Operating Lease is not in default, or, if not allowed or required to be restored by the Operating Tenant under the Operating Lease, as such restoration may otherwise be approved by Lender in accordance with the standards and conditions set forth herein.

“Restoration Threshold” shall mean $1,000,000.00 for each Individual Property; provided that the Restoration threshold shall be increased annually by any increase in the CPI Index.

“Restricted Party” shall mean Borrower, Principal, or any Affiliated Manager or any shareholder, partner, member or non-member manager, or any direct or indirect legal or beneficial owner of, Borrower, Principal, any Affiliated Manager or any non-member manager; provided, however, no direct or indirect legal or beneficial owner of Sponsor shall be deemed to be a Restricted Party.

“S&P” shall mean Standard & Poor’s Ratings Services, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc.

“Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance, transfer or pledge of a direct or indirect legal or beneficial interest.

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

“Secured Line of Credit” shall have the meaning set forth in Seciton 5.2.10(e) hereof.

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

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

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

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

“Security Instruments” means, collectively, each and every Security Instrument executed and delivered by Borrower as security for the Loan and encumbering all of the Properties.

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“Servicer” shall have the meaning set forth in Section 9.3 hereof.

“Servicing Agreement” shall have the meaning set forth in Section 9.3 hereof.

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

“Special Member” shall have the meaning set forth in Section 4.1.35(cc) hereof.

“Sponsor” shall mean Spirit Finance Corporation, a Maryland corporation.

“Square Footage Limitation” shall mean the aggregate combined amount (by square foot) of rentable space that can be assigned, sublet or substituted may not exceed twenty percent (20%) in any one calendar year and thirty percent (30%) over the term of the Operating Leases.  For purposes of clarification, the maximum amount of rentable square footage in the Operating Leases that can be assigned, sublet or substituted in any one calendar year is limited to twenty percent (20%) of the aggregate amount of rentable square footage of the building(s) covered by the Operating Leases and the maximum amount of rentable square footage of the building(s) in the Operating Leases that can be assigned, sublet or substituted over the term of the Operating Leases is limited to thirty percent (30%) of the aggregate amount of rentable square footage of the building(s) covered by the Operating Leases.  The Square Footage Limitations shall not include or apply to (i) Immaterial Leases, (ii) Individual Properties at which the Operating Tenant has ceased operations (or has “gone dark”) as permitted under the Operating Lease, and (iii) any subleases existing as of the Closing Date.

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

“Substitute Property” shall have the meaning set forth in Section 2.6 hereof.

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

“Survey” shall mean, with respect to an Individual Property, either (i) a survey prepared by a surveyor licensed in the State and satisfactory to Lender and the company or companies issuing the Title Insurance Policies, and containing a certification of such surveyor satisfactory to Lender or (ii) an Express Map.

“Tax Account” shall have the meaning set forth in Section 3.1 hereof.

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

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

“Tenant” shall mean any Person leasing, subleasing or otherwise occupying any portion of any Individual Property under a Lease or other occupancy agreement, including, without limitation, an Operating Tenant, a Qualified Assignee and a Qualified Subtenant.

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

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

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

“Transfer” shall have the meaning set forth in Section 5.2.10(a) hereof.

“Transferee” shall have the meaning set forth in Section 5.2.11(b) hereof.

“Triggering Event” shall mean the earlier to occur of (i) the date that Lender determines, based on the financial statements delivered to Lender in accordance with the terms hereof, the EBITDAR Ratio for the Operating Tenant is less than or equal to 1.15:1.00 (the “EBITDAR Event”); provided that Borrower shall not be required to commence making Reserve Fund Deposits until the earlier to occur of (A) Borrower’s receipt of Operating Tenant’s reserve payments under the Operating Lease or (B) the third (3rd) successive Payment Date after the EBITDAR Event; (ii) an uncured monetary event of default exists under the Operating Lease or (iii) an Event of Default has occurred and is continuing.

“Triggering Event Period” shall mean the period commencing on the occurrence of a Triggering Event and ending on a Triggering Event Termination Event.  The determination of whether a Triggering Event Period exists shall be tested quarterly upon delivery of the financial statements required hereunder.

“Triggering Event Termination Event” shall mean the earlier to occur of (i) payment in full of the Debt and (ii)(1) the date that Lender determines that the EBITDAR Ratio for Operating Tenant was equal to or greater than 1.15:1.00 for a period of four (4) consecutive fiscal quarters and (2) no monetary default exists under the Operating Lease.

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

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

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

“USPAP” shall mean the Uniform Standard of Professional Appraisal Practice.

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

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Section 1.2            Principles of Construction.

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

II.            GENERAL TERMS

Section 2.1            Loan Commitment; Disbursement to Borrower.

2.1.1        Agreement to Lend and Borrow.

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

2.1.2        Single Disbursement to Borrower.

Borrower may request and receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be re-borrowed.

2.1.3        The Note, Security Instruments and Loan Documents.

The Loan shall be evidenced by the Note and secured by the Security Instruments and the other Loan Documents.

2.1.4        Use of Proceeds.

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

Section 2.2            Interest; Loan Payments; Late Payment Charge.

2.2.1        Payments.

(a)           Interest on the outstanding principal balance of the Loan shall accrue from the Closing Date to but excluding the Maturity Date at the Applicable Interest Rate.  The Monthly Debt Service Payment Amount shall be paid on each Payment Date commencing on July 5, 2006 and on each subsequent Payment Date thereafter up to and including the Maturity Date, which payments shall be applied first to accrued and unpaid interest and the balance to principal.  Interest on the outstanding principal amount of the

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Loan for the period through and including June 5, 2006 shall be paid by Borrower on the date hereof. Each installment of the Monthly Debt Service Payment Amount shall be applied by Lender, pro rata, to the payment of (i) accrued and unpaid interest on the outstanding principal balance and (ii) scheduled amortization of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note ▇-▇, ▇▇▇▇ ▇-▇, and Note A-6 at the Applicable Interest Rate.

(b)           All payments and other amounts due under the Note, this Agreement and the other Loan Documents shall be made without any setoff, defense or irrespective of, and without deduction for, counterclaims.

2.2.2        Interest Calculation.

Interest on the outstanding principal balance of the Loan shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate equal to the Applicable Interest Rate divided by three hundred sixty (360) by (c) the outstanding principal balance.

2.2.3        Payment on Maturity Date.

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

2.2.4        Payments after Default.

Upon the occurrence and during the continuance of an Event of Default, interest on the outstanding principal balance of the Loan and, to the extent permitted by Applicable Law, overdue interest and other amounts due in respect of the Loan, shall accrue at the Default Rate, calculated from the date such payment was due without regard to any grace or cure periods contained herein.  Interest at the Default Rate shall be computed from the occurrence of the default until the actual receipt and collection of the Debt (or that portion thereof that is then due).  To the extent permitted by Applicable Law, interest at the Default Rate shall be added to the Debt, shall itself accrue interest at the same rate as the Loan and shall be secured by the Security Instruments.  This paragraph shall not be construed as an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default. Notwithstanding anything to the contrary contained herein, any amounts paid to or received by Lender in connection with the Loan during the continuation of an Event of Default shall be applied by Lender to the Debt in the following order of priority:

First, pro rata, to the payment of interest on the outstanding principal balances of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note A-4, Note A-5 and Note A-6 at the Applicable Interest Rate;

Second, pro rata, to the payment of the outstanding principal balances of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note A-4, Note A-5 and Note A-6 until Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note A-4, Note A-5 and Note A-6 are reduced to zero ($0); and

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Third, pro rata, to the payment of any other amounts then due the holder of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note ▇-▇, ▇▇▇▇ ▇-▇, and Note A-6.

2.2.5        Late Payment Charge.

If any principal, interest or any other sum due under the Loan Documents is not paid by Borrower on the date on which it is due (other than the final payment due on the Maturity Date), Borrower shall pay to Lender upon demand an amount equal to the lesser of four percent (4%) of such unpaid sum or the maximum amount permitted by Applicable Law in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment.  Any such amount shall be secured by the Security Instruments and the other Loan Documents to the extent permitted by Applicable Law.

2.2.6        Usury Savings.

This Agreement and the Note are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate.  If, by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Applicable Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder.  All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.

2.2.7        Indemnified Taxes.

(a)           All payments made by Borrower hereunder shall be made free and clear of, and without reduction for or on account of, Indemnified Taxes, excluding (i) Indemnified Taxes measured by Lender’s net income, and franchise taxes imposed on it, by the jurisdiction under the laws of which Lender is resident or organized, or any political subdivision thereof, (ii) taxes measured by Lender’s overall or branch net income, and franchise taxes imposed on it, by the jurisdiction of Lender’s applicable lending office or any political subdivision thereof or in which Lender is resident or engaged in business, and (iii) withholding taxes imposed by the United States of America, any state, commonwealth, protectorate territory or any political subdivision or taxing authority thereof or therein as a result of the failure of Lender which is a Non-U.S. Entity to comply with the terms of paragraph (b) below.  If any non excluded Indemnified Taxes are required to be withheld from any amounts payable to Lender hereunder, the amounts so payable to Lender shall be increased to the extent necessary to yield to

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Lender (after payment of all non excluded Indemnified Taxes) interest or any such other amounts payable hereunder at the rate or in the amounts specified hereunder.  Whenever any non excluded Indemnified Tax is payable pursuant to Applicable Law by Borrower, Borrower shall send (or cause to be sent) to Lender an original official receipt showing payment of such non excluded Indemnified Tax or other evidence of payment reasonably satisfactory to Lender.  Borrower hereby indemnifies Lender for any incremental taxes, interest or penalties that become payable by Lender which result from any failure by Borrower to pay any such non excluded Indemnified Tax when due to the appropriate taxing authority or any failure by Borrower to remit to Lender the required receipts or other required documentary evidence.

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

Section 2.3            Prepayments.

2.3.1        Voluntary Prepayments.

Except as otherwise provided herein, Borrower shall not have the right to prepay the Loan in whole or in part prior to the Maturity Date.  On April 5, 2016 (the “Permitted Prepayment Date”) or on any Payment Date thereafter, Borrower may, at its option and upon thirty (30) days prior written notice to Lender, prepay the Loan in whole but not in part, without payment of the Yield Maintenance Premium, provided, Borrower pays to Lender all accrued and unpaid interest on the amount of principal being prepaid through and including the date of prepayment.

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2.3.2        Mandatory Prepayments.

On the next occurring Payment Date following the date on which Borrower actually receives any Net Proceeds, if and to the extent Lender is not obligated to make such Net Proceeds available to Borrower for the Restoration of an Individual Property, Borrower shall prepay the outstanding principal balance of the Note in an amount equal to one hundred percent (100%) of such Net Proceeds.  No Yield Maintenance Premium shall be due in connection with any prepayment made pursuant to this Section 2.3.2. Any amounts paid to or received by Lender pursuant to this Section 2.3.2, provided that an Event of Default shall not have occurred, shall be applied by Lender to the Debt in the following order of priority:

First, pro rata, to the payment of accrued and unpaid interest on the outstanding principal balances of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note ▇-▇, ▇▇▇▇ ▇-▇, and Note A-6 at the Applicable Interest Rate;

Second, pro rata, to the payment of the outstanding principal balances of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note A-4, Note A-5, and Note A-6 until the amounts evidenced by the Notes are reduced to zero ($0); and

Third, pro rata, to the payment of any other amounts then due the holder of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note ▇-▇, ▇▇▇▇ ▇-▇, and Note A-6.

2.3.3        Prepayments After Default.

If, following an Event of Default, Borrower tenders payment of all or any part of the Debt, or if all or any portion of the Debt is recovered by Lender after such Event of Default such tender or recovery shall be deemed a voluntary prepayment by Borrower in violation of the prohibition against prepayment set forth in Section 2.3.1 hereof and Borrower shall pay, in addition to the Debt, (i) an amount equal to the greater of (a) one percent (1%) of the outstanding principal amount of the Loan to be prepaid or satisfied, or (b) the Yield Maintenance Premium that would be required if a Defeasance Event had occurred in an amount equal to the outstanding principal amount of the Loan to be satisfied or prepaid and (ii) all accrued and unpaid interest on the amount of principal being prepaid through and including the date of prepayment. Notwithstanding anything to the contrary contained herein, any amounts paid to or received by Lender in connection with the Loan during the continuation of an Event of Default shall be applied by Lender to the Debt in the following order of priority:

First, pro rata, to the payment of interest on the outstanding principal balances of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note ▇-▇, ▇▇▇▇ ▇-▇, and Note A-6 at the Applicable Interest Rate;

Second, pro rata, to the payment of the outstanding principal balances of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note ▇-▇, ▇▇▇▇ ▇-▇, and Note A-6 until Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note ▇-▇, ▇▇▇▇ ▇-▇, and Note A-6 are reduced to zero ($0); and

Third, pro rata, to the payment of any other amounts then due the holder of Note ▇-▇, ▇▇▇▇ ▇-▇, ▇▇▇▇ ▇-▇, Note ▇-▇, ▇▇▇▇ ▇-▇, and Note A-6.

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2.3.4        Making of Payments.

Each payment by Borrower hereunder or under the Note shall be made in funds settled through the New York Clearing House Interbank Payments System or other funds immediately available to Lender by 1:00 p.m., New York City time, on or prior to the date such payment is due, to Lender by deposit to such account as Lender may designate by written notice to Borrower.  Whenever any payment hereunder or under the Note shall be stated to be due on a day which is not a Business Day, such payment shall be made on the first Business Day succeeding such scheduled due date.

2.3.5        Application of Prepayments.

All prepayments received pursuant to this Section 2.3 and Section 2.5 hereof shall be applied to the payments of principal due under the Loan in the inverse order of maturity.

Section 2.4            Defeasance.

2.4.1        Voluntary Defeasance.

(a)           Provided no Event of Default shall then exist, Borrower shall have the right at any time after the Permitted Defeasance Date to voluntarily defease all, but other than in connection with a release of an Individual Property in accordance with the terms hereof, not a portion, of the Loan by and upon satisfaction of the following conditions (such event being a “Defeasance Event”):

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

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

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

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

(v)           In the event only a portion of the Loan is the subject of the Defeasance Event, Borrower shall prepare all necessary documents to modify this Agreement and to amend and restate the Note and issue two substitute notes for the Note, one note having a principal balance equal to the defeased portion of the original Note and a maturity date equal to the Permitted Prepayment Date (the “Defeased Note”) and the other note having a principal balance equal to the undefeased portion of the original Note and a maturity date equal to the Maturity Date (the “Undefeased Note”).  The Defeased Note and the Undefeased Note shall have identical terms as the original Note except for the principal balance. A Defeased Note cannot be the subject of any further Defeasance Event. The Undefeased Note may be the subject of a further Defeasance Event in accordance with the terms and provisions of this Section 2.4 (the term “Note”, as used in this clause (v)

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for such purpose, being deemed to refer to the Undefeased Note that is the subject of further defeasance), provided, however, that no such partial defeasance shall take place unless the conditions outlined in Section 2.5 are satisfied;

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

(vii)         Borrower shall deliver an opinion of counsel for Borrower in a form and substance that would be reasonably satisfactory to a prudent institutional lender stating, among other things, that Borrower has legally and validly transferred and assigned the Defeasance Collateral and all obligations, rights and duties under and to the Note or the Defeased Note (as applicable) to the Successor Borrower, that Lender has a perfected first priority security interest in the Defeasance Deposit and the Defeasance Collateral delivered by Borrower and that any REMIC Trust formed pursuant to a Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code as a result of such Defeasance Event;

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

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

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

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

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

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reasonable costs and expenses actually incurred by Servicer and any trustee, including reasonable attorneys’ fees.

(b)           In connection with a Defeasance Event, Borrower hereby appoints Lender as its agent and attorney-in-fact for the purpose of using the Defeasance Deposit to purchase U.S. Obligations or, to the extent approved by the Rating Agencies in writing, other “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 (the “Defeasance Collateral”) which provide payments on or prior to, but as close as possible to, all successive scheduled payment dates after the Defeasance Date upon which interest and principal payments are required under the Note in the case of a Defeasance Event for the entire outstanding principal balance of the Loan, or the Defeased Note, in the case of a Defeasance Event for only a portion of the outstanding principal balance of the Loan, as applicable, and in amounts equal to the scheduled payments due on such dates under this Agreement and the Note or the Defeased Note (as applicable) (including without limitation scheduled payments of principal, interest, servicing fees (if any), and any other amounts due under the Loan Documents on such dates) and assuming such Note or the Defeased Note (as applicable) is paid in full on the Permitted Prepayment Date or any date thereafter prior to the Maturity Date (the “Scheduled Defeasance Payments”).  Each of the U.S. Obligations or other securities that are part of the Defeasance Collateral shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance that would be satisfactory to a prudent institutional lender (including, without limitation, such instruments as may be required by the depository institution holding such securities or by the issuer thereof, as the case may be, to effectuate book entry transfers and pledges through the book entry facilities of such institution) in order to perfect upon the delivery of the Defeasance Collateral a first priority security interest therein in favor of Lender in conformity with all applicable state and federal laws governing the granting of such security interests.  Borrower, pursuant to the Security Agreement or other appropriate document, shall authorize and direct that the payments received from the Defeasance Collateral may be made directly to the Lockbox Account (unless otherwise directed by Lender) and applied to satisfy the obligations of Borrower under the Note or the Defeased Note (as applicable).  Any portion of the Defeasance Deposit in excess of the amount necessary to purchase the Defeasance Collateral required by this Section 2.4 and satisfy Borrower’s other obligations under this Section 2.4 and Section 2.5 hereof shall be remitted to Borrower.

2.4.2        Successor Borrower.

In connection with any Defeasance Event, Borrower shall establish or designate a successor entity (the “Successor Borrower”) which shall be a single purpose bankruptcy remote entity with two (2) Independent Directors approved by Lender, and Borrower shall transfer and assign all obligations, rights and duties under and to the Note or the Defeased Note (as applicable) together with the pledged Defeasance Collateral to such Successor Borrower.  Such Successor Borrower shall assume the obligations under the Note or the Defeased Note (as applicable) and the Security Agreement and Borrower shall be relieved of its obligations under such documents and the other Loan Documents, except with respect to those obligations which are expressly stated to survive.  Notwithstanding anything in this Agreement to the contrary, no other assumption fee shall be payable upon a transfer of the Note or the Defeased Note (as applicable) in accordance with this Section 2.4.2, but Borrower shall pay all actual and

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reasonable costs and expenses incurred by Lender, including Lender’s attorneys’ fees and expenses, incurred in connection therewith

Section 2.5            Release of Property.

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

2.5.1        Release of the Properties.

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

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

2.5.2        Release of Individual Property.

After the Permitted Defeasance Date, if Borrower has elected to defease a portion of the Loan and the applicable requirements of Section 2.4 hereof and this Section 2.5 have been satisfied, and provided that no Event of Default shall then exist, Borrower may obtain the release of an Individual Property from the Lien of the Security Instrument thereon (and related Loan Documents) and the release of Borrower’s obligations under the Loan Documents with respect to such Individual Property (other than those expressly stated to survive), upon the satisfaction of each of the following conditions

(a)           The amount of the outstanding principal balance of the Loan to be defeased in accordance with Section 2.4 hereof shall equal or exceed the Release Price for the applicable Individual Property, and such defeasance shall be deemed a voluntary defeasance for all purposes hereunder;

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

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

(d)           Borrower shall submit (or cause the Operating Tenant to submit) to Lender, not less than ten (10) Business Days prior to the date of such release, a release of Lien (and related Loan Documents) for such Individual Property for execution by Lender.  Such release shall be in a form appropriate in the State in which the Individual Property is located and shall contain standard provisions, if any, protecting the rights of the releasing lender.  In addition, Borrower shall provide all other documentation Lender reasonably requires to be delivered by Borrower in connection with such release, together with an Officer’s Certificate certifying that (i) such documentation is in compliance with all applicable Legal Requirements, and (ii) the release will not impair or otherwise adversely affect the Liens, security interests and other rights of Lender under the Loan Documents not being released (or as to the parties to the Loan Documents and Properties subject to the Loan Documents not being released);

(e)           Lender shall have received evidence that the Individual Property to be released shall be conveyed to (i) a third party not Affiliated with any Borrower, Guarantor or Indemnitor and in which Borrower and no Affiliate of Borrower, Guarantor and/or any Indemnitor has any Controlling beneficial interest or (ii) an Affiliate of Borrower provided the terms of such conveyance (including, without limitation, the consideration paid therefor) are substantially similar to those which would have been available to Borrower had the conveyance been negotiated on an arms’ length basis with a third party not Affiliated with Borrower, Principal, Guarantor or Indemnitor;

(f)            Unless the Operating Lease provides for such deletion to occur automatically, Lender shall have received a certified copy of an amendment to the Operating Lease reflecting the deletion of the Individual Property to be released, which amendment shall reduce the rental obligations of the applicable Operating Tenant thereunder by the Determined Minimum Rent, but no other economic provisions of the Leases shall be modified or amended;

(g)           Lender shall have received payment of all Lender’s costs and expenses, including due diligence review costs and reasonable counsel fees and disbursements incurred in connection with the release of the Individual Property from the lien of the related Security Instrument and the review and approval of the documents and information required to be delivered in connection therewith.

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2.5.3        Release on Payment in Full.

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

2.5.4        Out-Parcel Releases.

Upon the request of Borrower, Lender shall release one or more Out-Parcels from the Lien of the applicable Security Instrument and execute instruments of release or partial release in duly recordable form (an “Out-Parcel Release”) provided that Borrower shall, at its sole cost and expense, comply with all of the following terms, conditions and provisions with respect to each such Out-Parcel and requested Out-Parcel Release:

(a)           at the time of any such Out-Parcel Release, no Event of Default shall have occurred and be continuing;

(b)           Borrower shall have delivered to Lender an Officer’s Certificate (which Officer’s Certificate may be based on a certificate of the Operating Tenant as to all facts stated therein) (the “Required Out-Parcel Officer’s Certificate”) indicating that the conveyance of the Out-Parcel will not materially and adversely affect the use or operation of or access to or from the balance of the applicable Individual Property (the “Remaining Property”) and Lender shall have determined that the conveyance of the Out-Parcel will not (i) cause any portion of the Remaining Property to be in violation of any Legal Requirements, (ii) create any Liens on the Remaining Property or (iii) violate the terms of any document or instrument relating to the applicable Individual Property; provided, however, to the extent that Lender’s prior written approval is required pursuant to this Section 2.5.4(b), Lender shall have fifteen (15) Business Days from the later of (i) the date of receipt of such notice or (ii) if Lender has first requested additional information and/or documentation in connection therewith during such fifteen (15) Business Day period, receipt of all such information and documentation, in which to make such determination, provided, such request to Lender is marked in bold lettering with the following language: “LENDER’S RESPONSE IS REQUIRED WITHIN FIFTEEN (15) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER” and the envelope containing the request must be marked “PRIORITY”. In the event Lender fails to respond within such time, Lender’s approval shall be deemed given;

(c)           Borrower has obtained, (i)(x) subdivision, zoning and all other governmental approvals necessary or required to subdivide the Out-Parcel from the Remaining Property or (y) a legal opinion by counsel reasonably satisfactory to Lender (or such other evidence as would be reasonably acceptable to a prudent institutional mortgage loan lender), that the Out-Parcel and the Remaining Property are each entitled to be used and occupied as of right without reference to or reliance on the other parcel (except with respect to easements which have been reasonably approved by Lender in connection with an Out-Parcel Release applying the standards of a reasonably prudent

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institutional mortgage loan lender) and (ii) either (I) a legal opinion by counsel reasonably satisfactory to Lender or a letter from the applicable municipal authority, in either case, stating that, or (II) an endorsement to the title insurance policy insuring the Lien of the applicable Security Instrument insuring that, the Out-Parcel has been designated, assessed and taxed as a separate tax lot independent from the Remaining Property or such other evidence as would be reasonably acceptable to a prudent institutional mortgage loan lender or (III) if (I) or (II) above are not satisfied, Lender shall continue to escrow for Taxes for the Out-Parcel and the Remaining Property;

(d)           Borrower shall prepare and provide to Lender: subdivision map(s) of all those portions of the Individual Property which are approved by all Governmental Authorities having jurisdiction over the Out-Parcel and/or the Remaining Property, whose approval as to such plans and maps is required; and copies of each and all proposed easements and cross-easements and mutual or non-exclusive easements for ingress, egress, access, pedestrian walkways, parking, traffic flow, utilities and services and utilities shared by the Remaining Property and the Out-Parcel and the like which may be required by any Governmental Authority having jurisdiction or which are necessary and a survey of the Out Parcel(s) to be released and of the Remaining Property, in a form, scope and substance that would be acceptable to a reasonably prudent mortgage lender, including an accurate legal description of the Out Parcel(s) to be released.  Such subdivision map(s) (or other evidence that would be reasonably acceptable to a prudent institutional mortgage loan lender) shall show such parking structures and parking layouts as will afford, to the Improvements located on the Remaining Property the aggregate number of parking spaces required by the then applicable zoning requirements for the Remaining Property;

(e)           the Operating Leases shall remain in full force and effect and unaffected in any manner as a result of the Out-Parcel Release other than with respect to the release of such Out-Parcel from the Operating Lease;

(f)            Borrower shall deliver to Lender evidence reasonably acceptable to Lender that, other than the applicable Security Instrument, there are no liens, mortgages, deeds of trust or other security instruments, as the case may be, encumbering the Individual Property remaining encumbered by the lien of the applicable Security Instrument;

(g)           Lender shall have received evidence that the Out-Parcel to be released shall be conveyed to (i) a third party not Affiliated with Borrower, Guarantor or Indemnitor and in which Borrower and no Affiliate of Borrower, Guarantor and/or any Indemnitor has any Controlling beneficial interest or (ii) an Affiliate of Borrower provided the terms of such conveyance (including, without limitation, the consideration paid therefor) are substantially similar to those which would have been available to Borrower had the conveyance been negotiated on an arms’ length basis with a third party not Affiliated with Borrower, Principal, Guarantor or Indemnitor;

(h)           Borrower shall pay all of Lender’s reasonable actual out-of-pocket costs and expenses (including reasonable counsel fees and disbursements) incurred in

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connection with Lender’s review of the foregoing items, the determination of the satisfaction of such conditions and otherwise incurred in connection with the Out-Parcel Release; and

(i)            Only in the event that the Loan is then subject to a Securitization, Borrower shall deliver to Lender a legal opinion reasonably satisfactory to Lender from a law firm reasonably acceptable to Lender, stating among other things, that the Out-Parcel Release does not constitute a “significant modification” of the Loan under Section 1001 of the Code.

Lender shall promptly release such Out-Parcel from the Lien of the applicable Security Instrument after all of the requirements of this Section 2.5.4 have been satisfied.  All instruments of release shall be in duly recordable form and contain such covenants, conditions and restrictions and shall reserve such rights and easements with respect to the Out-Parcel as are necessary to protect and preserve Lender’s interests in the Remaining Property after any such release.

2.5.5        Release of the Madison Property Prior to the Permitted Defeasance Date.

Borrower shall have the right to a release of the Madison Property at any time that the Madison Property is subject to acquisition by a third party option holder pursuant to the exercise of the option agreement that is a Permitted Encumbrance on the Madison Property as of the date hereof by payment to Lender of the Release Price for the Madison Property and, if, such option is exercised prior to the Permitted Defeasance Date, such tender or recovery shall be deemed a voluntary prepayment by Borrower, and Borrower shall pay, in addition to the Release Price for the Madison Property, (i) an amount equal to the greater of (a) one percent (1%) of the outstanding principal amount of the Loan to be prepaid or satisfied, or (b) the Yield Maintenance Premium that would be required if a Defeasance Event had occurred in an amount equal to the outstanding principal amount of the Loan to be satisfied or prepaid and (ii) all accrued and unpaid interest on the amount of principal being prepaid through and including the date of prepayment (such amount payable to the Lender hereunder, the “Madison Property Release Price”).  All sums paid by the party exercising such option shall be paid to Lender on the closing date of such sale of the Madison Property in connection with the exercise of such option (the “Madison Property Option Purchase Price”) and Borrower shall, concurrently therewith, pay to Lender any shortfall amount equal to the difference between (i) the amount so paid by the option purchaser at the closing and the Madison Property Release Price (such shortfall, the “Madison Property Option Shortfall Amount”).  If the amount that is paid by the option purchaser in connection with the acquisition of the Madison Property is greater than the Madison Property Release Price, then any such excess purchase price amounts paid by the option purchaser shall be payable to Borrower.

Section 2.6            Substitution of Properties.

Subject to the terms of this Section 2.6, Borrower may obtain, from time to time, a release from the Lien of the related Security Instrument (and the related Loan Documents) (each, a “Replaced Property”) by substituting therefor another retail property of like kind and quality acquired by Borrower or an Affiliate of Borrower (provided, however, if the Substitute Property

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shall be owned by an Affiliate of Borrower said Affiliate (i) shall assume all the obligations of Borrower under this Agreement, the Note and the other Loan Documents and (ii) shall become a party to the Note and the other Loan Documents and shall be bound by the terms and provisions thereof as if it had executed the Note and the other Loan Documents and shall have the rights and obligations of Borrower thereunder) (individually, a “Substitute Property” and collectively, the “Substitute Properties”), provided that the following conditions precedent are satisfied:

(c)           Other than with respect to any Out-Parcel Release permitted hereunder, Borrower’s right to release and substitute Properties in accordance with this Section shall automatically terminate at such time as the Square Footage Limitations are met or exceeded.

(d)           Lender shall have received at least thirty (30) days prior written notice requesting the substitution and identifying the Substitute Property and Replaced Property.

(e)           If the applicable Borrower continues to own an Individual Property subject to the Lien of a Security Instrument, Lender shall have received (i) a copy of a deed conveying all of Borrower’s right, title and interest in and to the Replaced Property to a Person other than Borrower or Principal pursuant to an arms length transaction and (ii) a letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed and agreeing to record such deed in the real estate records for the county in which the Replaced Property is located.

(f)            Lender shall have received a current Appraisal of the Replaced Property and the Substitute Property prepared within one hundred eighty (180) days prior to the release and substitution showing an appraised value equal to or greater than the appraised value of the Replaced Property (A) as of the Closing Date and (B) immediately prior to the date of the proposed substitution.

(g)           Lender shall have received a certificate of Borrower certifying, together with other evidence that would be satisfactory to a prudent institutional mortgage loan lender that, after the substitution of a Substitute Property and the release of the Replaced Property, the debt service coverage ratio for the twelve (12) full calendar months immediately preceding the date of the substitution with respect to all Properties remaining subject to the lien of the Security Instruments after the substitution shall be equal to or greater than (A) debt service coverage ratio for the twelve (12) full calendar months immediately preceding the Closing Date and (B) debt service coverage ratio for the twelve (12) full calendar months immediately preceding the substitution (including the Replaced Property and excluding the Substitute Property).

(h)           After Individual Properties with an aggregate square footage of at least ten percent (10%) of the original square footage demised under the Operating Leases have been released pursuant to the terms of this Section 2.6, (A) if the Loan is part of a Securitization, Lender shall have received confirmation in writing from the Rating Agencies to the effect that such release and substitution will not result in a withdrawal, qualification or downgrade of the respective ratings in effect immediately prior to such release and substitution for the Securities issued in connection with the Securitization that are then outstanding or (B) if the Loan is not part of a Securitization, Lender shall have consented in writing to such release and substitution, which consent shall be given in Lender’s reasonable discretion applying the requirements of a

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prudent institutional mortgage loan lender with respect to real estate collateral of similar size, scope and value of the Substitute Property.

(i)            Lender has received evidence that the store-level profitability as set-forth in the P&L Report of the Substitute Property is equal to or greater than the store-level profitability of the Replaced Property as set-forth in the P&L Report for the immediately preceding twelve (12) month period.

(j)            No Event of Default shall have occurred and be continuing and Borrower shall be in compliance in all material respects with all terms and conditions set forth in this Agreement and in each other Loan Document on Borrower’s part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and warranties of Borrower contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of the release and substitution with respect to Borrower, the Properties and the Substitute Property and containing any other representations and warranties with respect to Borrower, the Properties, the Substitute Property or the Loan as (i) Lender, if a Securitization has not occurred, or (ii) the Rating Agencies, if a Securitization has occurred, may require, unless such certificate would be inaccurate, such certificate to be in form and substance satisfactory to Lender or the Rating Agencies, as applicable.

(k)           Borrower shall (A) have executed, acknowledged and delivered to Lender (I) a Security Instrument, an Assignment of Leases and Rents and two UCC-1 Financing Statements with respect to the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Security Instrument, Assignment of Leases and Rents and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Security Instrument, Assignment of Leases and Rents and one of the UCC-1 Financing Statements in the real estate records for the county in which the Substitute Property is located and to file one of the UCC-1 Financing Statements in the office of the Secretary of State (or other central filing office) of the State in which the Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable first priority Liens upon the Substitute Property, in favor of Lender (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and (II) an Environmental Indemnity with respect to the Substitute Property from Indemnitor and (B) have caused Guarantor to acknowledge and confirm its obligations with respect to the Non-Recourse Carve-Out Obligations under the Loan Documents.  The Security Instrument, Assignment of Leases and Rents, UCC-1 Financing Statements and Environmental Indemnity shall be the same in form and substance as the counterparts of such documents executed and delivered with respect to the related Replaced Property subject to modifications reflecting only the Substitute Property as the Individual Property and such modifications reflecting the laws of the State in which the Substitute Property is located.  The Security Instrument encumbering the Substitute Property shall secure all amounts then outstanding under the Note, provided that in the event that the jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or similar tax and does not permit the allocation of indebtedness for the purpose of determining the amount of such tax payable, the principal amount secured by such Security Instrument shall be equal to one hundred twenty-five percent (125%) of the Allocated Loan Amount for the Substitute Property.

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(l)            Lender shall have received (A) to the extent available, any “tie-in” or similar endorsement, together with a “first loss” endorsement, to each Title Insurance Policy insuring the Lien of the existing Security Instruments as of the date of the substitution with respect to the Title Insurance Policy insuring the Lien of the Security Instrument with respect to the Substitute Property and (B) a Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy related to the Substitute Property) insuring the Lien of the Security Instrument encumbering the Substitute Property, issued by the title company that issued the Title Insurance Policies insuring the Lien of the existing Security Instruments and dated as of the date of the substitution with respect to such Substitute Property, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the Lien of the Security Instrument encumbering the Replaced Property. The Title Insurance Policy issued with respect to the Substitute Property shall (1) provide coverage in the amount of the Substitute Allocated Loan Amount if the “tie-in” or similar endorsement described above is available or, if such endorsement is not available, in an amount equal to one hundred twenty-five percent (125%) of the Substitute Allocated Loan Amount, together with “last dollar endorsement,” (2) insure Lender that the relevant Security Instrument creates a valid first lien on the Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are then available and are contained in the Title Insurance Policies insuring the Liens of the existing Security Instruments, and such other endorsements or affirmative coverage that a prudent institutional mortgage lender would require, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.

(m)          Lender shall have received a current Survey for each Substitute Property, certified to the title company and Lender and its successors and assigns, in the same form and having substantially the same content (other otherwise sufficient to cause the title company to insure over any survey exception) as the certification of the Survey of the Replaced Property prepared by a professional land surveyor licensed in the State in which the Substitute Property is located and acceptable to the Rating Agencies in accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such Survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property (unless such real property has been satisfactorily designated by lot number on a recorded plat). The surveyor’s seal shall be affixed to each Survey and each Survey shall certify whether or not the surveyed property is located in a “one-hundred-year flood hazard area.”

(n)           Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an Individual Property hereunder have been satisfied with respect to the Substitute Property and evidence of the payment of all Insurance Premiums payable for the existing policy period.

(o)           Lender shall have received a Phase I environmental report dated not more than one hundred eighty (180) days prior to the proposed date of substitution and otherwise acceptable to a prudent institutional mortgage loan lender and, if recommended under the Phase I

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environmental report, a Phase II environmental report that would be acceptable to a prudent institutional mortgage loan lender, which conclude that the Substitute Property does not contain any Hazardous Materials and is not subject to any significant risk of contamination from any off site Hazardous Materials.

(p)           Borrower shall deliver, or cause to be delivered, to Lender (A) updates or, if the Substitute Property is to be owned by an Affiliate of Borrower, originals, in either case certified by Borrower or such Affiliate, as applicable, of all organizational documentation related to Borrower or such Affiliate, as applicable, and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender on the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction); and (C) resolutions of Borrower or such Affiliate, as applicable, authorizing the substitution and any actions taken in connection with such substitution.

(q)           Lender shall have received the following opinions of Borrower’s counsel: (A) an opinion or opinions of counsel admitted to practice under the laws of the State in which the Substitute Property is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (i) above are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors’ rights and equitable principles, and that Borrower is qualified to do business and in good standing under the laws of the jurisdiction where the Substitute Property is located or that Borrower is not required by Applicable Law to qualify to do business in such jurisdiction; (B) an opinion of counsel acceptable to the Rating Agencies if the Loan is part of a Securitization, or Lender if the Loan is not part of a Securitization, stating that the Loan Documents delivered with respect to the Substitute Property pursuant to this Section, among other things, have been duly authorized, executed and delivered by Borrower and that the execution and delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will not cause a breach of, or a default under, any agreement, document or instrument to which Borrower is a party or to which it or its properties are bound; (C) if the Loan is part of a Securitization, an update of the Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein; (D) if the Loan is part of a Securitization, an opinion of counsel acceptable to the Rating Agencies that the substitution does not constitute a “significant modification” of the Loan under Section 1001 of the Code or otherwise cause a tax to be imposed on a “prohibited transaction” by any REMIC Trust.

(r)            Borrower shall (i) have paid, (ii) have escrowed with Lender or (iii) be contesting in accordance with the terns hereof, all Basic Carrying Costs relating to each of the Properties and the Substitute Property, including without limitation, (i) accrued but unpaid Insurance Premiums relating to each of the Properties and the Substitute Property, and (ii) currently due and payable Taxes (including any in arrears) relating to each of the Properties and the Substitute Property and (iii) currently due and payable Other Charges relating to each of the Properties and Substitute Property.

(s)           Borrower shall have paid to Lender a substitution fee equal to $2,500 and paid or reimbursed Lender for all costs and expenses incurred by Lender (including, without limitation, reasonable attorneys’ fees and disbursements) in connection with the release and substitution and

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Borrower shall have paid all recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution. Borrower shall have paid all costs and expenses of the Rating Agencies incurred in connection with the substitution.

(t)            Lender shall have received annual P&L Reports and Mini Report for the Substitute Property for the most current completed fiscal year and a current P&L Report and Mini Report for the Replaced Property, each certified by Borrower to Lender as being a true and correct copy of the report received from the Operating Tenant and a certificate from Borrower certifying that, to Borrower’s knowledge, there has been no material adverse change in the financial condition of the Substitute Property since the date of such P&L Report.

(u)           Borrower shall have delivered to Lender an estoppel certificate from Operating Tenant with respect to the Operating Lease.  Such estoppel certificate shall be substantially in the form approved by Lender in connection with the origination of the Loan and shall indicate that (1) the Operating Lease is a valid and binding obligation of Operating Tenant, (2) there are no material defaults under the Operating Lease on the part of the landlord or Tenant thereunder, (3) Operating Tenant has no knowledge of any defense or offset to the payment of rent under the Operating Lease, (4) no rent under the Operating Lease has been paid more than one (1) month in advance and (5) Operating Tenant has no option under the Operating Lease to purchase all or any portion of the Substitute Property.

(v)           Lender shall have received subordination agreements in substantially the form approved by Lender in connection with the origination of the Loan (or such other form approved by Lender, which approval shall not be unreasonably withheld) with respect to the Operating Lease.

(w)          Lender shall have received (A) an endorsement to the Title Insurance Policy insuring the Lien of the Security Instrument encumbering the Substitute Property insuring that the Substitute Property constitutes a separate tax lot or, if such an endorsement is not available in the State in which the Substitute Property is located, a letter from the title insurance company issuing such Title Insurance Policy stating that the Substitute Property constitutes a separate tax lot or (B) a letter from the appropriate taxing authority stating that the Substitute Property constitutes a separate tax lot.

(x)            Lender shall have received a Physical Conditions Report with respect to the Substitute Property stating that the Substitute Property and its use comply in all material respects with all applicable Legal Requirements (including, without limitation, zoning, subdivision and building laws) and that the Substitute Property is in good condition and repair and free of damage or waste.

(y)           Lender shall have received evidence which would be satisfactory to a prudent institutional mortgage loan lender to the effect that all material building and operating licenses and permits necessary for the use and occupancy of the Substitute Property as a retail shopping establishment including, but not limited to, current certificates of occupancy, have been obtained and are in full force and effect.

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(z)            Intentionally Omitted.

(aa)         Lender shall have received a certified copy of an amendment to the Operating Lease reflecting the deletion of the Replaced Property and the addition of the Substitute Property as a property encumbered pursuant thereto, which amendment shall not change the rental obligations or any other economic provisions of Operating Tenant thereunder.

(bb)         Lender shall have received such other approvals, opinions, documents and information in connection with the substitution as requested by the Rating Agencies if the Loan is part of a Securitization, or as reasonably requested by Lender if the Loan is not part of a Securitization.

(cc)         Lender shall have received copies of all material contracts and agreements relating to the leasing and operation of the Substitute Property (other than the Management Agreement), each of which shall be in a form and substance which would be satisfactory to a prudent institutional mortgage loan lender together with a certification of Borrower attached to each such contract or agreement certifying that the attached copy is a true and correct copy of such contract or agreement and all amendments thereto.

(dd)         Lender shall have received certified copies of all material consents, licenses and approvals, if any, required in connection with the substitution of a Substitute Property, and evidence that such consents, licenses and approvals are in full force and effect.

(ee)         Lender shall have received satisfactory (i.e., showing no Liens other than Permitted Encumbrances) UCC searches, together with tax lien, judgment and litigation searches with respect to the Substitute Property, and Borrower in the State where the Substitute Property is located and the jurisdictions where such Person has its principal place of business.

(ff)           If Borrower owns a leasehold estate in the Substitute Property, Lender shall have received, (i) a complete certified copy of the Ground Lease for the Substitute Property, together with all amendments and modifications thereto and a recorded memorandum thereof, which Ground Lease would be reasonably satisfactory in all respects to a prudent institutional mortgage loan lender and which contains customary leasehold mortgagee provisions and protections, and which shall provide, among other things, (A) for a remaining term of no less than the greater of (1) 20 years from the Maturity Date or (2) 10 years from the end of the scheduled amortization term of the Loan, (B) that the Ground Lease shall not be terminated until Lender has received notice of a default thereunder and has had a reasonable opportunity to cure or complete foreclosure, and fails to do so in a diligent manner, (C) for a new lease on the same terms to Lender as tenant if the Ground Lease is terminated for any reason, (D) the non-merger of fee and leasehold interests, and (E) that insurance proceeds and condemnation awards (from the fee interest as well as the leasehold interest) will be applied pursuant to the terms of this Agreement, and (ii) a ground lease estoppel executed by the fee owner and ground lessor of the Substitute Property, reasonably acceptable to a prudent institutional mortgage loan lender.

(gg)         Borrower shall submit to Lender, not less than twenty (20) Business Days prior to the date of such substitution, a release of Lien (and related Loan Documents) for the Replaced Property for execution by Lender. Such release shall be in a form appropriate for the jurisdiction

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in which the Replaced Property is located and shall contain standard provisions, if any, protecting the rights of the releasing lender.

(hh)         Borrower stall deliver an Officers Certificate certifying that the requirements set forth in this Section 2.6 have been satisfied.

(ii)           Upon the satisfaction of the foregoing conditions precedent, Lender will release its Lien from the Replaced Property and the Substitute Property shall be deemed to be an Individual Property for purposes of this Agreement and the Substitute Allocated Loan Amount with respect to such Substitute Property shall be deemed to be the Allocated Loan Amount with respect to such Substitute Property for all purposes hereunder.

Section 2.7            Purchase of the Fee Estate of the Burlington Property.

Borrower (or an Affiliate of Borrower, if Borrower chooses option (ii) set forth in subsection (b) below of this Section 2.7) shall be entitled to purchase the Fee Estate of that certain Individual Property Store No. 141 located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ (the “Burlington Property”), provided that (i) Lender receives thirty (30) days prior written notice of such acquisition, (ii) no Event of Default has occurred and is continuing and (iii) upon the satisfaction of the following conditions:

(a)           Borrower shall have paid to Lender, concurrently with the closing of such acquisition, all out-of-pocket costs and expenses, including reasonable attorneys’ fees, incurred by Lender in connection with the purchase of the Burlington Property by Borrower (or an Affiliate of Borrower, if Borrower chooses option (ii) set forth in subsection (b) below of this Section 2.7);

(b)           Borrower, without any cost to Lender, shall furnish any information requested by Lender (i) relating to the purchase of the Fee Estate of the Burlington Property by Borrower, for the preparation of, and shall authorize Lender to file and/or record, new or amended and restated security instruments, financing statements and financing statement amendments and other documents to the fullest extent permitted by Applicable Law, and shall execute any additional documents related thereto reasonably requested by Lender or (ii) relating to the purchase of the Fee Estate of the Burlington Property by an Affiliate of Borrower and the extension of that certain Ground Lease of the Burlington Property by Borrower as tenant thereunder, in connection with the extension of the term of such Ground Lease for an additional term of at least twenty (20) years beyond the Maturity Date and providing for a rental rate thereunder of not more than nine percent (9%) of the yield on the purchase price of the Burlington Property;

(c)           If Borrower is the purchaser of the Fee Estate of the Burlington Property, Borrower shall have delivered to Lender, without any cost or expense to Lender, such endorsements to Lender’s Title Insurance Policy insuring that fee simple title to the Burlington Property is vested in Borrower (subject to Permitted Encumbrances), hazard insurance endorsements or certificates and other similar materials as Lender may deem necessary at the time of the transfer, all in form and substance reasonably satisfactory to Lender;

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(d)           If Borrower is the purchaser of the Fee Estate of the Burlington Property, Borrower shall furnish an opinion of counsel satisfactory to Lender and its counsel that all documents executed by Borrower, Guarantor and Indemnitor in connection with the purchase of the Burlington Property have been duly authorized, executed and delivered, and that the Security Instruments, and the other documents executed in connection therewith are valid, binding and enforceable against Borrower in accordance with their terms; and

(e)           The Operating Lease and all of the Qualified Assignee Leases shall remain in full force and effect during and after the completion of such transfer or extension of the Operating Lease, as applicable, without abatement of rent; provided that any increase in the rental rate under the Operating Lease shall be set forth in an amendment to the Operating Lease as approved by Lender.

III.           CASH MANAGEMENT

Section 3.1            Establishment of Accounts.

(a)           Borrower shall, simultaneously herewith, (i) establish, and hereby covenants to maintain, an account (the “Property Account”) with Property Account Bank into which Borrower shall deposit, or cause to be deposited, all Required Deposits, and (ii) execute an agreement with Lender and the Property Account Bank providing for the control of the Property Account by Lender substantially in a form reasonably acceptable to Lender (the “Property Account Control Agreement”).

(b)           Lender shall, simultaneously herewith, (i) establish accounts with the Lockbox Bank (the “Lockbox Account”), into which Borrower shall deposit, or cause to be deposited, sums on deposit in the Property Account, in accordance with the terms hereof and (ii) execute an agreement (which may be this Agreement) with the Lockbox Bank providing for the control of the Lockbox Account by Lender. The following Accounts (which may be book entry sub-accounts), shall be established in the Lockbox Account into which amounts in the Property Account shall be deposited or allocated on the date or during the period so specified:

(i)               An account with Lockbox Bank into which Borrower shall deposit, or cause to be deposited, during any Triggering Event Period, the Monthly Tax Deposit (the “Tax Account”);

(ii)              An account with Lockbox Bank into which Borrower shall deposit, or cause to be deposited, during any Triggering Event Period, the Monthly Insurance Premium Deposit (the “Insurance Premium Account”);