10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Mark One

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2008

OR

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission File Number 1-12928

Agree Realty Corporation

(Exact name of registrant as specified in its charter)

Maryland	38-3148187
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)
31850 Northwestern Highway, Farmington Hills, Michigan	48334
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (248) 737-4190

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o  Accelerated filer þ  Non-accelerated filer   o
(Do not check if a smaller reporting company) Smaller Reporting Company o 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of August 8, 2008, the Registrant had 7,794,546 shares of common stock, $0.0001 par value, outstanding.

Agree Realty Corporation

Form 10-Q

Index

	Page
Part I: Financial Information
Item 1. Interim Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 2008 (Unaudited) and December 31, 2007		1-2
Consolidated Statements of Income (Unaudited) for the three months ended June 30, 2008 and 2007		3
Consolidated Statements of Income (Unaudited) for the six months ended June 30, 2008 and 2007		4
Consolidated Statements of Stockholders’ Equity (Unaudited) for the six months ended June 30, 2008		5
Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2008 and 2007		6-7
Notes to Consolidated Financial Statements (Unaudited)		8-11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12-19
Item 3. Quantitative and Qualitative Disclosures About Market Risk		19
Item 4. Controls and Procedures		20-21
Part II: Other Information
Item 1. Legal Proceedings		21
Item 1A. Risk Factors		21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 3. Defaults Upon Senior Securities		21
Item 4. Submission of Matters to a Vote of Security Holders		21
Item 5 Other Information		22
Item 6. Exhibits		22
Signatures		23
EX-4.1
EX-4.2
EX-4.3
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Agree Realty Corporation

Consolidated Balance Sheets

	June 30,			December 31,
	2008			2007
	(Unaudited)
Assets
Real Estate Investments
Land	$	87,234,289		$	87,233,715
Buildings		206,895,228			197,033,867
Property under development		6,576,182			4,806,114
		300,705,699			289,073,696
Less accumulated depreciation		(55,824,194	)		(53,250,564	)
Net Real Estate Investments		244,881,505			235,823,132
Cash and Cash Equivalents		180,737			544,639
Accounts Receivable — Tenants, net of allowance of $20,000 for possible losses at June 30, 2008 and December 31, 2007		657,152			770,365
Unamortized Deferred Expenses
Financing costs, net of accumulated amortization of $4,743,144 and $4,665,144 at June 30, 2008 and December 31, 2007		785,738			837,033
Leasing costs, net of accumulated amortization of $746,679 and $716,679 at June 30, 2008 and December 31, 2007		506,953			424,002
Other Assets		888,299			948,335
	$	247,900,384		$	239,347,506

See accompanying notes to consolidated financial statements.

Agree Realty Corporation

Consolidated Balance Sheets

	June 30,			December 31,
	2008			2007
	(Unaudited)
Liabilities and Stockholders’ Equity
Mortgages Payable	$	44,407,947		$	45,760,168
Notes Payable		47,750,000			36,800,000
Dividends and Distributions Payable		4,234,891			4,211,827
Deferred Revenue		11,069,628			11,414,404
Accrued Interest Payable		487,532			329,171
Accounts Payable
Capital expenditures		710,919			1,069,734
Operating		864,601			1,483,127
Deferred Income Taxes		705,000			705,000
Tenant Deposits		70,076			64,085
Total Liabilities		110,300,594			101,837,516
Minority Interest		5,857,037			5,896,180
Stockholders’ Equity
Common stock, $0.0001 par value; 20,000,000 shares authorized, 7,798,096 and 7,754,246 shares issued and outstanding		780			775
Additional paid-in capital		142,841,659			142,260,659
Deficit		(11,099,686	)		(10,647,624	)
Total Stockholders’ Equity		131,742,753			131,613,810
	$	247,900,384		$	239,347,506

See accompanying notes to consolidated financial statements.

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Agree Realty Corporation

Consolidated Statements of Income (Unaudited)

	Three Months Ended			Three Months Ended
	June 30, 2008			June 30, 2007
Revenues
Minimum rents	$	8,133,119		$	7,642,554
Percentage rents		—			2,347
Operating cost reimbursements		654,325			726,107
Other income		1,657			6,518
Total Revenues		8,789,101			8,377,526
Operating Expenses
Real estate taxes		450,864			467,147
Property operating expenses		359,268			436,162
Land lease payments		171,050			168,550
General and administrative		1,130,155			975,399
Depreciation and amortization		1,347,452			1,262,463
Total Operating Expenses		3,458,789			3,309,721
Income From Operations		5,330,312			5,067,805
Other (Expense)
Interest expense, net		(1,238,977	)		(1,151,331	)
Income Before Minority Interest		4,091,335			3,916,474
Minority Interest		(324,877	)		(313,322	)
Net Income	$	3,766,458		$	3,603,152
Earnings Per Share — Basic	$	0.49		$	0.47
Earnings Per Share — Dilutive	$	0.49		$	0.47
Dividend Declared Per Share	$	0.50		$	0.49
Weighted Average Number of Common Shares Outstanding — Basic		7,676,258			7,643,026
Weighted Average Number of Common Shares Outstanding — Dilutive		7,683,039			7,691,475

See accompanying notes to consolidated financial statements.

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Agree Realty Corporation

Consolidated Statements of Income (Unaudited)

	Six Months Ended			Six Months Ended
	June 30, 2008			June 30, 2007
Revenues
Minimum rents	$	16,111,767		$	15,329,914
Percentage rents		4,758			16,026
Operating cost reimbursements		1,437,082			1,482,457
Other income		3,249			12,621
Total Revenues		17,556,856			16,841,018
Operating Expenses
Real estate taxes		916,177			924,508
Property operating expenses		953,646			946,609
Land lease payments		339,600			338,600
General and administrative		2,225,850			1,971,662
Depreciation and amortization		2,642,718			2,496,649
Total Operating Expenses		7,077,991			6,678,028
Income From Operations		10,478,865			10,162,990
Other (Expense)
Interest expense, net		(2,499,053	)		(2,327,970	)
Income Before Minority Interest		7,979,812			7,835,020
Minority Interest		(634,402	)		(626,809	)
Net Income	$	7,345,410		$	7,208,211
Earnings Per Share — Basic	$	0.96		$	0.94
Earnings Per Share — Dilutive	$	0.96		$	0.94
Dividend Declared Per Share	$	1.00		$	0.98
Weighted Average Number of Common Shares Outstanding — Basic		7,672,500			7,643,026
Weighted Average Number of Common Shares Outstanding — Dilutive		7,682,947			7,692,133

See accompanying notes to consolidated financial statements.

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Agree Realty Corporation

Consolidated Statements of Stockholders’ Equity (Unaudited)

						Additional
	Common Stock					Paid-In
	Shares		Amount			Capital		Deficit
Balance, January 1, 2008		7,754,246		$	775	$	142,260,659	$	(10,647,624	)
Issuance of shares under the Equity Incentive Plan		43,850			5		—		—
Vesting of restricted stock		—			—		581,000		—
Dividends declared for the period January 1, 2008 to June 30, 2008		—			—		—		(7,797,472	)
Net income for the period January 1, 2008 to June 30, 2008		—			—		—		7,345,410
Balance, June 30, 2008		7,798,096		$	780	$	142,841,659	$	(11,099,686	)

See accompanying notes to consolidated financial statements.

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Agree Realty Corporation

Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended			Six Months Ended
	June 30, 2008			June 30, 2007
Cash Flows From Operating Activities
Net income	$	7,345,410		$	7,208,211
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		2,609,942			2,468,181
Amortization		110,776			120,468
Stock-based compensation		581,000			489,460
Minority interests		634,402			626,809
Decrease in accounts receivable		113,213			328,494
Increase (decrease) in other assets		20,948			(112,311	)
Decrease in accounts payable		(618,526	)		(575,795	)
Decrease in deferred revenue		(344,776	)		(344,774	)
Increase in accrued interest		158,361			52,883
Increase in tenant deposits		5,991			—
Net Cash Provided By Operating Activities		10,616,741			10,261,626
Cash Flows From Investing Activities
Acquisition of real estate investments (including capitalized interest of $286,000 in 2008 and $265,000 in 2007)		(10,921,084	)		(6,026,384	)
Net Cash Used In Investing Activities		(10,921,084	)		(6,026,384	)
Cash Flows From Financing Activities
Payments of mortgages payable		(1,352,221	)		(1,213,491	)
Dividends and limited partners’ distributions paid		(8,447,948	)		(8,243,969	)
Line-of-credit net borrowings		10,950,000			5,700,000
Repayments of capital expenditure payables		(1,069,734	)		(766,378	)
Payments of financing costs		(26,705	)		—
Payments of leasing costs		(112,951	)		(13,500	)
Net Cash Used In Financing Activities		(59,559	)		(4,537,338	)
Net Decrease In Cash and Cash Equivalents		(363,902	)		(302,096	)
Cash and Cash Equivalents, beginning of period		544,639			463,730
Cash and Cash Equivalents, end of period	$	180,737		$	161,634

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Agree Realty Corporation

Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended		Six Months Ended
	June 30, 2008		June 30, 2007
Supplemental Disclosure of Cash Flow Information
Cash paid for interest (net of amounts capitalized)	$	2,263,133	$	2,183,742
Supplemental Disclosure of Non-Cash Transactions
Dividends and limited partners’ distributions declared and unpaid	$	4,234,891	$	4,123,402
Real estate investments financed with accounts payable	$	710,919	$	1,230,060

See accompanying notes to consolidated financial statements.

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Agree Realty Corporation

Notes to Consolidated Financial Statements

1. Basis of Presentation	The accompanying unaudited consolidated financial statements for the six and three months ended June 30, 2008 and 2007 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for audited financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated balance sheet at December 31, 2007 has been derived from the audited consolidated financial statements at that date. Operating results for the three months and six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008 or for any other interim period. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.
2. Stock Based Compensation	On January 1, 2006, Agree Realty Corporation (the “Company”) adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123 (R), “Share-Based Payments” (“SFAS 123R”), under the modified prospective method. Under the modified prospective method, compensation cost is recognized for all awards granted after the adoption of this standard and for the unvested portion of previously granted awards that are outstanding as of the adoption date. In accordance with SFAS 123R, the Company estimates the fair value of restricted stock and stock option grants at the date of grant and amortizes those amounts into expense on a straight line basis or amount vested, if greater, over the appropriate vesting period.
	As of June 30, 2008, there was $3,119,769 of total unrecognized compensation costs related to the outstanding restricted shares, which is expected to be recognized over a weighted average period of 3.40 years. The Company used a 0% discount factor and forfeiture rate for determining the fair value of restricted stock. The forfeiture rate was based on historical results and trends and the Company does not consider discount rates to be material.
	The holder of a restricted share award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a shareholder of the Company, including the right to vote the shares and the right to receive dividends on the shares.

				Weighted
				Average
	Shares			Grant Date
	Outstanding			Fair Value
Unvested restricted shares at December 31, 2007		96,450		$	24.89
Restricted shares granted		43,850			29.65
Restricted shares vested		(18,750	)		26.29
Restricted shares forfeited		—			—
Unvested restricted shares at June 30, 2008		121,550		$	30.79

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Agree Realty Corporation

3. Earnings Per Share	Earnings per share has been computed by dividing the net income by the weighted average number of common shares outstanding. The per share amounts reflected in the consolidated statements of income are presented in accordance with SFAS No. 128 “Earnings per Share.”
	The following is a reconciliation of the denominator of the basic net earnings per common share computation to the denominator of the diluted net earnings per common share computation for each of the periods presented:

	Three Months Ended June 30,
		2008		2007
Weighted average number of common shares outstanding		7,797,808		7,750,496
Unvested restricted stock		(121,550	)	(107,470	)
Weighted average number of common shares outstanding used in basic earnings per share		7,676,258		7,643,026
Weighted average number of common shares outstanding used in basic earnings per share		7,676,258		7,643,026
Effect of dilutive securities:
Restricted stock		6,781		48,449
Common stock options		—		—
Weighted average number of common shares outstanding used in diluted earnings per share		7,683,039		7,691,475
	Six Months Ended June 30,
		2008		2007
Weighted average number of common shares outstanding		7,794,050		7,750,496
Unvested restricted stock		(121,550	)	(107,470	)
Weighted average number of common shares outstanding used in basic earnings per share		7,672,500		7,643,026
Weighted average number of common shares outstanding used in basic earnings per share		7,672,500		7,643,026
Effect of dilutive securities:
Restricted stock		10,447		49,107
Common stock options		—		—
Weighted average number of common shares outstanding used in diluted earnings per share		7,682,947		7,692,133

4. Recent Accounting Pronouncements

In September 2006, the FASB issued Statement No. 157. “Fair Value Measurements” (“SFAS No. 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement applies to accounting pronouncements that require or permit fair value measurements, except for share-based compensation transactions under FASB Statement No. 123 (Revised) “Share Based Payment.” This Statement was effective for financial statements issued for fiscal years beginning after November 15, 2007, except for non-financial assets and liabilities for which this Statement will be effective for years beginning after November 15, 2008. The Company is evaluating the effect of implementing the Statement relating to such non-financial assets and liabilities, although the Statement does not require any new fair value measurements or remeasurements of previously reported fair values.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS No. 160”), an amendment to Accounting Research Board No. 51. SFAS No. 160’s objective is to improve the relevance, comparability

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Agree Realty Corporation

and transparency of financial information that a reporting entity provides in its consolidated financial statements. The key aspects of SFAS No. 160 are (i) the minority interests in subsidiaries should be presented in the consolidated balance sheet within equity of the consolidated group, separate from the parent’s shareholders’ equity, (ii) acquisitions or dispositions of noncontrolling interests in a subsidiary that do not result in a change of control should be accounted for as equity transactions, (iii) a parent recognizes a gain or loss in net income when a subsidiary is deconsolidated, measured using the fair value of the non-controlling equity investment, (iv) the acquirer should attribute net income and each component of other comprehensive income between controlling and noncontrolling interests based on any contractual arrangements or relative ownership interests, and (v) a reconciliation of beginning to ending total equity is required for both controlling and noncontrolling interests. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008 and should be applied prospectively. We are currently evaluating the provisions for SFAS No. 160 to determine the potential impact, if any, the adoption will have on our financial position and results of operations. In March 2008, the SEC announced revisions to Topic No. D-98 “Classification and Measurement of Redeemable Securities” that provide interpretive guidance on the interaction on the interaction between Topic D-98 and Statement
No. 160..

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS No. 141”). SFAS No. 141(R) will significantly change the accounting for business combinations. Under SFAS No. 141(R), an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141(R) will change the accounting treatment for certain specific acquisition related items including: (1) expensing acquisition related costs as incurred; (2) valuing noncontrolling interests at fair value at the acquisition date; and (3) expensing restructuring costs associated with an acquired business. SFAS No. 141(R) also includes a substantial number of new disclosure requirements. SFAS No. 141(R) is to be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009. We expect SFAS No. 141(R) will have an impact on our accounting for future business combinations once adopted, but we are still currently assessing the impact it will have on our consolidated results of operations and financial position.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities. It clarifies (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No.133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. The Company is currently evaluating the application of SFAS No. 161 and anticipates the SFAS No. 161 will not have an effect on its results of operations or financial position as SFAS N. 161 only provides for new disclosure requirements.

In December 2007, the FASB ratified EITF Issue No. 07-06, “Accounting for the Sale of Real Estate Subject to the Requirements of FASB Statement No. 66 When the Agreement Includes a Buy-Sell Clause” (“EITF 07-06”). EITF 07-06 requires companies to determine whether the terms of the buy-sell clause indicate that the seller has transferred the usual risks and rewards of ownership and does not have substantial continuing involvement pursuant to SFAS 66. It clarifies that a buy-sell clause, in and of itself, does not constitute a prohibited form of continuing involvement that would preclude partial sales treatment under SFAS 66, but should be evaluated in consideration of all the relevant facts and circumstances. EITF 07-06 is effective for fiscal years beginning after December 15, 2007. We do not expect EITF 07-06 to have a material impact on our financial position and results of operations.

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Agree Realty Corporation

	In May 2008, the FASB issued Statement No. 162 “The Hierarchy of Generally Accepted Accounting Principles.” The current hierarchy of generally accepted accounting principles is set forth in the American Institute of Certified Accountants (AICPA) Statement of Auditing Standards (SAS) No. 69, “The meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. Statement No. 162 is intended to improve financial reporting by identifying a consistent framework or hierarchy for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles for nongovernmental entities. This Statement is effective 60 days following the SEC’s approval of the Public Company Oversight Board Auditing amendments to SAS 69. The Company is currently evaluating the application of this Statement but does not anticipate that the Statement will have a material effect on the Company’s results of operations or financial position, as the Statement does not directly impact the accounting principles applied in the preparation of the Company’s financial statements.
	In June 2008, the FASB ratified FASB Staff Position No. EITF 03-6-01 “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-01”). FSP EITF 03-6-01 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”) under the two-class method of SFAS 128. It clarifies that unvested share-based payment awards that contain nonforfeitable right to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of EPS pursuant to the two-class method. FSP EITF 03-6-01 is effective for fiscal years beginning after December 15, 2008. We do not expect FSP EITF 06-6-01 to have a material impact on our computation of EPS.
5. Subsequent Event	In July 2008, the Company obtained a secured term loan in the amount of $24.8 million. The loan is collateralized by a first real estate mortgage and assignment of rents and leases on seven retail properties, bears interest at 150 basis points over LIBOR, has a term of five years and can be extended at our option for an additional two-year period. The loan requires monthly payments of interest and principal based on a 25 year amortization.

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Agree Realty Corporation

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Management has included herein certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements represent our expectations, plans and beliefs concerning future events and may be identified by terminology such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend” and similar expressions. Although the forward-looking statements made in this report are based on good faith beliefs, reasonable assumptions and our best judgment reflecting current information, certain factors could cause actual results to differ materially from such forward-looking statements, including but not limited to; the effect of economic and market conditions; risks that our acquisition and development projects will fail to perform as expected; financing risks, such as the inability to obtain debt or equity financing on favorable terms; the level and volatility of interest rates; loss or bankruptcy of one or more of our major retail tenants; a failure of our properties to generate additional income to offset increases in operating expenses; and other factors discussed elsewhere in this report and our other reports furnished or filed with the Securities and Exchange Commission, including our annual report on Form 10-K for the fiscal year ended December 31, 2007. Given these uncertainties, you should not place undue reliance on our forward-looking statements. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future.

Overview

Agree Realty Corporation is a fully-integrated, self-administered and self-managed real estate investment trust (“REIT”) focused primarily on the ownership, development, acquisition and management of retail properties net leased to national tenants. In this report, the terms “Company,” “we,” “ours” and “us” and similar terms refer to Agree Realty Corporation and its subsidiaries as the context may require. We were formed in December 1993 to continue and expand the business founded in 1971 by our current President and Chairman, Richard Agree. We specialize in developing retail properties for national tenants who have executed long-term net leases prior to the commencement of construction. As of June 30, 2008, approximately 88% of our annualized base rent was derived from national tenants. All of our freestanding property tenants and the majority of our community shopping center tenants have triple-net leases, which require the tenant to be responsible for property operating expenses, including property taxes, insurance and maintenance. We believe this strategy provides a generally consistent source of income and cash for distributions.

As of June 30, 2008, our portfolio consisted of 67 properties, located in 16 states containing an aggregate of approximately 3.4 million square feet of gross leasable area (“GLA”). As of June 30, 2008, our portfolio included 55 freestanding net leased properties and 12 community shopping centers that were 99.3% leased in aggregate. As of June 30, 2008, approximately 67% of our annualized base rent was derived from our top three tenants: Borders Group, Inc. — 30%; Walgreen Co. (“Walgreens”) — 25% and Kmart Corporation — 12%. During the period July 1, 2008 to December 31, 2010 we have 45 leases that are scheduled to expire assuming that none of the tenants exercise renewal options or terminate their leases prior to the contractual expiration date. These leases represent 508,783 square feet of gross leasable area and $2,896,203 of annualized base rent.

We expect to continue to grow our asset base primarily through the development of retail properties that are pre-leased on a long-term basis to national tenants. We focus on development because we believe, based on the historical returns we have been able to achieve, it generally provides us a higher return on investment than the acquisition of similarly located properties and does not entail the risks associated with speculative development. Since our initial public offering in 1994, we have developed 54 of our 67 properties, including 42 of our 55 freestanding properties and all 12 of our community shopping centers. As of June 30, 2008, the properties that we developed accounted for 83.7% of our annualized base rent. We expect to continue to expand our tenant relationships and diversify our tenant base to include other quality national tenants.

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Agree Realty Corporation

Our assets are held by, and all operations are conducted through, Agree Limited Partnership (the “Operating Partnership”), of which Agree Realty Corporation is the sole general partner and held a 92.05% and 92.01% interest as of June 30, 2008 and December 31, 2007, respectively. We are operating so as to qualify as a REIT for federal income tax purposes.

The following should be read in conjunction with the Consolidated Financial Statements of Agree Realty Corporation, including the respective notes thereto, which are included in this Form 10-Q.

Recent Accounting Pronouncements

In September 2006, the FASB issued Statement No. 157. “Fair Value Measurements” (“SFAS No. 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement applies to accounting pronouncements that require or permit fair value measurements, except for share-based compensation transactions under FASB Statement No. 123 (Revised) “Share Based Payment.” This Statement was effective for financial statements issued for fiscal years beginning after November 15, 2007, except for non-financial assets and liabilities for which this Statement will be effective for years beginning after November 15, 2008. The Company is evaluating the effect of implementing the Statement relating to such non-financial assets and liabilities, although the Statement does not require any new fair value measurements or remeasurements of previously reported fair values.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS No. 160”), an amendment to Accounting Research Board No. 51. SFAS No. 160’s objective is to improve the relevance, comparability and transparency of financial information that a reporting entity provides in its consolidated financial statements. The key aspects of SFAS No. 160 are (i) the minority interests in subsidiaries should be presented in the consolidated balance sheet within equity of the consolidated group, separate from the parent’s shareholders’ equity, (ii) acquisitions or dispositions of noncontrolling interests in a subsidiary that do not result in a change of control should be accounted for as equity transactions, (iii) a parent recognizes a gain or loss in net income when a subsidiary is deconsolidated, measured using the fair value of the non-controlling equity investment, (iv) the acquirer should attribute net income and each component of other comprehensive income between controlling and noncontrolling interests based on any contractual arrangements or relative ownership interests, and (v) a reconciliation of beginning to ending total equity is required for both controlling and noncontrolling interests. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008 and should be applied prospectively. The Company is currently evaluating the provisions for SFAS No. 160 to determine the potential impact, if any, the adoption will have on our financial position and results of operations. In March 2008, the SEC announced revisions to Topic No. D-98 “Classification and Measurement of Redeemable Securities” that provide interpretive guidance on the interaction on the interaction between Topic D-98 and Statement No. 160..

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS No. 141”). SFAS No. 141(R) will significantly change the accounting for business combinations. Under SFAS No. 141(R), an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141(R) will change the accounting treatment for certain specific acquisition related items including: (1) expensing acquisition related costs as incurred; (2) valuing noncontrolling interests at fair value at the acquisition date; and (3) expensing restructuring costs associated with an acquired business. SFAS No. 141(R) also includes a substantial number of new disclosure requirements. SFAS No. 141(R) is to be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009. We expect SFAS No. 141(R) will have an impact on our accounting for future business combinations once adopted, but we are still currently assessing the impact it will have on our consolidated results of operations and financial position.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging

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Agree Realty Corporation

activities. It clarifies (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No.133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. The Company is currently evaluating the application of SFAS No. 161 and anticipates the SFAS No. 161 will not have an effect on its results of operations or financial position as SFAS N. 161 only provides for new disclosure requirements.

In December 2007, the FASB ratified EITF Issue No. 07-06, “Accounting for the Sale of Real Estate Subject to the Requirements of FASB Statement No. 66 When the Agreement Includes a Buy-Sell Clause” (“EITF 07-06”). EITF 07-06 requires companies to determine whether the terms of the buy-sell clause indicate that the seller has transferred the usual risks and rewards of ownership and does not have substantial continuing involvement pursuant to SFAS 66. It clarifies that a buy-sell clause, in and of itself, does not constitute a prohibited form of continuing involvement that would preclude partial sales treatment under SFAS 66, but should be evaluated in consideration of all the relevant facts and circumstances. EITF 07-06 is effective for fiscal years beginning after December 15, 2007. The Company does not expect EITF 07-06 to have a material impact on our financial position and results of operations.

In May 2008, the FASB issued Statement No. 162 “The Hierarchy of Generally Accepted Accounting Principles.” The current hierarchy of generally accepted accounting principles is set forth in the American Institute of Certified Accountants (AICPA) Statement of Auditing Standards (SAS) No. 69, “The meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. Statement No. 162 is intended to improve financial reporting by identifying a consistent framework or hierarchy for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles for nongovernmental entities. This Statement is effective 60 days following the SEC’s approval of the Public Company Oversight Board Auditing amendments to SAS 69. The Company is currently evaluating the application of this Statement but does not anticipate that the Statement will have a material effect on the Company’s results of operations or financial position, as the Statement does not directly impact the accounting principles applied in the preparation of the Company’s financial statements.

In June 2008, the FASB ratified FASB Staff Position No. EITF 03-6-01 “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-01”). FSP EITF 03-6-01 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”) under the two-class method of SFAS 128. It clarifies that unvested share-based payment awards that contain nonforfeitable right to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of EPS pursuant to the two-class method. FSP EITF 03-6-01 is effective for fiscal years beginning after December 15, 2008. The Company does not expect FSP EITF 06-6-01 to have a material impact on our computation of EPS.

Critical Accounting Policies

Critical accounting policies are those that are both significant to the overall presentation of our financial condition and results of operations and require management to make difficult, complex or subjective judgments. For example, significant estimates and assumptions have been made with respect to revenue recognition, capitalization of costs related to real estate investments, potential impairment of real estate investments, operating cost reimbursements, and taxable income.

Minimum rental income attributable to leases is recorded when due from tenants. Certain leases provide for additional percentage rents based on tenants’ sales volumes. These percentage rents are recognized when determinable by us. In addition, leases for certain tenants contain rent escalations and/or free rent during the first several months of the lease term; however such amounts are not material.

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Agree Realty Corporation

Real estate assets are stated at cost less accumulated depreciation. All costs related to planning, development and construction of buildings prior to the date they become operational, including interest and real estate taxes during the construction period, are capitalized for financial reporting purposes and recorded as property under development until construction has been completed. Subsequent to the completion of construction, expenditures for property maintenance are charged to operations as incurred, while significant renovations are capitalized. Depreciation of the buildings is recorded in accordance with the straight-line method using an estimated useful life of 40 years.

We evaluate real estate for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets will be written down to fair value.

Substantially all of our leases contain provisions requiring tenants to pay as additional rent a proportionate share of operating expenses (“operating cost reimbursements”) such as real estate taxes, repairs and maintenance, insurance, etc. The related revenue from tenant billings is recognized in the same period the expense is recorded.

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our 1994 tax year. As a result, we are not subject to federal income taxes to the extent that we distribute annually at least 90% of our REIT taxable income to our stockholders and satisfy certain other requirements defined in the Code.

In October 2007, we established a taxable REIT subsidiary pursuant to the provisions of the REIT Modernization Act. Our TRS is able to engage in activities resulting in income that previously would have been disqualified from being eligible REIT income under the federal income tax regulations. As a result, certain activities of the Company which occur within its TRS entity are subject to federal and state income taxes. As of June 30, 2008, the Company had accrued a deferred income tax amount of $705,000.

Comparison of Three Months Ended June 30, 2008 to Three Months Ended June 30, 2007

Minimum rental income increased $490,000, or 6%, to $8,133,000 in 2008, compared to $7,643,000 in 2007. The increase was the result of the development of a Walgreens drug store in Livonia, Michigan in June 2007, the development of a Walgreens drug store in Barnesville, Georgia in October 2007, the development of a parcel of land located in East Lansing, Michigan in November 2007, the development of a parcel of land located in Plainfield, Indiana, in November 2007, the development of a Walgreens drug store and a bank land lease in Macomb Township, Michigan in March 2008 and the development of a Walgreen drug store in Ypsilanti, Michigan in May 2008. Our revenue increase from these developments amounted to $508,000. In addition, rental income from our Big Rapids, Michigan shopping center decreased by $34,000 as a result of redevelopment activities.

Percentage rents decreased $2,000, to $-0- in 2008, compared to $2,000 in 2007.

Operating cost reimbursements decreased $72,000, or 10%, to $654,000 in 2008, compared to $726,000 in 2007. Operating cost reimbursements decreased due to the decrease in property operating expenses as explained below.

Other income decreased $5,000, to $2,000 in 2008, compared to $7,000 in 2007.

Real estate taxes decreased $16,000, or 3%, to $451,000 in 2008, compared to $467,000 in 2007. The decrease was the result of general assessment adjustments.

Property operating expenses (shopping center maintenance, snow removal, insurance and utilities) decreased $77,000, or 18%, to $359,000 in 2008 compared to $436,000 in 2007. The net decrease was the result of: a decrease in shopping center maintenance costs of ($59,000); an decrease in snow removal costs of ($21,000); an increase in utility costs of $5,000; and a decrease in insurance costs of ($2,000) in 2008 versus 2007.

Land lease payments increased $2,000, to $171,000 in 2008, compared to $169,000 for 2007.

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Agree Realty Corporation

General and administrative expenses increased by $155,000, or 16%, to $1,130,000 in 2008, compared to $975,000 in 2007. The increase was the result of increased compensation related expenses as a result of: an increase in salaries and the value of employee stock awards of $114,000; an increase in legal and auditing costs of $35,000; an increase in other taxes of $48,000 and a decrease in property related expenses of ($42,000). General and administrative expenses as a percentage of total rental income (minimum and percentage rents) increased from 12.3% for 2007 to 13.9% for 2008.

Depreciation and amortization increased $85,000, or 7%, to $1,347,000 in 2008, compared to $1,262,000 in 2007. The increase was the result of the development of four properties in 2007 and three properties in 2008.

Interest expense increased $88,000, or 8%, to $1,239,000 in 2008, compared to $1,151,000 in 2007. The increase in interest expense resulted from increased borrowings to fund the development of the four properties in 2007 and the development of three properties in 2008.

Our income before minority interest increased $175,000, or 4%, to $4,091,000 in 2008 from $3,916,000 in 2007 as a result of the foregoing factors.

Comparison of Six Months Ended June 30, 2008 to Six Months Ended June 30, 2007

Minimum rental income increased $782,000, or 5%, to $16,112,000 in 2008, compared to $15,330,000 in 2007. The increase was the result of the development of a Walgreens drug store in Livonia, Michigan in June 2007, the development of a Walgreens drug store in Barnesville, Georgia in October 2007, the development of a parcel of land located in East Lansing, Michigan in November 2007, the development of a parcel of land located in Plainfield, Indiana, in November 2007, the development of a Walgreens drug store and a bank land lease in Macomb Township, Michigan in March 2008 and the development of a Walgreens drug store located in Ypsilanti, Michigan. Our revenue increase from these developments amounted to $893,000. In addition, rental income from our Big Rapids, Michigan shopping center decreased by $102,000 as a result of redevelopment activities.

Percentage rents decreased $11,000, to $5,000 in 2008, compared to $16,000 in 2007. The decrease was primarily the result of decreased tenant sales.

Operating cost reimbursements decreased $45,000, or 3%, to $1,437,000 in 2008, compared to $1,482,000 in 2007. Operating cost reimbursements decreased due to the decrease in property operating expenses as explained below.

Other income decreased $10,000, to $3,000 in 2008, compared to $13,000 in 2007.

Real estate taxes decreased $9,000, or 1%, to $916,000 in 2008, compared to $925,000 in 2007. The decrease was the result of general assessment adjustments.

Property operating expenses increased $7,000, or 1%, to $954,000 in 2008 compared to $947,000 in 2007. The net increase was the result of: a decrease in shopping center maintenance costs of ($42,000); an increase in snow removal costs of $47,000; an increase in utility costs of $7,000; and a decrease in insurance costs of ($5,000) in 2008 versus 2007.

Land lease payments remained relatively constant at $340,000 for 2008 and $339,000 for 2007.

General and administrative expenses increased by $254,000, or 13%, to $2,226,000 in 2008, compared to $1,972,000 in 2007. The increase was the result of increased compensation related expenses as a result of: an increase in salaries and the value of employee stock awards of $197,000; an increase in legal and auditing costs of $64,000 and increase in state and local taxes of $46,000; and a decrease in property related expenses of ($53,000). General and administrative expenses as a percentage of total rental income (minimum and percentage rents) increased from 12.9% for 2007 to 13.8% for 2008.

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Agree Realty Corporation

Depreciation and amortization increased $146,000, or 6%, to $2,643,000 in 2008, compared to $2,497,000 in 2007. The increase was the result of the development of four properties in 2007 and three properties in 2008.

Interest expense increased $171,000, or 7%, to $2,499,000 in 2008, compared to $2,328,000 in 2007. The increase in interest expense resulted from increased borrowings to fund the development of the four properties in 2007 and the development of three properties in 2008.

Our income before minority interest increased $145,000, or 2%, to $7,980,000 in 2008 from $7,835,000 in 2007 as a result of the foregoing factors.

Liquidity and Capital Resources

Our principal demands for liquidity are operations, distributions to our stockholders, debt repayment, development of new properties, redevelopment of existing properties and future property acquisitions. We intend to meet our short-term liquidity requirements, including capital expenditures related to the leasing and improvement of the properties, through cash flow provided by operations and the Line of Credit and the Credit Facility. We believe that adequate cash flow will be available to fund our operations and pay dividends in accordance with REIT requirements for at least the next 12 months. We may obtain additional funds for future development or acquisitions through other borrowings or the issuance of additional shares of common stock. We intend to incur additional debt in a manner consistent with our policy of maintaining a ratio of total debt (including construction and acquisition financing) to total market capitalization of 65% or less. As of June 30, 2008, our ratio of indebtedness to market capitalization was approximately 49%. We believe that these financing sources will enable us to generate funds sufficient to meet both our short-term and long-term capital needs.

During the quarter ended June 30, 2008, we declared a quarterly dividend of $0.50 per share. We paid the dividend on July 15, 2008 to holders of record on June 30, 2008.

As of June 30, 2008, we had total mortgage indebtedness of $44,407,947 with a weighted average interest rate of 6.64%. This mortgage debt is all fixed rate debt.

In addition, the Operating Partnership has in place a $55 million credit facility (the “Credit Facility”) with Bank of America, as the agent, which is guaranteed by the Company. The Credit Facility matures in November 2009 and can be extended at our option, subject to specified conditions, for two additional one-year periods. Advances under the Credit Facility bear interest within a range of one-month to twelve-month LIBOR plus 100 basis points to 150 basis points or the lender’s prime rate, at our option, based on certain factors such as the ratio of our indebtedness to the capital value of our properties. The Credit Facility generally is used to fund property acquisitions and development activities. As of June 30, 2008, $44,000,000 was outstanding under the Credit Facility bearing a weighted average interest rate of 4.63%.

We also have in place a $5 million line of credit (the “Line of Credit”), which matures in November 2009 and can be extended at our option, subject to specified conditions, for two additional one-year periods. The Line of Credit bears interest at the lender’s prime rate less 75 basis points or 150 basis points in excess of the one-month to twelve-month LIBOR rate, at our option. The purpose of the Line of Credit is generally to provide working capital and fund land options and start-up costs associated with new projects. As of June 30, 2008, $3,750,000 was outstanding under the Line of Credit bearing a weighted average interest rate of 4.25%.

In July 2008, the Company obtained a secured term loan in the amount of $24.8 million. The loan is collateralized by a first real estate mortgage and assignment of rents and leases on seven retail properties, bears interest at 150 basis points over LIBOR, has a term of five years and can be extended at our option for an additional two-year period. The loan requires monthly payments of interest and principal based on a 25-year amortization. Proceeds from the term loan were utilized to pay amounts outstanding under our Credit Facility.

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Agree Realty Corporation

The following table outlines our contractual obligations as of June 30, 2008 for the periods presented below (in thousands).

			July 1, 2008 –		July 1, 2009 –		July 1, 2011 –
	Total		June 30, 2009		June 31, 2011		June 30, 2013		Thereafter
Mortgages Payable	$	44,408	$	2,842	$	6,278	$	7,164	$	28,124
Notes Payable		47,750		—		47,750		—		—
Land Lease Obligation		10,959		684		1,435		1,463		7,377
Interest Payments on Mortgages And Notes Payable		22,070		5,055		6,050		4,249		6,716
Other Long-Term Liabilities		—		—		—		—		—
Total	$	125,187	$	8,581	$	61,513	$	12,876	$	42,217

At June 30, 2008 we had three development projects under construction that will add an additional 29,370 square feet of GLA to our portfolio. The projects are expected to be completed during the third and fourth quarters of 2008. Additional funding required to complete the projects is estimated to be $5,654,000, which is not reflected in the table above, and will be funded through advances under the Credit Facility.

We plan to begin construction of additional pre-leased developments and may acquire additional properties, which will initially be financed by the Credit Facility and Line of Credit. We will periodically refinance short-term construction and acquisition financing with long-term debt and/or equity.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet arrangements with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities.

Inflation

Our leases generally contain provisions designed to mitigate the adverse impact of inflation on net income. These provisions include clauses enabling the us to pass through to tenants certain operating costs, including real estate taxes, common area maintenance, utilities and insurance, thereby reducing the our exposure to increases in costs and operating expenses resulting from inflation. Certain of our leases contain clauses enabling us to receive percentage rents based on tenants’ gross sales, which generally increase as prices rise, and, in certain cases, escalation clauses, which generally increase rental rates during the terms of the leases. In addition, expiring tenant leases permit us to seek increased rents upon re-lease at market rates if rents are below the then existing market rates.

Funds from Operations

Funds from Operations (“FFO”) is defined by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) to mean net income computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental measure to conduct and evaluate our business because there are certain limitations associated with using GAAP net income by itself as the primary measure of our operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, management believes that the presentation of operating results for real estate companies that use historical cost accounting is insufficient by itself.

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Agree Realty Corporation

FFO should not be considered as an alternative to net income as the primary indicator of our operating performance or as an alternative to cash flow as a measure of liquidity. Further, while we adhere to the NAREIT definition of FFO, our presentation of FFO is not necessarily comparable to similarly titled measures of other REITs due to the fact that not all REITs use the same definition.

The following table provides a reconciliation of FFO and net income for the three and six months ended June 30, 2008 and 2007:

	Three Months Ended
	June 30,
	2008		2007
Net income	$	3,766,458	$	3,603,152
Depreciation of real estate assets		1,313,910		1,235,850
Amortization of leasing costs		15,200		12,442
Minority interest		324,877		313,322
Funds from Operations	$	5,420,445	$	5,164,766
Weighted Average Shares and Operating Partnership Units Outstanding — Dilutive		8,356,586		8,365,022

	Six Months Ended
	June 30,
	2008		2007
Net income	$	7,345,410	$	7,208,211
Depreciation of real estate assets		2,576,406		2,443,915
Amortization of leasing costs		30,000		24,692
Minority interest		634,402		626,809
Funds from Operations	$	10,586,218	$	10,303,627
Weighted Average Shares and Operating Partnership Units Outstanding — Dilutive		8,356,494		8,365,680

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate risk primarily through borrowing activities. There is inherent roll-over risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and our future financing requirements.

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Agree Realty Corporation

Our interest rate risk is monitored using a variety of techniques. The table below presents the principal payments (in thousands) and the weighted average interest rates on outstanding debt, by year of expected maturity, to evaluate the expected cash flows and sensitivity to interest rate changes.

	Year Ended June 30,
	2009			2010			2011			2012			2013			Thereafter			Total
Fixed rate debt	$	2,842		$	3,036		$	3,243		$	3,464		$	3,700		$	28,123		$	44,408
Average interest rate		6.64	%		6.64	%		6.64	%		6.64	%		6.64	%		6.64	%		—
Variable rate debt		—			—		$	47,750			—			—			—		$	47,750
Average interest rate		—			—			4.60	%		—			—			—			—

The fair value (in thousands) is estimated at $44,934 and $47,750 for fixed rate debt and variable rate debt, respectively, as of June 30, 2008.

The table above incorporates those exposures that exist as of June 30, 2008; it does not consider those exposures or positions, which could arise after that date. As a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period and interest rates.

We do not enter into financial instrument transactions for trading or other speculative purposes or to manage interest rate exposure.

As of June 30, 2008, a 100 basis point increase in interest rates on the portion of our debt bearing interest at variable rates would result in an annual increase in interest expense of approximately $478,000.

ITEM 4. CONTROLS AND PROCEDURES

At December 31, 2007, management identified the following material weakness in our internal controls:

• We lack segregation of duties in the period-end financial reporting process. Our chief financial officer is the only employee with any significant knowledge of generally accepted accounting principles. The chief financial officer is also the sole employee in charge of the general ledger (including the preparation of routine and non-routine journal entries and journal entries involving accounting estimates), the preparation of accounting reconciliations, the selection of accounting principles, and the preparation of interim and annual financial statements (including report combinations, consolidation entries and footnote disclosures) in accordance with generally accepted accounting principles.

We, under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report.

Based on this evaluation as of June 30, 2008, and due to the material weaknesses in our internal control over financial reporting as described above, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC.

Our audit committee has engaged independent third party consultants to perform periodic reviews of our financial reporting closing process to help mitigate the material weakness in our internal control over financial reporting. There

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Agree Realty Corporation

was no change in our internal control over financial reporting during the most recently completed fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not presently involved in any litigation nor, to our knowledge, is any other litigation threatened against us, except for routine litigation arising in the ordinary course of business which is expected to be covered by our liability insurance.

ITEM 1A. RISK FACTORS

There were no material changes in our risk factors set forth under Item 1A of Part I of our most recently filed Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 5, 2008, we held our annual meeting of stockholders. The following were the results of the meeting:

     The stockholders elected William S. Rubenfaer as a Director until the annual meeting of stockholders in 2010 or until a successor is duly elected and qualified. In addition, the stockholders elected Farris G. Kalil and Gene Silverman as Directors until the annual meeting of stockholders in 2011 or until a successor is duly elected and qualified. The vote was as follows:

	William S. Rubenfaer		Farris G. Kalil		Gene Silverman
Votes cast for		6,253,626		6,178,902		6,262,995
Votes withheld		861,869		936,593		872,499

Richard Agree, Michael Rotchford and Leon Schurgin continue to hold office after the annual meeting.

     The stockholders ratified the appointment of Virchow Krause & Company, LLP as our independent registered public accounting firm for 2008.

Votes cast for	6,465,886
Votes against	30,240
Votes abstained	619,369

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Agree Realty Corporation

ITEM 5. OTHER INFORMATION

     On July 14, 2008 we obtained a $24.8 million secured term loan. The loan is collateralized by a first real estate mortgage and assignment of rents and leases on seven of our retail properties. The loan bears interest at 150 basis pointes over LIBOR, has a term of five years and can be extended at our option for an additional two-year period. Monthly payments of interest and principal and interest are based on a 25-year amortization. The proceeds from the term loan were used to pay-down on the Company’s Credit Facility.

ITEM 6. EXHIBITS

3.1	Articles of Incorporation and Articles of Amendment of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-11 (Registration Statement No. 33-73858, as amended)
3.2	Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006)
*4.1	Loan Agreement dated as of July 14, 2008 by and between Agree Limited Partnership, as Borrower, and The Financial Institutions party thereto, as Co-Lenders, and LaSalle Bank Midwest National Association, as Agent
*4.2	Commercial Mortgage dated as of July 14, 2008 executed by Agree Limited Partnership to and for the benefit of LaSalle Bank Midwest National Association and Raymond James Bank, FSB
*4.3	Continuing Unconditional Guaranty dated as of July 14, 2008 by Agree Realty Corporation for the benefit of La Salle Bank Midwest National Association
*31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Richard Agree, President and Chief Executive Officer
*31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Kenneth R. Howe, Vice President and Chief Financial Officer
*32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Richard Agree, President and Chief Executive Officer
*32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Kenneth R. Howe, Vice President and Chief Financial Officer

* Filed herewith

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Agree Realty Corporation

/s/ RICHARD AGREE Richard Agree

President and Chief Executive Officer
(Principal Executive Officer)

/s/ KENNETH R. HOWE Kenneth R. Howe

Vice President and Financial Officer
(Principal Financial and Accounting Officer)

Date: August 8, 2008

23

EX-4.1

EXHIBIT – 4.1

LOAN AGREEMENT

dated as of July 14, 2008

by and between

AGREE LIMITED PARTNERSHIP,
a Delaware limited partnership,
as Borrower

THE FINANCIAL INSTITUTIONS PARTY HERETO, as Co-Lenders

and

LASALLE BANK MIDWEST NATIONAL ASSOCIATION,
a national banking association, as Agent

TABLE OF CONTENTS

Article	Page
ARTICLE 1 INCORPORATION AND DEFINITIONS		1
1.1 Incorporation and Definitions		1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES		7
2.1 Representations and Warranties		7
2.2 Continuation of Representations and Warranties		9
ARTICLE 3 AMOUNT AND TERMS OF LOANS		9
3.1 Agreement to Lend and to Borrow; Notes		9
3.2 Commitments Several		10
ARTICLE 4 PRINCIPAL, INTEREST; SPECIAL PROVISIONS FOR LIBOR LOANS		10
4.1 Interest Rates		10
4.2 Payment of Principal and Interest		10
4.3 Types of Loans; Setting and Notice of LIBOR Rates		11
4.4 Conversion and Continuation Procedures		12
4.5 Computation of Interest and Fees		12
4.6 Inability to Determine Interest Rate		13
4.7 Pro Rata Treatment and Payments		13
4.8 Illegality		13
4.9 Legal Requirements		13
4.10 Taxes		14
4.11 LIBOR Loan Indemnification		15
ARTICLE 5 LOAN DOCUMENTS		16
5.1 Loan Documents		16
ARTICLE 6 CONDITIONS TO LOAN CLOSING		17
6.1 Conditions to Loan Closing		17
6.2 Termination of Agreement		20
ARTICLE 7 DISBURSEMENTS		20
7.1 Conditions Precedent to Disbursement of Loan Proceeds		20
7.2 Advances by Banks		22
7.3 Expenses and Advances Secured by Mortgages		22
7.4 Acquiescence not a Waiver		22
7.5 Agent’s Action for Agent’s Own Protection Only		22
ARTICLE 8 FURTHER AGREEMENTS OF BORROWER		23
8.1 Furnishing Information		23
8.2 Compliance with Covenants; Prohibition Against Additional Recordings		23
8.3 Property Accounts		23
8.4 Distributions		23
8.5 Further Assurance		24

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Article	Page
ARTICLE 9 CASUALTIES AND CONDEMNATION		24
9.1 Application of Insurance Proceeds and Condemnation Awards		24
ARTICLE 10 ASSIGNMENTS, SALE AND ENCUMBRANCES		24
10.1 Bank Assignments, Participations		24
10.2 Prohibition of Assignments and Encumbrances by Borrower		25
10.3 Partial Releases of Property		25
ARTICLE 11 EVENTS OF DEFAULT BY BORROWER		26
11.1 Event of Default Defined		26
ARTICLE 12 AGENT’S REMEDIES UPON EVENT OF DEFAULT		27
12.1 Remedies Conferred upon Agent		27
12.2 Right of Banks to Make Advances to Cure Event of Defaults; Obligatory Advances		27
12.3 Attorneys Fees		28
12.4 No Waiver		28
12.5 Default Rate		28
ARTICLE 13 THE AGENT		28
13.1 Appointment and Authorization		28
13.2 Actions Requiring Consent and Approval		29
13.3 Liability of Agent		31
13.4 Reliance by Agent		31
13.5 Notice of Default		32
13.6 Credit Decision		32
13.7 Bank Indemnification		32
13.8 Agent in Individual Capacity		32
13.9 Successor Agent		33
13.10 Collateral Matters		33
13.11 Agent May File Proofs of Claim		33
ARTICLE 14 MISCELLANEOUS		34
14.1 Time is of the Essence		34
14.2 Agent’s Determination of Facts		34
14.3 Prior Agreements		34
14.4 Disclaimer by Banks		34
14.5 Borrower Indemnification		34
14.6 Captions		35
14.7 Inconsistent Terms and Partial Invalidity		35
14.8 Gender and Number		35
14.9 Notices		35
14.10 Effect of Agreement		36
14.11 Governing Law		36
14.12 Consent to Jurisdiction		36
14.13 Waiver of Jury Trial		36
14.14 Counterparts; Facsimile Signatures		37
14.15 Customer Identification — USA Patriot Act Notice		37

SCHEDULES

Schedule 3.1 – Loan Amounts
Schedule 10.1 — Schedule of Release Payments

EXHIBITS

EXHIBIT “A” — THE PROPERTY
EXHIBIT “B” – FORM OF PROMISSORY NOTE
EXHIBIT “C” — PERMITTED EXCEPTIONS
EXHIBIT “D” — FORM OF ASSIGNMENT AND ACCEPTANCE

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LOAN AGREEMENT

     This LOAN AGREEMENT dated as of July 14, 2008 (the “Agreement”), is executed by and among AGREE LIMITED PARTNERSHIP, a Delaware limited partnership (the “Borrower”), the financial institutions that are or may from time to time become parties hereto and are described on Schedule 3.1 hereto (together with LaSalle and their respective successors and assigns, the “Banks”) and LASALLE BANK MIDWEST NATIONAL ASSOCIATION, a national banking association (in its individual capacity, “LaSalle”), as agent for itself and the other Banks.

R E C I T A L S:

     A. Borrower is the owner or land lessee of the properties described in Exhibit “A” attached hereto (being collectively referred to herein as the “Property”).

     B. Borrower has applied to the Banks for the Loans (as hereinafter defined) for the purpose of financing the Property, and the Banks are willing to make the Loans upon the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements herein contained, the sufficiency of which is hereby acknowledged, the parties hereto represent and agree as follows:

ARTICLE 1

INCORPORATION AND DEFINITIONS

     1.1 Incorporation and Definitions. The foregoing recitals and all exhibits hereto are hereby made a part of this Agreement. The following terms shall have the following meanings in this Agreement:

     “Actual Knowledge”: Knowledge acutally possessed by Richard Agree, or his successor, without inquiry or additional investigation, and not constructive knowledge which is imputed to the Borrower.

     “Agent”: As of the date hereof, LaSalle in its capacity as agent for the Banks and any successor or assign of LaSalle in such capacity.

     “Applicable Margin”: With respect to LIBOR Loans, one and one-half percent (1.50%) per annum and with respect to Base Rate Loans, one percent (1.00%) per annum.

     “Assignments of Rents”: As defined in Section 5 hereof

     “Bank(s)”: As defined in the Preamble.

     “Bank Affiliate” means RJ Capital Services, Inc., an affiliate of Raymond James Bank, FSB, and any other affiliate of any Bank, and their respective successors and assigns.

     “Base Rate Loan”: Any Loan which bears interest at a rate determined by reference to the Base Rate.

     “Base Rate”: At any time, the greater of the Federal Funds Rate plus one-half of one percent (0.50%) and the Prime Rate.

     “Borrower”: As defined in the Preamble.

     “Business Day”: Any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in Troy, Michigan.

     “Commitment Fee”: A commitment fee in the amount of three eights of one percent (.375%) of the Loan Amount, payable to the Banks according to their Pro-Rata Shares in consideration for their commitments to make the Loans.

     “Debt Service”: For any fiscal year, the sum of all scheduled principal and interest payments on the Loans which are due and payable during such fiscal year.

     “Debt Service Coverage Ratio”: For any fiscal year, the ratio of Net Operating Income to Debt Service.

     “Default Rate”: As defined in Section 4.1 hereof.

     “Environmental Indemnity Agreement”: As defined in Section 5 hereof.

     “Environmental Laws”: As defined in the Environmental Indemnity.

     “ERISA”: The Employee Retirement Income Security Act of 1974.

     “Eurocurrency Reserve Percentage”: With respect to any LIBOR Loan for any Interest Period, a percentage (expressed as a decimal) equal to the daily average during such Interest Period of the percentage in effect on each day of such Interest Period, as prescribed by the FRB, for determining the aggregate maximum reserve requirements applicable to “Eurocurrency Liabilities” pursuant to Regulation D or any other then applicable regulation of the FRB which prescribes reserve requirements applicable to “Eurocurrency Liabilities” as presently defined in Regulation D.

     “Event of Default”: One or more of the events or occurrences referred to in Article 11 of this Agreement.

     “Federal Funds Rate”: For any day, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent. The Agent’s determination of such rate shall be binding and conclusive absent manifest error.

     “FRB”: The Board of Governors of the Federal Reserve System or any successor thereof.

     “GAAP”: Generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of

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Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination, provided, however, that interim financial statements or reports shall be deemed in compliance with GAAP despite the absence of footnotes and fiscal year-end adjustments as required by GAAP.

     “Governmental Authority”: Any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

     “Guarantor”: Agree Realty Corporation, a Maryland corporation.

     “Hazardous Materials”: As defined in the Environmental Indemnity.

     “Interest Period”: As to any LIBOR Loan, the period commencing on the date such Loan is borrowed or continued as a LIBOR Loan and ending on the date one, two or three months thereafter as selected by Borrower pursuant to Section 4.3; provided that:

     (i) each Interest Period occurring after the initial Interest Period of any LIBOR Loan shall commence on the day on which the preceding Interest Period for such LIBOR Loan expires;

     (ii) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day;

     (iii) any Interest Period that begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period; and

     (iv) Borrower may not select any Interest Period for a Loan which would extend beyond the scheduled Maturity Date.

     “LaSalle”: As defined in the Preamble.

     “Lease(s)”: Any and all leases, licenses or agreements for use of any part of the Property.

     “Legal Requirements”: As to any person or party, the Articles of Incorporation or Organization and bylaws, operating agreement, partnership agreement or other organizational or governing documents of such person or party, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other governmental authority, in each case applicable to or binding upon such person or party or any of its property or to which such person or party or any of its property is subject.

     “LIBOR Loan”: Any Loan which bears interest at a rate determined by reference to the LIBOR Rate (Reserve Adjusted).

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     “LIBOR Office”: With respect to any Bank, the office or offices of such Bank which shall be making or maintaining the LIBOR Loans of such Bank hereunder. A LIBOR Office of any Bank may be, at the option of such Bank, either a domestic or foreign office.

     “LIBOR Rate”: With respect to any LIBOR Loan for any Interest Period, the per annum rate of interest at which United States dollar deposits in an amount comparable to the amount of such LIBOR Loan and for a period equal to the relevant Interest Period are offered in the London Interbank Eurodollar market at 11:00 a.m. (London time) two (2) Business Days prior to the commencement of such Interest Period (or three Business Days prior to the commencement of such Interest Period if banks in London, England were not open and dealing in offshore United States dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by the Agent in its sole discretion).

     “LIBOR Rate (Reserve Adjusted)”: With respect to any LIBOR Loan for any Interest Period, a rate per annum equal to (A) the LIBOR Rate, divided by (B) a number determined by subtracting from 1.00 the Eurocurrency Reserve Percentage.

     “Loan Amount”: The aggregate principal amount of the Loans, which is equal to Twenty Four Million Eight Hundred Thousand and 00/100 Dollars ($24,800,000.00). The amount of each Bank’s Pro Rata Share of the Loan Amount is set forth on Schedule 3.1 attached hereto.

     “Loan Documents”: This Agreement, the documents specified in Article 5 hereof and any other instruments evidencing, securing or guarantying obligations of any party under the Loans.

     “Loan Expenses”: As defined in Section 7.2(b) hereof.

     “Loan Closing”: The first disbursement of the Loans.

     “Loan Closing Date”: July 14, 2008.

     “Loan Proceeds”: All amounts advanced as part of the Loans, whether advanced directly to Borrower or otherwise.

     “Loans”: The loans to be made by the Banks pursuant to this Agreement.

     “Maturity Date”: Initially, July 14, 2013, which shall be subject to extension at the Borrower’s option as provided in Section 4.2(b).

     “Mortgages”: As defined in Section 5 hereof.

     “Net Operating Income”: For any fiscal year, the gross income derived from the operation of the Property, on a combined basis, less Operating Expenses attributable to the Property, on a combined basis, accounted for on an accrual basis, in accordance with GAAP, including any rent loss or business interruption insurance proceeds, and water and sewer charges, which are actually received and Operating Expenses actually paid or payable on an accrual basis attributable to the Property as set forth on operating statements satisfactory to Agent. Notwithstanding the foregoing, Net Operating Income shall not include (i) any condemnation or insurance proceeds (excluding rent or business interruption insurance proceeds), (ii) any proceeds resulting from the sale, exchange, transfer, financing or refinancing of all or any portion of the Property, (iii) amounts received from tenants as security deposits, (iv) amounts received from

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affiliates of the Borrower or the Guarantor, which amounts do not represent pass-through rent payments received from bona-fide third party tenants, (v) interest income, and (vi) any type of income otherwise included in Net Operating Income but paid directly by any tenant to anyone other than Borrower or the Guarantor or its agents or representatives.

     “Non-Excluded Taxes”: As defined in Section 4.10 hereof.

     “Note(s)”: Collectively, the notes made by Borrower payable to each Bank in the aggregate amount of the Loans and in the Form of Exhibit “B” hereto.

     “Operating Expenses”: For any given period (and shall include the pro rata portion for such period of all such expenses attributable to, but not paid during, such period) all expenses to be paid or payable, as determined in accordance with GAAP, by Borrower or the Guarantor during that period in connection with the operation of the Property, including without limitation:

     (i) expenses for cleaning, repair, mantenance, decoration and painting of the Property (including, without limitation, parking lots and roadways), net of any insurance preceeds in respect of any of the foregoing;

     (ii) wages (including overtime payments), benefits, payroll taxes and all other related expenses for Borrower’s and the Guarantor’s on-site personnel, engaged in the repair, operation and maintenance of the Property and service to tenants and on-site personnel engaged in audit and accounting functions performed by Borrower;

     (iii) actual management fees, if any, together with any allocated management fees or similar fees received from tenants or other parties. Such fees shall include all fees for management services whether such services are performed at the Proeprty or off-site;

     (iv) the cost of all electricity, oil, gas, water, steam, heat, ventilation, air conditioning and any other energy, utility or similar item and the cost of building and cleaning supplies;

     (v) the cost of leasing commissions and tenant concessions or improvements payable by Borrower or the Guarantor pursuant to any leases which are in effect for the Property at the commencement of that period as such costs are recognized in accordance with GAAP, but on no less than a straight line basis over the remaining term of the respective Lease, exclusive of any renewal or extension or similar options;

     (vi) rent, liability, casualty and fidelity insurance premiums;

     (vii) legal, accounting and other professional fees and expenses;

     (viii) the cost of all equipment to be used in the ordinary course of business, which is not capitalized in accordance with GAAP;

     (ix) real estate and other taxes;

     (x) advertising and other marketing costs and expenses;

     (xi) casualty losses to the extent not reimbursed by a third party;

     (xii) any ground lease payments; and

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     (xiii) all amounts that should be reserved, as reasonably determined by Borrower and the Guarantor with approval by Agent in its reasonable discretion, for repair or maintenance of the Property and to maintain the value of the Property.

     Nothwithstanding the foregoing, Operating Expenses shall not include (i) depreciation or amortization or any other non-cash item of expense; (ii) interest, principal, fees, costs and expense reimbursements of Agent in administering the Loan but not in exercising any of its rights under this Agreement or the Loan Documents; or (iii) any expenditure (other than leasing commissions, tenant concessions and improvements, and replacement reserves) which is properly treatable as a capital item under GAAP.

     “Permitted Exceptions”: The title exceptions specified in Exhibit “C” hereto, together with such additional exceptions as may be approved in writing by Agent or are permitted by the terms hereof.

     “Prime Rate”: For any day, the rate of interest most recently announced by LaSalle at Troy, Michigan as its prime or base rate. A certificate made by an officer of LaSalle stating the Prime Rate in effect on any given day, for the purposes hereof, shall be conclusive evidence of the Prime Rate in effect on such day. The Prime Rate is a base reference rate of interest adopted by LaSalle as a general benchmark from which LaSalle determines the floating interest rates chargeable on various loans to borrowers with varying degrees of creditworthiness and Borrower acknowledges and agrees that LaSalle has made no representations whatsoever that the Prime Rate is the interest rate actually offered by LaSalle to borrowers of any particular creditworthiness. The effective date of any change in the Prime Rate shall for purposes hereof be the date the Prime Rate is changed by LaSalle. LaSalle shall not be obligated to give notice of any change in the Prime Rate.

     “Property”: As defined in the Recitals to this Agreement.

     “Pro Rata Share”: As to any Bank at any time, the percentage the aggregate principal amount of such Bank’s Loan then outstanding bears to the aggregate principal amount of the Loans then outstanding, as described on Schedule 3.1 attached hereto.

     “Rate Management Agreement” means any agreement, device or arrangement providing for payments which are related to fluctuations of interest rates, exchange rates, forward rates, or equity prices, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, and any agreement pertaining to equity derivative transactions (e.g., equity or equity index swaps, options, caps, floors, collars and forwards), including without limitation any and all obligations under any and all swap agreements as defined in 11 USC 1, Ch. 101 between the Borrower and any of the Banks and/or any Bank Affiliate and any ISDA Master Agreement between Borrower and any Bank and/or any Bank Affiliate, and any schedules, confirmations and documents and other confirming evidence between the parties confirming transactions thereunder, all whether now existing or hereafter arising, and in each case as amended, modified or supplemented from time to time.

     “Rate Management Obligations” means any and all obligations of Borrower to any Bank and/or Bank Affiliate, whether absolute, contingent or otherwise and howsoever and whensoever (whether now or hereafter) created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefore), under or in connection with (i)

6

any and all Rate Management Agreements, and (ii) any and all cancellations, buy-backs, reversals, terminations or assignments of any Rate Management Agreement.

     “Regulatory Change”: As to any Bank, the introduction of, or any change in any applicable law, treaty, rule, regulation or guideline or in the interpretation or administration thereof by any governmental authority or any central bank or other fiscal, monetary or other authority having jurisdiction over the Banks or their lending offices.

     “Required Banks”: Banks having Pro Rata Shares aggregating fifty one percent (51%) or more.

     “State”: The state in which the Property is located.

     “Title Company”: Liberty Title Insurance Company.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

     2.1 Representations and Warranties. To induce the Banks to execute and perform this Agreement, Borrower hereby represents, covenants or warrants to the Banks as follows:

     (a) At the Loan Closing and at all times thereafter until the Loans are paid in full, Borrower will have good and merchantable fee simple title to the Property, with the exception of the Property located at 56805 Van Dyke Avenue, Shelby Township, MI, with respect to which the Borrower is the ground lessee under a Ground Lease dated August 17, 2007, subject only to the Permitted Exceptions;

     (b) Borrower is a limited partnership, duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to conduct business in the State of Michigan. Borrower has full power and authority to conduct its business as presently conducted, to own and operate the Property, to enter into this Agreement and to perform all of its duties and obligations under this Agreement and under the Loan Documents; such execution and performance have been duly authorized by all necessary Legal Requirements; neither Borrower nor Guarantor has been convicted of a felony and there are no proceedings or investigations being conducted involving criminal activities of either Borrower or Guarantor;

     (c) This Agreement, the Note, the Mortgages, the other Loan Documents and any other documents and instruments required to be executed and delivered by Borrower and/or Guarantor in connection with the Loans, when executed and delivered, will constitute the duly authorized, valid and legally binding obligations of the party required to execute the same and will be enforceable strictly in accordance with their respective terms (except to the extent that enforceability may be affected or limited by applicable bankruptcy, insolvency and other similar debtor relief laws affecting the enforcement of creditors’ rights generally); no basis presently exists for any claim against Agent or the Banks under this Agreement, under the Loan Documents or with respect to the Loans; enforcement of this Agreement and the Loan Documents are subject to no defenses of any kind;

     (d) The execution, delivery and performance of this Agreement, the Note, the Mortgages, the other Loan Documents and any other documents or instruments to be executed and delivered by Borrower or Guarantor pursuant to this Agreement or in connection with the

7

Loans and occupancy and use of the Property will not, to the Borrower’s Actual Knowledge: (i) violate any Legal Requirements, or (ii) conflict with, be inconsistent with, or result in any breach or default of any of the terms, covenants, conditions or provisions of any indenture, mortgage, deed of trust, instrument, document, agreement or contract of any kind to which Borrower or Guarantor is a party or by which any of them may be bound. Neither Borrower nor Guarantor is in default (without regard to grace or cure periods) under any contract or agreement to which it is a party, the effect of which default will adversely affect the performance by Borrower or Guarantor of its obligations pursuant to and as contemplated by the terms and provisions of this Agreement and/or the other Loan Documents;

     (e) No condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding (or threatened litigation or proceeding or basis therefor) exists which could (i) adversely affect the validity or priority of the liens and security interests granted Agent under the Loan Documents; (ii)  materially adversely affect the ability of Borrower or Guarantor to perform their obligations under the Loan Documents; or (iii) constitute an Event of Default under any of the Loan Documents or an event which, with the giving of notice, the passage of time or both, would constitute such an Event of Default;

     (f) To the Borrower’s Actual Knowledge, the Property, and the present use and occupancy of the Property, will not violate or conflict with any applicable law, statute, ordinance, rule, regulation or order of any kind, including, without limitation, Environmental Laws, zoning, building, land use, noise abatement, occupational health and safety or other laws, any building permit or any condition, grant, easement, covenant, condition or restriction, whether recorded or not, and if a third-party is required under any covenants, conditions and restrictions of record or any other agreement to consent to the use and/or operation of the Property, Borrower has obtained such approval from such party. In addition, and without limiting the foregoing, Borrower shall (a) ensure that no person or entity which owns a controlling interest in or otherwise controls Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, (b) not use or permit the use of any Loan Proceeds to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply with all applicable Bank Secrecy Act laws and regulations, as amended;

     (g) The Property has never been used, and the Property will not be used, for any activities which, directly or indirectly, involve the use, generation, treatment, storage, transportation or disposal of any Hazardous Materials in violation of any Environmental Laws. No Hazardous Materials exist now, and no Hazardous Materials will hereafter exist, on or under the Property in violation of any Environmental Laws or in any surface waters or groundwaters on or under the Property. The Property and its existing and prior uses have at all times complied with and will comply with all Environmental Laws, and Borrower has not violated, and will not violate, any Environmental Laws;

     (h) There are no facilities on the Property which are subject to reporting under any State laws or Section 312 of the Federal Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. Section 11022), and federal regulations promulgated thereunder. The Property does not contain any underground storage tanks;

     (i) All financial statements submitted by Borrower or Guarantor to Agent in connection with the Loans are true and correct in all material respects, have been prepared in accordance with generally accepted accounting principles consistently applied, and fairly present

8

the respective financial conditions and results of operations of the entities which are their subjects;

     (j) This Agreement and all financial statements, budgets, schedules, opinions, certificates, confirmations, applications, rent rolls, affidavits, agreements, and other materials submitted to Agent in connection with or in furtherance of this Agreement by or on behalf of Borrower or Guarantor fully and fairly state the matters with which they purport to deal, and neither misstate any material fact nor, separately or in the aggregate, fail to state any material fact necessary to make the statements made not misleading;

     (k) All governmental permits and licenses required by applicable law to occupy and operate the Property have been validly issued and are in full force;

     (l) Improvements on the Property do not encroach upon any building line, set back line, sideyard line, or any recorded or visible easement (or other easement of which Borrower is aware or has reason to believe may exist) which exists with respect to the Property;

     (m) The Loans, including interest rate, fees and charges as contemplated hereby, are business loans; the Loans are an exempted transaction under the Truth In Lending Act, 12 U.S.C. § 1601 et seq.; and the Loans do not, and when disbursed will not, violate the provisions of the usury laws of the State, any consumer credit laws or the usury laws of any state which may have jurisdiction over this transaction, Borrower or any property securing the Loans;

     (n) There are no Leases for use or occupancy of any part of the Property other than as previously delivered to and approved by Agent; Borrower shall not enter into any other Lease for all or any portion of the Property, without the prior written consent of Agent; and

     (o) The Leases are in full force and effect; to the Borrower’s Actual Knowledge, no defaults have occurred thereunder; no tenant under any Lease has a current right of set-off against payment of rent due thereunder; and, to the Borrower’s Actual Knowledge, no events or circumstances exist which, with the passage of time or the giving of notice, or both, would constitute a default under a Lease.

     2.2 Continuation of Representations and Warranties. The Borrower hereby covenants, warrants and agrees that the representations and warranties made in Section 2.1 hereof shall be and shall remain true and correct at the time of the Loan Closing.

ARTICLE 3

AMOUNT AND TERMS OF LOANS

     3.1 Agreement to Lend and to Borrow; Notes.

     (a) Subject to the conditions and upon the terms provided for in this Agreement, each Bank severally agrees to make the Loans to Borrower in the principal amount indicated on Schedule 3.1 hereto. The Loans shall be LIBOR Loans except in the circumstances described in Section 4.4(b), 4.6 or 4.8.

     (b) The Loans made by each Bank shall be evidenced by a Note of Borrower, substantially in the form of Exhibit “B” hereto, with appropriate insertions therein as to payee, date and principal amount, payable to the order of such Bank. The date, amount and type of each

9

Loan and payment or prepayment of principal with respect thereto, each continuation thereof, and the length of each Interest Period with respect to each LIBOR Loan shall be recorded by each Bank on its books and, (prior to any transfer of its Note or, at the discretion of each Bank, at any other time) endorsed by each Bank, on the schedules annexed to and constituting a part of its Note. Each such recordation shall constitute prima facie evidence of the accuracy of the information so recorded in the absence of manifest error. The Note of each Bank shall (i) be dated the date hereof or, if a Bank’s interest is hereafter assigned, the effective date of such assignment, (ii) be stated to mature on the Maturity Date, and (iii) provide for the payment of princial and interest in accordance with Article 4 hereof.

     (c) No portion of any Loan shall be funded with plan assets of (i) any employee benefit plan subject to Title I of ERISA, (ii) any plan covered by Section 4975 of the Code, or (iii) any government plan subject to state laws that are comparable to Title I of ERISA or Section 4975 of the Code.

     3.2 Commitments Several. The failure of any Bank to make its Loan at the Loan Closing shall not relieve any other Bank of its obligation (if any) to make a Loan on such date, but no Bank shall be responsible for the failure of any other Bank to make any Loan to be made by such other Bank.

ARTICLE 4

PRINCIPAL, INTEREST; SPECIAL PROVISIONS FOR LIBOR LOANS

     4.1 Interest Rates. Borrower promises to pay interest on the unpaid principal amount of each Loan for the period commencing on the date of such Loan until such Loan is paid in full as follows:

     (a) at all times while such Loan is a LIBOR Loan, at a rate per annum equal to the sum of the LIBOR Rate (Reserve Adjusted) applicable to each Interest Period for such Loan plus the Applicable Margin from time to time in effect; and

     (b) at all times while such Loan is a Base Rate Loan, at a rate per annum equal to the sum of the Base Rate from time to time in effect minus the Applicable Margin from time to time in effect. Loans may be Base Rate Loans only under the circumstances described in Section 4.4(b), 4.6 or 4.8;

provided that at any time an Event of Default exists, the interest rate applicable to each Loan shall be increased by two percent (2.00%) (the “Default Rate”).

     4.2 Payment of Principal and Interest.

     (a) Principal and interest on the Loans shall be payable as provided in the Notes. The outstanding principal balance on all Loans made by the Banks hereunder shall be due and payable in full on the Maturity Date, unless the Loans are otherwise accelerated, terminated or extended as provided in this Agreement.

     (b) Borrower shall be entitled to exercise a one-time option to extend the Maturity Date for a period of two years from the initial Maturity Date, provided that: (1) as of the initial Maturity Date, the Property shall have generated a Debt Service Coverage Ratio, as of the end of the most recent fiscal year, of not less than 1.20 to 1.00, and (2) the Borrower shall pay to the Agent an extension fee in an amount equal to one eighth of one percent (1/8%) of the principal balance outstanding on the Loans as of the initial Maturity Date. In the event the Borrower

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exercises this extension option, the payment schedules attached to the Notes shall be revise to add the additional principal payments that will be required to continue amortizing the outstanding principal balance of the Loans as of the initial Maturity Date over the remainder or the original amortization period.

     (c) Prior to the occurrence of an Event of Default, all payments and prepayments on account of the indebtedness evidenced by the Note shall be applied as follows: (i) first, to fees, expenses, costs and other similar amounts then due and payable to the Banks, (ii) second, to accrued and unpaid interest on the principal balance of the Note, (iii) third, to the payment of principal due in the month in which the payment or prepayment is made, if any, (iv) fourth, to any escrows, impounds or other amounts which may then be due and payable under the Loan Documents, (v) fifth, to any other amounts then due the Banks hereunder or under any of the Loan Documents, and (vi) last, to the unpaid principal balance of the Note. After an Event of Default has occurred and is continuing, payments shall be applied as required under applicable law and in the absence of any such requirements, payments may be applied to amounts owed hereunder and under the Loan Documents in such order as Agent shall determine, in its sole discretion.

     (d) All payments of principal (including prepayments) and accrued interest shall be paid by wire transfer or check in United States Dollars, to Agent, for the account of the Banks, at such place as Agent may from time to time direct, and in the absence of such direction, then at the offices of Agent at 2600 West Big Beaver Road, Troy, Michigan 48084. Payment made by check shall be deemed paid on the date Lender receives such check; provided, however, that if such check is subsequently returned to Agent unpaid due to insufficient funds or otherwise, the payment shall not be deemed to have been made and shall continue to bear interest until collected. Notwithstanding the foregoing, the final payment due under the Note must be made by wire transfer or other immediately available funds.

     (e) If any payment of interest or principal due hereunder is not made within five days after such payment is due in accordance with the terms hereof, then, in addition to the payment of the amount so due, Borrower shall pay to Agent a “late charge” of five cents for each whole dollar so overdue to defray part of the cost of collection and handling such late payment. Borrower agrees that the damages to be sustained by the holder hereof for the detriment caused by any late payment are extremely difficult and impractical to ascertain, and that the amount of five cents for each one dollar due is a reasonable estimate of such damages, does not constitute interest, and is not a penalty.

     (f) LIBOR Loans and Base Rate Loans may be prepaid either in whole or in part at any time and from time to time without penalty or premium upon three (3) days prior notice to Agent; provided, however, that if a LIBOR Loan is prepaid on a date other than the last day of the applicable Interest Period, it shall be accompanied by any amounts due under Section 4.11 hereof.

     4.3 Types of Loans; Setting and Notice of LIBOR Rates.

     (a) Each Loan shall be divided into tranches which shall be LIBOR Loans, except in the circumstances described in Section 4.4(b), 4.6 or 4.8, in which case they shall be Base Rate Loans (each a “type” of Loan). Not more than five (5) different tranches of LIBOR Loans shall be outstanding at any one time. All borrowings, conversions and repayments of Loans shall be effected so that each Bank will have a pro rata share (according to its Pro Rata Share) of all Loans. Each LIBOR Loan shall be designated by the Borrower by any written, verbal, electronic, telephonic or telecopy request, in form acceptable to the Agent, which the Agent in good faith

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believes to emanate from a properly authorized representative of the Borrower, whether or not that is in fact the case. Each such request shall be effective upon receipt by the Agent, shall be irrevocable, and shall specify the date, amount and the initial Interest Period therefor. Upon receipt of any such notice, Agent shall promptly notify each Bank thereof. The final Interest Period for any LIBOR Loan must be such that its expiration occurs on or before the Maturity Date. A request to designate a LIBOR Loan must be (i) received by the Agent no later than 11:00 a.m. Troy, Michigan time, three days before the day it is to be designated a LIBOR Loan, and (ii) in an amount equal to Five Hundred Thousand and 00/100 Dollars ($500,000.00) or a higher integral multiple of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00). The Borrower does hereby irrevocably confirm, ratify and approve all such designations and does hereby indemnify the Agent and the Banks against losses and expenses (including court costs, attorneys’ and paralegals’ fees) and shall hold the Agent and the Banks harmless with respect thereto.

     (b) The applicable LIBOR Rate for each Interest Period shall be determined by the Agent, and notice thereof shall be given by the Agent promptly to Borrower and each Bank. The Agent shall, upon written request of Borrower or any Bank, deliver to Borrower or such Bank a statement showing the computations used by the Agent in determining any applicable LIBOR Rate hereunder.

     4.4 Conversion and Continuation Procedures.

     (a) Each LIBOR Loan shall automatically renew for the Interest Period specified in the initial request received by the Bank for the LIBOR Loan, at the then current LIBOR Rate unless the Borrower, pursuant to a subsequent written notice received by the Agent, shall elect a different Interest Period. Upon receipt by the Agent of such subsequent notice, the Borrower may, subject to the terms and conditions of this Agreement, elect, as of the last day of the applicable Interest Period, to continue any LIBOR Loan having an Interest Period expiring on such day for a different Interest Period. Such notice shall be given before 11:00 a.m., Troy, Michigan time, at least three Business Days prior to the last day of the applicable Interest Period, specifying: (i) the aggregate amount of LIBOR Loans to be converted to a different Interest Period; and (ii) the duration of the requested Interest Period.

     (b) The Borrower may not elect an Interest Period, and an Interest Period for a LIBOR Loan shall not automatically renew, with respect to any principal amount which is scheduled to be repaid before the last day of the applicable Interest Period, and any such amounts shall be converted to Base Rate Loans until repaid.

     4.5 Computation of Interest and Fees.

     (a) Fees and interest shall be calculated on the basis of a 365 day year (366 days for leap years) for the actual days elapsed in any portion of a month in which interest is due. Interest on Base Rate Loans and LIBOR Loans shall not exceed the maximum amount permitted under applicable law. Any change in the interest rate on a Loan resulting from a change in the Base Rate, or the Eurocurrency Reserve Percentage, shall become effective as of the opening of business on the day on which such change becomes effective. Agent shall as soon as practicable notify Borrower and the Banks of each determination of a LIBOR Rate.

     (b) Each determination of an interest rate by Agent pursuant to any provision of this Agreement shall be conclusive and binding upon the parties hereto in the absence of manifest error.

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     4.6 Inability to Determine Interest Rate. If prior to the first day of any Interest Period, Agent shall have determined (which determination shall be conclusive, absent manifest error) that (i) the making or maintenance of any LIBOR Loan would violate any applicable law, rule, regulation or directive, whether or not having the force of law, (ii) United States dollar deposits in the principal amount, and for periods equal to the Interest Period for funding any LIBOR Loan are not available in the London Interbank Eurodollar market in the ordinary course of business, or (iii) by reason of circumstances affecting the London Interbank Eurodollar market, adequate and fair means do not exist for ascertaining the LIBOR Rate to be applicable to the relevant LIBOR Loan, Agent shall give telecopy or telephonic notice thereof to Borrower and Banks as soon as practicable thereafter and, so long as such circumstances shall continue, (A) no Bank shall be under any obligation to make any LIBOR Loans or convert any Base Rate Loans into LIBOR Loans, and (B) on the last day of the current Interest Period for each LIBOR Loan, such Loan, unless then repaid in full, shall automatically convert to a Base Rate Loan, without further demand, presentment, protest or notice of any kind, all of which are hereby waived by the Borrower.

     4.7 Pro Rata Treatment and Payments. Each borrowing by Borrower from the Banks hereunder, and each payment by Borrower on account of any fees hereunder, shall be made pro rata according to the respective Pro Rata Shares of the Banks. Each payment (including each prepayment) by Borrower on account of principal of and interest on the Loans shall be made pro rata according to the respective outstanding principal amounts of the Loans then held by the Banks. All payments (including prepayments) to be made by Borrower hereunder and under the Notes, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 1:00 P.M., Troy, Michigan time, on the due date thereof. Agent shall distribute such payments to the Banks promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.

     4.8 Illegality. Notwithstanding any other provision herein, if Agent shall have reasonably determined that any Regulatory Change shall make it unlawful for any Bank to make or maintain LIBOR Loans as contemplated by this Agreement, Agent shall give notice of such determination to Borrower and each Bank and (A) the commitment of such Bank hereunder to make LIBOR Loans, continue LIBOR Loans as such and convert Base Rate Loans to LIBOR Loans shall forthwith be canceled and (B) the LIBOR Loans then outstanding, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such LIBOR Loans or within such earlier period as required by law. If any such conversion of a LIBOR Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, Borrower shall pay to each Bank such amounts, if any, as may be required pursuant to subSection 4.11.

     4.9 Legal Requirements.

     (a) If any Regulatory Change made subsequent to the date hereof shall:

     (i) subject any Bank to any tax of any kind whatsoever with respect to this Agreement, any Note or any LIBOR Loan made by it, or change the basis of taxation of payments to such Bank in respect thereof (except for Non-Excluded Taxes covered by subsection 4.10 and changes in the rate of tax on the overall net income of such Bank);

     (ii) impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or

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any other acquisition of funds by, any office of such Bank which is not otherwise included in the determination of the LIBOR Rate; or

     (iii) impose on such Bank any other condition regarding the LIBOR Loans or any Banks’ funding thereof;

and the result of any of the foregoing is to increase the cost to such Bank, by an amount which such Bank in good faith deems to be material, of making, converting into, continuing or maintaining LIBOR Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such case, Borrower shall promptly pay such Bank, upon its demand, any additional amounts necessary to compensate such Bank for such increased cost or reduced amount receivable.

     (b) If any Bank shall have determined that any Regulatory Change regarding capital adequacy or in the interpretation or application thereof or compliance by such Bank or any corporation controlling such Bank with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority, in any such case made subsequent to the date hereof, does or shall have the effect of reducing the rate of return on such Bank’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which such Bank or such corporation could have achieved but for such change or compliance (taking into consideration such Bank’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, after submission by such Bank to Borrower (with a copy to Agent) of a written request therefor, Borrower shall pay to such Bank such additional amount or amounts as will compensate such Bank for such reduction.

     (c) If any Bank becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify Borrower, with a copy to Agent, of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this subSection submitted by such Bank to Borrower (with a copy to Agent) shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder.

     (d) Notwithstanding anything to the contrary contained in this subsection, Borrower shall not be required to pay any additional amounts to any Bank pursuant to this subSection to the extent such additional amounts result from such Bank’s negligence.

     4.10 Taxes.

     (a) All payments made by Borrower under this Agreement and any Note shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on Agent or any Bank as a result of a present or former connection between Agent or such Bank and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from Agent or such Bank having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any Notes). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”) are required to be withheld from any amounts payable to Agent or any Bank

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hereunder or under any Notes, the amounts so payable to Agent or such Bank shall be increased to the extent necessary to yield to Agent or such Bank (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that Borrower shall not be required to increase any such amounts payable to any Bank that is not organized under the laws of the United States of America or a state thereof if such Bank fails to comply with the requirements of paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are payable by Borrower, as promptly as possible thereafter Borrower shall send to Agent for its own account or for the account of such Bank, as the case may be, a certified copy of an original official receipt received by Borrower showing payment thereof. If Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to Agent the required receipts or other required documentary evidence, Borrower shall indemnify Agent and the Banks for any incremental taxes, interest or penalties that may become payable by Agent or any Bank as a result of any such failures. The agreements in this subSection shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. Notwithstanding anything to the contrary contained in this subsection, Borrower shall not be required to pay any additional amounts to any Bank pursuant to this subSection to the extent such additional amounts result from such Bank’s negligence.

     (b) Each Bank that is not incorporated under the laws of the United States of America or a state thereof shall:

     (i) deliver to Borrower and Agent (A) two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, or successor applicable form, as the case may be, and (B) an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be;

     (ii) deliver to Borrower and Agent two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to Borrower; and

     (iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by Borrower or Agent; unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise by required which renders all such forms inapplicable or which would prevent such Bank from duly completing and delivering any such form with respect to it and such Bank so advises Borrower and Agent. Such Bank shall certify (i) in the case of a Form 1001 or 4224, that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes and (ii) in the case of a Form W-8 or W-9, that it is entitled to an exemption from United States backup withholding tax. Each party that shall become a transferee pursuant to Section 10.1 shall, upon the effectiveness of the related transfer, be required to provide all of the forms and statements required pursuant to this Section, provided that in the case of a participant such participant shall furnish all such required forms and statements to Bank from which the related participation shall have been purchased.

     4.11 LIBOR Loan Indemnification. Borrower agrees to indemnify each Bank and to hold each Bank harmless from any loss or expense which such Bank may sustain or incur as a consequence of (a) default by Borrower in making a borrowing of, conversion into or continuation of LIBOR Loans after

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Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by Borrower in making any prepayment after Borrower has given a notice thereof in accordance with the provisions of this Agreement, or (c) the making of a prepayment of LIBOR Loans on a day which is not the last day of an Interest Period with respect thereto. Such indemnified amount shall include any and all costs, expenses, penalties and charges incurred by the Banks as a result thereof, plus an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or borrowed, converted or continued, for the period from the time of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of the failure to borrow, convert or continue, the Interest Period which would have commenced on the date of such failure) in each case the applicable rate of interest for such Loans provided herein (excluding, however, the Applicable Margin included thereon, if any) over (ii) the amount of interest (as reasonably defined by such Bank) which would have accrued to such Bank on such amount by placing such amount on deposit for a comparable period with leading banks in the certificate of deposit market, the eurodollar deposit market, or other appropriate money market selected by such Bank. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts due hereunder. Amounts payable pursuant to this subSection shall be paid to Agent for the account of the applicable Bank, upon the request of such Bank through Agent and a determination of any Bank as to the amounts payable pursuant to this subSection shall be conclusive absent manifest error, based upon the assumption that such Bank funded its loan commitment for LIBOR Loans in the London Interbank Eurodollar market and using any reasonable attribution or averaging methods which such Bank deems appropriate and practical, provided, however, that such Bank is not obligated to accept a deposit in the London Interbank Eurodollar market in order to charge interest on a LIBOR Loan at the LIBOR Rate.

ARTICLE 5

LOAN DOCUMENTS

     5.1 Loan Documents. As a condition precedent to the Loan Closing, Borrower agrees that it will deliver the following Loan Documents to Agent at least five (5) days prior to the Loan Closing, all of which must be satisfactory to Agent and Agent’s counsel in form, substance and execution:

     (a) Promissory Notes. Promissory notes dated the date hereof executed by Borrower and made payable to the order of each Bank in the amount of its respective Loan in the form of Exhibit “B” attached hereto.

     (b) Mortgages. Mortgages dated as of even date herewith (the “Mortgages”), duly executed by Borrower to and for the benefit of Agent, granting a first lien on the Property to Agent for the benefit of the Banks, to secure the Notes, the Loan and all obligations of Borrower in connection therewith and any and all indebtedness, liabilities and obligations owing from the Borrower to the Banks, or any of them, arising under any interest rate, currency or commodity swap agreement(s), cap agreement(s) or collar agreement(s), and any other agreement(s) or arrangement(s) entered into by the Borrower in conjunction with the Loan and designed to protect the Borrower against fluctuations in interest rates, currency exchange rates or commodity prices.

     (c) Assignment of Rents and Leases. Assignments of Rents and Leases dated as of even date herewith (the “Assignments of Rents”), duly executed by Borrower to and for the benefit of Agent, collaterally assigning to Agent for the benefit of the Banks all of Borrower’s rents, leases and profits of the Property as security for the Notes, and, if Agent so requires, specific collateral assignments of any particular Leases bearing the consent to the assignment of the lessee whose Lease is so assigned.

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     (d) Financing Statements. Uniform Commercial Code Financing Statements as required by Agent to perfect all security interests granted by the Mortgages.

     (e) Environmental Indemnity. Environmental Indemnity Agreements dated as of even date herewith (the “Environmental Indemnity”), jointly and severally executed by Borrower and Guarantor to and for the benefit of Agent, on behalf of the Banks, whereby Borrower and Guarantor jointly and severally indemnify the Banks for any loss, cost, damage or expense incurred as a result of environmental matters at the Property.

     (f) Guaranty. A Guaranty of Payment (the “Guaranty”), jointly and severally executed by Guarantor to and for the benefit of Agent, guaranteeing to Agent, on behalf of the Banks, payment of all amounts due in connection with the Loan.

     (g) Other Loan Documents. Such other documents and instruments as further security for the Loan as Agent may reasonably require.

ARTICLE 6

CONDITIONS TO LOAN CLOSING

     6.1 Conditions to Loan Closing. As a condition precedent to the Loan Closing, Borrower shall furnish the following to Agent at least five (5) days prior to the Loan Closing or at such time as is set forth below, all of which must be strictly satisfactory to Agent and Agent’s counsel in form, content and execution:

     (a) Title Insurance Policy. At the Loan Closing, an ALTA Loan Policy-1997 issued on the date of the Loan Closing by the Title Company to Agent in the full amount of the Loan, insuring the Mortgages to be valid first, prior and paramount liens upon the fee title (or leasehold interest in the case of the Property located at 56805 Van Dyke Avenue, Shelby Township, MI) to the Property subject only to the Permitted Exceptions (the “Title Insurance Policy”). The Title Insurance Policy must contain the following endorsements: (i) ALTA Zoning Endorsement Form 3.1 (including compliance with parking requirements); (ii) Comprehensive Endorsement; (iii) location endorsement; (iv) access endorsement; (v) if a Property consists of more than one subparcel, contiguity endorsement; (vi) environmental lien endorsement; (vii) creditor’s rights endorsement; (viii) variable rate endorsements, if applicable; and (ix) such other endorsements as Agent may require. If required by any Bank, Borrower shall procure reinsurance with companies and in amounts satisfactory to the Banks.

     (b) Survey. A survey (the “Survey”) of the Property made by a land surveyor licensed in the State, which Survey must be satisfactory to the Agent, showing:

     (i) the location of all buildings, driveways, parking areas, number of parking spaces, fences and other improvements on the Property;

     (ii) the location (and recording information, to the extent recorded) of all visible or recorded easements (including appurtenant easements), water courses, drains, sewers, public and private roads (including the names and widths thereof and recording numbers for the dedications thereof), other rights of way, and curb cuts, if any, within, adjacent to or serving the Property or to which the Property is subject; that the same are unobstructed; and that all portions of the Property have direct access to dedicated public roads;

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     (iii) the location of the servient estate of any easements, if the Property is the dominant estate thereunder;

     (iv) the common street address of the Property and the dimensions, boundaries and acreage or square footage of the Property;

     (v) that there are no encroachments onto the Property from improvements located on adjoining property;

     (vi) the location and course of all utility lines;

     (vii) if the Property comprises more than one parcel, interior lines and other data sufficient to insure contiguity; and

     (viii) such additional information which may be required by Agent or the Title Company.

The Survey shall be made in accordance with (i) the current survey standards of the American Land Title Association and American Congress on Surveying and Mapping and (ii) the laws of the State. To the extent that there is any conflict or inconsistency among the Survey standards described above, the more restrictive standard shall apply. The Survey shall be dated not later than sixty (60) days prior to the Loan Closing, and shall bear a proper certificate by the surveyor, which certificate shall recite compliance with the laws and standards enumerated above, shall include the legal description of the Property and shall run in favor of Borrower, Agent and the Title Company.

     (c) Insurance Policies. Borrower shall, during the term of this Agreement, procure at its expense and keep in force the insurance coverages required by the Mortgages. In addition, all insurance shall be in form, content and amounts approved by Agent and written by an insurance company or companies licensed to do business in the state in which the Property is located and domiciled in the United States or a governmental agency or instrumentality approved by Agent. The policies for such insurance shall have attached thereto standard mortgagee clauses in favor of and permitting Agent to collect any and all proceeds payable thereunder and shall include a thirty (30) day (except for nonpayment of premium, in which case, a ten (10) day) notice of cancellation clause in favor of Agent. Duplicate policies or certificates of insurance shall be delivered to and held by Agent as further security for the payment of the Note and any other obligations arising under the Loan Documents, with evidence of renewal coverage delivered to Agent at least thirty (30) days before the expiration date of any policy. In lieu of the foregoing requirements, such insurance may be provided through self-insurance programs maintained by tenants under the Leases, if so provided in the Leases, in which case Agent shall be listed as the lender loss payee or an additional insured as its interest may apply.

     (d) Environmental Report. A written report (the “Environmental Report”) prepared at Borrower’s sole cost and expense by an independent professional environmental consultant approved by Agent in its sole and absolute discretion. The Environmental Report shall be subject to the Banks’ approval in their sole and absolute discretion. If the Environmental Report reveals contamination or conditions warranting further investigation in order to establish baseline data, the Banks may require, in their sole and absolute discretion, a written report (also referred to herein as the “Environmental Report”) based on additional testing and investigation in order to define the source and extent of the contamination or to establish baseline data, as well as to provide relevant detailed information on the area’s geological and hydrogeological conditions.

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Any additional Environmental Report prepared pursuant to this requirement shall be subject to the Banks’ approval, in their sole and absolute discretion.

     (e) Appraisals. Appraisals addressed and satisfactory to the Agent, prepared by a certified or licensed appraiser who is approved by Agent. The appraisals must show appraised values of the Property such that the ratio of the Loan Amount to the total of the appraised values of the Property shall be no more than eighty percent (80.00%).

     (f) Documents of Record. Copies of all covenants, conditions, restrictions, easements and matters of record which affect the Property.

     (g) Searches. A report from the appropriate filing officers of the state and county in which the Property is located, indicating that no judgments, tax or other liens, security interests, leases of personalty, financing statements or other encumbrances (other than Permitted Exceptions and liens and security interests in favor of Agent) are of record or on file encumbering any portion of the Property, and that there are no judgments, tax liens, pending litigation or bankruptcy actions outstanding with respect to Borrower and the Guarantor.

     (h) Borrower’s Attorney’s Opinion. An opinion of Borrower’s counsel addressing such issues as Agent may request, including the following propositions and questions of law that:

     (i) Borrower, its manager or general partner, as applicable, and, if Guarantor is not an individual, Guarantor are duly organized, validly existing and in good standing to do business in the state of their respective organization and in the State;

     (ii) Borrower has all necessary legal right, power and authority to conduct its business, to operate and use the Property and to enter into and perform its obligations under this Agreement and the Loan Documents;

     (iii) all necessary corporate, shareholder, membership, partnership approvals, resolutions and directions have been obtained for the operation and use of the Property and the execution of this Agreement and the Loan Documents;

     (iv) the execution and delivery of this Agreement and the Loan Documents, the performance thereunder by Borrower will comply with all applicable law and will not violate or conflict with the instruments under which Borrower is organized or any applicable contracts or agreements; and

     (v) the Loan Documents and this Agreement have been duly and validly executed and delivered.

     (i) Organizational Documents. If Borrower is a partnership (and if any general partner of Borrower is a partnership), a copy of the partnership agreement creating Borrower (and such general partner) certified by a general partner of such partnership as being a true and correct copy and as otherwise unmodified and in full force and effect, together with a notarized incumbency certificate showing specimen signatures for all partners of Borrower executing any Loan Documents. In addition, if Borrower is a limited partnership (or if any general partner of Borrower is a limited partnership), a certified copy of the certificate of limited partnership (and amendments thereto) of such partnership. If Borrower is a corporation (or if any general partner of Borrower is a corporation), a current Certificate of Good Standing for Borrower (or that partner) from the state of incorporation and from the State, a certified copy of the Articles of

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Incorporation and Bylaws, including all amendments thereto, for Borrower (or that partner) and a notarized incumbency certificate showing specimen signatures for all officers of Borrower (or that partner) executing any Loan Documents, and certified copies of director and shareholder resolutions authorizing execution and delivery of the Loan Documents. If Borrower is a limited liability company (or if any manager or general partner of Borrower is a limited liability company), a copy of the operating agreement creating Borrower (or such manager or partner), certified by the manager or the controlling member of such entity as being a true and correct copy and as otherwise unmodified and in full force and effect, together with a current Certificate of Good Standing for Borrower (and its manager or general partner) from the state of incorporation and the State, a certified copy of the Articles of Organization, including all amendments thereto, for Borrower (and its manager or general partner), a certificate from the manager or controlling member providing that no certificate of dissolution has been filed, a notarized incumbency certificate showing specimen signatures for all of the members of Borrower (and its manager or general partner) executing any Loan Documents and, if necessary, certified copies of resolutions from the members authorizing execution and delivery of the Loan Documents. Borrower shall also provide the appropriate organizational documents for Guarantor that is not an individual, together with proper authorizing resolutions, if applicable.

     (j) Leases. Certified copies of all Leases and such evidence as to the validity thereof, absence of defaults thereunder, good standing and financial ability of the parties thereto to perform, and such subordination, non-disturbance and attornment agreements and estoppel letters from tenants under Leases and holders of concessions or encumbrances with respect to any portion of the Property, all as Agent may require. In addition, Borrower shall deposit all security deposits required under Leases with Agent in an account in Borrower’s name, which account is pledged to Agent pursuant to the Assignment of Rents and Leases of even date herewith; provided, however, that such security deposits may only be applied in accordance with the terms and conditions of the Leases.

     (k) Real Estate Taxes. Evidence satisfactory to Agent that the Property is separately assessed for real estate taxing purposes.

     (l) Broker. Evidence satisfactory to Agent that all brokers’ commissions or fees due with respect to the Loan or the Property have been paid in full in cash.

     (m) Additional Documents. Such other papers and documents regarding Borrower or the Property as Agent may require.

     6.2 Termination of Agreement. Borrower agrees that all conditions precedent to the Loan Closing will be complied with on or prior to the Loan Closing Date. If all of the conditions precedent to the Loan Closing hereunder shall not have been performed on or before the Loan Closing Date, the Banks may, at their option at any time thereafter and prior to the Loan Closing, terminate this Agreement and all of their obligations hereunder by giving a written notice of termination from Agent to Borrower. In the event of such termination, Borrower shall pay all Loan Expenses which have accrued or been charged as of the Loan Closing Date.

ARTICLE 7

DISBURSEMENTS

     7.1 Conditions Precedent to Disbursement of Loan Proceeds. The Loan Closing shall be made at such time as all of the conditions and requirements of this Agreement required to be performed

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by Borrower or other parties prior to the Loan Closing have been satisfied or performed, unless the same shall have been waived in writing by Agent; but in no event shall the Loan Closing occur later than the Loan Closing Date. At the Loan Closing, the Banks shall disburse funds necessary to pay any Loan Expenses then due, unless paid by Borrower. The Loan Proceeds shall not be disbursed by the Banks to Borrower unless:

     (a) all conditions precedent to that disbursement under the Loan Documents have been satisfied;

     (b) no Event of Default has occurred under this Agreement or under any Loan Document, and no event, circumstance or condition has occurred or exists which, with the passage of time or the giving of notice, would constitute a Event of Default under this Agreement or under the Loan Documents;

     (c) no litigation or proceedings are pending or threatened (including proceedings under Title 11 of the United States Code) against Borrower, Guarantor or the Property, which litigation or proceeding is material; and

     (d) all representations and warranties made by Borrower to the Banks herein and otherwise in connection with the Loans are accurate in all material respects.

     7.2 Advances by Banks.

     (a) If a Bank (a “Defaulting Bank”) defaults in making any advance or paying any other sum due and payable by it hereunder, such sum together with interest thereon at the interest rate applicable to such borrowing from the date such amount was due until repaid (such sum and interest thereon as aforesaid referred to, collectively, as the “Bank Default Obligation”) shall be payable by the Defaulting Bank (i) to any Bank which elects, at its sole option (and with no obligation to do so), to fund the amount which the Defaulting Bank failed to fund or (ii) to Agent or any other Bank which under the terms of this Agreement is entitled to reimbursement from the Defaulting Bank for the amounts advanced or expended. Notwithstanding any provision hereof to the contrary, until such time as a Defaulting Bank has repaid the Bank Default Obligation in full, all amounts which would otherwise be distributed to the Defaulting Bank shall instead be applied first to repay the Bank Default Obligation (to be applied first to interest at the Federal Funds Rate and then to principal) until the Bank Default Obligation has been repaid in full (whether by such application or by cure by the Defaulting Bank), whereupon such Bank shall no longer be a Defaulting Bank. Any interest collected from Borrower on account of principal advanced by any Bank(s) on behalf of a Defaulting Bank shall be paid to the Bank(s) who made such advance and shall be credited against the Defaulting Bank’s obligation to pay interest on the amount advanced at the Federal Funds Rate. If no other Bank funds the amount which the Defaulting Bank was obligated to fund, then a portion of the Defaulting Bank’s indebtedness hereunder equal to the Bank Default Obligation shall be subordinated to the indebtedness of Borrower to the Banks (other than the Defaulting Bank) and shall be repaid only after payment in full of all other indebtedness hereunder. The provisions of this Section shall apply and be effective regardless of whether an Event of Default occurs and is then continuing, and notwithstanding (i) any other provision of this Agreement to the contrary or (ii) any instruction of Borrower as to its desired application of payments. Additionally, a Defaulting Bank’s right to vote on matters which are subject to the consent or approval of the Required Banks (other than the Defaulting Bank) shall be suspended until it ceases to be a Defaulting Bank, and during any such period in which a Defaulting Bank’s voting rights have been suspended the Required Banks shall be the requisite percentage of all other entities comprising the Banks. Agent shall be

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entitled to (i) withhold or set off, and to apply to the payment of the Bank Default Obligation any amounts to be paid to such Defaulting Bank under this Agreement, and (ii) bring an action or suit against such Defaulting Bank in a court of competent jurisdiction to recover the Bank Default Obligation and, to the extent such recovery would not fully compensate Bank (other than the Defaulting Bank) for the Defaulting Bank’s breach of this Agreement, to collect damages. In addition, the Defaulting Bank shall indemnify, defend and hold Agent and each of the other Banks harmless from and against any and all claims, actions, liabilities, damages, costs and expenses (including attorneys’ fees and expenses), plus interest thereon at the Default Rate, for funds advanced by Agent or any other Bank on account of the Defaulting Bank or any other damages such entities may sustain by reason of the Defaulting Bank’s failure or refusal to abide by its obligations under this Agreement. If a Bank becomes a Defaulting Bank, Borrower may find a replacement Bank and require the Defaulting Bank to assign its interests to such replacement in accordance with the terms of Section 10.1 of this Agreement provided that there shall be deducted from the amount that would otherwise be paid to the Defaulting Bank an amount equal to the Bank Default Obligation.

     (b) Borrower hereby authorizes each Bank to make an advance to Agent for payment of the Commitment Fee and reimbursement of all charges, costs and expenses incurred by Agent in connection with the Loan, including, but not limited to, (i) any points, loan fees, service charges, commitment fees or other fees due to Agent in connection with the Loan; (ii) all title examination, survey, escrow, filing, search, recording and registration fees and charges; (iii) all documentary stamp and other taxes and charges imposed by law on the issuance or recording of any of the Loan Documents; (iv) all appraisal fees; (v) all reasonable fees and disbursements of legal counsel engaged by Agent in connection with the origination, negotiation, document preparation, consummation and administration of the Loan and all reasonable fees and disbursements of legal counsel engaged by the Agent in connection with the enforcement of this Agreement or any of the Loan Documents, which shall also include reasonable attorneys’ fees and time charges of attorneys who may be employees of the Agent or any affiliate of the Agent; and (vi) any amounts required to be paid by Borrower under this Agreement, the Mortgages or any Loan Document after the occurrence of an Event of Default (all of which are herein referred to as “Loan Expenses”).

     7.3 Expenses and Advances Secured by Mortgages. Any and all advances or payments made by the Banks hereunder, from time to time, and any amounts expended by Agent pursuant to this Agreement and all other Loan Expenses, as and when advanced or incurred, shall be deemed to have been disbursed as part of the Loan and be and become secured and guaranteed by the Loan Documents to the same extent and effect as if the terms and provisions of this Agreement were set forth therein, whether or not the aggregate of such indebtedness shall exceed the face amount of the Note.

     7.4 Acquiescence not a Waiver. To the extent that Agent may have acquiesced (whether intentionally or unintentionally) in the Borrower’s failure to comply with and satisfy any condition precedent to the Loan Closing or to the disbursement of the Loan Proceeds, such acquiescence shall not constitute a waiver by Agent of any condition precedent set forth in this Agreement, and Agent at any time thereafter may require the Borrower to comply with and satisfy all conditions and requirements of this Agreement.

     7.5 Agent’s Action for Agent’s Own Protection Only. The authority herein conferred upon Agent and any action taken by Agent or its agents or employees will be taken by Agent and by its agents or employees for their own protection and that of the Banks only, and neither Agent nor its agents or employees shall be deemed to have assumed any responsibility to Borrower or Guarantor or any other person or entity with respect to any such action herein authorized or taken by them.

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ARTICLE 8

FURTHER AGREEMENTS OF BORROWER

     8.1 Furnishing Information. Borrower will:

     (a) Furnish to Agent: (i) annual audited consolidated financial statements of Borrower and Guarantor prepared in accordance with GAAP within 120 days after the end of Borrower’s and the Guarantor’s fiscal year prepared by a regional independent public accountants (which accountant’s opinion shall be unqualified), satifactory to Agent; (ii) within 60 days after the close of each quarterly accounting period in each fiscal year, the consolidated balance sheet of Borrower and the Guarantor as of the end of such quarterly period and the related consolidated statements of income, cash flow and retained earnings for such quarterly period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period, each prepared in accordance with GAAP; (iii) quarterly operating statements (prepared on a basis consistent with that used in the preparation of the GAAP consolidated financial statements of Borrower and the Guarantor) for each Property showing the most recently ended fiscal quarter and the fiscal year to date, and the Net Operating Income for the most recently completed fiscal quarter and 12 month period, within 60 days of the end of each fiscal quarter for the quarterly operating statements, and within 120 days of the end of each fiscal year for the annual operating statements, and (iv) copies of all of Borrower’s and the Guarantor’s quarterly and annual filings with the Securities and Exchange Commission and all shareholder reports and letters to Borrower’s and the Guarantor’s partners and shareholders and all other publicly released information promptly after their filing or mailing;

     (b) Within 60 days after the end of each fiscal quarter, furnish Agent certified rent rolls of all properties owned by the Borrower, as of the last day of such period in a form reasonable satisfactory to Agent;

     (c) Promptly notify Agent and each Bank of any condition or event which constitutes (or which, with the giving of notice or lapse of time, or both, would constitute) an Event of Default, and of any material adverse change in the financial condition of Borrower or Guarantor;

     (d) Maintain a standard and modern system of accounting in accordance with generally accepted accounting principles, consistently applied;

     (e) Permit Agent or any of its agents or representatives to have access to and to examine and copy and make abstracts from all books and records regarding the Property at any time or times hereafter during business hours.

     8.2 Compliance with Covenants; Prohibition Against Additional Recordings. Borrower will comply with all recorded covenants affecting the Property. Borrower will not record or permit to be recorded any document, instrument, agreement or other writing against the Property without the prior written consent of Agent.

     8.3 Property Accounts. Borrower will set up and maintain all operating accounts and other accounts related to the Property with Agent and shall maintain monthly minimum balances sufficient to cover demand deposit account activities.

     8.4 Distributions. Borrower shall not make any distributions to its members, partners or shareholders, as the case may be, of any revenue received by or on behalf of Borrower from the

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ownership and operation of the Property unless or until the Loan and all interest accrued thereon, the Loan Expenses and other amounts due the Banks hereunder have been paid in full.

     8.5 Further Assurance. Borrower, on request of Agent, from time to time, will execute and deliver such documents as may be necessary to perfect and maintain perfected as valid liens upon the Property and the personal property located thereon, the liens granted to Agent pursuant to this Agreement or any of the other loan Documents, and to fully consummate the transactions contemplated by this Agreement.

ARTICLE 9

CASUALTIES AND CONDEMNATION

     9.1 Application of Insurance Proceeds and Condemnation Awards. The proceeds of any insurance policies collected or claims as a result of any loss or damage to any portion of the Property resulting from fire, vandalism, malicious mischief or any other casualty or physical harm and any awards, judgments or claims resulting from the exercise of the power of condemnation or eminent domain shall be applied as provided in the Mortgages. Borrower shall not settle and adjust any claims under policies of insurance without Agent’s prior written consent, except as provided in the Mortgages.

ARTICLE 10

ASSIGNMENTS, SALE AND ENCUMBRANCES

     10.1 Bank Assignments, Participations.

     (a) Assignments. Any Bank may, with the prior written consent of Agent, at any time assign and delegate to one or more commercial banks or other financial institutions (any such entity to which such an assignment and delegation is to be made being herein called an “Assignee”) all or any fraction of such Bank’s Loans (which assignment and delegation shall be of a constant, and not a varying, percentage of all the assigning Bank’s Loans) in a minimum aggregate amount equal to the lesser of (i) the amount of the assigning Bank’s Pro Rata Share of the Loans and (ii) Two Million and 00/100 Dollars ($2,000,000.00); provided that Borrower and the Agent shall be entitled to continue to deal solely and directly with such Bank in connection with the interests so assigned and delegated to an Assignee until the date when all of the following conditions shall have been met:

     (i) five Business Days (or such lesser period of time as Agent and the assigning Bank shall agree) shall have passed after written notice of such assignment and delegation, together with payment instructions, addresses and related information with respect to such Assignee, shall have been given to the Borrower and Agent by such assigning Bank and the Assignee,

     (ii) the assigning Bank and the Assignee shall have executed and delivered to Borrower and the Agent an assignment agreement substantially in the form of Exhibit “D” (an “Assignment Agreement”), together with any documents required to be delivered thereunder, which Assignment Agreement shall have been accepted by Agent, and

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     (iii) except in the case of an assignment by a Bank to one of its affiliates, the assigning Bank or the Assignee shall have paid Agent a processing fee of Three Thousand Five Hundred and 00/100 Dollars ($3,500.00).

From and after the date on which the conditions described above have been met, (A) such Assignee shall be deemed automatically to have become a party hereto and, to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee pursuant to such Assignment Agreement, shall have the rights and obligations of a Bank hereunder, and (B) the assigning Bank, to the extent that rights and obligations hereunder have been assigned and delegated by it pursuant to such Assignment Agreement, shall be released from its obligations hereunder arising from and after the effective date of such assignment. Within five Business Days after effectiveness of any assignment and delegation, Borrower shall execute and deliver to Agent (for delivery to the Assignee and the Assignor, as applicable) a new Note in the principal amount of the Assignee’s Pro Rata Share of the Loans and, if the assigning Bank has retained a portion of the Loans, a replacement Note in the principal amount of the Pro Rata Share of the Loans retained by the assigning Bank (such Note to be in exchange for, but not in payment of, the predecessor Note held by such assigning Bank). Each such Note shall be dated the effective date of such assignment. The assigning Bank shall mark the predecessor Note “exchanged” and deliver it to Borrower. Accrued interest on that part of the predecessor Note being assigned shall be paid as provided in the Assignment Agreement. Accrued interest and fees on that part of the predecessor Note not being assigned shall be paid to the assigning Bank. Accrued interest and accrued fees shall be paid at the same time or times provided in the predecessor Note and in this Agreement. Any attempted assignment and delegation not made in accordance with this Section 10.1.(a) shall be null and void.

     (b) Participations. Any Bank may at any time sell to one or more commercial banks or other financial institutions participating interests in any Loan owing to such Bank, the Note held by such Bank, the Loans of such Bank, or any other interest of such Bank hereunder (any Person purchasing any such participating interest being herein called a “Participant”). In the event of a sale by a Bank of a participating interest to a Participant, (i) such Bank shall remain the holder of its Note for all purposes of this Agreement, (ii) Borrower and Agent shall continue to deal solely and directly with such Bank in connection with such Bank’s rights and obligations hereunder, and (iii) all amounts payable by Borrower shall be determined as if such Bank had not sold such participation and shall be paid directly to such Bank. No Participant shall have any direct or indirect voting rights hereunder and participants shall not have the right to further participate their interests. Each Bank agrees to incorporate the requirements of the preceding sentence into each participation agreement which such Bank enters into with any Participant. Borrower agrees that if amounts outstanding under this Agreement and the Notes are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement, any Note; provided that such right of setoff shall be subject to the obligation of each Participant to share with the Banks, and the Banks agree to share with each Participant, as provided herein. Borrower also agrees that each Participant shall be entitled to the benefits of Article 4 hereof as if it were a Bank (provided that no Participant shall receive any greater compensation pursuant to such Article 4 than would have been paid to the participating Bank if no participation had been sold).

     10.2 Prohibition of Assignments and Encumbrances by Borrower. Except as expressly provided in the Mortgages, Borrower, without the prior written consent of Agent, shall not create, effect, consent to, attempt, contract for, agree to make, suffer or permit any Prohibited Transfer (as defined in the Mortgages).

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     10.3 Partial Releases of Property. The Borrower shall be entitled to a partial release from the lien of a Mortgage of each Property upon payment of a principal payment on the Loan, in addition to all scheduled payments of principal, in the amount shown for the applicable Property in Schedule 10.1 attached. Any such principal payment shall be applied to the outstanding principal balance of the Loans, on a pro-rata basis, and, at Borrower’s request, the amount of the regularly scheduled payments of principal due thereafter shall be adjusted to the amount necessary to amortize the remaining principal balance over the remainder of the original amortization period. Upon receipt of such payment, the Agent shall execute and record a discharge of the Mortgage encumbering the applicable Property.

ARTICLE 11

EVENTS OF DEFAULT BY BORROWER

     11.1 Event of Default Defined. The occurrence of any one or more of the following shall constitute an Event of Default, and any Event of Default which may occur hereunder shall constitute an Event of Default under each of the other Loan Documents:

     (a) Borrower fails to pay (i) any installment of principal or interest payable pursuant to the Note within ten (10) days after written notice from the Agent that such installment is past due, or (ii) any other amount payable to the Banks under the Note, this Agreement or any of the other Loan Documents within twenty (20) days after written notice from the Agent that such amount is past due in accordance with the terms hereof or thereof;

     (b) Borrower fails to perform or cause to be performed any other obligation or observe any other condition, covenant, term, agreement or provision required to be performed or observed by Borrower under the Note, this Agreement or any of the other Loan Documents not otherwise described in Sections 11.1(a), or (c) through (p); provided, however, that if the Note, this Agreement or other applicable Loan Document does not provide for a specific grace, notice or cure period, and further provided that if such failure by its nature can be cured, then so long as the continued operation and safety of the Property, and the priority, validity and enforceability of the liens created by the Mortgages or any of the other Loan Documents and the value of the Property are not impaired, threatened or jeopardized, Borrower shall have a period (the “Cure Period”) of thirty (30) days after Borrower obtains actual knowledge of such failure or receives written notice of such failure to cure the same or, if the failure is of a kind which cannot be cured within thirty (30) days, if Borrower undertakes to cure the failure within thirty (30) days after Borrower obtains actual knowledge of such failure or receives written notice of such failure and thereafter diligently pursues such cure, the Cure Period shall be extended for a reasonable time necessary to complete such cure, and an Event of Default shall not be deemed to exist during the Cure Period;

     (c) The existence of any inaccuracy or untruth in any material respect in any representation or warranty contained in this Agreement or any of the other Loan Documents or of any statement or certification as to facts delivered to Agent by Borrower or Guarantor;

     (d) The occurrence of a Prohibited Transfer;

     (e) The existence of any collusion, fraud, dishonesty or bad faith by or with the acquiescence of Borrower or Guarantor which in any way relates to or affects the Loans or the Property;

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     (f) Borrower or Guarantor (i) files a voluntary petition in bankruptcy or is adjudicated a bankrupt or insolvent or files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal, state, or other statute or law, or (ii) seeks or consents to or acquiesces in the appointment of any trustee, receiver or similar officer of Borrower or of all or any substantial part of the property of Borrower or Guarantor or any of the Property; or all or a substantial part of the assets of Borrower or Guarantor are attached, seized, subjected to a writ or distress warrant or are levied upon unless the same is released or located within ninety (90) days;

     (g) The commencement of any involuntary petition in bankruptcy against Borrower or Guarantor or the institution against Borrower or Guarantor of any reorganization, arrangement, composition, readjustment, dissolution, liquidation or similar proceedings under any present or future federal, state or other statute or law, or the appointment of a receiver, trustee or similar officer for all or any substantial part of the property of Borrower or Guarantor, which shall remain undismissed or undischarged for a period of ninety (90) days;

     (h) The dissolution, unless corrected promptly within the time permitted by applicable law, or termination of Borrower or Guarantor;

     (i) The occurrence of an “Event of Default” under any of the Notes, the Mortgages or any of the other Loan Documents; or

     (j) Nonpayment by Borrower of any Rate Management Obligation when due or the breach by Borrower of any term, provision or condition contained in any Rate Management Agreement.

ARTICLE 12

AGENT’S REMEDIES UPON EVENT OF DEFAULT

     12.1 Remedies Conferred upon Agent. Upon the occurrence of any Event of Default, Agent, in addition to all remedies conferred upon Agent by law and by the terms of the Note, the Mortgages and the other Loan Documents, may, and at the direction of the Required Banks shall, and upon occurrence of an Event of Default described in Section 11.1(j) shall, pursue any one or more of the following remedies concurrently or successively, it being the intent hereof that none of such remedies shall be to the exclusion of any others:

     (a) Declare the Notes to be due and payable forthwith, without presentment, demand, protest or other notice of any kind, all of which Borrower hereby expressly waives, and

     (b) Exercise or pursue any other remedy or cause of action permitted at law or in equity or under this Agreement or any other Loan Document, including, but not limited to, foreclosure of the Mortgages and enforcement of all Loan Documents.

     12.2 Right of Banks to Make Advances to Cure Event of Defaults; Obligatory Advances. If an Event of Default shall occur as a result of Borrower’s failure to perform any of its covenants or agreements herein or in any of the other Loan Documents contained, Agent may (but shall not be required to) perform any of such covenants and agreements, and any amounts expended by Agent in so doing, and any amounts expended by Agent pursuant to Section 12.1 hereof and any amounts advanced by the Banks pursuant to this Agreement shall be deemed advanced by the Banks under an obligation to do so regardless of the identity of the person or persons to whom said funds are disbursed. Amounts advanced

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by the Banks to protect their security for the Loan are obligatory advances hereunder and shall constitute additional indebtedness payable on demand and evidenced and secured by the Loan Documents.

     12.3 Attorneys’ Fees. Borrower will pay Agent’s reasonable attorneys’ fees and costs in connection with the negotiation, preparation, administration and enforcement of this Agreement and the other Loan Documents, which shall also include reasonable attorneys’ fees and time charges of attorneys who may be employees of the Agent or any affiliate of the Agent; without limiting the generality of the foregoing, if at any time or times hereafter Agent employs counsel for advice or other representation with respect to any matter concerning Borrower, this Agreement, the Property or the Loan Documents or if the Banks employ one or more counsel to protect, collect, lease, sell, take possession of, or liquidate any of the Property, or to attempt to enforce or protect any security interest or lien or other right in any of the Property or under any of the Loan Documents, or to enforce any rights of the Banks or obligations of Borrower or any other person, firm or corporation which may be obligated to the Banks by virtue of this Agreement or under any of the Loan Documents or any other agreement, instrument or document, heretofore or hereafter delivered to Agent in furtherance hereof, then in any such event, all of the attorneys’ fees arising from such services, and any expenses, costs and charges relating thereto, shall constitute an additional indebtedness owing by Borrower to the Banks payable on demand and evidenced and secured by the Loan Documents; provided, however, that in connection with any enforcement proceedings, the Agent shall be entitled to recover attorney fees only in the event it is the prevailing party.

     12.4 No Waiver. No failure by Agent to exercise, or delay by Agent in exercising, any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement and in the Loan Documents are cumulative and not exclusive of each other or of any right or remedy provided at law or in equity. No notice to or demand on Borrower in any case, in itself, shall entitle Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Agent to any other or further action in any circumstances without notice or demand.

     12.5 Default Rate. From and after the date of any Event of Default until the date on which such Event of Default is cured or waived, interest on funds outstanding hereunder shall accrue at the Default Rate and be payable on demand. The failure of Agent to charge interest at the Default Rate shall not be evidence of the absence of an Event of Default or waiver of an Event of Default by Agent.

ARTICLE 13

THE AGENT

     13.1 Appointment and Authorization.

     (a) Each Bank hereby irrevocably (subject to Section 13.9) appoints, designates and authorizes Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, Agent shall not have any duty or responsibility except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in other Loan Documents with

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reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

     (b) Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.

     13.2 Actions Requiring Consent and Approval.

     (a) Agent may amend or waive any of the provisions of this Agreement or any of the other Loan Documents, or consent to any departure by any party to the Loan Documents there from which amendment, waiver or consent is intended to be within Agent’s discretion or determination, or otherwise in Agent’s reasonable determination shall not result in a material adverse change. Otherwise, no such amendment, waiver or consent shall be effective unless in writing, signed by the Required Banks, and Borrower or the applicable party to the Loan Documents, as the case may be, and acknowledged by Agent and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding the foregoing, Required Lender consent shall be required for the following:

     (i) Agent shall not, without the prior approval or consent of the Required Banks, appoint a successor Agent, provided that no Bank shall unreasonably withhold its consent to the appointment of a successor Agent and further provided that nothing contained in this Section 13.2 shall limit the rights of Agent under Section 13.9 in the event a successor Agent is not appointed within thirty (30) days of the retiring Agent giving notice of its resignation;

     (ii) Waive any non-monetary Event of Default on the part of the Borrower of Guarantor;

     (b) Agent shall not undertake any of the following actions without the prior approval or consent of each Bank:

     (i) Extend the Maturity Date or forgive all or any portion of the principal amount of the Loan or any accrued interest thereon, or any other amendment of this Agreement or the other Loan Documents which would reduce the underlying interest rate or the rate at which fees are calculated or forgive any loan fee, or extend the time of payment of any principal, interest or fees;

     (ii) Amend the recourse provisions in the Guaranty;

     (iii) Modify the percentage specified in the definition of Required Banks;

     (iv) Increase of the amount of the Loan;

     (v) Amend this Section 13.2(b);

     (vi) Waive a monetary default under the Loan Documents;

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     (vii) Amend any of the conditions to the Loan Closing set forth in Article 6 of this Agreement;

     (viii) Release all or any portion of any collateral for the Loan except in accordance with the terms and provisions of Section 13.10 hereof or any other Loan Document; and

     (ix) Consent to any additional indebtedness of Borrower secured by all or any portion of the Property, except as may be provided for in the Loan Documents.

     (c) No provision of Article 13 or other provision of this Agreement affecting the Agent in its capacity as such shall be amended, modified or waived without the written consent of the Agent.

     (d) In addition to the required consents or approvals referred to in subsections (a), (b) and (c) above, Agent may, but shall not be required to, at any time request instructions from the Required Banks with respect to any actions or approvals which, by the terms of this Agreement or of any of the Loan Documents, Agent is permitted or required to take or to grant without instructions from the Required Banks, and if such instructions are promptly requested, Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval and shall not be under any liability whatsoever for refraining from taking any action or withholding any approval under any of the Loan Documents until it shall have received such instructions from the Required Banks. Without limiting the foregoing, no Bank shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Required Banks. Agent shall promptly notify each Bank at any time that the Required Banks have instructed Agent to act or refrain from acting pursuant hereto.

     (e) If an Event of a Default occurs hereunder or under any of the Loan Documents, Agent may make the determination to accelerate the Loan and exercise or refrain from exercising remedies hereunder (and Agent shall do so at the written direction of the Required Banks). Notwithstanding the foregoing, Agent may take any action it deems to be necessary from time to time to protect the collateral.

     (f) Each Bank authorizes and directs Agent to enter into the Loan Documents other than this Agreement. Each Bank agrees that any action taken by Agent at the direction or with the consent of the Required Bank in accordance with the provisions of this Agreement or any other Loan Document, and the exercise by Agent at the direction or with the consent of the Required Banks of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Banks, except for actions specifically requiring the approval of all of the Banks. All communications from Agent to the Banks requesting a Bank’s determination, consent, approval or disapproval (i) shall be given in the form of a written notice to each Bank, (ii) shall be accompanied by a description of the matter or item as to which such determination, approval, consent or disapproval is requested, or shall advise each Bank where such matter or item may be inspected, or shall otherwise describe the matter or issue to be resolved, (iii) shall include, if reasonably requested and to the extent not previously provided written materials and a summary of all oral information provided to Agent by Borrower in respect of the matter or issue to be resolved, and (iv) shall include Agent’s recommended course of action or determination in respect thereof. Each Bank shall reply promptly, but in any event within ten (10) days after receipt of the request therefor from Agent (the “Bank Reply Period”). Unless written notice to Agent that a Bank objects to the

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recommendation or determination of Agent (together with a written explanation of the reasons behind such objection) within the Bank Reply Period, such party shall be deemed to have approved of or consented to such recommendation or determination. With respect to decisions requiring the approval of the Required Banks or all of the Banks, Agent shall submit its recommendation or determination for approval of or consent to such recommendation or determination to each Bank and upon receiving the required approval or consent shall, to the extent feasible, follow the course of action or determination recommended by Agent or such other course of action recommended by the Required Banks, and each non-responding party shall be deemed to have concurred with such recommended course of action.

     (g) Until such time as Borrower is otherwise instructed in writing by the Agent or the Required Banks, Borrower may rely on the direction, consent or approval of Agent as the direction, consent or approval of the Banks.

     13.3 Liability of Agent. None of Agent nor any of its directors, officers, employees or agents shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except to the extent resulting from its own gross negligence or willful misconduct in connection with the duties expressly set forth herein as determined by a final, non-appealable judgment by a court of competent jurisdiction), or (ii) be responsible in any manner to any of the Banks or any Participant for any recital, statement, representation or warranty made by Borrower, Guarantor, or any member, partner, shareholder or officer of Borrower or Guarantor, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (or the creation, perfection or priority of any lien, mortgage or security interest therein), or for any failure of Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. Agent shall not be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of Borrower or Guarantor.

     13.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper person or party, and upon advice and statements of legal counsel (including counsel to Borrower), independent accountants and other experts selected by the Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Banks as it deems appropriate and, if it so requests, confirmation from the Banks of their obligation to indemnify the Agent against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Banks and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Banks. For purposes of determining compliance with the conditions specified in Section 13, each Bank that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Bank unless the Agent shall have received written notice from such Bank prior to the proposed Loan Closing Date specifying its objection thereto.

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     13.5 Notice of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default except with respect to defaults in the payment of principal, interest and fees required to be paid to Agent for the account of the Banks, unless Agent shall have received written notice from a Bank or Borrower referring to this Agreement, describing such Event of Default and stating that such notice is a “notice of default”. Agent will notify the Banks of its receipt of any such notice. Agent shall take such action with respect to such Event of Default as may be requested by the Required Banks in accordance with this Section 13; provided that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable or in the best interest of the Banks.

     13.6 Credit Decision. Each Bank acknowledges that Agent has not made any representation or warranty to it, and that no act by Agent hereafter taken, including any review of the affairs of Borrower and Guarantor, shall be deemed to constitute any representation or warranty by Agent to any Bank as to any matter, including whether the Agent has disclosed material information in its possession. Each Bank represents to Agent that it has, independently and without reliance upon Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and Guarantor, and made its own decision to enter into this Agreement and to extend credit to Borrower hereunder. Each Bank also represents that it will, independently and without reliance upon Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower. Except for notices, reports and other documents expressly herein required to be furnished to the Banks by Agent, Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, prospects, operations, property, financial or other condition or creditworthiness of Borrower which may come into the possession of the Agent.

     13.7 Bank Indemnification. Whether or not the transactions contemplated hereby are consummated, the Banks shall indemnify upon demand Agent and its directors, officers, employees and agents (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so), pro rata, from and against any and all actions, causes of action, suits, losses, liabilities, damaged and expenses, including attorneys’ fees and expenses (collectively, the “Indemnified Liabilities”); provided that no Bank shall be liable for any payment to Agent of any portion of the Indemnified Liabilities to the extent determined by a final, non-appealable judgment by a court of competent jurisdiction to have resulted from Agent’s gross negligence or willful misconduct. No action taken in accordance with the directions of the Required Banks shall constitute gross negligence or willful misconduct for purposes of this Agreement. Without limitation of the foregoing, each Bank shall reimburse Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Loan Expenses) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of Borrower. The undertaking in this Section shall survive repayment of the Loans, cancellation of the Notes, any foreclosure under, or modification, release or discharge of, any or all of the Loan Documents, termination of this Agreement and the resignation or replacement of the Agent.

     13.8 Agent in Individual Capacity. LaSalle and its affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with Borrower and Guarantor as

32

though LaSalle were not Agent hereunder and without notice to or consent of the Banks. The Banks acknowledge that, pursuant to such activities, LaSalle or its affiliates may receive information regarding Borrower or Guarantor (including information that may be subject to confidentiality obligations in favor of Borrower or Guarantor) and acknowledge that Agent shall be under no obligation to provide such information to them. With respect to their Loans (if any), LaSalle and its affiliates shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though LaSalle were not the Agent, and the terms “Bank” and “Banks” include LaSalle and its affiliates, to the extent applicable, in their individual capacities.

     13.9 Successor Agent. Agent may resign as Agent upon thirty (30) days notice to the Banks. If Agent resigns under this Agreement, the Required Banks shall, with (so long as no Event of Default exists) the consent of Borrower (which shall not be unreasonably withheld or delayed), appoint from among the Banks a successor agent for the Banks. If no successor agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Banks and Borrower, a successor agent from among the Banks. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term “Agent” shall mean such successor agent, and the retiring Agent’s appointment, powers and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 13 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Banks shall perform all of the duties of the Agent hereunder until such time, if any, as the Required Banks appoint a successor agent as provided for above.

     13.10 Collateral Matters. The Banks irrevocably authorize Agent, at its option and in its discretion, to release any Lien granted to or held by Agent under any Loan Document (i) upon payment in full of all Loans and all other obligations of Borrower hereunder; (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder; or (iii) if approved, authorized or ratified in writing by all of the Banks.

     13.11 Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to Borrower or Guarantor, the Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

     (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, and all other obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Banks and the Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Banks and the Agent and their respective agents and counsel and all other amounts due the Banks and the Agent hereunder allowed in such judicial proceedings; and

     (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Bank to make such payments to the Agent and, in the event that the Agent shall consent to the making of such payments directly to

33

the Banks, to pay to the Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agent and its agents and counsel, and any other amounts due the Agent hereunder.

     Nothing contained herein shall be deemed to authorize the Agent to authorize or consent to or accept or adopt on behalf of any Bank any plan of reorganization, arrangement, adjustment or composition affecting the Loans or the rights of any Bank or to authorize the Agent to vote in respect of the claim of any Bank in any such proceeding.

ARTICLE 14

MISCELLANEOUS

     14.1 Time is of the Essence. Borrower agrees that time is of the essence in all of its covenants under this Agreement.

     14.2 Agent’s Determination of Facts. Agent and/or Banks at all times shall be free to establish independently to its or their satisfaction and in its or their sole and absolute discretion the existence or nonexistence of any fact or facts, the existence or nonexistence of which is a condition of this Agreement.

     14.3 Prior Agreements. This Agreement and the other Loan Documents, and any other documents or instruments executed pursuant thereto or contemplated thereby, shall represent the entire, integrated agreement between the parties hereto with respect to the Loan, and shall supersede all prior negotiations, representations or agreements pertaining thereto, either oral or written. This Agreement and any provision hereof shall not be modified, amended, waived or discharged in any manner other than by a written amendment executed by all parties to this Agreement.

     14.4 Disclaimer by Banks. Borrower is not or shall not be an agent of Agent or the Banks for any purposes, and neither Agent nor the Banks are venture partners with Borrower in any manner whatsoever. Approvals granted by Agent or the Banks for any matters covered under this Agreement shall be narrowly construed to cover only the parties and facts identified in any written approval or, if not in writing, such approvals shall be solely for the benefit of Borrower.

     14.5 Borrower Indemnification. Borrower agrees to defend (with counsel satisfactory to Lender), protect, indemnify and hold harmless Agent, each Bank, any parent corporation, affiliated corporation or subsidiary of Agent or any Bank, and each of their respective officers, directors, employees, attorneys and agents (each, an “Indemnified Party”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and distributions of any kind or nature (including, without limitation, the disbursements and the reasonable fees of counsel for each Indemnified Party thereto, which shall also include, without limitation, reasonable attorneys’ fees and time charges of attorneys who may be employees of Agent, any Bank or any parent or affiliated corporation of Agent or any Bank), which may be imposed on, incurred by, or asserted against, any Indemnified Party (whether direct, indirect or consequential and whether based on any federal, state or local laws or regulations, including, without limitation, securities, environmental laws and commercial laws and regulations, under common law or in equity, or based on contract or otherwise) in any manner relating to or arising out of this Agreement or any of the Loan Documents, or any act, event or transaction related or attendant thereto, the preparation, execution and delivery of this Agreement, the Notes and the Loan Documents, the making or issuance and management of the Loans, the use or intended use of the proceeds of the Loans and the enforcement of Agent and any Bank’s rights and remedies under this Agreement, the Notes, the Loan Documents, any other instruments and documents delivered hereunder or

34

thereunder; provided, however, that Borrower shall not have any obligation hereunder to any Indemnified Party with respect to disputes between the Banks or between the Banks and the Agent not arising out of the wrongdoing of the Borrower or matters caused by or resulting from the willful misconduct or gross negligence of such Indemnified Party. The Indemnified Parties shall give notice as promptly as reasonably practical to the Borrower in the event they become aware of a claim or potential claim for which they intend to seek indemnity under the provisions of this Section 14.5. To the extent that the undertaking to indemnify set forth in the preceding sentence may be unenforceable because it violates any law or public policy, Borrower shall satisfy such undertaking to the maximum extent permitted by applicable law. Any liability, obligation, loss, damage, penalty, cost or expense covered by this indemnity shall be paid to such Indemnified Party on demand, and failing prompt payment, together with interest thereon at the Default Rate from the date incurred by such Indemnified Party until paid by Borrower, shall be added to the obligations of Borrower evidenced by the Notes and secured by the collateral securing the Loans. This indemnity is not intended to excuse Agent or any Bank from performing hereunder. The provisions of this section shall survive the closing of the Loans, the satisfaction and payment of the Notes and any cancellation of this Agreement. Borrower shall also pay, and hold Agent and each Bank harmless from, any and all claims of any brokers, finders or agents claiming a right to any fees in connection with arranging the Loan. Each Bank hereby represents that it has not employed a broker or other finder in connection with the Loans. Borrower represents and warrants that no brokerage commissions or finder’s fees are to be paid in connection with the Loans.

     14.6 Captions. The captions and headings of various Articles and Sections of this Agreement and exhibits pertaining hereto are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.

     14.7 Inconsistent Terms and Partial Invalidity. In the event of any inconsistency among the terms hereof (including incorporated terms), or between such terms and the terms of any other Loan Document, Agent may elect which terms shall govern and prevail. If any provision of this Agreement, or any paragraph, sentence, clause, phrase or word, or the application thereof, in any circumstances, is adjudicated by a court of competent jurisdiction to be invalid, the validity of the remainder of this Agreement shall be construed as if such invalid part were never included herein.

     14.8 Gender and Number. Any word herein which is expressed in the masculine or neuter gender shall be deemed to include the masculine, feminine and neuter genders. Any word herein which is expressed in the singular or plural number shall be deemed, whenever appropriate in the context, to include the singular and the plural.

     14.9 Notices. Any notices, communications and waivers under this Agreement shall be in writing and shall be (i) delivered in person, (ii) mailed, postage prepaid, either by registered or certified mail, return receipt requested, or (iii) sent by overnight express carrier, addressed in each case as follows:

To Agent:	LaSalle Bank Midwest National Association
	2600 West Big Beaver Road
	Troy, Michigan 48084
	Attention: Commercial Real Estate
With copies to:	Daniel C. Watson, Esq.
	Dykema Gossett PLLC
	400 Renaissance Center
	Detroit, Michigan 48243

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To a Bank:	See notice addresses set forth on Schedule 3.1 hereto.
To Borrower:	Agree Limited Partnerhip/Agree Realty Corporation
	31850 Northwestern Highway
	Farmington Hills, Michigan 48334
	Attention: Richard Agree
With a copy to:	Leon M. Schurgin, Esq.
	Bodman LLP
	Suite 500
	201 W. Big Beaver Road
	Troy, Michigan 48084

or to any other address as to any of the parties hereto, as such party shall designate in a written notice to the other party hereto. All notices sent pursuant to the terms of this Section shall be deemed received (i) if personally delivered, then on the date of delivery, (ii) if sent by overnight, express carrier, then on the next Business Day immediately following the day sent, or (iii) if sent by registered or certified mail, then on the earlier of the third Business Day following the day sent or when actually received.

     14.10 Effect of Agreement. The submission of this Agreement and the Loan Documents to Borrower for examination does not constitute a commitment or an offer by Agent to make a commitment to lend money to Borrower; this Agreement shall become effective only upon execution by Banks and delivery hereof by Agent to Borrower.

     14.11 Governing Law. This Agreement has been negotiated, executed and delivered at Troy, Michigan, and shall be construed and enforced in accordance with the laws of the State of Michigan, without reference to the choice of law or conflicts of law principles of the State.

     14.12 Consent to Jurisdiction. TO INDUCE BANKS TO ACCEPT THE NOTES, BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO AGENT’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THE LOAN DOCUMENTS WILL BE LITIGATED IN COURTS HAVING SITUS IN OAKLAND COUNTY, MICHIGAN. BORROWER HEREBY CONSENTS AND SUBMITS TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO THE JURISDICTION OF ANY COURT LOCATED WITHIN OAKLAND COUNTY, MICHIGAN, WAIVES PERSONAL SERVICE OF PROCESS UPON BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

     14.13 Waiver of Jury Trial. BORROWER, AGENT AND BANKS (BY ACCEPTANCE HEREOF), HAVING BEEN REPRESENTED BY COUNSEL EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS AGREEMENT OR (B) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. BORROWER AGREES THAT IT WILL NOT ASSERT

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ANY CLAIM AGAINST AGENT OR BANKS OR ANY OTHER PERSON INDEMNIFIED UNDER THIS AGREEMENT ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

     14.14 Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof. Electronic records of executed Loan Documents maintained by Agent shall be deemed to be originals thereof.

     14.15 Customer Identification — USA Patriot Act Notice. Each Bank and Agent (for itself and not on behalf of any Bank) hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), and each Bank’s and Agent’s policies and practices, it is required to obtain, verify and record certain information and documentation that identifies Borrower, which information includes the name and address of Borrower and such other information that will allow such Bank or Agent to identify Borrower in accordance with the Act.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the Banks and Borrower have caused this Loan Agreement to be executed as of the day and year first above written.

BORROWER: AGREE LIMITED PARTNERSHIP, a Delaware limited partnership
By: Agree Realty Corporation, a Maryland corporation
Its: General Partner
	By:	/S/ Richard Agree
	Name:	Richard Agree
	Title:	President
AGENT: LASALLE BANK MIDWEST NATIONAL ASSOCIATION, a national banking association
By:	/s/ Kathleen W. Bozek
Name:	Kathleen W. Bozek
Title:	Vice President
THE BANKS: LASALLE BANK MIDWEST NATIONAL ASSOCIATION, a national banking association
By:	/s/ Kathleen W. Bozek
Name:	Kathleen W. Bozek
Title:	Vice President
RAYMOND JAMES BANK, FSB, a federal savings bank
By:	/s/ Thomas G. Scott
Name:	Thomas G. Scott
Title:	Senior Vice President

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SCHEDULE 3.1

THE BANKS AND LOAN AMOUNTS

BANK	LOAN AMOUNTS		PRO RATA SHARE
LaSalle Bank Midwest National Association	$	14,800,000.00		59.677419354	%
2600 West Big Beaver Road Troy, Michigan 48084 Attn: Commercial Real Estate
Raymond James Bank, FSB	$	10,000,000.00		40.322580645	%
710 Carillon Parkway St. Petersburg, Florida 33716 Attn: Thomas Scott

SCHEDULE 10.1

SCHEDULE OF RELEASE PAYMENTS

	REQUIRED
	PRINCIPAL PAYMENT
PROPERTY	FOR RELEASE
6421 West Saginaw Delta Township, MI	$	3,975,000
2643 Kalamazoo Grand Rapids, MI	$	3,780,000
16977 & 17001 Newburgh Road Livonia, MI	$	5,100,000
21790 & 21700 21 Mile Road Macomb Township, MI	$	5,055,000
56805 Van Dyke Avenue Shelby Township, MI	$	2,510,000
25966 Gratiot Roseville, MI	$	2,750,000
2255 South Jackson Road Summit Township, MI	$	1,630,000

Schedule 10.1 - 1

EXHIBIT “A”

THE PROPERTY

Property known as 6421 West Saginaw, Delta Township, MI described as:

Land Situated in the Township of Delta, County of Eaton, State of Michigan.

Commencing at the Northeast corner of Section 15, T4N, R3W, Delta Township, Eaton County, Michigan; thence S 00°2719“E 50.00 feet along the centerline of Creyts Road (66’ Wide) and the East line of said Section 15; thence S 89°51’50“W 50.00 feet for a PLACE OF BEGINNING; thence S 45°17’45“E 24.11 feet (recorded as Southeast 24.04 feet) to the Westerly right-of-way line of said Creyts Road (66’ Wide); thence S 0002719“E 181.00 feet along said West right-of-way line; thence S 89°51’50” W 182.00 feet; thence S 00°27’19“E 100.00 feet; thence S 89°51’50” W 118.50 feet; thence N 00°27’1 W 246.01 feet; thence S 89°32’41” W 2.50 feet; thence N 00°2719“W 52.00 feet; to the Southerly right-of-way line of Saginaw Highway (100’ Wide); thence N 89°51’50” E 286.00 feet along said South right-of-way line to the Place of Beginning, being part of the Northeast 1/4 of said Section 15.

TAX IDENTIFICATION NUMBER: 23-040-015-200-220-00

Property known as 2643 Kalamazoo, Grand Rapids, MI described as:

Land Situated in the City of Grand Rapids, County of Kent, State of Michigan.

Part of the Southeast 1/4 of Section 8, Town 6 North, Range 11 West, City of Grand Rapids, Kent County, Michigan, described as: Commencing at the Southeast corner of Section 8; thence South 90°00’00” West 690.33 feet along the South line of Section 8; thence North 03°48’25” West 50.69 feet to a point on the North right-of-way line of 28th Street and the place of beginning; thence North 03°48’25” West 149.31 feet parallel to the West line of the Southeast 1/4 of the Southeast 1/4 of Section 8; thence South 90°00’00” West 30.00 feet; thence North 03°48’25” West 207.59 feet along the East line of Oakgrove Cemetery; thence South 89°49’30” East 307.77 feet; thence North 00°10’30” East 30.00 feet; thence North 34°34’57” West 142.24 feet; thence Northeasterly 191.52 feet along a 115.50 foot radius curve to the right, the chord of which bears North 12°55’12” East 170.32 feet; thence North 60°43’14” East 14.10 feet; thence Southeasterly 544.27 feet along a 3769.83 foot radius curve to the right, the chord of which bears South 25°16’02” East 543.80 feet; thence South 35°21’20” West 225.40 feet along the Northwesterly line of a clear vision right-of-way; thence Northwesterly 71.70 feet along a 57246.01 foot radius curve to the right, the chord of which bears North 89°58’00” West 71.70 feet along the North line of 28th Street; thence North 89°55’50” West 253.76 feet to the point of beginning.

TAX IDENTIFICATION NUMBER: 41-18-08-400-017

Property known as 16977 & 17001 Newburgh Road, Livonia, MI described as:

Land Situated in the City of Livonia, County of Wayne, State of Michigan.

A parcel of land being a part of the Northeast 1/4 of Section 18, Town 1 South, Range 9 East, City of Livonia, Wayne County, Michigan, more particularly described as: Beginning at a point on the South line

A-1

of the Six Mile Road (180 feet wide), said point being South 89°58’ West 287.73 feet and South 00°02’ East 90.00 feet from the Southeast corner of said Section 18, Town ‘I South, Range 9 East, thence North 89°58’ East along said South line 105.24 feet to a point; thence South 00°21’20” East 120.00 feet to a point; thence North 89°58’ East 123.00 feet to a point on the West line of Newburgh Road (120 feet wide); thence South 00°21’20” East along said West line 413.01 feet to a point; thence South 89°58’ West 231.24 feet to a point; thence North 00°02’ West 533.00 feet to the point of beginning.

Together with, and subject to, the rights and benefits over adjacent parcels as disclosed in the Declaration of Easements, Covenants, Conditions, and Restrictions recorded in Liber 45251, page 151, Wayne County Records.

TAX IDENTIFICATION NUMBER: 46-069-99-0001-024

Property known as 21790 & 21700 21 Mile Road, Macomb Township, MI described as:

Land Situated in the Township of Macomb, County of Macomb, State of Michigan.

Units 1 and 2, Agree/Macomb Township Condominium, according to the Master Deed recorded in Liber 18821, Page 532, Macomb County Records, and any amendments thereto, and designated as Macomb County Condominium Subdivision Plan No. 1033, together with rights in general common elements and limited common elements as set forth in the above Master Deed and as described in Act 59 of the Public Acts of 1978.

TAX IDENTIFICATION NUMBER: 08-34-228-001 (Unit 1) and 08-34-228-002 (Unit 2)

Property known as 56805 Van Dyke Avenue, Shelby Township, MI described as:

Land Situated in the Township of Shelby, County of Macomb, State of Michigan.

A parcel of land located in the Northeast 1/4 of Section 4, Town 3 North, Range 12 East, Shelby Township, Macomb County, Michigan, described as being parts of Lots 14 and 15 of Brown’s Little Farms Subdivision (unrecorded) more particularly described as: Commencing at the Northeast corner of said Section 4; thence South 01°47’44” East 343.54 feet along the centerline of Van Dyke Avenue for a place of beginning; thence continuing along said centerline South 01°47’44” East 267.55 feet; thence South 89°16’28” West 327.33 feet; thence North 00°34’34” West 268.35 feet; thence North 89°25’26” East 321.83 feet to the centerline of Van Dyke Avenue and to the place of beginning.

TAX IDENTIFICATION NUMBER: 07-04-226-025.

Property known as 25966 Gratiot, Roseville, MI described as:

Land Situated in the City of Roseville, County of Macomb, State of Michigan.

Part of Lot 27 of Assessor’s Plat No. 8, as recorded in Liber 18, page 27, Macomb County Records, and also part of the Southwest 114 of Section 20, T1 N, R13E, City of Roseville, Macomb County, Michigan, and being more particularly described as follows: Commencing at the West 1/4 corner of Section 20, thence North 89 degrees 11 minutes 15 seconds East along the East-West 1/4 line of Section 20, 1246.72 feet to the intersection of the East-West 1/4 line of Section 20 and the Northeasterly extension of the Southeasterly line of Gratiot Avenue (204 feet wide); thence South 27 degrees 19 minutes 27 seconds

A-2

West along the extension of the Southeasterly line of Gratiot Avenue, 37.42 feet to the Northwest corner of said Lot 27 of Assessor’s Plat No. 8, being the point of beginning; thence North 89 degrees 11 minutes 15 seconds East along the North line of Lot 27, being also the South Right of Way line of Frazho Road (66 feet wide), 103.44 feet; thence South 11 degrees 12 minutes 30 seconds East 86.81 feet; thence South 01 degrees 12 minutes 30 seconds East 182.28 feet; thence South 27 degrees 21 minutes 58 seconds West 102.82 feet; thence North 62 degrees 38 minutes 02 seconds West 170.16 feet; thence North 34 degrees 05 minutes 31 seconds West 70.74 feet to a point on said Southeasterly line of Gratiot Avenue; thence North 27 degrees 19 minutes 27 seconds East along said Southeasterly line, 248.11 feet to the point of beginning.

TAX IDENTIFICATION NUMBER: 14-20-326-039

Property known as 2255 South Jackson Road, Summit Township, MI described as:

Land Situated in the Township of Summit, County of Jackson, State of Michigan.

Part of the Northwest 1/4 of Section 21, Town 3 South, Range 1 West, Summit Township, Jackson County, Michigan, described as commencing at the West 1/4 corner of said Section 21; thence due east, 1425.00 feet along the east and west 1/4 line of said Section 21 to the centerline of South Jackson Road; thence N 10°37’00” W, 398.51 feet along the centerline of South Jackson Road; thence N 11°18’00” W, 511.48 feet along the centerline of South Jackson Road to the point of beginning; thence N 11°18’00” W, 316.58 feet along the centerline of South Jackson Road; thence N 88°49’30” E, 300.00 feet; thence S 05°58’21” E, 148.33 feet; thence N 74°01’39” E, 200.00 feet; thence S 05°58’21” E, 75.00 feet, thence S 43°36’05” W, 206.48 feet; thence N 89°59’49” W, 311.03 feet to the point of beginning.

TAX IDENTIFICATION NUMBER: 000-13-21-176-046-02

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EXHIBIT “B”

FORM OF PROMISSORY NOTE

PROMISSORY NOTE

$                    .00	Date:                     , 20___
Troy, Michigan	Maturity Date:                     , 20___

     FOR VALUE RECEIVED, AGREE LIMITED PARTNERSHIP, a Delaware limited partnership (the “Borrower”), hereby promises to pay to the order of                                                              (the “Bank”) at the principal office of LaSalle Bank Midwest National Association (the “Agent”) in Troy, Michigan, on or before the Maturity Date (as defined in the hereinafter referred to Loan Agreement), which Maturity Date is subject to extension as provided in the Loan Agreement, the principal amount of                                          and 00/100 DOLLARS ($_                    .00), in accordance with the terms and provisions of that certain Loan Agreement dated as of                     , 20___, executed by and among the Borrower, certain financial institutions (including the Bank) and the Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”). Capitalized words and phrases not otherwise defined herein shall have the meanings assigned thereto in the Loan Agreement.

     The Borrower further promises to pay the outstanding principal balance of this Note in monthly installments of principal, each in the amount corresponding to the applicable payment due date, as shown in attached Schedule A, plus interest accrued to the due date of each payment on the unpaid principal balance of this Note outstanding from time to time at the rates set forth in the Loan Agreement. The outstanding principal balance hereof shall be repaid by the Borrower on the Maturity Date, unless payable sooner pursuant to the provisions of the Loan Agreement. The Maturity Date is subject to extension on the terms and conditions provided in the Loan Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America. The Loans made by the Bank and all payments on account of the principal and interest thereof, shall be recorded on the books and records of the Agent and the principal balance as shown on such books and records shall be rebuttably presumptive evidence of the principal amount owing hereunder.

     This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Loan Agreement, to which Loan Agreement reference is hereby made for a statement of the terms and provisions under which this Note may or must be paid prior to the Maturity Date, or pursuant to which the Maturity Date may be accelerated. The holder of this Note is entitled to all of the benefits and security provided for in the Loan Agreement.

     Except for such notices as may be expressly required under the Loan Documents, the Borrower waives presentment, demand, notice, protest, and all other demands, or notices, in connection with the delivery, acceptance, performance, default, or enforcement of this Note, and assents to any extension or postponement of the time of payment or any other indulgence. No failure to exercise, and no delay in exercising, any rights under any of the Loan Documents by the Agent of any holder of this Note shall operate as a waiver of such rights.

     This Note shall be governed and construed in accordance with the laws of the State of Michigan applicable to contracts made and to be performed entirely within such State.

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[SIGNATURE PAGE FOLLOWS]

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BORROWER: AGREE LIMITED PARTNERSHIP, a Delaware limited partnership
By:	Agree Realty Corporation, a Maryland corporation
Its:  General Partner
	By:
	Name:	Richard Agree
	Title:	President

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SCHEDULE A

SCHEDULE OF PRINCIPAL PAYMENTS

PAYMENT DUE DATE REQUIRED
PRINCIPAL PAYMENT

B-4

EXHIBIT “C”

PERMITTED EXCEPTIONS

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EXHIBIT “D”

FORM OF ASSIGNMENT AND ACCEPTANCE

     Reference is made to the Loan Agreement dated as of                     , 20___(as the same may be amended, modified or supplemented from time to time in accordance with its terms, the “Loan Agreement”) among (i) Agree Limited Partnership, a Delaware limited partnership (the “Borrower”), (ii) the several banks and financial institutions from time to time parties to the Agreement (collectively, the “Banks”) and (iii) LaSalle Bank Midwest National Association, as agent for the Banks (in such capacity the “Agent”). Terms defined in the Loan Agreement are used herein with the same meaning. This Assignment and Acceptance, between the Assignor (as identified on Schedule 1 hereto) and the Assignee (as identified on Schedule 1 hereto) is dated as of the Effective Date (as specified on Schedule 1 hereto, the “Effective Date”).

     The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor, without recourse to the Assignor, as of the Effective Date, the interest (the “Assigned Interest”) in and to the Assignor’s rights and obligations under the Loan Agreement with respect to the credit facility contained in the Loan Agreement (the “Assigned Facility”), in a principal amount and percentage of the credit facility as set forth in Schedule 1.

     The Assignor (a) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto, other than that it has not created any adverse claim upon the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (b) makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under the Loan Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto or thereto; and (c) attaches the Note held by it evidencing the Assigned Facility and requests that Agent exchange such Note for a new Note payable to the Assignor (if the Assignor has retained any interest in the Assigned Facility) and a new Note payable to the Assignee in the respective amounts which reflect the assignment being made hereby (and after giving effect to any other assignments which have become effective on the Effective Date).

     The Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (b) confirms that it has received a copy of the Loan Documents, together with copies of the financial statements delivered pursuant thereto and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (c) agrees that it will, independently and without reliance upon the Assignor, Agent or any other person which has become a Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement; (d) appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Loan Agreement as are delegated to Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Loan Agreement and will perform in accordance with its terms all the obligations which by the terms of the Loan Agreement are required to be performed by it as a Bank including, if it is organized under the laws of a jurisdiction outside the United States, its obligation pursuant to subSection 4.10 of the Loan Agreement to deliver the forms prescribed by the Internal Revenue Service of the United States certifying

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as to the Assignee’s exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Loan Agreement, or such other documents as are necessary to indicate that all such payments are subject to such tax at a rate reduced by an applicable tax treaty.

     This Agreement is conditioned upon the acceptance of Agent pursuant to the Loan Agreement. The execution of this Agreement by Agent is evidence of this consent. Following the execution of this Assignment and Acceptance, it will be delivered to Agent for acceptance by it and recording by Agent pursuant to subSection10.1 of the Loan Agreement, effective as of the Effective Date (which shall not, unless otherwise agreed to by Agent, be earlier than five Business Days after the date of acceptance and recording by Agent of the executed Assignment and Acceptance).

     Upon such acceptance and recording, from and after the Effective Date, Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to the Effective Date or accrue subsequent to the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by Agent for period prior to the Effective Date or with respect to the making of this Assignment directly between themselves.

     From and after the Effective Date (a) the Assignee shall be a party to the Loan Agreement and, with respect to the Assigned Interest, have the rights and obligations of a Bank thereunder and under the other Loan Documents and shall be bound by the provisions thereof, and (b) the Assignor shall, with respect to the Assigned Interest, relinquish its rights and be released from its obligations under the Loan Agreement.

     This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of Michigan.

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     IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed on Schedule 1 hereto by their respective duly authorized officers.

ASSIGNOR:
 

By:  

Name:  

Title:  

ASSIGNEE:
 

By:  

Name:  

Title:  

ACCEPTED BY AGENT

LASALLE BANK MIDWEST NATIONAL ASSOCIATION, as Agent
 

By:  

Name:  

Title:  

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SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE

NAME OF ASSIGNOR:

NAME OF ASSIGNEE:

EFFECTIVE DATE OF ASSIGNMENT:

PRINCIPAL AMOUNT ASSIGNED	ASSIGNEE’S PRO RATA SHARE
(ASSIGNEE’S LOAN AMOUNT):	IN LOAN
$		%

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EX-4.2

     Exhibit 4.2

COMMERCIAL MORTGAGE

     This COMMERCIAL MORTGAGE dated as of July 14, 2008 (the “Mortgage”), is executed by AGREE LIMITED PARTNERSHIP, a Delaware limited partnership, whose address is 31850 Northwestern Highway,Farmington Hills, Michigan 48334 (the “Mortgagor”), to and for the benefit of LASALLE BANK MIDWEST NATIONAL ASSOCIATION, a national banking association, whose address is 2600 West Big Beaver Road, Troy, Michigan 48084 (in its individual capacity, “LaSalle”), as Agent for itself and the other Banks party to a Loan Agreement of even date herewith (in such capacity, “Agent”), among the Mortgagor, LaSalle, as Agent, and LaSalle and RAYMOND JAMES BANK, FSB, as Banks (as defined in the Loan Agreement) (the “Banks”), as amended, supplemented, restated or otherwise modified from time to time (the “Loan Agreement”).

R E C I T A L S:

     A. The Banks have severally agreed to extend mortgage loans (collectively, the “Loan”) to the Mortgagor in the aggregate principal amount of Twenty Four Million Eight Hundred Thousand and 00/100 Dollars ($24,800,000.00) (the “Loan Amount”), evidenced by promissory notes from the Mortgagor to the Banks, dated of even date with the Loan Agreement, in an aggregate principal amount equal to the Loan Amount (as amended, restated or replaced from time to time, the “Notes”).

     B. As a condition to the Banks’ loaning funds or providing other financial accommodations to the Mortgagor, the Banks require that the Mortgagor grant this Mortgage in order to secure the obligations and performance of the Mortgagor under such loans or financial accommodations.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor agrees as follows:

A G R E E M E N T S:

     The Mortgagor hereby mortgages and warrants to the Agent, as agent for the Banks under the Loan Agreement, its successors and assigns, and grants to the Agent, as agent for the Banks under the Loan Agreement, its successors and assigns, a security interest in, the following described property, rights and interests (referred to collectively herein as the “Property”):

     (a) The real estate located in the State of Michigan and legally described on Exhibit A attached hereto and made a part hereof (the “Real Estate”);

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     (b) All improvements of every nature whatsoever now or hereafter situated on the Real Estate, including all extensions, additions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing (the “Improvements”);

     (c) All easements, rights of way, gores of real estate, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way now or hereafter belonging, relating or appertaining to the Real Estate, and the reversions, remainders, rents, issues and profits thereof, and all the estate, right, title, interest, property, possession, claim and demand whatsoever, at law as well as in equity, of the Mortgagor of, in and to the same;

     (d) All rents, revenues, issues, profits, proceeds, income, royalties, Letter of Credit Rights (as defined in the Uniform Commercial Code of the State of Michigan (the “Code”) in effect from time to time), escrows, security deposits, impounds, reserves, tax refunds and other rights to monies from the Property and/or the businesses and operations conducted by the Mortgagor thereon;

     (e) All interest of the Mortgagor in all leases and rental agreements (including, without limitation, oil and gas leases and any specific lease(s) described in an attachment to this Mortgage), written or unwritten, now or hereafter demising the Property in whole or in any part, and all amendments, modifications, extensions, renewals, substitutions and replacements for any of the foregoing (each, a “Lease”, and collectively, the “Leases”), together with all security therefor and all monies payable thereunder;

     (f) All fixtures and articles of personal property now or hereafter owned by the Mortgagor and located on or forming a part of or used in connection with the Real Estate or the Improvements, including, but without limitation, any and all air conditioners, antennae, appliances, apparatus, awnings, basins, bathtubs, bidets, boilers, bookcases, cabinets, carpets, computer hardware and software used in the operation of the Property, coolers, curtains, dehumidifiers, disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment, escalators, exercise equipment, fans, fittings, floor coverings, furnaces, furnishings, furniture, hardware, heaters, humidifiers, incinerators, lighting, machinery, motors, ovens, pipes, plumbing, pumps, radiators, ranges, recreational facilities, refrigerators, screens, security systems, shades, shelving, sinks, sprinklers, stokers, stoves, toilets, ventilators, wall coverings, washers, windows, window coverings, wiring, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Real Estate or the Improvements in any manner, together with the benefit of any deposits or payments now or hereafter made on such personal property or fixtures by the Mortgagor or on its behalf; it being mutually agreed that all of the aforesaid property owned by the Mortgagor and placed on the Real Estate or the Improvements, so far as permitted by law, shall be deemed to be fixtures, a part of the realty, and security for the Obligations; notwithstanding the agreement hereinabove expressed that certain articles of property form a part of the realty covered by this Mortgage and be appropriated to its use and deemed to be realty, to the extent that such agreement and declaration may not be effective and that any of said articles may constitute Goods (as defined in the Code), this instrument shall constitute a security agreement, creating a security interest in such goods, as collateral, in the Agent, as agent for the Banks under the Loan Agreement, as a Secured Party, and the Mortgagor, as Debtor, all in accordance with the Code;

     (g) All of the Mortgagor’s interests in General Intangibles, including Payment Intangibles and Software (each as defined in the Code) now owned or hereafter acquired and

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related to the Property, including, without limitation, all of the Mortgagor’s right, title and interest in and to: (i) all agreements, licenses, permits and contracts to which the Mortgagor is or may become a party and which relate to the Property; (ii) all obligations and indebtedness owed to the Mortgagor thereunder; (iii) all intellectual property related to the Property; and (iv) all choses in action and causes of action relating to the Property;

     (h) All of the Mortgagor’s accounts now owned or hereafter created or acquired as relate to the Property and/or the businesses and operations conducted thereon, including, without limitation, all of the following now owned or hereafter created or acquired by the Mortgagor: (i) Accounts (as defined in the Code), contract rights, book debts, notes, drafts, and other obligations or indebtedness owing to the Mortgagor arising from the sale, lease or exchange of goods or other property and/or the performance of services; (ii) the Mortgagor’s rights in, to and under all purchase orders for goods, services or other property; (iii) the Mortgagor’s rights to any goods, services or other property represented by any of the foregoing; (iv) monies due or to become due to the Mortgagor under all contracts for the sale, lease or exchange of goods or other property and/or the performance of services including the right to payment of any interest or finance charges in respect thereto (whether or not yet earned by performance on the part of the Mortgagor); (v) Securities, Investment Property, Financial Assets and Securities Entitlements (each as defined in the Code); (vi) proceeds of any of the foregoing and all collateral security and guaranties of any kind given by any person or entity with respect to any of the foregoing; and (vii) all warranties, guarantees, permits and licenses in favor of the Mortgagor with respect to the Property; and

     (i) All proceeds of the foregoing, including, without limitation, all judgments, awards of damages and settlements hereafter made resulting from condemnation proceeds or the taking of the Property or any portion thereof under the power of eminent domain, any proceeds of any policies of insurance, maintained with respect to the Property or proceeds of any sale, option or contract to sell the Property or any portion thereof.

FOR THE PURPOSE OF SECURING the Loan, as evidenced by the Notes, including any renewals or extensions thereof, from the Banks to the Mortgagor and any and all indebtedness, liabilities and obligations of any and every kind and nature heretofore, now or hereafter owing from the Mortgagor to the Banks or any Bank Affiliate, or any of them, arising under: (a) the Notes, and any and all extensions and renewals thereof, (b) this Mortgage, (c) any Rate Management Obligations and/or Rate Management Agreements (as such terms are defined in the Loan Agreement), or any other interest rate, currency or commodity swap agreement(s), cap agreement(s) or collar agreement(s), and any other agreement(s) or arrangement(s) entered into by the Mortgagor in conjunction with the Loan and designed to protect the Mortgagor against fluctuations in interest rates, currency exchange rates or commodity prices, or (d) any other instrument(s), document(s), contract(s) or agreement(s) heretofore, now or hereafter executed by the Mortgagor and delivered to the Agent in conjunction with the Loan or to or under which the Mortgagor or any subsidiary or affiliate of the Mortgagor is a party or beneficiary with respect to the Loan (collectively, the “Loan Documents”), plus all interest, costs, expenses and reasonable attorney fees which may be made or incurred by the Agent in the disbursement, administration or collection of such indebtedness, liabilities and obligations and in the protection, maintenance and liquidation of any collateral for such indebtedness, liabilities and obligations, and ANY FUTURE ADVANCES, WITH INTEREST THEREON, made to the Mortgagor by the Banks which are secured by this Mortgage pursuant to the provisions hereof (collectively, the “Obligations”). The Mortgagor covenants to pay when due any Obligations for which it is liable in accordance with the terms of the Loan Documents and duly perform and observe all of the terms, covenants and conditions to be observed and performed by the Mortgagor under the Notes, this Mortgage and the other Loan Documents.

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     FUTURE ADVANCE MORTGAGE. This Mortgage is a “Future Advance Mortgage” under Public Act 348 of Michigan Public Acts of 1990. All future advances under the Loan Documents shall have the same priority as if the future advance was made on the date that this Mortgage was recorded. This Mortgage shall secure all indebtedness of the Mortgagor, its successors and assigns under the Loan Documents, whenever incurred, such indebtedness to be due at the times provided in the Loan Documents. Notice is hereby given that the indebtedness secured hereby may increase as a result of any defaults hereunder by Mortgagor due to, for example, and without limitation, unpaid interest or late charges, unpaid taxes or insurance premiums which Agent elects to advance, defaults under leases that Agent elects to cure, attorney fees or costs incurred in enforcing the Loan Documents or other expenses incurred by Agent in protecting the premises, the security of this Mortgage or Agent’s rights and interests.

     IT IS FURTHER UNDERSTOOD AND AGREED THAT:

     1. Title. The Mortgagor represents, warrants and covenants that (a) the Mortgagor is the holder of the fee simple title to the Property, free and clear of all liens and encumbrances, except those liens and encumbrances in favor of the Agent and as otherwise described on Exhibit B attached hereto and made a part hereof (the “Permitted Exceptions”); and (b) the Mortgagor has legal power and authority to mortgage and convey the Property.

     2. Assignment of Rents and Leases. As additional security for the Obligations and performance of the covenants and agreements set forth herein, pursuant to Michigan Compiled Laws 565.81 et seq. and Michigan Compiled Laws 554.231 et seq., each as amended, Mortgagor hereby assigns to the Agent, and grants Agent a security interest in, any and all Leases, and all rents, issues, income and profits derived from the use of the Property or any portion thereof, whether due or to become due. These assignments shall run with the land and shall be good and valid against Mortgagor and all persons claiming by, under, or through Mortgagor from the date of recording of this Mortgage and shall continue to be operative during foreclosure or any other proceedings taken to enforce this Mortgage. If any foreclosure sale results in a deficiency, the assignments shall continue as security during the foreclosure redemption period. Mortgagor covenants with and warrants to Agent that as of the date of this Mortgage:

     (a) Each Lease is in full force and effect and there are no defaults existing thereunder.

     (b) Mortgagor has not, except as may be described in an attachment, if any, to this Mortgage: (1) executed or granted any prior assignment, encumbrance, or security interest in any Lease or the rentals thereunder; (2) performed any acts or executed any other instruments or agreements which would limit or prevent Agent from obtaining the benefit of and exercising its rights conferred by this Mortgage; or (3) executed or granted any modification of any Lease, either orally or in writing.

     (c) As of the date of this Mortgage and for so long as any of the Obligations remains unpaid or unperformed:

     (i) Mortgagor shall promptly inform Agent of, assign, and deliver, any subsequent Lease of the Property or any part thereof, and make, execute and deliver to the Agent, upon demand, any and all documents, agreements and instruments as may, in Agent’s opinion, be necessary to protect the Agent’s rights under this Mortgage; provided, that Mortgagor’s failure to do so will not impair Agent’s interest in or rights with respect to any subsequent Lease, nor in any way affect the applicability of this Mortgage to such Lease and the unpaid rents due or to become due thereunder.

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     (ii) Mortgagor shall not, without the prior written consent of Agent: (1) cancel or accept surrender of a Lease; (2) modify or alter a Lease in any material way, either orally or in writing; (3) reduce the amount of or postpone payment of any Lease rents; (4) consent to any assignment of the lessee’s interest in a Lease, or any subletting thereunder, except as permitted under the provisions of a Lease; (5) collect or accept payment of rents under a Lease for more than one (1) month in advance; (6) make any other assignment, pledge, encumbrance, or other disposition of a Lease or any Lease rents, issues, income or profits.

     (d) Mortgagor shall perform and discharge each and every obligation, covenant, and agreement required to be performed by the landlord under any Lease and should Mortgagor fail to do so the Agent, at Agent’s sole option and without releasing Mortgagor from any such obligation, may make or do the same in such manner and to such extent as the Agent deems necessary to protect its rights and interests under this Mortgage. Any and all costs, expenses and sums paid by the Agent in performing under any Lease, including reasonable attorney fees, shall be added to the Obligations secured by this Mortgage. This assignment of rents is given as collateral security only and will not be construed as obligating Agent to perform any of the covenants or undertakings required to be performed by Mortgagor under any Lease.

     3. Maintenance, Repair, Restoration, Prior Liens, Parking. The Mortgagor covenants that, so long as any portion of the Obligations remains unpaid, the Mortgagor will, or will cause the tenants under Leases, in accordance with the terms and provisions of the Leases to: (a) promptly repair, restore or rebuild any Improvements now or hereafter on the Property which may become damaged or be destroyed to a condition substantially similar to the condition immediately prior to such damage or destruction, whether or not proceeds of insurance are available or sufficient for the purpose; (b) keep the Property in good condition and repair, without waste, and free from construction or like liens or claims or other liens or claims for lien (subject to the Mortgagor’s right to contest liens as permitted by the terms hereof; (c) pay when due any indebtedness which may be secured by a permitted lien or charge on the Property, and upon request furnish satisfactory evidence of the discharge of such lien to the Agent (subject to the Mortgagor’s right to contest liens as permitted by the terms of hereof); (d) comply with all requirements of law, municipal ordinances or restrictions and covenants of record with respect to the Property and the use thereof; (e) obtain and maintain in full force and effect, and abide by and satisfy the material terms and conditions of, all material permits, licenses, registrations and other authorizations with or granted by any governmental authorities that may be required from time to time with respect to the performance of its obligations under this Mortgage; (f) make no material alterations in the Property or demolish any portion of the Property without the Agent’s prior written consent, except as required by law or municipal ordinance; (g) suffer or permit no change in the use or general nature of the occupancy of the Property, without the Agent’s prior written consent; (h) not initiate or acquiesce in any zoning reclassification with respect to the Property, without the Agent’s prior written consent; (i) provide and thereafter maintain adequate parking areas within the Property as may be required by law, ordinance or regulation (whichever may be greater), together with any sidewalks, aisles, streets, driveways and sidewalk cuts and sufficient paved areas for ingress, egress and right-of-way to and from the adjacent public thoroughfares necessary or desirable for the use thereof; and (j) comply, and cause the Property at all times to be operated in compliance, with all applicable federal, state, local and municipal environmental, health and safety laws, statutes, ordinances, rules and regulations.

     4. Payment of Taxes and Assessments. The Mortgagor will pay, or cause tenants under Leases to pay, when due and before any penalty attaches, all general and special taxes, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever (all herein generally called “Taxes”), whether or not assessed against the Mortgagor, if applicable to the Property or any interest therein, or the Obligations, or any obligation or agreement

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secured hereby, subject to the Mortgagor’s and the Tenants’ under the Leases right to contest the same, as provided by the terms hereof; and the Mortgagor will, upon written request, furnish to the Agent duplicate receipts therefor within sixty (60) days after the Agent’s request.

     5. Insurance. The Mortgagor shall at all times keep, or cause the tenants under the Leases, if so provided for in the Leases, to keep, all buildings, improvements, fixtures and articles of personal property now or hereafter situated on the Property insured against loss or damage by fire and such other hazards as may reasonably be required by the Agent, in accordance with the Agent’s current insurance requirements, and such other insurance as the Agent may from time to time reasonably require and Agent shall be included thereon as the lender loss payee or an additional insured, as applicable, under a standard mortgage clause acceptable to the Agent. Such insurance may be provided through self-insurance programs maintained by tenants under the Leases, if so provided in the Leases, in which case Agent shall be listed as the lender loss payee or an additional insured as its interest may apply.

     (a) Unless the Mortgagor provides the Agent evidence of the insurance coverages required hereunder, the Agent may purchase insurance at the Mortgagor’s expense to cover the Agent’s interest in the Property. The insurance may, but need not, protect the Mortgagor’s interest. The coverages that the Agent purchases may not pay any claim that the Mortgagor makes or any claim that is made against the Mortgagor in connection with the Property. The Mortgagor may later cancel any insurance purchased by the Agent, but only after providing the Agent with evidence that the Mortgagor has provided for the insurance as required by this Mortgage. If the Agent purchases insurance for the Property, the Mortgagor will be responsible for the costs of such insurance, including, without limitation, interest and any other charges which the Agent may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Obligations. The cost of the insurance may be more than the cost of insurance the Mortgagor may be able to obtain on its own.

     (b) The Mortgagor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained hereunder unless the Agent is included thereon as the loss payee or an additional insured as applicable, under a standard mortgage clause acceptable to the Agent and such separate insurance is otherwise acceptable to the Agent.

     (c) In the event of loss, the Mortgagor shall give prompt notice thereof to the Agent. Insurance proceeds shall be distributed in accordance with the terms of the Leases. To the extent insurance proceeds are distributable to the Mortgage under the terms of the Leases, if the loss exceeds an amount equal to ten percent (10.00%) of the Obligations (the “Threshold”), shall have the sole and absolute right to make proof of loss. If such loss exceeds the Threshold or if such loss is equal to or less than the Threshold and the conditions set forth in clauses (i), (ii) and (iii) of the immediately succeeding subsection are not satisfied, then the Agent, solely and directly, shall receive such payment for loss from each insurance company concerned. If and only if (i) such loss is equal to or less than the Threshold, (ii) no Event of Default or event that with the passage of time, the giving of notice or both would constitute an Event of Default then exists, (iii) the Agent determines that the work required to complete the repair or restoration of the Property necessitated by such loss can be completed no later than the maturity date of the earliest maturing Obligation, and (iv) the total of the insurance proceeds and such additional amounts placed on deposit with the Agent by the Mortgagor for the specific purpose of rebuilding or restoring the Improvements equals or exceeds, in the sole and absolute discretion of the Agent, the reasonable costs of such rebuilding or restoration, then the Agent shall endorse to the Mortgagor any such payment and the Mortgagor may collect such payment directly. The Agent shall have the right, at

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its option and in its sole discretion, to apply any insurance proceeds received by the Agent pursuant to the terms of this section, after the payment of all of the Agent’s expenses, either (i) on account of the Obligations, irrespective of whether such principal balance is then due and payable, whereupon the Agent may declare the whole of the balance of Obligations to be due and payable, or (ii) to the restoration or repair of the property damaged as provided in subsection (d) below; provided, however, that the Agent hereby agrees to permit the application of such proceeds to the restoration or repair of the damaged property, subject to the provisions of subsection (d) below, if (i) the Agent has received satisfactory evidence that such restoration or repair shall be completed no later than the maturity date of the earliest maturing Obligation, and (ii) no Event of Default, or event that with the passage of time, the giving of notice or both would constitute an Event of Default, then exists. If insurance proceeds are made available to the Mortgagor by the Agent as hereinafter provided, the Mortgagor shall repair, restore or rebuild the damaged or destroyed portion of the Property so that the condition and value of the Property are substantially the same as the condition and value of the Property prior to being damaged or destroyed. Any insurance proceeds applied on account of the unpaid principal balance of the Obligations shall be subject to any prepayment premium provided for in the Loan Documents. In the event of foreclosure of this Mortgage, all right, title and interest of the Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale.

     (d) If insurance proceeds are made available by the Agent to the Mortgagor, the Mortgagor shall comply with the following conditions:

     (i) Before commencing to repair, restore or rebuild following damage to, or destruction of, all or a portion of the Property, whether by fire or other casualty, the Mortgagor shall obtain from the Agent its approval of all site and building plans and specifications pertaining to such repair, restoration or rebuilding.

     (ii) Prior to each payment or application of any insurance proceeds to the repair or restoration of the improvements upon the Property, the Agent shall be satisfied as to the following:

     (A) either such Improvements have been fully restored, or the expenditure of money as may be received from such insurance proceeds will be sufficient to repair, restore or rebuild the Property, free and clear of all liens, claims and encumbrances, except the lien of this Mortgage and the Permitted Exceptions, or, if such insurance proceeds shall be insufficient to repair, restore and rebuild the Property, the Mortgagor has deposited with the Agent such amount of money which, together with the insurance proceeds shall be sufficient to restore, repair and rebuild the Property; and

     (B) prior to each disbursement of any such proceeds, the Agent shall be furnished with a statement of the Agent’s architect (the cost of which shall be borne by the Mortgagor), certifying the extent of the repair and restoration completed to the date thereof, and that such repairs, restoration, and rebuilding have been performed to date in conformity with the plans and specifications approved by the Agent and with all statutes, regulations or ordinances (including building and zoning ordinances) affecting the Property; and the Agent shall be furnished with appropriate evidence of payment for labor or materials furnished to the Property, and total or partial lien waivers substantiating such payments.

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     (iii) If the Mortgagor shall fail to restore, repair or rebuild the Improvements within a time deemed satisfactory by the Agent, then the Agent, at its option, may (A) commence and perform all necessary acts to restore, repair or rebuild the said Improvements for or on behalf of the Mortgagor, or (B) declare an Event of Default. If insurance proceeds shall exceed the amount necessary to complete the repair, restoration or rebuilding of the Improvements, such excess shall be applied on account of the Obligations irrespective of whether such Obligations is then due and payable without payment of any premium or penalty.

     6. Condemnation. If all or any part of the Property are damaged, taken or acquired, either temporarily or permanently, in any condemnation proceeding, or by exercise of the right of eminent domain, the amount of any award or other payment for such taking or damages made in consideration thereof shall be distributed in accordance with the terms of the Leases. Any such amount distributable to the Mortgagor, to the extent of the full amount of the remaining unpaid Obligations, is hereby assigned to the Agent, who is empowered to collect and receive the same and to give proper receipts therefor in the name of the Mortgagor and the same shall be paid forthwith to the Agent. Such award or monies shall be applied on account of the Obligations, irrespective of whether such Obligations is then due and payable and, at any time from and after the taking the Agent may declare the whole of the balance of the Obligations to be due and payable. Notwithstanding the provisions of this section to the contrary, if any condemnation or taking of less than the entire Property occurs and provided that no Event of Default and no event or circumstance which with the passage of time, the giving of notice or both would constitute an Event of Default then exists, and if such partial condemnation, in the reasonable discretion of the Agent, has no material adverse effect on the operation or value of the Property, then the award or payment for such taking or consideration for damages resulting therefrom may be collected and received by the Mortgagor, and the Agent hereby agrees that in such event it shall not declare the Obligations to be due and payable, if it is not otherwise then due and payable.

     7. Taxation. If, by the laws of the United States of America, or of any state or political subdivision having jurisdiction over the Mortgagor, any tax is due or becomes due in respect of the execution and delivery of this Mortgage or any of the other Loan Documents, the Mortgagor shall pay such tax in the manner required by any such law. The Mortgagor further agrees to reimburse the Agent for any sums which the Agent may expend by reason of the imposition of any such tax. Notwithstanding the foregoing, the Mortgagor shall not be required to pay any income or franchise taxes of the Agent. If any law is enacted after the date hereof requiring (a) the deduction of any lien on the Property from the value thereof for the purpose of taxation or (b) the imposition upon the Agent of the payment of the whole or any part of the Taxes, charges or liens herein required to be paid by the Mortgagor, or (c) a change in the method of taxation of mortgages or debts secured by mortgages or the Agent’s interest in the Property, or the manner of collection of taxes, so as to affect this Mortgage or the Obligations or the holders thereof, then the Mortgagor, upon demand by the Agent, shall pay such Taxes or charges, or reimburse the Agent therefor; provided, however, that the Mortgagor shall not be deemed to be required to pay any income or franchise taxes of the Agent. Notwithstanding the foregoing, if in the opinion of counsel for the Agent, it is or may be unlawful to require the Mortgagor to make such payment or the making of such payment might result in the imposition of interest beyond the maximum amount permitted by law, then the Agent may declare all of the Obligations to be immediately due and payable.

     8. Agent’s Performance of Defaulted Acts and Expenses Incurred by Agent. If an Event of Default has occurred, the Agent may, but need not, make any payment or perform any act herein required of the Mortgagor in any form and manner deemed expedient by the Agent, subject to the rights of the tenants under the Leases, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien or title or claim thereof, or redeem from any tax sale or forfeiture affecting the Property or

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consent to any tax or assessment or cure any default of the Mortgagor in any lease of the Property. All monies paid for any of the purposes herein authorized and all expenses paid or incurred in connection therewith, including reasonable attorneys’ fees, and any other monies advanced by the Agent in regard to any tax provided for herein or to protect the Property or the lien hereof, shall be so much additional Obligations, and shall become immediately due and payable by the Mortgagor to the Agent, upon demand, and with interest thereon accruing from the date of such demand until paid at the highest rate provided in the Loan Documents. In addition to the foregoing, any costs, expenses and fees, including reasonable attorneys’ fees, incurred by the Agent in connection with (a) sustaining the lien of this Mortgage or its priority, (b) protecting or enforcing any of the Agent’s rights hereunder, (c) recovering any Obligations, (d) any litigation or proceedings affecting the Notes, this Mortgage, any of the other Loan Documents or the Property, including without limitation, bankruptcy and probate proceedings, or (e)  preparing for the commencement, defense or participation in any threatened litigation or proceedings affecting the Notes, this Mortgage, any of the other Loan Documents or the Property, with interest thereon accruing from the date of such demand until paid at the highest rate provided in the Loan Documents, shall be so much additional Obligations, and shall become immediately due and payable by the Mortgagor to the Agent, upon demand. Should any amount paid out or advanced by the Agent hereunder, or pursuant to any agreement executed by the Mortgagor in connection with the Loan, be used directly or indirectly to pay off, discharge or satisfy, in whole or in part, any lien or encumbrance upon the Property or any part thereof, then the Agent shall be subrogated to any and all rights, equal or superior titles, liens and equities, owned or claimed by any owner or holder of said outstanding liens, charges and indebtedness, regardless of whether said liens, charges and indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment.

     9. Security Agreement. The Mortgagor and the Agent agree that this Mortgage shall constitute a Security Agreement within the meaning of the Code with respect to all property described herein in which a security interest can be granted under Article 9 of the Code (the “Personal Property”; all of the Personal Property and the replacements, substitutions and additions thereto and the proceeds thereof being sometimes hereinafter collectively referred to as “Collateral”), and that a security interest in and to the Collateral is hereby granted to the Agent to secure payment of the Obligations.

     (a) The only persons having any interest in the Collateral are the Mortgagor, the Agent and holders of interests, if any, expressly permitted hereby.

     (b) No Financing Statement (other than Financing Statements showing the Agent as the sole secured party, or with respect to liens or encumbrances, if any, expressly permitted hereby) covering any of the Collateral or any proceeds thereof is on file in any public office except pursuant hereto; the Mortgagor, at its own cost and expense, upon demand, will furnish to the Agent such further information and will execute and deliver to the Agent such financing statements and other documents in form satisfactory to the Agent and will do all such acts as the Agent may request at any time or from time to time or as may be necessary or appropriate to establish and maintain a perfected security interest in the Collateral as security for the Obligations, subject to no other liens or encumbrances, other than liens or encumbrances benefiting the Agent and liens and encumbrances (if any) expressly permitted hereby. The Mortgagor will pay the cost of filing or recording such financing statements or other documents, and this instrument, in all public offices wherever filing or recording is deemed by the Agent to be desirable. The Mortgagor hereby irrevocably authorizes the Agent at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto, without the signature of the Mortgagor covering the Collateral and containing such information as is required by Section 5 of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such financing statement or amendment is filed.

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     (c) Upon an Event of Default hereunder, the Agent shall have the remedies of a secured party under the Code, including, without limitation, the right to take immediate and exclusive possession of the Collateral. The Agent will give the Mortgagor at least ten (10) days notice of the time and place of any public sale of the Collateral or of the time after which any private sale or any other intended disposition thereof is made. The requirements of reasonable notice shall be met if such notice is mailed, by certified United States mail or equivalent, postage prepaid, to the address of the Mortgagor hereinafter set forth at least ten (10) days before the time of the sale or disposition. Any such sale may be held in conjunction with any foreclosure sale of the Property. If the Agent so elects, the Property and the Collateral may be sold as one lot. The net proceeds realized upon any such disposition, after deduction for the expenses of retaking, holding, preparing for sale, selling and the reasonable attorneys’ fees and legal expenses incurred by the Agent, shall be applied against the Obligations in such order or manner as the Agent shall select. The Agent will account to the Mortgagor for any surplus realized on such disposition.

     (d) The terms and provisions contained in this section, unless the context otherwise requires, shall have the meanings and be construed as provided in the Code.

     (e) This Mortgage is intended to be a financing statement within the purview of Section 9-502(3) of the Code with respect to the Collateral and the goods described herein, which goods are or may become fixtures relating to the Property.

     10. Restrictions on Transfer. The Mortgagor, without the prior written consent of the Agent, shall not effect, suffer or permit any of the following (a “Prohibited Transfer”), whether effected directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise:

     (a) Any conveyance, sale, assignment, transfer, lien, pledge, mortgage, security interest or other encumbrance or alienation (or any agreement to do any of the foregoing) of any the Property or any part thereof or interest therein, excepting only sales or other dispositions of Collateral no longer useful in connection with the operation of the Property (“Obsolete Collateral”), provided that prior to the sale or other disposition thereof, such Obsolete Collateral has been replaced by Collateral of at least equal value and utility which is subject to the lien hereof with the same priority as with respect to the Obsolete Collateral; provided, however, that the foregoing provisions of this section shall not apply (i) to the lien of current taxes and assessments not in default, or (ii) to leases permitted by the terms of the Loan Documents, if any.

     (b) Any conveyance, or assignment or other transaction which causes the current general partner of the Mortgage to no longer be the general partner of the Mortgagor.

     (c) In determining whether or not to make the loan secured by this Mortgage, the Agent evaluated the background and experience of the Mortgagor in owning and operating property such as the Property, found it acceptable and relied and continues to rely upon same as the means of maintaining the value of the Property which is the Agent’s security for the Obligations. The Mortgagor further recognizes that any secondary junior financing placed upon the Property (i) may divert funds which would otherwise be used to pay the Obligations; (ii) could result in acceleration and foreclosure by any such junior encumbrancer which would force the Agent to take measures and incur expenses to protect its security; (iii) would detract from the value of the Property should the Agent come into possession thereof with the intention of selling same; and (iv) would impair the Agent’s right to accept a deed in lieu of foreclosure, as a foreclosure by the Agent would be necessary to clear the title to the Property. In accordance with the foregoing and for the purposes of (a) protecting the Agent’s security, both of repayment and of value of the Property; (b) giving the Agent the full benefit of its bargain and contract with

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the Mortgagor; (c) keeping the Property free of subordinate financing liens, the Mortgagor agrees that if this section is deemed a restraint on alienation, that it is a reasonable one.

     11. Events of Default, Foreclosure; Expense of Litigation. If an event of default, as defined in the Loan Agreement, shall occur under the Obligations (an “Event of Default”), the Agent may, at its option, and upon occurrence of an Event of Default described in Section 11.1(j) of the Loan Agreement shall, declare the whole of the Obligations to be immediately due and payable without further notice to the Mortgagor. When all or any part of the Obligations shall become due, whether by acceleration or otherwise, the Agent shall have the right to foreclose this Mortgage and sell the Property at public auction or venue pursuant to Michigan Compiled Laws 600.3201 et seq. or judicially foreclose this Mortgage under the provisions of Michigan Compiled Laws 600.3101 et seq., and/or exercise any right, power or remedy provided in this Mortgage or any of the other Loan Documents in accordance with Michigan Compiled Laws 600.3201 et seq. or Michigan Compiled Laws 600.3101 et seq. (as may be amended from time to time, collectively, the “Act”). In the event of a foreclosure sale, the Agent is hereby authorized, without the consent of the Mortgagor, to assign any and all insurance policies to the purchaser at such sale or to take such other steps as the Agent may deem advisable to cause the interest of such purchaser to be protected by any of such insurance policies.

     (a) Mortgagor agrees to pay all of Agent’s costs and expenses, including reasonable attorney fees, which shall be added to the Obligations secured by this Mortgage. At any foreclosure sale held under the foregoing Michigan statutes, Mortgagor agrees that in its foreclosure sale bid price the Agent shall be allowed to deduct from the appraised value of the Property: (i) a brokerage commission of not more than ten percent (10%) of the Property value; (ii) the unpaid balance of any mortgage or other liens which have priority over the lien of this Mortgage; and (iii) the sum of all unpaid property taxes and assessments and insurance premiums due and to become due on the Property through the date upon which the foreclosure redemption period shall expire. Any foreclosure sale may, at the sole option of the Agent, be made en masse or in parcels, any law to the contrary notwithstanding, and Mortgagor hereby knowingly, voluntarily and intelligently waives any right to require any such foreclosure sale to be made in parcels or any right to select which parcels shall be sold. The proceeds of any foreclosure sale shall be applied, as the Agent elects, to the payment of Agent’s collection and other expenses, including reasonable attorney fees, and/or payment of the Obligations, with the surplus, if any, to Mortgagor or Mortgagor’s successor in interest. Commencement of proceedings to foreclose this Mortgage in any manner authorized by law shall be deemed an exercise of the Agent’s option to accelerate the Obligations. After the date upon which the maturity of the Obligations secured by this Mortgage has been accelerated, Agent acceptance of any amount(s) paid by Mortgagor less than the full unpaid principal balance of the Obligations plus accrued interest, late charges and Agent’s costs and expenses in this Mortgage described, shall not waive the default or acceleration, but shall only be credited upon the unpaid balance of the Obligations unless the Agent specifically agrees in writing to waive any such default and/or acceleration.

     THIS MORTGAGE CONTAINS A POWER OF SALE AND UPON DEFAULT MAY BE FORECLOSED BY ADVERTISEMENT. IN A FORECLOSURE BY ADVERTISEMENT, NO HEARING IS INVOLVED AND THE ONLY NOTICE REQUIRED IS PUBLICATION OF A FORECLOSURE NOTICE IN A LOCAL NEWSPAPER AND POSTING A COPY OF THE NOTICE UPON THE PREMISES. IF THIS MORTGAGE IS FORECLOSED BY ADVERTISEMENT UNDER THE PROVISIONS OF MICHIGAN COMPILED LAWS 600.3201 ET SEQ., MORTGAGOR HEREBY KNOWINGLY, VOLUNTARILY, AND INTELLIGENTLY WAIVES ALL RIGHTS UNDER THE CONSTITUTION AND LAWS OF THE STATE

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OF MICHIGAN AND THE CONSTITUTION AND LAWS OF THE UNITED STATES OF AMERICA TO ANY NOTICE OR HEARING IN CONNECTION WITH A FORECLOSURE BY ADVERTISEMENT EXCEPT AS SET FORTH IN THE MICHIGAN STATUTE.

     (b) The Agent may procure mortgage foreclosure or title reports. Mortgagor covenants to pay forthwith to the Agent all sums paid for such purposes with interest at the highest rate applicable to the Obligations, and such sums and the interest thereon shall constitute a further lien upon the Property. The Agent may also procure appraisals, environmental audits and such other investigations or analyses of the Property as the Agent may determine to be required by regulatory or accounting rules, procedures or practices or to otherwise be prudent or necessary. Mortgagor shall grant the Agent free and unrestricted access to the Property for such purposes. Mortgagor covenants to pay forthwith to the Agent all sums paid for such purposes with interest at the highest rate applicable to the Obligations, and such sums and the interest thereon shall constitute a further lien upon the Property.

     12. Appointment of Receiver. In conjunction with any foreclosure of this Mortgage, Agent shall be entitled to seek the appointment of a receiver for the Property in accordance with applicable law. Such appointment may be made either before or after sale, without notice, without regard to the solvency or insolvency of the Mortgagor at the time of application for such receiver and without regard to the value of the Property or whether the same shall be then occupied as a homestead or not and the Agent hereunder or any other holder of the Notes may be appointed as such receiver. Such receiver shall have power to collect the rents, issues and profits of the Property (i) during the pendency of such foreclosure, (ii) in case of a sale and a deficiency, during the full statutory period of redemption, whether there be redemption or not, and (iii) during any further times when the Mortgagor, but for the intervention of such receiver, would be entitled to collect such rents, issues and profits. Such receiver also shall have all other powers and rights that may be necessary or are usual in such cases for the protection, possession, control, management and operation of the Property during said period, including, to the extent permitted by law, the right to lease all or any portion of the Property for a term that extends beyond the time of such receiver’s possession without obtaining prior court approval of such lease. The court from time to time may authorize the application of the net income received by the receiver in payment of (a) the Obligations, or any tax, special assessment or other lien which may be or become superior to the lien hereof or of such decree, provided such application is made prior to foreclosure sale, and (b) any deficiency upon a sale and deficiency.

     13. Agent’s Right of Possession in Case of Default. At any time after an Event of Default has occurred, the Mortgagor shall, upon demand of the Agent, surrender to the Agent possession of the Property, subject to any rights of tenants under Leases. The Agent, in its discretion, may, with process of law, enter upon and take and maintain possession of all or any part of the Property, subject to any rights of tenants under Leases, together with all documents, books, records, papers and accounts relating thereto, and may exclude the Mortgagor and its employees, agents or servants therefrom, and the Agent may then hold, operate, manage and control the Property, either personally or by its agents. The Agent shall have full power to use such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment or security of the avails, rents, issues, and profits of the Property, including actions for the recovery of rent, actions in forcible detainer and actions in distress for rent. Without limiting the generality of the foregoing, the Agent shall have full power to: (a) cancel or terminate any lease or sublease for any cause or on any ground which would entitle the Mortgagor to cancel the same; (b) elect to disaffirm any lease or sublease which is then subordinate to the lien hereof; (c) extend or modify any then existing leases and to enter into new leases, which extensions, modifications and leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the Maturity Date and beyond the date of the issuance of a deed or deeds to a

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purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such leases, and the options or other such provisions to be contained therein, shall be binding upon the Mortgagor and all persons whose interests in the Property are subject to the lien hereof and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Obligations, satisfaction of any foreclosure judgment, or issuance of any certificate of sale or deed to any purchaser; (d) make any repairs, renewals, replacements, alterations, additions, betterments and improvements to the Property as the Agent deems are necessary; (e) insure and reinsure the Property and all risks incidental to the Agent’s possession, operation and management thereof.

     14. Waste. Mortgagor’s failure, refusal or neglect to pay any taxes or assessments levied against the Property or any insurance premiums due upon policies of insurance covering the Property will constitute waste under Michigan Compiled Laws 600.2927, and the Agent shall have a right to appointment of a receiver of the Property and of the rents and income from the Property, with such powers as the Court making such appointment confers. Mortgagor hereby irrevocably consents to such appointment in such event, and agrees that Agent’s costs and expenses, including reasonable attorney fees, incurred in such proceeding shall be added to the Obligations secured by this Mortgage. Payment by the Agent for and on behalf of Mortgagor of any delinquent taxes, assessments, or insurance premiums payable by Mortgagor under the terms of this Mortgage will not cure the default herein described nor in any manner impair the Agent’s right to appointment of a receiver as set forth herein.

     15. Rights Cumulative. Each right, power and remedy herein conferred upon the Agent is cumulative and in addition to every other right, power or remedy, express or implied, given now or hereafter existing under any of the Loan Documents or at law or in equity, and each and every right, power and remedy herein set forth or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by the Agent, and the exercise or the beginning of the exercise of one right, power or remedy shall not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy, and no delay or omission of the Agent in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power or remedy, or be construed to be a waiver of any Event of Default or acquiescence therein.

     16. Agent’s Right of Inspection. The Agent and its representatives shall have the right to inspect the Property and the books and records with respect thereto at all reasonable times upon not less than twenty four (24) hours prior notice to the Mortgagor, and access thereto, subject to the rights of tenants in possession, shall be permitted for that purpose.

     17. Notices. Any notices, communications and waivers under this Mortgage shall be in writing and shall be (i) delivered in person, (ii) mailed, postage prepaid, either by registered or certified mail, return receipt requested, or (iii) by overnight express carrier, addressed to the Mortgagor or the Agent at the address shown for each party, respectively, in the first paragraph of this Mortgage or to any other address as to any of the parties hereto, as such party shall designate in a written notice to the other party hereto. All notices sent pursuant to the terms of this section shall be deemed received (i) if personally delivered, then on the date of delivery, (ii) if sent by overnight, express carrier, then on the next federal banking day immediately following the day sent, or (iii) if sent by registered or certified mail, then on the earlier of the third federal banking day following the day sent or when actually received.

     18. Contests. Notwithstanding anything to the contrary herein contained, the Mortgagor and the tenants in accordance with the terms of the Leases shall have the right to contest by appropriate legal proceedings diligently prosecuted any Taxes imposed or assessed upon the Property or which may be or become a lien thereon and any construction or other liens or claims for lien upon the Property (each, a “Contested Liens”), and no Contested Lien shall constitute an Event of Default hereunder, if, but only if:

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     (a) The Mortgagor shall forthwith give notice of any Contested Lien to the Agent at the time the same shall be asserted;

     (b) If contested by the Mortgagor, the Mortgagor shall either pay under protest or deposit with the Agent the full amount (the “Lien Amount”) of such Contested Lien, together with such amount as the Agent may reasonably estimate as interest or penalties which might arise during the period of contest; provided that in lieu of such payment the Mortgagor may furnish to the Agent a bond or title indemnity in such amount and form, and issued by a bond or title insuring company, as may be satisfactory to the Agent.

     19. Further Instruments. Upon request of the Agent, the Mortgagor shall execute, acknowledge and deliver all such additional instruments and further assurances of title and shall do or cause to be done all such further acts and things as may reasonably be necessary fully to effectuate the intent of this Mortgage and of the other Loan Documents.

     20. Indemnity. The Mortgagor hereby covenants and agrees that no liability shall be asserted or enforced against the Agent in the exercise of the rights and powers granted to the Agent in this Mortgage, and the Mortgagor hereby expressly waives and releases any such liability, except to the extent resulting from the gross negligence or willful misconduct of the Agent. The Mortgagor shall indemnify and save the Agent harmless from and against any and all liabilities, obligations, losses, damages, claims, costs and expenses, including reasonable attorneys’ fees and court costs (collectively, “Claims”), of whatever kind or nature which may be imposed on, incurred by or asserted against the Agent at any time by any third party which relate to or arise from: (a) any suit or proceeding (including probate and bankruptcy proceedings), or the threat thereof, in or to which the Agent may or does become a party, either as plaintiff or as a defendant, by reason of this Mortgage or for the purpose of protecting the lien of this Mortgage; (b) the offer for sale or sale of all or any portion of the Property; and (c) the ownership, leasing, use, operation or maintenance of the Property, if such Claims relate to or arise from actions taken prior to the surrender of possession of the Property to the Agent in accordance with the terms of this Mortgage; provided, however, that the Mortgagor shall not be obligated to indemnify or hold the Agent harmless from and against any Claims with respect to disputes between the Banks or between the Banks and the Agent not arising out of the wrongdoing of the Borrower or directly arising from the gross negligence or willful misconduct of the Agent. The Agent shall give notice as promptly as reasonably practical to the Mortgagor in the event it becomes aware of a claim or potential claim for which it intends to seek indemnity under the provisions of this Section 20. All costs provided for herein and paid for by the Agent shall be so much additional Obligations and shall become immediately due and payable upon demand by the Agent and with interest thereon from the date incurred by the Agent until paid at the highest rate provided in the Loan Documents.

     21. Environmental Representations, Warranties, Covenants and Indemnification. The Mortgagor represents and warrants to the Agent that, to the best of the Mortgagor’s Actual Knowledge: (a) neither the Property nor the operations of the Mortgagor are in violation of any Environmental Law or any permit or authorization issued pursuant thereto., and (b) no Hazardous Substances have been released on or from the Property in violation of any Environmental Laws. “Actual Knowledge” shall mean knowledge actually possessed by Richard Agree, or his successor, without inquiry or additional investigation, and not constructive knowledge which is imputed to the Mortgagor. The Mortgagor covenants and agrees to at all times strictly observe and promptly comply with all Environmental Laws and shall keep the Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Laws (“Environmental Liens”). The Mortgagor shall promptly notify the Agent in writing if the Mortgagor receives written notice from a governmental authority having jurisdiction over environmental matters that there is or are (a) any Hazardous Substances, other than those used by the Mortgagor or tenants under leases at the Property in the ordinary course of their businesses and in

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compliance with all Environmental Laws, present on the Property; (b) any release of Hazardous Substances in, on, under, from or migrating towards the Property; (c) any non-compliance with Environmental Laws related in any way to the Property; (d) any actual or potential Environmental Liens; (e) any investigation or action or claim, whether threatened or pending, by any governmental agency or third party pertaining to the Release of Hazardous Substances in, on, under, from, or migrating towards the Property. Mortgagor agrees to allow the Agent or its agent access to the Property to confirm Mortgagor’s compliance with all Environmental Laws and Agent may at any time it has reasonable cause to suspect a violation of an Environmental Law may have occurred, at Mortgagor’s sole cost and expense, hire, or require Mortgagor to hire, an environmental consultant to inspect, test and audit the Property and advise the Agent concerning Mortgagor’s compliance with Environmental Laws. Any costs paid by Agent for violations of Environmental Laws or to hire an environmental consultant shall be added to the Obligations secured by this Mortgage. Mortgagor agrees to indemnify and hold the Agent harmless from any and all losses, costs, suits, harm, liability, and damages of any and every kind, including reasonable attorney fees, which result from or are related to any violation(s) by Mortgagor or Mortgagor’s predecessors in title to the Property of any Environmental Laws, and agrees that such indemnity shall survive the foreclosure or discharge of this Mortgage and shall continue so long as Agent has any interest in or liability for the Property. “Environmental Laws” shall mean any and all federal, state and local laws (whether under common law, statute, rule, regulation or otherwise), requirements under permits or other authorizations issued with respect thereto, and other orders, decrees, judgments, directives or other requirements of any governmental authority relating to or imposing liability or standards of conduct (including disclosure or notification) concerning protection of human health or the environment or Hazardous Substances or any activity involving Hazardous Substances, all as previously and in the future to be amended. “Hazardous Substance” shall mean, but is not limited to, any substance, chemical, material or waste (a) the presence of which causes a nuisance or trespass of any kind; (b) which is regulated by any federal, state or local governmental authority because of its toxic, flammable, corrosive, reactive, carcinogenic, mutagenic, infectious, radioactive, or other hazardous property or because of its effect on the environment, natural resources or human health and safety, including, but not limited to, petroleum and petroleum products, asbestos-containing materials, polychlorinated biphenyls, lead and lead-based paint, radon, radioactive materials, flammables and explosives; or (c) which is designated, classified, or regulated as being a hazardous or toxic substance, material, pollutant, waste (or a similar such designation) under any federal, state or local law, regulation or ordinance, including under any Environmental Law such as the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. §9601 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. §11001 et seq.), the Hazardous Substances Transportation Act (49 U.S.C. §1801 et seq.), or the Clean Air Act (42 U.S.C. §7401 et seq.).

     22. Miscellaneous.

     (a) Successors and Assigns. This Mortgage and all provisions hereof shall be binding upon and enforceable against the Mortgagor and its assigns and other successors. This Mortgage and all provisions hereof shall inure to the benefit of the Agent, its successors and assigns and any holder or holders, from time to time, of the Notes.

     (b) Invalidity of Provisions; Governing Law. In the event that any provision of this Mortgage is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, the Mortgagor and the Agent shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law, the purpose of this Mortgage and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect. This Mortgage is to be construed in accordance with and governed by the laws of the State of Michigan.

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     (c) Municipal Requirements. The Mortgagor shall not by act or omission permit any building or other improvement on premises not subject to the lien of this Mortgage to rely on the Property or any part thereof or any interest therein to fulfill any municipal or governmental requirement, and the Mortgagor hereby assigns to the Agent any and all rights to give consent for all or any portion of the Property or any interest therein to be so used. Similarly, no building or other improvement on the Property shall rely on any premises not subject to the lien of this Mortgage or any interest therein to fulfill any governmental or municipal requirement. Any act or omission by the Mortgagor which would result in a violation of any of the provisions of this subsection shall be void.

     (d) Option of Agent to Subordinate. At the option of the Agent, this Mortgage shall become subject and subordinate, in whole or in part (but not with respect to priority of entitlement to insurance proceeds or any condemnation or eminent domain award) to any and all leases of all or any part of the Property upon the execution by the Agent of a unilateral declaration to that effect and the recording thereof in the Office of the Register of Deeds in and for the county wherein the Property are situated.

     (e) Mortgagee-in-Possession. Nothing herein contained shall be construed as constituting the Agent a mortgagee-in-possession in the absence of the actual taking of possession of the Property by the Agent pursuant to this Mortgage.

     (f) Relationship of Agent and Mortgagor. The Agent shall in no event be construed for any purpose to be a partner, joint venturer, agent or associate of the Mortgagor or of any lessee, operator, concessionaire or licensee of the Mortgagor in the conduct of their respective businesses, and, without limiting the foregoing, the Agent shall not be deemed to be such partner, joint venturer, agent or associate on account of the Agent becoming a mortgagee-in-possession or exercising any rights pursuant to this Mortgage, any of the other Loan Documents, or otherwise. The relationship of the Mortgagor and the Agent hereunder is solely that of debtor/creditor.

     (g) Time of the Essence. Time is of the essence of the payment by the Mortgagor of all amounts due and owing to the Agent under the Loan Documents and the performance and observance by the Mortgagor of all terms, conditions, obligations and agreements contained in this Mortgage and the other Loan Documents.

     (h) No Merger. The parties hereto intend that the Mortgage and the lien hereof shall not merge in fee simple title to the Property, and if the Agent acquires any additional or other interest in or to the Property or the ownership thereof, then, unless a contrary intent is manifested by the Agent as evidenced by an express statement to that effect in an appropriate document duly recorded, this Mortgage and the lien hereof shall not merge in the fee simple title and this Mortgage may be foreclosed as if owned by a stranger to the fee simple title.

     (i) CONSENT TO JURISDICTION. TO INDUCE THE BANKS TO EXTEND THE OBLIGATIONS, THE MORTGAGOR IRREVOCABLY AGREES THAT, SUBJECT TO THE AGENT’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THE OBLIGATIONS AND THIS MORTGAGE WILL BE LITIGATED IN COURTS HAVING SITUS IN OAKLAND COUNTY, MICHIGAN. THE MORTGAGOR HEREBY CONSENTS AND SUBMITS, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO THE JURISDICTION OF ANY COURT LOCATED WITHIN OAKLAND COUNTY, MICHIGAN, WAIVES PERSONAL SERVICE OF PROCESS UPON THE MORTGAGOR, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE

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MADE BY REGISTERED MAIL DIRECTED TO THE MORTGAGOR AT THE ADDRESS STATED HEREIN AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

     (j) WAIVER OF JURY TRIAL. THE MORTGAGOR AND THE AGENT (BY ACCEPTANCE HEREOF), HAVING BEEN REPRESENTED BY COUNSEL EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS MORTGAGE OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS MORTGAGE OR (B) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS MORTGAGE, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE MORTGAGOR AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST THE AGENT OR ANY OTHER PERSON INDEMNIFIED UNDER THIS MORTGAGE ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

     (k) Complete Agreement. This Mortgage and the other Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof and the Loan Documents may not be modified, altered or amended except by an agreement in writing signed by both the Mortgagor and the Agent.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the Mortgagor has executed and delivered this Mortgage as of the day and year first above written.

MORTGAGOR:
AGREE LIMITED PARTNERSHIP, a Delaware
limited partnership
By:	Agree Realty Corporation, a Maryland corporation
Its:	General Partner
	By:	/s/ Richard Agree
	Name:	Richard Agree
	Title:	President

Notary Acknowledgement

     The foregoing instrument was acknowledged before me in                                          County, Michigan, on                                         , by Richard Agree, who is the President of Agree Realty Corporation, a Maryland corporation, which is the General Partner of AGREE LIMITED PARTNERSHIP, a Delaware limited partnership, on behalf of the limited partnership.

Notary’s Signature:                                                            

Notary’s Name:

Notary Public, State of Michigan, County of                    

My commission expires:                                                    

Acting in the County of:                                                     

DRAFTED BY:	WHEN RECORDED RETURN TO:
Daniel C. Watson, Esq.	LaSalle Bank Midwest N.A.
Dykema Gossett PLLC	c/o LaSalle Bank N.A.
400 Renaissance Center	Attn: Rita Gomez MC74-00
Detroit, Michigan 48243	4747 W. Irving Road
	Chicago, Illinois 60641

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EXHIBIT A

LEGAL DESCRIPTION OF REAL ESTATE

Land Situated in the City of Grand Rapids, County of Kent, State of Michigan.

Part of the Southeast 1/4 of Section 8, Town 6 North, Range 11 West, City of Grand Rapids, Kent County, Michigan, described as: Commencing at the Southeast corner of Section 8; thence South 90°00’00” West 690.33 feet along the South line of Section 8; thence North 03°48’25” West 50.69 feet to a point on the North right-of-way line of 28th Street and the place of beginning; thence North 03°48’25” West 149.31 feet parallel to the West line of the Southeast 1/4 of the Southeast 1/4 of Section 8; thence South 90°00’00” West 30.00 feet; thence North 03°48’25” West 207.59 feet along the East line of Oakgrove Cemetery; thence South 89°49’30” East 307.77 feet; thence North 00°10’30” East 30.00 feet; thence North 34°34’57” West 142.24 feet; thence Northeasterly 191.52 feet along a 115.50 foot radius curve to the right, the chord of which bears North 12°55’12” East 170.32 feet; thence North 60°43’14” East 14.10 feet; thence Southeasterly 544.27 feet along a 3769.83 foot radius curve to the right, the chord of which bears South 25°16’02” East 543.80 feet; thence South 35°21’20” West 225.40 feet along the Northwesterly line of a clear vision right-of-way; thence Northwesterly 71.70 feet along a 57246.01 foot radius curve to the right, the chord of which bears North 89°58’00” West 71.70 feet along the North line of 28th Street; thence North 89°55’50” West 253.76 feet to the point of beginning.

PROPERTY ADDRESS OF REAL ESTATE: 2643 Kalamazoo, Grand Rapids, Michigan

TAX IDENTIFICATION NUMBER: 41-18-08-400-017

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EXHIBIT B

PERMITTED EXCEPTIONS

     1. General real estate taxes for the year 2008 and each year thereafter not yet due and payable.

     2. Exception Nos. 1-11, inclusive, contained on Schedule B of Liberty Title Commercial Agency, LLC File No. K10969 dated April 9, 2008.

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EX-4.3

Exhibit 4.3

CONTINUING UNCONDITIONAL GUARANTY

     This CONTINUING UNCONDITIONAL GUARANTY dated as of July 14, 2008 (the “Guaranty”), is executed by AGREE REALTY CORPORATION, a Maryland corporation, whose address is 31850 Northwestern Highway, Farmington Hills, Michigan 48334 (the “Guarantor”), to and for the benefit of LASALLE BANK MIDWEST NATIONAL ASSOCIATION, a national banking association, whose address is 2600 West Big Beaver Road, Troy, Michigan 48084 (in its individual capacity, “LaSalle”), as Agent for itself and the other Banks party to a Loan Agreement of even date herewith (in such capacity, “Agent”), among AGREE LIMITED PARTNERSHIP, a Delaware limited partnership (the “Borrower”), LaSalle, as Agent, and LaSalle and RAYMOND JAMES BANK, FSB, as Banks (as defined in the Loan Agreement) (the “Banks”), as amended, supplemented, restated or otherwise modified from time to time (the “Loan Agreement”).

R E C I T A L S:

     A. The Banks have severally agreed to extend mortgage loans (collectively, the “Loan”) to the Borrower in the aggregate principal amount of Twenty Four Million Eight Hundred Thousand and 00/100 Dollars ($24,800,000.00) (the “Loan Amount”), evidenced by promissory notes from the Borrower to the Banks, dated of even date with the Loan Agreement, in an aggregate principal amount equal to the Loan Amount (as amended, restated or replaced from time to time, the “Notes”).

     B. As a condition to the Banks’ loaning funds or providing other financial accommodations to the Borrower, the Banks require that the Guarantor execute and deliver this Guaranty in order to support the obligations and performance of the Borrower under such loans or financial accommodations.

     C. The Guarantor is financially interested in the Borrower and desires the Banks to extend or continue the extension of credit to the Borrower, which is necessary and desirable to the conduct and operation of the business of the Borrower and will inure to the financial benefit of the Guarantor.

     NOW, THEREFORE, FOR VALUE RECEIVED, it is agreed that the preceding provisions and recitals are an integral part hereof and that this Guaranty shall be construed in light thereof, and in consideration of advances, credit or other financial accommodation heretofore afforded, concurrently herewith being afforded or hereafter to be afforded to the Borrower by the Banks, the Guarantor hereby unconditionally and absolutely guarantees to the Banks or other person paying or incurring the same, irrespective of the validity, regularity or enforceability of any instrument, writing, arrangement or credit agreement relating to or the subject of any such financial accommodation, the prompt payment in full of: (a) the Indebtedness (as hereinafter defined), plus (b) all Rate Management Obligations under any Rate Management Agreements (as defined in the Loan Agreement, plus (c) all costs, legal expenses and attorneys’ and paralegals’ fees of every kind (including those costs, expenses and fees of attorneys and paralegals who may be employees of the Agent, its parent or affiliates), paid or incurred by the Agent in endeavoring to collect all or any part of the Indebtedness, or in enforcing its rights in connection with any collateral therefor, or in enforcing this Guaranty, or in defending against any defense, counterclaim, setoff or crossclaim based on any act of commission or omission by the Banks with respect to the Indebtedness, any collateral therefor, or in connection with any Repayment Claim (as hereinafter defined) (collectively, the “Guaranteed Debt”). In addition, the Guarantor hereby unconditionally and absolutely guarantees to the Banks the prompt, full and faithful performance and discharge by the Borrower of each of the terms, conditions, agreements, representations and warranties on the part of the Borrower contained in any agreement, or in any modification or addenda thereto or substitution thereof in connection with any of the Indebtedness.

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     As used herein, “Indebtedness” shall mean and include any and all indebtedness, obligations and liabilities of the Borrower to the Banks or to any Bank Affiliates (as defined in the Loan Agreement) arising: (a) under and pursuant to the Loan Agreement, the Notes or the other Loan Documents (as defined in the Loan Agreement), including any and all new or renewal notes issued in substitution or replacement therefor or any and all extensions, renewals or replacements thereof, and (b) under any Rate Management Agreements, or any other interest rate, currency or commodity swap agreement(s), cap agreement(s) or collar agreement(s), and any other agreement(s) or arrangement(s) designed to protect the Borrower against fluctuations in interest rates, currency exchange rates or commodity prices entered into in connection with the loan evidenced by the Notes.

     Upon an event of default under the Indebtedness, or any default by the Guarantor of any of the covenants, terms and conditions set forth herein which is not cured within thirty days after notice from the Agent to the Guarantor, all of the Guaranteed Debt shall, without notice to anyone, immediately become due and all amounts due hereunder shall be payable by the Guarantor. The Guarantor hereby expressly and irrevocably: (a) waives, to the fullest extent possible, on behalf of itself and its successors and assigns (including any surety) and any other person, any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification, set off or to any other rights that could accrue to a guarantor or to the holder of a claim against any person, and which the Guarantor may have or hereafter acquire against any person in connection with or as a result of the Guarantor’s execution, delivery and/or performance of this Guaranty, or any other documents to which the Guarantor is a party or otherwise; (b) waives any “claim” (as such term is defined in the United States Bankruptcy Code) of any kind against the Borrower, and further agrees that it shall not have or assert any such rights against any person (including any surety), either directly or as an attempted set off to any action commenced against the Guarantor by the Agent or any other person; and (c) acknowledges and agrees (i) the foregoing waivers are intended to benefit the Banks and shall not limit or otherwise affect the Guarantor’s liability hereunder or the enforceability of this Guaranty, (ii) the Borrower and its successors and assigns are intended third party beneficiaries of the foregoing waivers, and (iii) the agreements set forth in this paragraph and the Banks’ rights under this paragraph shall survive payment in full of the Guaranteed Debt.

     All dividends or other payments received by the Banks on account of the Indebtedness, from whatever source derived, shall be taken and applied by the Agent toward the payment of the Indebtedness and in such order of application as the Agent may, in its sole discretion, from time to time elect. The Agent shall have the exclusive right to determine how, when and what application of payments and credits, if any, whether derived from the Borrower or any other source, shall be made on the Indebtedness and such determination shall be conclusive upon the Guarantor.

     This Guaranty shall in all respects be continuing, absolute and unconditional, and shall remain in full force and effect with respect to the Guarantor until: (i) written notice from the Agent to the Guarantor by United States certified mail of its discontinuance as to the Guarantor; or (ii) until all Guaranteed Debt created or existing before receipt of either such notice shall have been fully paid. If there is more than one Guarantor party hereto and this Guaranty is discontinued as to any Guarantor, this Guaranty shall nevertheless continue and remain in force against any other guarantor until discontinued as to all other Guarantors. In the event of the death, incompetency or dissolution of the Guarantor, this Guaranty shall continue as to all of the Guaranteed Debt theretofore incurred by the Borrower even though the Indebtedness is renewed or the time of maturity of the Indebtedness is extended without the consent of the successors or assigns of the Guarantor.

     No compromise, settlement, release or discharge of, or indulgence with respect to, or failure, neglect or omission to enforce or exercise any right against any other guarantor shall release or discharge the Guarantor.

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     The Guarantor’s liability under this Guaranty shall in no way be modified, affected, impaired, reduced, released or discharged by any of the following (any or all of which may be done or omitted by the Agent in its sole discretion, without notice to anyone and irrespective of whether the Indebtedness shall be increased or decreased thereby): (a) any acceptance by the Banks of any new or renewal note or notes of the Borrower, or of any security or collateral for, or other guarantors or obligors upon, any of the Indebtedness; (b) any compromise, settlement, surrender, release, discharge, renewal, refinancing, extension, alteration, exchange, sale, pledge or election with respect to the Indebtedness, or any note by the Borrower, or with respect to any collateral under Section 1111 or any action under Section 364, or any other section of the United States Bankruptcy Code, now existing or hereafter amended, or other disposition of, or substitution for, or indulgence with respect to, or failure, neglect or omission to realize upon, or to enforce or exercise any liens or rights of appropriation or other rights with respect to, the Indebtedness or any security or collateral therefor or any claims against any person or persons primarily or secondarily liable thereon; (c) any failure, neglect or omission to perfect, protect, secure or insure any of security interests, liens, or encumbrances of the properties or interests in properties subject thereto; (d) the granting of credit from time to time by the Banks to the Borrower in excess of the amount, if any, to which the right of recovery under this Guaranty is limited (which is hereby expressly authorized); (e) any change in the Borrower’s name or the merger of the Borrower into another entity; or (f) any act of commission or omission of any kind or at any time upon the part of the Banks with respect to any matter whatsoever, other than the execution and delivery by the Agent to the Guarantor of an express written release or cancellation of this Guaranty. The Guarantor hereby consents to all acts of commission or omission of the Banks set forth above and agrees that the standards of good faith, diligence, reasonableness and care shall be measured, determined and governed solely by the terms and provisions hereof.

     In order to hold the Guarantor liable hereunder, there shall be no obligation on the part of the Agent, at any time, to resort for payment to the Borrower or to anyone else, or to any collateral, security, property, liens or other rights and remedies whatsoever, all of which are hereby expressly waived by the Guarantor.

     The Guarantor hereby expressly waives diligence in collection or protection, presentment, demand or protest or in giving notice to anyone of the protest, dishonor, default, or nonpayment or of the creation or existence of any of the Indebtedness or of any security or collateral therefor or of the acceptance of this Guaranty or of extension of credit or indulgences hereunder or of any other matters or things whatsoever relating hereto.

     The Guarantor waives any and all defenses, claims and discharges of the Borrower, or any other obligor, pertaining to the Indebtedness, except the defense of discharge by payment in full. Without limiting the generality of the foregoing, the Guarantor will not assert, plead or enforce against the Banks any defense of waiver, release, discharge in bankruptcy, statute of limitations, res judicata, statute of frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality or unenforceability which may be available to the Borrower or any other person liable in respect of any of the Indebtedness, or any setoff available against the Banks to the Borrower or any such other person, whether or not on account of a related transaction. The Guarantor expressly agrees that the Guarantor shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Guaranteed Debt, whether or not the liability of the Borrower or any other obligor for such deficiency is discharged pursuant to statute or judicial decision.

     The Guarantor represents and warrants to the Banks that the financial statements of the Guarantor furnished to the Banks at or prior to the execution and delivery of this Guaranty fairly present the financial condition of the Guarantor for the periods shown therein, and since the dates covered by the most recent of such financial statements, there has been no material adverse change in the Guarantor’s

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business operations or financial condition. The Guarantor agrees to advise the Agent immediately of any adverse change in the financial condition, business operations or any other status of the Guarantor. The Agent shall have the right at all times during business hours to inspect the books and records of the Guarantor and make extracts therefrom. Except as expressly shown on the most recent of such financial statements, the Guarantor owns all of its assets free and clear of all liens; is not a party to any litigation, nor is any litigation threatened to the knowledge of the Guarantor which would, if adversely determined, cause any material adverse change in its business or financial condition; and has no delinquent tax liabilities, nor have any tax deficiencies been proposed against it. The Guarantor shall not sell, lease, transfer, convey or assign any of its assets, unless such sale, lease, transfer, conveyance or assignment is performed in the ordinary course of its business consistent with past practices, and will not have a material adverse effect on the business or financial condition of the Guarantor or its ability to perform its obligations hereunder. The Guarantor shall neither become a party to any merger or consolidation, nor, except in the ordinary course of its business consistent with past practices, acquire all or substantially all of the assets of, a controlling interest in the stock of, or a partnership or joint venture interest in, any other entity.

     The Banks may, without demand or notice of any kind to anyone, after the occurrence of an Event of Default, as defined in the Loan Agreement, apply or set off any balances, credits, deposits, accounts, moneys or other indebtedness at any time credited by or due from the Banks to the Guarantor against the amounts due hereunder and in such order of application as the Banks may from time to time elect.

     THE GUARANTOR WAIVES EVERY DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE GUARANTOR MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE AGENT IN ENFORCING THIS GUARANTY. AS FURTHER SECURITY, ANY AND ALL DEBTS AND LIABILITIES NOW OR HEREAFTER ARISING AND OWING TO THE GUARANTOR BY THE BORROWER, OR TO ANY OTHER PARTY LIABLE TO THE BANKS FOR THE BORROWER’S OBLIGATIONS, ARE HEREBY SUBORDINATED TO THE BANKS’ CLAIMS AND ARE HEREBY ASSIGNED TO THE BANKS. THE GUARANTOR HEREBY AGREES THAT THE GUARANTOR MAY BE JOINED AS A PARTY DEFENDANT IN ANY LEGAL PROCEEDING (INCLUDING, BUT NOT LIMITED TO, A FORECLOSURE PROCEEDING) INSTITUTED BY THE AGENT AGAINST THE BORROWER. THE GUARANTOR, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES IRREVOCABLY THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING COMMENCED BY OR AGAINST THE GUARANTOR IN WHICH THE GUARANTOR AND THE AGENT ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANKS GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWER AND ACCEPTING THIS GUARANTY.

     Should a claim (a “Repayment Claim”) be made upon the Banks at any time for repayment of any amount received by the Banks in payment of the Indebtedness, or any part thereof, whether received from the Borrower, the Guarantor pursuant hereto, or received by the Banks as the proceeds of collateral, by reason of: (i) any judgment, decree or order of any court or administrative body having jurisdiction over the Banks or any of their property; or (ii) any settlement or compromise of any such Repayment Claim effected by the Banks, in their sole discretion, with the claimant (including the Borrower), the Guarantor shall remain liable to the Banks for the amount so repaid to the same extent as if such amount had never originally been received by the Banks, notwithstanding any termination hereof or the cancellation of any note or other instrument evidencing the Indebtedness.

     The Banks may, without notice to anyone, sell or assign the Indebtedness, or any part thereof, or grant participations therein, and in any such event, the Agent, as agent for each and every immediate or

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remote assignee or holder of, or participant in, all or any of the Indebtedness shall have the right to enforce this Guaranty, by suit or otherwise for the benefit of such assignee, holder, or participant, as fully as if herein by name specifically given such right herein.

     Unless and until all of the Indebtedness have been paid in full, no release or discharge of any other person, whether primarily or secondarily liable for and obligated with respect to the Indebtedness, or the institution of bankruptcy, receivership, insolvency, reorganization, dissolution or liquidation proceedings by or against the Guarantor or any other person primarily or secondarily liable for and obligated with respect to the Indebtedness, or the entry of any restraining or other order in any such proceedings, shall release or discharge the Guarantor, or any other guarantor of the Indebtedness, or any other person, firm or corporation liable to the Banks for the Indebtedness.

     This Guaranty has been delivered to the Agent at its offices in Michigan, and the rights, remedies and liabilities of the parties shall be construed and determined in accordance with the laws of the State of Michigan, in which State it shall be performed by the Guarantor.

     TO INDUCE THE BANKS TO GRANT FINANCIAL ACCOMMODATIONS TO THE BORROWER, THE GUARANTOR IRREVOCABLY AGREES THAT ALL ACTIONS ARISING DIRECTLY OR INDIRECTLY AS A RESULT OR IN CONSEQUENCE OF THIS GUARANTY SHALL BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING SITUS IN THE COUNTY OF OAKLAND, MICHIGAN. THE GUARANTOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND VENUE OF ANY STATE OR FEDERAL COURT LOCATED AND HAVING ITS SITUS IN THE COUNTY OF OAKLAND, MICHIGAN, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. THE GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS, AND CONSENTS TO THE SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE GUARANTOR AT THE ADDRESS INDICATED IN THE AGENT’S RECORDS IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE. FURTHERMORE, THE GUARANTOR WAIVES ALL NOTICES AND DEMANDS IN CONNECTION WITH THE ENFORCEMENT OF THE BANKS’ RIGHTS HEREUNDER, AND HEREBY CONSENTS TO, AND WAIVES NOTICE OF THE RELEASE, WITH OR WITHOUT CONSIDERATION, OF THE BORROWER OR ANY OTHER PERSON RESPONSIBLE FOR PAYMENT OF THE BORROWER’S OBLIGATIONS, OR OF ANY COLLATERAL THEREFOR.

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

     It is agreed that the Guarantor’s liability is independent of any other guaranties at any time in effect with respect to all or any part of the Indebtedness, and that the Guarantor’s liability hereunder may be enforced regardless of the existence of any such other guaranties.

     No delay on the part of the Agent in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Agent of any right or remedy shall preclude other or further exercise thereof, or the exercise of any other right or remedy. No modification, termination, discharge or waiver of any of the provisions hereof shall be binding upon the Banks, except as expressly set forth in a writing duly signed and delivered on behalf of the Agent.

5

     The execution, delivery and performance of this Guaranty by the Guarantor have been duly authorized by all necessary action on the part of the Guarantor and do not and will not (i) require any consent or approval which has not been obtained, (ii) violate any provision of organizational documents of the Guarantor or of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Guarantor; (iii) require the consent or approval of, or filing or registration with, any governmental body, agency or authority, or (iv) result in a breach of or constitute a default under, or result in the imposition of any lien, charge or encumbrance upon any property of the Guarantor pursuant to, any indenture or other agreement or instrument under which the Guarantor is a party or by which it or any of its properties may be bound or affected. The person(s) executing and delivering this Guarantor for and on behalf of the Guarantor, are duly authorized to so act.

     This Guaranty: (i) is valid, binding and enforceable in accordance with its provisions, and no conditions exist to the legal effectiveness of this Guaranty as to the Guarantor; (ii) contains the entire agreement between the Guarantor and the Banks; (iii) is the final expression of their intentions; and (iv) supersedes all negotiations, representations, warranties, commitments, offers, contracts (of any kind or nature, whether oral or written) prior to or contemporaneous with the execution hereof. No prior or contemporaneous representations, warranties, understandings, offers or agreements of any kind or nature, whether oral or written, have been made by the Banks or relied upon by the Guarantor in connection with the execution hereof.

     The term “Guarantor” as used herein shall mean all parties signing this Guaranty, and the provisions hereof shall be binding upon the Guarantor, and each one of them, and all such parties, their respective successors and assigns shall be jointly and severally obligated hereunder. This Guaranty shall inure to the benefit of the Banks and their successors and assigns.

[SIGNATURE PAGE FOLLOWS]

6

     IN WITNESS WHEREOF, the Mortgagor has executed and delivered this Continuing Unconditional Guaranty as of the day and year first above written.

GUARANTOR:
AGREE REALTY CORPORATION, a Maryland corporation
By:	/s/ Richard Agree
Name:	Richard Agree
Title:	President

7

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard Agree, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Agree Realty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2008	/s/ Richard Agree
	Name: Richard Agree
	Title: President and Chief Executive Officer

1

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kenneth R. Howe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Agree Realty Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2008	/s/ Kenneth R. Howe
	Name: Kenneth R. Howe
	Title: Vice President and Chief Financial Officer

1

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Based on a review of the Quarterly Report of Agree Realty Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard Agree, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairy presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Richard Agree

Richard Agree

President and Chief Executive Officer

August 8, 2008

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Based on a review of the Quarterly Report of Agree Realty Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kenneth R. Howe, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairy presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Kenneth R. Howe

Kenneth R. Howe

Vice President and Chief Financial Officer

August 8, 2008