Exhibit 10.1

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of June 1, 2014, by
and between MARCUS & MILLICHAP, INC., a Delaware corporation (“Borrower”), and
WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

RECITALS

Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree as follows:

ARTICLE I

CREDIT TERMS

SECTION 1.1. LINE OF CREDIT.

(a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank
hereby agrees to make advances to Borrower from time to time up to and including
June 1, 2017, not to exceed at any time the aggregate principal amount of Sixty
Million Dollars ($60,000,000) (“Line of Credit”), the proceeds of which shall be
used working capital and general corporate needs (including, without limitation,
mergers and acquisitions and international expansion permitted or not prohibited
under this Agreement). Borrower’s obligation to repay advances under the Line of
Credit shall be evidenced by a promissory note dated as of June 1, 2014 (“Line
of Credit Note”), all terms of which are incorporated herein by this reference.

(b) Letter of Credit Subfeature. As a subfeature under the Line of Credit, Bank
agrees from time to time during the term thereof to issue or cause an Affiliate
to issue letters of credit for the account of Borrower to provide credit support
to Borrower’s and Borrower’s subsidiaries’ landlords or to provide credit or
finance such other activities of Borrower and its subsidiaries as are acceptable
to Bank in its sole but reasonable discretion (each, a “Letter of Credit” and
collectively, “Letters of Credit”); provided however, that the aggregate undrawn
amount of all outstanding Letters of Credit shall not at any time exceed Ten
Million Dollars ($10,000,000). The form and substance of each Letter of Credit
shall be subject to approval by Bank, in its sole but reasonable discretion.
Each Letter of Credit shall be issued for a term not to exceed three hundred
sixty five (365) days, as designated by Borrower; provided however, that no
Letter of Credit shall have an expiration date more than three hundred sixty
five (365) days beyond the maturity date of the Line of Credit. The undrawn
amount of all Letters of Credit shall be reserved under the Line of Credit and
shall not be available for borrowings thereunder. Each Letter of Credit shall be
subject to the additional terms and conditions of the Letter of Credit
agreements, applications and any related documents required by Bank in
connection with the issuance thereof. Each drawing paid under a Letter of Credit
shall be deemed an advance under the Line of Credit and shall be repaid by
Borrower in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if advances under the Line
of Credit are not available, for any reason, at the time any drawing is paid,
then Borrower shall immediately pay to Bank the full amount drawn, together with
interest thereon from the date such drawing is paid to the date such amount is
fully repaid by Borrower, at the rate of interest applicable to advances under
the Line of Credit. In such event Borrower agrees

 

LOGO [g746076g63k16.jpg]

 

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that Bank, in its sole discretion, may debit any account maintained by Borrower
with Bank for the amount of any such drawing. For purposes of this Agreement,
“Affiliate” shall mean, with respect to any person or entity, any other person
or entity directly or indirectly controlling (including but not limited to all
directors and officers of such person), controlled by, or under direct or
indirect common control with such person or entity. A person or entity shall be
deemed to control another person or entity for the purposes of the definition of
Affiliate if such person or entity possesses, directly or indirectly, the power
(i) to vote 20% or more of the equity interests having ordinary voting power for
the election of directors or managers of such other person or entity or (ii) to
direct or cause the direction of the management and policies of such other
person or entity, whether through the ownership of voting securities, by
contract or otherwise.

(c) Borrowing and Repayment. Borrower may from time to time during the term of
the Line of Credit borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions contained
herein or in the Line of Credit Note; provided however, that the total
outstanding borrowings under the Line of Credit shall not at any time exceed the
maximum principal amount available thereunder, as set forth above.

SECTION 1.2. INTEREST/FEES.

(a) Interest. The outstanding principal balance of advances and the amount of
each drawing paid under any Letter of Credit shall bear interest from the date
such drawing is paid to the date such amount is fully repaid by Borrower, at the
rate of interest set forth in the Line of Credit Note.

(b) Commitment Fee. Borrower shall pay to Bank a non-refundable commitment fee
for the Line of Credit equal to $175,000, which fee shall be due and payable in
full on the effective date of this Agreement.

(c) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to the
percentage per annum (computed on the basis of a 360-day year, actual days
elapsed) set forth below which corresponds to the daily unused percentage range
of the Line of Credit set forth below, on the daily unused amount of the Line of
Credit, which fee shall be calculated on a quarterly basis by Bank and shall be
due and payable by Borrower in arrears on the first Business Day of each fiscal
quarter of Borrower, commencing on July 1, 2014. As used herein, the term
“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks in the State of California are authorized or required to close.

 

Unused Percentage

of Line of Credit

   Unused
Commitment Fee  

66.7% to 100%

     0.10 % 

33.4% to 66.6%

     0.05 % 

0.0% to 33.3%

     0.00 % 

Each such adjustment shall be effective on the first Business Day of Borrower’s
fiscal quarter following the quarter during which Bank receives and reviews
Borrower’s most current fiscal quarter-end financial statements in accordance
with any requirements established by Bank for the preparation and delivery
thereof.

 

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SECTION 1.3. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all
interest due under the Line of Credit by debiting Borrower’s designated deposit
account with Bank, or any other deposit account maintained by Borrower with
Bank, for the full amount thereof. Should there be insufficient funds in any
such deposit account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by Borrower.

SECTION 1.4. COLLATERAL.

As security for all indebtedness and other obligations of Borrower to Bank
arising under this Agreement and the other Loan Documents, Borrower hereby
grants to Bank security interests of first priority in all Borrower’s personal
property assets; except to the extent any such property constitutes the capital
stock of a controlled foreign corporation (as defined in the Internal Revenue
Code).

As security for all indebtedness and other obligations of Borrower to Bank
arising under this Agreement and the other Loan Documents, Borrower shall cause
each domestic corporate guarantor to grant to Bank security interests of first
priority in all of its personal property assets; except to the extent any such
property constitutes the capital stock of a controlled foreign corporation (as
defined in the Internal Revenue Code) in which case no such pledge shall be
required.

All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, and other documents as Bank shall
reasonably require, all in form and substance reasonably satisfactory to Bank.
Borrower shall pay to Bank within ten (10) Business Days after written demand
the full amount of all documented charges, costs and expenses (to include fees
paid to third parties and all allocated costs of Bank personnel), expended or
incurred by Bank in connection with any of the foregoing security, including
without limitation, filing and recording fees and costs of appraisals and
audits.

SECTION 1.5. GUARANTIES. The payment and performance of all indebtedness and
other obligations of Borrower to Bank shall be guaranteed jointly and severally
by Marcus & Millichap Real Estate Investment Services, Inc., all of Marcus &
Millichap Real Estate Investment Services, Inc.’s domestic subsidiaries,
currently existing and formed in the future, and Marcus & Millichap Capital
Corporation, Mark One Capital, Inc., and all of Borrower’s domestic
subsidiaries, currently existing and formed in the future, as evidenced by and
subject to the terms of guaranties from time to time entered into and in form
and substance reasonably satisfactory to Bank.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.

 

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SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of Delaware, and is qualified or
licensed to do business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so licensed could
reasonably be expected to have a material adverse effect on Borrower.

SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory
note, contract, instrument and other document required hereby or at any time
hereafter delivered to Bank in connection herewith (collectively, the “Loan
Documents”) have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which executes the same,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
liquidation, moratorium or other similar laws of general application and
equitable principles relating to or affecting creditors’ rights.

SECTION 2.3. NO VIOLATION. The execution, delivery and performance by Borrower
of each of the Loan Documents do not violate any provision of any law or
regulation applicable to Borrower, or contravene any provision of the Articles
of Incorporation or By-Laws of Borrower, or result in any breach of or default
under any contract, obligation, indenture or other instrument to which Borrower
is a party or by which Borrower may be bound, except to the extent such default
could not reasonably be expected to cause a material adverse effect on the
financial condition or operation of Borrower.

SECTION 2.4. LITIGATION. There are no pending, or to the best of Borrower’s
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which, if adversely determined, will result in a judgment against Borrower in an
amount equal to or greater than $5,000,000 and which are or will be recorded on
Borrower’s financial statements as highly likely and probable, other than those
disclosed by Borrower to Bank in writing prior to the date hereof.

SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The annual financial statement
of Borrower dated December 31, 2013, and all interim financial statements
delivered to Bank since said date, true copies of which have been delivered by
Borrower to Bank prior to the date hereof, (a) have been prepared in accordance
with generally accepted accounting procedures (“GAAP”) which means, at any time,
generally accepted accounting principles in the United States of America as in
effect at such time, applied in accordance with the consistency requirements
thereof (excluding in the case of unaudited financial statements footnotes),
(b) are complete and correct and present fairly in all material respects the
financial condition of Borrower, (c) disclose all liabilities of Borrower that
are required to be reflected in the financial statements of Borrower in
accordance with GAAP, whether liquidated or unliquidated, fixed or contingent,
and (d) since the dates of such financial statements there has been no material
adverse change in the financial condition of Borrower, nor has Borrower
mortgaged, pledged, granted a security interest in or otherwise encumbered any
of its assets or properties except in favor of Bank or as otherwise permitted
herein or by Bank in writing or pursuant to this Agreement.

SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year in
excess of $500,000 in the aggregate.

SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower’s obligations
subject to this Agreement to any other obligation of Borrower, except as
otherwise permitted herein.

 

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SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.

SECTION 2.9. ERISA. Borrower is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time (“ERISA”); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a “Plan”); no Reportable Event
as defined in ERISA has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under GAAP.

SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any material
obligation for borrowed money, any material purchase money obligation or any
other material lease, commitment, contract, instrument or obligation the default
under which could reasonably be expected to cause a material adverse effect on
the financial condition or operation of Borrower.

SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in
writing prior to the date hereof, Borrower is in compliance in all material
respects with all applicable federal or state environmental, hazardous waste,
health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower’s operations and/or owned
properties, including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

ARTICLE III

CONDITIONS

SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank
to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank’s satisfaction of all of the following conditions:

(a) Approval of Bank Counsel. All legal matters incidental to the extension of
credit by Bank shall be satisfactory to Bank’s counsel.

 

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(b) Documentation. Bank shall have received, in form and substance satisfactory
to Bank, each of the following, duly executed:

 

  (i) This Agreement and each promissory note or other instrument or document
required hereby.

 

  (ii) Security agreements from Borrower and each corporate guarantor.

 

  (iii) Guaranties from each guarantor.

 

  (iv) Corporate resolutions and certificates of incumbency.

 

  (v) Such other documents as Bank may reasonably require under any other
Section of this Agreement.

(c) Financial Condition. There shall have been no material adverse change, as
determined by Bank in its reasonable discretion, in the financial condition or
business of Borrower or any guarantor hereunder, taken as a whole, if any, nor
any material decline, as determined by Bank in its reasonable discretion, in the
market value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower or any such guarantor, if any.

(d) Insurance. Borrower shall have delivered to Bank evidence of insurance
coverage, in form, substance, amounts, covering risks and issued by companies
reasonably satisfactory to Bank, and where required by Bank, with lender loss
payable endorsements in favor of Bank.

(e) Fees and Expenses. Bank shall have received all fees payable to it on or
before closing and a reimbursement for all costs and expenses, including fees
and out of pocket costs of its outside counsel, incurred or to be incurred by
Bank in connection with this Agreement and the transactions contemplated hereby.

(f) Financial Projections and Other Information. Bank shall have received
Borrower’s financial projections for the term of the credit facility, which
shall be satisfactory to Bank, including balance sheet, income statement and
statement of cash flow, together with such other financial and other information
reasonably requested by Bank.

(g) Final Credit Approval. Bank shall have obtained the final internal credit
approval for this transaction.

SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to
make each extension of credit requested by Borrower hereunder shall be subject
to the fulfillment to Bank’s satisfaction of each of the following conditions:

(a) Compliance. The representations and warranties contained herein and in each
of the other Loan Documents shall be true in all material respects (except in
the case of a representation or warranty qualified by materiality, in which case
such representation or warranty shall be true in all respects) on and as of the
date of the signing of this Agreement and on the date of each extension of
credit by Bank pursuant hereto (provided, however, that those representations
and warranties expressly referring to a specific date shall be true in all
material respects as of such date), with the same effect as though such
representations and warranties had been made on and as of each such date, and on
each such date, no Event of Default as defined herein, and no condition, event
or act which with the giving of notice or the passage of time or both would
constitute such an Event of Default, shall have occurred and be continuing or
shall exist.

(b) Documentation. Bank shall have received all additional documents which may
be required in connection with such extension of credit.

 

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SECTION 3.3. CONDITIONS OF INITIAL LETTER OF CREDIT. Prior to the issuance of
the first Letter of Credit hereunder, Bank shall have received any letter of
credit documentation required by Bank completed and duly executed by Borrower.

ARTICLE IV

AFFIRMATIVE COVENANTS

Borrower covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, and shall cause each corporate guarantor
(Borrowers and all corporate guarantors at any time and from time to time are
referred to herein collectively as “Obligors”) to, unless Bank otherwise
consents in writing:

SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or
other liabilities due under any of the Loan Documents at the times and place and
in the manner specified therein, and immediately upon written demand by Bank,
the amount by which the outstanding principal balance of any credit subject
hereto at any time exceeds any limitation on borrowings applicable thereto.

SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with GAAP consistently applied, and permit any representative of
Bank, at any reasonable time upon reasonable notice, to inspect, audit and
examine such books and records, to make copies of the same, and to inspect the
properties of such Obligor.

SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in form
and detail reasonably satisfactory to Bank:

(a) not later than 90 days after and as of the end of each fiscal year, the
consolidated financial statements of Borrower (including the other Obligors as
required by GAAP) including (i) balance sheet, (ii) income statement (and/or
statement of comprehensive income, as required by GAAP); (iii) statement of cash
flows and (iv) notes thereto, all prepared in accordance with GAAP. The
financial statements will include an opinion of the Borrower’s certified public
accountants (to be a firm recognized by the Public Company Accounting Oversight
Board);

(b) not later than 45 days after and as of the end of each quarter, the
condensed consolidated financial statements of Borrower (including the other
Obligors as required by GAAP) including (i) balance sheet, (ii) income statement
(and/or statement of comprehensive income as required by GAAP); (iii) statement
of cash flows and (iv) notes thereto, all prepared in accordance with GAAP as
required by the Securities and Exchange Commission for interim reporting;

(c) contemporaneously with each annual and quarterly financial statement of
Borrower required hereby, a certificate of the president, chief financial
officer or chief accounting officer of Borrower that (i) said financial
statements present fairly in all material respects the financial condition,
results of operations and cash flows of the Borrower in accordance with GAAP;
(ii) Borrower and Obligors are in compliance with all financial covenants in
this Agreement (as evidenced by supporting calculations in reasonable detail
attached to such certificate), and (iii) there exists no Event of Default nor
any condition, act or event which with the giving of notice or the passage of
time or both would constitute an Event of Default;

 

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(d) not later than 90 days after each fiscal year of Borrower, a budget for the
then current fiscal year, including balance sheet, income statement, and
statement of cash flows;

(e) Filings on Form 10-K, 10Q, and 8-K, and such other similar filings as are
required to be filed by Borrower with the Securities and Exchange Commission,
concurrently with such filings;

(f) from time to time such other information as Bank may reasonably request.

Documents required to be delivered pursuant to clauses (a), (b) and (e) above
may be delivered electronically and if so delivered, shall be deemed to have
been delivered on the date on which Borrower posts such documents, or provides a
link thereto on Borrower’s website on the Internet at the website address
“www.marcusmillichap.com” (or any successor page notified to Bank).

SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which such Obligor is organized and/or which govern such Obligor’s
continued existence and with the requirements of all laws, rules, regulations
and orders of any governmental authority applicable to such Obligor and/or its
business, in each case the failure of which to preserve, maintain and comply
with would reasonably be expected to have a material adverse effect on
Borrower’s business, operations, property or financial condition.

SECTION 4.5. INSURANCE. Maintain and keep in force, for each business in which
such Obligor is engaged, insurance of the types and in amounts customarily
carried in similar lines of business, including but not limited to fire,
extended coverage, public liability and workers’ compensation, with all such
insurance carried with companies and in amounts reasonably satisfactory to Bank,
and deliver to Bank from time to time at Bank’s request schedules setting forth
all insurance then in effect, together with a lender’s loss payee endorsement
for all such insurance naming Bank as a lender loss payee.

SECTION 4.6. FACILITIES. Keep all properties useful or necessary to such
Obligor’s business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.

SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as such Obligor may in good
faith contest or as to which a bona fide dispute may arise, and (b) for which
such Obligor has made provision, to Bank’s satisfaction, for eventual payment
thereof in the event such Obligor is obligated to make such payment.

SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower or any Obligor which, if
adversely determined, will result in a judgment against Borrower or any Obligor
in an amount equal to or greater than $5,000,000 and which is or will be
recorded on Borrower’s financial statements as highly likely and probable or is
not covered by insurance.

 

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SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower’s and the other Obligors’
financial condition, on a combined basis, as follows using GAAP consistently
applied and used consistently with prior practices (except to the extent
modified by the definitions herein), with compliance determined commencing with
Borrower’s financial statements for the period ending June 30, 2014:

(a) EBITDAR Coverage Ratio not less than 1.25 to 1.0 as of each quarter end,
determined on a rolling 4-quarter basis, with “EBITDAR” defined as net
income(loss) before tax plus interest expense (net of capitalized interest
expense), depreciation expense, amortization expense, rent expense and non-cash
stock based compensation expense, less capital expenditures, dividends and
taxes, and with “EBITDAR Coverage Ratio” defined as EBITDAR divided by the sum
of (i) interest expense (ii) total rent expense (iii) the current maturity of
long-term debt (iv) the current portion of capital lease obligations; (v)the
current maturity of subordinated debt.

(b) Total Funded Debt to EBITDA not greater than 2.0 to 1.0 as of each quarter
end, determined on a rolling 4-quarter basis.

“Funded Debt” is defined as the sum of (i) all obligations for borrowed money
(including subordinated debt) (ii) all capital lease obligations;
(iii) outstanding letters of credit, guarantees and contingent liabilities

“EBITDA” is defined as net income (loss) before tax plus the sum of (i) interest
expense (net of capitalized interest expense), (ii) depreciation expense,
(iii) amortization expense and (iv) non-cash stock based compensation expense.

SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five
(5) Business Days after the occurrence of each such event or matter) give
written notice to Bank in reasonable detail of: (a) the occurrence of any Event
of Default, or any condition, event or act which with the giving of notice or
the passage of time or both would constitute an Event of Default; (b) any change
in the name or the organizational structure of such Obligor; (c) the occurrence
and nature of any Reportable Event or Prohibited Transaction, each as defined in
ERISA, or any funding deficiency with respect to any Plan; or (d) any
termination or cancellation of any insurance policy which such Obligor is
required to maintain, or any uninsured or partially uninsured loss through
liability or property damage, or through fire, theft or any other cause
affecting such Obligor’s property in excess of an aggregate of $1,000,000.

ARTICLE V

NEGATIVE COVENANTS

Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not, and will not allow any other
Obligor to, without Bank’s prior written consent:

SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof; provided, that no
proceeds in excess of $10,000,000 in the aggregate during the term of this
Agreement for Permitted Acquisitions (as defined in Section 5.4 below) of
entities organized outside the United States shall be used to acquire, invest in
or loan to any entity (excluding independent contractors whose brokerage
business Borrower or one of the Obligors acquires) that does not become an
Obligor hereunder.

 

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SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any
indebtedness or liabilities directly resulting from borrowings, loans or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
(b) purchase money indebtedness or other indebtedness relating to capital
expenditures on credit, (c) any other liabilities of Borrower existing as of,
and disclosed to Bank prior to, the date hereof, (d) trade indebtedness incurred
in the ordinary course of business, and (e) extensions, refinancings and
renewals of any items described in clauses (b) and (c) above, provided that the
terms shall not be modified in a manner adverse to the interests of Bank (it
being understood that, among other things, such extension, refinancing or
renewal (1) shall not increase the principal amount of such indebtedness,
(2) shall not shorten the maturity date or accelerate the amortization schedule
of such indebtedness, (3) shall not be secured unless the indebtedness being
refinanced was secured (and in such event, only to such extent such Indebtedness
was secured), and (4) shall be subordinated to the extent that the indebtedness
being refinanced is subordinated).

SECTION 5.3. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity (provided that any Obligor other than Borrower
may merge into any other Obligor); make any substantial change in the nature of
such Obligor’s business as conducted as of the date hereof; nor sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of
such Obligor’s assets except in the ordinary course of its business; provided
that no Obligor shall transfer any asset in excess of $10,000,000 in the
aggregate during the term of this Agreement to any non-Obligor entity that is
organized outside the United States.

SECTION 5.4 ACQUISITIONS. Acquire all or substantially all of the assets of any
other entity, except for a Permitted Acquisition as defined below:

(a) If such acquisition does not cause the aggregate consideration as set forth
in subsection (vi) below to exceed $100,000,000, then “Permitted Acquisition”
means any acquisition directly or indirectly by Borrower of all or substantially
all of the operating assets or shares or other equity securities of any person
or entity so long as all of the following conditions are satisfied: (i) the
acquisition is consummated in compliance with applicable law, (ii) the acquired
entity is not an entity organized outside the United States; provided, that
Borrower may acquire entities organized outside the United States if all
conditions (other than the condition in this subsection (ii)) are satisfied and
the cash consideration with respect to all such acquisitions during the term of
this Agreement does not exceed $10,000,000, (iii) if an equity acquisition and
the entity is organized as a United States entity, the acquired entity becomes a
guarantor of the debt hereunder and grants a first-priority security interest to
Bank in all of its personal property assets, and executes and delivers such
agreements and documents as Bank reasonably requires to evidence the same,
(iv) both before and after any such acquisition Borrower has Unencumbered Liquid
Assets plus availability under the Line of Credit of not less than $30,000,000,
(v) there exists no Event of Default, nor any act, condition or event which with
the giving of notice or the passage of time or both would constitute an Event of
Default, and no such Event of Default or potential Event of Default results
after giving effect to the acquisition, (vi) the aggregate consideration
(valuing any non-cash consideration at its fair market value, and including
without limitation the amount of all liabilities assumed or acquired) does not
exceed $100,000,000 (including the $10,000,000 allowed in subsection (ii) above
for foreign

 

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acquisitions) in the aggregate for all such acquisitions hereafter through
June 1, 2017, (vii) Borrower provides Bank with notice of the acquisition at
least ten (10) Business Days prior thereto, and (viii) neither Borrower nor any
other Obligor incurs any debt or grants any security interests in its assets in
connection with such acquisition, other than to Bank, without Bank’s prior
written consent. As used in this Agreement, “Unencumbered Liquid Assets” shall
mean cash, cash equivalents and/or publicly traded/quoted marketable securities
acceptable to Bank in its sole but reasonable discretion, free of any lien or
other encumbrance. Retirement account assets held in a fiduciary capacity by
Borrower shall not qualify as Unencumbered Liquid Assets.

(b) If such acquisition causes the aggregate consideration as set forth in
subsection (vii) below to exceed $100,000,000, then “Permitted Acquisition”
means any acquisition by Borrower of all or substantially all of the operating
assets or shares or other equity securities of any person or entity so long as
all of the following conditions are satisfied: (i) Bank’s prior written approval
of such acquisition has been obtained; provided, that Bank shall provide its
approval or disapproval within fifteen (15) Business Days after receiving the
notice from Borrower of such proposed acquisition and other information required
under subsection (viii) below), (ii) the acquisition is consummated in
compliance with applicable law, (iii) the acquired entity is not an entity
organized outside the United States; provided, that Borrower may acquire
entities organized outside the United States if all conditions (other than the
condition in this subsection (iii)) are satisfied and the cash consideration
with respect to all such acquisitions during the term of this Agreement does not
exceed $10,000,000, (iv) if an equity acquisition and the entity is organized as
a United States entity, the acquired entity becomes a guarantor of the debt
hereunder and grants a first-priority security interest to Bank in all its
assets, and executes and delivers such agreements and documents as Bank
reasonably requires to evidence the same, (v) both before and after any such
acquisition Borrower has Unencumbered Liquid Assets plus availability under the
Line of Credit of not less than $30,000,000, (vi) there exists no Event of
Default, nor any act, condition or event which with the giving of notice or the
passage of time or both would constitute an Event of Default, and no such Event
of Default or potential Event of Default results after giving effect to the
acquisition, (vii) the aggregate consideration (valuing any non-cash
consideration at its fair market value, and including without limitation the
amount of all liabilities assumed or acquired) causes the aggregate for all such
acquisitions hereafter through June 1, 2017 to exceed $100,000,000 (including
the $10,000,000 allowed in subsection (iii) above for foreign acquisitions),
(viii) Borrower provides Bank with notice of the acquisition at least thirty
(30) days prior thereto, together with historical financial statements of
target, projections for the combined entities and a copy of its due diligence
package and the draft acquisition documents relating to such acquisition, and
(ix) neither Borrower nor any other Obligor incurs any debt or grants any
security interests in its assets in connection with such acquisition, other than
to Bank, without Bank’s prior written consent.

SECTION 5.5. GUARANTIES. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of such Obligor as security
for, any liabilities or obligations of any other person or entity, except any of
the foregoing in favor of Bank, other than guaranties issued in the ordinary
course of business on behalf of operating subsidiaries of Borrower that do not
in the aggregate at any given time exceed $10,000,000.

SECTION 5.6. LOANS, ADVANCES, INVESTMENTS. With respect to Borrower and other
Obligors on a combined basis, make any loans or advances to or investments in
any person or entity, except any of the foregoing existing as of, and disclosed
to Bank prior to, the

 

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date hereof, and additional loans or advances to its employees and independent
contractors in amounts not to exceed an aggregate of $10,000,000 outstanding at
any one time, and additional investments in the businesses of independent
contractors in amounts not to exceed an aggregate of $10,000,000 in any fiscal
year; provided, that no loans, advances or investments may be made to or in
entities organized outside the United States except as otherwise specifically
permitted hereunder.

SECTION 5.7. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on such Obligor’s stock
now or hereafter outstanding, nor redeem, retire, repurchase or otherwise
acquire any shares of any class of such Obligor’s stock now or hereafter
outstanding; provided however, that (a) any direct or indirect subsidiary of
Borrower may pay dividends to Borrower without restriction, and (b) Borrower may
pay cash dividends or distributions to its shareholders and/or repurchase any
class of its stock in any fiscal year so long as both before and after any such
payment or repurchase Borrower and the other Obligors have combined Unencumbered
Liquid Assets plus availability under the Line of Credit of not less than
$30,000,000 and no Events of Default shall then exist before or as a result of
such payment or repurchase. Borrower shall provide to Bank, upon request, any
documentation required by Bank to substantiate the appropriateness of amounts
paid or to be paid.

SECTION 5.8. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower’s assets now
owned or hereafter acquired, except any of the foregoing in favor of Bank or in
connection with other indebtedness of the type permitted pursuant to Section 5.2
(b) or (c) (collectively, “Permitted Liens”).

SECTION 5.9. ACCOUNTING CHANGES; ORGANIZATIONAL DOCUMENTS.

(a) Change its Fiscal Year end, or make (without the consent of Bank) any
material change in its accounting treatment and reporting practices except as
required by GAAP.

(b) Amend, modify or change its articles of incorporation (or corporate charter
or other similar organizational document(s) or amend, modify or change its
bylaws (or other similar documents) in any manner materially adverse to the
rights or interests of Bank.

SECTION 5.10. TRANSACTIONS WITH AFFILIATES. Enter into or permit to exist any
transaction or series of transactions with any Affiliate of such Obligor except
for (i) transactions that are in the ordinary course of such Obligor’s business,
upon fair and reasonable terms that are no less favorable to such Obligor than
would be obtained in an arm’s length transaction with a non-affiliated person or
entity and (ii) transactions contemplated pursuant to the Transition Services
Agreement between Borrower and The Marcus & Millichap Company.

SECTION 5.11. BURDENSOME AGREEMENTS. Enter into, or permit to exist, any
contractual obligation that encumbers or restricts the ability of Borrower to
(i) make any dividends or distributions or other payments in connection with its
equity, (ii) pay any indebtedness or obligation owed to Borrower, (iii) make
loans or advances to any Obligor, (iv) transfer any of its property to any
Obligor, or (v) pledge its property pursuant to the Loan Documents or any
renewals, refinancings, exchanges, refundings or extensions thereof except as
may be restricted pursuant to any Permitted Liens.

 

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SECTION 5.12. ORGANIZATION DOCUMENTS; FISCAL YEAR; LEGAL NAME, STATE OF
FORMATION AND FORM OF ENTITY.

(a) Amend, modify or changes its organization documents in a manner materially
adverse to Bank.

(b) Change its fiscal year.

(c) Without providing ten days prior written notice to Bank, change its name,
state of formation or form of organization.

SECTION 5.13. OWNERSHIP OF SUBSIDIARIES. Notwithstanding any other provisions of
this Agreement to the contrary, (a) permit any person or entity (other than an
Obligor) to own any equity interests of any subsidiary of such Obligor, or
(b) permit any subsidiary of such Obligor to issue or have outstanding any
shares of preferred equity interests not owned by Borrower or any other Obligor.

SECTION 5.14. SANCTIONS. Directly or indirectly, use the proceeds of any
advances under the Line of Credit or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other
individual or entity, to fund any activities of or business with any individual
or entity, or in any country or territory that is subject to Sanctions that, at
the time of such funding, is the subject of Sanctions, or in any other manner
that will result in a violation by any individual or entity (including any
individual or entity participating in the transaction) of Sanctions. Further,
such Obligor shall not (a) have any of its assets in a country that is subject
to any Sanctions applicable to such Obligor in the possession, custody or
control of a person in violation of any applicable Anti-Terrorism Laws; (b) do
business in or with, or derive any of its income from its investments in or
transactions with, any country subject to any applicable Sanctions or in the
possession, custody or control of a person in violation of any applicable
Anti-Terrorism Laws; (c) engage in any dealings or transactions prohibited by
any applicable Anti-Terrorism Law; or (d) use the proceeds of any advance under
the Line of Credit to fund any operations in, finance any investments or
activities in, or make any payments to a country subject to any applicable
Sanctions or in the possession, custody or control of a person in violation of
any applicable Anti-Terrorism Laws. As used herein, the terms “Anti-Terrorism
Laws” and “Sanctions” shall have the following meanings:

“Anti-Terrorism Laws” means any Laws applicable to, and that have jurisdiction
over, Borrower and/or its subsidiaries relating to terrorism, trade sanctions
programs and embargoes, import/export licensing, money laundering or bribery and
any regulation, order or directive promulgated, issued or enforced pursuant to
such Laws, all as amended, supplemented or replaced from time to time.

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

“Laws” means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law, and in each case to the
extent applicable to, and having jurisdiction over, Borrower and/or its
subsidiaries.

 

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“Sanction(s)” means any international economic sanction administered or enforced
by the United States Government, including OFAC, the United Nations Security
Council, the European Union, Her Majesty’s Treasury or other relevant sanctions
authority, in each case to the extent applicable to, and having jurisdiction
over, Borrower and/or its subsidiaries.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.1. The occurrence of any of the following shall constitute an “Event
of Default” under this Agreement:

(a) Borrower shall fail to pay when due any principal, interest, fees or other
amounts payable under any of the Loan Documents; provided, however, that with
respect to any first such failure, it shall only be an Event of Default if such
failure to pay is not cured within three (3) days after the date of occurrence
of such failure.

(b) Any financial statement or certificate furnished to Bank in connection with,
or any representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.

(c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those specifically described as an “Event of Default” in this
section 6.1), and with respect to any such default that by its nature can be
cured, such default shall continue for a period of thirty (30) Business Days
after the earliest of occurrence thereof, Borrower receiving notice thereof or
any officer of Borrower having knowledge thereof.

(d) Any default in the payment or performance of any obligation, or any defined
event of default, under the terms of any contract, instrument or document (other
than any of the Loan Documents) pursuant to which Borrower or any other Obligor
has incurred any debt or other liability to any person or entity in an aggregate
principal amount of at least $5,000,000, including Bank.

(e) Borrower or any other Obligor shall become insolvent, or shall suffer or
consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; Borrower or any other Obligor shall file a voluntary petition in
bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform Act,
Title 11 of the United States Code, as amended or recodified from time to time
(“Bankruptcy Code”), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or Borrower or any other Obligor
shall file an answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition; or Borrower or any other Obligor shall
be adjudicated a bankrupt, or an order for relief shall be entered against
Borrower or any other Obligor by any court of competent jurisdiction under the
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors.

 

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(f) The filing of a notice of judgment lien against Borrower or any other
Obligor; or the recording of any abstract of judgment against Borrower or any
other Obligor in any county in which Borrower or such other Obligor has an
interest in real property; or the service of a notice of levy and/or of a writ
of attachment or execution, or other like process, against the assets of
Borrower or any other Obligor; or the entry of a judgment against Borrower or
any other Obligor for the payment of money in an amount, individually or in the
aggregate, of at least $5,000,000; or any involuntary petition or proceeding
pursuant to the Bankruptcy Code or any other applicable state or federal law
relating to bankruptcy, reorganization or other relief for debtors is filed or
commenced against Borrower or any other Obligor.

(g) The death or incapacity of Borrower or any other Obligor if an individual.
The dissolution or liquidation of Borrower or any other Obligor if a
corporation, partnership, joint venture or other type of entity; or Borrower or
any such other Obligor, or any of its directors, stockholders or members, shall
take action seeking to effect the dissolution or liquidation of Borrower or such
other Obligor.

SECTION 6.2. REMEDIES. Upon the occurrence and during the continuance of any
Event of Default: (a) all indebtedness of Borrower under each of the Loan
Documents, any term thereof to the contrary notwithstanding, shall at Bank’s
option and without notice become immediately due and payable without
presentment, demand, protest or notice of dishonor, all of which are hereby
expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any
further credit under any of the Loan Documents shall immediately cease and
terminate; and (c) Bank shall have all rights, powers and remedies available
under each of the Loan Documents, or accorded by law, including without
limitation the right to resort to any or all security for any credit subject
hereto and to exercise any or all of the rights of a beneficiary or secured
party pursuant to applicable law. All rights, powers and remedies of Bank may be
exercised at any time by Bank and from time to time after the occurrence of an
Event of Default, are cumulative and not exclusive, and shall be in addition to
any other rights, powers or remedies provided by law or equity.

ARTICLE VII

MISCELLANEOUS

SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.

SECTION 7.2. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

 

BORROWER:    MARCUS & MILLICHAP, INC.    23975 Park Sorrento, Suite 400   
Calabasas, CA 91302    Attention: Corporate Secretary or Chief Financial Officer

 

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BANK:    WELLS FARGO BANK, NATIONAL ASSOCIATION    21255 Burbank Blvd., Suite
110    Woodland Hills, CA 91367    Attention: Neil Gillespie

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to Bank
within ten (10) Business Days after written demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable attorneys’
fees (to include outside counsel fees and all allocated costs of Bank’s in-house
counsel), expended or incurred by Bank in connection with (a) the negotiation
and preparation of this Agreement and the other Loan Documents, Bank’s continued
administration hereof and thereof, and the preparation of any amendments and
waivers hereto and thereto, (b) the enforcement of Bank’s rights and/or the
collection of any amounts which become due to Bank under any of the Loan
Documents, and (c) the prosecution or defense of any action in any way related
to any of the Loan Documents, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Borrower or any other person or entity.

SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interests or rights hereunder without
Bank’s prior written consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Bank’s rights and benefits under each of the Loan Documents to any person or
entity that is not a direct competitor of Borrower (as determined by Bank in its
reasonable discretion). In connection therewith, Bank may disclose all documents
and information which Bank now has or may hereafter acquire relating to any
credit subject hereto, Borrower or its business, any guarantor hereunder or the
business of such guarantor, if any, or any collateral required hereunder,
subject to the confidentiality restrictions set forth in Section 7.12.

SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only in writing signed by each
party hereto.

SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered
into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.

 

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SECTION 7.7. TIME. Time is of the essence of each and every provision of this
Agreement and each other of the Loan Documents.

SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.

SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.

SECTION 7.11. ARBITRATION.

(a) Arbitration. The parties hereto agree, upon demand by any party, to submit
to binding arbitration all claims, disputes and controversies between or among
them (and their respective employees, officers, directors, attorneys, and other
agents), whether in tort, contract or otherwise in any way arising out of or
relating to (i) any credit subject hereto, or any of the Loan Documents, and
their negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit. Any party who
fails or refuses to submit to arbitration following a demand by any other party
shall bear all costs and expenses incurred by such other party in compelling
arbitration of any dispute. Nothing contained herein shall be deemed to be a
waiver by any party that is a bank of the protections afforded to it under 12
U.S.C. §91 or any similar applicable state law.

(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location
in California selected by the American Arbitration Association (“AAA”); (ii) be
governed by the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, as the “Rules”). If
there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law.

(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the

 

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pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of California or a neutral retired judge of the
state or federal judiciary of California, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator’s discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of California and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

(e) Discovery. In any arbitration proceeding, discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party’s presentation and that no alternative means for
obtaining information is available.

(f) Class Proceedings and Consolidations. No party hereto shall be entitled to
join or consolidate disputes by or against others in any arbitration, except
parties who have executed any Loan Document, or to include in any arbitration
any dispute as a representative or member of a class, or to act in any
arbitration in the interest of the general public or in a private attorney
general capacity.

(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs
and expenses of the arbitration proceeding.

(h) Real Property Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no dispute shall be submitted to arbitration if the
dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and

 

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obligations of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid and
enforceable. If any such dispute is not submitted to arbitration, the dispute
shall be referred to a referee in accordance with California Code of Civil
Procedure Section 638 et seq., and this general reference agreement is intended
to be specifically enforceable in accordance with said Section 638. A referee
with the qualifications required herein for arbitrators shall be selected
pursuant to the AAA’s selection procedures. Judgment upon the decision rendered
by a referee shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure Sections 644 and
645.

(i) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.

(j) Small Claims Court. Notwithstanding anything herein to the contrary, each
party retains the right to pursue in Small Claims Court any dispute within that
court’s jurisdiction. Further, this arbitration provision shall apply only to
disputes in which either party seeks to recover an amount of money (excluding
attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small
Claims Court.

SECTION 7.12. CONFIDENTIALITY. In handling any confidential information Bank and
all employees and agents of Bank, including but not limited to accountants,
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Agreement
except that disclosure of such information may be made (i) to the subsidiaries
or Affiliates of Bank in connection with their present or prospective business
relations with Borrower or any of its subsidiaries, (ii) to prospective
transferees or purchasers of any interest in the loans, provided that they are
similarly bound by confidentiality obligations, (iii) as required by law,
regulations, rule or order, subpoena, judicial order or similar order, (iv) as
may be required in connection with the examination, audit or similar
investigation of Bank and (v) as Bank may determine in connection with the
enforcement of any remedies hereunder. Confidential information hereunder shall
not include information that either: (a) is in the public domain or in the
knowledge or possession of Bank when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank through no fault of Bank; or (b) is
disclosed to Bank by a third party, provided Bank does not have actual knowledge
that such third party is prohibited from disclosing such information.

[Signature page to follow.]

 

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

 

MARCUS & MILLICHAP, INC.      

WELLS FARGO BANK,

NATIONAL ASSOCIATION

By:   /s/ John J. Kerin       By:   /s/ Neil Gillespie Name:   John J. Kerin   
   Name:   Neil Gillespie Title:   CEO/President       Title:   VP By:   /s/
Marty Louie         Name:   Marty Louie         Title:   CFO        

Credit Agreement

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SECURITY AGREEMENT

1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
MARCUS & MILLICHAP, INC. (“Debtor”), hereby grants and transfers to WELLS FARGO
BANK, NATIONAL ASSOCIATION (“Bank”) a security interest in all of the property
of Debtor described as follows (collectively, the “Collateral”):

(a) all accounts, deposit accounts, contract rights, chattel paper, (whether
electronic or tangible) instruments, promissory notes, documents, general
intangibles, payment intangibles, software, letter of credit rights, health-care
insurance receivables and other rights to payment of every kind now existing or
at any time hereafter arising;

(b) reserved;

(c) reserved;

(d) all money and property heretofore, now or hereafter delivered to or
deposited with Bank or otherwise coming into the possession, custody or control
of Bank (or any agent or bailee of Bank) in any manner or for any purpose
whatsoever during the existence of this Agreement and whether held in a general
or special account or deposit for safekeeping or otherwise;

(e) all right, title and interest of Debtor under licenses, guaranties,
warranties, management agreements, marketing or sales agreements, escrow
contracts, indemnity agreements, insurance policies, service or maintenance
agreements, supporting obligations and other similar contracts of every kind in
which Debtor now has or at any time hereafter shall have an interest;

(f) all goods, tools, machinery, furnishings, furniture and other equipment and
fixtures of every kind now existing or hereafter acquired, and all improvements,
replacements, accessions and additions thereto and embedded software included
therein, whether located on any property owned or leased by Debtor or elsewhere,
including without limitation, any of the foregoing now or at any time hereafter
located at or installed on the land or in the improvements at any of the real
property owned or leased by Debtor, and all such goods after they have been
severed and removed from any of said real property; and

(g) reserved;

together with whatever is receivable or received when any of the foregoing or
the proceeds thereof are sold, leased, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, including
without limitation, all rights to payment, including returned premiums, with
respect to any insurance relating to any of the foregoing, and all rights to
payment with respect to any claim or cause of action affecting or relating to
any of the foregoing (collectively, “Proceeds”).

2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank
arising under that certain Credit Agreement, dated as of June 1, 2014 between
Debtor and Bank (as amended, restated or otherwise modified from time to time,
the “Credit Agreement”); and (b) all obligations of Debtor and rights of Bank
under this Agreement and the other Loan Documents (as defined

 

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in the Credit Agreement). The word “Indebtedness” is used herein in its most
comprehensive sense and includes any and all advances, debts, obligations and
liabilities of Debtor, or any of them, heretofore, now or hereafter made,
incurred or created, whether voluntary or involuntary and however arising,
whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, including under any swap, derivative, foreign
exchange, hedge, deposit, treasury management (including but not limited to
commercial credit cards) or other similar transaction or arrangement, and
whether Debtor may be liable individually or jointly with others, or whether
recovery upon such Indebtedness may be or hereafter becomes unenforceable.

3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank arising under the Credit Agreement and the other
Loan Documents, including without limitation, the payment of all Indebtedness of
Debtor to Bank arising under the Credit Agreement and the other Loan Documents,
and the termination of all commitments of Bank to extend credit to Debtor under
the Credit Agreement, existing at the time Bank receives written notice from
Debtor of the termination of this Agreement.

4. OBLIGATIONS OF BANK. Any money received by Bank in respect of the Collateral
may be deposited, at Bank’s option, into a non-interest bearing account over
which Debtor shall have no control, and the same shall, for all purposes, be
deemed Collateral hereunder.

5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank that:
(a) Debtor’s legal name is exactly as set forth on the first page of this
Agreement, and all of Debtor’s organizational documents delivered to Bank are
complete and accurate in every respect; (b) Debtor is the owner and has
possession or control of the Collateral and Proceeds; (c) Debtor has the
exclusive right to grant a security interest in the Collateral and Proceeds;
(d) all Collateral and Proceeds are genuine, free from liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character, except the lien created hereby or as otherwise agreed to by Bank, or
as heretofore disclosed by Debtor to Bank, in writing, or Permitted Liens (as
defined in the Credit Agreement); (e) all statements contained herein and, where
applicable, in the Collateral are true and complete in all material respects;
(f) no financing statement covering any of the Collateral or Proceeds, and
naming any secured party other than Bank, is on file in any public office,
except with respect to Permitted Liens; (g) where Collateral consists of rights
to payment, all persons appearing to be obligated on the Collateral and Proceeds
have authority and capacity to contract and are bound as they appear to be, all
property subject to chattel paper has been properly registered and filed in
compliance with law and to perfect the interest of Debtor in such property, and
all such Collateral and Proceeds comply with all applicable laws concerning
form, content and manner of preparation and execution, including where
applicable Federal Reserve Regulation Z and any State consumer credit laws; and
(h) where the Collateral consists of equipment, Debtor is not in the business of
selling goods of the kind included within such Collateral, and Debtor
acknowledges that no sale or other disposition of any such Collateral, including
without limitation, any such Collateral which Debtor may deem to be surplus, has
been consented to or acquiesced in by Bank, except as specifically set forth in
writing by Bank.

6. COVENANTS OF DEBTOR.

(a) Debtor agrees in general: (i) to pay Indebtedness secured hereby when due;
(ii) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto other than losses
arising as a result of the gross negligence or willful misconduct of Bank or any
of its affiliates; (iii) to permit Bank to exercise its powers; (iv)

 

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to execute and deliver such documents as Bank deems necessary to create, perfect
and continue the security interests contemplated hereby; (v) not to change its
name, and as applicable, its chief executive office, its principal residence or
the jurisdiction in which it is organized and/or registered without giving Bank
prior written notice thereof; (vi) not to change the places where Debtor keeps
any Collateral or Debtor’s records concerning the Collateral and Proceeds
without giving Bank prior written notice of the address to which Debtor is
moving same; and (vii) to cooperate with Bank in perfecting all security
interests granted herein and in obtaining such agreements from third parties as
Bank deems reasonably necessary, proper or convenient in connection with the
preservation, perfection or enforcement of any of its rights hereunder.

(b) Debtor agrees with regard to the Collateral and Proceeds, unless Bank agrees
otherwise in writing: (i) that Bank is authorized to file financing statements
in the name of Debtor to perfect Bank’s security interest in Collateral and
Proceeds; (ii) where applicable, to insure the Collateral with Bank named as
loss payee, in form, substance and amounts, under agreements, against risks and
liabilities, and with insurance companies reasonably satisfactory to Bank and as
otherwise required pursuant to the Credit Agreement; (iii) where applicable, to
operate the Collateral in accordance with all applicable statutes, rules and
regulations relating to the use and control thereof, and not to use any
Collateral for any unlawful purpose or in any way that would void any insurance
required to be carried in connection therewith; (iv) not to remove the
Collateral from Debtor’s premises except in the ordinary course of Debtor’s
business; (v) to pay when due all license fees, registration fees and other
charges in connection with any Collateral, in each case the failure of which to
pay could reasonably be expected to have a material adverse effect on the
financial condition or operation of Borrower; (vi) not to permit any lien on the
Collateral or Proceeds, including without limitation, liens arising from repairs
to or storage of the Collateral, except in favor of Bank or in connection with
Permitted Liens; (vii) not to sell, hypothecate or dispose of, nor permit the
transfer by operation of law of, any of the Collateral or Proceeds or any
interest therein, except as otherwise permitted pursuant to Section 5.3 of the
Credit Agreement; (viii) to permit Bank to inspect the Collateral at any time
subject to the limitations set forth in the Credit Agreement; (ix) to keep, in
accordance with generally accepted accounting principles, complete and accurate
records regarding all Collateral and Proceeds, and to permit Bank to inspect the
same and make copies thereof at any reasonable time subject to the limitations
set forth in the Credit Agreement; (x) if requested by Bank, to receive and use
reasonable diligence to collect Collateral consisting of accounts and other
rights to payment and Proceeds, in trust and as the property of Bank, and to
immediately endorse as appropriate and deliver such Collateral and Proceeds to
Bank daily in the exact form in which they are received together with a
collection report in form reasonably satisfactory to Bank; (xi) if requested by
Bank, not to commingle Collateral or Proceeds, or collections thereunder, with
other property; (xii) from time to time, when requested by Bank, to prepare and
deliver a schedule of all Collateral and Proceeds subject to this Agreement and,
after the occurrence and during the continuance of an Event of Default, to
assign in writing and deliver to Bank all accounts, contracts, leases and other
chattel paper, instruments, documents and other evidences thereof; (xiii) in the
event Bank elects to receive payments of rights to payment or Proceeds hereunder
after the occurrence and during the continuance of an Event of Default, to pay
all expenses incurred by Bank in connection therewith, including expenses of
accounting, correspondence, collection efforts, reporting to account or contract
debtors, filing, recording, record keeping and expenses incidental thereto; and
(xiv) to provide any service and do any other acts which may be necessary to
maintain, preserve and protect all Collateral and, as appropriate and
applicable, to keep all Collateral in good and saleable condition, to deal with
the Collateral in accordance with the standards and practices adhered to
generally by users and manufacturers of like property, and to keep all
Collateral and Proceeds free and clear of all defenses, rights of offset and
counterclaims.

 

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7. POWERS OF BANK. Debtor appoints Bank its true attorney in fact to perform any
of the following powers, which are coupled with an interest, are irrevocable
until termination of this Agreement and may be exercised from time to time by
Bank’s officers and employees, or any of them, upon the occurrence and during
the continuance of an Event of Default (other than the powers set forth in
clauses (f), (i), (m) and (n) (with respect to accounts held at Bank) below
which may be exercised by Bank regardless of whether or not an Event of Default
has occurred and is continuing): (a) to perform any obligation of Debtor
hereunder in Debtor’s name or otherwise; (b) to give notice to account debtors
or others of Bank’s rights in the Collateral and Proceeds, to enforce or
forebear from enforcing the same and make extension and modification agreements
with respect thereto; (c) to release persons liable on Collateral or Proceeds
and to give receipts and acquittances and compromise disputes in connection
therewith; (d) to release or substitute security; (e) to resort to security in
any order; (f) to prepare, execute, file, record or deliver notes, assignments,
schedules, designation statements, financing statements, continuation
statements, termination statements, statements of assignment, applications for
registration or like papers to perfect, preserve or release Bank’s interest in
the Collateral and Proceeds; (g) to receive, open and read mail addressed to
Debtor; (h) to take cash, instruments for the payment of money and other
property to which Bank is entitled; (i) to verify facts concerning the
Collateral and Proceeds by inquiry of obligors thereon, or otherwise, in its own
name or a fictitious name; (j) to endorse, collect, deliver and receive payment
under instruments for the payment of money constituting or relating to Proceeds;
(k) to prepare, adjust, execute, deliver and receive payment under insurance
claims, and to collect and receive payment of and endorse any instrument in
payment of loss or returned premiums or any other insurance refund or return,
and to apply such amounts received by Bank, at Bank’s sole option, toward
repayment of the Indebtedness or, where appropriate, replacement of the
Collateral; (l) to exercise all rights, powers and remedies which Debtor would
have, but for this Agreement, with respect to all Collateral and Proceeds
subject hereto; (m) to enter onto Debtor’s premises in inspecting the
Collateral, subject to any limitations set forth in the Credit Agreement; (n) to
make withdrawals from and to close deposit accounts or other accounts with any
financial institution, wherever located, into which Proceeds may have been
deposited, and to apply funds so withdrawn to payment of the Indebtedness;
(o) to preserve or release the interest evidenced by chattel paper to which Bank
is entitled hereunder and to endorse and deliver any evidence of title
incidental thereto; and (p) to do all acts and things and execute all documents
in the name of Debtor or otherwise, deemed by Bank as necessary, proper and
convenient in connection with the preservation, perfection or enforcement of its
rights hereunder.

8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to
pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of Debtor
to do so, Bank at its option may pay any of them and shall be the sole judge of
the legality or validity thereof and the amount necessary to discharge the same.
Any such payments made by Bank shall be obligations of Debtor to Bank, due and
payable immediately upon written demand, together with interest at a rate
determined in accordance with the Credit Agreement, and shall be secured by the
Collateral and Proceeds, subject to all terms and conditions of this Agreement.

9. EVENTS OF DEFAULT. The occurrence of any Event of Default under the Credit
Agreement shall constitute an “Event of Default” under this Agreement.

 

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10. REMEDIES. Upon the occurrence and during the continuance of any Event of
Default, Bank shall have the right to declare immediately due and payable all or
any Indebtedness secured hereby and to terminate any commitments to make loans
or otherwise extend credit to Debtor. Bank shall have all other rights, powers,
privileges and remedies granted to a secured party upon default under the
California Uniform Commercial Code or otherwise provided by law, including
without limitation, the right (a) to contact all persons obligated to Debtor on
any Collateral or Proceeds and to instruct such persons to deliver all
Collateral and/or Proceeds directly to Bank, and (b) to sell, lease, license or
otherwise dispose of any or all Collateral. All rights, powers, privileges and
remedies of Bank shall be cumulative. No delay, failure or discontinuance of
Bank in exercising any right, power, privilege or remedy hereunder shall affect
or operate as a waiver of such right, power, privilege or remedy; nor shall any
single or partial exercise of any such right, power, privilege or remedy
preclude, waive or otherwise affect any other or further exercise thereof or the
exercise of any other right, power, privilege or remedy. Any waiver, permit,
consent or approval of any kind by Bank of any default hereunder, or any such
waiver of any provisions or conditions hereof, must be in writing and shall be
effective only to the extent set forth in writing. It is agreed that public or
private sales or other dispositions, for cash or on credit, to a wholesaler or
retailer or investor, or user of property of the types subject to this
Agreement, or public auctions, are all commercially reasonable since differences
in the prices generally realized in the different kinds of dispositions are
ordinarily offset by the differences in the costs and credit risks of such
dispositions. While an Event of Default exists: (a) Debtor will deliver to Bank
from time to time, as requested in writing by Bank, current lists of all
Collateral and Proceeds; (b) Debtor will not dispose of any Collateral or
Proceeds except on terms approved by Bank; (c) at Bank’s written request, Debtor
will assemble and deliver all Collateral and Proceeds, and books and records
pertaining thereto, to Bank at a reasonably convenient place designated by Bank;
and (d) Bank may, without notice to Debtor, enter onto Debtor’s premises and
take possession of the Collateral. With respect to any sale or other disposition
by Bank of any Collateral subject to this Agreement, Debtor hereby expressly
grants to Bank the right to sell such Collateral using any or all of Debtor’s
trademarks, trade names, trade name rights and/or proprietary labels or marks.
Debtor further agrees that Bank shall have no obligation to process or prepare
any Collateral for sale or other disposition.

11. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In
disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys’ fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order of application as Bank
may from time to time elect. Upon the transfer of all or any part of the
Indebtedness, Bank may transfer all or any part of the Collateral or Proceeds
and shall be fully discharged thereafter from all liability and responsibility
with respect to any of the foregoing so transferred, and the transferee shall be
vested with all rights and powers of Bank hereunder with respect to any of the
foregoing so transferred; but with respect to any Collateral or Proceeds not so
transferred, Bank shall retain all rights, powers, privileges and remedies
herein given.

12. STATUTE OF LIMITATIONS. Until all Indebtedness arising under the Credit
Agreement and the other Loan Documents shall have been paid in full and all
commitments by Bank to extend credit to Debtor have been terminated, the power
of sale or other disposition and all other rights, powers, privileges and
remedies granted to Bank hereunder shall continue to exist and may be exercised
by Bank at any time and from time to time irrespective of the fact that the
Indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due to the payment in full of all Indebtedness
secured hereunder.

 

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13. MISCELLANEOUS. When there is more than one Debtor named herein: (a) the word
“Debtor” shall mean all or any one or more of them as the context requires;
(b) the obligations of each Debtor hereunder are joint and several; and
(c) until all Indebtedness arising under the Credit Agreement and the other Loan
Documents shall have been paid in full and all commitments thereunder shall have
been terminated, no Debtor shall have any right of subrogation or contribution,
and each Debtor hereby waives any benefit of or right to participate in any of
the Collateral or Proceeds or any other security now or hereafter held by Bank.
Debtor hereby waives any right to require Bank to (i) proceed against Debtor or
any other person, (ii) marshal assets or proceed against or exhaust any security
from Debtor or any other person, (iii) perform any obligation of Debtor with
respect to any Collateral or Proceeds, and (d) make any presentment or demand,
or give any notice of nonpayment or nonperformance, protest, notice of protest
or notice of dishonor hereunder or in connection with any Collateral or
Proceeds. Debtor further waives any right to direct the application of payments
or security for any Indebtedness of Debtor or indebtedness of customers of
Debtor.

14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Bank at the address specified in the Credit
Agreement and to Debtor at the address of its chief executive office (or
principal residence, if applicable) specified below or to such other address as
any party may designate by written notice to each other party, and shall be
deemed to have been given or made as follows: (a) if personally delivered, upon
delivery; (b) if sent by mail, upon the earlier of the date of receipt or three
(3) days after deposit in the U.S. mail, first class and postage prepaid; and
(c) if sent by telecopy, upon receipt.

15. COSTS, EXPENSES AND ATTORNEYS’ FEES. Debtor shall pay to Bank within ten
(10) Business Days (as defined in the Credit Agreement) written demand the full
amount of all documented payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all
allocated costs of Bank’s in-house counsel), expended or incurred by Bank in
connection with (a) the perfection and preservation of the Collateral or Bank’s
interest therein, and (b) the realization, enforcement and exercise of any
right, power, privilege or remedy conferred by this Agreement, whether incurred
at the trial or appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested
matter or motion brought by Bank or any other person) relating to Debtor or in
any way affecting any of the Collateral or Bank’s ability to exercise any of its
rights or remedies with respect thereto. All of the foregoing shall be paid by
Debtor with interest from the date of demand until paid in full at a rate per
annum set forth in the Credit Agreement.

16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties, and may be amended or
modified only in writing signed by Bank and Debtor.

17. OBLIGATIONS OF MARRIED PERSONS. Any married person who signs this Agreement
as Debtor hereby expressly agrees that recourse may be had against his or her
separate property for all his or her Indebtedness to Bank secured by the
Collateral and Proceeds under this Agreement.

 

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18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

Debtor warrants that Debtor is an organization registered under the laws of
Delaware.

Debtor warrants that its chief executive office (or principal residence, if
applicable) is located at the following address: 23975 Park Sorrento, Suite 400,
Calabasas, CA 91302.

[Signature page to follow.]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of June 1, 2014.

MARCUS & MILLICHAP, INC.

 

By:   /s/ John J. Kerin Name:   John J. Kerin Title:   President/CEO By:   /s/
Marty Louie Name:   Marty Louie Title:   CFO

Borrower Security Agreement

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REVOLVING LINE OF CREDIT NOTE

 

$60,000,000                        , California

June 1, 2014

FOR VALUE RECEIVED, the undersigned MARCUS & MILLICHAP, INC., a Delaware
corporation (“Borrower”) promises to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION (“Bank”) at its office at 21255 Burbank Blvd., Suite 110,
Woodland Hills, CA 91367, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in immediately
available funds, the principal sum of Sixty Million Dollars ($60,000,000), or so
much thereof as may be advanced and be outstanding, with interest thereon, to be
computed on each advance from the date of its disbursement as set forth herein.

DEFINITIONS:

As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth
at the place defined:

(a) “Base Rate” means, for any day, a fluctuating rate equal to the highest of:
(i) the Prime Rate in effect on such day, (ii) a rate determined by Bank to be
one and one-half percent (1.50%) above Daily One Month LIBOR in effect on such
day, and (iii) the Federal Funds Rate plus one and one-half percent (1.50%).

(b) “Daily One Month LIBOR” means, for any day, the rate of interest equal to
LIBOR then in effect for delivery for a one (1) month period.

(c) “Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers for the
immediately preceding day, as published by the Federal Reserve Bank of New York;
provided that if no such rate is so published on any day, then the Federal Funds
Rate for such day shall be the rate most recently published.

(d) “LIBOR” means (i) for the purpose of calculating effective rates of interest
for loans making reference to LIBOR Periods, the rate of interest per annum
determined by Bank based on the rate for United States dollar deposits for
delivery on the first day of each LIBOR Period for a period approximately equal
to such LIBOR Period as reported on Reuters Screen LIBOR01 page (or any
successor page) at approximately 11:00 a.m., London time, two London Business
Days prior to the first day of such LIBOR Period (or if not so reported, then as
determined by Bank from another recognized source or interbank quotation), or
(ii) for the purpose of calculating effective rates of interest for loans making
reference to the Daily One Month LIBOR Rate, the rate of interest per annum
determined by Bank based on the rate for United States dollar deposits for
delivery of funds for one (1) month as reported on Reuters Screen LIBOR01 page
(or any successor page) at approximately 11:00 a.m., London time, or, for any
day not a London Business Day, the immediately preceding London Business Day (or
if not so reported, then as determined by Bank from another recognized source or
interbank quotation).

 

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(e) “LIBOR Period” means a period commencing on a Los Angeles Business Day and
continuing for one, two, three, six or twelve months, as designated by Borrower,
during which all or a portion of the outstanding principal balance of this Note
bears interest determined in relation to LIBOR; provided however, that (i) no
LIBOR Period may be selected for a principal amount less than One Million
Dollars ($1,000,000), (ii) if the day after the end of any LIBOR Period is not a
Los Angeles Business Day (so that a new LIBOR Period could not be selected by
Borrower to start on such day), then such LIBOR Period shall continue up to, but
shall not include, the next Los Angeles Business Day after the end of such LIBOR
Period, unless the result of such extension would be to cause any immediately
following LIBOR Period to begin in the next calendar month in which event the
LIBOR Period shall continue up to, but shall not include, the Los Angeles
Business Day immediately preceding the last day of such LIBOR Period, and
(iii) no LIBOR Period shall extend beyond the scheduled maturity date hereof.

(f) “London Business Day” means any day that is a day for trading by and between
banks in Dollar deposits in the London interbank market.

(g) “Los Angeles Business Day” means any day except a Saturday, Sunday or any
other day on which commercial banks in Los Angeles are authorized or required by
law to close.

(h) “Prime Rate” means at any time the rate of interest most recently announced
within Bank at its principal office as its Prime Rate, with the understanding
that the Prime Rate is one of Bank’s base rates and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.

(i) “State Business Day” means any day except a Saturday, Sunday or any other
day on which commercial banks in the jurisdiction described in “Governing Law”
herein are authorized or required by law to close.

INTEREST:

(a) Interest. The outstanding principal balance of this Note shall bear interest
(computed on the basis of a 360-day year, actual days elapsed) either (i) at a
fluctuating rate per annum zero percent (0.00%) above the Base Rate in effect
from time to time, or (ii) at a fixed rate per annum determined by Bank to be
eight hundred seventy five one thousandths of one percent (0.875%) above LIBOR
in effect on the first day of the applicable LIBOR Period. When interest is
determined in relation to the Base Rate, each change in the rate of interest
hereunder shall become effective on the date each Base Rate change is announced
within Bank. With respect to each LIBOR selection hereunder, Bank is hereby
authorized to note the date, principal amount, interest rate and LIBOR Period
applicable thereto and any payments made thereon on Bank’s books and records
(either manually or by electronic entry) and/or on any schedule attached to this
Note, which notations shall be prima facie evidence of the accuracy of the
information noted.

(b) Selection of Interest Rate Options. Subject to the provisions herein
regarding LIBOR Periods and the prior notice required for the selection of a
LIBOR interest rate, (i) at any time any portion of this Note bears interest
determined in relation to LIBOR for a LIBOR Period, it may be continued by
Borrower at the end the LIBOR Period applicable thereto so that all or a portion
thereof bears interest determined in relation to the Base Rate or to LIBOR for a
new LIBOR Period designated by Borrower, (ii) at any time any portion of this
Note bears interest determined in relation to the Base Rate, Borrower may
convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a LIBOR Period designated by Borrower, and (iii) at the
time an advance is made hereunder, Borrower may choose to have all or a portion
thereof bear interest determined in relation to the Base Rate or to LIBOR for a
LIBOR Period designated by Borrower.

 

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To select an interest rate option hereunder determined in relation to LIBOR for
a LIBOR Period, Borrower shall give Bank notice thereof that is received by Bank
prior to 11:00 a.m. California time on a State Business Day at least two State
Business Days prior to the first day of the LIBOR Period, or at a later time
during such State Business Day if Bank, at its sole discretion, accepts
Borrower’s notice and quotes a fixed rate to Borrower. Such notice shall
specify: (A) the interest rate option selected by Borrower, (B) the principal
amount subject thereto, and (C) for each LIBOR selection, the length of the
applicable LIBOR Period. If Bank has not received such notice in accordance with
the foregoing before an advance is made hereunder or before the end of any LIBOR
Period, Borrower shall be deemed to have made a Base Rate interest selection for
such disbursement or the principal amount to which such LIBOR Period applied.
Any such notice may be given by telephone (or such other electronic method as
Bank may permit) so long as it is given in accordance with the foregoing and,
with respect to each LIBOR selection, if requested by Bank, Borrower provides to
Bank written confirmation thereof not later than three State Business Days after
such notice is given. Borrower shall reimburse Bank immediately upon demand for
any loss or expense (including any loss or expense incurred by reason of the
liquidation or redeployment of funds obtained to fund or maintain a LIBOR
borrowing) incurred by Bank as a result of the failure of Borrower to accept or
complete a LIBOR borrowing hereunder after making a request therefor. Any
reasonable determination of such amounts by Bank shall be conclusive and binding
upon Borrower.

(c) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately within
ten (10) Los Angeles Banking Days after written demand, in addition to any other
amounts due or to become due hereunder, any and all (i) withholdings, interest
equalization taxes, stamp taxes or other taxes (except income and franchise
taxes) imposed by any domestic or foreign governmental authority and related in
any manner to LIBOR, and (ii) costs, expenses and liabilities arising from or in
connection with reserve percentages prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as
defined in Regulation D of the Federal Reserve Board, as amended), assessment
rates imposed by the Federal Deposit Insurance Corporation, or similar
requirements or costs imposed by any domestic or foreign governmental authority
or resulting from compliance by Bank with any request or directive (whether or
not having the force of law) from any central bank or other governmental
authority and related in any manner to LIBOR. In determining which of the
foregoing are attributable to any LIBOR option available to Borrower hereunder,
any reasonable allocation made by Bank among its operations shall be conclusive
and binding upon Borrower.

(d) Payment of Interest. Interest accrued on this Note shall be payable on the
first day of each calendar month, commencing June 1, 2014.

(e) Default Interest. From and after the maturity date of this Note, or such
earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, or at Bank’s option upon the occurrence, and during
the continuance of an Event of Default, the outstanding principal balance of
this Note shall bear interest at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to two percent (2%) above
the rate of interest from time to time applicable to this Note.

 

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BORROWING AND REPAYMENT:

(a) Borrowing and Repayment. Borrower may from time to time during the term of
this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with or governing this Note; provided
however, that the total outstanding borrowings under this Note shall not at any
time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for
Borrower, which balance may be endorsed hereon from time to time by the holder.
The outstanding principal balance of this Note shall be due and payable in full
on June 1, 2017.

(b) Advances. Advances hereunder, to the total amount of the principal sum
stated above and subject to the terms and conditions of the Credit Agreement
defined below, may be made by the holder at the written request of
(i) Borrower’s Chief Executive Officer, Chief Financial Officer or Chief
Accounting Officer, any one acting alone, who are authorized to request advances
and direct the disposition of any advances until written notice of the
revocation of such authority is received by the holder at the office designated
above, or (ii) any person, with respect to advances deposited to the credit of
any deposit account of Borrower, which advances, when so deposited, shall be
conclusively presumed to have been made to or for the benefit of Borrower
regardless of the fact that persons other than those authorized to request
advances may have authority to draw against such account. The holder shall have
no obligation to determine whether any person requesting an advance is or has
been authorized by Borrower.

(c) Application of Payments. Each payment made on this Note shall be credited
first, to any interest then due and second, to the outstanding principal balance
hereof. All payments credited to principal shall be applied first, to the
outstanding principal balance of this Note which bears interest determined in
relation to the Base Rate, if any, and second, to the outstanding principal
balance of this Note which bears interest determined in relation to LIBOR, with
such payments applied to the oldest LIBOR Period first.

PREPAYMENT:

(a) Base Rate. Borrower may prepay principal on any portion of this Note which
bears interest determined in relation to the Base Rate at any time, in any
amount and without penalty.

(b) LIBOR. Borrower may prepay principal on any portion of this Note which bears
interest determined in relation to LIBOR at any time and in the minimum amount
of One Million Dollars ($1,000,000); provided however, that if the outstanding
principal balance of such portion of this Note is less than said amount, the
minimum prepayment amount shall be the entire outstanding principal balance
thereof. In consideration of Bank providing this prepayment option to Borrower,
or if any such portion of this Note shall become due and payable at any time
prior to the last day of the LIBOR Period applicable thereto by acceleration or
otherwise, Borrower shall pay to Bank immediately upon demand a fee which is the
sum of the discounted monthly differences for each month from the month of
prepayment through the month in which such LIBOR Period matures, calculated as
follows for each such month:

 

  (i) Determine the amount of interest which would have accrued each month on
the amount prepaid at the interest rate applicable to such amount had it
remained outstanding until the last day of the LIBOR Period applicable thereto.

 

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  (ii) Subtract from the amount determined in (i) above the amount of interest
which would have accrued for the same month on the amount prepaid for the
remaining term of such LIBOR Period at LIBOR in effect on the date of prepayment
for new loans made for such term and in a principal amount equal to the amount
prepaid.

 

  (iii) If the result obtained in (ii) for any month is greater than zero,
discount that difference by LIBOR used in (ii) above.

Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum zero percent (0.00%) above the
Prime Rate in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed).

EVENTS OF DEFAULT:

This Note is made pursuant to and is subject to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of June 1, 2014, as
amended from time to time (the “Credit Agreement”). Any default in the payment
or performance of any obligation under this Note, or any defined event of
default under the Credit Agreement, shall constitute an “Event of Default” under
this Note.

MISCELLANEOUS:

(a) Remedies. Upon the occurrence of any Event of Default, the holder of this
Note, at the holder’s option, may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without presentment,
demand, notice of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by Borrower, and the obligation, if
any, of the holder to extend any further credit hereunder shall immediately
cease and terminate. Borrower shall pay to the holder immediately upon demand
the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all
allocated costs of the holder’s in-house counsel), expended or incurred by the
holder in connection with the enforcement of the holder’s rights and/or the
collection of any amounts which become due to the holder under this Note, and
the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.

(b) Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of California.

 

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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

 

MARCUS & MILLICHAP, INC. By:   /s/ John J. Kerin Name:   John J. Kerin Title:  
President/CEO By:   /s/ Marty Louie Name:   Marty Louie Title:   CFO

Revolving Note

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ADDENDUM TO PROMISSORY NOTE

(BASE RATE/LIBOR PRICING ADJUSTMENTS)

THIS ADDENDUM is attached to and made a part of that certain promissory note
executed by MARCUS & MILLICHAP, INC., a Delaware corporation (“Borrower”) and
payable to WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”), or order, dated as
of June 1, 2014, in the principal amount of Sixty Million Dollars ($60,000,000)
(the “Note”).

The following provisions are hereby incorporated into the Note to reflect the
interest rate adjustments agreed to by Bank and Borrower:

INTEREST RATE ADJUSTMENTS:

(a) Initial Interest Rates. The initial interest rates applicable to this Note
shall be the rates set forth in the “Interest” paragraph herein.

(b) Interest Rate Adjustments. In addition to any interest rate adjustments
resulting from changes in the Base Rate, Bank shall adjust the LIBOR margins
used to determine the rates of interest applicable to this Note on a quarterly
basis, commencing with June 1, 2014, if required to reflect a change in
Borrower’s ratio of Total Funded Debt to EBITDA (as defined in the Credit
Agreement referenced herein), in accordance with the following grid:

 

     Applicable  

Total Funded

Debt to EBITDA

   LIBOR
Margin  

0.0:1.0 to 1.0:1.0

     0.875 % 

1.01:1.0 to 1.50:1.0

     1.000 % 

1.51:1.0 to 2.0:1.0

     1.125 % 

Each such adjustment shall be effective on the first Business Day of Borrower’s
fiscal quarter following the quarter during which Bank receives and reviews
Borrower’s most current fiscal quarter-end financial statements in accordance
with any requirements established by Bank for the preparation and delivery
thereof.

[Signature page to follow.]

 

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IN WITNESS WHEREOF, this Addendum has been executed as of the same date as the
Note.

 

MARCUS & MILLICHAP, INC.

By:   /s/ John J. Kerin Name:   John J. Kerin Title:   President/CEO By:   /s/
Marty Louie Name:   Marty Louie Title:   CFO

Addendum to Note

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FORM OF CONTINUING GUARANTY

 

TO: WELLS FARGO BANK, NATIONAL ASSOCIATION

1. GUARANTY; DEFINITIONS. In consideration of any credit or other financial
accommodation heretofore, now or hereafter extended or made to MARCUS &
MILLICHAP, INC. (“Borrower”), by WELLS FARGO BANK, NATIONAL ASSOCIATION
(“Bank”),pursuant to that certain Credit Agreement, dated as of the date hereof,
between Borrower and Bank (as amended, restated or otherwise modified from time
to time, the “Credit Agreement”) and for other valuable consideration, the
undersigned [GUARANTOR NAME] (“Guarantor”), jointly and severally
unconditionally guarantees and promises to pay to Bank, or order, on demand in
lawful money of the United States of America and in immediately available funds,
any and all Indebtedness of any of the Borrower to Bank arising under the Credit
Agreement and the other Loan Documents (as defined in the Credit Agreement). The
term “Indebtedness” is used herein in its most comprehensive sense and includes
any and all advances, debts, obligations and liabilities of Borrower,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, including under any
swap, derivative, foreign exchange, hedge, deposit, treasury management or other
similar transaction or arrangement, and whether Borrower may be liable
individually or jointly with others, or whether recovery upon such Indebtedness
may be or hereafter becomes unenforceable. This Guaranty is a guaranty of
payment and not collection.

2. MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION; OBLIGATION UNDER
OTHER GUARANTIES. This is a continuing guaranty and all rights, powers and
remedies hereunder shall apply to all past, present and future Indebtedness of
Borrower to Bank arising under the Credit Agreement and the other Loan
Documents, including that arising under successive transactions which shall
either continue such Indebtedness, increase or decrease it, or from time to time
create new Indebtedness after all or any prior Indebtedness has been satisfied,
and notwithstanding the death, incapacity, dissolution, liquidation or
bankruptcy of Borrower or Guarantor or any other event or proceeding affecting
Borrower or Guarantor. This Guaranty shall not apply to any new Indebtedness
created after actual receipt by Bank of written notice of its revocation as to
such new Indebtedness; provided however, that loans or advances made by Bank to
Borrower after revocation under commitments existing prior to receipt by Bank of
such revocation, and extensions, renewals or modifications, of any kind, of
Indebtedness incurred by Borrower or committed by Bank prior to receipt by Bank
of such revocation, shall not be considered new Indebtedness. Any such notice
must be sent to Bank by registered U.S. mail, postage prepaid, addressed to its
office at 21255 Burbank Blvd, Suite 110, Woodland Hills, California 91367, or at
such other address as Bank shall from time to time designate. Any payment by
Guarantor shall not reduce Guarantor’s maximum obligation hereunder unless
written notice to that effect is actually received by Bank at or prior to the
time of such payment. The obligations of Guarantor hereunder shall be in
addition to any obligations of Guarantor under any other guaranties of any
liabilities or obligations of Borrower or any other persons heretofore or
hereafter given to Bank unless said other guaranties are expressly modified or
revoked in writing; and this Guaranty shall not, unless expressly herein
provided, affect or invalidate any such other guaranties.

3. OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF
LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are joint and
several and independent of the obligations of Borrower, and a separate action or
actions may be brought and prosecuted against Guarantor whether action is
brought against Borrower or any other person, or whether Borrower or any other
person is joined in any such action or actions. Guarantor acknowledges that this
Guaranty is absolute and unconditional, there are no conditions precedent to the
effectiveness of this Guaranty, and this Guaranty is in full force and effect
and is binding on Guarantor as of the date written below, regardless of whether
Bank obtains collateral or any guaranties from others or takes any other action
contemplated by Guarantor. Guarantor waives the benefit of any statute of
limitations affecting Guarantor’s liability hereunder or the enforcement
thereof, and Guarantor agrees that any payment of any

 

LOGO [g746076g34e94.jpg]

 

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Indebtedness or other act which shall toll any statute of limitations applicable
thereto shall similarly operate to toll such statute of limitations applicable
to Guarantor’s liability hereunder. The liability of Guarantor hereunder shall
be reinstated and revived and the rights of Bank shall continue if and to the
extent for any reason any amount at any time paid on account of any Indebtedness
guaranteed hereby is rescinded or must otherwise be restored by Bank, whether as
a result of any proceedings in bankruptcy or reorganization or otherwise, all as
though such amount had not been paid. The determination as to whether any amount
so paid must be rescinded or restored shall be made by Bank in its sole
discretion; provided however, that if Bank chooses to contest any such matter at
the request of Guarantor, Guarantor agrees to indemnify and hold Bank harmless
from and against all costs and expenses, including reasonable attorneys’ fees,
expended or incurred by Bank in connection therewith, including without
limitation, in any litigation with respect thereto.

4. AUTHORIZATIONS TO BANK. Guarantor authorizes Bank either before or after
revocation hereof, without notice to or demand on Guarantor, and without
affecting Guarantor’s liability hereunder, from time to time to: (a) alter,
compromise, renew, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of the Indebtedness or any portion thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security for the payment of this Guaranty or the Indebtedness or any
portion thereof, and exchange, enforce, waive, subordinate or release any such
security; (c) apply such security and direct the order or manner of sale
thereof, including without limitation, a non-judicial sale permitted by the
terms of the controlling security agreement, mortgage or deed of trust, as Bank
in its discretion may determine; (d) release or substitute any one or more of
the endorsers or any other guarantors of the Indebtedness, or any portion
thereof, or any other party thereto; and (e) apply payments received by Bank
from Borrower to any Indebtedness of Borrower to Bank, in such order as Bank
shall determine in its sole discretion, whether or not such Indebtedness is
covered by this Guaranty, and Guarantor hereby waives any provision of law
regarding application of payments which specifies otherwise. Bank may without
notice assign this Guaranty in whole or in part. Upon Bank’s request, Guarantor
agrees to provide to Bank copies of Guarantor’s previously prepared financial
statements.

5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Bank
that: (a) this Guaranty is executed at Borrower’s request; (b) Guarantor shall
not, without Bank’s prior written consent, sell, lease, assign, encumber,
hypothecate, transfer or otherwise dispose of all or a substantial or material
part of Guarantor’s assets other than in the ordinary course of Guarantor’s
business; (c) Bank has made no representation to Guarantor as to the
creditworthiness of Borrower; and (d) Guarantor has established adequate means
of obtaining from Borrower on a continuing basis financial and other information
pertaining to Borrower’s financial condition. Guarantor agrees to keep
adequately informed from such means of any facts, events or circumstances which
might in any way affect Guarantor’s risks hereunder, and Guarantor further
agrees that Bank shall have no obligation to disclose to Guarantor any
information or material about Borrower which is acquired by Bank in any manner.

6. GUARANTOR’S WAIVERS.

(a) Guarantor waives any right to require Bank to: (i) proceed against Borrower
or any other person; (ii) marshal assets or proceed against or exhaust any
security held from Borrower or any other person; (iii) give notice of the terms,
time and place of any public or private sale or other disposition of personal
property security held from Borrower or any other person; (iv) take any other
action or pursue any other remedy in Bank’s power; or (v) make any presentment
or demand for performance, or give any notice of nonperformance, protest, notice
of protest or notice of dishonor hereunder or in connection with any obligations
or evidences of indebtedness held by Bank as security for or which constitute in
whole or in part the Indebtedness guaranteed hereunder, or in connection with
the creation of new or additional Indebtedness.

(b) Guarantor waives any defense to its obligations hereunder based upon or
arising by reason of: (i) any disability or other defense of Borrower or any
other person; (ii) the cessation or limitation from any cause whatsoever, other
than payment in full, of the Indebtedness of Borrower or any other person;
(iii) any lack of authority of any officer, director, partner, agent or any
other person acting or purporting to act on behalf of Borrower, or any defect in
the formation of Borrower; (iv) the application by Borrower of

 

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the proceeds of any Indebtedness for purposes other than the purposes
represented by Borrower to, or intended or understood by, Bank or Guarantor;
(v) any act or omission by Bank which directly or indirectly results in or aids
the discharge of Borrower or any portion of the Indebtedness by operation of law
or otherwise, or which in any way impairs or suspends any rights or remedies of
Bank against Borrower; (vi) any impairment of the value of any interest in any
security for the Indebtedness or any portion thereof, including without
limitation, the failure to obtain or maintain perfection or recordation of any
interest in any such security, the release of any such security without
substitution, and/or the failure to preserve the value of, or to comply with
applicable law in disposing of, any such security; (vii) any modification of the
Indebtedness, in any form whatsoever, including any modification made after
revocation hereof to any Indebtedness incurred prior to such revocation, and
including without limitation the renewal, extension, acceleration or other
change in time for payment of, or other change in the terms of, the Indebtedness
or any portion thereof, including increase or decrease of the rate of interest
thereon; or (viii) any requirement that Bank give any notice of acceptance of
this Guaranty. Until all Indebtedness shall have been paid in full, Guarantor
shall have no right of subrogation, and Guarantor waives any right to enforce
any remedy which Bank now has or may hereafter have against Borrower or any
other person, and waives any benefit of, or any right to participate in, any
security now or hereafter held by Bank. Guarantor further waives all rights and
defenses Guarantor may have arising out of (A) any election of remedies by Bank,
even though that election of remedies, such as a non-judicial foreclosure with
respect to any security for any portion of the Indebtedness, destroys
Guarantor’s rights of subrogation or Guarantor’s rights to proceed against
Borrower for reimbursement, or (B) any loss of rights Guarantor may suffer by
reason of any rights, powers or remedies of Borrower in connection with any
anti-deficiency laws or any other laws limiting, qualifying or discharging
Borrower’s Indebtedness, whether by operation of Sections 726, 580a or 580d of
the Code of Civil Procedure as from time to time amended, or otherwise,
including any rights Guarantor may have to a Section 580a fair market value
hearing to determine the size of a deficiency following any foreclosure sale or
other disposition of any real property security for any portion of the
Indebtedness.

7. BANK’S RIGHTS WITH RESPECT TO GUARANTOR’S PROPERTY IN BANK’S POSSESSION. In
addition to all liens upon and rights of setoff against the monies, securities
or other property of Guarantor given to Bank by law, Bank shall have a lien upon
and a right of setoff against all monies, securities and other property of
Guarantor now or hereafter in the possession of or on deposit with Bank, whether
held in a general or special account or deposit or for safekeeping or otherwise,
and every such lien and right of setoff may be exercised without demand upon or
notice to Guarantor. No lien or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Bank, or by any neglect to exercise
such right of setoff or to enforce such lien, or by any delay in so doing, and
every right of setoff and lien shall continue in full force and effect until
such right of setoff or lien is specifically waived or released by Bank in
writing.

8. SUBORDINATION. Any Indebtedness of Borrower now or hereafter held by
Guarantor is hereby subordinated to the Indebtedness of Borrower to Bank. Such
Indebtedness of Borrower to Guarantor is assigned to Bank as security for this
Guaranty and the Indebtedness and, if Bank requests, after the occurrence and
during the continuance of an Event of Default (as defined in the Credit
Agreement) shall be collected and received by Guarantor as trustee for Bank and
paid over to Bank on account of the Indebtedness of Borrower to Bank but without
reducing or affecting in any manner the liability of Guarantor under the other
provisions of this Guaranty. Any notes or other instruments now or hereafter
evidencing such Indebtedness of Borrower to Guarantor shall be marked with a
legend that the same are subject to this Guaranty and, if Bank so requests,
shall be delivered to Bank. Bank is hereby authorized in the name of Guarantor
from time to time to file financing statements and continuation statements and
execute such other documents and take such other action as Bank deems necessary
or appropriate to perfect, preserve and enforce its rights hereunder.

9. REMEDIES; NO WAIVER. All rights, powers and remedies of Bank hereunder are
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power or remedy hereunder shall affect or operate as a waiver of such right,
power or remedy; nor shall any single or partial exercise of any such right,
power or remedy preclude, waive or otherwise affect any other or further
exercise thereof or the exercise of any other right, power or remedy. Any
waiver, permit, consent or approval of any kind by Bank of any breach of this
Guaranty, or any such waiver of any provisions or conditions hereof, must be in
writing and shall be effective only to the extent set forth in writing.

 

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10. COSTS, EXPENSES AND ATTORNEYS’ FEES. Guarantor shall pay to Bank within ten
(10) Business Days (as defined in the Credit Agreement) written demand the full
amount of all documented payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all
allocated costs of Bank’s in-house counsel), expended or incurred by Bank in
connection with the enforcement of any of Bank’s rights, powers or remedies
and/or the collection of any amounts which become due to Bank under this
Guaranty, and the prosecution or defense of any action in any way related to
this Guaranty, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Guarantor or any other person or entity. All of the
foregoing shall be paid by Guarantor with interest from the date of demand until
paid in full at the rate set forth in the Credit Agreement.

11. SUCCESSORS; ASSIGNMENT. This Guaranty shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Guarantor may not
assign or transfer any of its interests or rights hereunder without Bank’s prior
written consent. Guarantor acknowledges that Bank has the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, any Indebtedness of Borrower to Bank and any obligations with
respect thereto, including this Guaranty. In connection therewith, Bank may
disclose all documents and information which Bank now has or hereafter acquires
relating to Guarantor and/or this Guaranty, whether furnished by Borrower,
Guarantor or otherwise. Guarantor further agrees that Bank may disclose such
documents and information to Borrower.

12. AMENDMENT. This Guaranty may be amended or modified only in writing signed
by Bank and Guarantor.

13. OBLIGATIONS OF MARRIED PERSONS. Any married person who signs this Guaranty
as a Guarantor hereby expressly agrees that recourse may be had against his or
her separate property for all his or her obligations under this Guaranty.

14. UNDERSTANDING WITH RESPECT TO WAIVERS; SEVERABILITY OF PROVISIONS. Guarantor
warrants and agrees that each of the waivers set forth herein is made with
Guarantor’s full knowledge of its significance and consequences, and that under
the circumstances, the waivers are reasonable and not contrary to public policy
or law. If any waiver or other provision of this Guaranty shall be held to be
prohibited by or invalid under applicable public policy or law, such waiver or
other provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such waiver or other provision
or any remaining provisions of this Guaranty.

15. GOVERNING LAW. This Guaranty shall be governed by and construed in
accordance with the laws of the State of California.

16. CREDIT AGREEMENT COVENANTS. By signing below, the Guarantor hereby agrees to
be bound by the covenants that are applicable to it by the terms of and as set
forth in the Credit Agreement.

17. ARBITRATION.

(a) Arbitration. The parties hereto agree, upon demand by any party, to submit
to binding arbitration all claims, disputes and controversies between or among
them (and their respective employees, officers, directors, attorneys, and other
agents), whether in tort, contract or otherwise, in any way arising out of or
relating to this Guaranty and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination. In the event of a court ordered
arbitration, the party requesting arbitration shall be

 

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responsible for timely filing the demand for arbitration and paying the
appropriate filing fee within 30 days of the abatement order or the time
specified by the court. Failure to timely file the demand for arbitration as
ordered by the court will result in that party’s right to demand arbitration
being automatically terminated.

(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location
in California selected by the American Arbitration Association (“AAA”); (ii) be
governed by the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, as the “Rules”). If
there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law.

(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of California or a neutral retired judge of the
state or federal judiciary of California, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator’s discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of California and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

(e) Discovery. In any arbitration proceeding, discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party’s presentation and that no alternative means for
obtaining information is available.

 

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(f) Class Proceedings and Consolidations. No party hereto shall be entitled to
join or consolidate disputes by or against others in any arbitration, except
parties who have executed this Guaranty or any other contract, instrument or
document relating to any Indebtedness, or to include in any arbitration any
dispute as a representative or member of a class, or to act in any arbitration
in the interest of the general public or in a private attorney general capacity.

(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs
and expenses of the arbitration proceeding.

(h) Real Property Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no dispute shall be submitted to arbitration if the
dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such dispute is not submitted to arbitration, the dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA’s selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.

(i) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the documents between the parties or the subject matter of the
dispute shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the documents or any relationship between the
parties.

(j) Small Claims Court. Notwithstanding anything herein to the contrary, each
party retains the right to pursue in Small Claims Court any dispute within that
court’s jurisdiction. Further, this arbitration provision shall apply only to
disputes in which either party seeks to recover an amount of money (excluding
attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small
Claims Court.

[Signature page to follow.]

 

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IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of
June 1, 2014.

 

[GUARANTOR NAME] By:     Name:     Title:     By:     Name:     Title:    

Continuing Guaranty

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FORM OF THIRD PARTY SECURITY AGREEMENT

1. GRANT OF SECURITY INTEREST. In consideration of any credit or other financial
accommodation heretofore, now or hereafter extended or made to MARCUS &
MILLICHAP, INC. (“Borrower”) pursuant to that certain Credit Agreement, dated as
of the date hereof between Borrower and WELLS FARGO BANK, NATIONAL ASSOCIATION
(“Bank”) (as amended, restated or otherwise modified from time to time, the
“Credit Agreement”), and for other valuable consideration, as security for the
payment of all Indebtedness of Borrower to Bank arising under the Credit
Agreement and the other Loan Documents (as defined in the Credit Agreement), the
undersigned [GUARANTOR NAME] (“[Guarantor Name]”) hereby grants and transfers to
Bank a security interest in all of the property of [Guarantor Name] described as
follows (collectively, the “Collateral”):

(a) all accounts, deposit accounts, contract rights, chattel paper (whether
electronic or tangible), instruments, promissory notes, documents, general
intangibles, payment intangibles, software, letter of credit rights, health-care
insurance receivables and other rights to payment of every kind now existing or
at any time hereafter arising;

(b) reserved;

(c) reserved;

(d) all money and property heretofore, now or hereafter delivered to or
deposited with Bank or otherwise coming into the possession, custody or control
of Bank (or any agent or bailee of Bank) in any manner or for any purpose
whatsoever during the existence of this Agreement and whether held in a general
or special account or deposit for safekeeping or otherwise;

(e) all right, title and interest of [Guarantor Name] under licenses,
guaranties, warranties, management agreements, marketing or sales agreements,
escrow contracts, indemnity agreements, insurance policies, service or
maintenance agreements, supporting obligations and other similar contracts of
every kind in which [Guarantor Name] now has or at any time hereafter shall have
an interest;

(f) all goods, tools, machinery, furnishings, furniture and other equipment and
fixtures of every kind now existing or hereafter acquired, and all improvements,
replacements, accessions and additions thereto and embedded software included
therein, whether located on any property owned or leased by [Guarantor Name] or
elsewhere, including without limitation, any of the foregoing now or at any time
hereafter located at or installed on the land or in the improvements at any of
the real property owned or leased by [Guarantor Name], and all such goods after
they have been severed and removed from any of said real property; and

(g) reserved;

 

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together with whatever is receivable or received when any of the foregoing or
the proceeds thereof are sold, leased, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, including
without limitation, all rights to payment, including returned premiums, with
respect to any insurance relating to any of the foregoing, and all rights to
payment with respect to any claim or cause of action affecting or relating to
any of the foregoing (collectively, “Proceeds”). The word “Indebtedness” is used
herein in its most comprehensive sense and includes any and all advances, debts,
obligations and liabilities of Borrower heretofore, now or hereafter made,
incurred or created, whether voluntary or involuntary and however arising,
whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, including under any swap, derivative, foreign
exchange, hedge, deposit, treasury management (including but not limited to
commercial credit cards) or other similar transaction or arrangement, and
whether Borrower may be liable individually or jointly with others, or whether
recovery upon such Indebtedness may be or hereafter becomes unenforceable.

2. CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER AGREEMENTS. This is
a continuing agreement and all rights, powers and remedies hereunder shall apply
to all past, present and future Indebtedness of Borrower to Bank arising under
the Credit Agreement and the other Loan Documents, including that arising under
successive transactions which shall either continue such Indebtedness, increase
or decrease it, or from time to time create new Indebtedness after all or any
prior Indebtedness has been satisfied, and notwithstanding the death,
incapacity, dissolution, liquidation or bankruptcy of Borrower or [Guarantor
Name] or any other event or proceeding affecting Borrower or [Guarantor Name].
This Agreement shall not apply to any new Indebtedness created after actual
receipt by Bank of written notice of its revocation as to such new Indebtedness;
provided however, that loans or advances made by Bank to Borrower after
revocation under commitments existing prior to receipt by Bank of such
revocation, and extensions, renewals or modifications, of any kind, of
Indebtedness incurred by Borrower or committed by Bank prior to receipt by Bank
of such revocation, shall not be considered new Indebtedness. Any such notice
must be sent to Bank by registered U.S. mail, postage prepaid, addressed to its
office at 21255 Burbank Blvd., Suite 110, Woodland Hills, California 91367, or
at such other address as Bank shall from time to time designate. The obligations
of [Guarantor Name] hereunder shall be in addition to any obligations of
[Guarantor Name] under any other grants or pledges of security for any
liabilities or obligations of Borrower or any other person heretofore or
hereafter given to Bank unless said other grants or pledges of security are
expressly modified or revoked in writing; and this Agreement shall not, unless
expressly herein provided, affect or invalidate any such other grants or pledges
of security.

3. OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF
LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations hereunder are joint and
several and independent of the obligations of Borrower, and a separate action or
actions may be brought and prosecuted against [Guarantor Name] whether action is
brought against any of the Borrower or any other person, or whether Borrower or
any other person is joined in any such action or actions. [Guarantor Name]
acknowledges that this Agreement is absolute and unconditional, there are no
conditions precedent to the effectiveness of this Agreement, and this Agreement
is in full force and effect and is binding on [Guarantor Name] as of the date
written below, regardless of whether Bank obtains collateral or any

 

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guaranties from others or takes any other action contemplated by [Guarantor
Name]. [Guarantor Name] waives the benefit of any statute of limitations
affecting [Guarantor Name]’s liability hereunder or the enforcement thereof, and
[Guarantor Name] agrees that any payment of any Indebtedness or other act which
shall toll any statute of limitations applicable thereto shall similarly operate
to toll such statute of limitations applicable to [Guarantor Name]’s liability
hereunder. The liability of [Guarantor Name] hereunder shall be reinstated and
revived and the rights of Bank shall continue if and to the extent that for any
reason any amount at any time paid on account of any Indebtedness secured hereby
is rescinded or must be otherwise restored by Bank, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, all as though such
amount had not been paid. The determination as to whether any amount so paid
must be rescinded or restored shall be made by Bank in its sole discretion;
provided however, that if Bank chooses to contest any such matter at the request
of [Guarantor Name], [Guarantor Name] agrees to indemnify and hold Bank harmless
from and against all costs and expenses, including reasonable attorneys’ fees
(to include outside counsel fees and all allocated costs of Bank’s in-house
counsel), expended or incurred by Bank in connection therewith, including
without limitation, in any litigation with respect thereto.

4. OBLIGATIONS OF BANK. Any money received by Bank in respect of the Collateral
may be deposited, at Bank’s option, into a non-interest bearing account over
which [Guarantor Name] shall have no control, and the same shall, for all
purposes, be deemed Collateral hereunder.

5. REPRESENTATIONS AND WARRANTIES.

(a) [Guarantor Name] represents and warrants to Bank that: (i) [Guarantor
Name]’s legal name is exactly as set forth on the first page of this Agreement,
and all of [Guarantor Name]’s organizational documents delivered to Bank are
complete and accurate in every respect; (ii) [Guarantor Name] is the [Guarantor
Name] and has possession or control of the Collateral and Proceeds;
(iii) [Guarantor Name] has the right to grant a security interest in the
Collateral and Proceeds; (iv) all Collateral and Proceeds are genuine, free from
liens, adverse claims, setoffs, default, prepayment, defenses and conditions
precedent of any kind or character, except the lien created hereby or as
otherwise agreed to by Bank, or as heretofore disclosed by [Guarantor Name] to
Bank, in writing or Permitted Liens (as defined in the Credit Agreement);
(v) all statements contained herein and, where applicable, in the Collateral are
true and complete in all material respects; (vi) no financing statement covering
any of the Collateral or Proceeds, and naming any secured party other than Bank,
is on file in any public office, except with respect to Permitted Liens;
(vii) where Collateral consists of rights to payment, all persons appearing to
be obligated on the Collateral and Proceeds have authority and capacity to
contract and are bound as they appear to be, all property subject to chattel
paper has been properly registered and filed in compliance with law and to
perfect the interest of [Guarantor Name] in such property, and all such
Collateral and Proceeds comply with all applicable laws concerning form, content
and manner of preparation and execution, including where applicable Federal
Reserve Regulation Z and any State consumer credit laws; and (viii) where the
Collateral consists of equipment, [Guarantor Name] is not in the business of
selling goods of the kind included within such Collateral, and [Guarantor Name]
acknowledges that no sale or other disposition of any such Collateral, including
without limitation, any such Collateral which [Guarantor Name] may deem to be
surplus, has been consented to or acquiesced in by Bank, except as specifically
set forth in writing by Bank.

 

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(b) [Guarantor Name] further represents and warrants to Bank that: (i) the
Collateral pledged hereunder is so pledged at Borrower’s request; (ii) Bank has
made no representation to [Guarantor Name] as to the creditworthiness of
Borrower; and (iii) [Guarantor Name] has established adequate means of obtaining
from Borrower on a continuing basis financial and other information pertaining
to Borrower’s financial condition. [Guarantor Name] agrees to keep adequately
informed from such means of any facts, events or circumstances which might in
any way affect [Guarantor Name]’s risks hereunder, and [Guarantor Name] further
agrees that Bank shall have no obligation to disclose to [Guarantor Name] any
information or material about Borrower which is acquired by Bank in any manner.

6. COVENANTS OF [GUARANTOR NAME].

(a) [Guarantor Name] agrees in general: (i) to indemnify Bank against all
losses, claims, demands, liabilities and expenses of every kind caused by
property subject hereto other than losses arising as a result of the gross
negligence or willful misconduct of Bank; (ii) to permit Bank to exercise its
powers; (iii) to execute and deliver such documents as Bank deems necessary to
create, perfect and continue the security interests contemplated hereby;
(iv) not to change [Guarantor Name]’s name, and as applicable, its chief
executive office, its principal residence or the jurisdiction in which it is
organized and/or registered without giving Bank prior written notice thereof;
(v) not to change the places where [Guarantor Name] keeps any Collateral or
[Guarantor Name]’s records concerning the Collateral and Proceeds without giving
Bank prior written notice of the address to which [Guarantor Name] is moving
same; and (vi) to cooperate with Bank in perfecting all security interests
granted herein and in obtaining such agreements from third parties as Bank deems
reasonably necessary, proper or convenient in connection with the preservation,
perfection or enforcement of any of its rights hereunder.

(b) [Guarantor Name] agrees with regard to the Collateral and Proceeds, unless
Bank agrees otherwise in writing: (i) that Bank is authorized to file financing
statements in the name of [Guarantor Name] to perfect Bank’s security interest
in Collateral and Proceeds; (ii) where applicable, to insure the Collateral with
Bank named as loss payee, in form, substance and amounts, under agreements,
against risks and liabilities, and with insurance companies reasonably
satisfactory to Bank and as otherwise required pursuant to the Credit Agreement;
(iii) where applicable, to operate the Collateral in accordance with all
applicable statutes, rules and regulations relating to the use and control
thereof, and not to use any Collateral for any unlawful purpose or in any way
that would void any insurance required to be carried in connection therewith;
(iv) not to remove the Collateral from [Guarantor Name]’s premises except in the
ordinary course of [Guarantor Name]’s business; (v) to pay when due all license
fees, registration fees and other charges in connection with any Collateral, in
each case the failure of which to pay could reasonably be expected to have a
material adverse effect on the financial condition or operation of [Guarantor
Name]; (vi) not to permit any lien on the Collateral or Proceeds, including
without limitation, liens arising from repairs to or storage of the Collateral,
except in favor of Bank or in connection with Permitted Liens; (vii) not to
sell, hypothecate or dispose of, nor permit the transfer by operation of law of,
any of the Collateral or Proceeds or any interest therein, except as otherwise
permitted pursuant to Section 5.3 of the Credit

 

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Agreement; (viii) to permit Bank to inspect the Collateral at any time subject
to the limitations set forth in the Credit Agreement; (ix) to keep, in
accordance with generally accepted accounting principles, complete and accurate
records regarding all Collateral and Proceeds, and to permit Bank to inspect the
same and make copies thereof at any reasonable time, subject to the limitations
set forth in the Credit Agreement; (x) if requested by Bank, to receive and use
reasonable diligence to collect Collateral consisting of accounts and other
rights to payment and Proceeds, in trust and as the property of Bank, and to
immediately endorse as appropriate and deliver such Collateral and Proceeds to
Bank daily in the exact form in which they are received together with a
collection report in form reasonably satisfactory to Bank; (xi) if requested by
Bank, not to commingle Collateral or Proceeds, or collections thereunder, with
other property; (xii) from time to time, when requested by Bank, to prepare and
deliver a schedule of all Collateral and Proceeds subject to this Agreement and,
after the occurrence and during the continuance of an Event of Default, to
assign in writing and deliver to Bank all accounts, contracts, leases and other
chattel paper, instruments, documents and other evidences thereof; (xiii) in the
event Bank elects to receive payments of rights to payment or Proceeds hereunder
after the occurrence and during the continuance of an Event of Default, to pay
all expenses incurred by Bank in connection therewith, including expenses of
accounting, correspondence, collection efforts, reporting to account or contract
debtors, filing, recording, record keeping and expenses incidental thereto; and
(xiv) to provide any service and do any other acts which may be necessary to
maintain, preserve and protect all Collateral and, as appropriate and
applicable, to keep all Collateral in good and saleable condition, to deal with
the Collateral in accordance with the standards and practices adhered to
generally by users and manufacturers of like property, and to keep all
Collateral and Proceeds free and clear of all defenses, rights of offset and
counterclaims.

7. POWERS OF BANK. [Guarantor Name] appoints Bank its true attorney in fact to
perform any of the following powers, which are coupled with an interest, are
irrevocable until termination of this Agreement and may be exercised from time
to time by Bank’s officers and employees, or any of them, upon the occurrence
and during the continuance of an Event of Default (other than the powers set
forth in clauses (f), (i), (m) and (n) (only with respect to accounts held at
Bank)) below which may be exercised by Bank regardless of whether or not an
Event of Default has occurred and is continuing): (a) to perform any obligation
of [Guarantor Name] hereunder in [Guarantor Name]’s name or otherwise; (b) to
give notice to account debtors or others of Bank’s rights in the Collateral and
Proceeds, to enforce or forebear from enforcing the same and make extension or
modification agreements with respect thereto; (c) to release persons liable on
Proceeds and to give receipts and acquittances and compromise disputes in
connection therewith; (d) to release or substitute security; (e) to resort to
security in any order; (f) to prepare, execute, file, record or deliver notes,
assignments, schedules, designation statements, financing statements,
continuation statements, termination statements, statements of assignment,
applications for registration or like papers to perfect, preserve or release
Bank’s interest in the Collateral and Proceeds; (g) to receive, open and read
mail addressed to [Guarantor Name]; (h) to take cash, instruments for the
payment of money and other property to which Bank is entitled; (i) to verify
facts concerning the Collateral and Proceeds by inquiry of obligors thereon, or
otherwise, in its own name or a fictitious name; (j) to endorse, collect,
deliver and receive payment under instruments for the payment of money
constituting or relating to Proceeds; (k) to prepare, adjust, execute, deliver
and receive payment under insurance claims, and to collect and receive payment
of and endorse any instrument in payment of loss or returned premiums or any

 

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other insurance refund or return, and to apply such amounts received by Bank, at
Bank’s sole option, toward repayment of the Indebtedness or, where appropriate,
replacement of the Collateral; (l) to exercise all rights, powers and remedies
which [Guarantor Name] would have, but for this Agreement, with respect to all
Collateral and Proceeds subject hereto; (m) to enter onto [Guarantor Name]’s
premises in inspecting the Collateral, subject to any limitations set forth in
the Credit Agreement); (n) to make withdrawals from and to close deposit
accounts or other accounts with any financial institution, wherever located,
into which Proceeds may have been deposited, and to apply funds so withdrawn to
payment of the Indebtedness; (o) to preserve or release the interest evidenced
by chattel paper to which Bank is entitled hereunder and to endorse and deliver
any evidence of title incidental thereto; and (p) to do all acts and things and
execute all documents in the name of [Guarantor Name] or otherwise, deemed by
Bank as necessary, proper and convenient in connection with the preservation,
perfection or enforcement of its rights hereunder.

8. [GUARANTOR NAME]’S WAIVERS.

(a) [Guarantor Name] waives any right to require Bank to: (i) proceed against
Borrower or any other person; (ii) marshal assets or proceed against or exhaust
any security held from Borrower or any other person; (iii) give notice of the
terms, time and place of any public or private sale or other disposition of
personal property security held from Borrower or any other person; (iv) take any
other action or pursue any other remedy in Bank’s power; or (v) make any
presentment or demand for performance, or give any notice of nonperformance,
protest, notice of protest or notice of dishonor hereunder or in connection with
any obligations or evidences of indebtedness held by Bank as security for or
which constitute in whole or in part the Indebtedness secured hereunder, or in
connection with the creation of new or additional Indebtedness.

(b) [Guarantor Name] waives any defense to its obligations hereunder based upon
or arising by reason of: (i) any disability or other defense of Borrower or any
other person; (ii) the cessation or limitation from any cause whatsoever, other
than payment in full, of the Indebtedness of Borrower or any other person;
(iii) any lack of authority of any officer, director, partner, agent or any
other person acting or purporting to act on behalf of any of the Borrower which
is a corporation, partnership or other type of entity, or any defect in the
formation of any such Borrower; (iv) the application by Borrower of the proceeds
of any Indebtedness for purposes other than the purposes represented by Borrower
to, or intended or understood by, Bank or [Guarantor Name]; (v) any act or
omission by Bank which directly or indirectly results in or aids the discharge
of Borrower or any portion of the Indebtedness by operation of law or otherwise,
or which in any way impairs or suspends any rights or remedies of Bank against
Borrower; (vi) any impairment of the value of any interest in security for the
Indebtedness or any portion thereof, including without limitation, the failure
to obtain or maintain perfection or recordation of any interest in any such
security, the release of any such security without substitution, and/or the
failure to preserve the value of, or to comply with applicable law in disposing
of, any such security; (vii) any modification of the Indebtedness, in any form
whatsoever, including any modification made after revocation hereof to any
Indebtedness incurred prior to such revocation, and including without limitation
the renewal, extension, acceleration or other change in time for payment of, or
other change in the terms of, the Indebtedness or any portion thereof, including
increase or decrease of the rate of interest thereon;

 

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or (viii) or any requirement that Bank give any notice of acceptance of this
Agreement. Until all Indebtedness shall have been paid in full, [Guarantor Name]
shall have no right of subrogation, and [Guarantor Name] waives any right to
enforce any remedy which Bank now has or may hereafter have against Borrower or
any other person and waives any benefit of, or any right to participate in, any
security now or hereafter held by Bank. [Guarantor Name] further waives all
rights and defenses [Guarantor Name] may have arising out of (A) any election of
remedies by Bank, even though that election of remedies, such as a non-judicial
foreclosure with respect to any security for any portion of the Indebtedness,
destroys [Guarantor Name]’s rights of subrogation or [Guarantor Name]’s rights
to proceed against Borrower for reimbursement, or (B) any loss of rights
[Guarantor Name] may suffer by reason of any rights, powers or remedies of
Borrower in connection with any anti-deficiency laws or any other laws limiting,
qualifying or discharging Borrower’s Indebtedness, whether by operation of
Sections 726, 580a or 580d of the Code of Civil Procedure as from time to time
amended, or otherwise, including any rights [Guarantor Name] may have to a
Section 580a fair market value hearing to determine the size of a deficiency
following any foreclosure sale or other disposition of any real property
security for any portion of the Indebtedness.

9. AUTHORIZATIONS TO BANK. [Guarantor Name] authorizes Bank either before or
after revocation hereof, without notice to or demand on [Guarantor Name], and
without affecting [Guarantor Name]’s liability hereunder, from time to time to:
(a) alter, compromise, renew, extend, accelerate or otherwise change the time
for payment of, or otherwise change the terms of, the Indebtedness or any
portion thereof, including increase or decrease of the rate of interest thereon;
(b) take and hold security, other than the Collateral and Proceeds, for the
payment of the Indebtedness or any portion thereof, and exchange, enforce,
waive, subordinate or release the Collateral and Proceeds, or any part thereof,
or any such other security; (c) apply the Collateral and Proceeds or such other
security and direct the order or manner of sale thereof, including without
limitation, a non-judicial sale permitted by the terms of the controlling
security agreement, mortgage or deed of trust, as Bank in its discretion may
determine; (d) release or substitute any one or more of the endorsers or
guarantors of the Indebtedness, or any portion thereof, or any other party
thereto; and (e) apply payments received by Bank from Borrower to any
Indebtedness of Borrower to Bank, in such order as Bank shall determine in its
sole discretion, whether or not such Indebtedness is covered by this Agreement,
and [Guarantor Name] hereby waives any provision of law regarding application of
payments which specifies otherwise. Bank may without notice assign this
Agreement in whole or in part.

10. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. [Guarantor Name]
agrees to pay, prior to delinquency, all insurance premiums, taxes, charges,
liens and assessments against the Collateral and Proceeds, and upon the failure
of [Guarantor Name] to do so, Bank at its option may pay any of them and shall
be the sole judge of the legality or validity thereof and the amount necessary
to discharge the same. Any such payments made by Bank shall be obligations of
[Guarantor Name] to Bank, due and payable immediately upon written demand,
together with interest at a rate determined in accordance with the provisions of
this Agreement, and shall be secured by the Collateral and Proceeds, subject to
all terms and conditions of this Agreement.

 

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11. EVENTS OF DEFAULT. The occurrence of any Event of Default under the Credit
Agreement shall constitute an “Event of Default” under this Agreement.

12. REMEDIES. Upon the occurrence and during the continuance of any Event of
Default, Bank shall have and may exercise without demand any and all rights,
powers, privileges and remedies granted to a secured party upon default under
the California Uniform Commercial Code or otherwise provided by law, including
without limitation, the right (a) to contact all persons obligated to [Guarantor
Name] on any Collateral or Proceeds and to instruct such persons to deliver all
Collateral and/or Proceeds directly to Bank, and (b) to sell, lease, license, or
otherwise dispose of any or all Collateral. All rights, powers, privileges and
remedies of Bank shall be cumulative. No delay, failure or discontinuance of
Bank in exercising any right, power, privilege or remedy hereunder shall affect
or operate as a waiver of such right, power, privilege or remedy; nor shall any
single or partial exercise of any such right, power, privilege or remedy
preclude, waive or otherwise affect any other or further exercise thereof or the
exercise of any other right, power, privilege or remedy. Any waiver, permit,
consent or approval of any kind by Bank of any default hereunder, or any such
waiver of any provisions or conditions hereof, must be in writing and shall be
effective only to the extent set forth in writing. It is agreed that public or
private sales or other dispositions, for cash or on credit, to a wholesaler or
retailer or investor, or user of property of the types subject to this
Agreement, or public auctions, are all commercially reasonable since differences
in the prices generally realized in the different kinds of dispositions are
ordinarily offset by the differences in the costs and credit risks of such
dispositions. While an Event of Default exists: (a) [Guarantor Name] will
deliver to Bank from time to time, as requested in writing by Bank, current
lists of all Collateral and Proceeds; (b) [Guarantor Name] will not dispose of
any Collateral or Proceeds except on terms approved by Bank; (c) at Bank’s
written request, [Guarantor Name] will assemble and deliver all Collateral and
Proceeds, and books and records pertaining thereto, to Bank at a reasonably
convenient place designated by Bank; and (d) Bank may, without notice to
[Guarantor Name], enter onto [Guarantor Name]’s premises and take possession of
the Collateral. With respect to any sale or other disposition by Bank of any
Collateral subject to this Agreement, [Guarantor Name] hereby expressly grants
to Bank the right to sell such Collateral using any or all of [Guarantor Name]’s
trademarks, trade names, trade name rights and/or proprietary labels or marks.
[Guarantor Name] further agrees that Bank shall have no obligation to process or
prepare any Collateral for sale or other disposition.

13. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In
disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys’ fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order of application as Bank
may from time to time elect. Upon the transfer of all or any part of the
Indebtedness, Bank may transfer all or any part of the Collateral or Proceeds
and shall be fully discharged thereafter from all liability and responsibility
with respect to any of the foregoing so transferred, and the transferee shall be
vested with all rights and powers of Bank hereunder with respect to any of the
foregoing so transferred; but with respect to any Collateral or Proceeds not so
transferred, Bank shall retain all rights, powers, privileges and remedies
herein given.

 

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14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Bank at the address specified in Section 2
hereof and to [Guarantor Name] at the address of its chief executive office (or
principal residence, if applicable) specified below or to such other address as
any party may designate by written notice to each other party, and shall be
deemed to have been given or made as follows: (a) if personally delivered, upon
delivery; (b) if sent by mail, upon the earlier of the date of receipt or three
(3) days after deposit in the U.S. mail, first class and postage prepaid; and
(c) if sent by telecopy, upon receipt.

15. COSTS, EXPENSES AND ATTORNEYS’ FEES. [Guarantor Name] shall pay to Bank
within ten (10) Business Days (as defined in the Credit Agreement) written
demand the full amount of all documented payments, advances, charges, costs and
expenses, including reasonable attorneys’ fees (to include outside counsel fees
and all allocated costs of Bank’s in-house counsel), expended or incurred by
Bank in connection with (a) the perfection and preservation of the Collateral or
Bank’s interest therein, and (b) the realization, enforcement and exercise of
any right, power, privilege or remedy conferred by this Agreement, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
[Guarantor Name] or in any way affecting any of the Collateral or Bank’s ability
to exercise any of its rights or remedies with respect thereto. All of the
foregoing shall be paid by [Guarantor Name] with interest from the date of
demand until paid in full at a rate per annum set forth in the Credit Agreement.

16. SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that [Guarantor Name]
may not assign or transfer any of its interests or rights hereunder without
Bank’s prior written consent. [Guarantor Name] acknowledges that Bank has the
right to sell, assign, transfer, negotiate or grant participations in all or any
part of, or any interest in, any Indebtedness of Borrower to Bank and any
obligations with respect thereto, including this Agreement. In connection
therewith, Bank may disclose all documents and information which Bank now has or
hereafter acquires relating to [Guarantor Name] and/or this Agreement, whether
furnished by Borrower, [Guarantor Name] or otherwise. [Guarantor Name] further
agrees that Bank may disclose such documents and information to Borrower.

17. AMENDMENT. This Agreement may be amended or modified only in writing signed
by Bank and [Guarantor Name].

18. APPLICATION OF SINGULAR AND PLURAL. In all cases where there is but a single
Borrower, then all words used herein in the plural shall be deemed to have been
used in the singular where the context and construction so require; and when
there is more than one Borrower named herein.

 

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19. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

20. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

21. ARBITRATION.

(a) Arbitration. The parties hereto agree, upon demand by any party, to submit
to binding arbitration all claims, disputes and controversies between or among
them (and their respective employees, officers, directors, attorneys, and other
agents), whether in tort, contract or otherwise in any way arising out of or
relating to this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination. In the event of a court ordered
arbitration, the party requesting arbitration shall be responsible for timely
filing the demand for arbitration and paying the appropriate filing fee within
30 days of the abatement order or the time specified by the court. Failure to
timely file the demand for arbitration as ordered by the court will result in
that party’s right to demand arbitration being automatically terminated.

(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location
in California selected by the American Arbitration Association (“AAA”); (ii) be
governed by the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, as the “Rules”). If
there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law.

(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

 

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(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of California or a neutral retired judge of the
state or federal judiciary of California, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator’s discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of California and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

(e) Discovery. In any arbitration proceeding, discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party’s presentation and that no alternative means for
obtaining information is available.

(f) Class Proceedings and Consolidations. No party hereto shall be entitled to
join or consolidate disputes by or against others in any arbitration, except
parties who have executed this Agreement or any other contract, instrument or
document relating to any Indebtedness, or to include in any arbitration any
dispute as a representative or member of a class, or to act in any arbitration
in the interest of the general public or in a private attorney general capacity.

(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs
and expenses of the arbitration proceeding.

(h) Real Property Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no dispute shall be submitted to arbitration if the
dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue

 

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of the single action rule statute of California, thereby agreeing that all
indebtedness and obligations of the parties, and all mortgages, liens and
security interests securing such indebtedness and obligations, shall remain
fully valid and enforceable. If any such dispute is not submitted to
arbitration, the dispute shall be referred to a referee in accordance with
California Code of Civil Procedure Section 638 et seq., and this general
reference agreement is intended to be specifically enforceable in accordance
with said Section 638. A referee with the qualifications required herein for
arbitrators shall be selected pursuant to the AAA’s selection procedures.
Judgment upon the decision rendered by a referee shall be entered in the court
in which such proceeding was commenced in accordance with California Code of
Civil Procedure Sections 644 and 645.

(i) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the documents between the parties or the subject matter of the
dispute shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the documents or any relationship between the
parties.

(j) Small Claims Court. Notwithstanding anything herein to the contrary, each
party retains the right to pursue in Small Claims Court any dispute within that
court’s jurisdiction. Further, this arbitration provision shall apply only to
disputes in which either party seeks to recover an amount of money (excluding
attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small
Claims Court.

[Guarantor Name] warrants that [Guarantor Name] is an organization registered
under the laws of the State of California.

[Guarantor Name] warrants that its chief executive office (or principal
residence, if applicable) is located at the following address: [23975 Park
Sorrento, Suite 400, Calabasas, CA 91302].

[Signature page to follow.]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of June 1, 2014.

[GUARANTOR NAME]

 

By:  

 

Name:  

 

Title:  

 

By:  

 

Name:  

 

Title:  

 

Third Party Security Agreement