Exhibit 10.2

EXECUTION VERSION

 

 

 

 

 

 

 

SECOND AMENDED AND RESTATED

REVOLVING CREDIT AGREEMENT

AMONG

THE PROPERTY OWNERS PARTY HERETO FROM TIME TO TIME

each as a Borrower,

COLFIN AH FINANCE MASTERCO, LLC,

as Guarantor,

COLFIN AH FINANCE HOLDCO, LLC

as Guarantor and the Borrower Representative,

WELLS FARGO BANK, N.A.

as Calculation Agent and Paying Agent,

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

as Lead Arranger, Agent and a Lender,

and

THE LENDERS FROM TIME TO TIME PARTY HERETO

 

 

Dated as of July 14, 2015

 

 

 

 

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TABLE OF CONTENTS

 

 

Page

 

 

ARTICLE 1 DEFINITIONS

1

 

 

 

Section

1.1

Definitions

1

 

Section

1.2

Construction of Certain Terms and Phrases

44

 

 

 

 

 

ARTICLE 2 THE CREDIT FACILITY

46

 

 

 

Section

2.1

Description of Facility; Borrower Representative

46

 

Section

2.2

Procedure for Adding Financed Properties and Borrowing Advances

48

 

Section

2.3

Purpose

51

 

Section

2.4

Interest and Fees

51

 

Section

2.5

Payment of Principal and Interest

52

 

Section

2.6

Termination and Reduction of Facility

52

 

Section

2.7

Prepayments and Releases

53

 

Section

2.8

Application of Available Funds; Collection Account

55

 

Section

2.9

Inability to Determine Applicable Interest Rate

58

 

Section

2.10

Illegality or Impracticability of LIBOR Rate Advances

59

 

Section

2.11

Increased Costs

59

 

Section

2.12

Indemnified Taxes

61

 

Section

2.13

Remedies Upon Breach of Representation As To Eligible Property

64

 

Section

2.14

The Paying Agent

65

 

Section

2.15

The Calculation Agent

69

 

 

ARTICLE 3 CONDITIONS PRECEDENT

74

 

 

 

Section

3.1

Conditions to Closing

74

 

Section

3.2

Conditions to Adding Financed Properties and Each Advance

78

 

 

 

 

 

ARTICLE 4 PROPERTY MANAGEMENT, VALUATIONS AND RESERVES

81

 

 

 

Section

4.1

Property Management and Cash Management

81

 

Section

4.2

Property Valuations

83

 

Section

4.3

Audit and Information Rights

85

 

Section

4.4

Ongoing Reserve Account

86

 

Section

4.5

Interest Reserve Account

86

 

Section

4.6

Insurance Premiums and Real Property Taxes; Insurance Reserve Account and Tax
Reserve Account

86

 

Section

4.7

Special Reserve Account

88

 

Section

4.8

Insurance Proceeds Account

89

 

Section

4.9

Renovations and Renovation Cost Reserve Account

89

 

Section

4.10

Ratio Trigger Reserve Account

91

 

Section

4.11

Reserve Accounts Generally

91

 

Section

4.12

Prohibited Conveyance

92

 

 

 

 

 

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ARTICLE 5 REPRESENTATIONS AND WARRANTIES 

94

 

 

 

Section

5.1

Representations and Warranties

94

 

 

 

 

 

ARTICLE 6 AFFIRMATIVE COVENANTS

100

 

 

 

Section

6.1

Affirmative Covenants of the Loan Parties

100

 

Section

6.2

Insurance

109

 

Section

6.3

Hedging Arrangements

115

 

Section

6.4

Condemnation

120

 

 

 

 

 

ARTICLE 7 NEGATIVE COVENANTS

120

 

 

 

Section

7.1

Negative Covenants of the Loan Parties

120

 

 

 

 

 

ARTICLE 8 DEFAULT

123

 

 

 

Section

8.1

Default

123

 

Section

8.2

Remedies Upon Default

127

 

 

 

 

 

ARTICLE 9 THE AGENT

128

 

 

 

Section

9.1

Authorization and Action

128

 

Section

9.2

Delegation of Duties

129

 

Section

9.3

Exculpatory Provisions

129

 

Section

9.4

Reliance

129

 

Section

9.5

Non-Reliance on Agent

130

 

Section

9.6

Indemnification

131

 

Section

9.7

Agent in its Individual Capacity

131

 

Section

9.8

Successor Agent

131

 

 

 

 

 

ARTICLE 10 ASSIGNMENTS AND PARTICIPATIONS

132

 

 

 

Section

10.1

Assignments and Participations

132

 

 

 

 

 

ARTICLE 11 INTENTIONALLY OMITTED

134

 

 

ARTICLE 12 CROSS-GUARANTY

134

 

 

 

Section

12.1

Cross-Guaranty

134

 

Section

12.2

Waivers by Borrowers

135

 

Section

12.3

Benefit of Guaranty

135

 

Section

12.4

Waiver of Subrogation, Etc

136

 

Section

12.5

Liability Cumulative

136

 

 

 

 

 

ARTICLE 13 MISCELLANEOUS

136

 

 

 

Section

13.1

Amendments and Waivers

136

 

Section

13.2

Governing Law; Consent to Jurisdiction

137

 

Section

13.3

Waiver of Jury Trial

138

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Section

13.4

Assignment

138

 

Section

13.5

Notices

139

 

Section

13.6

Data Site; Access to Information

140

 

Section

13.7

Severability

141

 

Section

13.8

Entire Agreement; Amendments; No Third Party Beneficiaries

141

 

Section

13.9

Counterparts

142

 

Section

13.10

Expenses

142

 

Section

13.11

Indemnity

143

 

Section

13.12

Usury Savings Clause

143

 

Section

13.13

Set-off

144

 

Section

13.14

Confidentiality

144

 

Section

13.15

Limitation of Liability

146

 

Section

13.16

No Joint Venture

147

 

Section

13.17

No Insolvency Proceedings

147

 

Section

13.18

Lender Communications

147

 

EXHIBITS, SCHEDULES AND ANNEXES

 

Exhibit A

Form of Borrowing Notice

Exhibit A-1

Form of Borrowing Notice Confirmation

Exhibit A-2

Form of Property Addition Notice

Exhibit A-2A

Form of Property Addition Confirmation (Calculation Agent)

Exhibit A-2B

Form of Property Addition Confirmation (Diligence Agent)

Exhibit A-3

Form of Borrower Representative Certification

Exhibit B

Form of Note

Exhibit C

Form of Eligible Lease

Exhibit D

Form of Monthly Report

Exhibit E

Form of Joinder Agreement

Exhibit F

Form of Calculation Schedule

Exhibit G

Form of Certificate of Completion

Exhibit H

Form of Monthly Report Confirmation

Exhibit I

Form of Power of Attorney

Exhibit J

Form of Eligible Property Management Agreement

Exhibit K

Title Review and Specially Permitted Liens

Exhibit L

Form of Assignment of Management Agreement

Exhibit M-1

Form of Tax Compliance Certificate

Exhibit M-2

Form of Tax Compliance Certificate

Exhibit M-3

Form of Tax Compliance Certificate

Exhibit M-4

Form of Tax Compliance Certificate

 

 

Schedule 1

Borrowers

Schedule 2

Eligibility Requirements

Schedule 3

Filing Offices

Schedule 4

Schedule of Properties

Schedule 5

Leasing Standards

Schedule 6

Sponsor Financial Covenants

 

 

Annex A

Lender Accounts

 

 

 

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SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

This SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this “Agreement”)
is made and entered into as of July 14, 2015 (the “Restatement Effective Date”),
by and among each person listed on Schedule 1 hereto and each person that
becomes a party hereto pursuant to a Joinder, COLFIN AH FINANCE MASTERCO, LLC,
as guarantor, COLFIN AH FINANCE HOLDCO, LLC, as guarantor and borrower
representative (in such capacity, the “Borrower Representative”), WELLS FARGO
BANK, N.A., as calculation agent (in such capacity, the “Calculation Agent”) and
as paying agent (in such capacity, the “Paying Agent”), JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, a national banking association, as Lead Arranger, Lender
(in such capacity, the “JPM Lender”) and agent for each Lender (in such
capacity, the “Agent”) and THE LENDERS PARTY HERETO FROM TIME TO TIME.

RECITALS

WHEREAS, the Borrowers, Calculation Agent, Paying Agent, Lenders and Agent
entered into the Amended and Restated Revolving Credit Agreement, dated as of
November 22, 2013 (the “Existing Agreement”);

WHEREAS, the Borrowers, Calculation Agent, Paying Agent, JPM Lender and Agent
wish to amend and restate the Existing Agreement in its entirety pursuant to
this Agreement and the Borrowers, Calculation Agent, Paying Agent, JPM Lender,
Lenders and Agent have agreed to amend and restate such Existing Agreement;

NOW THEREFORE, in consideration of the premises and mutual covenants set forth
herein and other good and valuable  consideration, the  receipt and sufficiency
of which are hereby acknowledged, the parties, intending to be legally bound,
hereby agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1   Definitions. For purposes hereof, the following terms, when used
herein with initial capital letters, shall have the respective meanings set
forth herein:

“Accepted Management Practices”: With respect to any Property, those management,
rental, sales and collection practices (a) of prudent companies that manage
single family and 2-4 family residential homes for rent and sale of a type
similar to the Properties in the jurisdiction where the related Property is
located, (b) that are in accordance with commercially reasonable professional
standards, (c) that are in compliance with all Applicable Laws and (d) using
good faith and commercially reasonable efforts.

“Account Control Agreement”: With respect to the Ongoing Reserve Account, the
Insurance Reserve Account, the Tax Reserve Account, the Interest Reserve
Account, the Special Reserve Account, the Renovation Cost Reserve Account, the
Insurance Proceeds Account, Ratio Trigger Reserve Account and the Collection
Account, a Securities Account Control Agreement among the Borrower
Representative, the Agent and the Paying Agent, in form and substance
satisfactory to the Agent.

 

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“Acquisition Date”: With respect to any Property, the date on which the related
Borrower or an Affiliate acquired title to such Property.

“Actual Renovation Costs”: With respect to any Property, the actual
out-of-pocket Renovation Costs paid by the applicable Borrower with respect to
the renovation of such Property in accordance with the Renovation Standards, as
demonstrated in a certificate certified by a Responsible Officer of the Borrower
Representative delivered to the Diligence Agent and the Agent; provided that
reasonably satisfactory written evidence supporting the Renovation Costs set
forth in such a certificate shall be delivered to the Diligence Agent and the
Agent; provided further that with respect to any Property for which such costs
exceed 15% of the Asset Purchase Price, the Agent shall have a right to
recalculate the Actual Renovation Costs in any case where it considers the
evidence supporting the Renovation Costs not reasonably satisfactory.

“Advance”: Each advance of funds by each Lender to the Borrowers under Section
2.2.

“Advances Outstanding”: As of any date of determination, the aggregate
outstanding principal balance of all outstanding Advances as of such date.

“Affected Advances”: As defined in Section 2.10.

“Affiliate”: As applied to any Person, (a) each Person that, (x) directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or
other fiduciary such Person, or (y) otherwise has the power to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise (notwithstanding the
foregoing, a Property Manager shall not be an Affiliate of any Borrower-Related
Party solely due to such Property Manager being a party to an Eligible Property
Management Agreement), (b) each Person that controls, is controlled by or is
under common control with such Person, and (c) each of such Person’s officers,
directors, joint ventures, managers and partners. For the purposes of this
definition, “control” of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, no direct or indirect owner of any
Equity Interest of Colony American Homes, Inc. shall be deemed to be an
Affiliate of any Borrower-Related Party.

“Agent”: As defined in the introductory paragraph.

“Agent Fee”: As defined in the CAH Fee Letter.

“Aggregate Asset Purchase Price”: On any date of determination, the sum of the
Asset Purchase Prices for all Financed Properties included in the Facility.

“Aggregate Market Value”: On any date of determination, the sum of the Market
Values for all Financed Properties included in the Facility.

“Aggregate Property Value”: On any date of determination, the sum of the
Property Values for all Financed Properties included in the Facility.

2

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“Agreement”: As defined in the introductory paragraph.

“Allocated Loan Amount”: On any day for any Financed Property, the Advances
Outstanding multiplied by a fraction, the numerator of which is the Asset
Purchase Price (adjusted, in the case of Non-Eligible Properties, as required by
Section 2.13) of such Financed Property and the denominator of which is the
Aggregate Asset Purchase Price of all Financed Properties.

“Annualized Net Cash Flow”: For any Measurement Quarter, the excess, if any of
(a) the aggregate annualized Collections received during such Measurement
Quarter in respect of all of the Financed Properties owned by the Borrowers
during such Measurement Quarter over (b) the sum of (i) an amount equal to the
annualized Operating Expenses in respect of such Financed Properties for such
Measurement Quarter, (ii) the aggregate real estate taxes or other governmental
assessments related to such Financed Properties payable during the related
calendar year; (iii) the aggregate insurance premiums payable during the related
calendar year necessary in order to maintain compliance with the Insurance
Requirements (excluding premiums related to Non-Financed Properties if such
premiums (12 months) are on deposit in the Ongoing Reserve Account), in  each
case for the calendar year in which  such Measurement Quarter occurs; provided
that, (i) leasing commissions shall be amortized over the term of the applicable
Lease for purposes of calculating Annualized Net Cash Flow, and (ii) with
respect to any Financed Property acquired by the Borrower or an Affiliate during
the Measurement Quarter or which became a Leased Property, after the first day
of the relevant Measurement Quarter, Annualized Net Cash Flow shall be
calculated based on Estimated Net Cash Flow. Annualized Net Cash Flow shall be
calculated pro forma for the addition or release of Financed Properties as if
such addition or release had occurred on the first day of the applicable
Measurement Quarter.

“Anti-Money Laundering Laws”: As defined in Section 5.1(n).

“Applicable  Laws”: All laws of any Governmental Authority applicable to the
matters contemplated by  this Agreement, including any ordinances, judgments,
decrees, injunctions, writs, orders and other legally binding actions of any
Governmental Authority, common law and rules and regulations of any federal,
regional, state, county, municipal or other Governmental Authority.

“Applicable Margin”: As defined in the CAH Fee Letter; provided, however, the
Applicable Margin may not be amended or modified in the CAH Fee Letter without
the consent of each Lender and notice to the Calculation Agent.

“Applicable Taxes”: All present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

“Approved Monthly Expense Amount”: With respect to any Payment Date after the
occurrence and during the continuation of an Event of Default, the monthly
amount set forth in the Approved Quarterly Operating Expense Budget for
Operating Expenses for the calendar month in which such Monthly Payment Date
occurs.

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“Approved Quarterly Operating Expense Budget”: The Operating Expense Budget
approved by the Directing Lenders pursuant to Section 4.1(e).

“Asset Purchase Price”: With respect to any Property, the price paid to purchase
such Property from the applicable third-party on the related Acquisition Date by
the related Borrower or an Affiliate thereof, plus (a) actual out-of-pocket
costs and expenses incurred by the related Borrower or Affiliate that originally
acquired such Property in connection with the acquisition of such Property,
payment of Liens and clearance of other title defects, gaining possession and
settlement of disputes relating to title and possession thereof (subject to the
reasonable satisfaction of the Directing Lenders as to appropriateness and
amount, prior to the initial Advance made with respect to such Property) and to
the extent permitted by GAAP to increase the Borrower’s basis in such Property
and (b) the Actual Renovation Costs paid with respect to such Property;
provided, however, if such Property is not an Eligible Property on any date of
determination and the applicable Cure Period has expired, then the Asset
Purchase Price for such Property shall be deemed to be zero and; provided,
further, that any Borrower may elect, in a Property Addition Notice or
subsequent written notice to the Diligence Agent and the Agent, to reduce the
Asset Purchase  Price  for any Financed Property in order  to meet the
Eligibility Requirements relating to Asset Purchase Price, so long as any such
subsequent election does not cause the Advances Outstanding to exceed the
resulting Borrowing Base. Any such election shall permanently reduce the Asset
Purchase Price of such Financed Property for all purposes hereunder.
Notwithstanding anything to the contrary in the foregoing, the Asset Purchase
Price of each Property owned by the Borrowers as of the Restatement Effective
Date shall be deemed to equal the Market Value of such Property as of the
Restatement Effective Date.

“Assigning Lender”: As defined in Section 10.1(a).

“Assignment and Assumption”: As defined in Section 10.1(a).

“Assignment of Management Agreement”: A written assignment and acknowledgement
duly executed by a Property Manager, each Borrower and the Agent in the form of
Exhibit L attached hereto or, with respect to the Master Property Manager, the
Assignment of Master Property Management Agreement and Acknowledgement and
Agreement, dated as of August 28, 2013.

“Available  Funds”: For any Payment Date, the sum of (a) all Collections for the
related Collection Period, (b) all Property Release Amounts received during the
related Collection Period (less any amounts paid to the Lenders during such
Collection Period in respect of any Property Release Amount in accordance with
the provisions of Section 2.7(a)), (c) all Condemnation Proceeds deposited into
the Collection Account pursuant to Sections 4.8 or 6.4 during the related
Collection Period, (d) all Insurance Proceeds deposited into the Collection
Account pursuant to Sections 4.8 or 6.2(g) during the related Collection Period,
(e) all amounts on deposit in the Ratio Trigger Reserve Account on a Ratio
Trigger Delay Termination Date, (f) all amounts received during the related
Collection Period from any Hedge Counterparty in respect of any Hedge
Transaction, and (g) any amounts deposited by or on behalf of the Borrowers in
the Collection Account pursuant to Section 2.7(d), and (e) (less any amounts
paid to the Lenders during such Collection Period in accordance with the
provisions of

4

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Section 2.7(d) and (e), as applicable) and any other amounts deposited into the
Collection Account during such Collection Period (less any amounts paid to the
Lenders or any other Person from such amounts during such Collection Period in
accordance with this Agreement).

“Bankruptcy Code”: Title 11 of the United States Code, as amended.

“Base Rate”: For any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day, and (b) the Federal Funds Effective Rate in
effect on such day plus 0.50% plus the Applicable Margin. Any change in the Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.

“Base Rate Advance”: As defined in Section 2.9.

“Bid Receipt” means a trustee receipt in customary form reasonably acceptable to
the Diligence Agent, evidencing the purchase of such Property at auction by the
applicable Borrower.

“Bid Receipt Property” means a Property with respect to which the applicable
Borrower has not yet received and delivered to the Diligence Agent a recorded
deed, but the Diligence Agent has received a Bid Receipt.

“Borrower” and “Borrowers”: At any time, any Eligible Property Owner that is, at
such time, a party to this Agreement, whether by executing this Agreement on the
Effective Date or, after the Effective Date, subject to the reasonable approval
of the Directing Lenders, by executing a Joinder, including the Persons who are
listed as Borrowers on Schedule 1 attached hereto, unless and until any such
Person is removed as a Borrower in accordance with Section 2.7(f).

“Borrower Deposit Accounts”: As defined in Section 4.1(d)(i).

“Borrower Expense Account”: The Deposit Account maintained by each Borrower from
which Operating Expenses for the Properties of such Borrower are paid.

“Borrower Funding Account”:  The Deposit Account maintained by each Borrower for
the purposes of funding certain acquisition related expenses.

“Borrower Property Release”: The release of a Financed Property to the related
Borrower as a Non-Financed Property.

“Borrower-Related Party”:   Each of the Borrowers, Masterco, Holdco, the
Sponsors, the initial Master Property Manager and their respective Affiliates.

“Borrower Rent Account”:   The Deposit Account maintained by each Borrower into
which all rent checks, electronic and online rent payments are deposited.

“Borrower Representative”: As defined in the introductory paragraph.

 

5

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“Borrower Security Deposit Account”: The Deposit Account, if any, maintained by
a Borrower into which all Tenant security deposits are deposited if not
otherwise maintained by the applicable Property Manager.

 

“Borrowing Base”: On any date of determination, an amount equal to the sum of
the Property Borrowing Bases for all Financed Properties.

 

“Borrowing Base Shortfall”:   On any date of determination, the amount, if any,
by which the Advances Outstanding exceeds the Borrowing Base.

 

“Borrowing Date”:   The date (which shall be a Business Day) on which any
Advance is made pursuant to Section 2.2.

 

“Borrowing Notice”: A written request by the Borrowers for an Advance, in the
form of Exhibit A attached hereto.

 

“Borrowing Notice Confirmation”: With respect to each Borrowing Notice, a
confirmation, in the form of Exhibit A-1 attached hereto, by the Calculation
Agent that it has reviewed and confirmed the results of each of the calculations
set forth in the reports annexed to Exhibit A-1 hereto and has found no
deficiency therein.

 

“BPO”: A written broker’s price opinion from the Diligence Agent as to the fair
market value of a Property, or other similar customary evidence of the fair
market value of a Property from the Diligence Agent, in each case in form and
substance acceptable to the Directing Lenders, which opinion shall include an
opinion as to the market rent for such Property and, if such BPO is an
(a) exterior BPO, the “as-is” value of any such Property that is a Leased
Property and the “quick sale” value of any such Property that is a Non-Leased
Property or (b) interior BPO, the “as is” value of such Property, each stated in
U.S. dollar value. BPOs shall include such information as shall be reasonably
acceptable to the Directing Lenders, including, but not limited to, opinion of
value.

 

“BPO Value”: The stated U.S. dollar value contained in a BPO as the fair market
value of a Property, which value shall be, if such BPO is an (a) exterior BPO,
the “as-is” value of any such Property that is a Leased Property and the “quick
sale” value of any such Property that is a Non-Leased Property or (b) interior
BPO, the “as is” value of such Property, each stated in U.S. dollar value.

 

“BPO Report”: With respect to any Quarterly Sample or Additional Sample required
to be delivered pursuant to Section 4.2(a) hereof, a cumulative report showing
the calculation of the Loan to Value Ratio taking into account such updated
BPOs, which report shall specify the property ID, the date of such Quarterly
Sample or Additional Sample, the related BPO Value and Allocated Loan Amount
used for Loan to Value Ratio computation, the Market Value used for Loan to
Value Ratio computation and the Asset Purchase Price used to calculate the Loan
to Value Ratio computation.

 

6

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“Business Day”: Any day (a) other than (i) a Saturday or a Sunday, (ii) a day on
which the New York Stock Exchange or Federal Reserve is closed, (iii) a public
holiday or the equivalent for banks in New York City, New York, or (iv) a day on
which banking institutions in the State of Maryland or the State of New York are
authorized or obligated by law or executive order to be closed, and (b) if used
in connection with the LIBOR Rate, on which dealings are carried on in the
London interbank market.

 

“CA/PA Responsible Officer”: With respect to the Calculation Agent or Paying
Agent, any vice president, assistant vice president, any assistant secretary,
any assistant treasurer, any associate or any other officer in the corporate
trust group of the Calculation Agent or Paying Agent, as applicable, having
direct responsibility for the administration of this Agreement, and any other
officer of the Calculation Agent or Paying Agent, as applicable, to whom, with
respect to a particular matter, such matter is referred because of such
officer’s knowledge of and familiarity with the particular subject.

 

“CAH Fee Letter”: That certain amended and restated fee letter dated as of July
14, 2015, by and between the Agent and the Borrower Representative.

 

“Calculation Agent”: Wells Fargo Bank, N.A., or any replacement designated
pursuant to Section 2.15.

 

“Calculation Agent Deficiency Report”: With respect to any Borrowing Notice,
Property Addition Notice or a certificate of a Responsible Officer of the
Borrower Representative in the form of Exhibit A-3 attached hereto delivered in
connection with the Document Package, a report setting forth any Calculation
Deficiency identified therein by the Calculation Agent.

 

“Calculation Agent Fee”: As defined in the Calculation Agent and Paying Agent
Fee Letter, provided, however, the Calculation Agent Fee may not be amended or
modified in the Calculation Agent and Paying Agent Fee Letter without the
consent of each Lender.

 

“Calculation Agent and Paying Agent Fee Letter”: That fee letter dated as of the
date hereof, by and between the Calculation Agent, Paying Agent and the Agent.

 

“Calculation Deficiency”: With respect to any Borrowing Notice, Property
Addition Notice or a certificate of a Responsible Officer of the Borrower
Representative in the form of Exhibit A-3 attached hereto delivered in
connection with the Document Package, (i) any calculation deficiency, error or
non-compliance in any applicable calculation included on the calculation
schedule attached hereto as Exhibit F or (ii) any other material deficiency
exists with respect to the applicable Property, Borrowing Notice,
Property  Addition Notice or the certificate of a Responsible Officer of the
Borrower Representative in the form of Exhibit A-3 attached hereto delivered in
connection with the Document Package.

 

“Capital Lease Obligation”: As applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.

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“Carry-Over Lease”: a Lease in effect at the time of acquisition of such
Property by a Borrower or its Affiliate, for so long as such Lease has not been
renewed (other than pursuant to any automatic renewal provision thereof).

 

“Carry-Over Property”: An Eligible Property that is occupied by a carry-over
tenant pursuant to a Carry-Over Lease and is occupied by the same carry-over
tenant as of the date of the related Property Addition Notice.

 

“Cash Management Requirements”: The requirements set forth in Section 4.1(d).

 

“Casualty”: As defined in Section 6.2(a)(ii).

 

“Casualty Threshold Amount” means, with respect to all Casualties arising from
any single Casualty event, an amount equal to the greater of $5,000,000 or two
percent (2%) of the Advances Outstanding as of the date of such Casualty event.

 

“CCAI”: CSFR ColFin American Investors, LLC.

 

“Certificate of Completion”: With respect to any construction, repair or
renovation made to any Property (or multiple Properties specified in such
certificate), a certificate of Responsible Officer of the Borrower
Representative on behalf of the related Borrower, in form and substance
substantially the same as set forth in Exhibit G attached hereto.

 

“Change of Control”: With respect to (a) Masterco, any event, transaction or
occurrence as a result of which CCAI shall cease to (i) Control and (ii) own and
control all of the economic and voting rights associated with ownership of 100%
of the Equity Interests of, Masterco, (b)  Holdco, any event, transaction or
occurrence as a result of which Masterco shall cease to (i) Control and (ii) own
and control all of the economic and voting rights associated with ownership of
100% of the Equity Interests of, Holdco, (c) any Borrower, except as permitted
by the Loan Documents, any event, transaction or occurrence as a result of which
Holdco shall cease to (i) Control and (ii) own and control all of the economic
and voting rights associated with ownership of 100% of the Equity Interests of,
any of the Borrowers, or (d) Sponsor , any event, transaction or occurrence as a
result of which Colony American Homes, Inc. and/or other Colony Controlled
Investment Affiliates shall cease to (i) Control and (ii) directly or indirectly
own and control all of the economic and voting rights associated with ownership
of at least a majority of the Equity Interests of, Sponsor.

 

“Code”: The Internal Revenue Code of 1986 and the rules and regulations
thereunder.

 

“Collateral”: As defined in the Security Agreement.

 

“Collection Account”: The Securities Account established and maintained by the
Paying Agent in the name of the Borrower Representative and entitled “Wells
Fargo Bank, N.A., as Paying Agent, in trust for the Borrowers — Collection
Account # 46587001” or such other account established at the Paying Agent (or
any successor) as may be designated in writing from time to time by the Agent,
and at all times subject to an Account Control Agreement.

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“Collection Period”: Each calendar month.

 

“Collections”: With respect to any Property, all of the following: all amounts
actually collected in respect of the Property, including, rents, proceeds of
rent loss insurance, utility payments and deposit forfeitures, interest received
(and permitted by Applicable Law to be retained) by any Loan Party and other
collected revenues (including any awards from suits not representing rent in
respect of such Property, and related charges, security deposits and other
deposits received by a Loan Party and not (or no longer) refundable to the
applicable Tenant and not applied directly to the cost of repairs by the
applicable Borrower or Property Manager, and all late charges and insufficient
fund charges collected with respect to such Property). Collections shall not
include any (i) Conveyance Proceeds, (ii) Insurance Proceeds (other than
insurance covering rent loss), (iii) Condemnation Proceeds, or (iv) except as
expressly provided above, security deposit or any other refundable deposits
received.

 

“Colony Controlled  Investment  Affiliate”: A Person that is directly or
indirectly under the Control of Colony Capital, Inc. and organized by Colony
Capital, Inc. or its Affiliates for the purpose of making and holding
investments.

 

“Commitment”: With respect to each Lender, the amount set forth below such
Lender’s signature hereto, as such amount may be modified in accordance with the
terms hereof or in the applicable Assignment and Assumption.

 

“Commitment Termination Date”: The earlier of (a) July 13, 2017 and (b) the date
on which the Commitments are terminated pursuant to Section 8.2(a).

 

“Completion Requirements”:  In respect of any Non-Leased Property, that all
Scheduled Renovation Work for such Property has been completed in a good and
workmanlike manner and in accordance with the Renovation Standards and all costs
and expenses in respect thereof, including labor and materials, have been paid
in full.

 

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

 

“Condemnation Proceeds”: All proceeds of any Condemnation, net of costs incurred
in the contest of such Condemnation, and the pursuit and collection of such
proceeds.

 

“Confidential Information”: As defined in Section 13.14(a).

 

“Connection Income Taxes”: Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Applicable
Taxes or branch profits Applicable Taxes.

 

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“Contractual Obligation”: As applied to any Person, any provision of any
Security issued by that Person or of any indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument to which that Person is a
party or by which it or any of its properties is bound or to which it or any of
its properties is subject.

 

“Control”: The possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ability to exercise voting power, by contract or otherwise, and the terms
“Controls,” “Controlling” and “Controlled” shall have meanings correlative
thereto.

 

“Control Required Security Deposit Accounts”: As defined in Section 4.1(c).

 

“Conveyance”: With respect to any Property, any sale, conveyance, assignment,
transfer, grant of option to purchase or other transfer or disposal of a legal
or beneficial interest, whether direct or indirect, by operation of law or
otherwise, to a Person that is not a Borrower.

 

“Conveyance  Expenses”: With respect to any Property, the reasonable expenses of
the applicable Borrower incurred in connection with the Conveyance of such
Property for any of the following: (i) third party real estate commissions, (ii)
the closing costs of the purchaser of such Property actually paid by the
applicable Borrower and (iii) the applicable Borrower’s miscellaneous closings
costs, including, but not limited to legal fees and expenses, title, escrow and
appraisal costs and expenses, in each case to the extent paid to a third party
in an arm’s- length transaction.

 

“Conveyance Proceeds”: With respect to any Conveyance of a Property, all gross
amounts realized with respect to such Property, net of the related Conveyance
Expenses.

 

“COP”: CAH Operating Partnership, L.P.

 

“CSR”: CAH Subsidiary REIT, Inc.

 

“Cure Period”: With respect to the failure of any Financed Property to qualify
as an Eligible Property, if such failure is reasonably susceptible of cure, a
period of thirty (30) days after the earlier of actual knowledge of such
condition by a Responsible Officer of any Borrower-Related Party or notice
thereof by the Agent, the Diligence Agent or any Lender to the Borrower
Representative; provided that the Cure Period shall not be available for any
failure of any Financed Property to constitute an Eligible Property if (i) any
Borrower-Related Party had actual knowledge of such failure at the time such
Property initially became a Financed Property or (ii) the reason for such
failure is due to a consensual Lien (other than a Permitted Lien) on such
Property. If any failure of any Financed Property to qualify as an Eligible
Property is not reasonably susceptible of cure, then no cure period shall be
available. For the avoidance of doubt, the Calculation Agent shall not have any
obligation to track or determine the existence of a Cure Period.

 

“Data Site”: As defined in Section 13.6(a).

 

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“Debt”: With respect to any Person, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments representing extensions of
credit whether or not representing obligations for borrowed money, (c) all
obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable arising in the ordinary course of
business not overdue for more than sixty (60) days), (d) all Capital Lease
Obligations of such Person, (e) all obligations of such Person to reimburse any
Person with respect to amounts paid under a letter of credit or similar
instrument, (f) all obligations of such Person under hedge agreements, (g) all
indebtedness of other Persons secured by a Lien on any property of such Person,
whether or not such indebtedness is assumed by such Person (other than Permitted
Liens), and (h) all indebtedness of other Persons guaranteed by such Person. For
purposes of this definition, the amount of the obligations of such Person with
respect to any hedge agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that such Person would be required to
pay if such hedge agreement were terminated at such time.

 

“Debt Service Coverage Ratio”: At any time, the ratio, determined as of the last
day of the most recently ended Measurement Quarter, of (a) the Annualized Net
Cash Flow for the Financed Properties (excluding income and expense attributable
to Non-Leased Properties and Vacant Properties during their respective Exclusion
Periods) for such Measurement Quarter to (b) the annualized interest expense due
with respect to the Advances Outstanding during such Measurement Quarter, where
such annualized interest expense shall be equal to the product of (i)  the
Advances Outstanding as of such last day of such Measurement Quarter and (ii)
the greater of (A) the Interest Rate as of the last day of such Measurement
Quarter and (B) the sum of (I) the lesser of (x) the Two-Year Swap Rate as of
such last day of such Measurement Quarter and (y) 3.00% and (II) the Applicable
Margin, in each case calculated on an interest only basis (excluding the
Allocated Loan Amounts for Non-Leased Properties and Vacant Properties during
their respective Exclusion Periods).

 

“Debt Yield Ratio”: At any time, the percentage equivalent of a fraction,
determined as of the last day of the most recently ended Measurement Quarter,
the numerator of which is equal to the Annualized Net Cash Flow (excluding
income and expense attributable to Non-Leased Properties and Vacant Properties
during their respective Exclusion Periods) for such Measurement Quarter and the
denominator of which is equal to the Advances Outstanding as of such last day of
such Measurement Quarter (excluding the Allocated Loan Amounts for Non-Leased
Properties and Vacant Properties during their respective Exclusion Periods).

 

“Default”: Any condition, occurrence or event which, after notice or lapse of
time or both, would constitute an Event of Default.

 

“Delinquent Tenant”: A Tenant whose rent payment under the related Lease remains
unpaid for more than 30 days (in an amount exceeding $200.00) after the original
due date for such rent payment.

 

“Deposit Account”: As defined in the UCC.

 

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“Deposit Account Control Agreement”: With respect to any Deposit Account, any
control agreement or other similar agreement between each institution
maintaining such Deposit Account, the owner of such Deposit Account and the
Agent pursuant to which the Agent obtains “control” of such Deposit Account
within the meaning of the UCC, in form and substance reasonably acceptable to
the Agent, it being agreed that any Deposit Account Control Agreement on any
Deposit Account holding tenant security deposits shall be subject to any
limitations on disposition of such funds as may be required by Applicable Law.

 

“Diligence Agent”: Green River Capital, LLC.

 

“Diligence Agent Agreement”: The Valuation Agent Agreement, dated as of August
28, 2013, by and between the Diligence Agent and the Agent.

 

“Diligence Agent Deficiency Notice”: With respect to any Borrowing Notice,
Property Addition Notice or Document Package, a report setting forth any
Diligence Deficiency identified therein by the Diligence Agent.

 

“Diligence Agent Fees”: All fees at any time due and payable to the Diligence
Agent under the Diligence Agent Agreement as reported to the Calculation Agent
and Paying Agent.

 

“Diligence Deficiency”: With respect to any Borrowing Notice, Property Addition
Notice or Document Package, (i) the failure of one or more documents required to
be contained therein to be fully executed or to match in all material respects
the information on the related Schedule of Properties or Supplemental Schedule
of Properties, as applicable, (ii) one or more documents contained therein are
mutilated, materially damaged or torn or otherwise physically altered or
unreadable, (iii) the absence from a Document Package of any document required
to be contained therein, (iv) the applicable Property is not an Eligible
Property, (v) the requirements for the related BPO have not been satisfied, or
(vi) any other material deficiency exists with respect to the applicable
Property, Borrowing Notice, Property Addition Notice or Document Package.

 

“Directing Lenders”: JPMorgan Chase Bank, National Association. For the
avoidance of doubt, the approval of the Directing Lenders shall not be required
with respect to any matter identified as subject to the approval of the
Directing Lenders herein that was approved by the Agent or the JPM Lender prior
to the Restatement Effective Date.

 

“Document Package”: With respect to any Property, the following documents:

 

(a)A copy of the Purchase Agreement related to such Property;

 

(b)A Supplemental Schedule of Properties with respect to such Property;

 

(c)A copy of the recorded deed conveying the Property to the applicable Borrower
with recording information on it; or, if unavailable, either, (x) in the case of
a Bid Receipt Property, a Bid Receipt, or (y) otherwise, evidence reasonably
satisfactory to the Diligence Agent that the deed has been submitted for
recording provided, in each case, that a

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copy of the recorded deed shall be added to the Document Package as promptly as
practicable and in no event more than ninety (90) days after the Property first
becomes a Financed Property; 

 

(d)A copy of an Eligible Title Insurance Policy in respect of such Property,
together with a list of all claims made under such Eligible Title Insurance
Policy by or on behalf of the Borrower provided, in the case of a Bid Receipt
Property, that an Eligible Title Insurance Policy is not required to be included
in the Documentation Package during the first ninety (90) days after the
Property first becomes a Financed Property;

 

(e)Evidence of the Required Insurance Policies with respect to such Property
reasonably satisfactory to the Diligence Agent;

 

(f)A certificate of a Responsible Officer of the Borrower Representative in the
form of Exhibit A-3 attached hereto and setting forth all of the information
described in such Exhibit;

 

(g)If such Property is a Leased Property:

 

(i)a certificate of a Responsible Officer of the Borrower Representative in the
form of Exhibit A-3 attached hereto certifying that the related Tenant is an
Eligible Tenant (or a carry-over tenant) and the original executed Lease related
to such Property is an Eligible Lease (or a Carry-Over Lease), and is on file
with the related Property Manager;

 

(ii)a copy of the Eligible Lease (or Carry-Over Lease) in respect of such
Property; and

 

(iii)a calculation showing pro forma compliance with the Debt Service Coverage
Ratio and the Debt Yield Ratio giving effect to such Property becoming a
Financed Property, and based on Estimated Net Cash Flow for such Property, if
applicable.

 

(h)If such Property is a Non-Leased Property, a certificate of a Responsible
Officer of the Borrower Representative:

 

(i)summarizing the estimated capital expenditures and costs of repairs projected
to be incurred in connection with converting such Property to a Leased Property,
including the Renovations Costs;

 

(ii)a calculation showing pro forma compliance with the Debt Service Coverage
Ratio and the Debt Yield Ratio, calculated solely with respect to the pool of
Non-Leased Properties and based on Estimated Net Cash Flow (assuming solely for
this purpose no Exclusion Period and Pro Forma Collections equal to a reasonable
estimate of annual rent collections); and

 

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(iii)attaching, and certifying the accuracy of the amounts set forth therein, a
spread sheet containing the initial capital expenditures and costs of repairs
actually incurred and planned in connection with converting such Property to a
Leased Property, as reflected in its general ledger. 

 

(i)In the case of any increase in the Asset Purchase Price of a Property due to
the completion of the renovation work with respect to such Property:

 

(i)a Certificate of Completion; and

 

(ii)a certificate of the Borrower Representative:

 

 

1.

certifying that such renovations meet the Renovation Standards;

 

 

2.

certifying the amount of the actual costs of completing the renovation work; and

 

 

3.

certifying that the Tenant thereof is not a Delinquent Tenant and that all other
requirements of a Leased Property have been satisfied with respect to such
Property.

 

“Effective Date”: September 5, 2013.

 

“Eligibility Requirements”: Each of the eligibility requirements set forth in
Schedule 2 hereto, as the same may be modified from time to time with respect to
any Special Eligible Property pursuant to any Special Eligibility Addendum.

 

“Eligible Lease”: With respect to any Eligible Property (a) which, as of the
date such Property first becomes subject to this Facility, was leased to a
Tenant, such existing Lease and (b) any Lease (i) with an Eligible Tenant, (ii)
with an initial term of at least six (6) months (except in the case of Eligible
Properties constituting no more than 5% of Leased Properties (by Allocated Loan
Amount)), (iii) that was entered into in compliance with the Leasing Standards,
(iv) that complies with all Applicable Laws and (v) is in a form either (1)
customary for the market in which the Property is located or (2) approved by the
Directing Lenders (such approval not to be unreasonably withheld or delayed).
Subject to changes which may be required due to changes in law or other
applicable standards, as of the Effective Date, the Directing Lenders have
approved the form attached hereto as Exhibit C.

 

“Eligible Property”: Any Property owned by a Borrower that satisfies each of the
Eligibility Requirements.

 

“Eligible Property Management Agreement”: A property management agreement
entered into by and among the applicable Borrower and a Property Manager and
relating to one or more Properties either (x) in substantially the form of
Exhibit J attached hereto, and accompanied by an agreement for the benefit of
the Agent in substantially the form of Exhibit L attached hereto, or (y)
providing that the Property Manager (i) recognizes the applicable

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Borrowers as owners of each of the related Properties and the parties entitled
to the services of the Property Manager under the related agreement, (ii) shall
manage the related Properties for the benefit of the Borrowers and their
successors and assigns, (iii) recognizes, acknowledges and agrees that all
amounts collected by it in respect of the related Properties are property of the
Borrowers and are security for the Obligations, and (iv) agrees that its fees,
all property maintenance expenses, real property taxes and assessments, utility
charges and related expenses relating to any property that it manages for any
Person other than a Borrower (including any Affiliate of a Borrower, which
Affiliate is not a Borrower), shall not be netted against any amounts received
by such Property Manager in respect of any Property, (b) require the related
Property Manager to perform all management and other services in respect of the
related Properties in accordance with Accepted Management Practices, (c) require
the Property Manager to comply with all Applicable Laws in conducting collection
activities, (d) include all of the termination provisions in the form attached
as Exhibit J hereto and any other termination provisions that the Borrower
Representative deems appropriate, (e) require the related Property Manager to
maintain books and records such that payments and withdrawals from the related
Property Manager Account can be traced to each individual Property, reconciled
and identified, (f) require such Property Manager to comply with the Cash
Management Requirements and (g) provides that the Property Manager acknowledges
the assignment of the Eligible Property Management Agreement to the Agent and
agrees to take all direction from the Agent after the occurrence of an Event of
Default. A property management agreement providing for regularly scheduled fees
exceeding 8.0% of all rent payments and other non-deposit amounts actually
collected with respect to the related Properties shall not be deemed an Eligible
Property Management Agreement unless approved by the Directing Lenders.

 

“Eligible Property Owner”: Each Person (i) that is a limited liability company,
(ii) that is 100% legally and beneficially owned by Holdco, (iii) with respect
to which Holdco has pledged its membership interest to the Agent pursuant to the
Security Agreement, (iv) whose Governing Documents are substantially in the form
of the Governing Documents of the Borrowers, except as has been approved by the
Directing Lenders, (v) whose Governing Documents include, and require compliance
with, the SPE Requirements and (vi) that has satisfied the “know your customer”
requirements of the Agent and each Lender.

 

“Eligible Tenant”: A Tenant as to whom all of the Leasing Standards were met at
the time of lease signing. With respect to a carry-over Tenant, a Tenant who
undergoes a background check and is not on the OFAC List at the time either (a)
the applicable Borrower acquires the subject Property, or (b) the related
Carry-Over Lease is renewed.

 

“Eligible Title Insurance  Policy”: A Title Insurance Policy that satisfies each
of the requirements described in clause (q) of Schedule 2 hereto.

 

“Environmental Indemnity”: means that certain Environmental Indemnity, dated as
of August 28, 2013, by the Borrowers, the Guarantors and the Sponsors in favor
of Agent on behalf of the Secured Parties.

 

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“Environmental Law”: Any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law,
relating to protection of human health or the environment, relating to Hazardous
Substances and/or relating to liability for or costs of other danger to human
health or the environment. The term “Environmental Laws” includes, but is not
limited to, the following statutes, as amended, any successor thereto, and any
regulations promulgated pursuant thereto, and any state or local statutes,
ordinances, rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-to-Know Act; the Hazardous Substances
Transportation Act; the Resource Conservation and Recovery Act (including, but
not limited to, Subtitle I relating to underground storage tanks); the Solid
Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances
Control Act; the Safe Drinking Water Act; the Occupational Safety and Health
Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide
and Rodenticide Act; the Endangered Species Act; the National Environmental
Policy Act; the River and Harbors Appropriation Act; and those relating to lead
based paint. The term “Environmental Laws” also includes, but is not limited to,
any present and future federal, state and local laws, statutes, ordinances,
rules or regulations, as well as common law, (i) conditioning transfer of
property upon a negative declaration or other approval of a Governmental
Authority of the environmental condition of any Property, (ii) requiring
notification or disclosure of the presence of or Releases of Hazardous
Substances or other environmental condition of any Property to any Governmental
Authority or other Person, whether or not in connection with any transfer of
title to or interest in such Property and (iii) imposing conditions or
requirements with respect to Hazardous Substances in connection with permits or
other authorization for lawful activity.

 

“Equity Interests”: Shares of capital stock (whether denominated as common stock
or preferred stock), beneficial, partnership, membership or limited liability
company interests, participations or other equivalents (regardless of how
designated, including, without limitation, any subordinated debt, zero coupon
debt or payment-in-kind or similar debt instrument) of or in a corporation,
partnership, limited liability company or equivalent entity, whether voting or
non- voting, and any warrant or other option to purchase any of the above.

 

“ERISA”: The Employee Retirement Income Security Act of 1974, as amended from
time to time, and any successor thereto.

 

“ERISA Affiliate”:  With respect to any person, any trade or business (whether
or not incorporated) under common control with Masterco within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

 

“ERISA Event”: (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by a Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by a Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d)

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the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, upon a Borrower or any ERISA Affiliate.

 

“Estimated Net Cash Flow”: For purposes of calculating the Annualized Net Cash
Flow for a Property, if a Property was acquired by the Borrower or an Affiliate
or became a Leased Property after the first day of the relevant Measurement
Quarter, the Estimated Net Cash Flow will be based on the excess of (a) Pro
Forma Collections, over (b) the sum of (i) an estimate of annual Operating
Expenses, (ii) the aggregate real estate taxes  or other governmental
assessments related to such Property payable during the related calendar year,
and (iii) the aggregate insurance premiums related to such Property payable
during the related calendar year necessary in order to maintain compliance with
the Insurance Requirements, in each case anticipated for such Property by the
Borrower Representative and approved by the Directing Lenders.

 

“Event of Default”: As defined in Section 8.1.

 

“Excluded Taxes”: Any of the following Applicable Taxes imposed on or with
respect to a Lender or required to be withheld or deducted from a payment to a
Lender, (a) Applicable Taxes imposed on or measured by net income (however
denominated), franchise Taxes, and branch profits Taxes, in each case, (i)
imposed as a result of such Lender being organized under the laws of, or having
its principal office or, in the case of any Lender, its applicable lending
office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of
a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for
the account of such Lender with respect to an applicable interest in a Loan or
Commitment pursuant to a law in effect on the date on which (i) such Lender
acquires such interest in the Loan or Commitment or (ii) such Lender changes its
lending office, except in each case to the extent that, pursuant to Section
2.12, amounts with respect to such Taxes were payable either to such Lender’s
assignor immediately before such Lender became a party hereto or to such Lender
immediately before it changed its lending office, (c) Taxes attributable to such
Lender’s failure to comply with Section 2.12(f), and (d) any U.S. federal
withholding Taxes imposed under FATCA.

 

“Exclusion Periods”: With respect to: (a) a Non-Leased Property, the period
commencing on the date on which such Property initially becomes a Financed
Property and ending on the earliest of (i) six months from the date on which
such Property initially became a Financed Property and (ii) the date on which
such Property initially becomes a Leased Property; and (b) a Vacant Property,
the period commencing on the date on which such Property initially becomes a
Vacant Property and ending on the earliest of (i) 60 days from the date on which
the Property initially became a Vacant Property and (ii) the date on which the
Vacant Property ceases to be a Vacant Property.

 

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“Facility”: As defined in Section 2.1(a).

 

“Facility Amount”: $800,000,000.

 

“Facility Fee”: As defined in the CAH Fee Letter.

 

“FATCA”: Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version) and any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b) of the Code or any intergovernmental agreements
entered into in connection with the implementation of such Sections of the Code.

 

“Federal Funds Effective Rate”: For any day, the rate per annum (expressed, as a
decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided, (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day, as determined by the Agent.

 

“Fee Letter”: Each of the JPM Fee Letter and the CAH Fee Letter.

 

“Filing Collateral”: All Collateral with respect to which a security interest
may be perfected by the filing of financing statements under the UCC.

 

“Filing Offices”: The filing offices listed on Schedule 3 hereto, as the same
may be updated from time to time as required by Applicable Law.

 

“Financed Property”: Each Eligible Property owned by a Borrower and which has
(i) satisfied the requirements for inclusion in the Facility as a Financed
Property pursuant to Sections 2.2(a) and (b) and (ii) not been released as a
Financed Property pursuant to Section 2.7(a) or (d).

 

“Financing Statement”: The UCC financing statement(s) naming each Borrower, as
debtor, and the Agent, for the benefit of the Secured Parties, as secured party,
and describing the Collateral as the collateral.

 

“Fiscal Quarter”: As defined in Section 5.1(w).

 

“Foreign Lender”: A Lender that is not a U.S. Person.

 

“GAAP”: Generally accepted accounting principles in the United States
of  America, consistently applied and maintained on a consistent basis.

 

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“Governing Documents”: With respect to any specified Person, the limited
liability company agreement, trust agreement, certificate of incorporation,
limited partnership agreement, certificate of formation, certificate of limited
partnership, or any other organization or formation document or documents
related to such Person.

 

“Governmental Authority”: Any national, federal, provincial, state, county,
municipal, regional or other governmental, quasi-governmental, regulatory or
administrative authority, agency, board, court, arbitrator, body,
instrumentality, commission, or other judicial body (including their respective
successors) exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any governmental or
quasi- governmental authority having legal power to administer any Applicable
Laws.

 

“Grant,” “Grants” or “Granting”: Shall include to grant, assign, pledge,
encumber, transfer, convey, set over and dispose.

 

“Guarantor”: Individually or collectively, as the context may require, Masterco
or Holdco.

 

“Guarantor Default”: The occurrence of any default by any Guarantor or Sponsor,
as the case may be, under the Limited  Guarantee, the Guaranty Agreement or the
Security Agreement, including, without limitation, any breach of any Sponsor
Financial Covenant.

 

“Guaranty  Agreement”: The Guaranty Agreement, dated as of August 28, 2013, made
by Masterco and Holdco in favor of Agent for the benefit of the Secured Parties.

 

“Hazardous Materials”: Includes, but is not limited to, any and all substances
(whether solid, liquid or gas) defined, listed or otherwise classified as
pollutants, contaminants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes or words of similar meaning or regulatory
effect under any present or future Environmental Laws, including, but not
limited to, petroleum and petroleum products, asbestos and asbestos-containing
materials, polychlorinated biphenyls, lead, radon, radioactive materials,
flammables and explosives, lead based paint and toxic mold. Notwithstanding
anything to the contrary contained herein, the term “Hazardous Substances” will
not include: (i) substances which otherwise would be included in such definition
but which are of kinds and in amounts ordinarily and customarily used or stored
in similar properties, including, without limitation substances used for the
purposes of cleaning, maintenance, or operations, substances typically used in
construction, and typical products used in residential properties like each
Property, and which are otherwise stored and used in compliance with all
Environmental Laws and any required permits issued pursuant thereto; or

 

(ii) substances which otherwise would be included in such definition but which
are of kinds and amounts ordinarily and customarily utilized in residential
properties and which are otherwise in compliance with all Environmental Laws and
any required permits issued pursuant thereto.

 

“Hedge Assignor”: As defined in Section 6.3.

 

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“Hedge Collateral”: All of the rights of each Hedge Assignor, whether now
existing or hereafter acquired, in and to all Hedging Agreements, Hedge
Transactions and all present and future amounts payable by all Hedge
Counterparties to such Hedge Assignor under or in connection with such Hedging
Agreements and Hedge Transactions with such Hedge Counterparties.

 

“Hedge Counterparty”: Any entity which (i) on the date of entering into any
Hedge Transaction is (a) either a Lender or an Affiliate of a Lender, or (b) an
entity whose debt ratings meet each of the Long-Term Rating Requirement and the
Short-Term Rating Requirement, and (ii) in a Hedging Agreement consents to the
collateral assignment of the related Hedge Assignor’s rights under the Hedging
Agreement to the Agent pursuant to Section 6.3.

 

“Hedge Transaction”: Each interest rate hedging transaction between the Hedge
Assignor and a Hedge Counterparty entered into pursuant to Section 6.3 that is
governed by a Hedging Agreement and evidenced by a “Confirmation” relating
thereto.

 

“Hedging Agreement”: Each agreement between the Hedge Assignor and a Hedge
Counterparty which governs one or more Hedge Transactions entered into pursuant
to Section 6.3, in form and substance satisfactory to the Directing Lenders,
together with each “Schedule” and “Confirmation” thereunder confirming the
specific terms of each such Hedge Transaction, as applicable, and, if
applicable, a “Credit Support Annex” thereto with a Hedge Counterparty specified
as pledgor and the related Hedge Assignor specified as secured party.

 

“Highest Lawful Rate”: The maximum lawful interest rate, if any, that at any
time or from time to time may be contracted for, charged, or received under the
laws applicable to any Lender which are presently in effect or, to the extent
allowed by law, under such Applicable Laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than Applicable Laws now
allow.

 

“Holdco”: ColFin AH Finance Holdco, LLC.

 

“Indemnified Taxes”: (a) Applicable Taxes, other than Excluded Taxes, imposed on
or with respect to any payment made by or on account of any obligation of
Borrower under any Loan Document and (b) to the extent not otherwise described
in (a), Other Taxes.

 

“Indemnified Party”: As defined in Section 13.11.

 

“Independent  Director  or  Independent  Manager”: An individual who is provided
by CT Corporation, Corporation Service Company, National Registered Agents,
Inc., Wilmington Trust National Association, Wilmington Trust SP Services, Inc.,
Lord Securities Corporation or, if none of those companies is then providing
professional Independent Directors or Independent Managers, another nationally
recognized company reasonably acceptable to the Directing Lenders, in each case
that is not an Affiliate of any of the Borrowers and that provides professional
Independent Directors and Independent Managers and other corporate services in
the ordinary course of its business, and which individual is duly appointed as a
member of the board of directors or board of managers of such corporation or

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limited liability company and is not, has never been, and will not while serving
as Independent Director or Independent Manager be, any of the following:

 

(a)a member (other than as a special member), partner, equityholder, manager,
director, officer or employee of any Borrower-Related Party (other than (i) as
an Independent Manager or Independent Director of a Loan Party and (ii) as an
Independent Director or Independent Manager of a Borrower-Related Party that is
required by the terms of a financing (or anticipated financing) to be a special
purpose bankruptcy remote entity, provided that such Independent Director or
Independent Manager is employed by a company that routinely provides
professional Independent Directors or Independent Managers);

 

(b)a creditor, supplier or service provider (including provider of professional
services) to any Borrower-Related Party, any special purpose entity
equityholder, or any of their respective equityholders or Affiliates (other than
a nationally recognized company that routinely provides professional Independent
Directors or Independent Managers and other corporate services to any
Borrower-Related Party, any special purpose entity equityholder, or any of their
respective equityholders or Affiliates in the ordinary course of business);

 

(c)a family member of any such member, partner, equityholder, manager, director,
officer, employee, creditor, supplier or service provider; or

 

(d)a Person that controls (whether directly, indirectly or otherwise) any of the
individuals described in the preceding clauses (a), (b) or (c).

 

An individual who otherwise satisfies the preceding definition by reason of
being the Independent Director or Independent Manager of a “special purpose
entity” affiliated with any Borrower-Related Party shall not be disqualified
from serving as an Independent Manager of a Borrower-Related Party if the fees
that such individual earns from serving as Independent Directors or Independent
Managers of Affiliates of the Borrower-Related Parties in any given year
constitute in the aggregate less than 1% of such individual’s annual income for
that year.

 

“Initial Securitization”: The first Property Release to occur after the
Restatement Effective Date in connection with a securitization of Properties.

 

“Insolvency Action”: With respect to any Person, the taking by such Person of
any action resulting in an Insolvency Event, other than solely under clause (g)
of the definition thereof.

 

“Insolvency  Event”: With respect to any Person, (a) a case or other proceeding
shall be commenced, without the application or consent of such Person in any
court seeking the liquidation, reorganization, debt arrangement, dissolution,
winding up, or composition or readjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or substantially all of its
assets, or any similar action with respect to such Person under any Insolvency
Law, and (i) such case or proceeding shall continue undismissed, or unstayed
and   in   effect,   for   a   period   of sixty (60) consecutive days or (ii)
an order for relief in respect of such Person shall

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be entered in such case or proceeding or a decree or order granting such other
requested relief shall be entered, (b) the commencement by such Person of a
voluntary case under any Insolvency Law now or hereafter in effect, (c) the
consent by such Person to the entry of an order for relief in an involuntary
case under any Insolvency Law, (d) the consent by such Person to the appointment
of or taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its assets or property, (e) the making by such Person of any general assignment
for the benefit of creditors, (f) the admission in a legal proceeding of the
inability of such Person to pay its debts generally as they become due, (g) the
failure by such Person generally to pay its debts as they become due, or (h) the
taking of action by such Person in furtherance of any of the foregoing.

 

“Insolvency Laws”: The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, arrangement, rearrangement,
receivership, insolvency, reorganization, suspension of payments, marshaling of
assets and liabilities or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally.

 

“Insurance Reserve Account”: The Securities Account established and maintained
by the Paying Agent in the name of the Borrower Representative and entitled
“Wells Fargo Bank, N.A., as Paying Agent, in trust for the Borrowers — Insurance
Reserve Account # 46587002” or such other account established at the Paying
Agent (or any successor) as may be designated in writing from time to time by
the Agent, and at all times subject to an Account Control Agreement.

 

“Insurance Reserve Account Deposit Amount”: For any Payment Date, an amount
equal to, for any Property, the product of (i) the aggregate insurance premiums
payable during each calendar year necessary in order to maintain compliance with
the Insurance Requirements and (ii) 1/12th.

 

“Insurance Reserve Account Initial Deposit”: For any Property and the first
Advance made after a Borrower acquires such Property, an amount equal to the
product of (i) the aggregate insurance premiums payable during each calendar
year necessary in order to maintain compliance with the Insurance Requirements
and (ii) a fraction the numerator of which is the number of months since such
premiums were most recently paid in full and the denominator of which is 12.

 

“Insurance Reserve Account Required Amount”: On any day, for each Property, an
amount equal to the product of (i) the aggregate insurance premiums payable
during each calendar year necessary in order to maintain compliance with the
Insurance Requirements and (ii) a fraction the numerator of which is the number
of months since such premiums were most recently paid in full and the
denominator of which is 12.

 

“Insurance Reserve Account Shortfall Amount”: As of any date of determination,
the positive excess, if any, of (a) the Insurance Reserve Account Required
Amount determined as of such date over (b) the amount on deposit in the
Insurance Reserve Account as of such date of determination.

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“Insurance Proceeds”: All proceeds of any insurance policy, including property
insurance policies, casualty insurance policies and title insurance policies,
“partnership liability” insurance policy, employee fidelity insurance policy
required to be maintained by or on behalf of any Borrower.

 

“Insurance Proceeds Account”: The Securities Account established and maintained
by the Paying Agent in the name of the Borrower Representative and entitled
“Wells Fargo Bank, N.A., as Paying Agent, in trust for the Borrowers — Insurance
Proceeds Account # 46587008” or such other account established at the Paying
Agent (or any successor) as may be designated in writing from time to time by
the Agent, and at all times subject to an Account Control Agreement.

 

“Insurance Requirements”: With respect to any Borrower and each Property, the
insurance policies and requirements described, or referred to, in Section 6.2;
provided, however, that the Borrowers are not required to maintain the coverages
specified in Section 6.2(a)(i) or (ii) with respect to any Non-Financed
Properties owned by the Borrowers. For the avoidance of doubt, premiums
necessary in order to maintain compliance with the Insurance Requirements for
each Property shall include, without duplication: (i) premiums related to or
payable by reference to such Property and (ii) such Property’s pro rata portion
of any aggregate insurance premiums payable in  order to maintain  compliance
with the Insurance Requirements, which  insurance premiums are not determined
solely by reference to any particular Property.

 

“Interest Accrual Period”: For any Payment Date, other than the first Payment
Date following the Effective Date, the period beginning on the previous Payment
Date and ending on the day before such Payment Date, and for the first Payment
Date following the Effective Date, the period beginning on the Effective Date
and ending on the day before such Payment Date.

 

“Interest Payment Amount”: For any Payment Date, the aggregate amount obtained
by the daily application of (a) the Interest Rate for each day of the Interest
Accrual Period ended immediately before such Payment Date and (b) Advances
Outstanding on each such day, such amount to be calculated as set forth in
Section 2.4(b); provided, however, that for purposes of computing the Interest
Payment Amount for any Payment Date, LIBOR and Advances Outstanding for each day
following the Reporting Date in the related Interest Accrual Period (each such
period, a “Stub Period”) shall be LIBOR and Advances Outstanding as determined
on such Reporting Date; provided further, that (x) if the Interest Payment
Amount calculated based on actual LIBOR or Advances Outstanding for each day in
the Stub Period exceeds the Interest Payment Amount calculated based on the
foregoing proviso, the Interest Payment Amount for the immediately following
Payment Date will be increased by the amount of such excess and (y) if the
Interest Payment Amount calculated based on actual LIBOR or Advances Outstanding
for each day in the Stub Period is less than the Interest Payment Amount
calculated based on the foregoing proviso, the Interest Payment Amount for the
immediately following  Payment Date will be decreased by the amount of such
difference.

 

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“Interest Rate”: On any day, (a) the sum of (i) the LIBOR Rate for such day and
(ii) the Applicable Margin or (b) to the extent required by Section 2.9 or 2.10,
the Base Rate for such day, as applicable.

 

“Interest Reserve Account”: The Securities Account established and maintained by
the Paying Agent in the name of the Borrower Representative and entitled “Wells
Fargo Bank, N.A., as Paying Agent, in trust for the Borrowers — Interest Reserve
Account # 46587003” or such other account established at the Paying Agent (or
any successor) as may be designated in writing from time to time by the Agent,
and at all times subject to an Account Control Agreement.

 

“Interest Reserve Account Deposit Amount”: On any date of determination, for any
Eligible Property and the initial Advance requested related thereto:

 

(a)if such Eligible Property is a Non-Leased Property, the product of (i) the
Interest Rate for the related Interest Accrual Period (for such purpose, the
LIBOR Rate shall be the rate in effect on such date of determination), (ii) the
Allocated Loan Amount for such Non-Leased Property, (iii) 1/12 and (iv) four
(4); or

 

(b)if such Eligible Property is a Leased Property, the product of (i) the
Interest Rate for the related Interest Accrual Period (for such purpose, the
LIBOR Rate shall be the rate in effect on such date of determination), (ii) the
Allocated Loan Amount for such Leased Property, (iii) 1/12 and (iv) two (2).

 

“Interest Reserve Account Required Amount”:  As of any date of determination, an
amount equal to the sum of:

 

(a)an amount equal to the product of (i) the Interest Rate for the related
Interest Accrual Period (for such purpose, the LIBOR Rate shall be the rate in
effect on such date of determination), (ii) the aggregate Allocated Loan Amounts
of all Non-Leased Properties then funded by the Facility, (iii) 1/12 and (iv)
four (4); and

 

(b)an amount equal to the product of (i) the Interest Rate for the related
Interest Accrual Period (for such purpose, the LIBOR Rate shall be the rate in
effect on such date of determination), (ii) the aggregate Allocated Loan Amounts
of all Leased Properties then funded by the Facility, (iii) 1/12 and (iv) two
(2).

 

“Interest  Reserve Account Excess Amount”:  As of  any date
of  determination,  the positive excess, if any, of (a) the amount on deposit in
the Interest Reserve Account as of such date of determination over (b) the
Interest Reserve Account Required Amount determined as of such date.

 

“Interest Reserve Account Shortfall Amount”: As of any date of determination,
the positive excess, if any, of (a) the Interest Reserve Account Required Amount
determined as of such date over (b) the amount on deposit in the Interest
Reserve Account as of such date of determination.

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“Investment Company Act”: The Investment Company Act of 1940.

 

“IRS”: The United States Internal Revenue Service.

 

“Joinder”: A Joinder Agreement in substantially the form of Exhibit E attached
hereto, delivered by a Person who is an Eligible Property Owner pursuant to
Section 3.2(b) and acknowledged by the Agent.

 

“JPM Facility Fee”: As defined in the JPM Fee Letter.

 

“JPM Fee Letter”: The letter agreement, dated as of August 28, 2013, by and
between the Agent and the Borrower Representative.

 

“JPM Lockbox”: The post office box maintained by the Loan Parties with JPMorgan
Chase Bank, N.A. into which rent checks are sent prior to deposit into the
applicable Borrower Rent Account.

 

“Lead Arranger”: As defined in the introductory paragraph.

 

“Lease”: Any residential lease agreement providing for the lease of a Property.

 

“Leased Property”: As of any date of determination, either (a) an Eligible
Property that is a Carry-Over Property, or (b) an Eligible Property that
satisfies the following: (i) the applicable Borrower has satisfied the
Completion Requirements, (ii) the Property is leased to an Eligible Tenant
pursuant to an Eligible Lease; provided that an Eligible Property that has been
leased to an Eligible Tenant pursuant to an Eligible Lease shall continue to be
a Leased Property notwithstanding that the Tenant ceases to be an Eligible
Tenant or its tenancy is terminated as a result of the expiration or termination
of such Eligible Lease, and (iii) the applicable Borrower or Property Manager
has received the first monthly rent payment under an Eligible Lease for such
Property.

 

“Leasing Standards”: Those standards described in Schedule 5 hereto.

 

“Lender”: JPMorgan Chase Bank, National Association and each Person that may
from time to time become party hereto or to any Assignment and Assumption in the
capacity of a Lender.

 

“LIBOR”: With respect to each day on which any Advance is outstanding (or if
such day is not a Business Day, the next succeeding Business Day) and determined
daily by the Calculation Agent, the offered rate for ninety (90) day U.S. dollar
deposits, as the applicable rate appears on Reuters Screen LIBOR01 Page as of
11:00 a.m. (London time) on the second Business Day before such date (rounded up
to the nearest whole multiple of 1/100%); provided that if the applicable rate
does not appear on Reuters Screen LIBOR01 Page, the rate for such date will be
based upon the offered rates of the reference banks selected by the Agent for
U.S. dollar deposits as of 11:00 a.m. (London time) on the second Business Day
before such date. In such event, Calculation Agent will request the principal
London office of each of at least three reference banks selected by Calculation
Agent to provide a

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quotation of its rate. If on such date, two or more of such reference banks
provide such offered quotations, LIBOR shall be the arithmetic mean of all such
offered quotations (rounded to the nearest whole multiple of 1/100%). If on such
date, fewer than two of such reference banks provide such offered quotations,
LIBOR shall be the higher of (i) LIBOR as determined on the immediately
preceding day that LIBOR is available and (ii) the Reserve Interest Rate. Upon
determination of LIBOR by the Agent in accordance with the forgoing, the
Calculation Agent shall communicate LIBOR to the Paying Agent.

 

“LIBOR Rate”: As of any date of determination, a rate per annum determined in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):

 

LIBOR

1 - Re serve Re quirement

 

“LIBOR Rate Advance”: As defined in Section 2.10.

 

“Lien”: Any lien, mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, and any lease in the
nature thereof) and any option, trust or other preferential arrangement having
the practical effect of any of the foregoing.

 

“Limited  Guarantee”: The Limited Guarantee, dated as of August 28, 2013, made
by the Sponsors in favor of the Agent for the benefit of the Secured Parties.

 

“Liquidity”: As defined in Schedule 6 hereto.

 

“Loan Account”: The non-interest bearing trust account established and
maintained by the Paying Agent in the name of the Agent and entitled “Wells
Fargo Bank, N.A., as Paying Agent, in trust for the Lenders — Loan Account #
46587000” or such other account established at the Paying Agent (or any
successor) as may be designated in writing from time to time by the Agent.

 

“Loan Documents”: This Agreement, the Note, the Security Agreement, the
Environmental Indemnity, the Limited Guarantee, the Guaranty Agreement, the
Master Property Management Agreement, the Diligence Agent Agreement, each
Account Control Agreement, each Deposit Account Control Agreement relating to
each Deposit Account of any Borrower or the Borrower Representative, each
Securities Account Control Agreement relating to each Securities Account of any
Borrower or the Borrower Representative, each Joinder, each Borrowing Notice,
each Assignment of Management Agreement, each Power of Attorney and any other
document or agreement that evidences, secures or governs any of the Obligations
or the Collateral.

 

“Loan Parties”: Collectively, Masterco, Holdco and each Borrower.

 

“Loan to Aggregate Market Value Ratio”:  As of any date of determination, the
percentage equivalent of a fraction, the numerator of which is equal to the
Advances Outstanding and

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the denominator of which is the Aggregate Market Value of all Financed
Properties (adjusted for Non-Eligible Properties, as required by Section 2.13).

 

“Loan To  Value Ratio”  or  “LTV Ratio”:  As of any date of determination, the
percentage equivalent of a fraction, the numerator of which is equal to the
Advances Outstanding and the denominator of which is equal to the lesser of (i)
the Aggregate Market Value of all Financed Properties and (ii) the Aggregate
Asset Purchase Price of all Financed Properties (in each case, adjusted for
Non-Eligible Properties, as required by Section 2.13).

 

“Long-Term Rating Requirement”: A long-term unsecured debt rating of not less
than “A” by S&P’s and not less than “A2” by Moody’s; provided that, solely for
purposes of the definition of Hedge Counterparty, if the Hedge Counterparty is
the JPM Lender (or an affiliate thereof), the Long-Term Rating Requirement shall
mean a long-term unsecured debt rating of not less than “BBB” by S&P’s and not
less than “Baa2” by Moody’s, for so long as such Hedge Counterparty or its
affiliate remains a Lender under this Agreement.

 

“Market Value”: With respect to any Property and any date of determination, the
fair market value of such Property, which shall be the most recent related BPO
Value; provided, however, if such Property is not an Eligible Property on such
date of determination and the applicable Cure Period has expired, the Market
Value for such Property shall be deemed to be zero. With respect to any Financed
Property that the related Borrower has elected to reduce the Asset Purchase
Price (pursuant to the definition of “Asset Purchase Price”), the Market Value
of such Financed Property may not exceed the Asset Purchase Price as so reduced.

 

“Masterco”: ColFin AH Finance Masterco, LLC.

 

“Master  Property  Management  Agreement”:  The Master Property Management
Agreement, dated as of August 28, 2013, by and among the Master Property
Manager, the Borrower Representative and each Borrower.

 

“Master Property Manager”: CAH Manager, LLC or any successor thereto.

 

“Master Property Manager Event of Default”: The occurrence of any of the
following: (a) fraud, gross negligence, willful misconduct, or misappropriation
of funds by the Master Property Manager, (b) any Insolvency Event with respect
to the Master Property Manager, or (c) the occurrence of a Property Manager
Trigger Event (as defined in the Assignment of Management Agreement with respect
to the Master Property Management Agreement) with respect to a Property Manager
in connection with its applicable Eligible Property Management Agreement, any
Borrower or any Property, and the Master Property Manager fails to terminate
such Eligible Property Management Agreement within thirty (30) days after Agent
notifies the Master Property Manager in writing that Agent believes the Master
Property Manager has failed to exercise remedies with respect to any such
Property Manager Trigger Event in accordance with Accepted Management Practices
(as defined in the Master Property Management Agreement).

 

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“Master Property Manager Fee”: The amounts payable to the Master Property
Manager pursuant to the Master Property Management Agreement; which shall not
exceed the Master Property Manager Fee Limit.

 

“Master Property Manager Fee Limit”: As defined in the CAH Fee Letter; provided,
however, the Master Property Manager Fee Limit may not be modified or amended in
the CAH Fee Letter without the consent of each Lender.

 

“Material Adverse Effect”: A material adverse effect on (a) the business
operations, properties, assets or condition (financial or otherwise) of the Loan
Parties, taken as a whole, or the Sponsors taken as a whole, (b) the ability of
any Loan Party to perform its respective material obligations under any of the
Loan Documents to which it is a party, (c) the material rights and remedies of
any Secured Party under any of the Loan Documents or (d) the perfection or
priority of any Secured Party’s interest in any Equity Interests in any Borrower
or in any other material portion of the Collateral.

 

“Measurement Quarter”: On any date of determination, (a) if no Trigger Event
exists, a Fiscal Quarter, or (b) if a Trigger Event exists, the three (3)
immediately preceding calendar months.

 

“Monthly  Report”: For each Collection Period, a report prepared by the Borrower
Representative setting forth the information identified on Exhibit D attached
hereto.

 

“Monthly Report Confirmation”: For each Monthly Report, the confirmation by the
Calculation Agent in the form of Exhibit H attached hereto, together with the
annexes thereto.

 

“Moody’s”: Moody’s Investor’s Service, Inc. or any successors thereto.

 

“Mortgage Recording Expenses”: As defined in Section 4.12(b).

 

“Mortgages”: As defined in Section 4.12(a).

 

“MSA”: “Metropolitan statistical area” as such term is defined by the United
States Office of Management and Budget from time to time.

 

“Multiemployer Plan”: Any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which any Borrower or any ERISA  Affiliate makes or is
obligated to make contributions, or during the preceding five (5) plan years,
has made or been obligated to make contributions.

 

“Net Non-Financed Collections”: With respect to any Collection Period the
aggregate of all Collections received solely in connection with the Non-Financed
Properties minus the sum of the aggregate Insurance Reserve Account Deposit
Amount and the aggregate Tax Reserve Account Deposit Amount for all Non-Financed
Properties.

 

“Net Worth”: As defined in Schedule 6 hereto.

 

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“No Lien Certificate”: A certificate in substantially the form of Exhibit  C
attached hereto certifying that subject the Property is not subject to any
liens, other than Permitted Liens.

 

“Non-Eligible Property”: As defined in Section 2.13.

 

“Non-Financed Property”: Any Property owned by a Borrower that is not a Financed
Property.

 

“Non-Leased Property”: Any Financed Property that is not a Leased Property.

 

“Non-U.S. Entity”: As defined in Section 2.12(b).

 

“Note”: As defined in Section 3.1(a).

 

“OFAC”: The U.S. Department of the Treasury’s Office of Foreign Assets Control.

 

“Obligations”: All indebtedness, liabilities and obligations of every nature of
any Borrower from time to time owed to the Agent (including former Agents), each
Secured Party or any of them, under this Agreement or any Loan Document, whether
for principal, interest (including interest which, but for the filing of a
petition in bankruptcy with respect to any Borrower, would have accrued on any
Obligation, whether or not a claim is allowed against such Borrower for such
interest in the related bankruptcy proceeding), fees, expenses, indemnification
or otherwise, whether now existing or arising in the future, direct or indirect,
fixed or contingent, joint, several or joint and several, including any
extensions, renewals, refinancing, or changes in form thereof.

 

“Ongoing Reserve Account”: The Securities Account established and maintained by
the Paying Agent in the name of the Borrower Representative and entitled “Wells
Fargo Bank, N.A., as Paying Agent, in trust for the Borrowers — Ongoing Reserve
Account # 46587004” or such other account established at the Paying Agent (or
any successor) as may be designated in writing from time to time by the Agent,
and at all times subject to an Account Control Agreement.

 

“Ongoing Reserve Account Deposit Amount”: On any date of determination, for any
Financed Property, an amount equal to 25% of the sum of the following, without
duplication (and calculated in accordance with Estimated Net Cash Flows, if
applicable): (i) the annualized Operating Expenses; (ii) the aggregate real
estate taxes or other governmental assessments related to such Property payable
during each calendar year; (iii) the aggregate insurance premiums payable during
each calendar year necessary in order to maintain compliance with the Insurance
Requirements.

 

“Ongoing Reserve Account Excess Amount”: As of any date of determination, the
positive excess, if any, of (a) the amount on deposit in the Ongoing Reserve
Account as of such date of determination over (b) the Ongoing Reserve Account
Required Amount for such date of determination.

 

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“Ongoing Reserve Account Required Amount”: As of any date of determination, an
amount equal to 25% of the sum of: (i) the annualized Operating Expenses for
each Financed Property; (ii) the aggregate real estate taxes or other
governmental assessments related to each Financed Property payable during each
calendar year; and (iii) the aggregate insurance premiums payable during each
calendar year necessary in order to maintain compliance with the Insurance
Requirements for all Properties; provided  that the amount computed pursuant
to  this clause (iii) shall be 100% of such insurance premiums payable in such
calendar year with respect to the Non-Financed Properties if the Borrowers elect
to exclude such premiums from the calculation of Annualized Net Cash Flow
pursuant to Section 4.4.

 

“Ongoing Reserve Account Shortfall Amount”: As of any date of determination, the
positive excess, if any, of (a) the Ongoing Reserve Account Required Amount for
such date of determination over (b) the amount on deposit in the Ongoing Reserve
Account as of such date of determination.

 

“Operating  Expenses”: With respect to any Property, all costs, expenses
relating to the ownership, management and maintenance of the Property, including
property maintenance costs and expenses, home owners association dues, leasing
costs and other expenses necessary to maintain the Property and title thereto
(including, without limitation, Property Manager Fees, and amounts required to
be paid to keep title of the related Borrower free and clear of liens), in each
case in amounts and for purposes reasonable, customary and prudent, and
consistent with prior practices of the Borrowers. Operating Expenses shall
exclude (i) real estate taxes, other governmental assessments and insurance
premiums to the extent reserved in, paid from or reimbursed by the Insurance
Reserve Account or Tax Reserve Account, as applicable, (ii) capital expenditures
and Renovation Costs, (iii) Master Property Manager Fees and (iv) bad debt
expense. Operating Expenses included in the calculation of Annualized Net Cash
Flow will be calculated in accordance with GAAP, and may differ from the
Operating Expenses reported in Monthly Reports for the same period.

 

“Other Charges”: All ground rents, maintenance charges, impositions other than
Taxes, and any other charges now or hereafter accessed or imposed against a
Property or any part thereof.

 

“Other Connection Taxes”: With respect to any Lender, Taxes imposed as a result
of a present or former connection between such Lender and the jurisdiction
imposing such Tax (other than connections arising from such Lender having
executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Document, or
sold or assigned an interest in any Loan or Loan Document).

 

“Other Taxes”: All present or future stamp, court or documentary, intangible,
recording, filing, registration or similar Taxes that arise from any payment
made under, from the execution, delivery, performance, enforcement or
registration of, from the receipt or perfection of a security interest under, or
the Liens created or secured under, or otherwise with respect to, any Loan
Document, except any such Taxes that are Other Connection Taxes imposed with
respect to an assignment.

 

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“Parent”: COP, subject to Section 13.19.

 

“Participant”: As defined in Section 10.1(e).

 

“Participant Registrar”: As defined in Section 10.1(f).

 

“Party”: Each Person who from time to time is a party to this Agreement.

 

“Paying Agent”:  Wells Fargo Bank, N.A., or any replacement designated pursuant
to Section 2.14.

 

“Paying Agent  Fee”: As defined in the Calculation Agent and Paying Agent Fee
Letter, provided, however, the Paying Agent Fee may not be amended or modified
in the Calculation Agent and Paying Agent Fee Letter without the consent of each
Lender.

 

“Payment Date”: The 20th calendar day of each month or the next succeeding
Business Day if such calendar day is not a Business Day. The initial Payment
Date shall be October 21, 2013.

 

“Payment Date Report”: For any Payment Date, the report prepared by the
Calculation Agent reflecting the principal, Interest Payment Amount, fees,
costs, expenses, indemnities and deposits into the Reserve Accounts payable
hereunder on such Payment Date.

 

“PBGC”: The Pension Benefit Guaranty Corporation.

 

“Pension Plan”: Any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to
Title IV of ERISA and is sponsored or maintained by any Borrower or any ERISA
Affiliate or to which any Borrower or any ERISA Affiliate contributes or has an
obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five (5) plan years.

 

“Permitted Distributions”: With respect to any Borrower, (a) REIT Distributions
to the extent permitted hereunder, and (b)(i) Restricted Payments made with
proceeds of Advances, or funds distributed to the Borrower Representative and
expressly permitted to be applied to Restricted Payments in accordance with
Section 2.8(b) and (ii) dividend or other distribution of any Non-Financed
Property; provided, in the case of any such distributions subject to this clause
(b), at the time such Permitted Distribution is made, no Responsible Officer of
the Loan Parties has any notice or knowledge of a Default and no Event of
Default or Trigger Event has occurred and is continuing or would be caused
thereby.

 

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“Permitted Investments”: (a) Cash and Government securities within the meaning
of Section 856(c)(4)(A) of the Code and (b) negotiable instruments or securities
or other investments that (x) as of any date of determination, mature by their
terms on or prior to the Business Day preceding the next succeeding Payment
Date, (y) are denominated in U.S. dollars and (z) evidence:

 

(i)marketable obligations of the United States, the full and timely payment of
which are backed by the full faith and credit of the United States;

 

(ii)certificates of deposit and other interest-bearing obligations and issued by
any bank with capital, surplus and undivided profits aggregating at least
$100,000,000 or the equivalent thereof in any other currency as determined by
the Agent in accordance with its normal-course foreign currency exchange
practices, the short-term obligations of which meet or exceed the Short-Term
Rating Requirement;

 

(iii)publicly traded money market funds subject to regulation under the
Investment Company Act and in compliance with Rule 2a-7 of the Investment
Company Act and the having a rating, at the time of such investment, of not less
than “Aaa” by Moody’s and “AAA” by S&P including any fund for which the Paying
Agent or an Affiliate thereof serves as an investment advisor, administrator,
shareholder servicing agent and/or custodian; and

 

(iv)demand deposits, time deposits or certificates of deposit of depository
institutions or trust companies incorporated under the laws of the United
States, any State thereof (or domestic branches of any foreign bank) and subject
to supervision and examination by federal or State banking  or depository
institution authorities; provided, however, that at the time such investment, or
the commitment to make such investment, is entered into, the short-term debt
rating of such depository institution or trust company shall meet or exceed the
Short-Term Rating Requirement.

 

“Permitted Liens”: Any (a) Liens granted pursuant to or by the Loan Documents,
(b) statutory materialmen’s Liens and mechanic’s Liens, in each case arising in
the ordinary course of business with respect to obligations which are not
delinquent, (c) Leases, (d) deposits in the ordinary course of business to
secure liabilities to insurance carriers, utilities and other service providers,
(e) Liens for taxes not yet due and payable, (f) homeowners’ association
covenants, conditions and restrictions, (g) customary utility easements, (h)
non-monetary liens constituting customarily acceptable title exceptions that are
created or permitted by the related Borrower in the ordinary course of owning
and operating a Property subsequent to the date of the related Title Insurance
Policy, which liens do not have a material adverse effect on the related
Property or the value thereof, (i) Specially Permitted Liens and (j) any other
Lien agreed to by the Directing Lenders in connection with the title review for
a Property in conformity with the provisions of Exhibit K attached hereto.

 

“Person”: Any individual or any general partnership, limited partnership,
cooperation, joint venture, trust, limited liability company, trust,
cooperative, association, unincorporated government organization or entity or
any department or agency thereof.

 

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“Plan”: Any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA) established by any Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

 

“Pledged Security”: As defined in the Security Agreement.

 

“Power of Attorney”: The Power of Attorney attached hereto as Exhibit I.

 

“Prime Rate”: The rate of interest quoted in The Wall Street Journal, Money
Rates Section as the “Prime Rate” as in effect from time to time. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer.  The Agent and any Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.

 

“Pro Forma Collections”: For purposes of calculating Estimated Net Cash Flow (a)
with respect to any Leased Property, the actual monthly rent received during the
period such Property has been owned by the Borrower and has been a Leased
Property, divided by the number of rental payment dates in such period and
multiplied by twelve (12) and (b) with respect to any Non-Leased Property, the
Borrower Representative’s reasonable estimate of annual rent collections, as
reasonably approved by the Directing Lenders.

 

“Pro Rata Share”: For any Lender, on any date of determination, the percentage
equivalent of a fraction (a) prior to the Revolving Period Termination Date, the
numerator of which is equal to such Lender’s Commitment on such date of
determination and the denominator of which is equal to the Facility Amount and
(b) on and after the Revolving Period Termination Date, the numerator of which
is the portion of the Advances Outstanding on such date that have been funded by
such Lender and the denominator of which is equal to the Advances Outstanding on
such date.

 

“Proceeds”: As defined in the UCC and shall include any and all Condemnation
Proceeds, all gross proceeds related to any Conveyance, Insurance Proceeds and
loss proceeds in respect of the Collateral.

 

“Property”: Each real property owned or acquired by or transferred to a
Borrower, the fee title to which is held by such Borrower, together with all
buildings, fixtures and improvements thereon and all other rights, benefits and
proceeds arising from and in connection with such property.

 

“Property Addition Notice”: A written request by the Borrowers to add additional
Eligible Properties as Financed Properties, in the form of Exhibit A-2 attached
hereto.

 

“Property  Addition  Confirmations”: With respect to each Property Addition
Notice: (i) a confirmation, in the form of Exhibit A-2A attached hereto, by the
Calculation Agent that it has reviewed and confirmed the results of each of the
calculations set forth in the reports annexed to Exhibit A-2A hereto and has
found no Calculation Deficiency therein; and (ii) a certification, in the form
of Exhibit A-2B attached hereto, by the Diligence  Agent that it

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has reviewed the Document Package and confirmed that it has found no Diligence
Deficiency therein.

 

“Property Borrowing  Base”: On any date of determination, for any Financed
Property, an amount (not less than zero) equal to (a) 65% of the Property Value
of such Financed Property minus (b) the Release Premium Deduction for such
Financed Property; provided, however, (x) with respect to any Special Eligible
Property, the percentage in clause (a) above may be reduced pursuant to the
applicable Special Eligibility Addendum, and (y) if such Property is not an
Eligible Property on such date of determination and the applicable Cure Period
has expired, the Property Borrowing Base for such Property shall be deemed to be
zero.

 

“Property Expense Amount”: With respect to any Collection Period, (a) absent the
existence of a Trigger Event, the aggregate of all Operating Expenses for the
Properties paid or due for such Collection Period and (b) during the existence
of a Trigger Event, the aggregate of all Operating Expenses for the Financed
Properties paid or due for such Collection Period.

 

“Property Manager”: A reputable and experienced residential property management
organization with experience providing management services for residential
properties similar to the Properties that is reasonably acceptable to the
Borrower Representative and who is responsible for the management of any
Property pursuant to an Eligible Property Management Agreement. For the
avoidance of doubt, the Master Property Manager or an Affiliate of a Loan Party
or the Master Property Manager may, if it otherwise satisfies this definition of
Property Manager, be a Property Manager.

 

“Property Manager Account”: Deposit Accounts of any Property Manager that hold
security deposits with respect to Financed Properties.

 

“Property Manager Fee”: With respect to each Property, the fees payable to any
Property Manager with respect to such Property pursuant to the related Eligible
Property Management Agreement; which fees shall not exceed 8.0% of all rent
payments and other non-deposit amounts actually collected with respect to the
related Properties.

 

“Property Release”: As defined in Section 2.7(a).

 

“Property Release Amount”: In connection with any proposed Property Release, the
sum of: (A) an amount sufficient to cure any Borrowing Base Shortfall, an LTV
Ratio in excess of 70% or a Trigger Event, if any, immediately after giving
effect to such release, (B) an amount equal to the applicable Release Premium
(together with the amount described in Clause (A), the “Reduction Amount”), (C)
the unpaid interest on the Reduction Amount through the related date of
prepayment, calculated at the applicable Interest Rate and (D) all unpaid fees
or unreimbursed costs with respect to the Facility, to the extent relating to
the portion of the Advances Outstanding to be repaid. For the purpose of clause
(A) above, the Debt Service Coverage Ratio and Debt Yield Ratio shall be as
determined for the most recently ended Measurement Quarter, and recalculated to
exclude items included in the Annualized Net Cash Flow attributable to the
Property for which the Property Release Amount is calculated.

 

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“Property Value”: With respect to any Property, as of any date of determination,
the lesser of (a)  the related Asset Purchase Price and (b) the related Market
Value as of the date such Property became a Financed Property; provided,
however, that such Market Value for a Leased Property shall be based on the
“as-is” value (and not the “quick sale” value) of such Property at such time,
notwithstanding that such Property may have been a Non-Leased Property as of the
date such Property became a Financed Property; and, provided, further, that if
such Property is not an Eligible Property on such date of determination and the
applicable Cure Period has expired, then the Property Value for such Property
shall be zero.

 

“Proposed Scheduled Renovation Work”: As defined in Section 4.9(a).

 

“Purchase Agreement”: Any purchase agreement or trustee’s receipt related to, or
any other document evidencing the acquisition of, a Property.

 

“Qualified Institution”: Any depository institution or trust company organized
under the laws of the United States or any State (or any domestic branch of a
foreign bank), (i) (a) that has or the parent of which has, either (1) a
long-term unsecured debt rating of “A-” or higher by S&P and “A-” or higher by
Moody’s, or (2) a short-term unsecured debt rating of not less than “A-1” by S&P
and not less than “P-1” by Moody’s or (b) is otherwise acceptable to the
Directing Lenders and (ii) whose deposits are insured by the Federal Deposit
Insurance Corporation.

 

“Qualified Title Insurance Company”: As defined in clause (q) of Schedule 2
hereto.

 

“Quarterly Sample”: As defined in Section 4.2(a).

 

“Quarterly Valuation”: Any quarterly valuation of Financed Properties made in
accordance with the provisions of Section 4.2(a).

 

“Ratio Cure Amount”: An amount sufficient to repay Advances Outstanding such
that the financial covenants in Section 8.1(s) are met.

 

“Ratio Cure Procedures”: With respect to a breach of Section 8.1(s):

 

 

1.

Within five (5) Business Days after the relevant Monthly Report or BPO Report,
as applicable, is delivered or is required to be  delivered, the Borrowers shall
notify the Agent and Lenders in writing of their intention to cure such
condition by repayment of Ratio Cure Amount or delivery of additional Eligible
Properties in each case to the extent necessary to cure such condition.

 

 

2.

If the Borrowers elect to repay the Ratio Cure Amount in an amount sufficient to
cure such condition, the Borrowers shall have five (5) Business Days from the
date of such election to make such cure payment.

 

 

3.

If the Borrowers elect to deliver additional Eligible Properties, the Borrowers
shall have five (5) Business Days from the date of such election

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to deliver the applicable Document Packages to the Diligence Agent and the
Agent, and five (5) Business Days after receipt of a Diligence Agent Deficiency
Notice or Calculation Agent Deficiency Report, as applicable, in which to
correct any identified Diligence Deficiency or Calculation Deficiency, as
applicable, therein, and such Eligible Properties will be added to the Facility
as Financed Properties as soon as the Diligence Agent completes its review of
the Document Packages but no later than 20 calendar days after delivery of such
Document Packages. 

 

For the purpose of determining whether a breach of Section 8.1(s) has been cured
in accordance with the Ratio Cure Procedures, the Debt Service Coverage Ratio
and Debt Yield Ratio shall be as determined for the most recently ended
Measurement Quarter and the Loan to Value Ratio shall be as determined in the
most recent BPO Report, and in each case, recalculated to give pro forma effect
to any addition of any Financed Properties and any reduction of Advances
Outstanding, as if such addition or reduction had occurred on the first day of
the applicable Measurement Quarter or the date of such BPO Report, as
applicable.

 

The failure to make the cure election in 1, or to effectuate an elected cure
pursuant to the requirements of 2 or 3, as applicable, shall trigger an
immediate Event of Default under Section 8.1(s).

 

“Ratio Trigger Event”: The existence, on a Reporting Date immediately following
a Measurement Quarter, of either:

 

 

(a)

a Debt Service Coverage Ratio of less than 1.50:1 or

 

 

(b)

a Debt Yield Ratio of less than 7.25%;

 

provided, however, that for purposes of determining at any time whether a Ratio
Trigger Event would exist or continues to exist, the Debt Service Coverage Ratio
and Debt Yield Ratio shall be as determined for the most recently ended
Measurement Quarter, and recalculated to give pro forma effect to any addition
or release of any Financed Properties and any reduction of Advances Outstanding,
as if such addition or reduction had occurred on the first day of the applicable
Measurement Quarter.

 

“Ratio Trigger Delay Termination Date”: After the occurrence of a Ratio Trigger
Event, the earliest to occur of: (a) an Event of Default, (b) the Borrower
Representative requests release of the Ratio Trigger Reserve Account or (c) a
Ratio Trigger Event continues for three consecutive months.

 

“Ratio Trigger Reserve Account”: The Securities Account established and
maintained by the Paying Agent in the name of the Borrower Representative and
entitled “Wells Fargo Bank, N.A., as Paying Agent, in trust for the Borrowers —
Ratio Trigger Reserve Account # 46587007” or such other account established at
the Paying Agent (or any successor) as may be designated in writing from time to
time by the Agent, and at all times subject to an Account Control Agreement.

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“Reduction Amount”: As defined in the definition of Property Release Amount.

 

“Register”: As defined in Section 10.1(d).

 

“REIT”: A Person satisfying the conditions and limitations set forth in Section
856(b) and 856(c) of the Code which are necessary to qualify such Persona as a
“real estate investment trust,” as defined in Section 856(a) of the Code.

 

“REIT Distributions”: With respect to any Payment Date, distributions in the
minimum amount that Borrower’s Representative determines is then required to
allow CSR to distribute during each calendar year 90% of its net taxable income
to its shareholders and an additional amount necessary to pay any tax due on
undistributed net taxable income, but solely to the extent that such required
distributions or undistributed taxable income are attributable to the net income
of the Borrowers.

 

“Related Party Property Release”: Either a Borrower Property Release or the
Conveyance of a Financed Property to a Borrower-Related Party other than a Loan
Party.

 

“Release”: Any release, spill, emission, leaking, pumping, pouring, injection,
escaping, deposit, disposal, discharge, dispersal, dumping, leaching or
migration of any Hazardous Material into the indoor or outdoor environment,
including the movement of any Hazardous Material through the air, soil, surface
water or groundwater.

 

“Release Premium”: For any Property Release, (i) if in connection with the
Initial Securitization, 5% of the Property Borrowing Base of the released
Financed Property and, (ii) otherwise, 10% of such Property Borrowing Base.

 

“Release Premium Deduction”: For any Financed Property, an amount which shall
equal zero prior to the first Property Release to occur after the Restatement
Effective Date, and which shall be increased with respect to each Property
Release occuring after the Restatement Effective Date by an amount equal to the
Release Premium for such Property Release times a percentage, the numerator of
which is the Property Borrowing Base of such Financed Property and the
denominator of which is the remaining Borrowing Base after giving effect to the
applicable Property Release.

 

“Release Premium Report”: As defined in Section 6.1(i).

 

“Renovation Cost Reserve Account”: The Securities Account established and
maintained by the Paying Agent in the name of the Borrower Representative and
entitled “Wells Fargo Bank, N.A., as Paying Agent, in trust for the Borrowers —
Renovation Cost Reserve Account # 46587005” or such other account established at
the Paying Agent (or any successor) as may be designated in writing from time to
time by the Agent, and at all times subject to an Account Control Agreement.

 

“Renovation Cost Reserve Account Required Amount”: As defined in Section 4.9(b).

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“Renovation Cost Reserve Account Shortfall Amount”: As of any date of
determination, the positive excess, if any, of (a) the Renovation Cost Reserve
Account Required Amount for such date of determination over (b) the amount on
deposit in the Renovation Cost Reserve Account as of such date of determination.

 

“Renovation Costs”: For any Property, the aggregate of the costs estimated to be
incurred by the applicable Borrower with respect to the renovation of such
Property, as demonstrated in a certificate certified by a Responsible Officer of
the Borrower Representative delivered to and approved by the Diligence Agent and
the Directing Lenders as provided in the Diligence Agent Agreement; provided
that, with respect to any Property for which such costs exceed 10% of the Asset
Purchase Price, the Agent and the Lenders shall have a right to request
recalculation of the Renovation Costs in any case where any of them considers
the assessment thereof not reasonably satisfactory. For the avoidance of doubt,
Renovation Costs do not include any fees, costs or expenses associated with any
ongoing recurring repairs or maintenance to any Property.

 

“Renovation Standards”: Those maintenance, repairs, improvements and
installations that are necessary (i) for a Property to conform to the
requirements of Applicable Law and not deviate materially from local rental
market standards for the area in which such Property is located and (ii) for a
Property to conform to Requirements for Existing Housing One to Four Family
Units (4905.1) or Minimum Property Standard for One and Two Family Dwellings
(200.926) as applicable, as published by the U.S. Department of Housing and
Urban Development.

 

“Repair Completion Certificate”: The repair completion certificate of a
Responsible Officer of the Borrower Representative certifying that all repairs
to any Property in respect of which Insurance Proceeds are held in the Insurance
Proceeds Account have been completed.

 

“Replacement Cost”: With respect to any Property, the cost, determined using the
replacement cost assumptions satisfying the requirements of 6.2(i), to rebuild
in full the improvements and replace all personal property of the related
Borrower related to such Property, which shall be exclusive of costs of
excavations, foundations, underground utilities and footings.

 

“Reportable Event”: Any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30 day notice period has been waived.

 

“Reporting Date”: With respect to any Payment Date, the fifteenth (15th) day of
the related calendar month or, if such day is not a Business Day, the
immediately succeeding Business Day.

 

“Required Insurance Policies”: With respect to a Property, the insurance
policies required by Section 6.2.

 

“Required Lenders”: On any day, Lenders with Pro Rata Shares exceeding 50% in
the aggregate; provided that if there are only two (2) Lenders, Required Lenders
shall mean both Lenders.

 

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“Required Principal Payment Amounts”: Principal prepayments required pursuant to
Sections 2.7 and 2.13.

 

“Reserve Account”: Individually or collectively, as the context may require, the
Insurance Reserve Account, the Tax Reserve Account, the Ratio Trigger Reserve
Account, the Ongoing Reserve Account, the Special Reserve Account, the
Renovation Cost Reserve Account and the Interest Reserve Account.

 

“Reserve Account Deposit Amount”: For any proposed Advance, (i) the related
Interest Reserve Account Deposit Amount and the Interest Reserve Account
Shortfall Amount, without double counting, (ii) the related Insurance Reserve
Account Initial Deposit Amount and the Insurance Reserve Account Shortfall
Amount, without double counting, (iii) the related Tax Reserve Account Initial
Deposit Amount and the Tax Reserve Account Shortfall Amount, without double
counting, (iv) the related Ongoing Reserve Account Deposit Amount and the
Ongoing Reserve Account Shortfall Amount, without double counting, (v) the
Renovation Cost Reserve Account Shortfall Amount and (vi) the related Special
Reserve Account Deposit Amount.

 

“Reserve Interest Rate”: With respect to any LIBOR determination date, the rate
per annum that the Agent determines to be either (i) the arithmetic mean
(rounded to the nearest whole multiple of 1/100%) of the one-month or overnight
U.S. dollar lending rates (as applicable) which New York City banks selected by
the Agent are quoting on the relevant LIBOR determination date to the principal
London offices of leading banks in the London interbank market or (ii) in the
event that the Agent can determine no such arithmetic mean, the lowest one-month
or overnight U.S. dollar lending rate (as applicable) which New York City banks
selected by the Agent are quoting on such LIBOR determination date to leading
European banks.

 

“Reserve  Requirement”: With respect to  any date of determination, the
aggregate (without duplication) of the rates (expressed as a decimal fraction)
of reserve requirements (if any) arising from any Applicable Laws enacted or
imposed after the date hereof and in effect on such date (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for Eurocurrency funding (currently referred to
as “Eurocurrency Liabilities” in Regulation D of such Board of Governors)
maintained by each Lender.

“Responsible Officer”: With respect to any specified Person and any
circumstance, any member, manager, general partner or officer who has
supervisory responsibilities relating to the specified circumstance.

 

“Restatement Effective Date”: As defined in the introductory paragraph.

 

“Restricted  Payment”: With respect to any Person, (i) any dividend or other
distribution (whether direct or indirect, and whether in cash, securities or
other property) with respect to any class of Equity Interests of such Person now
or hereafter outstanding, other than a

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dividend payable to the holders of any class of Equity Interests solely in
shares of Equity Interests of such Person, (ii) any payment (whether direct or
indirect, and whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, full or partial
redemption, full or partial withdrawal, retirement, acquisition, cancellation or
termination of any such Equity Interests or of any option, warrant or other
right to acquire any such Equity Interests, (iii) any voluntary prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, any subordinated Debt of such Person,
and (iv) any management or similar payments to any Affiliate, excluding, for the
avoidance of doubt, any payments made to a Property Manager or the Master
Property Manager pursuant to the terms of the related Eligible Property
Management Agreement or Master Property Management Agreement, as applicable.

 

“Revolving Period Termination Date”: The Commitment Termination Date (as the
same may be accelerated pursuant to Section 8.2(a)).

 

“S&P”: Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. or any successor thereto.

 

“Schedule of Properties”: The schedule listing each of the Properties of each of
the Borrowers subject to this Facility as of the Effective Date in form and
substance as set forth in Schedule 4 hereto.

 

“Scheduled Maturity Date”: July 13, 2017.

 

“Scheduled Renovation Work”: As defined in Section 4.9(a).

 

“Secured Parties”: Collectively or individually, as the context may require,
each of the Lenders, the Agent, the Calculation Agent, the Paying Agent, the
Diligence Agent and each Indemnified Party.

 

“Securities”: Any stock, shares, partnership interests, limited liability
company interests, voting trust certificates, certificates of interest or
participation in any profit sharing agreement or arrangement, options, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as “securities” or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

 

“Securities Account”: As defined in the UCC.

 

“Securities Account Control Agreement”: With respect to any Securities Account,
any control agreement or other similar agreement among the Securities
Intermediary, the owner of such Securities Account and the Agent as the Agent
shall deem necessary in its reasonable discretion, in form and substance
acceptable to the Agent, providing for such institution’s agreement to comply
with entitlement orders from the Agent with respect to security

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entitlements in financial assets credited to or held in the applicable
Securities Account without the further consent of, or notice to, such owner.

 

“Securities Intermediary”: Wells Fargo Bank, N.A.

 

“Security Agreement”: means that certain Amended and Restated Security
Agreement, dated as of the date hereof, by and among the Loan Parties and Agent.

 

“Security Agreement Supplement”: As defined in the Security Agreement.

 

“Senior Master Property Manager Fee”: With respect to each Collection Period, an
amount equal to the Senior Master Property Manager Fee Amount.

 

“Senior Master Property Manager Fee Amount”: As defined in the CAH Fee Letter;
provided, however, the Senior Master Property Manager Fee Amount may not be
amended or modified in the CAH Fee Letter without the consent of each Lender.

 

“Short-Term Rating Requirement”: A short-term unsecured debt rating of not less
than “A-1” by S&P and not less than “P-1” by Moody’s; provided that, solely for
purposes of the definition of Hedge Counterparty, if the Hedge Counterparty is
the JPM Lender (or an affiliate thereof), the Short-Term Rating Requirement
shall mean a short-term unsecured debt rating of not less than “A-2” by S&P’s
and not less than “P-2” by Moody’s, for so long as such Hedge Counterparty or
its affiliate remains a Lender under this Agreement.

 

“Solvent”: With respect to any Person as of the date of determination, both (i)
(a) the sum of such Person’s Debt (including contingent liabilities) does not
exceed the present fair saleable value of such Person’s present assets, (b) such
Person’s capital is not unreasonably small in relation to its business as then
contemplated and (c) such Person has not incurred and does not intend or expect
to incur, Debts beyond its ability to pay such Debts as  they become due
(whether at maturity or otherwise) and (ii) such Person is “solvent” within the
meaning given that term and similar terms under Applicable Laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability (irrespective of whether such contingent liabilities meet the
criteria for accrual under Statement of Financial Accounting Standard No. 5).

 

“SPE Requirements”: The covenants set forth in Section 6.1(g).

 

“Special Eligible Property” means a Property relying on a Special Eligibility
Addendum in order to qualify as an Eligible Property.

 

“Special Eligibility Addendum” means any written addendum to Schedule 2 hereto
hereafter proposed by the Borrower Representative, approved in writing by
Directing Lenders, and delivered to the Agent, the Calculation Agent and the
Diligence Agent.

 

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“Special Reserve Account”: The Securities Account established and maintained by
the Paying Agent in the name of the Borrower Representative and entitled “Wells
Fargo Bank, N.A., as Paying Agent, in trust for the Borrowers — Special Reserve
Account # 46587006” or such other account established at the Paying Agent (or
any successor) as may be designated in writing from time to time by the Agent,
and at all times subject to an Account Control Agreement.

 

“Special Reserve Account Deposit Amount”: As defined in Section 4.7(a).

 

“Specially Permitted Lien”: With respect to any Property, any Lien that secures
an obligation for the payment of money if (i) the aggregate amount of the
obligations secured by all such Liens on such Property (other than the Liens
granted pursuant to this Agreement) remains less than 15% of the Asset Purchase
Price of such Property, (ii) the aggregate amount of the obligations secured by
all such Liens with respect to all Financed Properties (other than the Liens
granted pursuant to this Agreement) remains less than 10% of the Aggregate
Property Value and (iii) the Borrowers have deposited into the Special Reserve
Account a reserve in an amount equal to the greater of (x) 110% of the amount of
the obligations secured by all such monetary Liens and (y) $1,000. For the
avoidance of doubt, a Borrower’s election to treat any apparent Lien as a
Specially Permitted Lien for purposes of meeting the Eligibility Criteria shall
not constitute its admission that such apparent Lien is in effect or that it
does not otherwise constitute a Permitted Lien.

 

“Sponsor”: Individually or collectively, as the context may require, COP, CSR
and CCAI, subject to Section 13.19.

 

“Sponsor Financial Covenant”: Any of the covenants relating to Sponsor set forth
in Schedule 6 hereto.

 

“Subordinate Master Property Manager Fee”: With respect to each Collection
Period, an amount equal to the Subordinate Master Property Manager Fee Amount.

 

“Subordinate  Master  Property  Manager  Fee  Amount”: As  defined in the CAH
Fee Letter; provided, however, the Subordinate Master Property Manager Fee
Amount may not be amended or modified in the CAH Fee Letter without the consent
of each Lender.

 

“Supplemental Schedule of Properties”: For any requested Advance following the
Effective Date, the schedule attached to the related Borrowing Notice, as
Schedule 1 thereto, and listing each of the Properties of each of the Borrowers
to be funded by such requested Advance, in form and substance as set forth in
Schedule 4 hereto, and which shall include:

 

 

(a)

the address of each Property that is the subject of the proposed Advance;

 

 

(b)

the name of the Borrower owning such Property;

 

 

(c)

whether such Property is a Non-Leased Property or a Leased Property;

 

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(d)

each Reserve Account Deposit Amount, separately stated; 

 

 

(e)

the Asset Purchase Price;

 

 

(f)

the Market Value;

 

 

(g)

the Property Value; and

 

 

(h)

such other information as either Directing Lender may reasonably request with
respect to the related Advance.

 

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

 

“Tax Reserve Account”: The Securities Account established and maintained by the
Paying Agent in the name of the Borrower Representative and entitled “Wells
Fargo Bank, N.A., as Paying Agent, in trust for the Borrowers — Tax Reserve
Account # 46587009” or such other account established at the Paying Agent (or
any successor) as may be designated in writing from time to time by the Agent,
and at all times subject to an Account Control Agreement.

 

“Tax Reserve Account Deposit Amount”: For any Payment Date, an amount equal to,
for any Financed Property, the product of  (i) the aggregate real estate taxes
or other governmental assessments related to such Financed Property payable
during each calendar year and (ii) 1/12th.

 

“Tax Reserve Account Initial Deposit”: For any Financed Property and the initial
Advance requested related thereto, an amount equal to the product of (i) the
aggregate real estate taxes or other governmental assessments related to such
Property payable during each calendar year and (ii) a fraction the numerator of
which is the number of months since such real estate taxes or other governmental
assessments were most recently paid in full and the denominator of which is 12.

 

“Tax Reserve Account Required Amount”: On any day, for each Financed Property,
an amount equal to the product of (i) the aggregate real estate taxes or other
governmental assessments related to such Property payable during each calendar
year and (ii) a fraction the numerator of which is the number of months since
such real estate taxes or other governmental assessments were most recently paid
in full and the denominator of which is 12.

 

“Tax Reserve Account Shortfall Amount”: As of any date of determination, the
positive excess, if any, of (a) the Tax Reserve Account Required Amount
determined as of such date over (b) the amount on deposit in the Tax Reserve
Account as of such date of determination.

 

“Tenant”: An individual who has leased any Property pursuant to a Lease.

“Termination Date”: The earlier of (a) the Scheduled Maturity Date and (b) the
date on which all Advances shall become due and payable pursuant to Section
8.2(a).

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“Title Insurance Policy”: As defined in clause (q) of Schedule 2 hereto.

 

“Trigger Event”: The existence of any of the following:

 

 

(a)

an Event of Default; or

 

 

(b)

a Ratio Trigger Event.

 

“Two-Year Swap Rate”: On any day, the rate, as determined by the Agent, equal to
the mid market USD-ISDA-Swap Rate for U.S. Dollar swaps with a maturity of two
years, expressed as a percentage (rounded up to the nearest whole multiple of
1/100%), which appears  on the Reuters Screen ISDAFIX1 Page (or any successor
page) at 11:00 a.m. on such date of determination.

 

“Unfunded Pension Liability”: The excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
that Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.

 

“Uniform Commercial Code” or “UCC”: The Uniform Commercial Code as in effect in
the State of New York; provided, that, if, by reason of Applicable Laws, the
perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than New York,
“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or priority.

 

“Unused Fee”: As defined in the CAH Fee Letter; provided, however, the Unused
Fee may not be amended or modified in the CAH Fee Letter without the consent of
each Lender.

 

“Upsize Amount”: As defined in Section 2.1(d).

 

“U.S. Person”: Any Person that is a “United States person” as defined in Section
7701(a)(30) of the Code.

 

“Vacant Property”: Any Leased Property that (i) has no Lease in place, or (ii)
has a Lease in place that is past the expiration date and the Tenant under such
expired Lease is not paying month-to-month rent.

 

“Withholding Agent”: A Borrower, a Loan Party or the Paying Agent.

 

Section 1.2    Construction of Certain Terms and Phrases. Unless the context of
this Agreement otherwise requires: (a) words of either gender include the other
gender; (b) words using the singular or plural also include the plural or
singular, respectively; (c) the terms “hereof,” “herein,” “hereby,” “hereto” and
similar words refer to this entire Agreement and not any particular Article,
Section, Clause, Exhibit, Appendix or Schedule or any other subdivision of this
Agreement; (d) references to “Article,” “Section,” “Clause,” “Exhibit,”

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“Appendix” or “Schedule” are to the Articles, Sections, Clauses, Exhibits,
Appendices and Schedules, respectively, of this Agreement; (e) the words
“include” or “including” shall be deemed to be followed by “without limitation”
or “but not limited to” whether or not they are followed by such phrases or
words of like import; and (f) references to “this Agreement” or any other
agreement or document shall be construed as a reference to such agreement or
document, including any Exhibits, Appendices, Attachments and Schedules thereto,
as amended, restated, amended and restated, modified or supplemented and in
effect from time to time and shall include a reference to any document that
amends, modifies or supplements it, or is entered into, made or given pursuant
to or in accordance with its terms. Whenever this Agreement refers to a number
of days, such number shall refer to calendar days unless Business Days are
specified. A reference to legislation or to a provision of legislation includes
a modification, codification, replacement, amendment or re-enactment of it, a
legislative provision substituted for it and a rule, regulation or statutory
instrument issued under it. A reference to writing includes a facsimile or
electronic transmission and any means of reproducing words in a tangible and
permanently visible form. A reference to conduct includes an omission, statement
or undertaking, whether or not in writing. A Default or Event of Default exists
until it has been waived in writing in accordance with the provisions of this
Agreement. The words “hereof,” “herein,” “hereunder” and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement,
unless the context clearly requires or the language provides otherwise. A
reference to any time means New York time. This Agreement may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their respective terms. All accounting
terms used herein and not expressly defined herein shall have the meanings given
to them under GAAP as in effect on the date hereof. All terms used in Articles 8
and 9 of the UCC, and used but not specifically defined herein, are used herein
as defined in such Articles 8 and 9. A reference to “fiscal year” and “fiscal
quarter” means the fiscal periods of the applicable Person referenced therein.
Unless otherwise defined herein, terms used herein and in the other Loan
Documents that are defined in the Uniform Commercial Code, from time to time in
effect in the State of New York, shall have the meanings given to them therein.
Except where otherwise expressly stated, each of the Agent, a Directing Lender,
the Required Lenders and the Lenders may give or withhold, or give
conditionally, approvals and consents, and may form opinions and make
determinations, in its sole discretion subject in all cases to the implied
covenant of good faith and fair dealing. Reference in any Loan Document to the
Agent’s or any Lender’s discretion shall mean, unless otherwise expressly stated
herein or therein, the Agent’s or such Lender’s sole discretion, respectively,
and the exercise of such discretion shall be final and conclusive subject in all
cases to the implied covenant of good faith and fair dealing. In addition,
except where a different standard is specified, in any Loan Document whenever
the Agent or any Lender has a decision or right of determination, opinion or
request, exercises any right given to it to agree, disagree, accept, consent,
grant waivers, take action or no action or to approve or disapprove, or any
arrangement or term is to be satisfactory or acceptable to or approved by (or
any similar language or terms) the Agent or such Lender, respectively, the
decision of the Agent or each Lender, respectively, with respect thereto shall
be in the sole discretion of the Agent or each Lender, respectively, and such
decision shall be final and conclusive subject in all cases to the implied
covenant of good faith and fair dealing. Any requirement of good faith,
discretion or judgment by the Agent or any Lender shall not be

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construed to require the Agent or any Lender to request or await receipt of
information or documentation not immediately available from or with respect to
the Borrowers or the Eligible Properties. A reference to a document includes an
agreement in writing or a certificate, notice, instrument, document and any
information stored in electronic format. Whenever a Person is required to
provide any document to a Lender under any Loan Document, the relevant document
shall be provided in writing or printed form unless such Lender requests
otherwise. At the request of any Lender, the document shall be provided in
computer disk form or both printed and computer disk form. The Loan Documents
are the result of negotiations between the applicable Parties to each Loan
Document, have been reviewed by counsel to each applicable Party, and are the
product of all of the applicable Parties to each respective Loan Document. No
rule of construction shall apply to disadvantage one Party on the ground that
such Party proposed or was involved in the preparation of any particular
provision of the Loan Documents or the Loan Documents themselves.

 

ARTICLE 2

THE CREDIT FACILITY

 

Section 2.1    Description of Facility; Borrower Representative.

 

 

(a)

On the terms and conditions set forth in this Agreement each Lender hereby
establishes in favor of the Borrowers a revolving credit facility (the
“Facility”) pursuant to which the Borrower Representative, on behalf of the
Borrowers or any one or more of them, may from time to time on any Business Day
subject to the limitations set forth in Section 3.2(l)(xii) of this Agreement on
or after the Effective Date and prior to the Revolving Period Termination Date,
request an Advance.   The Borrowers shall be jointly and severally liable for
all Advances made hereunder, regardless of which Borrower or Borrowers received
the proceeds of any Advance.

 

 

(b)

Each Borrower hereby designates the Borrower Representative as its
representative and agent on its behalf for the purposes of issuing Borrowing
Notices, giving instructions with respect to the disbursement of the proceeds of
the Advances, giving and receiving all other notices and consents hereunder or
under any of the other Loan Documents and taking all other actions (including in
respect of compliance with covenants) on behalf of any Borrower or the Borrowers
under the Loan Documents. The Borrower Representative hereby accepts such
appointment. Each Lender and the Agent may regard any notice or other
communication pursuant to any Loan Document from Borrower Representative as a
notice or communication from all Borrowers, and may give any notice or
communication required or permitted to be given to any Borrower or Borrowers
hereunder to Borrower Representative on behalf of such Borrower or Borrowers.
Each Borrower agrees that each notice, election, representation and warranty,
covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and

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enforceable against such Borrower to the same extent as if the same had been
made directly by such Borrower. 

 

 

(c)

No Advance shall be requested or made in respect of any Person (including in
respect of any property of any Person) who is not, at the time the related
Borrowing Notice is delivered to the Agent, a Borrower hereunder.

 

 

(d)

The Borrower Representative may by written notice to the Agent request an
increase to the Facility Amount, in each case in minimum increments of
$100,000,000 so long as, after giving effect thereto, the aggregate amount of
all such increases does not exceed $500,000,000 (each such increase, the “Upsize
Amount”). Such notice shall specify the proposed date the Upsize Amount shall
become effective and shall otherwise be in form and substance reasonably
satisfactory to the Directing Lenders. The Upsize Amount may become effective,
if, and only if, (i) no Trigger Event, Default or Event of Default shall have
occurred and be continuing or would occur after giving effect to such increase
and (ii) the Directing Lenders shall have consented to such increase in their
sole and absolute discretion. No increase in the Facility Amount shall become
effective until existing and/or new Lenders agree to increase the aggregate
Commitments by the Upsize Amount and the Loan Parties shall have delivered to
the Agent documents satisfactory to the Agent pursuant to which any such
existing Lender states the amount of its Commitment increase, any such new
Lender states its Commitment amount and agrees to assume and accept the
obligations and rights of a Lender hereunder and the Loan Parties accept such
incremental Commitments. Any increase of the Facility Amount pursuant to this
Section shall be subject to receipt by the Agent of such supplemental opinions,
resolutions, certificates and other documents as the Agent may reasonably
request. Upon approval of any increase in Facility Amount pursuant to this
Section 2.1(d), the Borrower Representative shall provide written notice to the
Calculation Agent of such increased Facility Amount. Nothing contained herein
shall constitute a commitment on the part of any Lender hereunder to agree to
any such increase.

 

 

(e)

Upon the effectiveness of any Upsize Amount after the Effective Date, each
Lender (whether new or existing) shall be deemed to have accepted an assignment
from the existing Lenders, and the existing Lenders shall be deemed to have made
an assignment to each new or existing Lender accepting a new or increased
Commitment, of a portion of the Advances Outstanding such that, after giving
effect to such assignments, the Advances Outstanding hereunder are held ratably
by the Lenders in their respective Pro Rata Shares. The Agent shall notify each
Lender in writing whether it is an assignee or an assignor of Advances, and the
principal amount to be assigned or assumed by such Lender, pursuant to the
foregoing, and the day on which such assignment shall occur. Each Lender that is
an assignee pursuant to the foregoing shall remit the principal amount to be
assigned to it to the Loan Account by 1:00 p.m. (New York City time) by wire
transfer of same day funds on the day the assignment

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is to occur. Upon receipt of such funds, the Paying Agent shall remit from the
funds so received, by wire transfer of same day funds, to each Lender that is an
assignor pursuant to the foregoing, an amount equal to the principal to be
assigned by such Lender. The assignment described in this paragraph will be
self-effecting pursuant to this paragraph, and is not required to be evidenced
by an Assignment and Assumption or other assignment agreement, but will be
deemed governed by the applicable terms and conditions set forth in the form of
Assignment and Assumption. To the extent that payments are received after the
date of such assignment in respect of obligations that accrued prior to such
assignment, the Paying Agent, at the written direction of the Agent, shall
allocate the portion of any such payments attributed to assigned Advances (x) to
the assignor Lender for amounts which have accrued to but excluding the date of
such assignment and (y) to the assignee Lender for amounts which have accrued
from and after the date of such assignment. 

 

Section 2.2    Procedure for Adding Financed Properties and Borrowing Advances.

 

 

(a)

Adding Financed  Properties. The Borrower Representative may from time to time
prior to the Revolving Period Termination Date, subject to satisfaction of the
conditions precedent set forth in Section 3.2, add Eligible Properties as
Financed Properties hereunder by:

 

(i)delivering to the Agent, the Calculation Agent and the Diligence Agent a
Property Addition Notice (which may be delivered in conjunction with a Borrowing
Notice pursuant to Section 2.2(c) below) identifying the Eligible Properties to
be added to the Facility as Financed Properties and certifying to the matters
required therein;

 

(ii)simultaneously with delivery of such Property Addition Notice (or not more
than fifteen (15)  Business Days prior thereto) posting to the Data  Site the
Document Packages relating to each such Property.

 

 

(b)

Property Addition and Document Package Verification.   Following delivery of a
Property Addition Notice:

 

(i)the Calculation Agent shall, within three (3) Business Days after receipt by
it of such Property Addition Notice, deliver to the Agent, the Diligence Agent
and the Borrower Representative, either (A) if it has confirmed all of the
applicable calculations related to a Property Addition Notice as reflected on
the calculation schedule attached hereto as Exhibit F, its Property Addition
Confirmation or (B) if it has found any Calculation Deficiency therein, a
Calculation Agent Deficiency Report;

 

(ii)the Diligence Agent shall, within three (3) Business Days after receipt such
Property Addition Notice, deliver to the Agent, the Calculation Agent and the
Borrower Representative, either (A) its certification that (i) it has reviewed
each Document Package related to such Property Addition Notice, that there is no
Diligence Deficiency with respect to any such Document Package, (ii) it has
completed its due diligence review of each

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Property, including, without limitation, that it has determined that each such
Property is an Eligible Property, (iii) BPOs have been prepared (and which shall
not be older than 60 days prior to the date of the Property Addition Notice) and
completed by it for each Property included in such Property Addition Notice (the
Agent shall direct the Diligence Agent to post copies of the related BPOs to the
Data Site) and (iv) it has determined the Property Value for each such Property
included in such Property Addition Notice or (B) if it has found any Diligence
Deficiency, deliver a Diligence Agent Deficiency Notice; and 

 

(iii)upon receipt by the Agent of the Calculation Agent’s confirmation described
in Section 2.2(b)(i) and the Diligence Agent’s certification described in
Section 2.2(b)(ii), and the satisfaction of the conditions precedent set forth
in Section 3.2, the Agent shall deliver copies thereof, together with the
related Property Addition Notice to each Lender. Upon delivery of the Property
Addition Confirmations from each of the Calculation Agent and the Diligence
Agent to each Lender, the Properties included in such Property Addition
Confirmations shall be Financed Properties for all purposes under this
Agreement.

 

(iv)Upon delivery to the Borrower Representative of a Calculation Agent
Deficiency Report or Diligence Agent Deficiency Notice, as applicable, the
Borrower Representative shall forthwith deliver to the Agent, the Calculation
Agent and the Diligence Agent a new Property Addition Notice to be reviewed
pursuant to Section 2.2(b)(i) hereof and any related Document Packages
(including any revisions or updates thereto) to correct each of the Deficiencies
noted in such Calculation Agent Deficiency Report or Diligence Agent Deficiency
Notice, as applicable, which may include removing Properties subject to such
Calculation Deficiencies or Diligence Deficiencies, as the case may be.

 

 

(c)

Borrowing Notice. The Borrower Representative may from time to time prior to the
Revolving Period Termination Date request Advances by:

 

(i)delivering to the Agent, the Calculation Agent and the Diligence Agent a
Borrowing Notice for such proposed Advance; and

 

(ii)simultaneously with delivery of such Borrowing Notice, posting to the Data
Site the Document Packages relating to each Property relating to such proposed
Advance to the extent not already a Financed Property or  any supplement or
update to such Document Package required in connection with each Property.

 

 

(d)

Funding Advances. Each Property related to a requested Advance that is not
already a Financed Property, shall be subject to the review and certification
procedures in Section 2.2(b). In addition, the Calculation Agent shall, within
three (3) Business Days after receipt by it of such Borrowing Notice, deliver to
the Agent, the Diligence Agent and the Borrower Representative, either (A) if it
has confirmed all of the calculations, its Borrowing Notice Confirmation or (B)
if it has found any Calculation Deficiency therein, a Calculation Agent
Deficiency Report. Upon receipt by the Agent of the Property Addition
Confirmations from each of the Calculation Agent and the Diligence Agent for
such Properties, and satisfaction of the other conditions precedent set forth in

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Section 3.2, the Agent shall deliver copies thereof, together with the related
Borrowing Notice to each Lender. 

 

 

(e)

Each Borrowing Notice shall specify: (i) the proposed Borrowing Date, (ii) each
Borrower related to such proposed Advance, (iii) each Property related to such
proposed Advance, (iv) the Asset Purchase Price related to each such Property
and (v) the amount of the Advance requested, which shall be in an amount at
least equal to five million dollars ($5,000,000). In connection with each
Borrowing Notice, the Borrower Representative shall certify on behalf of each
Borrower that 1. each of the Properties related to such proposed Advance is an
Eligible Property, 2. each of the representations and warranties on Schedule 2
hereto with respect to each such Property is true and correct and that each of
the documents contained in each of the related Document Packages is true and
complete copy of the original document and 3. no Trigger Event, Default or Event
of Default exists or would exist after giving effect to such proposed Advance.
The Borrowers shall indemnify the Agent and the Lenders against any loss or
expense incurred by the Agent or any of the Lenders, either directly or
indirectly as a result of any failure by any Borrower to complete any requested
Advance, including any loss (including loss of profit) or expense incurred by
the Agent or any Lender, either directly or indirectly by reason of the
liquidation or reemployment of funds acquired by any Lender (including obtaining
deposits or loans from third parties) in order to fund such requested Advance.

 

 

(f)

The obligations of any Lender to make Advances hereunder are several from the
obligations of any other Lenders. The failure of any Lender to make available
its Pro Rata Share of any Advance hereunder shall not release the obligations of
any other Lender to make available its Pro Rata Share of any Advance hereunder,
but no Lender shall be responsible for the failure of any other Lender to make
available its Pro Rata Share of any Advance hereunder.

 

 

(g)

On the third (3rd) Business Day after delivery by the Agent to each Lender of
the Borrowing Notice and related Borrowing Notice Confirmation, pursuant to
Section 2.2(d), subject to the satisfaction of the applicable conditions
precedent specified in Section 3.2, each Lender shall remit its Pro Rata Share
of the Advance requested by the Borrowers to the Loan Account by 1:00 p.m. (New
York City time) by wire transfer of same day funds. Upon receipt of such funds,
the Paying Agent, in accordance with the written instruction of the Agent (which
may be in electronic form) received no later than 4:00 p.m. (New York City time)
one (1) Business Day prior to such Borrowing Date, shall remit such funds by
wire transfer of same day funds (i) to the Agent, in the amount of any unpaid
fees, costs or expenses of the Agent, (ii) to the Diligence Agent, in the amount
of any unpaid fees, costs or expenses of the Diligence Agent, (iii) to each
applicable Reserve Account, in the amount of the related Reserve Account Deposit
Amount with respect to the proposed Advance and (iv) the balance of such funds
to the accounts specified

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in such related Borrowing Notice by 4:00 p.m. (New York City time), to the
extent it has received such funds from the Lenders no later than 1:00 p.m. (New
York City time). Funds received by the Paying Agent from any Lender after 1:00
p.m. (New York City time) on any Business Day may, at the discretion of the
Paying Agent, be deemed to have been received on the next Business Day. 

 

 

(h)

Advances repaid under this Agreement may be re-borrowed prior to the Revolving
Period Termination Date, subject to the terms of this Agreement.

 

 

(i)

Any Lender may elect to postpone remittance of an Advance pursuant to Section
2.2(g), subject to the following: any such election must be made by written
notice to the Borrower Representative, Calculation Agent, the Agent and each of
the other Lenders delivered prior to 5:00 p.m. (New York City time) on the
Business Day immediately following the date the Borrowing Notice is received. If
any Lender timely delivers such notice, the date on which such Lender is
obligated to remit its Pro Rata Share of an Advance pursuant to Section 2.2(g)
shall be deemed postponed to the earliest of (a) the date provided in such
notice and (b) the date that is thirty-five (35) days after the applicable
Borrowing Notice was received.

 

Section 2.3    Purpose. The proceeds of the Advances will be used by the
Borrowers for the costs and expenses related to their acquisition, renovation
and maintenance of Properties and for other general purposes of the Borrowers,
including, without limitation, Permitted Distributions, provided, that no
portion of the proceeds of any Advance may be used in any manner that causes or
might cause such Advance or the application of such proceeds to violate
Regulation T, Regulation U or Regulation X of the Board of Governors of the
Federal Reserve System or any other regulation thereof.

 

Section 2.4    Interest and Fees.

 

 

(a)

Except as otherwise set forth in this Agreement, the Advances Outstanding on
each day shall bear interest at the applicable Interest Rate. Interest accrued
during each Interest Accrual Period shall be payable on each Payment Date in
accordance with Section 2.8.

 

 

(b)

Unless otherwise provided herein, interest and fees payable under this Agreement
shall be computed on the basis of a 360 day year and the actual number of days
in the related Interest Accrual Period. In computing interest on the Advances
Outstanding on each day, interest shall accrue on the Advances Outstanding at
the opening of business on such day, even if a principal payment is made as of
such day.

 

 

(c)

On or prior to the Effective Date, the Borrowers shall have paid to the Paying
Agent, and the Paying Agent shall have distributed to the JPM Lender,

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the JPM Facility Fee. The JPM Facility Fee is fully earned as of the Effective
Date and non-refundable in whole or in part. 

 

 

(d)

On the Restatement Effective Date, the Borrowers shall pay to the Paying Agent,
and the Paying Agent shall distribute to each Lender, their Pro Rata Share of
the Facility Fee payable under the CAH Fee Letter. The Facility Fee for each
Lender is fully earned as of the Restatement Effective Date and non-refundable
in whole or in part.

 

 

(e)

On or prior to the Restatement Effective Date, the Borrowers shall pay to the
Lead Arranger any fees payable to the Lead Arranger in respect of the
transactions contemplated by this Agreement, pursuant to the prior written
agreement of the Borrower Representative and the Lead Arranger.

 

Section 2.5    Payment of Principal and Interest. Each of the Borrowers, jointly
and severally, unconditionally promises to pay to the order of each Lender all
Obligations due such Lender under this Agreement as provided herein.

 

 

(a)

Unless the Advances Outstanding and all accrued and unpaid interest on the
Advances Outstanding become due and payable earlier in accordance with Section
8.2(a), the Advances Outstanding and all accrued and unpaid interest on the
Advances Outstanding shall be due and payable in full on the Scheduled Maturity
Date.

 

 

(b)

Interest accrued hereunder shall be due and payable (i) on each Payment Date,
(ii) upon any prepayment or repayment of any portion or all of the Advances
Outstanding, whether on the Scheduled Maturity Date or otherwise, to the extent
accrued on the amount being prepaid or repaid and (iii) otherwise as provided
herein.

 

 

(c)

Payments to each Lender hereunder shall be made in lawful money of the United
States of America in immediately available funds, without defense, recoupment,
setoff or counterclaim, free of any restriction or condition, and delivered to
each Lender, not later than 2:00 p.m. (New York City time) on the date due by
via wire transfer of immediately available funds to the account of such Lender
set forth on Annex A hereto (or at such other location or bank account within
the City and State of New York as may be designated by each Lender from time to
time); funds received by any Lender in writing to the Paying Agent after that
time on such due date shall be deemed to have been paid on the next Business Day
and such extension of time shall be included in the computation of the payment
of interest hereunder.

 

Section 2.6    Termination and Reduction of Facility. The Borrower
Representative may at any time terminate the Facility, or from time to time
reduce the Facility Amount; provided that (i) each reduction of the Facility
Amount shall be in an aggregate amount of $1,000,000 or any whole multiple of
$1,000,000 in excess thereof and (ii) the Borrower shall not

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terminate the Facility or reduce the Facility Amount if the Advances Outstanding
would exceed the Facility Amount (after giving effect to any concurrent
prepayment of Advances). In connection with any reduction of the Facility
Amount, each Lender shall be entitled to have its Commitment reduced by at least
its Pro Rata Share of the aggregate reduction amount, such that its Pro Rata
Share of the Facility is not increased, but any Lender may (with the consent of
the Borrower Representative) waive reduction of its Commitment, in whole or in
part, in connection therewith. The Borrower shall notify the Agent and the
Calculation Agent of any election to terminate the Facility or reduce the
Facility Amount at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Any such notice of termination or reduction shall be irrevocable; but
may be conditioned upon the receipt of proceeds from Indebtedness, an asset sale
or other transaction. Promptly following receipt of any such notice, the Agent
shall advise the Lenders of the contents thereof.

 

Section 2.7    Prepayments and Releases.

 

 

(a)

Prepayments  In  Connection  With  Property  Releases. Notwithstanding the
provisions of Section 7.1(b), at any time and from time to time prior to the
Termination Date, the Borrower Representative may, by delivering at least three
(3) Business Days’ prior written notice to the Agent, each Lender, the
Calculation Agent and the Paying Agent, obtain the release of a Financed
Property as a Financed Property (a “Property  Release”) hereunder (in connection
with a Conveyance or otherwise), provided that each of the following conditions
has been satisfied:

 

(i)the payment to the Collection Account, in immediately available funds on the
date of transfer of ownership or release of such Financed Property of the
related Property Release Amount, if applicable;

 

(ii)the Borrower Representative shall certify, at least three (3) Business Days’
prior to the proposed Property Release date, to the Agent, each Lender, the
Calculation Agent and the Paying Agent (A) the Allocated Loan Amount for the
related Financed Property, (B) the related Conveyance Proceeds; (C) the related
Release Premium and Reduction Amount; (D) the Release Premium Deduction that
will apply after such Property Release; and (E) that, after giving effect to the
release of such Financed Property, the Eligibility Requirements will be met with
respect to all remaining Financed Properties;

 

(iii)if the Financed Property is being released in a Related Party Property
Release, the Borrower Representative shall certify, at least three (3) Business
Days’ prior to theproposed release, to the Agent, the Calculation Agent, the
Paying Agent and each Lender, that the selection of such Financed Property for
release does not violate Section 7.1(o);

 

(iv)the Borrower Representative shall certify pursuant to a certificate of its
Responsible Officer, at least three (3) Business Days’ prior to the proposed
Property Release date, to the Agent, each Lender, the Calculation Agent and the
Paying Agent, that no Trigger Event, Default or Event of Default has occurred
and is continuing prior to or

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after giving pro forma effect to the removal of such Financed Property from the
Facility and the application of the Property Release Amount, if any, including,
without limitation, pro forma calculation of the Borrowing Base, Debt Service
Coverage Ratio, Debt Yield Ratio and Loan to Value Ratio, which pro forma
calculation shall be attached as a schedule to such certificate and certified by
the Borrower Representative and calculated by the Borrower Representative; 

 

(v)if the Property Release Amounts deposited in the Collection Account pursuant
to this Section 2.7(a) exceed $5,000,000, then the Agent may give notice to the
Paying Agent instructing the Paying Agent to apply such sums to the prepayment
of the Advances Outstanding, and the Paying Agent shall so apply such funds
within one (1) Business Day after receipt of such notice. If not so applied
prior to the Payment Date following deposit of any Property Release Amount
pursuant to this Section 2.7(a), the related Property Release Amount shall be
due and payable on such Payment Date pursuant to Section 2.8(b); and

 

(vi)the Borrower Representative shall deliver a Release Premium Report prior to
such Property Release.

 

 

(b)

Prepayments In Connection With Condemnations. In the first Monthly Report
delivered after the receipt of any Condemnation Proceeds in the Collection
Account pursuant to the provisions of Section 6.4, the Borrower Representative
shall state the amount thereof, the identity of the related Property, and
whether the related Property is a Financed Property and, if such Property is a
Financed Property, the Allocated Loan Amount therefor. If the related Property
is a Financed Property, then on the related Payment Date such Condemnation
Proceeds shall be applied to repay the Allocated Loan Amount of the related
Financed Property, or, if the related Condemnation Proceeds are less than the
related Allocated Loan Amount, the portion of the Allocated Loan Amount equal to
the related Condemnation Proceeds.

 

 

(c)

Prepayments In Connection With Insurance Proceeds. In the first Monthly Report
delivered after the receipt of any Insurance Proceeds in the Collection Account
pursuant to the provisions of Section 6.2(g), the Borrower Representative shall
state the amount thereof and, if such Insurance Proceeds relate to any damage,
destruction or other casualty affecting any Property, the identity of the
related Property, whether the related Property is a Financed Property and, if
such Property is a Financed Property, the Allocated Loan Amount therefor. If the
related Property is a Financed Property, then on the related Payment Date such
Insurance Proceeds shall be applied to repay Advances in an amount equal to the
Allocated Loan Amount of the related Financed Property or, if the related
Insurance Proceeds are less than the related Allocated Loan Amount, the portion
of the Allocated Loan Amount equal to the related Insurance Proceeds.

 

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(d)

Prepayments In Connection With Non-Eligible Properties. If the Borrowers are
required to repay Advances Outstanding pursuant to Section 2.13, the Borrowers
shall deposit or cause to be deposited into the Collection Account the amount
required to be repaid on or before the date required under Section 2.13. Upon
deposit of any amounts in the Collection Account in compliance with the
provisions of Section 2.13, the Borrower Representative shall notify the Agent,
the Lenders, the  Calculation Agent and the Paying Agent of the deposit and
amount thereof, the purpose for which it was deposited, the identity of the
related Property, and the Allocated Loan Amount therefor. Upon receipt of the
Borrower Representative’s notice referred to above, the Paying Agent shall pay
to each Lender its Pro Rata Share of the Advances Outstanding from the amounts
deposited by or on behalf of the Borrowers into the Collection Account for such
purpose. 

 

 

(e)

Prepayments In Connection With Ratio Compliance. If the Borrowers elect to cure
a breach of Section 8.1(s) by repaying the Ratio Cure Amount, upon deposit in
the Collection Account of the amounts required pursuant to the Ratio Cure
Procedures, the Borrower Representative shall notify the Agent, the Lenders, the
Calculation Agent and the Paying Agent of the deposit and amount thereof, and
the purpose for which it was deposited. Upon receipt of the Borrower
Representative’s notice referred to above, the Paying Agent shall pay to each
Lender its Pro Rata Share of the Ratio Cure Amount from the amounts deposited by
or on behalf of the Borrowers into the Collection Account for such purpose.

 

 

(f)

Release of Borrowers. In the event a Borrower has Conveyed or obtained the
release of all of its Financed Properties pursuant to Section 2.7(a) above, the
Agent shall if requested by the Borrower Representative, and at the Borrowers’
expense, execute, deliver, file and record any release, document or other
instrument and take such action that may be necessary or that the Borrower may
reasonably request, to evidence the release by the Agent of the Borrower from
the Obligations hereunder.

 

 

(g)

Voluntary Prepayments. If the Borrowers elect to prepay Advances, upon deposit
in the Collection Account of the amount of such prepayment, the Borrower
Representative shall notify the Agent, the Lenders, the Calculation Agent and
the Paying Agent of the deposit and amount thereof. Upon receipt of the Borrower
Representative’s notice referred to above, the Paying Agent shall pay to each
Lender its Pro Rata Share of the amount deposited by or on behalf of the
Borrowers into the Collection Account for such purpose.

 

Section 2.8    Application of Available Funds; Collection Account.

 

 

(a)

The Collection Account shall be established and maintained with the Paying
Agent.The Agent shall have sole dominion and control (including, without
limitation, “control” within the meaning of Section 9-104(a) of the

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UCC) over the Collection Account. None of the Borrowers, the Borrower
Representative, the Master Property Manager, Guarantors, Sponsors or any Person
claiming through or under any of them shall have any right to direct application
of funds in the Collection Account until all Obligations have been repaid in
full and this Agreement is terminated. So long as no Default or Event of Default
shall have occurred and be continuing, the Borrower Representative shall have
the right to direct the investment of sums on deposit in the Collection Account
in Permitted Investments if (i) such investments are permitted by Applicable
Laws and (ii) the maturity date of the Permitted Investment is not later than
the date on which funds in the related Collection Account are required for
payment of an obligation. 

 

 

(b)

On each Payment Date, the Paying Agent shall, in accordance with the related
Payment Date Report, distribute the Available Funds for such Payment Date and
any other funds deposited into the Collection Account by or on behalf of the
Borrowers not later than the Business Day immediately prior to such Payment Date
for distribution, to the extent the Calculation Agent has received notice of
such amounts on or prior to the Reporting Date, on such Payment Date in the
following order of priority:

 

(i)first, to the Borrower Representative (for application by Borrower
Representative or the applicable Borrower to the purposes described in this
clause (i)) the sum of (A) the Senior Master Property Manager Fees due and
payable and (B) Operating Expenses for the related Collection Period in an
amount equal to:

 

 

1.

if no Trigger Event or Event of Default exists (and none will result from
application of the Available Funds pursuant to this Section 2.8(b) on such
Payment Date), the Property Expense Amount to pay such Operating Expenses for
the Properties;

 

 

2.

if a Ratio Trigger Event has occurred and is continuing (or will result from
application of the  Available Funds pursuant to this Section 2.8(b) on such
Payment Date), the Property Expense Amount to pay Operating Expenses for the
Financed Properties and the Net Non-Financed Collections to the Borrower
Representative to pay Operating Expenses for the Non-Financed Properties and for
such other lawful purposes permitted hereunder as determined by the Borrower
Representative; or

 

 

3.

if an Event of Default has occurred and is continuing (or will result from
application of the Available Funds pursuant to this Section 2.8(b)
on  such  Payment Date), the Approved Monthly Expense Amount, or, if no Approved
Monthly Expense Amount has been established, then to the payment of
Operating  Expenses for the Properties as submitted by the Borrower

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Representative in the applicable Monthly Report, excluding such items thereof as
either 

 

Directing Lender shall have determined to exclude in its sole discretion;

 

(ii)second, (x) to the Insurance Reserve Account, the aggregate Insurance
Reserve Account Deposit Amount for such Payment Date and (y) to the Tax Reserve
Account, the aggregate Tax Reserve Account Deposit Amount for such Payment Date;

 

(iii)third, to pay, pro rata, (A) the Agent Fee owed to the Agent on such
Payment Date, together with any costs, expenses or indemnities then due and
payable to the Agent, (B) the Paying Agent Fee owed to the Paying Agent on such
Payment Date, together with any costs, expenses or indemnities then due and
payable to the Paying Agent, (C) the Calculation Agent Fee to the Calculation
Agent, together with any costs, expenses or indemnities then due and payable to
the Calculation Agent, (D) the Diligence Agent Fees then due and payable to the
Diligence Agent, together with any costs, expenses or indemnities then due and
payable to the Diligence Agent, and (E) any costs, expenses or indemnities then
due and payable to the Securities Intermediary;

 

(iv)fourth, pro rata to each Lender, any fees, costs, expenses or indemnities
then due or payable under this Agreement or any Loan Document;

 

(v)fifth, to pay to each Lender, such Lender’s Pro Rata Share of each of the
Interest Payment Amount and the Unused Fee for such Payment Date (and any unpaid
amounts from any prior Payment Date);

 

(vi)sixth, to pay to each Lender, such Lender’s Pro Rata Share of any Required
Principal Payment Amount to the extent not paid prior to such Payment Date;

 

(vii)seventh, to the Interest Reserve Account, an amount equal to the Interest
Reserve Account Shortfall Amount, if any, as of such Payment Date;

 

(viii)eighth, to the Ongoing Reserve Account, an amount equal to the Ongoing
Reserve Account Shortfall Amount, if any, as of such Payment Date;

 

(ix)ninth, to the Renovation Cost Reserve Account, an amount equal to the
Renovation Cost Reserve Account Shortfall Amount, if any, as of such Payment
Date;

 

(x)tenth, if a Ratio Trigger Event has occurred and is continuing, (A) prior to
the Ratio Trigger Delay Termination Date, to the Ratio Trigger Reserve Account
the amount necessary to reduce the Advances Outstanding such that such Ratio
Trigger Event would be cured if such amount were applied to reduce the Advances
Outstanding on a pro forma basis, and (B) on and after the Ratio Trigger Delay
Termination Date, to each Lender such Lender’s Pro Rata Share of the amount
necessary to reduce the Advances Outstanding to

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an amount such that, after giving effect to such reduction, no Ratio Trigger
Event shall be continuing; 

 

(xi)eleventh, if an Event of Default exists, to each Lender such Lender’s Pro
Rata Share of the Advances Outstanding until the Advances Outstanding have been
reduced to zero; and

 

(xii)twelfth, to the payment of the Subordinate Master Property Manager Fees due
and payable;

 

(xiii)thirteenth, to the Borrower Representative (or its designee) all remaining
amounts, who may use or apply such amounts for any lawful purpose permitted
under this Credit Agreement.

 

Notwithstanding the above, prior to the occurrence and continuation of an Event
of Default, if the funds distributable to the Borrower Representative pursuant
to clause “thirteenth” above, together with amounts distributed to the Borrower
Representative on prior Payment Dates pursuant to clause “thirteenth”, are
insufficient to make the REIT Distribution, and the Borrower Representative so
notifies the Agent on the applicable Reporting Date, then the Agent shall direct
the Paying Agent to distribute an amount sufficient to pay the REIT Distribution
to the Borrower Representative on the applicable Payment Date in an amount not
to exceed the amount of remaining Available Funds after payment of clause
“ninth” above.

 

 

(c)

On each Reporting Date, the Borrower Representative will prepare and deliver to
the Calculation Agent and the Agent a Monthly Report for the related Collection
Period. Upon receipt of such Monthly Report, the Calculation Agent shall review
the substance thereof, verify any applicable calculations contained therein and
shall prepare and deliver a Monthly Report Confirmation and a Payment Date
Report to the Agent (with a copy to the Borrower Representative, the Paying
Agent and the Lenders) two (2) Business Days prior to the related Payment Date.
Upon the Agent’s approval of each such Payment Date Report, the Agent will
forward each such Payment Date Report to the Paying Agent (with a copy to the
Borrower Representative and the Lenders) no later than 4:00 p.m. (New York City
time) one (1) Business Day prior to the related Payment Date and instruct the
Paying Agent to pay the Available Funds in the Collection Account in accordance
with such Payment Date Report in the manner set forth in Section 2.8(b).

 

 

(d)

Distributions pursuant to this Section 2.8 in respect of amounts payable under
the Loan Documents shall constitute payment of such amounts by the Loan Parties
for all purposes of the Loan Documents.

 

Section 2.9    Inability to  Determine  Applicable  Interest  Rate. In the event
that the Agent shall have determined (which determination shall be final and
conclusive and binding upon all Borrowers and Lenders), on any interest rate
determination date, that by reason of circumstances affecting the London
interbank market adequate and fair means do

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not exist for ascertaining the Interest Rate applicable to an Advance on the
basis provided for in the definition of LIBOR Rate, the Agent shall on such date
give notice (by fax or by telephone confirmed in writing) to the Borrowers, each
Lender and the Calculation Agent of such determination, whereupon each the
Interest Rate for the next Interest Accrual Period shall be equal to the Base
Rate (a “Base Rate Advance”) during the pendency of such circumstances.

 

Section 2.10    Illegality or Impracticability of LIBOR Rate Advances. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto) that the
making, maintaining or continuation of any Advance bearing interest with
reference to the LIBOR Rate (a “LIBOR Rate Advance”) (a) has become unlawful as
a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful),
or (b) has become impracticable, as a result of contingencies occurring after
the Effective Date which materially and adversely affect the London interbank
market or the position of such Lender in that market, then, and in any such
event, the Agent shall on that day give notice (by email, facsimile or by
telephone confirmed in writing) to the Borrowers and the Calculation Agent of
such determination. Thereafter (i) any obligation of the Lenders to make any
LIBOR Rate Advance shall be suspended until such notice shall be withdrawn by
the Agent, (ii) each Lender’s obligation to maintain any portion or all of the
Advances Outstanding (the “Affected Advances”) at the LIBOR Rate shall be
terminated at the earlier to occur of the expiration of the Interest Accrual
Period then in effect with respect to the Affected Advances or when required by
law, and (iii) the Affected Advances shall automatically convert into Base Rate
Advances on the date of such termination.

 

Section 2.11    Increased Costs.

 

 

(a)

If any Applicable Laws (other than with respect to any amendment made to any
Lender’s organizational or governing documents), including those regarding
capital adequacy, or any change in, or change in the interpretation or
application of, any Applicable Laws or compliance by any Lender with any request
or directive (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the date hereof:

 

(i)subject any Lender to any Applicable Taxes (other than (A) Indemnified Taxes,
(B) Excluded Taxes  and (C) Connection Income Taxes) on its loans, loan
principal, letters of credit, commitments, or other obligations, or its
deposits, reserves, other liabilities or capital attributable thereto;

 

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(ii)shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, or other extensions of credit
by, or any other acquisition of funds by, any office of any Lender which is not
otherwise included in the determination of the LIBOR Rate hereunder; or 

(iii)shall impose on any Lender any other condition; and the result of any of
the foregoing is to increase the cost to any Lender, by an amount which such
Lender deems to be material, of entering, continuing or maintaining the Advances
or to reduce any amount due or owing hereunder in respect thereof or shall have
the effect of reducing any Lender’s rate of return, then, in any such case, the
Borrowers shall promptly deposit into the Collection Account such additional
amount or amounts as calculated by such Lender in good faith as will compensate
such Lender for such increased cost or reduced amount receivable.

 

 

(b)

If any Lender shall have determined that any Applicable Laws (whether now
existing or hereafter enacted) regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Person with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority shall have the effect of reducing the rate of return on such Lender’s
or such corporation’s capital as a  consequence of its obligations hereunder to
a level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender’s
or such corporation’s policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, the Borrowers
shall promptly deposit into the Collection  Account such additional amount or
amounts as will compensate such Lender for such reduction. For the avoidance of
doubt, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines or directives thereunder or issued in connection
therewith and (ii) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “change in Applicable Law” subject to this Section
2.11, regardless of the date enacted, adopted or issued.

 

 

(c)

If any Lender becomes entitled to claim any additional amounts pursuant to this
Section 2.11, it shall notify the Borrowers, the Agent and Paying Agent in
writing of the amount payable. A certificate as to any additional amounts
payable pursuant to this Section submitted by a Lender to the Borrowers and the
Agent shall be conclusive in the absence of manifest error.

 

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Section 2.12    Indemnified Taxes.

 

 

(a)

Any and all payments by or on account of any obligation of Borrower under any
Loan Document shall be made without deduction or withholding for any Applicable
Taxes, except as required by Applicable Law. If any Applicable law (as
determined in the good faith discretion of the applicable Withholding Agent)
requires the deduction or withholding of any Applicable Tax from any such
payment by the applicable Withholding Agent, then the applicable Withholding
Agent shall be entitled to make such deduction or withholding and shall timely
pay the full amount deducted or withheld to the relevant Governmental Authority
in accordance with Applicable Law and, if such Applicable Tax is an Indemnified
Tax, then the sum payable by Borrower shall be increased as necessary so that
after such deduction or withholding has been made (including such deductions and
withholdings applicable to additional sums payable under this Section 2.12) the
applicable Lender receives an amount equal to the sum it would have received had
no such deduction or withholding been made.

 

 

(b)

Borrower shall timely pay to the relevant Governmental Authority in accordance
with Applicable Law, or at the option of the applicable Withholding Agent timely
reimburse it for the payment of, any Other Taxes.

 

 

(c)

Borrower shall indemnify each Lender, within ten (10) days after demand
therefor, for the full amount of any Indemnified Taxes (including Indemnified
Taxes imposed or asserted on or attributable to amounts payable under this
Section 2.12) payable or paid by such Lender or required to be withheld or
deducted from a payment to such Lender and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to
Borrower by a Lender (with a copy to Agent), or by Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.

 

 

(d)

Each Lender shall severally indemnify Agent, within ten (10) days after demand
therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to
the extent that Borrower has not already indemnified Agent for such Indemnified
Taxes and without limiting the obligation of Borrower to do so), (ii) any
Applicable Taxes attributable to such Lender’s failure to comply with the
provisions of Section 10.1(e) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by Agent in connection with any Loan Document, and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Applicable Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority.  A certificate as to the  amount of  such
payment or liability delivered to any Lender by Agent shall be conclusive

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absent manifest error. Each Lender hereby authorizes Agent to set off and apply
any and all amounts at any time owing to such Lender under any Loan Document or
otherwise payable by the Agent to Lender from any other source against any
amount due to the Agent under this Section 2.12(d). 

 

 

(e)

As soon as practicable after any payment of Applicable Taxes by Borrower to a
Governmental Authority pursuant to this Section 2.12, Borrower shall deliver to
Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to Agent.

 

 

(f)

Any Lender that is entitled to an exemption from or reduction of withholding Tax
with respect to payments made under any Loan Document shall deliver to the
applicable Withholding Agent, at the time or times reasonably requested by the
applicable Withholding Agent, such properly completed and executed documentation
reasonably requested by the Withholding Agent  as will  permit such payments to
be made without withholding or at a reduced rate of withholding. In addition,
any Lender, if reasonably requested by a Withholding Agent, shall deliver such
other documentation prescribed by Applicable Law or reasonably requested by a
Withholding Agent as will enable the Withholding Agent to determine whether or
not such Lender is subject to backup withholding or information reporting
requirements. Notwithstanding anything to the contrary in the preceding two
sentences, the completion, execution and submission of such documentation (other
than such documentation set forth in Section 2.12(f)(i), (ii) and (iv) below)
shall not be required if in the Lender’s reasonable judgment such completion,
execution or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender. Without limiting the generality of the foregoing,

 

(i)any Lender that is a U.S. Person shall deliver to the Applicable Withholding
Agent on or prior to the date on which such Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the reasonable request of a
Withholding Agent), executed originals of IRS Form W-9 certifying that such
Lender is exempt from U.S. federal backup withholding tax;

 

(ii)any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the applicable Withholding Agent (in such number of copies as shall
be requested by the Lender) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of a Withholding Agent), whichever of the following is
applicable:

 

1.in the case of a Foreign Lender claiming the benefits of an income tax treaty
to which the United States is a party (x) with respect to payments of interest
under any Loan Document, executed originals of IRS

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Form  W-8BEN establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “interest” article of such tax treaty and (y)
with respect to any other applicable payments under any Loan Document, IRS Form
W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding
Tax pursuant to the “business profits” or “other income” article of such tax
treaty; 

 

2.executed originals of IRS Form W-8ECI;

 

3.in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit M-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of
the Code, or a “controlled foreign corporation” described in Section
881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed
originals of IRS Form W-8BEN; or

 

4.to the extent a Foreign Lender is not the beneficial owner, executed originals
of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax
Compliance Certificate substantially in the form of Exhibit M-2 or Exhibit M-3,
IRS Form W-9, and/or other certification documents from each beneficial owner,
as applicable; provided that if the Foreign Lender is a partnership and one or
more direct or indirect partners of such Foreign Lender are claiming the
portfolio interest exemption, such Foreign Lender may provide a U.S. Tax
Compliance Certificate substantially in the form of Exhibit M-4 on behalf of
each such direct and indirect partner;

 

(iii)any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the applicable Withholding Agent (in such number of copies as shall
be requested by the Lender) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the
reasonable request of a Withholding Agent), executed originals of any other form
prescribed by Applicable Law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Applicable Tax, duly completed, together
with such supplementary documentation as may be prescribed by Applicable Law to
permit the applicable Withholding Agent to determine the withholding or
deduction required to be made; and

 

(iv)For the avoidance of doubt, neither the Calculation Agent nor the Paying
Agent shall have any obligation under this Agreement to determine any
withholding amount required pursuant to FATCA or otherwise.

 

(v)Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the applicable Withholding Agent in
writing of its legal inability to do so.

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(vi)If any party determines, in its sole discretion exercised in good faith,
that it has received a refund of any Applicable Taxes as to which it has been
indemnified pursuant to this Section 2.12 (including by the payment of
additional amounts pursuant to this Section 2.12), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section 2.12 with respect to the Applicable
Taxes giving rise to such refund), net of all out-of-pocket expenses (including
Applicable Taxes) of such indemnified party and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund). Such indemnifying party, upon the request of such indemnified party,
shall repay to such indemnified party the amount paid over pursuant to this
paragraph (f) (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) in the event that such indemnified party is
required to repay such refund to such Governmental Authority. Notwithstanding
anything to the contrary in this paragraph (f), in no event will the indemnified
party be required to pay any amount to an indemnifying party pursuant to this
paragraph (f) the payment of which would place the indemnified party in a less
favorable net after-tax position than the indemnified party would have been in
if the Applicable Tax subject to indemnification and giving rise to such refund
had not been deducted, withheld or otherwise imposed and the indemnification
payments or additional amounts with respect to such Applicable Tax had never
been paid. This paragraph (vi) shall not be construed to require any indemnified
party to make available its tax returns (or any other information relating to
its Applicable Taxes that it deems confidential) to the indemnifying party or
any other Person. Each party’s obligations under this Section 2.12 shall survive
the resignation or replacement of Agent or any assignment of rights by a Lender
and the repayment, satisfaction or discharge of all obligations under any Loan
Document. 

 

Section 2.13    Remedies Upon Breach of Representation As To Eligible
Property.  If at any time any Financed Property no longer qualifies as an
Eligible Property or at any time any Borrower, the Borrower Representative, the
Master Property Manager, the Agent, the Diligence Agent or any Lender determines
that any Financed Property that has been represented to be an Eligible Property
is not an Eligible Property (in any such case, a “Non-Eligible Property”), the
party making such discovery shall promptly notify the other parties of such
Non-Eligible Property and the reasons it fails to qualify as an Eligible
Property. On or before the last day of the applicable Cure Period, the Borrowers
shall either (i) cure the failure of such Non-Eligible Property to constitute an
Eligible Property or (ii) repay Advances Outstanding, and/or qualify and deliver
additional Eligible Properties as Financed Properties pursuant to Section 2.2,
to the extent necessary to cure any Borrowing Base Shortfall, an LTV Ratio in
excess of 70% or a Trigger Event resulting from such Non-Eligible Property
(together with any other Non-Eligible Properties) failing to constitute an
Eligible Property, and in either case provide notice to the Calculation Agent of
the Borrowers’ election to proceed under the foregoing (i) or (ii). For the
purpose of clause (ii) of the immediately preceding sentence, (i) such
Non-Eligible Property shall be deemed to have a Market Value, Property Value and
Purchase Price of zero and (ii) the Debt Service Coverage Ratio and Debt Yield
Ratio shall be recalculated as of the most recently ended Measurement Quarter
with the Annualized Net Cash Flow related to such Non-Eligible Property excluded
from the applicable calculation. Unless the failure of such Non-Eligible
Property to constitute an Eligible Property is cured on or before the last day
of the applicable Cure Period, such

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Non-Eligible Property shall no longer constitute a Financed Property unless and
until it subsequently qualifies as an Eligible Property and is re-delivered and
qualified pursuant to Section 2.2.

 

Section 2.14    The Paying Agent.

 

 

(a)

The Lenders hereby appoint Wells Fargo Bank, N.A. as the initial Paying Agent
and Wells Fargo Bank, N.A. hereby accepts such appointment.

 

 

(b)

The Paying Agent hereby agrees that subject to the provisions of this Section
2.14, it shall:

 

(i)establish and maintain, until the Revolving Period Termination Date, the Loan
Account as a separate account for the benefit of the Lenders;

 

(ii)hold any sums held by it for the payment of amounts due with respect to the
Obligations in trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided;

 

(iii)give the Agent notice of any default by any Borrower of which a CA/PA
Responsible Officer has actual knowledge in the making of any payment required
to be made with respect to the Obligations; and

 

(iv)at any time during the continuance of any such default, upon the written
instruction of the Agent (a copy of which shall be provided by the Agent to the
Borrower Representative), forthwith pay at the direction of the Agent any sums
so held in trust by the Paying Agent.

 

 

(c)

Any successor paying agent shall be appointed by the Agent, subject to notice
thereof being provided to the Lenders by the Agent, and to consent by the
Directing Lenders; provided that any successor Paying Agent shall be, at the
time of such appointment, a Qualified Institution. Each Directing Lender shall
have the right to approve the fees (including any adjustments or modifications
thereto) required to engage the services of any successor paying agent, such
approved fee shall constitute the Paying Agent Fee.

 

 

(d)

The Paying   Agent   shall   be   entitled   to   indemnification,   pursuant  
to Section 2.8(b)(iii), from and against any and all  liabilities,
obligations,  losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever (including litigation costs and
reasonable attorneys’ fees and expenses) which may at any time (including at any
time following the payment of the obligations under this Agreement, including
the Advances Outstanding) be imposed on, incurred by or asserted against the
Paying Agent in any way relating to or arising out of this Agreement, or any
documents contemplated by or referred to herein or the transactions contemplated
hereby

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or any action taken or omitted by the Paying Agent under or in connection with
any of the foregoing; provided, that the Paying Agent shall not be entitled to
the payment of any such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of the Agent
resulting from its own gross negligence, or willful misconduct, or fraud. The
provisions of this Section shall survive the payment of the Obligations, the
termination of this Agreement, and any resignation or removal of the Paying
Agent. 

 

 

(e)

The Paying Agent shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Paying Agent in such capacity
herein. No implied covenants or obligations shall be read into this Agreement
against the Paying Agent and, in the absence of gross negligence, willful
misconduct or fraud on the part of the Paying Agent, the Paying Agent may
conclusively rely on the truth of any statements and written direction or
instruction and the correctness of the opinions expressed in any certificates or
opinions furnished to the Paying Agent pursuant to and conforming to the
requirements of this Agreement.

 

 

(f)

The Paying Agent shall not be liable for (i) an error of judgment made in good
faith by one of its officers; or (ii) any action taken, suffered or omitted to
be taken in good faith in accordance with or believed by it to be authorized by
this Agreement or at the direction of a Secured Party relating to the exercise
of any power conferred upon the Paying Agent under this Agreement, in each case,
unless it shall be proved that the Paying Agent shall have been grossly
negligent or acted in fraud or with willful misconduct in ascertaining the
pertinent facts.

 

 

(g)

The Paying Agent shall not be charged with knowledge of any Default or Event of
Default unless a CA/PA Responsible Officer obtains actual knowledge of such
event or the Paying Agent receives written notice of such event from the
Borrowers, the Borrower Representative, any Secured Party or the Agent, as the
case may be.

 

 

(h)

Without limiting the generality of this Section 2.14, the Paying Agent shall
have no duty (i) to record, file or deposit this Agreement or any agreement
referred to herein or any financing statement or continuation statement
evidencing a security interest in the Collateral, or maintain any such
recording, filing or depositing or to subsequently record, refile or redeposit
any of the same, (ii) to pay or discharge any Taxes, real property taxes or
assessment or other governmental charge or any Lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Collateral,
(iii) to confirm or verify the contents of any reports or certificates of
the  Agent or  the Calculation Agent delivered to the Paying Agent pursuant to
this Agreement believed by the Paying Agent to be genuine and to have been
signed or presented by the proper party or parties or (iv) to ascertain or
inquire

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as to the performance or observance of any of the Borrowers’ representations,
warranties or covenants under this Agreement or any other Loan Document. 

 

 

(i)

The Paying Agent shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable grounds for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Paying Agent to perform, or be responsible for the manner of
performance of, any of the obligations of the Borrowers under this Agreement.

 

 

(j)

The Paying Agent may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate of a Responsible Officer, any Monthly
Report, certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties.

 

 

(k)

The Paying Agent may consult with counsel of its choice with regard to legal
questions arising out of or in connection with this Agreement and the advice or
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken, omitted or suffered by the Paying Agent in good
faith and in accordance therewith.

 

 

(l)

Any Person into which the Paying Agent may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which to Paying Agent shall be a party, or any Person
succeeding to the business of the Paying Agent, shall be the successor of the
Paying Agent under this Agreement, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.

 

 

(m)

The Paying Agent may: (i) terminate its obligations as Paying Agent under this
Agreement (subject to the terms set forth herein) upon at least thirty (30)
days’

 

prior written notice to the Borrowers, the Lenders and the Agent; provided,
however, that, without the consent of the Directing Lenders and, so long as no
Event of Default has occurred and is continuing, the Borrower, such resignation
shall not be effective until a successor Paying Agent acceptable to the Agent,
and to whose appointment a Directing Lender does not object within five (5)
Business Days after the Lenders are notified thereof (or such shorter period in
which the Required Lenders consent thereto), shall have accepted appointment as
Paying Agent, pursuant hereto and shall have agreed to be

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bound by the terms of this Agreement; or (ii) be removed at any time by written
demand of the Agent, upon sixty (60) days’ notice delivered to the Paying Agent,
the Lenders and the Borrower Representative; provided, however, that, such
removal shall not be effective until the appointment of a successor Paying Agent
acceptable to the Agent, and to whose appointment a Directing Lender does not
object within five (5) Business Days after the Lenders are notified thereof (or
such shorter period in which the Directing Lenders consent thereto). In the
event of such termination or removal, the Agent shall make reasonable efforts to
appoint a successor Paying Agent. If, however, a successor Paying Agent is not
appointed by the Agent within sixty (60) days after the giving of a notice of
resignation, the Agent may petition a court of competent jurisdiction for the
appointment of a successor Paying Agent.

 

 

(n)

Any successor Paying Agent appointed pursuant hereto shall (i) execute,
acknowledge, and deliver to the Agent and to the predecessor Paying Agent an
instrument accepting such appointment under this Agreement. Thereupon, the
resignation or removal of the predecessor Paying Agent shall become effective
and such successor Paying Agent, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties, and obligations
of its predecessor as Paying Agent under this Agreement, with like effect as if
originally named as Paying Agent. The predecessor Paying Agent shall upon
payment of its fees and expenses deliver to the successor Paying Agent all
documents and statements and monies held by it under this Agreement; and the
Agent and the predecessor Paying Agent shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Paying Agent all such rights,
powers, duties, and obligations.

 

 

(o)

In the event the Paying Agent’s appointment hereunder is terminated without
cause, the Borrowers shall reimburse the Paying Agent for the reasonable out of
pocket expenses of the Paying Agent incurred in transferring any funds in its
possession to the successor Paying Agent.

 

 

(p)

The Paying Agent shall not be bound to make any investigation into the facts of
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing so to do by a Lender or the Agent;
provided, that if the payment within a reasonable time to the Paying Agent of
the costs, expenses or liabilities likely to be incurred by it in the making of
such investigation shall be, in the opinion of the Paying Agent, not reasonably
assured by the Borrowers, the Paying Agent may require reasonable indemnity from
the Lenders against such cost, expense or liability as a condition to so
proceeding. The reasonable expense of every such investigation shall be paid by
the Borrowers.

 

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Section 2.15   The Calculation Agent.

 

 

(a)

The Lenders hereby appoint Wells Fargo Bank, N.A. as Calculation Agent, and
authorize the Calculation Agent to take such actions and to exercise such powers
and perform such duties as are expressly delegated to the Calculation Agent by
the terms hereof, together with such other powers as are reasonably incidental
thereto and Wells Fargo Bank, N.A. hereby accepts such appointment.

 

(i)The duties of the Calculation Agent hereunder shall be limited to those
duties expressly set forth in this Agreement.

 

(ii)In the event of a discrepancy between the calculations received by the
Calculation Agent from the Borrowers or the Borrower Representative and the
results of the reviews thereof conducted by the Calculation Agent as reflected
in any reports provided by the Calculation Agent, the Calculation Agent shall
work with such parties to resolve such discrepancy.

 

(iii)Each of the Borrowers, the Borrower Representative, the Lenders and the
Agent agree that so long as the Calculation Agent complies with the terms of
clause (ii) above, the Calculation Agent shall have no liability with respect to
any calculations that are verified by the Calculation Agent (including pursuant
to consultations described in clause (ii) above) that are subsequently
determined to be incorrect. For avoidance of doubt, such exculpation from
liability shall include, without limitation, any loss, liability or expense of
Lenders incurred as a result of lending to Borrowers based on any such erroneous
calculations.

 

 

(b)

Any successor Calculation Agent shall be appointed by the Agent subject to
providing notice thereof to the Lenders and the absence of objection thereto by
either Directing Lender within five (5) Business Days after being notified
thereof (or such shorter period in which the Directing Lenders consent thereto).
The Directing Lenders shall have the right to approve in their respective sole
discretion the fees (including any adjustments or modifications thereto)
required to engage the services of any such successor Calculation Agent and such
approved fee shall constitute the Calculation Agent Fee.

 

 

(c)

The Calculation Agent shall be entitled to indemnification, pursuant to Section
2.8(b)(iii), from and against any and all  liabilities, obligations,  losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever (including litigation costs and reasonable attorneys’
fees and expenses) which may at any time (including at any time following the
payment of the obligations under this Agreement, including the Advances
Outstanding) be imposed on, incurred by or asserted against the Calculation
Agent in any way relating to or arising out of this Agreement, or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted by the Calculation Agent under or in connection with
any of the foregoing; provided, that the

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Calculation Agent shall not be entitled to the payment of any such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of the Agent resulting from its own gross negligence,
willful misconduct or fraud. The provisions of this Section shall survive the
payment of the Obligations, the termination of this Agreement, and any
resignation or removal of the Calculation Agent. 

 

 

(d)

The Calculation Agent shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Calculation Agent in such
capacity herein. No implied covenants or obligations shall be read into this
Agreement against the Calculation Agent and, in the absence of gross negligence,
willful misconduct or fraud on the part of the Calculation Agent, the
Calculation Agent may conclusively rely on the truth of the statements and the
correctness of the opinions expressed in any certificates or opinions furnished
to the Calculation Agent pursuant to and conforming to the requirements of this
Agreement. The Calculation Agent shall not be responsible for verifying any
calculations pursuant to this Agreement to the extent information necessary to
make such verifications is not provided to it by the Agent, the Borrower
Representative or the Borrowers.

 

 

(e)

The Calculation Agent shall not be liable for (i) an error of judgment made in
good faith by one of its officers; or (ii) any action taken, suffered or omitted
to be taken in good faith in accordance with or believed by it to be authorized
or within the discretion or rights or powers conferred by this Agreement or at
the direction of a Secured Party relating to the exercise of any power conferred
upon the Calculation Agent under this Agreement, in each case, unless it shall
be proved that the Calculation Agent shall have been grossly negligent or acted
in fraud or with willful misconduct in ascertaining the pertinent facts.

 

 

(f)

The Calculation Agent shall not be charged with knowledge of any Default or
Event of Default unless a Responsible Officer of the Calculation Agent obtains
actual knowledge of such event or the Calculation Agent receives written notice
of such event from the Borrowers, any Secured Party or the Agent, as the case
may be.

 

 

(g)

Without limiting the generality of this Section 2.15, the Calculation Agent
shall have no duty (i) to record, file or deposit this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest in the Collateral, or maintain any such
recording, filing or depositing or to subsequently record, refile or redeposit
any of the same, (ii) to pay or discharge any Taxes, real property taxes or
assessments or other governmental charge or any Lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the Collateral,
(iii) to confirm or verify the contents of any reports or certificates of the
Borrowers or the Agent delivered to the Calculation Agent pursuant to this
Agreement believed by the Calculation Agent to be genuine and to have been

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signed or presented by the proper party or parties or (iv) to ascertain or
inquire as to the performance or observance of any of the Borrowers’
representations, warranties or covenants under this Agreement or any other Loan
Document. 

 

 

(h)

The Calculation Agent shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable grounds for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Calculation Agent to perform, or be responsible for the manner of
performance of, any of the obligations of the Borrowers under this Agreement.

 

 

(i)

The Calculation Agent may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate of a Responsible Officer, any
report, certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties.

 

 

(j)

The Calculation Agent may consult with counsel of its choice with regard to
legal questions arising out of or in connection with this Agreement and the
advice or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, omitted or suffered by the
Calculation Agent in good faith and in accordance therewith.

 

 

(k)

The Calculation Agent shall be under no obligation to exercise any of the
rights, powers or remedies vested in it by this Agreement (except to comply with
its obligations under this Agreement and any other Loan Document to which it is
a party) or to institute, conduct or defend any litigation under this Agreement
or in relation to this Agreement, at the request, order or direction of the
Agent or any Lender pursuant to the provisions of this Agreement, unless the
Agent, on behalf of the Secured Parties, or such Lender shall have offered to
the Calculation Agent reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby.

 

 

(l)

The Calculation Agent shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing so to do by the Agent; provided, that
if the payment within a reasonable time to the Calculation Agent of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Calculation Agent, not reasonably
assured by the Borrowers, the Calculation Agent may require reasonable indemnity
against such cost, expense or liability as a condition to so

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proceeding. The reasonable expense of every such investigation shall be paid by
the Borrowers. 

 

 

(m)

The Calculation Agent shall not be responsible for the acts or omissions of the
Agent, the Borrowers, the Borrower Representative, the Master Property Manager,
any Lender or any other Person.

 

 

(n)

Any Person into which the Calculation Agent may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which to Calculation Agent shall be a party, or
any Person succeeding to the business of the Calculation Agent, shall be the
successor of the Calculation Agent under this Agreement, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.

 

 

(o)

The Calculation Agent does not assume and shall have no responsibility for, and
makes no representation as to, monitoring the value of the Properties or the
Collateral.

 

 

(p)

If the Calculation Agent shall at any time receive conflicting instructions from
the Agent and the Borrowers or any other party to this Agreement and the
conflict between such instructions cannot be resolved by reference to the terms
of this Agreement, the Calculation Agent shall be entitled to rely on the
instructions of the Agent. In the absence of fraud, gross negligence or willful
misconduct on the part of the Calculation Agent, the Calculation Agent may rely
and shall be protected in acting or refraining from acting upon any resolution,
officer’s certificate, any Monthly Payment Report, certificate of auditors, or
any other certificate, statement, instrument, opinion, report, notice request,
consent, order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties. The
Calculation Agent may rely upon the validity of documents delivered to it,
without investigation as to their authenticity or legal effectiveness, and the
parties to this Agreement will hold the Calculation Agent harmless from any
claims that may arise or be asserted against the Calculation Agent because of
the invalidity of any such documents or their failure to fulfill their intended
purpose.

 

 

(q)

The Calculation Agent is authorized, in its sole discretion, to disregard any
and all notices or instructions given by any other party hereto or by any other
person, firm or corporation, except only such notices or instructions as are
herein provided for and orders or process of any court entered or issued with or
without jurisdiction. If any property subject hereto is at any time attached,
garnished or levied upon under any court order or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by any court affecting such property or any part

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hereof, then and in any of such events the Calculation Agent is authorized, in
its sole discretion, to rely upon and comply with any such order, writ, judgment
or decree with which it is advised by legal counsel of its own choosing is
binding upon it, and if it complies with any such order, writ, judgment or
decree it shall not be liable to any other party hereto or to any other person,
firm or corporation by reason of such compliance even though such order, writ,
judgment or decree maybe subsequently reversed, modified, annulled, set aside or
vacated. 

 

 

(r)

The Calculation Agent may: (i) terminate its obligations as Calculation Agent
under this Agreement (subject to the terms set forth herein) upon at least
thirty (30) days’ prior written notice to the Borrowers,  the Lenders and the
Agent; provided, however, that, without the consent of the Directing Lenders,
such resignation shall not be effective until a successor Calculation Agent
acceptable to the Directing Lenders shall have accepted appointment as
Calculation Agent, pursuant hereto and shall have agreed to be bound by the
terms of this Agreement; or (ii) be removed at any time by written demand of the
Agent upon sixty (60) days’ notice, delivered to the Calculation Agent, the
Lenders and the Borrower Representative; provided, however, that, such removal
shall not be effective until the appointment of a successor Calculation Agent
acceptable to  the Directing Lenders. In the event of such termination or
removal, the Agent shall make reasonable efforts to appoint a successor
calculation agent. If, however, a successor calculation agent is not appointed
by the Agent within sixty (60) days after the giving of a notice of resignation,
the Agent may petition a court of competent jurisdiction for the appointment of
a successor calculation agent.

 

 

(s)

Any successor Calculation Agent appointed pursuant hereto shall (i) execute,
acknowledge, and deliver to the Agent and to the predecessor Calculation Agent
an instrument accepting such appointment under this Agreement. Thereupon, the
resignation or removal of the predecessor Calculation Agent shall become
effective and such successor Calculation Agent, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties, and
obligations of its predecessor as Calculation Agent under this Agreement, with
like effect as if originally named as Calculation Agent. The predecessor
Calculation Agent shall upon payment of its fees and expenses deliver to the
successor Calculation Agent all documents and statements and monies held by it
under this Agreement; and the Agent and the predecessor Calculation Agent shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Calculation Agent all such rights, powers, duties, and obligations.

 

 

(t)

In the event the Calculation Agent’s appointment hereunder is terminated without
cause, the Borrowers shall (i) reimburse the Calculation Agent for the
reasonable out-of-pocket expenses of the Calculation Agent incurred in

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connection with such termination and the related succession by the successor
Calculation Agent. 

 

 

(u)

The Loan Parties hereby agree, in connection with an appointment of a successor
Calculation Agent, to negotiate in good faith any modifications to this
Agreement reasonably requested by such successor Calculation Agent.

 

ARTICLE 3

CONDITIONS PRECEDENT

 

Section 3.1    Conditions to Closing. On or prior to the Restatement Effective
Date, each of the conditions precedent set forth below shall have been
satisfied, as determined by the Agent and the Lenders:

 

 

(a)

Loan Documents. Each of the Borrowers shall have duly executed and delivered, or
caused to be duly executed and delivered, (i) to the Agent and the Lenders: (A)
this Agreement, (B) the Security Agreement and (C) each Fee Letter, and (ii) to
each Lender that has requested a Note, a Note in the amount of such Lender’s
Commitment, dated as of the Effective Date, executed by each of the Borrowers
and payable to the order of such Lender (each, a “Note”) in substantially the
form of Exhibit B attached hereto. In no event shall either the Paying Agent or
the Calculation Agent have any obligation to maintain a register of holders of
any such Notes, or to register or otherwise monitor transfers thereof.

 

 

(b)

Limited Guarantee. The Sponsors shall have duly executed and delivered, or
caused to be duly executed and delivered, the Limited Guarantee.

 

 

(c)

Guaranty  Agreement. Masterco and Holdco shall have duly executed and delivered,
or caused to be duly executed and delivered, the Guaranty Agreement.

 

 

(d)

Security Agreement. Masterco and Holdco shall each have duly executed and
delivered, or caused to be duly executed and delivered, the Security Agreement.

 

 

(e)

Master Property Management Agreement. The Master Property Manager and the
Borrowers shall have duly executed and delivered, or caused to be duly executed
and delivered, the Master Property Management Agreement and Assignment of
Management Agreement.

 

 

(f)

Assignment of Management Agreement. The Agent shall have received copies of each
Assignment of Management Agreement duly executed by each Borrower and each
applicable Property Manager.

 

 

(g)

Environmental Indemnity. Borrowers, Guarantors and Sponsors shall have duly
executed and delivered, or caused to be duly executed and delivered, the
Environmental Indemnity.

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(h)

Control Agreements. The Agent and each Lender shall have received copies of the
Deposit Account Control Agreements required by the Cash Management Requirements
(other than for Control Required Security Deposit Accounts), in each case duly
executed by each Borrower, the  bank maintaining the related Deposit Account and
the Agent.

 

 

(i)

Collection Account, Reserve Accounts, Insurance Proceeds Account and Account
Control  Agreement. The Borrower Representative shall have established the
Collection Account, the Insurance Proceeds Account and each Reserve Account as a
Securities Account with the Paying Agent. The Borrower Representative, the
Paying Agent, the Borrowers and the Paying Agent shall have duly executed and
delivered, or caused to be duly executed and delivered, the Account Control
Agreement.

 

 

(j)

Security Interest. The Agent, pursuant to the Security Agreement, shall have (i)
received the certificates representing each of the Pledged Securities and the
certificates representing each such Pledged Security shall have been (x)
registered in the name of Masterco with respect to the Pledged Security relating
to Holdco and such registration shall have been confirmed by the related
certificate registrar and (y) registered in the name of Holdco with respect to
each Pledged Security related to the Borrowers, and, in each case, have a Stock
Power (as such term is defined in the Security Agreement) duly executed and
delivered in favor of the Agent or in blank and (ii) received evidence in form
and substance satisfactory to the Agent that it has a first priority perfected
security interest in each of the Pledged Securities, subject to no other Liens.
Any documents (including, without limitation, financing statements) required to
be filed, registered or recorded in order to create, in favor of the Agent, a
perfected, first-priority security interest in the Collateral, subject to no
Liens other than those created hereunder, shall have been properly prepared and
executed for filing (including the applicable county(ies) if the Agent
determines such filings are necessary in its sole discretion), registration or
recording in each office in each jurisdiction in which such filings,
registrations and recordations are required to perfect such first- priority
security interest.

 

 

(k)

Financing  Statements. Acknowledgment copies or other evidence of filing
acceptable to the Agent of the Financing Statements filed on or before the
Effective Date or other similar instruments or documents as may be necessary or
in the reasonable opinion of the Agent desirable under the UCC of all
appropriate jurisdictions or any comparable law to perfect the Agent’s security
interest in the Collateral (other than the Properties).

 

 

(l)

Representations and Warranties. Each representation or warranty by each of the
Borrowers, each of the Guarantors and Sponsors, the Master Property Manager and
their respective Affiliates contained herein or in any other Loan

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Document shall be true and correct in all material respects (without duplication
of any materiality qualifier contained herein or therein). 

 

 

(m)

No  Default. No Default or Event of Default shall have occurred and be
continuing or result from or exist upon the effectiveness of this Agreement.

 

 

(n)

No  Guarantor  Default. No Guarantor Default shall have occurred and be
continuing or result from or exist upon the effectiveness of this Agreement.

 

 

(o)

Consents; Authorizations. All consents, authorizations, permits and approvals of
any Governmental Authority or other Person required in connection with the
execution and delivery of the Loan Documents and the transactions contemplated
thereby shall have been obtained and be in full force and effect.

 

 

(p)

Completion of Proceedings. All limited liability company and other proceedings
taken or to be taken in connection with the transactions contemplated hereby and
all documents incidental thereto not previously found acceptable by the Agent
and its counsel shall be satisfactory in form and substance to the Agent and
such counsel, and the Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as the  Agent may
reasonably request.

 

 

(q)

Opinions of Counsel to the Borrowers, the Master Property Manager and each
Guarantor. The Agent and each of the Lenders and their respective counsel shall
have received originally executed copies of the favorable written opinions of
Skadden, Arps, Slate, Meagher & Flom LLP and Richards, Layton & Finger, counsel
for the Borrowers, as to such matters as the Agent or any of the Lenders may
reasonably request, dated as of the Effective Date and otherwise in form and
substance reasonably satisfactory to the Agent and each of the Lenders (and each
of the Borrowers hereby instructs such counsel to deliver such opinions to the
Agent and each of the Lenders). The Agent and each of the Lenders and their
respective counsel shall have received originally executed copies of the
favorable written opinions of Skadden, Arps, Slate, Meagher & Flom LLP and
Richards, Layton & Finger, counsel for the Guarantors, as to such matters as the
Agent or any of the Lenders may reasonably request, dated as of the Effective
Date and otherwise in form and substance reasonably satisfactory to the Agent.
The Agent and each of the Lenders and their respective counsel shall have
received originally executed copies of the favorable written opinions of
Skadden, Arps, Slate, Meagher & Flom LLP, Hogan Lovells US LLP and Richards,
Layton & Finger counsel for the Sponsors, as to such matters as the Agent or any
of the Lenders may reasonably request, dated as of the Effective Date and
otherwise in form and substance reasonably satisfactory to the Agent.

 

 

(r)

Governing Documents. Each Borrower shall have provided to the Agent and each of
the Lenders the executed and delivered Governing Documents of

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such Borrower, in form and substance satisfactory to the Agent and each of the
Lenders, which provide that each such Borrower is subject to the SPE
Requirements. Holdco shall have provided to the Agent and each of the Lenders
its executed and delivered Governing Documents, in form and substance
satisfactory to the Agent and each of the Lenders, which provide that Holdco is
a special purpose entity with at least two (2) Independent Directors or
Independent Managers. Masterco shall have provided to the Agent and each of the
Lenders its executed Governing Documents, in form and substance satisfactory to
the Agent and each of the Lenders, which provide that Masterco is a special
purpose entity with at least two (2) Independent Directors or Independent
Managers. Each Sponsor shall have provided to the Agent and each of the Lenders
copies of their executed and delivered Governing Documents. 

 

 

(s)

Secretary’s  Certificates. The Agent shall have received a certificate of the
secretary or assistant secretary of (1) each of the Borrowers certifying as to
the incumbency and genuineness of the signature of each officer of such Borrower
executing this Agreement and certifying that attached thereto is a true, correct
and complete copy of (i) the certificate of formation or comparable Governing
Documents, if any, of such Borrower and all amendments thereto, certified as of
a recent date by the appropriate Governmental Authority in such Borrower’s
jurisdiction of organization, (ii) the Governing Documents of such Borrower as
in effect on the date of such certifications, (iii) resolutions duly adopted by
the board of directors or comparable governing body of such Borrower
authorizing, as applicable, the transactions contemplated hereunder and the
execution, delivery and performance of this Agreement, and (iv) certificates as
of a recent date of the good standing or active status, as applicable, of such
Borrower under the laws of its jurisdiction of organization and under the laws
of each jurisdiction where such Borrower owns any Properties, and (2) each of
the  Guarantors and Sponsors certifying as to the incumbency and genuineness of
the signature of each officer of such Guarantor and Sponsor, as applicable,
executing this Agreement and certifying that attached thereto is a true, correct
and complete copy of (i) the certificate of formation or comparable Governing
Documents, if any, of such Guarantor or Sponsor and all amendments thereto,
certified as of a recent date by the appropriate Governmental Authority in such
Guarantor’s or Sponsor’s jurisdiction of organization, (ii) the Governing
Documents of such Guarantor or Sponsor Borrower as in effect on the date of such
certifications, (iii) resolutions duly adopted by the board of directors or
comparable governing body of such Guarantor or Sponsor authorizing, as
applicable, the transactions contemplated hereunder and the execution, delivery
and performance of this Agreement, and (iv) certificates as of a recent date of
the good standing or active status, as applicable, of such Guarantor or Sponsor
under the laws of its jurisdiction of organization and short-form certificates
as of a recent date of the good standing of such Guarantor or Sponsor under the
laws of each other jurisdiction where such Guarantor or Sponsor is qualified

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to do business and where a failure to be so qualified could have a reasonable
likelihood of causing a Material Adverse Effect. 

 

 

(t)

Fees and Expenses. The Paying Agent and Calculation Agent shall have received
all fees and expenses required to be paid to or on behalf of the Paying Agent
and Calculation Agent and each Lender on the Effective Date, including all fees
and expenses required hereunder and under the Fee Letters.

 

 

(u)

No Adverse Effect. The Agent and each Lender shall not have determined that a
Material Adverse Effect exists and, in the Agent’s or any Lender’s
determination, (i) no event, circumstance or information or matter shall exist
that is inconsistent in a material adverse manner with any event, circumstance
or information or matter disclosed to the Agent or any Lender by any of the
Borrowers, the Guarantors, the Sponsors or the Master Property Manager, or (ii)
any change whatsoever has occurred that, in the opinion of the Agent or any
Lender, could reasonably be expected to have a Material Adverse Effect.

 

 

(v)

No Market Disruption Event. There shall not, in the opinion of the Agent, or any
Lender, have occurred (i) a material adverse change in any of the financial,
banking or capital markets including but not limited to lending or repurchase
markets, an outbreak or escalation of hostilities or a material adverse change
in national or international political, financial or economic conditions, (ii) a
general suspension of trading on major national or international stock
exchanges, or (iii) a disruption in or moratorium on commercial banking
activities or securities settlement services.

 

 

(w)

Insurance Policies. The Borrowers shall have delivered to the Agent copies of
all insurance certificates evidencing satisfaction of the Insurance
Requirements.

 

 

(x)

Power of Attorney. The Borrowers shall have delivered to the Agent an executed
Power of Attorney in the form of Exhibit I hereto.

 

 

(y)

Other Documents and Information. The Borrowers shall have delivered to the Agent
such other documents, certificates, resolutions, instruments and agreements
reasonably requested by the Agent.

 

Section 3.2    Conditions  to  Adding  Financed  Properties  and  Each  Advance.
The addition of any Property as a Financed Property and each Advance to be
made  under this Agreement shall be subject to the prior or concurrent
satisfaction of the conditions precedent set forth below, in each case to the
reasonable satisfaction of the Directing Lenders:

 

 

(a)

Property Addition Notice and Borrowing Notice. The Borrower Representative shall
have delivered a completed Property Addition Notice and Borrowing Notice
pursuant to Section 2.2, together with the Document Packages for each Property
to which the requested Advance relates.

 

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(b)

Joinder. If submitted for addition as a Borrower in connection with such
requested Advance, each such new Borrower with respect to which such Advance
relates is an Eligible Property Owner and has executed and delivered a Joinder,
an amendment to the Account Control Agreement, to become a party thereto, and
each other Loan Document required to be executed and delivered by it under this
Agreement, including, but not limited to, a Power of Attorney, a Security
Agreement Supplement, Deposit Account Control Agreements and any other Loan
Document and all conditions to the effectiveness of such Joinder have, in the
opinion of the Agent and each Lender, been satisfied. 

 

 

(c)

Revolving Period Termination Date. The Revolving Period Termination Date has not
occurred.

 

 

(d)

Representations  and   Warranties. Each representation or warranty by the
Borrowers, the Guarantors, the Sponsors and the Master Property Manager
contained herein or in any other Loan Document shall be true and correct in all
material respects on such date, except to the extent that such representation or
warranty expressly relates to an earlier date.

 

 

(e)

No  Default. No Default or Event of Default shall have occurred and be
continuing or could reasonably be expected or anticipated to result from such
addition or Advance.

 

 

(f)

No  Guarantor  Default. No Guarantor Default shall have occurred and be
continuing.

 

 

(g)

Calculation Agent and Diligence Agent Confirmations. The Calculation Agent shall
have delivered to the Agent its reports according to the results of its
calculations described in Section 2.2(b)(i) and Section 2.2(d), as applicable,
and the Diligence Agent shall have delivered to the Agent its certification
described in Section 2.2(b)(ii), with respect to all Properties to which such
Advance relates.

 

 

(h)

Hedging Transactions. All Hedging Transactions required by Section 6.3 are in
full force and effect, which shall have an aggregate notional amount at least
equal to the Advances Outstanding (determined after giving effect to the
requested Advance).

 

 

(i)

No Adverse Effect. No Material Adverse Effect has occurred as determined by the
Directing Lenders.

 

 

(j)

Property  Inspection. Completion of a Property inspection of any proposed
Financed Property reasonably satisfactory to the Directing Lenders, if required
by either Directing Lender.

 

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(k)

Mortgage Licensing Compliance. If the Borrowers elect to place Mortgages on the
Financed Properties pursuant to Section 4.12(a), no Advance or additional
Advance may be made with respect to any Financed Property or proposed Financed
Property with a Mortgage thereon that is located in a state in which a Lender
has notified the Borrower Representative and the Agent that such Lender is
required to obtain one or more license(s), or otherwise take action, to comply
with Applicable Law prior to making an Advance or additional Advance on a
mortgaged property in such state, until such license(s) have been obtained or
such action has been taken; provided, however, each such Lender shall make
commercially reasonable efforts  to  obtain such  license(s) or take
such  action. Accordingly, for purposes of any requested Advance to which this
Section 3.2(k) applies, the Property Borrowing Base of any such Financed
Property or proposed Finance Property will be excluded from the Borrowing Base
for purposes of Section 3.2(l)(ii). 

 

 

(l)

Facility Parameters. The following parameters are satisfied, determined after
giving effect to the requested addition or Advance:

 

(i)the Advances Outstanding will not exceed the Facility Amount;

 

(ii)the Advances Outstanding will not exceed the Borrowing Base;

 

(iii)any Lender’s Pro Rata Share of the Advances Outstanding will not exceed
such Lender’s Commitment;

 

(iv)each Reserve Account Deposit Amount will be fully funded and credited to the
applicable Reserve Account;

(v)the Asset Purchase Price of each Financed Property is greater than $50,000,
and the Asset Purchase Price of each Financed Property does not exceed, for
Financed Properties located in California, $750,000 and, for all other Financed
Properties, $600,000;

 

(vi)no more than twenty percent (20%) of the Financed Properties (by Allocated
Loan Amount) will have a Asset Purchase Price of less than $75,000;

 

(vii)no more than twenty percent (20%) of the Financed Properties (by Allocated
Loan Amount) will have an Asset Purchase Price exceeding, for Financed
Properties located in California, $400,000 and, for all other Financed
Properties, $300,000;

 

(viii)no more than 40% of the Financed Properties (by Allocated Loan Amount)
will be located in any one MSA;

(ix)no more than 30% of the Financed Properties (by Allocated Loan Amount) will
be Non-Leased Properties;

 

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(x)no more than 20% of the Financed Properties (by Allocated Loan Amount) will
be condominium units; 

 

(xi)no Trigger Event exists on such date;

 

(xii)such Advance will not result in more than one (1) Advance being funded on
any Business Day or more than two (2) Advances be funded during any calendar
month;

 

(xiii)the requirements of Section 2.13 are satisfied with respect to any Non-
Eligible Property existing on such date (without regard to any Cure Period)
after giving effect to such addition or Advance. For the avoidance of doubt, the
requirements of Section 2.13 shall be deemed to be satisfied if the requirements
of this Section 3.2 are met assuming any Non-Eligible Property within its
applicable Cure Period is treated as if such Cure Period has expired without
cure;

 

(xiv)in connection with any Advance, the Loan to Aggregate Market Value Ratio
prior to and after giving pro forma effect to such Advance shall not exceed 65%.

 

ARTICLE 4

PROPERTY MANAGEMENT, VALUATIONS AND RESERVES

 

Section 4.1    Property Management and Cash Management.

 

 

(a)

Eligible Property Management Agreements. On or prior to the Effective Date, the
Borrower Representative shall have caused each Property  owned by the Borrowers
to be managed by a Property Manager pursuant to an Eligible Property Management
Agreement. The applicable Borrower shall cause any Property acquired by any
Borrower following the Effective Date to be managed by a Property Manager
pursuant to an Eligible Property Management Agreement as of the date acquired by
such Borrower. Upon the termination of any Property Manager, the applicable
Borrower shall cause the related Properties to be managed by a successor
Property Manager pursuant to an Eligible Property Management Agreement.

 

 

(b)

Assignment of Management Agreement. On or prior to the Effective Date, each
Property Manager shall have executed and delivered an Assignment of Management
Agreement. With respect to any Property Manager retained after the Effective
Date, the applicable Borrower shall cause the applicable Property Manager to
execute and deliver an Assignment of Management Agreement on or prior to the
date it commences managing any Properties on behalf of any Borrower.

 

 

(c)

Blocked Accounts. If Property Manager Accounts of any Property Manager hold
security deposits with respect to Financed Properties aggregating over
$1,000,000 (each a “Control Required Security Deposit Account”), then within

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ninety (90) days after the Effective Date, or (if later) the date such limit is
exceeded, the applicable Borrower shall either (i) cause such Property Manager
to have executed and delivered a Deposit Account Control Agreement with respect
to each of such Property Managers’ Property Manager Accounts in form and
substance reasonably acceptable to the Agent or (ii) deposit an amount equal to
the amount held in such Control Required Security Deposit Account into the
Special Reserve Account to be held until clause (i) of this Section 4.1(c) is
satisfied. With respect to all Property Manager Accounts that hold security
deposits, the applicable Borrower shall use commercially reasonable efforts to
deliver a monthly report detailing the activity in such accounts for the prior
calendar month. 

 

 

(d)

Cash Management Requirements. Each Loan Party shall (collectively, the “Cash
Management Requirements”):

 

(i)establish and maintain the following Deposit  Accounts with JPMorgan Chase
Bank, N.A. for each Borrower: (A) a Borrower Rent Account; (B) a Borrower
Expense Account; (C) Borrower Funding Account; and (D) unless and until
maintained by the applicable Property Manager, a Borrower Security Deposit
Account (collectively, the “Borrower Deposit Accounts”).

 

(ii)cause all Borrower Deposit Accounts and any Control Required Security
Deposit Accounts to be at all times subject to a Deposit Account Control
Agreement;

 

(iii)cause the Collection Account, the Insurance Proceeds Account and each
Reserve Account to be at all times subject to an Account Control Agreement;

 

(iv)by its own action, or  by instructing and causing the  relevant Property
Manager for each Property to take such action, (A) direct all Tenants to mail
rent checks to the JPM Lockbox for deposit into the Borrower Rent Account, (B)
cause all rents received in the form of electronic or online payments to be
deposited (and each electronic or online service provider shall be instructed to
deposit) directly into the applicable Borrower Rent Account and (C) deposit all
other Collections received by such Property Manager with respect to all
Properties managed by such Property Manager directly to the applicable Borrower
Rent Account;

 

(v)cooperate with the Agent in causing all amounts deposited in a Borrower Rent
Account to be swept to the Collection Account within two (2) Business Days of
receipt in the Borrower Rent Account;

 

(vi)instruct and cause the relevant Property Manager for each Financed Property
of each Borrower to deposit security deposits with respect to all Financed
Properties directly to a Deposit Account, which holds no amounts other than
security deposits for Tenants of the related Borrower;

 

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(vii)deposit or cause any escrow agent for the Conveyance of any Financed
Property to deposit all Conveyance Proceeds directly to the Collection Account; 

 

(viii)deposit or cause to be deposited all other Collections and amounts
required to be included in Available Funds to the Collection Account; and

 

(ix)cause all amounts received for Operating Expenses pursuant to Section
2.8(b)(i) to be deposited in the applicable Borrower Expense Account maintained
by each Borrower for payment of such Operating Expenses from such account.

 

 

(e)

Operating Expense Budget. If an Event of Default has occurred and is continuing
(or will occur upon application of the Available Funds pursuant to Section
2.8(b)), (i)  Borrower Representative shall submit to the Agent and the Lenders
a proposed quarterly operating expense budget, with a proposed monthly expense
allocation, for Operating Expenses for all Properties and shall by the second
month of each calendar quarter submit a quarterly budget for Operating Expenses
for the following calendar quarter, (ii) the Directing Lenders shall have the
right to approve each such proposed quarterly budget of Operating Expenses,
proposed monthly expense allocation and each item contained therein in their
respective sole and absolute discretion, and upon such approvals such quarterly
budget of Operating Expenses shall constitute the “Approved Quarterly Operating
Expense Budget” for such calendar quarter.

 

Section 4.2    Property Valuations.

 

 

(a)

Quarterly Valuations. On the fifteenth (15th) day (or if such day is not a
Business Day, the immediately preceding Business Day) of the month following
each Fiscal Quarter, the Agent shall, at the sole cost and expense of the
Borrowers, order updated BPOs from the Diligence Agent with respect to 12.5%, by
Allocated Loan Amount, of the Financed Properties (each, a “Quarterly Sample”).
Each Quarterly Sample shall be randomly selected by the Agent with a
statistically meaningful sample from the portfolio of Financed Properties which
were not included in any of the eight immediately preceding Quarterly Samples
and with BPOs obtained more than 30 days prior to the date of such selection,
including each geographic area in which such Financed Properties are located.

 

If the Loan To Value Ratio for Financed Properties (calculated with respect to
Properties for which BPOs were obtained in a Quarterly Sample) is greater than
65% (any such condition, a “Sample Decline”), then the Agent shall, at the sole
cost and expense of the Borrowers and within five (5) Business Days of any such
Sample Decline, order updated BPOs from the Diligence Agent with respect to an
additional 12.5%, by Allocated Loan Amount, of the Financed Properties (each, an
“Additional Sample”). Each Additional Sample shall be randomly selected by the
Agent with a statistically meaningful sample from the portfolio of Financed
Properties, which were not included in any of the four immediately preceding

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Quarterly Samples and with BPOs obtained more than 30 days prior to the date of
such selection, including each geographic area in which such Financed Properties
are located.

 

If the Loan To Value Ratio for Financed Properties (calculated with respect to
Financed Properties for which BPOs were obtained in a Quarterly Sample and a
related Additional Sample) is greater than 65%, then the Agent may within five
(5) Business Days of such findings, at the sole cost and expense of the
Borrowers, obtain updated BPOs from the Diligence Agent with respect to all of
the Financed Properties.

 

 

(b)

The Diligence Agent shall be required to deliver any such updated BPOs required
pursuant to Section 4.2(a) above to the Borrower Representative and the Agent
not later than thirty (30) days after they are ordered by the Agent. Within five
(5) Business Days after receipt of such updated BPOs, the Borrower
Representative shall deliver to the Agent and the Calculation Agent a BPO Report
showing the calculation of the Loan to Value Ratio taking into account such
updated BPOs. The Loan To Value Ratio for all Financed Properties and for all
purposes under this Agreement will be recalculated based on the updated BPOs
obtained in connection with any Quarterly Valuation. All updated BPOs prepared
pursuant to Section 4.2(a) above shall be posted to the Data Site upon
completion of such BPOs.

 

 

(c)

In addition to BPOs obtained in connection with any Quarterly Valuation, if any
Borrower or the Master Property Manager obtains any BPO or any external
valuation of any or all Properties, it shall promptly upon receipt thereof
provide the Agent and the Diligence Agent with copies of each such BPO or
valuation. Any such additional BPOs prepared pursuant to Section 4.2(c) shall be
posted to the Data Site upon completion of such BPOs.

 

Section 4.3    Audit and Information Rights.

 

 

(a)

Each Borrower shall deliver to the Agent and the Lenders information at any time
or from time to time reasonably requested by the Agent or any Lender regarding
the Advances, the Properties, the Master Property Manager, the Property
Managers, the Guarantors, the Sponsors and the Borrowers. Any reasonable out-
of-pocket costs and expenses in connection with any such request shall be paid
by the Borrowers. The Agent shall have the right from time to time at all times
during normal business hours upon reasonable notice (and, in any event, not more
than twice in any calendar year (unless an Event of Default shall have occurred
and be continuing, in which case no such restriction shall apply)) to examine
such

 

books, records, accounts, agreements, leases, instruments and other documents
and the collection systems of the Borrower-Related Parties at the offices of the
Borrower-Related Parties or any other Person maintaining such books, records and
accounts and to make such copies or extracts thereof as the Agent shall desire.
After the occurrence of an Event of Default, the

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Borrower-Related Parties shall pay any reasonable costs and expenses incurred by
the Agent and the Lenders to examine the Borrower-Related Parties’ records, as
the Agent or any Lender shall determine to be necessary or appropriate in the
protection of the Lenders’ interest.

 

 

(b)

Each Borrower shall grant or cause to be granted to the Diligence Agent at
reasonable times, subject to reasonable advance notice, and subject to the
rights of tenants, access to any of the Financed (or pending Financed
Properties) to enable the Diligence Agent to inspect such the Properties.

 

 

(c)

Each Borrower shall (and shall cause the Master Property Manager to) cooperate
with the Diligence Agent to enable the Diligence Agent to perform various
oversight functions with respect to the Properties, including periodic
verification that all property taxes have been paid in full.

 

Section 4.4    Ongoing Reserve Account. On the date of each Advance or addition
of a Property as a Financed Property hereunder, the Borrowers shall deposit (or
cause to be deposited from such Advance) in the Ongoing Reserve Account the
Ongoing Reserve Account Deposit Amount for each Financed Property (to the extent
not previously funded) and, any Ongoing Reserve Account Shortfall existing on
such date. On each Payment Date, as applicable, (i) in accordance with Section
2.8(b), the Borrowers shall deposit any Ongoing Reserve Account Shortfall Amount
existing on such date or (ii) the Paying Agent shall withdraw any Ongoing
Reserve Account Excess Amount identified in the Monthly Report from the Ongoing
Reserve Account and shall deposit such amount in the Collection Account as
Available Funds for such Payment Date. At the Borrowers’ option, the Borrowers
may elect to increase the Ongoing Reserve Required Amount to include the
aggregate insurance premiums payable during the related calendar year necessary
in order to maintain compliance with the Insurance Requirements related to
Non-Financed Properties (as compared to the 25% of such premiums otherwise
required) in order to exclude such premiums from the calculation of Annualized
Net Cash Flow. In addition, if increased pursuant to the foregoing sentence, the
Borrowers may subsequently elect to reduce the Ongoing Reserve Required Amount
to 25% of such premiums related to Non- Financed Properties. Any election to
increase or decrease the Ongoing Reserve Required Amount shall be made by notice
from the Borrower Representative to the Agent and the Calculation Agent not
later than the first Business Day of the Measurement Quarter for which such
election shall apply. During the continuance of an Event of Default, the Agent
may, and at the direction of the Directing Lenders shall, direct the Paying
Agent in writing to withdraw all or any portion of the amounts on deposit in the
Ongoing Reserve Account and apply such funds to pay (i) costs and expenses for
maintenance or operation of the Properties, or (ii) the Advances Outstanding,
pro rata to each Lender, in such proportion as between items (i) and (ii) above
as the Agent may determine in its sole discretion or the Directing Lenders may
direct. The right to direct the Paying Agent in writing to withdraw and apply
amounts on deposit in the Ongoing Reserve Account in accordance with the
foregoing shall be in addition to all other rights and remedies provided to the
Agent or any Lenders under this Agreement and the other Loan Documents. Provided
no Trigger Event, Default or Event of Default shall exist and remain uncured,
the Paying Agent shall disburse the amounts on deposit in the Ongoing Reserve
Account with respect to a Property to

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the Borrower Representative (as directed in writing by the Agent) upon the
Conveyance of such Property or a Property Release with respect to such Property,
and the payment in full of the applicable Property Release Amount with respect
to such Property. Except as expressly set forth in this Section 4.4 or Section
4.11, the amounts on deposit in the Ongoing Reserve Account shall not be
released to the Borrowers or otherwise available to pay any Obligations.

 

Section 4.5    Interest Reserve Account. On the date of each Advance hereunder,
the Borrowers shall deposit (or cause to be deposited from such Advance) in the
Interest Reserve Account the Interest Reserve Account Deposit Amount for each
Financed Property (to the extent not previously funded) and any Interest Reserve
Account Shortfall Amount existing on such date. On each Payment Date, as
applicable, (i) in accordance with Section 2.8(b), the Borrowers shall deposit
any Interest Reserve Account Shortfall Amount for the Financed Properties
existing on such date and (ii) the Paying Agent shall withdraw any Interest
Reserve Account Excess Amount identified in the Monthly Report from the Interest
Reserve Account and deposit such amount in the  Collection Account as Available
Funds for such Payment Date. During the continuance of an Event of Default, the
Agent may, and at the direction of the Directing Lenders shall, direct the
Paying Agent in writing to withdraw all or any portion of the amounts on deposit
in the Interest Reserve Account and apply such funds to pay (i) unpaid Interest
Payment Amounts, or (ii) the Advances Outstanding, pro rata to each Lender, in
such proportion as between items (i) and (ii) above as the Agent may determine
in its sole discretion or the Directing Lenders may direct. The right to direct
the Paying Agent in writing to withdraw and apply amounts on deposit in the
Interest Reserve Account in accordance with the foregoing shall be in addition
to all other rights and remedies provided to the Agent or any Lenders under this
Agreement and the other Loan Documents. Except as expressly set forth in this
Section 4.5, the amounts on deposit in the Interest Reserve Account shall not be
released to the Borrowers or otherwise available to pay any Obligations.

 

Section 4.6    Insurance Premiums and Real Property Taxes; Insurance Reserve
Account and Tax Reserve Account.

 

 

(a)

The Borrowers shall pay (or shall cause to be paid) all insurance premiums
related to all Properties necessary in order to maintain compliance with the
Insurance Requirements for such Properties and all real estate taxes and other
governmental assessments for all Financed Properties. For the avoidance of
doubt, the Borrower Representative may not use amounts on deposit in the
Insurance Reserve Account for the payment of taxes or other governmental
assessments relating to any Non-Financed Property.

 

 

(b)

The Borrower Representative shall, not later than the Reporting Date for each
Collection Period, deliver to the Agent, the Diligence Agent and the Calculation
Agent a report certifying (i) the amounts paid during the related Collection
Period in respect of insurance premiums related to Properties necessary in order
to maintain compliance with the Insurance Requirements for such Properties and
real estate taxes and other governmental assessments for Financed Properties,
(ii) the aggregate insurance premiums related to all

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Properties paid during the related Collection Period and necessary in order to
maintain compliance with the Insurance Requirements for such Properties, (iii)
the insurance premiums related to each Property paid during the related
Collection Period and necessary in order to maintain compliance with the
Insurance Requirements for such Property, (iv) the aggregate real estate taxes
or other governmental assessments paid for all Financed Properties during the
related Collection Period and (v) the real estate taxes or other governmental
assessments paid for each Financed Property during the related Collection
Period. Upon receipt of such certification, the Agent may request additional
detail from the Borrower Representative and, upon the Agent’s receipt of all
requested detail, the Agent shall, subject to the provisions of Section 2.8(c)
and Section 4.6(c) below, (i) direct the Paying Agent to withdraw from the
Insurance Reserve Account an amount equal to the aggregate insurance premiums
related to all Properties paid during the related Collection Period and
necessary in order to maintain compliance with the Insurance Requirements for
such Properties and (ii) direct the Paying Agent to withdraw from the Tax
Reserve Account an amount equal to the sum of the aggregate real estate taxes or
other governmental assessments paid for all Financed Properties during the
related Collection Period (in each case, to the extent not previously drawn
under Section 4.6(c) below) and, in accordance with such direction from the
Agent, pay such sum to the Borrower Representative in reimbursement of such
amounts. 

 

 

(c)

So long as no Event of Default has occurred and is continuing (unless otherwise
approved by the Directing Lenders) and subject to Section 4.6(b) above, the
Borrower Representative may request, from time to time, by written notice to the
Agent, (i) disbursement of amounts on deposit in the Insurance Reserve Account
for the purposes of paying insurance premiums and (ii) disbursement of amounts
on deposit in the Tax Reserve Account for the purposes of paying real estate
taxes and other governmental assessments required to be paid pursuant to Section
4.6(a). Upon receipt by the Agent of reasonably satisfactory evidence of such
amounts payable, the Agent shall direct the Paying Agent shall disburse funds on
deposit in the Insurance Reserve Account and Tax Reserve Account, respectively,
to the Borrower Representative in the amount requested (or approved) no more
than five (5) Business Days after receipt of such request. Funds disbursed
pursuant to this Section 4.6(c) and not applied to the payment of the insurance
premiums, taxes and assessments described in such notice within thirty days
after receipt shall be redeposited by the Borrowers into either the Insurance
Reserve Account or Tax Reserve Account, as appropriate.

 

 

(d)

Upon the occurrence of an Event of Default, the Agent may, or at the direction
of the Directing Lenders shall, instruct the Paying Agent in writing to remit
all or any portion of the amount on deposit in the Insurance Reserve Account
and/or the Tax Reserve Account and apply such funds to (i) the costs of
maintaining insurance on the  Properties in compliance  with the provisions of

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Section 6.2 and/or to the payment of real estate taxes or other governmental
assessments with respect  to any Properties, or (ii) the Advances Outstanding,
pro rata to each 

 

Lender, in such proportion as between items (i) and (ii) above as the Agent may
determine in its sole discretion or the Directing Lenders may direct. The right
to instruct the Paying Agent to remit and apply such amounts in accordance with
the foregoing shall be in addition to all other rights and remedies provided to
the Agent or any Lender under this Agreement and the other Loan Documents.
Provided no Event of Default shall exist and remain uncured, the Paying Agent
shall disburse the amounts on deposit in the Insurance Reserve Account and the
Tax Reserve Account with respect to a Property to the Collection Account as
Available Funds for the next Payment Date upon the Conveyance of such Property
and the payment in full of the applicable Property Release Amount with respect
to such Property. Except as expressly set forth in this Section 4.6, the amounts
on deposit in the Insurance Reserve Account and the Tax Reserve Account shall
not be released to the Borrowers or otherwise available to pay any Obligations.

 

Section 4.7    Special Reserve Account.

 

 

(a)

If any Borrower is required, in connection with any requested Advance or the
addition of a Property as a Financed Property, to set aside reserves in
connection with any Specially Permitted Lien, the Borrower Representative shall
provide the Paying Agent, the Calculation Agent and the Agent with written
notice of any such amount (a “Special Reserve Account Deposit Amount”), which
notice shall be deemed to be an instruction to the Paying Agent to deposit such
Special Reserve Account Deposit Amount into the Special Reserve Account. Subject
to Section 2.19(b), upon the release, discharge or termination of a Specially
Permitted Lien with respect to which a Special Reserve Account Deposit Amount
was established, which release, discharge, termination or payment is evidenced
by such certificates of the Borrower Representative, invoices and other evidence
as the Agent may require, or if the applicable Property ceases to be a Financed
Property pursuant to Section 2.7(a) or Section 2.13, then the Paying Agent shall
withdraw such Special Reserve Account Deposit Amount from the Special Reserve
Account and deposit such amount in the Collection Account as Available Funds for
the next Payment Date.

 

 

(b)

Upon the occurrence of an Event of Default, the Agent may, or at the direction
of the Directing Lenders shall, instruct the Paying Agent in writing to remit
all or any portion of the amount on deposit in the Special Reserve Account and
apply such funds to (i) the release of the applicable Specially Permitted Liens
or (ii) the Advances Outstanding hereunder, pro rata to each Lender, in such
proportion as between items (i) and (ii) above as the Agent may determine in its
sole discretion or the Directing Lenders may direct. The right to instruct

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the Paying Agent to remit and apply such amounts in accordance with the
foregoing shall be in addition to all other rights and remedies provided to the
Agent or any Lender under this Agreement and the other Loan Documents. Except as
expressly set forth in this Section 4.7, the amounts on deposit in the Special
Reserve Account shall not be released to the Borrowers or otherwise available to
pay any Obligations. 

 

Section 4.8    Insurance Proceeds Account.

 

 

(a)

All repairs to any Property with respect to which any Insurance or Condemnation
Proceeds have been deposited to the Insurance Proceeds Account shall be deemed
to be renovations and all of the provisions of Section 4.9(a), including the
requirements for inspections by the Diligence Agent, shall apply to such
Properties.

 

 

(b)

Upon (i) completion of all repairs to any Property in respect of which Insurance
Proceeds or Condemnation Proceeds are held in the Insurance Proceeds Account,
(ii) receipt by the Agent and the Diligence Agent of a Repair Completion
Certificate of a Responsible Officer of the Borrower Representative and (iii)
confirmation by the Diligence Agent to the Agent that such repairs have been
completed in compliance with the Renovation Standards, the Agent shall direct
Paying Agent to withdraw from the Insurance Proceeds Account the related
Insurance Proceeds or Condemnation Proceeds on the next Payment Date and deposit
such amount in the Collection Account as Available Funds for such Payment Date.

 

 

(c)

Upon the occurrence of an Event of Default, the Agent may, or at the direction
of the Directing Lenders shall, instruct the Paying Agent in writing to remit
all or any portion of the amount on deposit in the Insurance Proceeds Account
and apply such funds to (i) the costs of completion of the repairs to any
Property in respect of which Insurance Proceeds are held in the Insurance
Proceeds Account, or (ii) the Advances Outstanding, pro rata to each Lender, in
such proportion as between items (i) and (ii) above as the Agent may determine
in its sole discretion or the Directing Lenders may direct. The right to
instruct the Paying Agent to remit and apply such amounts in accordance with the
foregoing shall be in addition to all other rights and remedies provided to the
Agent or any Lender under this Agreement and the other Loan Documents. Except as
expressly set forth in this Section 4.8, the amounts on deposit in the Insurance
Proceeds Account shall not be released to the Borrowers or otherwise available
to pay any Obligations.

 

Section 4.9    Renovations and Renovation Cost Reserve Account.

 

 

(a)

The Borrower Representative shall provide to the Agent, the Lenders and the
Diligence Agent a budget and schedule (the “Proposed Scheduled Renovation Work”)
describing, if applicable, the Renovation Costs for each

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Non-Leased Property and the renovation work necessary in the Borrowers’ good
faith determination to cause such Non-Leased Properties to be renovated,
improved, repaired and completed so as to satisfy the Renovation Standards. The
Agent shall cause the Diligence Agent to review the Proposed Scheduled
Renovation Work in accordance with the Diligence Agent Agreement. After the
Diligence Agent completes its evaluation, the Agent may propose modifications to
the Proposed Scheduled Renovation Work for such Non-Leased Properties and upon
revision of the Proposed Scheduled Renovation Work in a manner agreed to by the
Borrower Representative and the Agent, such revised schedule shall constitute
the   “Scheduled   Renovation   Work”   for   such   Non-Leased   Property.The
Borrowers shall promptly perform all of the Scheduled Renovation Work (i) in
compliance with all Applicable Laws in all material respects and (ii) in a Lien-
free, good and workmanlike manner, and shall promptly deliver to the Agent, the
Lenders and the Diligence Agent a Certificate of Completion when the Scheduled
Renovation Work on a Property has been completed. The Agent shall cause the
Diligence Agent to inspect each month at least 10% of all Non-Leased Properties
for which the Scheduled Renovation Work has been completed in the prior month
for purposes of verifying compliance with the Renovation Standards, such sample
to be selected by the Diligence Agent. If the Diligence Agent is not able to
access any such Property selected for inspection, the Diligence Agent shall
select other Properties to be inspected, such that at least 10% of the
Non-Leased Properties for which the Scheduled Renovation Work has been completed
in the prior month are so inspected. The Borrowers will cooperate reasonably to
enable the Diligence Agent to inspect such Properties before they become
occupied. If any such sample shows that more than 5% of such sampled Properties
are not then in compliance with the Renovation Standards, the Agent or either
Directing Lender may cause the Diligence Agent to subsequently inspect all or a
larger sample of the Non-Leased Properties for which the Scheduled Renovation
Work has been completed in the prior month to confirm compliance for such
Properties with the Renovation Standards. 

 

 

(b)

The Borrowers shall be required to deposit to the Renovation Cost Reserve
Account on the date of the initial Advance, the addition of a Property as a
Financed Property hereunder, the date of each subsequent Advance and on each
Payment Date, an amount such that the amount on deposit in the Renovation Cost
Reserve equals an amount (the “Renovation Cost Reserve Account Required Amount”)
equal to the aggregate Renovation  Costs related  to all Non-Leased Properties
that on such date of determination are subject to any Scheduled Renovation Work
or if Scheduled Renovation Work has not been agreed to, the Proposed Scheduled
Renovation Work. Upon completion of the Scheduled Renovation Work, delivery of
the related Certificate of Completion and verification by the Diligence Agent in
accordance with Section 4.9(a) with respect to a Property, provided no Event of
Default has occurred and is continuing, the Paying Agent (at the written
direction of the  Agent) shall release  the related Renovation Cost Reserve
Account Required

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Amount to the Collection Account as Available Funds for the next Payment Date.
If the applicable Property ceases to be a Financed Property pursuant to Section
2.7(a) or Section 2.13, then the Paying Agent shall withdraw any amount on
deposit in the Renovation Cost Reserve Account for such Property from the
Renovation Cost Reserve Account and deposit such amount in the Collection
Account as Available Funds for such Payment Date. 

 

 

(c)

Upon the occurrence of an Event of Default, the Agent may, or at the direction
of the Directing Lenders shall, instruct the Paying Agent in writing to remit
all or any portion of the amount on deposit in the Renovation Cost Reserve
Account and apply such funds to (i) the costs of completion of the Scheduled
Renovation Work of any Non-Leased Properties or (ii) the Advances Outstanding,
pro rata to each Lender, in such proportion as between items (i) and (ii) above
as the Agent may determine in its sole discretion or the Directing Lenders may
direct. The right to instruct the Paying Agent to remit and apply such amounts
in accordance with the foregoing shall be in addition to all other rights and
remedies provided to the Agent or any Lender under this Agreement and the other
Loan Documents. Except as expressly set forth in this Section 4.9, the amounts
on deposit in the Renovation Cost Reserve Account shall not be released to the
Borrowers or otherwise available to pay any Obligations.

 

Section 4.10    Ratio Trigger Reserve Account.

 

 

(a)

If, on any Payment Date, no Trigger Event has occurred and is continuing (and
none will result from application of the  Available Funds pursuant to Section
2.8(b) on such Payment Date), then Agent shall direct Paying Agent to withdraw
from the Ratio Trigger Reserve Account any amounts then on deposit in such
account and deposit such amounts in the Collection Account as Available Funds
for such Payment Date.

 

 

(b)

Otherwise, amounts deposited in the Ratio Trigger Reserve Account shall be
applied as provided in Section 2.8(b)(x).

 

Section 4.11    Reserve Accounts Generally.

 

 

(a)

Each Reserve Account shall be established and maintained by the Paying Agent as
a Securities Account in the name of the Borrower Representative in trust for the
benefit of Agent as agent for the Secured Parties. Each Reserve Account shall,
pursuant to the Account Control Agreement, be under the sole dominion and
control of the Agent. The Paying Agent on behalf of the Agent shall have the
sole right to issue entitlement orders with respect to each Reserve Account. The
taxpayer identification number associated with the Reserve Accounts shall be
that of the Borrower Representative and the Borrower Representative (and other
applicable Borrowers) will report for

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federal, state and local income taxes, the income, if any, represented by the
Reserve Accounts. 

 

 

(b)

Any costs of any Reserve Account shall be deducted from any income or earnings,
if any, on amounts on deposit in such Reserve Account and to the extent such
income or earnings is not sufficient to pay such costs, such costs shall be
deducted from amounts on deposit in such Reserve Account.

 

 

(c)

All interest or other earnings on Reserve Accounts shall be added to and become
a part of the related Reserve Account and shall be disbursed in the same manner
as other monies deposited in the applicable Reserve Account. So long as no
Default or Event of Default shall have occurred and be continuing, the Borrower
Representative shall have the right to direct the investment of sums on deposit
in the Reserve Accounts in Permitted Investments if (i) such investments are
permitted by Applicable Laws and (ii) the maturity date of the Permitted
Investment is not later than the date on which funds in the related Reserve
Account are required for payment of an obligation for which the applicable
Reserve Account was created. Absent the written instruction of the Borrower
Representative, the funds on deposit in the Reserve Accounts shall remain
uninvested; provided that, if an Event of Default has occurred and is
continuing, the Directing Lenders in their respective sole discretion, shall
have the right (but not the obligation) to direct the investment of sums on
deposit in the Reserve Accounts in Permitted Investments. The Borrowers shall be
responsible for payment of any federal, state or local income or other Taxes
applicable to the interest and other amounts earned on the Reserve Accounts,
regardless of to whom any amount in any such Reserve Account is credited or
paid. No other investments of the sums on deposit in the Reserve Accounts shall
be permitted except as set forth in this Section 4.9(c).

 

 

(d)

Neither the Agent nor the Paying Agent shall be liable for any loss sustained on
the investment of any funds maintained in any of the Reserve Accounts. The
Borrowers shall indemnify the Agent and the Paying Agent and hold the Agent and
the Paying Agent harmless from and against any and all actions, suits, claims,
demands, liabilities, losses, damages, obligations and costs and expenses
(including litigation costs and reasonable attorneys’ fees and expenses) arising
from or in any way connected with the Reserve Accounts or the performance of the
obligations for which the Reserve Accounts were established. The Borrowers shall
collaterally assign to the Agent, as security for the Obligations, all rights
and claims the Borrowers may have against all persons or entities supplying
labor, materials or other services which are to be paid from or secured by the
Reserve Accounts.

 

Section 4.12    Prohibited Conveyance.

 

 

(a)

If the Borrowers fail to obtain the Agent’s prior written consent to any
Conveyance or refinancing of any Property(ies) with an aggregate market

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value (measured with respect to any such Property as of the date of its
conveyance or refinancing) of more than $1,000,000, to the extent not permitted
under the Loan Documents, upon the written request of a Directing Lender or the
Agent, the Borrowers shall obtain, grant to Agent (for the benefit of the
Secured Parties) and record in the applicable recording offices first priority
mortgage liens on all of the Borrowers’ Financed Properties (in each case,
pursuant to mortgages, deeds of trust of other forms of security instruments as
are required in the subject jurisdiction, in form and substance reasonably
acceptable to Agent (collectively, “Mortgages”), and insured by a nationally
recognized title insurance company pursuant to a lender’s policy of title
insurance in an amount not less than the Allocated Loan Amount of the applicable
Financed Property, in form and substance reasonably acceptable to Agent) within
sixty (60) days of such request. Notwithstanding anything to the contrary
contained herein, the Borrowers may elect, at any time and in their sole
discretion, to obtain and grant to Agent (for the benefit of the Secured
Parties) Mortgages on the Financed Properties.     If Mortgages are granted in
jurisdictions that require a cap on the amount secured, such amount shall be no
less than 125% of the Allocated Loan Amount, provided that if such excess would
result in material additional taxes or fees payable by the Borrowers, then the
Agent may in its discretion accept such other cap or alternative arrangement as
the Agent may deem appropriate in light of the risk to the Lenders resulting
from such cap and such cost to the Borrowers. 

 

 

(b)

In connection with any Mortgages obtained pursuant to Section 4.12(a) above, the
Borrowers will pay all costs associated with providing such Mortgages, including
all recordation taxes with respect to such Mortgages, any costs and/or expenses
related to the preparation and assembly of such Mortgages and the delivery
thereof to the proper Governmental Authority for recordation, any reasonable
out- of-pocket fees for attorneys and other professionals incurred in connection
with the preparation, review on behalf of the Agent and recordation of such
Mortgages, and the cost of such lender’s title insurance policies (collectively,
the “Mortgage Recording Expenses”).

 

 

(c)

Notwithstanding the above, either or the Directing Lenders may make arrangements
for the recording of Mortgages on some or all Financed Properties and obtain a
lender’s policy of title insurance with respect to each such Financed Property,
subject to confirmation from each other Lender that there are no regulatory
issues associated with such Mortgages (or licensing issues of the kind
referenced in Section 3.2(k)). The Directing Lender or Directing Lenders
requesting such Mortgages shall pay all related Mortgage Recording Expenses,
including the costs and expenses incurred by the Diligence Agent and Agent in
connection with the review of such Mortgages and title policies. In connection
with such recording of Mortgages, the Borrowers consent to and authorize such
recordation and agree to cooperate with the Lenders in a commercially reasonable
manner, including the execution

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and delivery of such documents and authorizations necessary to effectuate such
recordation. 

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

 

Section 5.1    Representations  and  Warranties. To induce each Lender, the
Paying Agent and the Calculation Agent to enter into this Agreement and the
other Loan Documents and to make Advances,  each Loan Party hereby represents
and warrants to the Agent and each Lender, on the Effective Date and Restatement
Effective Date and, except to the extent such representation and warranty
specifically relates to an earlier date, on each Borrowing Date and each date
that any Property is added as a Financed Property that the following statements,
and each of the representations and warranties set forth on Schedule 2 hereto
are true and correct:

 

 

(a)

Existence. It is duly formed, validly existing and in good standing under the
laws of its jurisdiction of organization, and has all requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as presently conducted.   It is qualified to do business in every
jurisdiction where such qualification is required, except where the failure so
to qualify could not be reasonably expected to have a Material Adverse Effect.

 

 

(b)

Power  and  Authority;  Enforceability. It has all necessary corporate, limited
liability company or organizational power to enter into, and has taken all
necessary corporate, limited liability company or organizational action to
authorize the execution, delivery and performance of, this Agreement and the
other Loan Documents to which it is a party, and all of the transactions
contemplated herein and therein. This Agreement and the other Loan Documents
have been duly executed and delivered by it constitutes, and any Loan Documents
executed and delivered by it after the Effective Date will constitute, its
legal, valid and binding obligations, enforceable against it in accordance with
their respective terms, subject to applicable Insolvency Laws and general
principles of equity, regardless of whether considered in a proceeding in equity
or at Law. Each Loan Document to which it is a party is in full force and
effect.

 

 

(c)

No Violation. Neither the execution and delivery by it of this Agreement and the
other Loan Documents, as applicable, nor the performance by it of its duties and
obligations hereunder or thereunder, (i) require any consent or approval of its
directors, shareholders, trustees, members or managers, other than any consents
or approvals previously obtained, (ii) results or will result in a breach of, or
constitutes or will constitute a violation or default under 1. any term or
provision of its Governing Documents, 2. any law, rule, regulation, order,
judgment, writ, injunction, or decree of any court or Governmental Authority
having jurisdiction over its or its property or assets, the violation of which
could be reasonably expected to have a Material Adverse Effect or 3.

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any loan agreement, mortgage, deed of trust, security agreement or lease, or any
other contract or instrument binding on or affecting it or its property or
assets, the violation of which could be reasonably expected to have a Material
Adverse Effect, (iii) requires any approval of stockholders, members or partners
or any approval or consent of any Person under any of its Contractual
Obligations, except for such approvals or consents which will be obtained on or
before the Effective Date and disclosed in writing to the Agent or (iv) results
or will result in the creation or imposition of any Lien of any nature upon or
with respect to any of its properties or assets, whether now owned or hereafter
acquired (except the Liens created by the Loan Documents). 

 

 

(d)

Consents;   Authorizations. No authorization, consent, approval, license,
exemption of, or filing or registration with, or any other action in respect of
any other Governmental Authority is or will be necessary for the valid
execution, delivery or performance by it of this Agreement and the other Loan
Documents to which it is a party except (i) those with have been made or
obtained and are in full force and effect, and (ii) those filings or recordings
contemplated in connection with this Agreement or the other Loan Documents.

 

 

(e)

Title to Assets. It has good and marketable title to all of the Financed
Properties (or, with respect to the Non-Financed Properties and all other assets
owned by it, good and marketable title except where the failure to have such
title could not be reasonably expected to have a Material Adverse Effect), in
each case free and clear of all Liens other than Permitted Liens.

 

 

(f)

Collateral. It has rights in and the power to transfer each item of Collateral
upon which it purports to grant a Lien under this Agreement, the Security
Agreement or the other Loan Documents free and clear of any and all Liens other
than Permitted Liens. No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public office, except
such as may have been filed in connection with this Agreement or the other Loan
Documents. With respect to the security interest granted by it in the  Security
Agreement, such security interest is a valid first priority security interest in
the Collateral, subject only to Permitted Liens, which security interest will,
upon the filing of the Financing Statements as provided for in the Security
Agreement, be perfected to the extent such security interest can be perfected by
possession, filing or control. The execution and delivery of this Agreement, the
Security Agreement and the Grant of the Lien under the Security Agreement create
a valid, enforceable Lien on the Collateral and the Proceeds thereof. The Filing
Offices are the only offices where Financing Statements are required to be filed
under the UCC in order to perfect such Lien in all Filing Collateral. Following
the filing of the Financing Statements in the Filing Offices, the Lien Granted
hereunder in all Filing Collateral will be a first priority perfected Lien.

 

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(g)

Litigation. There is no litigation pending, or, to its knowledge, threatened, to
which it is a party that (i) purports to affect the legality, validity or
enforceability of this Agreement or any other Loan Document or the transactions
contemplated hereunder or thereunder or (ii) if adversely determined,
individually or in the aggregate, could be reasonably expected to have a
Material Adverse Effect. 

 

 

(h)

Compliance with Laws. It is in compliance with all Applicable Laws including
without limitation those with respect to owning, leasing and maintaining the
Properties, except in each case where any failure to comply therewith could not
be reasonably expected to have a Material Adverse Effect.

 

 

(i)

Disclosure. No representation or warranty made by it and contained in any Loan
Document or in any other documents, certificates or written statements furnished
to the Agent, the Calculation Agent, the Paying Agent, the Diligence Agent and
any Lender by or on behalf of any of the Borrowers for use in connection with
any Advance or the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by it to be reasonable at the time made, and
are not to be viewed as facts and the actual results during the period or
periods covered by any such projections may differ from the projected results.
There are no material facts known (or which should upon the reasonable exercise
of diligence be known) to any Borrower - Related Party (other than matters of a
general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to any Lender or the Agent for use in connection with the transactions
contemplated hereby.

 

 

(j)

Environmental Matters. (i) To its knowledge, there is no past or present
material non-compliance with Environmental Laws, or with permits issued pursuant
thereto, in connection with any Property which has not been fully addressed
and/or remediated in accordance with Environmental Law or in accordance with any
requirements imposed by any Governmental Authority, except for those that could
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect and (ii) except as otherwise disclosed to Agent, it does
not have any knowledge of, nor has it received, any written notice from any
inspector, contractor, property manager, agent of any property manager or
Governmental Authority relating  to Hazardous Substances or Remediation (as
defined in  the Environmental Indemnity) in  connection  with any Property, of
liability of any Person pursuant to any Environmental Law or any actual
administrative or judicial proceedings in connection with any of the foregoing,
except for those that

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could not, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. 

 

 

(k)

Solvency. It is and, upon each Borrowing Date, both before and after giving
effect to the making of the Advance requested hereunder, the Grant by it
hereunder and the consummation of the other transactions contemplated hereunder,
will be, Solvent, and intends to remain Solvent. No Insolvency Event has
occurred with respect to it and it has not taken any Insolvency Action or action
in contemplation or furtherance thereof.

 

 

(l)

Organization  Documents. Since the Effective Date, it has not amended,
supplemented, restated or other modified its Governing Document or any other of
its organizational or governing documents.

 

 

(m)

Taxes. It has filed (or obtained effective extensions for filing) all required
income tax returns and all other material tax returns, domestic and foreign,
required to be filed by it and has paid all material taxes (including mortgage
recording taxes), assessments, fees, and other governmental charges payable by
it, or with respect to any of its properties or assets, which have become due,
and income or franchise taxes have been paid except that individually or in the
aggregate could reasonably be expected to result in a Material Adverse Effect
unless, in each case, the same are not delinquent and are being contested in
accordance with the provisions of Section 6.1(u). It has paid, or has provided
adequate reserves for the payment of, all such taxes for all prior fiscal years
and for the current fiscal year to date. There is no material action, suit,
proceeding, investigation, audit or claim relating to any such taxes now pending
or, to its knowledge, threatened by any Governmental Authority against any it,
which is not being contested in good faith as provided above if adversely
determined could reasonably be expected to have a Material Adverse Effect. No
tax liens that have not been discharged have been filed against it or any of its
assets (except with respect to any Property, Liens in respect of taxes not yet
due and payable) and Specially Permitted Liens.

 

 

(n)

Anti-Money Laundering Laws. It has complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA Patriot
Act of 2001 (collectively, the “Anti-Money Laundering Laws”); it has established
an anti-money laundering compliance program as required by the Anti-Money
Laundering Laws, has conducted and will conduct the requisite due diligence in
connection with the Leases and Tenants for purposes of the Anti-Money Laundering
laws, including with respect to the legitimacy of the applicable Tenant and the
origin of the assets used by the said Tenant to lease the property in question
and maintains and will maintain, sufficient information to identify the
applicable Tenant for purposes of the Anti-Money Laundering Laws.

 

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(o)

OFAC. Neither any Borrower nor any entity owned directly or indirectly by Colony
American Homes, Inc., nor any such Borrower’s or entity’s officers, directors,
partners or members or, to any Borrower’s knowledge (based on the duty of
investigation described below), any Tenant of any Borrower is an entity or
person (or to any Borrower’s knowledge, owned or controlled by an entity or
person): (i) that is listed in the Annex to, or is otherwise subject to the
provisions of the Executive Order 13224 issued on September 24, 2001
(“EO13224”); (ii) whose name appears on OFAC’s most current list of
“Specifically Designated National and Blocked Persons” (as such list is
published from time to time on the OFAC website,
http:www.treas.gof/ofac/t11sdn.pdf, or any replacement thereof promulgated by
OFAC, the “OFAC List”); or (iii) who commits or threatens to commit “terrorism”,
as that term is defined in EO13224. The Borrowers shall cause the Property
Managers, prior to entering into any Lease with a Tenant, to screen each
Tenant’s provided name against the OFAC List to confirm such Tenant’s name does
not appear on the OFAC List. If a Responsible Officer of any Loan Party obtains
knowledge that any Tenant’s name appears on the OFAC List, such Loan Party shall
give prompt notice to the Agent and shall take all legally required action with
respect to any such Tenant as a result thereof. 

 

 

(p)

ERISA Compliance. Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Applicable Law. Each Plan
that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS and, to Borrower’s knowledge,
nothing has occurred which would prevent, or cause the loss of, such
qualification. To the extent applicable, such Borrower and each ERISA Affiliate
have made all material required contributions to each Plan subject to Section
412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan. There are no pending or, to its knowledge, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan, except for those that could not, either individually or in
the  aggregate, reasonably be expected to have a Material Adverse Effect. There
has been no non-exempt prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan, except for those that could not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither such Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither such Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201

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or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither such
Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Sections 4069 or 4212(c) of ERISA, in each case that either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. 

 

 

(q)

Equity Interests  and  Ownership.  (i) Holdco owns all of the outstanding and
issued Equity Interests in each Borrower, (ii) Masterco owns all of the
outstanding and issued Equity Interests in Holdco, (iii) CCAI owns all of the
outstanding and issued Equity Interests in Masterco, and (iv) no Change of
Control has occurred. Such Equity Interests and all Equity Interests of the
Sponsors have been duly authorized and validly issued and are fully paid and
non- assessable. There is no existing option, warrant, call, right, commitment
or other agreement to which it is a party requiring, and none of its Equity
Interests outstanding, which upon conversion or exchange, would require the
issuance by it of its Equity Interests or other Securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase, its
Equity Interests. The Equity Interest of each Borrower and Holdco have been
pledged to the Agent for the benefit of the Lenders pursuant to the terms of the
Security Agreement.

 

 

(r)

Governmental Regulation. It is not subject to regulation under the Investment
Company Act of 1940 or under any other federal or state statute or regulation
which may limit its ability to incur Obligations or which may otherwise render
all or any portion of its Obligations unenforceable. It is not a “registered
investment company” or a company “controlled” by a “registered investment
company” or a “principal underwriter” of a “registered investment company” as
such terms are defined in the Investment Company Act of 1940.

 

 

(s)

Margin  Stock. None of the transactions contemplated by any of the Loan
Documents will violate or result in a violation of Section 7 of the Exchange
Act, or any regulations issued pursuant thereto, including Regulations T, U and
X of the Federal Reserve Board, 12 C.F.R., Chapter II. It does not own or intend
to carry or purchase, and no proceeds of any Advance or from the pledge of the
Collateral will be used to carry or purchase, any “Margin Stock” within the
meaning of Regulation U or to extend “Purchase Credit” within the meaning of
Regulation U.

 

 

(t)

Insurance. The Borrowers have obtained and delivered to the Agent certificates
evidencing the insurance policies that satisfy the Insurance Requirements. All
such policies are in full force and effect. No claims have been made that are
currently pending, outstanding or otherwise remain unsatisfied under any such
insurance policies that could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. With respect to any insurance
policy, to its knowledge, there has been no act or omission would impair the
coverage of such policy, to its knowledge the

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benefits of the endorsement or the validity and binding effect of either in any
material respect. 

 

 

(u)

Eligibility. Such Borrower is an Eligible Property Owner. Each Financed Property
is an Eligible Property.

 

 

(v)

Investment  Company  Act. Such Borrower is not an “investment company”
registered or required to be registered under the Investment Company Act.

 

 

(w)

Fiscal Year and Fiscal Quarters. Such Borrower’s fiscal year ends on December 31
of each calendar year and its fiscal quarters end on March 31, June 30,
September 30 and December 31 (each, a “Fiscal Quarter”) of each calendar year.

 

ARTICLE 6

AFFIRMATIVE COVENANTS

 

Section 6.1    Affirmative Covenants  of the  Loan Parties. Each of the Loan
Parties covenants with each Lender, the Paying Agent, the Calculation Agent and
the Agent that until all Obligations have been repaid in full and this Agreement
is terminated:

 

 

(a)

Compliance With Laws. It shall comply with all Environmental Laws as required by
the Environmental Indemnity. It shall comply with all other Applicable Laws,
except in each case where any failure to comply therewith could not be
reasonably expected to have a Material Adverse Effect.

 

 

(b)

Maintenance of Existence. It shall maintain its existence and the right to carry
on its business and duly procure all necessary renewals and extensions thereof
and maintain, preserve and renew all rights, powers, privileges and franchises
and conduct its business in the usual and ordinary course; provided, that it
shall not be required to maintain, preserve or renew any such rights, powers,
privileges or franchises unless the failure to maintain, preserve or renew the
same could reasonably be expected to have a Material Adverse Effect. It shall
maintain and preserve all property material to the conduct of its business and
keep such property in good repair, working order and condition (ordinary wear
and tear and casualty excepted) and from time to time make, or cause to be made,
such repairs, renewals, additions, improvements and replacements thereto as are
necessary in order that the business carried on in connection therewith may be
properly conducted at all times, except, in each case, where the failure to do
so could not be reasonably expected to have a Material Adverse Effect.

 

 

(c)

Use of Proceeds. It shall use the proceeds of all Advances solely for the
purposes described in Section 2.3.

 

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(d)

Delivery of Information. It shall furnish, or cause to be furnished, to the
Agent: 

 

(i)as soon as available and in any event within one hundred twenty (120) days
after the end of each fiscal year of Parent, the audited consolidated balance
sheet of Parent and its consolidated subsidiaries (which shall include the
Borrowers, the Guarantors and the Sponsors) as at the end of such fiscal year
and the related consolidated statements of income and cash flows of Parent and
its consolidated subsidiaries (which shall include the Borrowers, the Guarantors
and the Sponsors) for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on in
conformity with GAAP, with the opinion thereon of an independent public
accountant reasonably acceptable to the Directing Lenders, together with such
information as shall be reasonably required to permit the reconciliation of the
net worth and liquidity of Sponsor as set forth in such financial statements to
the Net Worth and Liquidity required to be maintained by Sponsor pursuant to the
Sponsor Financial Covenants;

 

(ii)as soon as available and in any event within seventy-five (75) days after
the end of each fiscal quarter (other than the last fiscal quarter in such
fiscal year) of Parent and its consolidated subsidiaries (which shall include
the Borrowers, the Guarantors and the Sponsors), an unaudited consolidated
balance sheet of Parent and its consolidated subsidiaries (which shall include
the Borrowers, the Guarantors and the Sponsors) as at the end of each such
fiscal quarter and the related statements of income and cash flows of Parent and
its consolidated subsidiaries (which shall include the Borrowers, the Guarantors
and the Sponsors) for such quarter and for the period from the beginning of the
then current fiscal year to the end of such fiscal quarter, setting forth in
each case in comparative form the figures for the corresponding quarter in the
previous fiscal year, all certified as to fairness of presentation and
conformity with GAAP (other than with respect to lack of footnotes and being
subject to normal year-end adjustments) by a Responsible Officer of Parent,
together with such information as shall be reasonably required to permit the
reconciliation of the net worth and liquidity of Sponsor as set forth in such
financial statements to the Net Worth and Liquidity required to be maintained by
Sponsor pursuant to the Sponsor Financial Covenants;

 

(iii)a Monthly Report on each Reporting Date together with a certificate of a
Responsible Officer of the Borrower Representative delivered to Agent certifying
(a) that the Borrowers, each of the Guarantors, each of the Sponsors and their
respective Affiliates have each complied with all covenants and agreements in
the Loan Documents applicable to such Person and (b) that no Default or Event of
Default has occurred and is continuing on the date of such certificate, and if
any Default or Event of Default then exists, setting forth the details thereof
and the action which the Borrowers are taking or propose to take with respect
thereto;

 

(iv)promptly after any of its Responsible Officers becoming aware of the
occurrence of any Default or Event of Default (but in any event within three (3)
Business Days thereafter), a certificate of a Responsible Officer setting forth
the details thereof and the action that it is taking or proposes to take with
respect thereto;

 

(v)promptly after any of its Responsible Officers becoming aware of any event or
occurrence (including any litigation, whether pending or threatened) that could

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reasonably be expected to have a Material Adverse Effect (but in any event
within two (2) Business Days thereafter), a certificate of a Responsible Officer
setting forth the details thereof and the action that it is taking or proposes
to take with respect thereto; 

 

(vi)promptly after receipt of written notice of the matters described in Section
2(k) of the Environmental Indemnity;

 

(vii)as soon as possible, notice of any material changes to its organization or
structure or any material change or expansion of its operations or programs;

 

(viii)promptly after receipt thereof, any notice of default given by or to the
Hedge Assignor under or with respect to any Hedge Agreement;

 

(ix)promptly upon request by a Directing Lender from time to time, such
additional information regarding its financial condition or business or assets
(including, without limitation, the Collateral), as such Directing Lender may
reasonably request from time to time;

 

(x)as soon as practicable but in no event later than five Business Days prior to
the acquisition of any such real property by a Borrower, notice that such
Borrower intends to acquire real property in a state other than the state or
states that such Borrower owned Properties as of the Restatement Effective Date;
and

 

(xi)all information furnished by or on behalf of any Borrower to the Agent or
any Lender in connection with the Loan Documents will be true, correct and
complete in all material respects, or in the case of projections will be based
on reasonable estimates prepared and presented in good faith, on the date as of
which such information is stated or certified.

 

 

(e)

Books and Records. It shall keep proper books of record and account in which
full, true and correct entries shall be made of all dealings and transactions in
relation to its business and activities to the extent necessary to prepare its
financial statements in conformity with GAAP.

 

 

(f)

Further Assurances. It shall at any time or from time to time upon the
reasonable request of either Directing Lender, at the Borrowers’ sole cost and
expense, (i) furnish to the Agent all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and
every  other document, certificate, agreement and instrument required to be
furnished by any Borrower pursuant to the terms of the Loan Documents or
reasonably requested by either Directing Lender in connection therewith, in each
case to the extent in the possession of the Borrowers, the Borrower
Representative or any of their agents; (ii)  promptly execute any and all
further documents, financing statements, agreements and instruments, and take
all such further actions (including the filing and recording of financing
statements,

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continuation statements and fixture filings), which are required under any
Applicable Laws or may be reasonably requested by the Agent to effectuate the
transactions contemplated by the Loan 

 

Documents or to grant, preserve, protect or perfect the Liens created by the
Loan Documents or the validity or priority of an such Lien; and (iii) cooperate
with each Lender and the Agent with respect to any proceedings before any court,
board or other Governmental Authority which may in any way adversely affect the
rights of any Secured Party hereunder (other than any adverse proceeding between
any Borrower-Related Parties, on the one hand and any Lender, Agent, Paying
Agent, Calculation Agent and/or Diligence Agent, on the other hand, relating to
the transactions contemplated herein). During the existence and continuance of
an Event of Default, it shall provide to the Agent and the Lenders, from time to
time upon request, evidence reasonably satisfactory to the Directing Lenders as
to the perfection and priority of the Liens created or intended to be created by
the Loan Documents.

 

 

(g)

SPE Requirements. Since its formation and at all times thereafter it has
complied with the following provisions, and it shall:

 

(i)own no material assets, and shall not engage in any business, other than the
assets and transactions specifically contemplated by this Agreement and any
other Loan Document;

 

(ii)not incur any Debt or other obligation, secured or unsecured, direct or
indirect, absolute or contingent (including guaranteeing any obligation), other
than as permitted under Section 7.1(a) or as otherwise permitted under this
Agreement;

 

(iii)not make any loans or advances to any Affiliate or third party and shall
not acquire obligations or securities of its Affiliates, in each case other than
in connection with the acquisition, conversion or maintenance of Properties in
connection with the Loan Documents;

 

(iv)pay its debts and liabilities (including, as applicable, shared personnel
and overhead expenses) only from and to the extent of its own assets; provided,
however that the foregoing shall not require its member to make any additional
capital contributions to it;

 

(v)maintain a sufficient number of employees, if any, in light of its
contemplated business operations;

 

(vi)pay the salaries of its own employees, if any, only from and to the extent
of its own funds;

 

(vii)comply with the provisions of its Governing Documents;

 

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(viii)do all things necessary to observe organizational formalities and to
preserve its existence, and shall not amend, modify, waive provisions of or
otherwise change its Governing Documents without the consent of the Directing
Lenders; 

 

(ix)maintain all of its books, records, financial statements and bank accounts
separate from those of its Affiliates and any other Person, and has not and
shall not list its assets as assets on the financial statements of any other
Person (except that, to the extent required under GAAP or as a matter of
Applicable Law its assets may be included in a consolidated financial statement
of its Affiliates; provided, that (a) appropriate notation shall be made on such
financial statements to indicate the separateness of such Person from such
Affiliate and to indicate that such Person’s assets and credit are not available
to satisfy the debts and other obligations of such Affiliate or any other Person
and (b) such assets shall also be listed on such Person’s own separate balance
sheet) and file its own tax returns separate from those of any other Person
except to the extent such Person is treated as a “disregarded entity” for tax
purposes and is not required to file tax returns under Applicable Law;

 

(x)be, and at all times shall hold itself out to the public as, a legal entity
separate and distinct from any other entity (including any Affiliate), shall
correct any known misunderstanding regarding its status as a separate entity,
shall conduct business solely in its own name, and shall not identify itself or
any of its Affiliates as a division of the other;

 

(xi)intend to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations; provided, however  that the foregoing shall
not require  its member  to make  any additional capital contributions to it;

 

(xii)not engage in or suffer any Change of Control, dissolution, winding up,
liquidation, consolidation or merger in whole or in part or convey or transfer
all or substantially all of its properties and assets to any Person (except as
contemplated herein);

 

(xiii)except with respect to other Borrowers to the extent permitted by the Cash
Management Requirements, not commingle its funds or other assets with those of
any Person and shall maintain its properties and assets in such a manner that it
would not be costly or difficult to identify, segregate or ascertain its
properties and assets from those of others;

 

(xiv)hold all of its assets in its own name;

 

(xv)maintain its properties, assets and accounts separate from those of any
Affiliate or any other Person;

 

(xvi)except with respect to other Borrowers and/or the Borrower Representative
as provided for in the Loan Documents, not hold itself out to be responsible for
the debts or obligations of any other Person;

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(xvii)not, without the prior unanimous written consent of the holders of 100% of
its Equity Interests, take any Insolvency Action;

 

(xviii)not enter into any transaction with an Affiliate of any of the Borrowers
except on terms and conditions that are intrinsically fair, commercially
reasonable and substantially similar to those available to unaffiliated parties
in an arm’s length transaction;

 

(xix)use separate stationary, invoices and checks bearing its own name;

 

(xx)allocate fairly and reasonably any shared expenses with an affiliate
(including, without limitation, shared office space);

 

(xxi)except with respect to other Borrowers and/or the Borrower Representative
as provided for in the Loan Documents, not pledge its assets to secure the
obligations of any other Person; and

 

(xxii)not form, acquire or hold any subsidiary or own any equity interest in any
other entity other than in the case of the Borrower Representative, its equity
interest in the Borrowers as expressly permitted under this Agreement or the
other Loan Documents.

 

 

(h)

Litigation. It shall give prompt written notice to the Agent and the Lenders of
any litigation or governmental proceedings pending or, to its knowledge,
threatened against it which could reasonably be expected to have a Material
Adverse Effect.

 

 

(i)

Release Premium Report. In connection with a Property Release, it shall provide
a report (the “Release Premium Report”) to the Agent, the Calculation Agent and
each Directing Lender detailing the Release Premium, the Release Premium
Deduction, the Reduction Amount, the Property Value, the Property Borrowing Base
and the Borrowing Base, both before and after giving effect to such Property
Release, in form and substance reasonably acceptable to the Directing Lenders.

 

 

(j)

Estoppel Statement. After request by the Agent, it shall within ten (10)
Business Days furnish the Agent with a statement, duly acknowledged and
certified, setting forth (i) the Facility Amount Outstanding as of such date,
(ii) the Interest Rate, (iii) the date interest and/or principal were last paid,
(iv) any offsets or defenses to the payment of the Obligations evidence by this
Agreement, and (v) that the Note, this Agreement and the other Loan Documents
are valid, legal and binding obligations and have not been modified or if
modified, giving particulars of such modification.

 

(k)

Performance  and  Compliance  with  Loan  Documents. It will, at its expense,
timely and fully perform and comply with all provisions, covenants and

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other promises required to be observed by it under each Loan Document to which
it is a party. 

 

 

(l)

Inspection Rights. The Agent and the Lenders (and their respective agents or
professional advisors) shall have the right, from time to time, at their
discretion and upon reasonable prior notice to the relevant party, to visit and
inspect any of the offices of any Borrower, to discuss the affairs, finances and
condition of any Borrower with the officers thereof and independent accountants
therefor and to examine, and audit, during business hours or at such other times
as might be reasonable under applicable circumstances, any and all of the books,
records, financial statements, collection policies, legal and regulatory
compliance, operating and reporting procedures and information systems, their
respective directors, officers and employees, or other information and
information systems (including without limitation customer service and/or
whistleblower hotlines) of the Borrowers, or held by another for a Borrower or
on its behalf, concerning or otherwise affecting the Properties, the Loan
Documents, the Borrower Representative, Sponsor, Masterco, Holdco or any
Borrower.   Upon reasonable notice and during regular business hours, each
Borrower agrees to promptly provide the Agent and the Lenders (and their
respective agents or professional advisors) with access to, copies of and
extracts from any and all documents, records, agreements, instruments or
information (including, without limitation, any of the foregoing in computer
data banks and computer software systems) the Agent and the Lenders (and their
respective agents or professional advisors) may reasonably require in order to
conduct periodic due diligence relating to the Borrowers in connection with the
Properties and the Loan Documents. Each Borrower will make available to the
Agent and the Lenders (and their respective agents or professional advisors)
knowledgeable financial, accounting, legal and compliance officers for the
purpose of answering questions with respect to such Borrower and the Properties
and to assist in the Agent’s and the Diligence Agent’s diligence. In addition,
the Borrowers shall provide, or shall cause the Borrower Representative and each
Property Manager to provide, the Agent and the Diligence Agent (and their
respective agents or professional advisors) from time to time, at their
discretion and upon reasonable prior notice to the relevant party, with access
to such Person to visit and inspect the offices of such Person and to examine,
and audit, during business hours or at such other times as might be reasonable
under applicable circumstances, any and all of the books, records, financial
statements, collection policies, legal and regulatory compliance, operating and
reporting procedures and information systems, their respective directors,
officers and employees, or other information and information systems (including
without limitation customer service and/or whistleblower hotlines) of such
Persons, concerning or otherwise affecting the Properties. All costs and
expenses incurred by the Agent, the Lenders and the Diligence Agent (and their
respective agents or professional advisors) in connection with the due diligence
and other matters outlined in this Section shall be paid pursuant to Section
2.8(b) in an aggregate amount not to exceed

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$100,000 per year. Notwithstanding the foregoing, all inspections of Properties
shall be subject to the rights of tenants pursuant to Leases entered into in
accordance with the terms hereof. 

 

 

(m)

HOA Dues. It will pay, or cause to be paid, in full when due all home owners’
association dues and fees for each Property owned by it.

 

 

(n)

Conversion to Leased Property. It will exercise commercially reasonable efforts
to complete and pay for all repairs and make all capital expenditures necessary
to repair and renovate any Non-Leased Property owned in accordance with the
budget and timeframe submitted to the Agent in connection with the Advance made
in respect of such Non-Leased Property and that is necessary to render such
Property a Leased Properties.

 

 

(o)

Maintenance of  Properties. The Loan Parties shall keep and maintain (i) the
Financed Properties in a good, safe and habitable condition and repair, and from
time to time make, or cause to be made, all reasonably necessary repairs,
renewals, replacements, betterments and improvements thereto and (ii) all other
Properties, except the extent that the failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
in a good, safe and habitable condition and repair (ordinary wear and tear
excepted), and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto.

 

 

(p)

Maintenance of Documents Relating to Properties. The Borrower shall deliver to
the Data Site any new Lease entered into by a Borrower with respect to a
Financed Property. The Borrower Representative shall maintain at its offices the
original (or, if originals are not available, true, complete and correct copies
of) Purchase Agreements, Title Insurance Policies, deeds and other documents
that are part of each Document Package and shall provide access to the Agent and
the Lenders to review each such document in connection with any inspection
performed in accordance with Section 6.1(m), above or as otherwise reasonably
requested by the Agent or Diligence Agent hereunder.

 

 

(q)

Defense of Title. The Borrower warrants and will defend the right, title and
interest of Lender in and to all Collateral against all adverse claims and
demands of all Persons whomsoever.

 

 

(r)

Operation  of  Financed  Property. Each Loan Party shall cause the Financed
Properties to be operated by the applicable Property Manager, under the
supervision of the Master Property Manager, in accordance with the applicable
Eligible Property Management Agreement and the Master Property Management
Agreement. In the event that the Master Property Management Agreement expires or
is terminated (without limiting any obligation of the Loan Parties to obtain the
Directing Lenders’ consent to any termination or

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modification of the Master Property Management Agreement in accordance with the
terms and provisions of this Agreement), the Borrowers shall promptly enter into
a replacement Master Property Management Agreement with Master Property Manager
or another qualified Master Property Manager (which qualified Master Property
Manager shall be reasonably acceptable to the Directing Lenders), as applicable
and provide to the Agent an Assignment of Property Management Agreement with
respect to such replacement Master Property Management Agreement. Each Borrower
shall: (i) promptly perform and/or observe, in all material respects, all of the
covenants and agreements required to be performed and observed by it under the
Master Property Management Agreement and do all things necessary to preserve and
to keep unimpaired its material rights thereunder; (ii) promptly notify the
Agent of any material default under the Master Property Management Agreement of
which it is aware (and post a copy of such notice to a Data Site); and (iii)
enforce the performance and observance in all material respects of all of the
covenants and agreements required to be performed and/or observed by Master
Property Manager under the Master Property Management Agreement, in a
commercially reasonable manner. 

 

 

(s)

Property Managers. Each Loan Party shall use commercially reasonable efforts to
replace any resigning Property Manager prior to the effective date of such
Property Manager’s resignation. In the event a replacement Property Manager is
not appointed prior to such resignation, the Loan Parties shall take reasonable
steps to assume the obligations of such resigning Property Manager until a
replacement Property Manager is appointed.

 

 

(t)

Taxes and Other Charges. It shall pay, or shall cause to be paid, all Taxes and
Other Charges now or hereafter levied or assessed or imposed against any
Property or any part thereof as the same become due and payable. It shall
maintain receipts, or other evidence for the payment of the Taxes and the Other
Charges prior to the date the same shall become delinquent and shall furnish, or
cause to be furnished, copies thereof to the Agent promptly upon request. It
shall not suffer and shall promptly pay and discharge any Lien or charge
whatsoever which may be or become a Lien or charge against any Collateral other
than Permitted Liens. After prior written notice to the Agent, it may, at its
own expense, contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any Taxes or Other Charges, provided that (i)
no Default or Event of Default has occurred; (ii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which the Borrowers are subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
Applicable Laws; (iii) neither the Collateral nor any Property nor any part
thereof or interest therein will be in danger of being sold, forfeited,
terminated, cancelled or lost; (iv) it shall promptly upon final determination
thereof pay the amount of any such Taxes or Other

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Charges, together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
contested Taxes or Other Charges, from the released Property; (vi) appropriate
reserves have been established in accordance with GAAP and (vii) it shall
furnish such security as may be required in the proceeding, or as may be
requested by the Agent, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon. The Agent may apply
such security or part thereof held by it at any time when, in its judgment, the
validity or applicability of such Taxes or Other Charges are established or the
Property or any other of its asset (or part thereof or interest therein) shall
be in danger of being sold, forfeited, terminated, cancelled or lost or there
shall be any danger of the Lien granted hereunder being primed by any related
Lien. 

 

 

(u)

Anti-Money Laundering Laws. It will comply with all applicable Anti-Money
Laundering Laws and shall provide notice to the Agent and the Lenders, within
two (2) Business Days after it obtains knowledge of any Anti-Money Laundering
Law regulatory notice or action involving it.

 

 

(v)

OFAC. It will, prior to entering into a Lease with a Tenant, confirm that such
Tenant is not a Person that is the subject of any sanctions administered by
OFAC, including any person or entity listed on the OFAC List and not enter into
a Lease with a Tenant that is listed on either of such lists. Notwithstanding
the foregoing, if a Responsible Officer of any Loan Party determines or obtains
knowledge that a Tenant’s name appears on the OFAC List, such Loan Party shall
give notice of such determination to the Agent within two (2) Business Days and
shall take all legally required action with respect to any such Tenant.

 

Section 6.2    Insurance.

 

 

(a)

It shall obtain and maintain, or cause to be maintained, insurance for itself
and each Property (and its related improvements and personal property) providing
at least the following coverages:

 

(i)comprehensive “all risk” or special causes of loss form insurance, as is
available in the insurance market as of the Restatement Effective Date,
including, but not limited to, loss caused by any type of windstorm (including
hail) on the Properties (A) in an amount equal to one hundred percent (100%) of
the “full replacement cost”, which for purposes of this Agreement shall mean
actual replacement value of the Properties, subject to a loss limit equal to
$25,000,000 per occurrence; (B) containing an agreed amount endorsement with
respect to the improvements and personal property at any Property waiving all
co-insurance provisions or to be written on a no co-insurance form and (C)
providing for no deductible in excess of $25,000 (it being understood that, so
long as no Default or Event of Default has occurred and is continuing, (1)
Borrowers may utilize a $3,000,000 aggregate deductible stop loss subject to a
$25,000 per occurrence deductible and a $25,000 maintenance deductible following
the exhaustion of the aggregate, (2) the aggregate stop loss

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does not apply to any losses arising from named windstorm, earthquake or flood,
(3) the perils of named windstorm or flood shall be permitted to have a
deductible of five percent (5%) of the total insurable value of the Properties
(with a minimum deductible of $250,000 per occurrence for any and all
locations), (4) the peril of earth movement including but not limited to
earthquake shall be permitted to have a deductible of ten percent (10%) of the
total insurable value of the Properties (with a minimum deductible of $250,000
per occurrence for any and all locations) and (5) the peril of “other wind and
hail” shall be permitted to have a deductible of three percent (3%) of the
total  insurable value of the Properties (with a minimum deductible of $250,000
per occurrence for any and all locations)). In addition, it shall obtain (x) if
any portion of a Property is currently or at any time in the future located in a
federally designated “special flood hazard area”, flood hazard insurance in an
amount equal to the maximum amount of such insurance available under the
National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973
or the National Flood Insurance Reform Act of 1994, as each may be amended, plus
excess amounts as Agent shall require, (y) named windstorm insurance in an
amount equal to the Probable Maximum Loss (PML) or Scenario Expected Limit (SEL)
based upon a storm risk analysis for a 475 year event (such analysis to be
secured by the applicable Borrower utilizing a third-party firm qualified to
perform such storm risk analysis using the most current RMS software, or its
equivalent, to include consideration of storm surge, if applicable, and loss
amplification, at the expense of the applicable Borrower at least one time per
year or more frequently as may reasonably be requested by Agent and shared with
Agent, presented by the Properties located in areas prone to named storm
activity); and (z) earthquake insurance in an amount equal to the Probable
Maximum Loss (PML) or Scenario Expected Limit (SEL) based upon a seismic risk
analysis for a 475 year event (such analysis to be secured by the applicable
Borrower utilizing a third-party firm qualified to perform such seismic risk
analysis using the most current RMS software, or its equivalent, to include
consideration of loss amplification, at the expense of the applicable Borrower
at least one time per year or more frequently as may reasonably be requested by
Agent and shared with Agent, presented by the Properties located in areas prone
to seismic activity); provided, that the insurance pursuant to subclauses (x),
(y) and (z) hereof shall be on terms consistent with the comprehensive all risk
insurance policy required under this Section 6.2(a)(i); 

 

(ii)business income or rental loss insurance, written on an “Actual Loss
Sustained Basis” (A) with loss payable to the Agent for the benefit of the
Secured Parties; (B) covering all risks required to be covered by the insurance
provided for in Section 6.2(a)(i); (C) in an amount equal to one hundred percent
(100%) of the aggregate projected net income plus continuing expenses from the
operation of a Property for a period of at least twelve (12) months after the
date a Property is damaged or destroyed, in whole or in part, by fire or other
casualty (a “Casualty”); and (D) containing an extended period of indemnity
endorsement which provides that after the physical loss to the improvements and
personal property at a Property has been repaired, the continued loss of income
will be insured until such income either returns to the same level it was at
prior to the loss, or the expiration of thirty (30) days from the date that the
applicable Property is repaired or replaced and operations are resumed,
whichever first occurs, and notwithstanding that the policy may expire prior to
the end of such period. The amount of such business income or rental loss
insurance shall be determined prior to the Restatement Effective Date and at
least once each year

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thereafter based on Borrowers’ reasonable estimate of the net income from each
Property for the succeeding twelve (12) month period. All proceeds payable to
the Agent pursuant to this subsection shall be held by the Agent and shall be
applied in Agent’s sole discretion to (x) the Obligations or (y) Operating
Expenses approved by Agent in its sole discretion; provided, however, that
nothing herein contained shall be deemed to relieve Borrowers of their
obligation to pay the Obligations on the respective dates of payment provided
for in this Agreement and the other Loan Documents except to the extent such
amounts are actually paid out of the proceeds of such business income
insurance; 

 

(iii)at all times during which structural construction, repairs or renovations
are being made with respect to any Property, and only if each of the property
coverage form and the liability insurance coverage form does not otherwise
apply, (A) owner’s contingent or protective liability insurance,
otherwise  known as Owner  Contractor’s Protective  Liability (or  its
equivalent), covering claims not covered by or under the terms or provisions of
the above mentioned commercial general liability insurance policy and (B) the
insurance provided for in Section 6.2(a)(i), (ii) written in a so-called
builder’s risk completed value form including coverage for all insurable hard
and soft costs of construction (x) on a non-reporting basis, (y) against all
risks insured against pursuant to Section 6.2(a)(i), (z) including permission to
occupy su