Document:

efc14-505_ex47.htm

Exhibit 4.7

 

	 

 

 

 

 

SALE AND SERVICING AGREEMENT

 

Dated as of                      , 20__

 

among

 

                      HOME LOAN OWNER TRUST 20__-__ (Issuing Entity)

 

[                                    ]

 

(Depositor)

 

 

(Transferor and Master Servicer)

 

and

 

 

(Indenture Trustee)

 

                      HOME LOAN OWNER TRUST 20__-__

 

HOME LOAN ASSET BACKED NOTES

 

SERIES 20__-__

 

 

 

 

	 

 

  

  

  

TABLE OF CONTENTS

 

Page

 

	
ARTICLE I DEFINITIONS

	
1

	  	  	  
	
Section 1.01

	
Definitions

	
1

	
Section 1.02

	
Other Definitional Provisions

	
24

	  	  
	
ARTICLE II CONVEYANCE OF THE HOME LOANS

	
24

	  	  
	
Section 2.01

	
Conveyance of the Home Loans

	
24

	
Section 2.02

	
Ownership and Possession of Home Loan Files

	
25

	
Section 2.03

	
Books and Records

	
25

	
Section 2.04

	
Delivery of Home Loan Documents

	
26

	
Section 2.05

	
Acceptance by the Indenture Trustee of the Home Loans; Certain Substitutions; Certification by the Custodian

	
27

	  	  
	
ARTICLE III REPRESENTATIONS AND WARRANTIES

	
29

	  	  
	
Section 3.01

	
Representations and Warranties of the Depositor

	
29

	
Section 3.02

	
Representations and Warranties of the Transferor

	
31

	
Section 3.03

	
Representations, Warranties and Covenants of the Master Servicer

	
33

	
Section 3.04

	
Representations and Warranties Regarding Individual Home Loans

	
35

	
Section 3.05

	
Purchase and Substitution

	
42

	  	  
	
ARTICLE IV ADMINISTRATION AND SERVICING OF THE HOME LOANS

	
45

	  	  	  
	
Section 4.01

	
Appointment and Duties of the Master Servicer

	
45

	
Section 4.02

	
Interim Servicer

	
48

	
Section 4.03

	
Powers of Attorney

	
48

	
Section 4.04

	
Filing of Continuation Statements

	
48

	
Section 4.05

	
Reports to the Securities and Exchange Commission

	
48

	  	  
	
ARTICLE V ESTABLISHMENT OF TRUST ACCOUNTS

	
49

	  	  	  
	
Section 5.01

	
Collection Account and Note Payment Account

	
49

	
Section 5.01A

	
Claims Under Guaranty Policy

	
52

	
Section 5.02

	
Certificate Distribution Account

	
54

	
Section 5.03

	
Trust Accounts; Trust Account Property

	
55

	
Section 5.04

	
Allocation of Losses

	
58

	  	  
	
ARTICLE VI STATEMENTS AND REPORTS; WITHHOLDING

	
58

	  	  	  
	
Section 6.01

	
Statements

	
58

	
Section 6.02

	
Withholding

	
61

	  	  
	
ARTICLE VII GENERAL SERVICING PROCEDURES

	
61

	  	  	  
	
Section 7.01

	
Servicing Advances

	
61

	
Section 7.02

	
Release of Home Loan Files

	
61

 

  

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TABLE OF CONTENTS

 

 

(Continued)

 

Page

 

	
Section 7.03

	
Servicing Compensation

	
62

	
Section 7.04

	
Statement as to Compliance and Financial Statements

	
62

	
Section 7.05

	
Independent Public Accountants’ Servicing Report

	
63

	
Section 7.06

	
Reports to the Indenture Trustee; Collection Account Statements

	
64

	
Section 7.07

	
Financial Statements and Records of Servicer

	
64

	  	  
	
ARTICLE VIII (RESERVED)

	
64

	  	  
	
ARTICLE IX THE MASTER SERVICER

	
64

	  	  	  
	
Section 9.01

	
Indemnification; Third Party Claims

	
64

	
Section 9.02

	
Merger or Consolidation of the Master Servicer

	
65

	
Section 9.03

	
Limitation on Liability of the Master Servicer and Others

	
65

	
Section 9.04

	
Master Servicer Not to Resign; Assignment

	
66

	
Section 9.05

	
[Reserved]

	
66

	
Section 9.06

	
Relationship of Master Servicer to the Issuing Entity and the Indenture Trustee

	
66

	
Section 9.07

	
Master Servicer May Own Securities

	
66

	
Section 9.08

	
Right to Examine Master Servicer Records

	
67

	
Section 9.09

	
Financial Statements

	
67

	  	  
	
ARTICLE X DEFAULT

	
67

	  	  	  
	
Section 10.01

	
Master Servicer Events of Default

	
67

	
Section 10.02

	
[Reserved]

	
70

	
Section 10.03

	
Waiver of Defaults

	
70

	
Section 10.04

	
Accounting Upon Termination of Master Servicer

	
70

	  	  
	
ARTICLE XI TERMINATION

	
70

	  	  	  
	
Section 11.01

	
Termination

	
70

	
Section 11.02

	
Optional Termination

	
70

	
Section 11.03

	
Notice of Termination

	
71

	  	  
	
ARTICLE XII MISCELLANEOUS PROVISIONS

	
71

	  	  	  
	
Section 12.01

	
Acts of Noteholders

	
71

	
Section 12.02

	
Amendment

	
71

	
Section 12.03

	
Recordation of Agreement

	
72

	
Section 12.04

	
Duration of Agreement

	
72

	
Section 12.05

	
Governing Law

	
72

	
Section 12.06

	
Notices

	
73

	
Section 12.07

	
Severability of Provisions

	
73

	
Section 12.08

	
No Partnership

	
73

	
Section 12.09

	
Counterparts

	
74

 

 

  

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TABLE OF CONTENTS

 

 

(Continued)

 

Page

 

	
Section 12.10

	
Successors and Assigns

	
74

	
Section 12.11

	
Headings

	
74

	
Section 12.12

	
Actions of Securityholders

	
74

	
Section 12.13

	
Reports to Rating Agencies

	
74

	
Section 12.14

	
Holders of the Residual Interest Certificates

	
75

	
Section 12.15

	
[Grant of Noteholder Rights to Securities Insurer

	
75

	
Section 12.16

	
Third Party Beneficiary

	
76

	
Section 12.17

	
[Suspension and Termination of Securities Insurer’s Rights

	
76

 

EXHIBITS:

 

A – Home Loan Schedule

B – Form of Servicer’s Monthly Remittance Report to Indenture Trustee

C – Form of Loan Liquidation Report

D – Form of Master Servicer Renewal Notice

E – Form of Standard Servicing Terms

 

 

  

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This SALE AND SERVICING AGREEMENT is entered into effective as of                     , 20  , (this “Agreement”) among                        HOME LOAN OWNER TRUST 20__-__, a Delaware business trust (the “Issuing Entity” or the “Trust”), [                        ], a Delaware corporation, as Depositor (the “Depositor”),                                   , a                                (“                   “), as Transferor (in such capacity, the “Transferor”) and Master Servicer (in such capacity, the “Master Servicer”) and                               , a                        , as Indenture Trustee on behalf of the Noteholders (the “Indenture Trustee”).

 

W I T N E S S E T H:

 

In consideration of the mutual agreements herein contained, the parties hereto hereby agree as follows for the benefit of each of them and for the benefit of the holders of the Notes issued under the Indenture, the Residual Interest Certificates issued under the Owner Trust Agreement [and the Securities Insurer for issuing the Guaranty Policy]:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01   Definitions.  Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Article.  Unless otherwise specified, all calculations of interest described herein shall be made on the basis of the actual number of days elapsed during the related Interest Accrual Period and a 360-day year.

 

Accepted Servicing Procedures:  Servicing procedures that satisfy the following:  (a) meet at least the same standards the Servicer would follow in exercising reasonable care in servicing mortgage loans such as the Home Loans held for its own account; (b) comply with applicable state and federal law; (c) comply with the provisions of the related Debt Instruments and Mortgages; and (d) give due consideration to the accepted standards of practice of prudent loan servicers that service sub-prime mortgage loans comparable to the Home Loans, including the terms set forth in the Standard Servicing Terms set forth herein as Exhibit E, and the reliance placed by [the Securities Insurer,] the Master Servicer and Securityholders on the Servicer for the servicing of the Home Loans, but without regard to:

 

(a)           any relationship that the Servicer or any Affiliate of the Servicer may have with the related Obligor;

 

(b)           the ownership of any Notes or the Residual Interest Certificates by the Servicer or any Affiliate of the Servicer;

 

(c)           the Servicer’s obligation to make Servicing Advances; or the Servicer’s right to receive compensation for its services hereunder with respect to any particular transaction.

 

Accrual Period:  With respect to the Notes and any Payment Date, the period commencing on the Payment Date preceding the month in which the related Payment Date occurs and ending on the day immediately preceding the related Payment Date, except in the

 

  

  

  

case of the first Payment Date, which shall be the period commencing on the Closing Date and ending on the first Payment Date.

 

Administration Agreement:  The Administrative Agreement, dated as of                       , 20  , by and among the Issuing Entity,                         and                           .

 

Affiliate:  With respect to any specified Person, any other Person controlling, controlled by, or under common control with such specified Person.  For the purposes of this definition, the term “control”, when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have corresponding meanings.

 

Agreement:  This Sale and Servicing Agreement and all amendments hereof and supplements hereto.

 

Annual Loss Percentage:  With respect to any Payment Date, a fraction, expressed as a percentage, the numerator of which is the aggregate of all Realized Losses for the twelve preceding Due Periods ending on the last day of the preceding Due Period and the denominator of which is the Pool Principal Balance as of the first day of the twelfth preceding Due Period.

 

Assignment of Mortgage:  With respect to each Home Loan, an assignment, notice of transfer or equivalent instrument sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect or record the sale of the related Home Loan which assignment, notice of transfer or equivalent instrument may be in the form of one or more blanket assignments covering Mortgages secured by Mortgaged Properties located in the same county, if permitted by law.

 

Available Collection Amount:  With respect to any Payment Date, an amount without duplication equal to the sum of:  (i) all amounts received on the Home Loans or required to be paid by the Master Servicer, the Servicer or the Transferor during the related Due Period (exclusive of amounts not required to be deposited in the Collection Account pursuant to Section 5.01(b)(1) hereof and amounts permitted to be withdrawn by the Indenture Trustee from the Collection Account pursuant to Section 5.01(b)(3) hereof); (ii) upon exercise of optional redemption of the Notes and termination of the Issuing Entity pursuant to Section 11.02 hereof, the Termination Price; and (iii) the Purchase Price paid for any Home Loans purchased pursuant to Section 3.05 hereof prior to the related Determination Date and the Substitution Adjustment to be deposited in the Collection Account in connection with any substitution, in each case prior to the related Determination Date.

 

Available Payment Amount:  With respect to any Payment Date, the Available Collection Amount deposited into the Note Payment Account, minus the amount of any Trust Fees and Expenses required to be paid from the Note Payment Account pursuant to Section 5.01(c)(i) hereof.

 

Business Day:  Any day other than (a) a Saturday or Sunday, or (b) a day on which the banking institutions are authorized or obligated by law or executive order to be closed in a city at any of the following locations:  (i) The City of New York, [(ii) where the Securities Insurer is

 

  

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located,] (iii) where the Corporate Trust Office of the Indenture Trustee is located, (iv) where the servicing operations of the Servicer are located or (v) where the master servicing operations of the Master Servicer are located.

 

Call Option Date:  The first Payment Date on which the Pool Principal Balance has declined to ___% or less of the Original Pool Principal Balance.

 

Certificate Distribution Account:  The account designated as such, established and maintained pursuant to Section 5.02 hereof.

 

Certificate Register:  The register established pursuant to Section 3.4 of the Owner Trust Agreement.

 

Certificateholder:  A holder of a Residual Interest Certificate.

 

Closing Date:                           , 20__.

 

Code:  The Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder.

 

Collection Account:  The Eligible Account established and maintained by the Indenture Trustee pursuant to Section 5.01(a)(1) hereof.

 

Compensating Interest:  With respect to any Due Period, the amount of the shortfall in the interest portion of the Monthly Payments due on Home Loans that prepay in full or in part during the related month other than on the date the Monthly Payments were due.

 

Custodial Agreement:  The custodial agreement dated as of                           , 20   by and among the Depositor, the Issuing Entity,                         , as the Transferor and as the Master Servicer, and                         , a                           , as the custodian, providing for the retention of the Indenture Trustee’s Home Loan Files by such custodian on behalf of the Owner Trust.

 

Custodian:  Any custodian [acceptable to the Securities Insurer and] appointed by the Indenture Trustee pursuant to the Custodial Agreement, which custodian shall not be affiliated with the Master Servicer, the Transferor, the Servicer or the Depositor.                        ,                        shall be the initial Custodian pursuant to the terms of the Custodial Agreement.

 

Custodian’s Final Certification:  As defined in Section 1(c) of the Custodial Agreement.

 

Custodian’s Initial Certification:  As defined in Section 1(a) of the Custodial Agreement.

 

Custodian’s Updated Certification:  As defined in Section 1(c) of the Custodial Agreement.

 

Cut-Off Date:  The close of business on                           , 20  .

 

Debt Instrument:  The mortgage note evidencing the indebtedness of an Obligor under a Home Loan.

 

  

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Defaulted Home Loan:  With respect to any date of determination, any Home Loan, including, without limitation, any Liquidated Home Loan with respect to which any of the following has occurred as of the end of the preceding Due Period:  (a) foreclosure or similar proceedings have been commenced; or (b) the Servicer has determined in good faith and in accordance with the Accepted Servicing Procedures that such Home Loan is in default for a period in excess of 30 days or imminent default and that such default or imminent default involves the nonpayment of any Monthly Payment or a default which has or would have a material adverse affect on such Home Loan.

 

Defective Home Loan:  As defined in Section 3.05 hereof.

 

Deficiency Amount:  As of any Payment Date, the sum of (a) the amount by which (1) the Noteholders’ Interest Payment Amount for the Notes on such Payment Date less Relief Act Shortfalls for such Payment Date, exceeds (2) the Available Payment Amount for such Payment Date, and (b) the Noteholders’ Principal Deficiency Amount for such Payment Date.

 

Deleted Home Loan:  A Home Loan replaced or to be replaced by one or more than one Qualified Substitute Home Loan.

 

Delinquent:  A Home Loan is “Delinquent” if any Monthly Payment due thereon is not made by the Due Date.  A Home Loan shall be deemed to be “30 days Delinquent” if the delinquency remains uncured for two calendar months, but not three.  The determination of whether a Home Loan is “60 days Delinquent,” “90 days Delinquent”, etc., shall be made in like manner.

 

Delivery:  When used with respect to Trust Account Property means the delivery of such Trust Account Property in a manner that results in the transferee having either the status of a perfected security interest free of any adverse claims or a holder in due course in accordance with the following:  (a) in the case of “certificated securities” or “uncertificated securities” (in either case as defined in Article 8 of the UCC), the applicable provisions of Article 8 of the UCC, and in the case of “instruments”, “accounts” or “general intangibles” (in either case as defined in Article 9 of the UCC), the applicable provisions of Article 9 of the UCC; or (b) in the case of book-entry securities governed by Federal law, the applicable provisions of Federal law.

 

Denomination:  With respect to a Note, the portion of the Original Note Principal Balance represented by such Note as specified on the face thereof.

 

Depositor:  [                                 ], a [                                                                                                     ] [                   ], and any successor thereto.

 

Determination Date:  With respect to any Payment Date, the                 calendar day of the month in which such Payment Date occurs or if such day is not a Business Day, the immediately preceding Business Day.

 

Due Date:  With respect to a Monthly Payment, the day of the month on which such Monthly Payment is due from the Obligor on a Home Loan.

 

  

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Due Period:  With respect to any Determination Date or Payment Date, the      day of the calendar month preceding the month in which the relevant Determination Date or Payment Date occurs, and ending on the                day of the month in which the relevant Determination Date or Payment Date occurs.

 

Eligible Account:  At any time, an account that is either:

 

(a)           A segregated account or accounts maintained with an institution that satisfies the following:  (1) whose deposits are insured by the FDIC; (2) whose unsecured and uncollateralized long-term debt obligations of which are then rated by each Rating Agency in one of their two highest short-term ratings; and (3) which is either (i) a federal savings and loan association duly organized, validly existing and in good standing under the federal banking laws, (ii) an institution duly organized, validly existing and in good standing under the applicable banking laws of any state, (iii) a national banking association duly organized, validly existing and in good standing under the federal banking laws, (iv) a principal subsidiary of a bank holding company, or (v) an institution approved in writing by the Securities Insurer and each Rating Agency; or

 

(b)           A segregated trust account or accounts maintained with the corporate trust department of a federal or state chartered depository institution that satisfies the following:  (1) is acceptable to the Securities Insurer and each Rating Agency; (2) has capital and surplus of not less than $100,000,000; and (3) is acting in its fiduciary capacity.

 

Eligible Servicer:  A Person that (i) has demonstrated the ability professionally and competently to service a portfolio of mortgage loans similar to the Home Loans, (ii) has a net worth calculated in accordance with GAAP of at least $500,000, and (iii) is acceptable to the Securities Insurer and each Rating Agency.

 

Excess Spread:  With respect to any Payment Date, the excess of (a) the Available Payment Amount over (b) the Regular Payment Amount.

 

FDIC:  The Federal Deposit Insurance Corporation and any successor thereto.

 

FHLMC:  Freddie Mac (f/k/a Federal Home Loan Mortgage Corporation) and any successor thereto.

 

FNMA:  Fannie Mae (f/k/a Federal National Mortgage Association) and any successor thereto.

 

Foreclosed Loan:  As of any date of determination, any Home Loan that has been discharged as a result of (i) the completion of foreclosure or comparable proceedings; (ii) the Issuing Entity’s acceptance of the deed or other evidence of title to any related Mortgaged Property in lieu of foreclosure or other comparable proceeding; or (iii) the acquisition by the Issuing Entity of title to any related Mortgaged Property by operation of law.

 

  

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Foreclosure Property:  Any real property securing a Foreclosed Loan that has been acquired by the Servicer through foreclosure, deed in lieu of foreclosure or similar proceedings in respect of the related Home Loan.

 

GAAP:  Generally accepted accounting principles as in effect in the United States.

 

[Guaranty Insurance Premium:  The premium payable monthly that is specified in the Premium Letter.]

 

[Guaranty Policy:  That certain financial guaranty insurance policy for the Notes, number dated                     , 20  , and issued by the Securities Insurer to the Indenture Trustee and guaranteeing payment of any Insured Payment thereunder.]

 

Home Loan:  Any mortgage loan that is included in the Home Loan Pool.  As applicable, a Home Loan shall be deemed to refer to the related Debt Instrument, the Mortgage and any related Foreclosure Property, and shall include, among other items, all Monthly Payments with a Due Date after the Cut-Off Date.

 

Home Loan File:  As to each Home Loan, the Indenture Trustee’s Home Loan File and the Servicer’s Home Loan File.

 

Home Loan Interest Rate:  The annual rate of interest borne by a Debt Instrument, as shown on the related Home Loan Schedule.

 

Home Loan Pool:  The pool of Home Loans conveyed to the Issuing Entity pursuant to this Agreement on the Closing Date, together with the payments thereon and proceeds therefrom received after the applicable Cut-Off Date, as identified on the Home Loan Schedule annexed hereto as Exhibit A.

 

Home Loan Purchase Agreement:  The Home Loan Purchase Agreement between the Transferor and the Depositor, dated as of                      , 20  .

 

Home Loan Schedule:  The schedule of Home Loans set forth on Exhibit A attached hereto, as amended or supplemented from time to time specifying, with respect to each Home Loan, the following information:  (i) the Transferor’s Home Loan number; (ii) the Obligor’s name and the street address; (iii) the current principal balance; (iv) the original principal amount with respect to any Home Loan originated by the Transferor and the principal amount purchased by the Transferor with respect to a Home Loan acquired by the Transferor subsequent to its origination; (v) any related Loan-to-Value Ratio as of the date of the origination of the related Home Loan; (vi) the paid through date; (vii) whether the Home Loan pays interest at a fixed rate or an adjustable rate; (viii) the current Home Loan Interest Rate; (ix) if such Home Loan has an adjustable Home Loan Rate, (A) the initial rate reset date, (B) the frequency of the rate reset, (C) the initial periodic cap, (D) the subsequent periodic cap, (E) the margin, (F) the maximum lifetime rate and (G) the minimum lifetime rate; (x) the final maturity date under the Debt Instrument; (xi) the current Monthly Payment; (xii) the occupancy status of the Mortgaged Property, if any; and (xiii) the original term of the Debt Instrument.

 

  

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Indemnification and Contribution Agreement:  The Indemnification and Contribution Agreement dated as of                      , 20   by and among                           , the Depositor, [Barclays], and                      .

 

Indenture:  The Indenture, dated as of                      , 20  , between the Issuing Entity and the Indenture Trustee.

 

Indenture Trustee:                        , a                           , as Indenture Trustee under the Indenture and this Agreement acting on behalf of the Noteholders, or any successor indenture trustee under the Indenture or this Agreement.

 

Indenture Trustee Fee:  As to any Payment Date, the one-twelfth (1/12) of the Indenture Trustee Fee Rate times the Pool Principal Balance as of the opening of business on the first day of the Due Period immediately preceding the calendar month of such Payment Date (or, with respect to the first Payment Date, the Original Pool Principal Balance).

 

Indenture Trustee Fee Rate:      % (         basis points) per annum.

 

Indenture Trustee’s Home Loan File:  As defined in Section 2.04 hereof.

 

Independent:  When used with respect to any specified Person, such Person (i) is in fact independent of the Transferor, the Servicer, the Master Servicer, the Depositor, [the Securities Insurer,] the Indenture Trustee or any of their respective Affiliates, (ii) does not have any direct financial interest in, or any material indirect financial interest in, any of the Transferor, the Servicer, the Master Servicer, the Depositor, [the Securities Insurer,] the Indenture Trustee or any of their respective Affiliates and (iii) is not connected with any of the Transferor, the Servicer, the Depositor, [the Securities Insurer,] the Indenture Trustee or any of their respective Affiliates, as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, however, that a Person shall not fail to be Independent of the Transferor, the Servicer, the Depositor, [the Securities Insurer,] the Indenture Trustee or any of their respective Affiliates merely because such Person is the beneficial owner of 1% or less of any the securities issued by the Transferor, the Servicer, the Depositor or any of their respective Affiliates, as the case may be.

 

Independent Accountants:  A firm of nationally recognized certified public accountants that is in fact Independent.

 

[Insurance Agreement:  The Insurance and Indemnity Agreement, dated as of                    , 20  , among the Securities Insurer, the Transferor, the Master Servicer, the Depositor and the Issuing Entity.]

 

[Insured Payment:  With respect to the Guaranty Policy, as of any Payment Date (i) any Deficiency Amount and (ii) any Preference Amount.]

 

[Insured Securities:  Each of the Notes.]

 

Interest Reduction Amount:  As to any Payment Date, the sum of the Servicing Fee, the Master Servicer Fee, the Indenture Trustee Fee, [and the Guaranty Insurance Premium] payable

 

  

7

  

with respect to such Payment Date or the related Interest Accrual Period or Due Period as applicable, provided that on any Payment Date on or after the Payment Date occurring in                          20  , the Interest Reduction Amount shall increase by an amount equal to one-twelfth of the product of     % and the aggregate Principal Balance of the Home Loans as of the first day of the related Due Period.

 

Issuing Entity:                        Home Loan Owner Trust 20    -    , a Delaware business trust.

 

Liquidated Home Loan:  With respect to any date of determination, any Foreclosure Property or any Home Loan in respect of which a Monthly Payment is in excess of 30 days past due and as to which the Servicer has determined that all amounts which it reasonably and in good faith expects to collect have been recovered from or on account of such Home Loan or the related Foreclosure Property; provided, however, that in any event any Home Loan or the related Foreclosure Property shall be deemed uncollectible and therefore be a Liquidated Home Loan upon the earliest to occur of:  (i) the liquidation or disposition of such Home Loan or the related Foreclosure Property; or (ii) the determination by the Servicer in accordance with the Accepted Servicing Procedures that there is no reasonable likelihood of (A) recovering an economically significant amount attributable to the outstanding interest and principal owing on such Home Loan from either the related Mortgaged Property or the Obligor, in excess of (B) the costs and expenses to obtain such recovery (including without limitation any Servicing Advances), and in relation to (C) the expected timing of such recovery therefrom.

 

Liquidation Proceeds:  With respect to a Liquidated Home Loan, any cash amounts received in connection with the liquidation or disposition of such Liquidated Home Loan, whether through trustee’s sale, foreclosure sale or other disposition, any cash amounts received in connection with the management of the Foreclosure Properties from Foreclosed Home Loans and any other amounts required to be deposited in the Collection Account pursuant to Section 5.01(b) hereof, in each case other than Property Insurance Proceeds and Released Mortgaged Property Proceeds.

 

Loan-to-Value Ratio:  With respect to any Home Loan, the fraction, expressed as a percentage, (a) the numerator of which is the principal balance of such Home Loan at origination and (b) the denominator of which is the value as determined pursuant to the Transferor’s underwriting guidelines of the related Mortgaged Property at the time of origination of such Home Loan.

 

Majority Noteholders:  The holder or holders of in excess of 50% of the Note Principal Balance of all the Notes.

 

Majority Residual Interestholders:  The holder or holders of more than 50% of the Residual Interest.

 

Master Servicer:                            , a                       , as Master Servicer hereunder, or any successor Master Servicer hereunder.

 

Master Servicer Compensation:  The Master Servicer Fee and other amounts to which the Master Servicer is entitled pursuant to Section 4.01(a) hereof.

 

  

8

  

Master Servicer Event of Default:  As described in Section 10.01 hereof.

 

Master Servicer Fee:  As to each Home Loan (including any Home Loan that has been foreclosed and has become a Foreclosure Property, but excluding any Liquidated Home Loan), the fee payable monthly to the Master Servicer on each Payment Date, which shall equal the product of (a) one-twelfth (1/12) of % (___ basis points) and (b) the Principal Balance of such Home Loan as of the beginning of the immediately preceding Due Period.

 

Maturity Date:  With respect to the Notes, the Payment Date occurring in                       203  .

 

Monthly Advance:  As defined in Section 4.01(h) hereof.

 

Monthly Advance Reimbursement Amount:  With respect to any date of determination and with respect to the receipt of proceeds from or the liquidation of a Home Loan for which any Monthly Advances have been made, the amount of any such Monthly Advances that have not been reimbursed as of such date, including Nonrecoverable Monthly Advances.

 

Monthly Cut-Off Date:  The last day of any calendar month and, with respect to any Payment Date, the last day of the calendar month immediately preceding such Payment Date.

 

Monthly Payment:  The scheduled monthly payment of principal and/or interest required to be made by an Obligor on the related Home Loan, as set forth in the related Debt Instrument.

 

Mortgage:  The mortgage, deed of trust or other security instrument creating a lien in accordance with applicable law on a Mortgaged Property to secure the Debt Instrument which evidences a Home Loan.

 

Mortgaged Property:  The real property encumbered by the Mortgage that secures the Debt Instrument evidencing a Home Loan.

 

Mortgaged Property States:  Each state in which any Mortgaged Property securing a Home Loan is located as set forth in the Home Loan Schedule.

 

Net Interest Rate:  As to any Payment Date, the annualized percentage derived from the fraction (which shall not be greater than 1), the numerator of which is the positive difference, if any, between (x) the amount of all interest due on the Home Loans during the related Due Period and (y) the Interest Reduction Amount and the denominator of which is the aggregate principal amount of the Notes immediately prior to such Payment Date.

 

Net Liquidation Proceeds:  With respect to any Payment Date, Liquidation Proceeds received during the related Due Period, net of any reimbursements to the Servicer or the Master Servicer, as the case may be, made from such amounts for the following:  (i) any unreimbursed Servicing Compensation or Master Servicing Compensation; and (ii) Servicing Advances (including Nonrecoverable Servicing Advances) made, and (iii) Monthly Advances (including Nonrecoverable Monthly Advances) made and any other fees and expenses paid in connection with the foreclosure, conservation or liquidation of the related Liquidated Home Loan or Foreclosure Property.

 

  

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Net Loan Losses:  With respect to any Defaulted Home Loan that is subject to a modification, an amount equal to the portion of the Principal Balance, if any, released in connection with such modification.

 

Nonrecoverable Monthly Advance:  With respect to any Defaulted Home Loan or any Foreclosure Property, any Monthly Advance previously made and not reimbursed from late or other fee collections, Liquidation Proceeds, Property Insurance Proceeds or the Released Mortgaged Property Proceeds following the liquidation or disposition of such Defaulted Home Loan or Foreclosure Property, as evidenced by an Officer’s Certificate delivered to the Indenture Trustee [and the Securities Insurer].

 

Nonrecoverable Servicing Advance:  With respect to any Defaulted Home Loan or any Foreclosure Property, any Servicing Advance previously made and not reimbursed from late or other fee collections, Liquidation Proceeds, Property Insurance Proceeds or the Released Mortgaged Property Proceeds following the liquidation or disposition of such Defaulted Home Loan or Foreclosure Property, as evidenced by an Officer’s Certificate delivered to the Indenture Trustee, the Master Servicer [and the Securities Insurer].

 

Note:  Any of the Notes issued pursuant to the Indenture.

 

Note Factor:  With respect to any date of determination, the Note Principal Balance divided by the Original Note Principal Balance.

 

Note Interest Rate:  As to any Payment Date, a per annum rate equal to the lesser of (i) One-Month LIBOR plus     %, provided that on any Payment Date after the Call Option Date, this rate shall be One-Month LIBOR plus     %; and (ii) the Net Interest Rate.

 

Note Payment Account:  The Eligible Account established and maintained pursuant to Section 5.01(a)(2) hereof.

 

Note Principal Balance:  As of any date of determination, the Original Note Principal Balance reduced by the sum of all amounts previously distributed in respect of principal of such Notes on all previous Payment Dates.

 

Note Redemption Amount:  As of any date of determination, an amount without duplication equal to the sum of (i) the then outstanding Note Principal Balance of all Notes plus all accrued and unpaid interest thereon including any unpaid Noteholders Interest Carry-Forward Amount, (ii) any Trust Fees and Expenses due and unpaid on such date, (iii) any Servicing Advance Reimbursement Amount [and Monthly Advance Reimbursement Amount and (iv) any due and unpaid Securities Insurer Reimbursement Amount].

 

Noteholder:  A holder of a Note.

 

Noteholders’ Interest Carry-Forward Amount:  With respect to any Payment Date, (A) if on the immediately preceding Payment Date the Note Interest Rate was limited pursuant to clause (ii) of the definition of “Note Interest Rate,” the excess, if any, of the amount of interest that would have accrued on the Notes for the immediately preceding Payment Date pursuant to clause (i) of the definition thereof, over the amount of interest that was due on the Notes for the

 

  

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immediately preceding Payment Date pursuant to clause (ii) of the definition thereof, plus (ii) any outstanding Noteholders’ Interest Carry-Forward Amount remaining unpaid from prior Payment Dates, together with interest thereon at the Note Interest Rate (without regard to clause (ii) thereof).

 

Noteholders’ Interest Payment Amount:  With respect to any Payment Date, the sum of the Noteholders’ Monthly Interest Payment Amount for such Payment Date and the Noteholders’ Interest Shortfall Amount for such Payment Date.

 

Noteholders’ Interest Shortfall Amount:  With respect to any Payment Date, the excess, if any, of (A) the Noteholders’ Monthly Interest Payment Amount for the preceding Payment Date plus any outstanding Noteholders’ Interest Shortfall Amount on such preceding Payment Date, over (B) the amount in respect of interest that is actually deposited in the Note Payment Account on such preceding Payment Date.

 

Noteholders’ Monthly Interest Payment Amount:  With respect to each Payment Date and the Notes, the interest accrued during the related Accrual Period at the Note Interest Rate on the Note Principal Balance of the Notes immediately preceding such Payment Date (or, in the case of the first Payment Date, beginning on the Closing Date) after giving effect to all payments of principal to the holders of the Notes on or prior to such preceding Payment Date.

 

Noteholders’ Principal Deficiency Amount:  (1) With respect to any Payment Date (other than as set forth in (2) below), the excess, if any, of (a) the Note Principal Balance as of such Payment Date (after giving effect to all payments of principal on such Payment Date, but without giving effect to any payments in respect of this Noteholders’ Principal Deficiency Amount to be made on such Payment Date), over (b) the Pool Principal Balance as of the end of the related Due Period; and [(2) with respect to the Maturity Date of the Notes or any Payment Date upon which the Securities Insurer has exercised its option to accelerate the Notes under the Indenture, the excess of (a) the Note Principal Balance (after giving effect to all payments of principal on such Payment Date, but without giving effect to any payments in respect of this Noteholders’ Principal Deficiency Amount to be made on such Payment Date), over (b) the Available Payment Amount remaining after the payment of the Noteholders’ Interest Payment Amount and the Regular Principal Payment Amount for such Payment Date].

 

Obligor:  Each obligor on a Debt Instrument.

 

OC Trigger Increase Event:  With respect to any Payment Date, the occurrence of any of the following:  (1) the Six-Month Average Delinquency equals or exceeds     %; (2) the Annual Loss Percentage exceeds     %; or (3) cumulative Realized Losses as a percentage of the Original Pool Principal Balance, equal or exceed the following percentages based on the month of determination after the Closing Date:

 

 

 

  

11

  

 

 

	

Month of

Determination

	 	

Cumulative

Realized Losses

	
0 – 12                                   

	 	
__%

	
13 – 24                                   

	 	
__%

	
25 – 36                                   

	 	
__%

	
37 – 48                                   

	 	
__%

	
49+                                   

	 	
__%

 

Officer’s Certificate:  A certificate delivered to the Indenture Trustee, the Depositor, the Servicer, the Master Servicer, [the Securities Insurer,] the Transferor or the Issuing Entity signed by the President or a Vice President or an Assistant Vice President or other officer of the Indenture Trustee, the Depositor, the Servicer, the Master Servicer, [the Securities Insurer,] the Issuing Entity or the Transferor, in each case, as required by this Agreement.

 

One-Month LIBOR:  With respect to each Accrual Period, as determined by the Indenture Trustee on the second Business Day preceding the beginning of such Accrual Period, on the basis of the offered rates of the Reference Bank for one-month U.S. dollar deposits as such rates appear on the Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such LIBOR Determination Date:  As used in this paragraph, “business day” means a day on which banks are open for dealing in foreign currency and exchange in London and New York City; and “Reference Banks” means leading banks selected by the Indenture Trustee and engaged in transactions in Eurodollar deposits in the international Eurocurrency market (i) with an established place of business in London, (ii) whose quotations appear on the Telerate Screen Page 3750 on the LIBOR Determination Date in question, (iii) which have been designated as such by the Indenture Trustee and (iv) not controlling, controlled by or under common control with the Issuing Entity, the Depositor or the Transferor.

 

On each LIBOR Determination Date, One-Month LIBOR will be established by the Indenture Trustee as follows:

 

(a)           If on such LIBOR Determination Date two or more Reference Banks provide such offered quotations, One-Month LIBOR shall be the arithmetic mean (rounded upwards if necessary to the nearest whole multiple of 0.0625%) of such offered quotations.

 

(b)           If on such LIBOR Determination Date fewer than two Reference Banks provide such offered quotations, One-Month LIBOR shall be the greater of (x) One-Month LIBOR as determined on the previous LIBOR Determination Date and (y) the Reserve Interest Rate:  The “Reserve Interest Rate” shall be the rate per annum that the Indenture Trustee determines to be either (i) the arithmetic mean (rounded upwards if necessary to the nearest whole multiple of 0.0625%) of the one-month U.S. dollar lending rates which New York City banks selected by the Indenture Trustee are quoting on the relevant LIBOR Determination Date to the principal London offices of leading banks in the London interbank market or, in the event that the Indenture Trustee can determine no such arithmetic mean, (ii) the lowest one-month U.S. dollar lending rate which New York

 

  

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City banks selected by the Indenture Trustee are quoting on such LIBOR Determination Date to leading European banks.

 

The establishment of One-Month LIBOR on each LIBOR Determination Date by the Indenture Trustee and the Indenture Trustee’s calculation of the Note Interest Rate for the related Accrual Period shall (in the absence of manifest error) be final and binding.

 

Opinion of Counsel:  A written opinion of counsel issued by counsel (a) who is acceptable to the Master Servicer, the Indenture Trustee, the Rating Agencies [and the Securities Insurer], and (b) who may be employed or retained by the Transferor, the Servicer, the Master Servicer, the Depositor, [the Securities Insurer] or any of their respective Affiliates.

 

Original Note Principal Balance:  $                       .

 

Original Pool Principal Balance:  $                       , which is the Pool Principal Balance as of the Cut-Off Date.

 

Outstanding:  As defined in the Indenture.

 

[Overcollateralization Amount:  With respect to any Payment Date, the amount equal to the excess of (A) the Pool Principal Balance as of the end of the preceding Due Period, over (B) the Note Principal Balance of the Notes (after giving effect to the payments made on such date pursuant to Section 5.01(d) and (e) hereof).  As of the Closing Date, the initial Overcollateralization Amount attributable to such excess shall be equal to zero.]

 

[Overcollateralization Deficiency Amount:  With respect to any Payment Date, the excess, if any, of the Overcollateralization Target Amount over the Overcollateralization Amount prior to the application of Excess Spread on such Payment Date.]

 

[Overcollateralization Reduction Amount:  With respect to any Payment Date that occurs on or after the Stepdown Date, the lesser of (1) the excess, if any, of (a) the Overcollateralization Amount (assuming principal payments on the Notes on such Payment Date are equal to the Regular Principal Payment Amount without deduction of this Overcollateralization Reduction Amount), over (b) the Overcollateralization Target Amount, and (2) the Regular Principal Payment Amount (as determined without the deduction of this Overcollateralization Reduction Amount therefrom) on such Payment Date.  Prior to the occurrence of a Stepdown Date, the Overcollateralization Reduction Amount shall be zero.]

 

[Overcollateralization Target Amount:  With respect to any Payment Date, an amount determined as follows:

 

(a)           with respect to any Payment Date occurring prior to the Stepdown Date or on which the Step Down Test is not satisfied, an amount equal to     % of the Original Pool Principal Balance plus the Spread Squeeze Amount, if any;

 

(b)           with respect to any other Payment Date occurring on or after the Stepdown Date and on which the Step Down Test is satisfied, an amount equal to the greatest of (a) the Stepped Down Percentage of the Pool Principal Balance, (b)    % of the Original

 

  

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Pool Principal Balance; and the aggregate Principal Balance of the three largest Home Loans then outstanding, plus, in the case of (a), (b) and (c), the Spread Squeeze Amount, if any; and

 

(c)           with respect to any Payment Date occurring on which an OC Trigger Increase Event is occurring, notwithstanding any of the preceding clauses (1) through (2), an amount equal to 100% of the Pool Principal Balance; provided, however, with respect to any Payment Date, notwithstanding any of the preceding clauses (1) through (3), the Overcollateralization Target Amount shall not exceed the Note Principal Balance and may be modified by the Securities Insurer, but shall not be reduced below, (1) with respect to any Payment Date occurring prior to the Stepdown Date,     % of the Cut-Off Date Pool Balance or (2) with respect to any Payment Date occurring on or after the Stepdown Date, an amount equal to the greater of (a)     % of the Pool Principal Balance as of the end of the related Due Period, (b)     % of the Cut-Off Date Pool Principal Balance or (c) an amount equal to the aggregate Principal Balance of the                  largest Loans then outstanding.

 

Owner Trust Agreement:  The Owner Trust Agreement, dated as of                    , 20  , among the Depositor,                       , the Owner Trustee and                           , a national banking association.

 

Owner Trustee:                         , as owner trustee under the Owner Trust Agreement, and any successor owner trustee under the Owner Trust Agreement.

 

Ownership Interest:  As to any Note, any ownership or security interest in such Note, including any interest in such Note as the holder thereof and any other interest therein, whether direct or indirect, legal or beneficial, as owner or as pledgee.

 

Payment Date:  The      day of any month or if such   day is not a Business Day, the first Business Day immediately following such day, commencing in                       20  .

 

Payment Statement:  As defined in Section 6.01 hereof.

 

Percentage Interest:  As defined in the Owner Trust Agreement.

 

Permitted Investments:  Each of the following:

 

(a)           direct obligations of, and obligations fully guaranteed by, the United States of America, FHLMC, FNMA, the Federal Home Loan Banks or any agency or instrumentality of the United States of America the obligations of which are backed by the full faith and credit of the United States of America;

 

(b)           (i) demand and time deposits in, certificates of deposit of, bankers acceptances issued by, or federal funds sold by, any depository institution or trust company (including the Indenture Trustee or its agent acting in their respective commercial capacities) incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by federal or state authorities, so long as, at the time of such investment or contractual commitment

 

  

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providing for such investment, such depository institution or trust company or its ultimate parent has a short-term unsecured debt rating in                         highest available rating categories of                 and the                       available rating category of Moody’s and provided that each such investment has an original maturity of no more than 365 days, and (ii) any other demand or time deposit or deposit which is fully insured by the FDIC;

 

(c)           repurchase obligations with a term not to exceed 30 days with respect to any security described in clause (a) above and entered into with a depository institution or trust company (acting as principal) rated “A” or higher by S&P and rated “A2” or higher by Moody’s; provided, however, that collateral transferred pursuant to such repurchase obligation must be of the type described in clause (a) above and must (i) be valued daily at current market price plus accrued interest, (ii) pursuant to such valuation, be equal, at all times, to at least     % of the cash transferred by the Indenture Trustee in exchange for such collateral, and (iii) be delivered to the Indenture Trustee, or if the Indenture Trustee is supplying the collateral, an agent for the Indenture Trustee, in such a manner as to accomplish perfection of a security interest in the collateral by possession of certificated securities;

 

(d)           securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States of America or any state thereof which has a short-term unsecured debt rating in the highest available rating category of each of the Rating Agencies at the time of such investment;

 

(e)           commercial paper having an original maturity of less than 365 days and issued by an institution having a short-term unsecured debt rating in the highest available rating category of each of the Rating Agencies at the time of such investment;

 

(f)           a guaranteed investment contract approved by each of the Rating Agencies [and the Securities Insurer] and issued by an insurance company or other corporation having a short-term unsecured debt rating in the highest available rating category of each of the Rating Agencies at the time of such investment;

 

(g)           money market funds having one of the two highest available rating categories of S&P and the highest available rating category of Moody’s at the time of such investment, which invests only in other Permitted Investments, including any such money market funds for which the Master Servicer or the Indenture Trustee or any affiliate of the Master Servicer or the Indenture Trustee acts as the investment manager or advisor; provided that any such money market funds which provide for demand withdrawals shall be conclusively deemed to satisfy any maturity requirements for Permitted Investments set forth in this Agreement; and

 

(h)           any investment approved in writing by the Securities Insurer and for which the Ratings Confirmation have been obtained with respect to such investment.

 

The Indenture Trustee may purchase from or sell to itself or an affiliate, as principal or agent, the Permitted Investments listed above.  All Permitted Investments in a trust account under this Agreement shall be made in the name of the Indenture Trustee for the benefit of the

 

  

15

  

Securityholders and the Securities Insurer; provided, that the Master Servicer shall be entitled to all investment earnings from the Note Payment Account and the Collection Account as part of its Master Servicer Compensation hereunder.

 

Person:  Any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, estate, national banking association, unincorporated organization or government or any agency or political subdivision thereof.

 

Pool Principal Balance:  With respect to any date of determination, the aggregate Principal Balances of the Home Loans as of the end of the preceding Due Period; provided, however, that the Pool Principal Balance on any Payment Date on which the Termination Price is to be paid to Noteholders will be deemed to have been equal to zero as of such date.

 

Preference Amount:  Any amount previously distributed to the holder of an Insured Security that is recoverable and sought to be recovered as a voidable preference by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a final, non-appealable order of a court having jurisdiction.

 

[Premium Letter:  The letter agreement dated                       , 20   between the Securities Insurer and                         relating to the premiums due in respect of the Guaranty Policy.]

 

Principal Balance:  With respect to any Home Loan or related Foreclosure Property, (i) at the Cut-Off Date, the outstanding unpaid principal balance of the Home Loan as of the Cut-Off Date and (ii) with respect to any date of determination, the outstanding unpaid principal balance of the Home Loan as of the last day of the preceding Due Period (after giving effect to all payments received thereon or Monthly Advances in respect of principal made with respect thereto and the allocation of any Net Loan Losses with respect thereto which relates to such Due Period), without giving effect to amounts received in respect of such Home Loan or related Foreclosure Property after such Due Period; provided, however, that any Liquidated Home Loan shall have a Principal Balance of zero and with respect to the valuation of the Issuing Entity’s assets such Liquidated Home Loan shall not accrue interest thereon.

 

Principal Prepayment:  With respect to any Home Loan and any Due Period, any principal amount received on a Home Loan in excess of the principal of the Monthly Payment due in such Due Period and applied by the Servicer during such Due Period in reduction of the Principal Balance of the Home Loan.

 

Property Insurance Proceeds:  With respect to any Mortgaged Property, all amounts collected in respect of any related insurance policy that insures such Mortgaged Property or the related Obligor and not required to be applied to the restoration of any such Mortgaged Property or paid to the related Obligor (but excluding any Insured Payments).

 

Prospectus:  The Depositor’s final Prospectus dated                        , 20   as supplemented by the Prospectus Supplement.

 

Prospectus Supplement:  The Prospectus Supplement dated                        , 20   prepared by the Depositor and Transferor in connection with the issuance and sale of the Notes.

 

  

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Purchase Price:  With respect to a Defective Home Loan, the Principal Balance thereof as of the date of purchase, plus all accrued and unpaid interest on such Defective Home Loan from the Closing Date to but not including the date of repurchase computed at the applicable Home Loan Interest Rate, plus the amount of any unreimbursed Servicing Advances and Monthly Advances with respect to such Defective Home Loan (after deducting therefrom any amounts received in respect of such repurchased Defective Home Loan and being held in the Collection Account for future distribution to the extent such amounts represent recoveries of principal not yet applied to reduce the related Principal Balance or interest (net of the Servicing Fee, Master Servicer Fee, Indenture Trustee Fee [and Guaranty Insurance Premium] for such Defective Home Loan) for the period from and after the date of repurchase).

 

Qualified Substitute Home Loan:  A home loan or home loans substituted for a Deleted Home Loan pursuant to Section 3.05 hereof, which satisfies the following:  (i) in the case of a fixed rate Home Loan, has or have a fixed interest rate (a) no lower than the Home Loan Interest Rate for the Deleted Home Loan, and (b) not more than 2.0 percentage points greater than the Home Loan Interest Rate for the Deleted Home Loan; (ii) in the case of an adjustable rate Home Loan has or have an adjustable rate and (a) has a current interest rate no lower than the Home Loan Interest Rate for the Deleted Home Loan, (b) has a gross margin not more than percentage points different than the Home Loan Interest Rate for the Deleted Home Loan, (c) has a lifetime interest rate cap not more than percentage points lower than the Home Loan Interest Rate for the Deleted Home Loan, (d) has a lifetime interest rate floor not more than percentage points lower than the Home Loan Interest Rate for the Deleted Home Loan, and (e) pays interest based on the same index as the Deleted Home Loan; (iii) matures or mature not more than one year later than, and not more than one year earlier, than the maturity date of Deleted Home Loan, has a maturity date no later than                      , 20   and an original term to maturity of less than or equal to 30 years; (iv) has or have a principal balance or principal balances (after application of all payments received on or prior to the date of substitution) equal to or less than the Principal Balance or Balances of the Deleted Home Loan or Loans as of such date; (v) has or have a borrower or borrowers with a debt-to-income ratio no higher than the debt-to-income ratio of the Obligor with respect to the Deleted Loan; (vi) complies or comply as of the date of substitution with each representation and warranty set forth in Section 3.04 hereof and is or are not more than 89 days delinquent as of the date of substitution for such Deleted Home Loan or Loans; (vii) has or have a lien priority no lower than the Deleted Loan; and [(viii) is otherwise satisfactory to the Securities Insurer].  For purposes of determining whether multiple mortgage loans proposed to be substituted for one or more Deleted Home Loans pursuant to Section 3.05 hereof are in fact “Qualified Substitute Home Loans” as provided above, the criteria specified in clauses (i), (ii) and (iii) above may be considered on an aggregate or weighted average basis, rather than on a loan-by-loan basis (i.e., so long as the weighted average Home Loan Interest Rate of any loans proposed to be substituted is not less than the Home Loan Interest Rate for the designated Deleted Home Loan or Loans and not more than two percentage points greater than the Home Loan Interest Rate for the designated Deleted Home Loan or Loans, the requirements of clause (i) above would be deemed satisfied).

 

Rating Agencies:                            and                        .  If no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable person designated by the Master Servicer [and approved

 

  

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by the Securities Insurer], notice of which designation shall have been given to the Indenture Trustee[, the Securities Insurer], the Servicer and the Issuing Entity.

 

Ratings:  The ratings initially assigned to the Notes by the Rating Agencies, as evidenced by letters from the Rating Agencies.

 

Ratings Confirmation:  With respect to a contemplated action to be undertaken or performed pursuant to this Agreement, a written confirmation from each Rating Agency to the effect that such action will not result in or cause the downgrading, withdrawal or qualification of the rating that would otherwise be assigned by such Rating Agency to the Notes [without the benefit of the Guaranty Policy provided by the Securities Insurer].

 

Realized Losses:  As of any Payment Date, the sum of (1) with respect to all Home Loans that have become Liquidated Home Loans during the related Due Period, the difference between (a) the aggregate Principal Balances of such Liquidated Home Loans and accrued and unpaid interest thereon, minus (b) the aggregate Net Liquidation Proceeds collected during the related Due Period, and (2) with respect to all Defaulted Home Loans, the aggregate Net Loan Losses that occurred during the related Due Period.

 

Record Date:  With respect to each Payment Date, the close of business on the last Business Day of the month immediately preceding the month in which such Payment Date occurs.

 

Regular Payment Amount:  With respect to any Payment Date, the lesser of (a) the Available Payment Amount and (b) the sum of (i) the Noteholders’ Interest Payment Amount and (ii) the Regular Principal Payment Amount.

 

Regular Principal Payment Amount:  On each Payment Date, an amount equal to the lesser of:

 

(a)           the Note Principal Balance of the Notes immediately prior to such Payment Date; and

 

(b)           the sum of (i) each scheduled payment of principal collected by the Servicer or advanced by the Master Servicer in respect of the related Due Period, (ii) all Principal Prepayments applied by the Servicer during such related Due Period, (iii) the principal portion of all Net Liquidation Proceeds, Property Insurance Proceeds and Released Mortgaged Property Proceeds received during the related Due Period, (iv) that portion of the Purchase Price of any repurchased Home Loan which represents principal received prior to the related Determination Date, (v) the principal portion of any Substitution Adjustments required to be deposited in the Collection Account as of the related Determination Date and (vi) on the Payment Date on which the Issuing Entity is to be terminated pursuant to Section 11.02 hereof, the Termination Price (net of any accrued and unpaid interest, Trust Fees and Expenses due and unpaid on such date and Servicing Advance Reimbursement Amounts and Monthly Advance Reimbursement Amounts);

 

  

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provided, however, that if such Payment Date is on or after a Stepdown Date, then with respect to the payment of principal to the Noteholders the foregoing amount will be reduced (but not less than zero) by the Overcollateralization Reduction Amount, if any, for such Payment Date.

 

Released Mortgaged Property Proceeds:  With respect to any Home Loan, proceeds received by the Servicer in connection with (i) a taking of an entire Mortgaged Property by exercise of the power of eminent domain or condemnation or (ii) any release of part of the Mortgaged Property from the lien of the related Mortgage, whether by partial condemnation, sale or otherwise; which proceeds in either case are not released to the Obligor in accordance with applicable law, Accepted Servicing Procedures and this Agreement.

 

Relief Act Shortfall:  Any shortfall in an Obligor’s Monthly Payment caused by the application of the Servicemembers’ Civil Relief Act, as amended.

 

Residual Interest:  The meaning assigned thereto in the Owner Trust Agreement.

 

Residual Interest Certificate:  The meaning assigned thereto in the Owner Trust Agreement.

 

Responsible Officer:  When used with respect to the Indenture Trustee, any officer within the Corporate Trust Office of the Indenture Trustee, including any Vice President, Assistant Vice President, Secretary, Assistant Secretary or any other officer of the Indenture Trustee, customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.  When used with respect to the Issuing Entity, any officer in the Corporate Trust Administration Department of the Owner Trustee with direct responsibility for the administration of the Owner Trust Agreement and this Agreement on behalf of the Issuing Entity.  When used with respect to the Depositor, the Servicer, the Master Servicer, the Transferor, the Servicer or any Custodian, the President or any Vice President, Assistant Vice President, or any Secretary or Assistant Secretary.

 

Securities:  The Notes or Residual Interest Certificates.

 

[Securities Insurer:                          , as issuer of the Guaranty Policy, and its successors and assigns.]

 

[Securities Insurer Default:  The existence and continuation of any of the following:

 

(a)           The Securities Insurer fails to make a payment required under the Guaranty Policy in accordance with its terms;

 

(b)           The Securities Insurer (1) files any petition or commences any case or proceeding under any provision or chapter of the United States Bankruptcy Code or any other similar federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (2) makes a general assignment for the benefit of its creditors, or (3) has an order for relief entered against it under the United States Bankruptcy Code or any other similar federal or state law relating to insolvency,

 

  

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bankruptcy, rehabilitation, liquidation or reorganization which is final and nonappealable; or

 

(c)           A court of competent jurisdiction, the New York Department of Insurance or other competent regulatory authority enters a final and nonappealable order, judgment or decree (1) appointing a custodian, trustee, agent or receiver for the Securities Insurer or for all or any material portion of its property or (2) authorizing the taking of possession by a custodian, trustee, agent or receiver of the Securities Insurer (or the taking of possession of all or any material portion of the property of the Securities Insurer).]

 

[Securities Insurer Reimbursement Amount:  At any time, an amount owed to the Securities Insurer for any unreimbursed Insured Payments made under the Guaranty Policy and any other amounts then owing to the Securities Insurer under the Insurance Agreement, which have not previously been reimbursed, in each case together with interest thereon at the rate specified in the Insurance Agreement.]

 

Securityholder:  Any Noteholder or Certificateholder.

 

Series or Series 20  -  :                          Home Loan Asset Backed Notes, Series 20  -  .

 

[Servicer:  One or more servicers that enter into a Servicing Agreement with the Master Servicer, which initially will be                            , a                                                   for an interim period, and thereafter will be                           , a                    corporation.]

 

Servicer’s Home Loan Files:  In respect of each Home Loan, all documents customarily included in the Servicer’s loan file for the related type of Home Loan as specifically set forth in Section 4.4 of the Servicing Agreement.

 

Servicer’s Monthly Remittance Report:  A report prepared and computed by the Servicer in substantially the form of Exhibit B attached hereto.

 

Servicing Advance Reimbursement Amount:  With respect to any date of determination and with respect to the receipt of proceeds from or the liquidation of a Home Loan for which any Servicing Advances have been made, the amount of any such Servicing Advances that have not been reimbursed as of such date, including Nonrecoverable Servicing Advances.

 

Servicing Advances:  All reasonable, customary and necessary “out-of-pocket” costs and expenses advanced or paid by the Servicer with respect to the Home Loans in accordance with the performance by the Servicer of its servicing obligations under Section 6.6 of the Servicing Agreement, including, but not limited to, the costs and expenses for (i) the preservation, restoration and protection of any related Mortgaged Property, including without limitation advances in respect of real estate taxes and assessments, (ii) any collection, enforcement or judicial proceedings, including without limitation foreclosures, collections and liquidations, (iii) the conservation, management and sale or other disposition of a Foreclosure Property, and (iv) the satisfaction, cancellation, release or discharge of any Home Loan or any related Mortgage in accordance with this Agreement; provided, however, that such Servicing Advances (plus accrued interest thereon from the date of such advance to the date of reimbursement and at the rate equal to the Servicer’s cost of funds) are reimbursable to the Servicer out of the expected

 

  

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late collections, Liquidation Proceeds, Property Insurance Proceeds or Released Mortgaged Property Proceeds from the related Home Loan, Obligor or Mortgaged Property.

 

Servicing Agreement:  The servicing agreement, incorporating by reference the Agreement Regarding Standard Servicing Terms, each dated as of the date hereof each between                           owner of the Home Loans and as the Master Servicer and the Servicer, a form of which is attached hereto as Exhibit E.

 

Servicing Compensation:  The Servicing Fee and other amounts to which the Servicer is entitled pursuant to this Agreement and the Servicing Agreement.  On any Payment Date Servicing Compensation shall include any Servicing Fee Recovery Amounts due and unpaid, to the extent of Master Servicer Compensation available after allocations under Section 4.01(K) hereof on such Payment Date.

 

Servicing Fee:  As to each Home Loan (including any Home Loan that has been foreclosed and has become a Foreclosure Property, but excluding any Liquidated Home Loan), the fee payable monthly to the Servicer on each Payment Date, which shall equal the product of (a) one-twelfth (1/12) of ____% (____ basis points) and (b) the Principal Balance of such Home Loan as of the beginning of the immediately preceding Due Period (or as of the Cut-Off Date with respect to the first Due Period).

 

Servicing Fee Recovery Amount:  The amount of any Servicing Fee used to pay Compensating Interest for which the Servicer has not received reimbursement.

 

Servicing Officer:  Any officer of the Servicer or Master Servicer involved in, or responsible for, the administration and servicing of the Home Loans whose name and specimen signature appears on a list of servicing officers annexed to an Officer’s Certificate furnished by the Servicer or the Master Servicer, respectively, to [the Securities Insurer,] the Master Servicer and the Indenture Trustee, on behalf of the Securityholders [and the Securities Insurer], as such list may from time to time be amended.

 

Six-Month Average Delinquency:  With respect to any Payment Date, the average for such Payment Date and the five preceding Payment Dates of the respective ratios, expressed as a percentage, equal to (x) the aggregate Principal Balances of all Home Loans that are 90 days or more Delinquent (excluding any Liquidated Home Loans but including Foreclosed Loans and Home Loans in foreclosure proceedings) as of the end of each of the related Due Periods, divided by (y) the respective Pool Principal Balance as of the end of the applicable Due Period.

 

Spread Squeeze Amount:  For any Payment Date on or after the Payment Date in                     20  , an amount (not less than zero) equal to the product, obtained by multiplying (i)                   , (ii) the excess, if any, of     % (                            ) or     % (with respect to any Payment Date after the 24th Payment Date) over the Spread Squeeze Percentage for such Payment Date and (iii) the Original Pool Principal Balance.

 

Spread Squeeze Percentage:  With respect to any Payment Date, the percentage equivalent of a fraction, the numerator of which is the product of                        and the excess of the Excess Spread for such Payment Date [over the Securities Insurer Reimbursement Amount]

 

  

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for such Payment Date, and the denominator of which is the Pool Principal Balance for such Payment Date.

 

Stepdown Date:  The first Payment Date occurring on the later of:  (a) the          month after the month in which the Closing Date occurs; or (b) the Payment Date on which the Pool Principal Balance as of the end of the related Due Period has been reduced to an amount that is less than or equal to     % of the Original Pool Principal Balance.

 

Step Down Test:  As of any Payment Date, each of the following conditions:

 

(a)           the most recent six month rolling 90-day and over average delinquency rate (including foreclosures and REOs) is equal to or less than     % of the Pool Principal Balance.

 

(b)           the cumulative losses through the given month is equal to or less than the following percent of Principal Pool Original Balance:

 

	

Month

	 	

Cumulative Loss % of 

Original Pool Balance

	
24                                

	 	
__%

	
36                                

	 	
__%

	
48                                

	 	
__%

	
60+                                

	 	
__%

	
and                                

	 	
__%

 

(c)           the aggregate loss during the 12 months preceding a Payment Date, as a percentage of the Pool Principal Balance as of the first day of such 12 month period must be less than      basis points (    %).

 

Stepped Down Percentage:  For any Payment Date on or after the Step Down Date on which the Step Down Test is satisfied, a percentage equal to     %.

 

Substitution Adjustment:  As to any date on which a substitution occurs pursuant to Section 3.05 hereof, the amount, if any, by which (a) the sum of the aggregate principal balance (after application of principal payments received on or before the date of substitution) of any Qualified Substitute Home Loans as of the date of substitution, plus any accrued and unpaid interest thereon to the date of substitution, is less than (b) the sum of the Principal Balance, together with accrued and unpaid interest thereon to the date of substitution, of the related Deleted Home Loans.

 

Tangible Net Worth:  As defined in Section 10.01(a)(x) hereof.

 

Termination Price:  As of any date of determination, an amount without duplication equal to the greater of (A) the Note Redemption Amount and (B) the sum of (i) the Principal Balance of each Home Loan as of the applicable Monthly Cut-Off Date; (ii) all unpaid interest accrued on the Principal Balance of each such Home Loan at the related Home Loan Interest Rate to such Monthly Cut-Off Date; (iii) the aggregate fair market value of each Foreclosure Property on such

 

  

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Monthly Cut-Off Date, as determined by an appraiser acceptable to [the Indenture Trustee as of a date not more than 30 days prior to such Monthly Cut-Off Date; and (iv) any due but unpaid Securities Insurer Reimbursement Amount].

 

Transaction Documents:  This Agreement, the Servicing Agreement, the Home Loan Purchase Agreement, the Owner Trust Agreement, the Custodial Agreement, the Administration Agreement, the Indemnification and Contribution Agreement, [the Insurance and Indemnity Agreement, the Premium Letter and the Indemnification Agreement].

 

Transferor:                                   , in its capacity as the transferor hereunder.

 

Treasury Regulations:  Regulations, including proposed or temporary regulations, promulgated under the Code.  References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.

 

Trust:  The Issuing Entity.

 

Trust Account Property:  The Trust Accounts, all amounts and investments held from time to time in the Trust Accounts and all proceeds of the foregoing.

 

Trust Accounts:  The Note Payment Account, the Certificate Distribution Account, the Policy Payment Account or the Collection Account.

 

Trust Estate:  The assets subject to this Agreement, the Owner Trust Agreement and the Indenture and assigned and conveyed to the Trust, which assets consist of:  (i) such Home Loans as from time to time are subject to this Agreement as listed in the Home Loan Schedule, as the same may be amended or supplemented from time to time including by the removal of Deleted Home Loans and the addition of Qualified Substitute Home Loans, together with the Home Loan File relating thereto and all proceeds thereof, (ii) the Mortgages and security interests in Mortgaged Properties, (iii) all payments in respect of interest due with respect to the Home Loans on or after the Cut-Off Date and all payments in respect of principal received after the Cut-Off Date, (iv) such assets as from time to time are identified as Foreclosure Property, (v) such assets and funds as are from time to time are deposited in the Collection Account, the Note Payment Account and the Certificate Distribution Account, including amounts on deposit in such accounts which are invested in Permitted Investments, (vi) the Issuing Entity’s rights under all insurance policies with respect to the Home Loans and any Property Insurance Proceeds, (vii) Net Liquidation Proceeds and Released Mortgaged Property Proceeds, (viii) all right, title and interest of the Depositor in and to the obligations of the Transferor under the Home Loan Purchase Agreement pursuant to which the Depositor acquired the Home Loans from the Transferor, and (ix) all right, title and interest of the Depositor in and to the Servicing Agreement and all proceeds of any of the foregoing.

 

Trust Fees and Expenses:  As of each Payment Date, an amount equal to the Master Servicer Compensation (which includes the Master Servicer Fee), the Servicing Compensation (which includes the Servicing Fee), [Guaranty Insurance Premium] and the Indenture Trustee Fee and reimbursement of the reasonable expenses of the Indenture Trustee.

 

  

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UCC:  The Uniform Commercial Code as in effect in the State of New York.

 

Section 1.02   Other Definitional Provisions.  (a) Capitalized terms used herein and not otherwise defined herein have the meanings assigned to them in the Indenture and the Owner Trust Agreement.

 

(b)           All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

 

(c)           As used in this Agreement and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, shall have the respective meanings given to them under GAAP.  To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document shall control.

 

(d)           The words “hereof,” “herein,” “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Article, Section, Schedule and Exhibit references contained in this Agreement are references to Articles, Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation.”

 

(e)           The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine genders of such terms.

 

(f)           Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted successors and assigns.

 

ARTICLE II

 

CONVEYANCE OF THE HOME LOANS

 

Section 2.01   Conveyance of the Home Loans.

 

(a)           As of the Closing Date, in consideration of the Issuing Entity’s delivery of the Notes and the Residual Interest Certificates to the Depositor or its designee, upon the order of the Depositor, the Depositor, as of the Closing Date and concurrently with the execution and delivery hereof, does hereby sell, transfer, assign, set over and otherwise convey to the Issuing Entity, without recourse, but subject to the other terms and provisions of this Agreement, all of the right, title and interest of the Depositor in and to the Trust Estate.  The foregoing sale, transfer, assignment, set over and conveyance does not, and is not intended to, result in a creation

 

  

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or an assumption by the Issuing Entity of any obligation of the Depositor, the Transferor or any other person in connection with the Trust Estate or under any agreement or instrument relating thereto except as specifically set forth herein.

 

(b)           As of the Closing Date, the Issuing Entity acknowledges the conveyance to it of the Trust Estate, including all right, title and interest of the Depositor in and to the Trust Estate, receipt of which is hereby acknowledged by the Issuing Entity.  Concurrently with such delivery and in exchange therefor, the Issuing Entity has pledged the Trust Estate to the Indenture Trustee and executed the Notes, and the Indenture Trustee, pursuant to the written instructions of the Issuing Entity, has caused the Notes to be authenticated and delivered to the Depositor or its designee.  In addition, concurrently with such delivery and in exchange therefor, the Owner Trustee, pursuant to the instructions of the Depositor, has executed (not in its individual capacity, but solely as Owner Trustee on behalf of the Issuing Entity) and caused the Residual Interest Certificates to be authenticated and delivered to the Depositor or its designee, upon the order of the Depositor.

 

Section 2.02   Ownership and Possession of Home Loan Files.  Upon the issuance of the Notes, with respect to the Home Loans, the ownership of each Debt Instrument, the related Mortgage and the contents of the related Servicer’s Home Loan File and the Indenture Trustee’s Home Loan File shall be vested in the Trust and pledged to the Indenture Trustee for the benefit of the Noteholders, although possession of the Servicer’s Home Loan Files (other than items required to be maintained in the Indenture Trustee’s Home Loan Files) on behalf of and for the benefit of the Securityholders shall remain with the Servicer, and the Custodian shall take possession of the Indenture Trustee’s Home Loan Files as contemplated in Section 2.05 hereof.

 

Section 2.03   Books and Records.  The sale of each Home Loan shall be reflected on the balance sheets and other financial statements of the Depositor or the Transferor, as the case may be, as a sale of assets by the Depositor or the Transferor, as the case may be, under GAAP.  Each of the Servicer and the Custodian shall be responsible for maintaining, and shall maintain, a complete set of books and records for each Home Loan which shall be clearly marked to reflect the ownership of each Home Loan by the Owner Trustee and pledged to the Indenture Trustee for the benefit of the Noteholders.

 

It is the intention of the parties hereto that the transfers and assignments contemplated by this Agreement shall constitute a sale of the Home Loans and the other property specified in Section 2.01(a) hereof from the Depositor to the Trust.  If the assignment and transfer of the Home Loans and the other property specified in Section 2.01(a) hereof to the Trust pursuant to this Agreement or the conveyance of the Home Loans or any of such other property to the Trust is held or deemed not to be a sale or is held or deemed to be a pledge of security for a loan, the Depositor intends that the rights and obligations of the parties shall be established pursuant to the terms of this Agreement and that in such event, (i) the Depositor shall be deemed to have granted and does hereby grant to the Trust a first priority security interest in the entire right, title and interest of the Depositor in and to the Home Loans and all other property conveyed to the Trust pursuant to Section 2.01 hereof and all proceeds thereof and (ii) this Agreement shall constitute a security agreement under applicable law.  Within ten (10) days of the Closing Date, the Depositor shall cause to be filed UCC-1 financing statements naming the Trust as a “secured

 

  

25

  

party” and describing the Home Loans being sold by the Depositor to the Trust with the office of the Secretary of State of the state in which the Depositor is located.

 

Section 2.04   Delivery of Home Loan Documents.

 

(a)           With respect to each Home Loan, the Transferor and/or the Depositor, as applicable, shall, on the Closing Date, deliver or caused to be delivered to the Custodian, as the designated agent of the Indenture Trustee, each of the following documents (collectively, the “Indenture Trustee’s Home Loan Files”):

 

(i)           The original Debt Instrument, endorsed by the Transferor in blank or in the following form:  “Pay to the order of                         as Trustee without recourse” with all prior and intervening endorsements showing a complete chain or endorsement from origination of the Home Loan to the Transferor, or a lost note affidavit acceptable to the Indenture Trustee (not to exceed ___ Home Loans);

 

(ii)           The original Mortgage with evidence of recording thereon (or, if the original Mortgage has not been returned from the applicable public recording office or is not otherwise available, a copy of the Mortgage certified by a Responsible Officer of the Transferor or by the closing attorney or by an officer of the title insurer or agent of the title insurer which issued the related title insurance policy, if any, or commitment therefor to be a true and complete copy of the original Mortgage submitted for recording) and, if the Mortgage was executed pursuant to a power of attorney, the original power of attorney with evidence of recording thereon (or, if the original power of attorney has not been returned from the applicable public recording office or is not otherwise available, a copy of the power of attorney certified by a Responsible Officer of the Transferor or by the closing attorney or by an officer of the title insurer or agent of the title insurer which issued the related title insurance policy, if any, or commitment, thereof, to be a true and complete copy of the original power of attorney submitted for recording);

 

(iii)           The original executed Assignment of Mortgage, in blank or in recordable form to “                            , as Trustee.”  The Assignment of Mortgage may be a blanket assignment, to the extent such assignment is effective under applicable law, for Mortgages covering Mortgaged Properties situated within the same county.  If the Assignment of Mortgage is in blanket form, an Assignment of Mortgage need not be included in the individual Indenture Trustee’s Home Loan File;

 

(iv)           All original intervening assignments of mortgage, with evidence of recording thereon, showing a complete chain of assignment from origination of the Home Loan to the Transferor (or, if any such assignment of mortgage has not been returned from the applicable public recording office or is not otherwise available, a copy of such assignment of mortgage certified by a Responsible Officer of the Transferor or by the closing attorney or by an officer of the title insurer or agent of the title insurer which issued the related title insurance policy, if any, or commitment therefor to be a true and complete copy of the original assignment submitted for recording); provided that the chain of intervening recorded assignments shall not be required to match the chain of intervening endorsements of the Debt Instrument so long as the chain of intervening

 

  

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recorded assignments, if applicable, evidences one or more assignments of the Mortgage from the original mortgagee ultimately to the person who has executed the Assignment of Mortgage;

 

(v)           The original, or a copy certified by the Transferor to be a true and correct copy of the original, of each assumption, modification, written assurance or substitute agreement, if any; and

 

(vi)           [The original policy of title insurance, including riders and endorsements thereto, as if the policy has not yet been issued, a written commitment or interim binder or preliminary report of title issued by the title insurance or escrow company.]

 

(b)           With respect to each Home Loan, the Transferor and the Depositor shall, on the Closing Date, deliver or caused to be delivered to the Servicer, as the designated agent of the Indenture Trustee, the Servicer’s Home Loan Files.

 

(c)           The Indenture Trustee shall cause the Custodian to take and maintain continuous physical possession of the Indenture Trustee’s Home Loan Files in the State of                           and, in connection therewith, shall act solely as agent for the Noteholders in accordance with the terms hereof and not as agent for the Transferor or any other party.

 

(d)           Within 60 days after the Closing Date, the Transferor, at its own expense, shall record each Assignment of Mortgage (which may be a blanket assignment if permitted by applicable law) in the appropriate real property or other records; provided, however, that the Transferor need not record any such Assignment of Mortgage which relates to a Home Loan in any jurisdiction under the laws of which, as evidenced by an Opinion of Counsel delivered by the Transferor (at the Transferor’s expense) to the Indenture Trustee, the Securities Insurer and the Rating Agencies, that recordation of such Assignment of Mortgage is not necessary to protect the Indenture Trustee’s and the Noteholder’s interest in the related Home Loan.  With respect to any Assignment of Mortgage as to which the related recording information is unavailable within 60 days following the Closing Date, such Assignment of Mortgage shall be submitted for recording within 30 days after receipt of such information but in no event later than 360 days after the Closing Date.  The Indenture Trustee shall be required to retain a copy of each Assignment of Mortgage submitted for recording.  In the event that any such Assignment of Mortgage is lost or returned unrecorded because of a defect therein, the Transferor shall promptly prepare a substitute Assignment of Mortgage or cure such defect, as the case may be, and thereafter the Transferor shall be required to submit each such Assignment of Mortgage for recording.

 

(e)           All recordings required pursuant to this Section 2.04 shall be accomplished by and at the expense of the Transferor.

 

Section 2.05   Acceptance by the Indenture Trustee of the Home Loans; Certain Substitutions; Certification by the Custodian.

 

(a)           The Indenture Trustee agrees to cause the Custodian to execute and deliver on the Closing Date an acknowledgment of receipt of the Indenture Trustee’s Home Loan

 

  

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File for each Home Loan.  The Indenture Trustee will cause the Custodian to hold such documents and any amendments, replacements or supplements thereto, as well as any other assets included in the Trust Estate and delivered to the Custodian, in trust, upon and subject to the conditions set forth herein.  The Indenture Trustee agrees to cause the Custodian to review each Indenture Trustee’s Home Loan File within 45 days after the Closing Date (or, with respect to any Qualified Substitute Home Loan, within 45 days after the conveyance of the related Home Loan to the Trust) and to cause the Custodian to deliver to the Transferor, the Depositor, the Servicer, the Indenture Trustee, [and the Securities Insurer] a certification (the “Custodian’s Initial Certification”) to the effect that, as to each Home Loan listed in the Home Loan Schedule (other than any Home Loan paid in full or any Home Loan specifically identified as an exception to such certification), (i) all documents required to be delivered to the Indenture Trustee pursuant to this Agreement are in its possession or in the possession of the Custodian on its behalf (other than as expressly permitted by Section 2.04 hereof), (ii) such documents have been reviewed by the Custodian and have not been mutilated or damaged and appear regular on their face (handwritten additions, changes or corrections shall not constitute irregularities if initialed by the Obligor) and relate to such Home Loan, and (iii) based on the examination of the Custodian on behalf of the Indenture Trustee, and only as to the foregoing documents, the information set forth on the Home Loan Schedule accurately reflects the information set forth in the Indenture Trustee’s Home Loan File.  Neither the Indenture Trustee nor the Custodian shall be under any duty or obligation to make an independent examination of any documents contained in each Indenture Trustee’s Home Loan File beyond the review listed herein.  Neither the Custodian nor the Indenture Trustee makes any representations as to:  (i) the validity, legality, sufficiency, enforceability, execution by a responsible officer or genuineness of any of the documents contained in each Indenture Trustee’s Home Loan File of any of the Home Loans identified on the Home Loan Schedule relating to such Home Loans, or (ii) the collectibility, insurability, effectiveness or suitability of any such Home Loan, or (iii) the existence of any document specified in clause (v) of Section 1(b) of the Custodial Agreement.

 

(b)           The Servicer’s Home Loan Files shall be held in the custody of the Servicer for the benefit of, and as agent for, the Noteholders and the Indenture Trustee for so long as the Indenture continues in full force and effect; after the Indenture is terminated in accordance with the terms thereof, the Servicer’s Home Loan Files shall be held in the custody of the Servicer for the benefit of, and as agent for, the Certificateholders.  It is intended that, by the Servicer’s agreement pursuant to this Section 2.05(b), the Indenture Trustee shall be deemed to have possession of the Servicer’s Home Loan Files for purposes of Section 9-305 of the Uniform Commercial Code of the state in which such documents or instruments are located.  The Servicer shall promptly report to the Indenture Trustee any failure by it to hold the Servicer’s Home Loan File as herein provided and shall promptly take appropriate action to remedy any such failure.  In acting as custodian of such documents and instruments, the Servicer agrees not to assert any legal or beneficial ownership interest in the Home Loans or such documents or instruments.  The Servicer agrees to indemnify the Securityholders and the Indenture Trustee for any and all liabilities, obligations, losses, damages, payments, costs or expenses of any kind whatsoever which may be imposed on, incurred by or asserted against the Securityholders or the Indenture Trustee as the result of any act or omission by the Servicer relating to the maintenance and custody of such documents or instruments which have been delivered to the Servicer; provided, however, that the Servicer will not be liable for any portion of any such amount resulting from the negligence or misconduct of any Securityholders or the Indenture Trustee; and

 

  

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provided, further, that the Servicer will not be liable for any portion of any such amount resulting from the Servicer’s compliance with any instructions or directions consistent with this Agreement issued to the Servicer by the Indenture Trustee.  The Indenture Trustee shall have no duty to monitor or otherwise oversee the Servicer’s performance as custodian hereunder.

 

(c)           The Indenture Trustee agrees to cause the Custodian to review, for the benefit of the Securityholders, each Indenture Trustee’s Home Loan File within 60 days after the date the Custodian delivered a Custodian’s Initial Certification and to deliver to the Transferor, the Depositor, the Servicer, the Indenture Trustee [and the Securities Insurer] an updated certification (a “Custodian’s Updated Certification”), setting forth those exceptions listed on the Custodian’s Initial Certification which continue to exist on the date of such Custodian’s Updated Certification.  With respect to any Home Loans which are set forth as exceptions in the Custodian’s Updated Certification because recorded assignments or original or certified copies of Mortgages have not yet been delivered to the Custodian, the Transferor shall cure such exceptions by delivering such missing documents to the Custodian no later than 180 days after the Closing Date.

 

The Indenture Trustee agrees to cause the Custodian to review for the benefit of the Securityholders, each Indenture Trustee’s Home Loan File within 180 days after the date it delivered a Custodian’s Initial Certification and to deliver to the Transferor, the Depositor, the Servicer, the Indenture Trustee, [and the Securities Insurer] a final certification (a “Custodian’s Final Certification”), setting forth those exceptions listed on the Custodian’s Updated Certification which continue to exist on the date of such Custodian’s Final Certification.

 

In performing any such review, the Custodian may conclusively rely on the Transferor as to the purported genuineness of any such document and any signature thereon.  Neither the Indenture Trustee nor the Custodian shall have any responsibility for determining whether any document is valid and binding, whether the text of any assignment or endorsement is in proper or recordable form, whether any document has been recorded in accordance with the requirements of any applicable jurisdiction or whether a blanket assignment is permitted in any applicable jurisdiction.  If a material defect in a document constituting part of a Indenture Trustee’s Home Loan File is discovered, then the Depositor and Transferor shall comply with the cure, substitution and repurchase provisions of Section 3.05 hereof.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.01   Representations and Warranties of the Depositor.  The Depositor hereby represents and warrants to the Transferor, the Master Servicer, the Servicer, the Indenture Trustee, the Owner Trustee[, the Securities Insurer] and the Noteholders that as of the Closing Date:

 

(a)           The Depositor is a [                        ] duly organized, validly existing and in good standing under the laws of the State of [                     ] and has, and had at all relevant times, full power to own its property, to carry on its business as currently conducted, to enter into

 

  

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and perform its obligations under each Transaction Document to which the Depositor is a party and to create the Trust pursuant to the Owner Trust Agreement.

 

(b)           The execution and delivery of each Transaction Document to which the Depositor is a party by the Depositor and its performance of and compliance with the terms thereof will not violate the Depositor’s certificate or limited liability company agreement constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach or acceleration of, any material contract, agreement or other instrument to which the Depositor is a party or which may be applicable to the Depositor or any of its assets.

 

(c)           The Depositor has the full power and authority to enter into and consummate the transactions contemplated by each Transaction Document to which the Depositor is a party, has duly authorized the execution, delivery and performance of each Transaction Document to which the Depositor is a party and has duly executed and delivered each Transaction Document to which the Depositor is a party.  Each Transaction Document to which the Depositor is a party, assuming due authorization, execution and delivery by each other party thereto, constitutes a valid, legal and binding obligation of the Depositor, enforceable against it in accordance with the terms thereof, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

(d)           The Depositor is not in violation of, and the execution and delivery of any Transaction Document by the Depositor and its performance and compliance with the terms of any Transaction Document to which the Depositor is a party will not constitute a violation with respect to, any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction, which violation would materially and adversely affect the condition (financial or otherwise) or operations of the Depositor or its properties or materially and adversely affect the performance of its duties hereunder or thereunder.

 

(e)           There are no actions or proceedings against, or investigations of, the Depositor currently pending with regard to which the Depositor has received service of process and no action or proceeding against, or investigation of, the Depositor is, to the knowledge of the Depositor, threatened or otherwise pending before any court, administrative agency or other tribunal that (A) if determined adversely, would prohibit its entering into any Transaction Document to which the Depositor is a party or render the Notes invalid, (B) seek to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by any Transaction Document to which the Depositor is a party or (C) if determined adversely, would prohibit or materially and adversely affect the performance by the Depositor of its obligations under, or the validity or enforceability of, any Transaction Document to which the Depositor is a party or the Notes.

 

(f)           No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Depositor of, or compliance by the Depositor with, any Transaction Document to which the Depositor is a party

 

  

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or the Notes, or for the consummation of the transactions contemplated by any Transaction Document, except for such consents, approvals, authorizations and orders, if any, that have been obtained prior to the Closing Date.

 

(g)           The Depositor is solvent, is able to pay its debts as they become due and has capital sufficient to carry on its business and its obligations hereunder; it will not be rendered insolvent by its execution and delivery of any Transaction Document or its obligations hereunder; no petition of bankruptcy (or similar insolvency proceeding) has been filed by or against the Depositor prior to the date hereof.

 

(h)           The Depositor did not sell the Home Loans to the Issuing Entity, with any intent to hinder, delay or defraud any of its creditors; the Depositor will not be rendered insolvent as a result of the sale of the Home Loans to the Issuing Entity.

 

(i)           Immediately upon each transfer and assignment herein contemplated, the Depositor will have delivered to the Issuing Entity good title to, and the Issuing Entity will be the sole beneficial owner of, the Home Loans free and clear of any lien or options in favor of, or claims of, any other Person.

 

(j)           No Officers’ Certificate, statement, report or other document prepared by the Depositor and furnished or to be furnished by it pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of material fact.

 

(k)           The Depositor is not required to be registered as an “investment company” under the Investment Company Act of 1940, as amended.

 

Section 3.02   Representations and Warranties of the Transferor.  The Transferor hereby represents and warrants to the Servicer, the Indenture Trustee, the Owner Trustee[, the Securities Insurer], the Noteholders and the Depositor that as of the Closing Date (except as otherwise specifically provided herein):

 

(a)           The Transferor is                               duly organized, validly existing and in good standing under the laws of the State of and has and had at all relevant times, full corporate power to originate or purchase the Home Loans, to own its property, to carry on its business as presently conducted and to enter into and perform its obligations under each Transaction Document to which it is a party.

 

(b)           The execution and delivery of each Transaction Document to which it is a party by the Transferor and its performance of and compliance with the terms of each Transaction Document to which it is a party will not violate the Transferor’s certificate of incorporation or by-laws or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the breach or acceleration of, any material contract, agreement or other instrument to which the Transferor is a party or which may be applicable to the Transferor or any of its assets.

 

(c)           The Transferor has the full power and authority to enter into and consummate all transactions to be consummated by it, contemplated by each Transaction Document to which it is a party has duly authorized the execution, delivery and performance of

 

  

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each Transaction Document to which it is a party and has duly executed and delivered each Transaction Document to which it is a party.  Each Transaction Document to which the Transferor is a party, assuming due authorization, execution and delivery by the other parties thereto, constitutes a valid, legal and binding obligation of the Transferor, enforceable against it in accordance with the terms thereof, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

(d)           The Transferor is not in violation of, and the execution and delivery of any Transaction Documents by the Transferor and its performance and compliance with the terms thereof will not constitute a violation with respect to, any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction, which violation would materially and adversely affect the condition (financial or otherwise) or operations of the Transferor or its properties or materially and adversely affect the performance of its duties hereunder or thereunder.

 

(e)           There are no actions or proceedings against, or investigations of, the Transferor currently pending with regard to which the Transferor has received service of process and no action or proceeding against, or investigation of, the Transferor is, to the knowledge of the Transferor, threatened or otherwise pending, before any court, administrative agency or other tribunal that (A) if determined adversely, would prohibit its entering into this Agreement or render the Notes invalid, (B) seek to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by this Agreement or (C) if determined adversely, would prohibit or materially and adversely affect the sale of the Home Loans to the Depositor, the performance by the Transferor of its obligations under, or the validity or enforceability of, this Agreement or the Notes.

 

(f)           No consent, approval, authorization or order of any court or governmental agency or body is required for:  (1) the execution, delivery and performance by the Transferor of, or compliance by the Transferor with, this Agreement, (2) the issuance of the Notes, (3) the sale of the Home Loans under the Home Loan Purchase Agreement or (4) the consummation of the transactions required of it by this Agreement, except such as shall have been obtained before the Closing Date.

 

(g)           The Transferor acquired title to the Home Loans in good faith, without notice of any adverse claim.

 

(h)           The collection practices used by the Transferor with respect to the Home Loans have been, in all material respects, legal, proper, prudent and customary in the servicing of loans of the same type as the Home Loans;

 

(i)           No Officer’s Certificate, statement, report or other document prepared by the Transferor and furnished or to be furnished by it pursuant to any Transaction Document or in connection with the transactions contemplated hereby contains any untrue statement of material fact.

 

  

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(j)           The Transferor is solvent, is able to pay its debts as they become due and has capital sufficient to carry on its business and its obligations hereunder; it will not be rendered insolvent by the execution and delivery of any Transaction Document or by the performance of its obligations hereunder; no petition of bankruptcy (or similar insolvency proceeding) has been filed by or against the Transferor prior to the date hereof.

 

(k)           The Prospectus Supplement does not contain an untrue statement of a material fact and does not omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Transferor makes no statement with respect to:  (1) the statements set forth in the final paragraph of the cover of the Prospectus Supplement; and (2) statements set forth under the following captions:  (i) “SUMMARY – Tax Status”, “– ERISA Considerations”, and “– Legal Investment”; (ii) “DESCRIPTION OF CREDIT ENHANCEMENT”; (iii) “FEDERAL INCOME TAX CONSEQUENCES”; (iv) “ERISA CONSIDERATIONS”; (v) “LEGAL INVESTMENT MATTERS”; and (vi) “UNDERWRITING”.

 

(l)           The Transferor has transferred the Home Loans without any intent to hinder, delay or defraud any of its creditors.

 

(m)           The origination and collection practices used with respect to each Debt Instrument and Mortgage have been in all material respects legal, proper, prudent and customary in the mortgage origination and servicing business and in compliance with the Transferor’s underwriting criteria as described in the Prospectus Supplement.

 

(n)           Upon the receipt of each Indenture Trustee’s Home Loan File by the Custodian, the Indenture Trustee will have a first priority security interest in each Home Loan and such other items comprising the corpus of the Trust free and clear of any lien, charge or encumbrance other than the lien of the Indenture.

 

(o)           The transfer, assignment and conveyance of the Debt Instruments and the Mortgages by the Transferor pursuant to this Agreement are not subject to the bulk transfer laws or any similar statutory provisions in effect in any applicable jurisdiction.

 

It is understood and agreed that the representations and warranties set forth in this Section 3.02 shall survive delivery of the Indenture Trustee’s Home Loan Files to the Custodian and shall inure to the benefit of the Securityholders, the Securities Insurer, the Depositor, the Master Servicer, the Servicer, the Indenture Trustee, the Owner Trustee and the Trust.  Upon discovery by any of the Transferor, [the Securities Insurer,] the Depositor, the Master Servicer, the Servicer, the Indenture Trustee or the Owner Trustee of a breach of any of the foregoing representations and warranties that materially and adversely affects the value of any Home Loan, the party discovering such breach shall give prompt written notice (but in no event later than two Business Days following such discovery) to the other parties.  The obligations of the Transferor set forth in Section 3.05 hereof shall constitute the sole remedies available hereunder to the Securityholders, the Depositor, the Master Servicer, the Servicer, the Indenture Trustee or the Owner Trustee respecting a breach of the representations and warranties contained in this Section 3.02.

 

  

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Section 3.03    Representations, Warranties and Covenants of the Master Servicer.  The Master Servicer hereby represents and warrants to and covenants with the Owner Trustee, the Indenture Trustee, [the Securities Insurer,] the Noteholders, the Depositor, and the Transferor that as of the Closing Date or as of such date specifically provided herein:

 

(a)           The Master Servicer is a                             duly organized, validly existing, and in good standing under the laws of the state of                         and has all licenses necessary to carry on its business as now being conducted and is licensed, qualified and in good standing in each state where any property securing the Home Loans is located if the laws of such state require licensing or qualification in order to conduct business of the type conducted by the Master Servicer and perform its obligations as Master Servicer hereunder and under the Servicing Agreement; the Master Servicer has the power and authority to execute and deliver this Agreement and under the Servicing Agreement and to perform its obligations in accordance herewith and therewith; the execution, delivery and performance of this Agreement and under the Servicing Agreement (including all instruments of transfer to be delivered pursuant to this Agreement) by the Master Servicer and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action; this Agreement and under the Servicing Agreement evidences the valid, binding and enforceable obligation of the Master Servicer; and all requisite action has been taken by the Master Servicer to make this Agreement valid, binding and enforceable upon the Master Servicer in accordance with its terms, subject to and under the Servicing Agreement the effect of bankruptcy, insolvency, reorganization, moratorium and other, similar laws relating to or affecting creditor’s rights generally or the application of equitable principles in any proceeding, whether at law or in equity.

 

(b)           All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits authorizations, rights and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency, that are necessary in connection with the purchase and sale of the Notes and the execution and delivery by the Master Servicer of the documents to which it is a party, have been duly taken, given or obtained, as the case may be, are in full force and effect, are not subject to any pending proceedings or appeals (administrative, judicial or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and the other documents on the part of the Master Servicer and the performance by the Master Servicer of its obligations as Master Servicer under this Agreement and such other documents to which it is a party.

 

(c)           The consummation of the transaction contemplated by this Agreement and the Servicing Agreement will not result in the breach of any terms or provisions of the certificate of incorporation or by-laws of the Master Servicer or result in the breach of any term or provision of, or conflict with or constitute a default under or result in the acceleration for any obligation under, any material agreement, indenture or loan or credit agreement or other material instrument to which the Master Servicer or to its property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which the Master Servicer or its property is subject;

 

  

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(d)           Neither this Agreement nor any report or other document prepared by the Master Servicer and furnished or to be furnished pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of material fact; and the statements set forth in the Prospectus Supplement under the caption “THE MASTER SERVICER” do not contain an untrue statement of a material fact and do not omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(e)           There is no action, suit, proceeding or investigation pending or, to the best of the Master Servicer’s knowledge, threatened against the Master Servicer which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Master Servicer or in any material impairment of the right or ability of the Master Servicer to carry on its business substantially as now conducted, or in any material liability on the part of the Master Servicer or which would draw into question the validity of this Agreement, the Servicing Agreement or the Home Loans or of any action taken or to be taken in connection with the obligations of the Master Servicer contemplated herein, or which would be likely to impair the ability of the Master Servicer to perform under the terms of this Agreement or the Servicing Agreement.

 

(f)           The Master Servicer is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default might have consequences that would materially and adversely affect the condition (financial or other) or operations of the Master Servicer or its properties or might have consequences that would adversely affect its performance hereunder or under the Servicing Agreement.

 

It is understood and agreed that the representations, warranties and covenants set forth in this Section 3.03 shall survive delivery of the respective Home Loan Files to the Indenture Trustee and shall inure to the benefit of the Depositor, the Noteholders, the Owner Trustee[, the Securities Insurer], and the Indenture Trustee.  Upon discovery by any of the Transferor, the Depositor, the Indenture Trustee[, the Securities Insurer] or the Owner Trustee of a breach of any of the foregoing representations, warranties and covenants that materially and adversely affects the value of any Home Loan or the interests of such Person therein, the party discovering such breach shall give prompt written notice (but in no event later than      Business Days following such discovery) to the other parties.

 

Section 3.04   Representations and Warranties Regarding Individual Home Loans.  The Transferor hereby represents and warrants to the Depositor, the Issuing Entity, the Indenture Trustee, the Owner Trustee[, the Securities Insurer], the Master Servicer and the Noteholders, with respect to each Home Loan as of the Closing Date, except as otherwise expressly stated:

 

(a)           Home Loan Schedule.  The information with respect to each Home Loan set forth in the Home Loan Schedule is complete, true and correct as of the Cut-off-Date;

 

(b)           Delivery of Home Loan File.  All of the original or certified documentation required to be delivered by the Transferor on the Closing Date or as otherwise provided herein has or will be so delivered as provided; The Home Loan File contains each of

 

  

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the documents and instruments specified to be included therein duly executed and in due and proper form, and each such document or instrument is in a form generally acceptable to prudent home loan lenders that regularly originate or purchase mortgage loans comparable to the Home Loans for sale to prudent investors in the secondary market that invest in mortgage loans such as the Home Loans;

 

(c)           Nature of Property.  Each Mortgaged Property consists of a single parcel of residential real property, separately assessed for tax purposes, owned by the related Obligor in fee simple absolute and is improved by a one-to-four-family residential dwelling, which does not include condominiums, cooperatives, units in a planned urban development, town houses, or mobile homes and does not constitute other than real property under the state law.  No Mortgage Property is a manufactured housing unit, as defined in the Fannie Mae/Freddie Mac Seller-Servicer’s Guide;

 

(d)           Servicing.  Each Home Loan is being serviced by the Master Servicer;

 

(e)           Fixed Interest Rate.  The Debt Instruments related to approximately     % of the Home Loans bear a fixed Home Loan Interest Rate.  The Home Loan Interest Rate on the fixed rate Home Loans is not less than     % nor more than     % and as of the Cut-Off-Date, the weighted average Home Loan Interest Rate on the fixed rate Home Loans is approximately     %;

 

(f)           Adjustable Home Loan Interest Rates.  The Debt Instrument related to approximately     % of the Home Loans bear an adjustable Home Loan Interest Rate (“ARMs”).  All of the terms of the Mortgage pertaining to interest rate adjustments, payment adjustments and adjustments of the principal balance with respect to the ARMs are enforceable, all such adjustments have been correctly made in accordance with the terms of the related Debt Instrument and such adjustments will not affect the priority of the Mortgage lien; all ARMs have an index and there is no provision which would permit the Obligor to convert to a fixed interest rate; as of the Cut-off Date, the weighted average margin on the ARMs was approximately     %; the ARMs have a weighted average contractual maximum interest rate equal to approximately     %; the ARMs have a weighted average contractual minimum interest rate equal to approximately     %; approximately     % of the ARMS are 2/28’s and have a subsequent adjustment frequency of six months, approximately     % of the ARMs are 3/27’s and have a subsequent adjustment frequency of six months and the remaining approximately     % of the ARMs adjust every 6 months;

 

(g)           Priority of Lien.  Each Mortgage is a valid and subsisting first lien of record on a single parcel of real estate constituting the Mortgaged Property, subject in all cases to the exceptions to title set forth in the title insurance policy, with respect to the related Home Loan, which exceptions are generally acceptable to mortgage lending companies, and such other exceptions to which similar properties are commonly subject and which do not individually, or in the aggregate, materially and adversely affect the benefits of the security intended to be provided by such Mortgage;

 

(h)           Title.  Except with respect to liens released immediately prior to the transfer herein contemplated, immediately prior to the transfer and assignment herein contemplated the Transferor held good and indefeasible title to, and was the sole owner of, each

 

  

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Home Loan, subject to no liens, charges, mortgages, encumbrances or rights of others; and immediately upon the transfer and assignment herein contemplated, the Owner Trust will hold good and indefeasible title to, and be the sole owner of, each Home Loan, subject to no liens, charges, mortgages, encumbrances or rights of others;

 

(i)           Delinquencies.  As of the Cut-Off Date,                            Home Loans are 30 or more days delinquent;                            Home Loans are over 60 days delinquent; and                            Home Loan has ever been 89 or more days delinquent;

 

(j)           Tax Liens; Status of Property.  There is no delinquent tax or assessment lien on any Mortgaged Property, and each Mortgaged Property is free of material damage and is in good repair;

 

(k)           No Defenses.  The Home Loan is not subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of the Debt Instrument or the Mortgage, or the exercise of any right thereunder, render either the Debt Instrument or the Mortgage unenforceable in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto;

 

(l)           No Mechanic’s Lien.  There is no mechanic’s lien or claim for work, labor or material affecting any Mortgaged Property which is or may be a lien prior to, or equal to or on a parity with, the lien of such Mortgage except those which are insured against by the title insurance policy referred to in Section (n) below;

 

(m)           Origination in Compliance with Laws.  Each Home Loan complies, at the time it was made complied and at all times has complied in all material respects with applicable local, state and federal laws and regulations, including, without limitation, usury, truth-in-lending, real estate settlement procedure, consumer credit protection, equal credit opportunity, disclosure and recording laws and the Transferor has and shall maintain in its possession available for inspection and shall deliver upon demand, evidence of compliance with all such requirements; and, to the Transferor’s knowledge, no fraud or misrepresentation was committed by any person or entity in connection with the origination of each Home Loan;

 

(n)           Title Insurance.  With respect to each Home Loan, a written commitment for a lender’s title insurance policy, issued in standard American Land Title Association or California Land Title Association form, or other form acceptable in a particular jurisdiction, by a title insurance company authorized to transact business in the state in which the related Mortgaged Property is situated, together with a condominium endorsement, if applicable, in an amount at least equal to the original Principal Balance of such Home Loan insuring the mortgagee’s interest under the related Home Loan as the holder of a valid first mortgage lien of record on the real property described in the Mortgage, subject only to exceptions of the character referred to in paragraph (g) above, was effective on the date of the origination of such Home Loan, and, as of the Closing Date, such commitment will be valid and thereafter the policy issued pursuant to such commitment shall continue in full force and effect.  The originator is the sole named insured of such mortgage title insurance policy, the assignment to the Owner Trust, and the pledge to the Indenture Trustee, of the originator’s interest in such mortgage title

 

  

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insurance policy does not require the consent of or notification to the insurer, and such mortgage title insurance policy is in full force and effect and will be in full force and effect and inure to the benefit of the Owner Trust upon the consummation of the transactions contemplated by this Agreement.  No claims have been made under such mortgage title insurance policy and no prior holder of the related Mortgage, including the originator, has done, by act or omission, anything that would impair the coverage of such mortgage title insurance policy;

 

(o)           Hazard Insurance.  The improvements upon each Mortgaged Property are covered by a valid and existing hazard insurance policy with a generally acceptable carrier that provides for fire and extended coverage representing coverage not less than the least of (1) the outstanding principal balance of the related Mortgage, (2) the minimum amount required to compensate for damage or loss on a replacement cost basis or (3) the full insurable value of the Mortgaged Property.  All individual insurance policies (collectively, the “Hazard insurance policy”) are the valid and binding obligation of the insurer and contain a standard mortgagee clause naming the originator, its successors and assigns, as mortgagee.  All premiums thereon have been paid.  The Mortgage obligated the Obligor thereunder to maintain all such insurance at the Obligor’s cost and expense, and upon the Obligor’s failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at the Obligor’s cost and expense and to seek reimbursement therefor from the Obligor;

 

(p)           Flood Insurance.  If any Mortgaged Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, a flood insurance policy in a form meeting the requirements of the current guidelines of the Federal Insurance Administration is in effect with respect to such Mortgaged Property with a generally acceptable carrier in an amount representing coverage not less than the least of (A) the outstanding principal balance of the related Home Loan, (B) the minimum amount required to compensate for damage or loss on a replacement cost basis or (C) the maximum amount of insurance that is available under the National Flood Insurance Act of 1968, as amended; The Mortgage obligated the Obligor thereunder to maintain all such insurance at the Obligor’s cost and expense, and upon the Obligor’s failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at the Obligor’s cost and expense and to seek reimbursement therefor from the Obligor;

 

(q)           Enforceability.  Each Mortgage and Debt Instrument is genuine and is the legal, valid and binding obligation of the maker thereof and is enforceable in accordance with its terms, except only as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law), and all parties to each Home Loan had full legal capacity to execute all Home Loan documents and convey the estate therein purported to be conveyed and the Mortgage and Debt Instrument have been duly and properly executed by such parties; the Obligor is a natural person who is a party to the Debt Instrument and the Mortgage in an individual capacity and not in the capacity of a trustee or otherwise;

 

(r)           Notice to Insurers.  The Transferor has caused or will cause to be performed any and all acts required to be performed to preserve the rights and remedies of the Indenture Trustee in any insurance policies applicable to the Home Loans including, without

 

  

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limitation, any necessary notifications of insurers, assignments of policies or interests therein, and establishments of co-insured, joint loss payee and mortgagee rights in favor of the Indenture Trustee;

 

(s)           Geographic Concentration.  No more than approximately     % of the Original Pool Principal Balance is secured by Mortgaged Properties located within any single zip code area; no more than     % of the Original Pool Principal Balance is located within any single state, except as follows                         ,                         ,                         , or                         ;

 

(t)           Primary Residence.  At least approximately     % of the Original Pool Principal Balance is secured by Mortgaged Properties that are maintained by the Obligors as primary residence;

 

(u)           No Modification.  The terms of the Debt Instrument and the Mortgage have not been impaired, altered or modified in any material respect, except by a written instrument which has been recorded or is in the process of being recorded, if necessary, to protect the interest of the Securityholders and which has been or will be delivered to the Trustee or the Custodian.  The substance of any such alteration or modification is reflected on the Home Loan Schedule;

 

(v)           Recordation.  Each original Mortgage was recorded, and all subsequent assignments of the original Mortgage have been recorded in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of the Transferor (or, subject to Section 2.04(d) hereof, are in the process of being recorded);

 

(w)           No Waiver.  No instrument or release or waiver has been executed in connection with the Home Loan, and no Obligor has been released, in whole or in part;

 

(x)           Taxes and Insurance.  All taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which previously became due and owing have been paid, or an escrow of funds has been established in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable;

 

(y)           No Advances.  Except for payments in the nature of escrow payments, including without limitation, taxes and insurance payments, the Master Servicer has not advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Obligor, directly or indirectly, for the payment of any amount required by the Mortgage, except for interest accruing from the date of the Debt Instrument or date of disbursement of the Mortgage proceeds, whichever is greater, to the day which precedes by one month the Due Date of the first installment of principal and interest;

 

(z)           Condemnation; Damage.  There is no proceeding pending or threatened for the total or partial condemnation of the Mortgaged Property, nor is such a proceeding currently occurring.  No Mortgaged Property is damaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty, so as to affect adversely the value of the Mortgaged Property as security for the Home Loan or the use for which the premises were intended;

 

  

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(aa)           No Encroachments.  All of the improvements which were included for the purpose of determining the appraised value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of such property, and no improvements on adjoining properties encroach upon the Mortgaged Property;

 

(bb)           Property in Compliance with Law.  No improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning law or regulation.  All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities and the Mortgaged Property is lawfully occupied under applicable law;

 

(cc)           No Future Advances.  The proceeds of the Home Loan have been fully disbursed, and there is no obligation on the part of the mortgagee or any person to make, or option on the part of the mortgagor to request, future advances thereunder.  Any and all requirements as to completion of any on-site or off-site improvements and as to disbursements of any escrow funds therefor have been satisfied.  All costs, fees and expenses incurred in making or closing or recording the Home Loans were paid;

 

(dd)           Mortgage as Sole Security.  The related Debt Instrument is not and has not been secured by any collateral, pledged account or other security except the lien of the corresponding Mortgage;

 

(ee)           No-Buy-Down Loans.  No Home Loan was originated under a buydown plan;

 

(ff)           No Originator Payment Obligations.  There is no obligation on the part of the Master Servicer or any other party to make payments in addition to those made by the Obligor;

 

(gg)           Deeds of Trust.  With respect to each Mortgage constituting a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in such Mortgage, and no fees or expenses are or will become payable by the Noteholders or the Trust to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Obligor;

 

(hh)           No Shared Appreciation.  No Home Loan has a shared appreciation feature, or other contingent interest feature;

 

(ii)           State Qualification.  All parties which have had any interest in the Home Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (1) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (2)(A) organized under the laws of such state, or (B) qualified to do business in such state, or (C) federal savings and loans associations or national banks having principal offices in such state or (D) not doing business in such state so as to require qualification or licensing;

 

  

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(jj)           Due on Sale.  The Mortgage contains a customary provision for the acceleration of the payment of the unpaid principal balance of the Home Loan in the event the related Mortgage Property is sold without the prior consent of the mortgagee thereunder;

 

(kk)           Obligor Bankruptcy.  No Obligor is a debtor in any state or federal insolvency or bankruptcy proceeding;

 

(ll)           Enforcement Rights.  The related Mortgage contains customary and enforceable provisions which render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial foreclosure.  There is no homestead or other exemption available to the Mortgagor which would materially interfere with the right to sell the Mortgaged Property at a trustee’s sale or the right to foreclose upon the related Mortgage;

 

(mm)           No Default.  Other than delinquent Home Loans set forth in clause (i) of this Section 3.04, there is no default, breach, violation or event of acceleration existing under the Mortgage or the related Debt Instrument and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration; and neither the Master Servicer nor the Transferor has waived any default, breach, violation or event of acceleration;

 

(nn)           Deposit of Payments.  All amounts received on and after the Cut-Off Date with respect to the Home Loans to which the Transferor is not entitled to have been deposited into the Collection Account and are, as of the Closing Date, in the Collection Account;

 

(oo)           Underwriting.  All of the Home Loans were originated and underwritten by the Transferor, or purchased and re-underwritten by the Transferor, in each case in accordance with the underwriting criteria set forth in the Prospectus Supplement;

 

(pp)           Conformity to Prospectus.  Each Home Loan conforms, and all such Home Loans in the aggregate conform, to the description thereof set forth in the Prospectus and the Prospectus Supplement;

 

(qq)           No Adverse Selection.  The Home Loans were not selected by the Transferor for inclusion in the Trust on any basis intended to adversely affect the Trust;

 

(rr)           Appraisal.  A full appraisal on forms approved by FNMA or FHLMC was performed in connection with the origination of the related Home Loan.  Each appraisal meets guidelines that would be generally acceptable to prudent mortgage lenders that regularly originate or purchase mortgage loans comparable to the Home Loan for sale to prudent investors in the secondary market that invest in loans such as the Home Loans;

 

(ss)           Loan-To-Value.  As of the Cut-Off Date, no Home Loan had a Loan-To-Value Ratio in excess of 90.00% and as of the Cut-off Date, the weighted average Loan-To-Value Ratio is     %;

 

  

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(tt)           Environmental Matters.  To the best of the Transferor’s knowledge, (i) no Mortgaged Property was, as of the Cut-Off Date, (A) located within a one-mile radius of any site containing environmental or hazardous waste risks, and (B) in violation of any environmental law or regulation; and (ii) no Mortgaged Property contained any environmentally hazardous material, substance or waste;

 

(uu)           Status of Originators.  Each Home Loan was either (i) originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution which is supervised and examined by a federal or state authority, or by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act or (ii) such Home Loan was underwritten in accordance with standards established by the Transferor, using application forms and related credit documents approved by the Transferor; the Transferor approved each application and the related credit documents before a commitment by the originator was issued, and no such commitment was issued until the Transferor agreed to fund such Home Loan; the closing documents for such Home Loan were prepared on forms approved by the Transferor; and such Home Loan was actually funded by the Transferor and was purchased by the Transferor at closing or soon thereafter;

 

(vv)           Term.  No Home Loan has a remaining term in excess of 360 months; and

 

(ww)           Monthly Payments.  Each Debt Instrument will provide for a schedule of substantially equal Monthly Payments which are, if timely made, sufficient to fully amortize the principal balance of such Debt Instrument on or before its maturity date.

 

Section 3.05   Purchase and Substitution.

 

(a)           Repurchase and Substitution of Defective Home Loans.  It is understood and agreed that the representations and warranties set forth in Section 3.02 and Section 3.04 hereof shall survive the conveyance of the Home Loans from the Transferor to the Depositor and from the Depositor to the Issuing Entity, the pledge of the Home Loans to the Indenture Trustee and the delivery of the Notes to the Noteholders.  Upon discovery by the Depositor, the Master Servicer, the Servicer, the Transferor, any Custodian, the Issuing Entity, the Indenture Trustee, the Owner Trustee, the Securities Insurer or any Securityholder of a breach of any of the representations and warranties set forth in Section 3.02 and Section 3.04 which materially and adversely affects the value of the Home Loans or the interests of the Owner Trustee, the Securities Insurer or the Indenture Trustee in the related Home Loan (notwithstanding that such representation and warranty was made to the Transferor’s best knowledge), the party discovering such breach shall give prompt written notice to the others.  The Transferor shall, within 60 days of the earlier of its discovery or its receipt of notice of any breach of a representation or warranty, promptly cure such breach in all material respects.  If within 60 days after the earlier of the Transferor’s discovery of such breach or the Transferor’s receiving notice thereof such breach has not been remedied by the Transferor or waived by the Securities Insurer and such breach materially and adversely affects the interests of the Owner Trustee or the Indenture Trustee in, or the value of, the related Home Loan (the “Defective Home Loan”), the Transferor shall on or before the Determination Date next succeeding the end of such 60-day period either (i) remove such Defective Home Loan from the Trust (in which case it shall become a Deleted

 

  

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Home Loan) and substitute one or more Qualified Substitute Home Loans in the manner and subject to the conditions set forth in this Section 3.05 or (ii) purchase such Defective Home Loan at a purchase price equal to the Purchase Price by depositing such Purchase Price in the Collection Account.  The Transferor shall provide the Master Servicer, the Servicer, the Indenture Trustee, the Securities Insurer and the Owner Trustee with a certification of a Responsible Officer on the Determination Date next succeeding the end of such 60-day period indicating whether the Transferor is purchasing the Defective Home Loan or substituting in lieu of such Defective Home Loan a Qualified Substitute Home Loan.

 

Any substitution of Home Loans pursuant to this Section 3.05(a) shall be accompanied by payment by the Transferor of the Substitution Adjustment, if any, to be deposited in the Collection Account.  For purposes of calculating the Available Collection Amount for any Payment Date, amounts paid by the Transferor pursuant to this Section 3.05 in connection with the repurchase or substitution of any Defective Home Loan that are on deposit in the Collection Account as of the Determination Date for such Payment Date shall be deemed to have been paid during the related Due Period and shall be transferred to the Note Payment Account as part of the Available Collection Amount to be retained therein or transferred to the Certificate Distribution Account, if applicable, pursuant to Section 5.01(c) hereof.

 

In addition to such cure, repurchase or substitution obligation, the Transferor shall indemnify the Issuing Entity, the Depositor, the Master Servicer, the Indenture Trustee, the Securities Insurer and the Securityholders against any losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments, and other costs and expenses resulting from any claim, demand, defense or assertion based on or grounded upon, or resulting from, a breach by the Transferor of any of it representations and warranties contained in Section 3.02 and Section 3.04.

 

(b)           Repurchase of Defaulted Home Loans.  In addition to the preceding repurchase obligations, each of the Transferor and Master Servicer shall have the option, exercisable in its sole discretion at any time, to repurchase from the Owner Trustee any Home Loan that is delinquent 91 or more days (in which case such Home Loan shall become a Deleted Home Loan); provided, however, that any such repurchase of a Home Loan pursuant to this Subsection shall be conducted in the same manner as the repurchase of a Defective Home Loan pursuant to this Section 3.05.  If the Home Loans repurchased pursuant to this Subsection 3.05(b) are in excess of     % of the Original Pool Principal Balance, then such repurchases of Home Loans that exceed     % of the Original Pool Principal Balance may be affected only with the consent of the Securities Insurer and shall be included as Realized Losses for purposes of determining the Realized Losses under the OC Trigger Increase Event (but not with respect to the determination of a Master Servicer Event of Default under Section 10.01(a) hereof).

 

(c)           Substitutions.  As to any Deleted Home Loan for which the Transferor substitutes a Qualified Substitute Home Loan(s), the Transferor shall effect such substitution by delivering to the Indenture Trustee, the Master Servicer and Owner Trustee (i) a certification executed by a Responsible Officer of the Transferor to the effect that the Substitution Adjustment has been credited to the Collection Account and (ii) the documents constituting the Indenture Trustee’s Home Loan File for such Qualified Substitute Home Loan(s).

 

  

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In accordance with Section 5.01(b)(1) hereof, the Master Servicer shall cause the Servicer to deposit in the Collection Account all payments received in connection with such Qualified Substitute Home Loan(s) after the date of such substitution.  Monthly Payments received with respect to Qualified Substitute Home Loans on or before the date of substitution will be retained by the Transferor.  The Indenture Trustee will be entitled to all payments received on the Deleted Home Loan on or before the date of substitution and the Transferor shall thereafter be entitled to retain all amounts subsequently received in respect of such Deleted Home Loan.  The Transferor shall give written notice to the Owner Trustee, the Master Servicer, the Servicer (if the Transferor is not then acting as such), the Indenture Trustee[, the Securities Insurer] and Owner Trustee that such substitution has taken place and the Servicer shall amend the Home Loan Schedule pursuant to Subsection (g) below.  Upon such substitution, such Qualified Substitute Home Loan(s) shall be subject to the terms of this Agreement in all respects, and the Transferor shall be deemed to have made with respect to such Qualified Substitute Home Loan(s), as of the date of substitution, the covenants, representations and warranties set forth in Section 3.02 and Section 3.04 hereof.  On the date of such substitution, the Transferor will deposit into the Collection Account an amount equal to the related Substitution Adjustment, if any.

 

(d)           Reassignment of Defective Home Loans.  With respect to all Defective Home Loans or other Home Loans repurchased by the Transferor pursuant to this Agreement, upon the deposit of the Purchase Price therefor into the Collection Account, the Owner Trustee shall assign to the Transferor, without recourse, representation or warranty, all the Owner Trustee’s right, title and interest in and to such Defective Home Loans or other Home Loans, which right, title and interest were conveyed to the Owner Trustee pursuant to the Home Loan Purchase Agreement.  The Owner Trustee shall take any actions as shall be reasonably requested by the Transferor to effect the repurchase of any such Home Loans.

 

(e)           Sole Remedies Against Transferor.  It is understood and agreed that the obligations of the Transferor to cure or to repurchase or substitute any such Home Loan, and to indemnify for any breach of any representation or warranty with respect thereto, pursuant to this Section 3.05 shall constitute the sole remedies against it with respect to such breach of the foregoing representations or warranties or the existence of the foregoing conditions.  Any cause of action against the Transferor relating to or arising out of a defect in an Indenture Trustee’s Home Loan File as or against the Transferor relating to or arising out of a breach of any representations and warranties made in Section 3.02 and Section 3.04 hereof shall accrue as to any Home Loan upon (i) discovery of such defect or breach by any party and notice thereof to the Transferor or notice thereof by the Transferor to the Indenture Trustee, (ii) failure by the Transferor to cure such defect or breach or purchase or substitute such Home Loan as specified above, and (iii) demand upon the Transferor, as applicable, by the Owner Trustee for all amounts payable in respect of such Home Loan.

 

(f)           No Duty to Investigate.  Neither [the Securities Insurer,] the Master Servicer, the Owner Trustee nor the Indenture Trustee shall have any duty to conduct any affirmative investigation other than as specifically set forth in this Agreement as to the occurrence of any condition requiring the repurchase or substitution of any Home Loan pursuant to this Section or the eligibility of any Home Loan for purposes of this Agreement.

 

  

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(g)           Amendment of Home Loan Schedule.  In connection with a repurchase or substitution of any Home Loan pursuant to this Section 3.05, the Master Servicer shall cause the Servicer shall amend the Home Loan Schedule to reflect (i) the removal of the applicable Deleted Home Loan from the terms of this Agreement, and (ii) if applicable, the substitution of the applicable Qualified Substitute Home Loan.  In connection with its monthly reporting here under, the Master Servicer shall cause the Servicer shall deliver a copy of the amended Home Loan Schedule to [the Securities Insurer,] the Master Servicer, the Indenture Trustee, and the Transferor.

 

ARTICLE IV

 

ADMINISTRATION AND SERVICING OF THE HOME LOANS

 

Section 4.01   Appointment and Duties of the Master Servicer.

 

(a)           Appointment and Compensation of Master Servicer.  The Issuing Entity, the Securityholders and the Indenture Trustee hereby assign and appoint the Master Servicer to act as the Master Servicer for the Home Loans (including all of the duties, obligations and rights of the Master Servicer) under this Agreement.  The Master Servicer hereby accepts its appointment as the Master Servicer hereunder.  The Master Servicer hereby undertakes to enter into the Servicing Agreement with an Eligible Servicer.  The Master Servicer may remove and replace the Servicer under the terms of the Servicing Agreement, provided that the Securities Insurer consents to such termination and such Servicer is replaced with an Eligible Servicer.  The Master Servicer shall not consent to any amendment or modification of any Servicing Agreement [without the consent of the Securities Insurer].  The Master Servicer shall not consent to any material amendment, modification or waiver of the servicing provisions of this Agreement, without the consent of [the Securities Insurer and] the Indenture Trustee.  The Issuing Entity, the Securityholders and the Indenture Trustee hereby assign and appoint the Master Servicer to act on behalf of the Issuing Entity as “Owner” under the Servicing Agreement.

 

As compensation for its services hereunder, the Master Servicer shall be entitled to receive from the Note Payment Account the Master Servicer Fee.  In addition to the Master Servicer Fee, additional compensation attributable to prepayment penalties, 20% of any late charges collected on the Home Loans, investment earnings from the Collection Account and the Note Payment Account shall be part of the Master Servicer Compensation payable to the Master Servicer pursuant to Section 5.01(c) hereof.  Master Servicing Compensation shall be reduced by the amount of any due and unpaid Servicing Fee Recovery Amounts.  The Master Servicer shall be required to pay all expenses incurred by it in connection with its Master Servicer duties and activities hereunder and shall not be entitled to reimbursement therefor except as specifically provided for herein.

 

(b)           Master Servicer Assumes Servicing Responsibility.  If a Servicer Termination Event occurs, then the Master Servicer shall be obligated (1) if instructed by the Securities Insurer, to select a successor Servicer, [that is acceptable to the Securities Insurer,] or (2) to act as the Servicer of the Home Loans hereunder [unless the Securities Insurer directs otherwise].

 

  

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(c)           Monitoring of Servicing.  The Master Servicer shall:  (i) review the servicing reports and loan level information prepared by the Servicer (1) to determine whether such reports are inaccurate or incomplete, in any material respect, and (2) to ascertain that the Servicer is in compliance, in all material respects, with its duties and obligations with respect to such reports under this Agreement; (ii) otherwise monitor the performance by the Servicer of its duties and obligations hereunder and notify the Indenture Trustee [and the Securities Insurer] of any Servicer Event of Default of which it has received notice or has actual knowledge; and (iii) be obligated to verify that the Servicer has deposited all payments and proceeds required to be deposited into the Collection Account pursuant to Section 5.01(b)(1) hereof.  On the 19th calendar day of each month (or the next Business Day, if the 19th is not a Business Day), the Master Servicer shall provide the Indenture Trustee with an Officer’s Certificate to the effect that the Master Servicer has performed its obligations under this Subsection 4.01(c) with respect to the servicing information for such month.

 

(d)           Successor Servicer.  The Master Servicer agrees that it shall at all times be prepared [(and shall take all steps reasonably required by the Securities Insurer to ensure such preparation)], to perform the duties and obligations of the Servicer and become the successor servicer, if the Servicer fails to perform its duties and obligations hereunder.

 

(e)           Servicer Termination or Non-Renewal.  At the direction of [the Securities Insurer, or] the Master Servicer [(with the prior consent of the Securities Insurer)] or the Majority Noteholders [(with the prior consent of the Securities Insurer)], the Master Servicer, on behalf of the Issuing Entity and the Securityholders, shall terminate the Servicer upon the occurrence and continuance of a Servicer Event of Default.  [The Securities Insurer will instruct the Master Servicer not to renew the term of the Servicer and appoint a replacement servicer (which shall be an Eligible Servicer) approved by the Securities Insurer at the request of the Master Servicer.]

 

(f)           Resignation of Master Servicer.  The Master Servicer shall resign as Master Servicer hereunder if it determines that its duties hereunder are no longer permissible under applicable law or are in material conflict by reason of applicable law with any other activities carried on by it and cannot be cured, provided that such determination shall be evidenced by an Opinion of Counsel (which shall be Independent) to such effect delivered to the Owner Trustee, the Indenture Trustee and the Securities Insurer.  In addition, the Master Servicer may resign for any reason with 30 day’s prior written notice to the Owner Trustee, the Indenture Trustee and the Securities Insurer.  No resignation of the Master Servicer shall become effective until a successor master servicer acceptable to the Securities Insurer shall have assumed the obligations of the Master Servicer hereunder.

 

(g)           Limitation on Liability of the Depositor and the Master Servicer.  Except as set forth in Section 9.01 herein, neither the Depositor nor the Master Servicer nor any of the directors, officers, employees or agents of the Depositor or the Master Servicer shall be under any liability to the Owner Trustee, the Indenture Trustee, the Servicer, the Securities Insurer, the Noteholders or any other Person for any action taken or for refraining from the taking of any action at the direction of the Securities Insurer or any action in good faith pursuant to this Agreement, or for errors in judgment; provided, however, that this provision shall not protect the Depositor or the Master Servicer or any such Person against any liability that would otherwise be

 

  

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imposed by reason of willful misfeasance, bad faith or negligence in its performance of its duties or by reason of reckless disregard for its obligations and duties under this Agreement.  The Depositor or the Master Servicer and any directors, officer, employee or agent of the Depositor or the Master Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder.

 

(h)           Monthly Advances.  If any Obligor fails to make all or any portion of its Monthly Payment for any Due Period by the related Determination Date, the Master Servicer shall deposit such shortfall (net of the Servicing Fee and the Master Servicer Fee in respect thereof) into the Collection Account on or before such Determination Date, unless the Master Servicer, in its reasonable judgment, determines that any such Monthly Advance would be non-recoverable from future proceeds from the related Home Loan.  The Indenture Trustee shall make any Monthly Advance that the Master Servicer fails to make.  The Indenture Trustee shall be reimbursed for funds so advanced out of Master Servicing Compensation on subsequent Payment Dates.

 

(i)           Three Month Renewal of Master Servicer Term.  The Master Servicer hereby covenants and agrees to act as master servicer under this Agreement for an initial term commencing on the Closing Date and expiring on                      , 20   (the “Initial Term”).  Thereafter, the Initial Term shall be extendible in the sole discretion of the Securities Insurer by written notice (each, a “Master Servicer Renewal Notice”) of the Securities Insurer (or the Indenture Trustee if a Securities Insurer Default is then occurring) for successive three month terms.  Each such Master Servicer Renewal Notice (if any) shall be delivered by the Securities Insurer to the other parties to this Agreement.  The Master Servicer hereby agrees that, as of the date hereof and upon its receipt of any Master Servicer Renewal Notice, the Master Servicer shall be bound for the duration of the Initial Term and the term covered by any such Master Servicer Renewal Notice to act as the Master Servicer, subject to and in accordance with the other provisions of this Agreement.  The Master Servicer agrees that if, as of the last day of the calendar month preceding the last day of any such servicing term, the Master Servicer shall not have received a Master Servicer Renewal Notice from the Securities Insurer, the Master Servicer shall, within five days thereafter, give written notice of such non-receipt to the Securities Insurer and the Indenture Trustee.  The failure of the Securities Insurer to deliver a Master Servicer Renewable Notice by the end of any such three-month term shall result in the automatic termination of the Master Servicer.

 

(j)           Non-renewal or Termination.  Upon any non-renewal or termination of the Master Servicer pursuant to this Section 4.01, the master servicing of the Home Loans hereunder shall be transferred to a successor master servicer in accordance with the terms hereof.

 

(k)           Compensating Interest.  If Compensating Interest is owing with respect to such Payment Date, then the Master Servicer shall cause the Servicer to direct Compensating Interest, up to the amount of the sum of the Master Servicer Fee and the Servicing Fee for such Payment Date, into the Collection Account on or before the related Determination Date.  The Master Servicer shall fund the payment of Compensating Interest on any Payment Date first out of its Master Servicer Compensation for the related Payment Date, and if and only if such amount is not sufficient, shall cause any remaining amounts to be paid out of the Servicing Fee

 

  

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for the related Payment Date.  Any Servicing Fees used to pay Compensating Interest hereunder shall be repaid to the Servicer through the payment of Servicing Fee Recovery Amounts.

 

Section 4.02   Interim Servicer.  Until the transfer of servicing to the initial Servicer on the “servicing transfer date” as specified in the Servicing Agreement, the Master Servicer agrees, and the Issuing Entity, Securityholders, the Security Insurer and the Indenture Trustee hereby assign and appoint the Master Servicer as the Servicer of the Home Loans.  The Master Servicer shall be obligated to act as the Servicer of the Home Loans and agrees to service the Home Loans in accordance with Accepted Servicing Procedures until the transfer of servicing to the Servicer.  During the period in which the Master Servicer is acting as servicer, it shall be entitled to any Servicing Fee earned during such period.

 

Section 4.03   Powers of Attorney.  The Indenture Trustee shall execute, at the written direction of the Servicer or the Master Servicer, any limited or special powers of attorney and other documents reasonably acceptable to the Indenture Trustee to enable the Servicer or the Master Servicer to carry out their servicing and administrative duties hereunder, including, without limitation, limited or special powers of attorney with respect to any Foreclosure Property, and the Indenture Trustee shall not be accountable for the actions of the Servicer or the Master Servicer under such powers of attorney and shall be indemnified by the Master Servicer in accordance with Section 9.01 hereof.

 

Section 4.04   Filing of Continuation Statements.  On or before the fifth (or twelfth, as appropriate) anniversary of the filing of any financing statements by the Transferor and the Depositor, respectively, with respect to the assets conveyed to the Owner Trustee or to the Owner Trust, the Transferor and the Depositor shall prepare, have executed by the necessary parties and file in the proper jurisdictions at their expense all financing and continuation statements necessary to maintain the liens, security interests and priorities of such liens and security interests that have been granted by the Transferor and the Depositor, respectively, the Transferor and the Depositor shall continue to file on or before each fifth (or twelfth) anniversary of the filing of any financing and continuation statements such additional financing and continuation statements until the Trust has terminated pursuant to Section 9.1 of the Owner Trust Agreement.  The Indenture Trustee and Owner Trustee agree to cooperate with the Transferor and the Depositor in preparing, executing and filing such statements.  The filing of any such statement with respect to the Transferor and the Depositor shall not be construed as any indication of an intent of any party contrary to the expressed intent set forth in Section 2.03 hereof and Section 2.04 of the Home Loan Purchase Agreement.  If the Transferor or the Depositor has ceased to do business whenever any such financing and continuation statements must be filed or the Transferor or the Depositor fails to file any such financing statements or continuation statements at least one month prior to the expiration thereof, each of the Transferor and the Depositor does hereby make, constitute and appoint the Owner Trustee its attorney-in-fact, with full power and authority, to execute and file in its name and on its behalf any such financing statements or continuation statements required under this Section 4.04 relating to assets conveyed to the Owner Trustee and the Depositor does hereby make, constitute and appoint the Indenture Trustee its attorney-in-fact, with full power and authority, to execute and file in its name and on its behalf any such financing statements or continuation statements required under this Section 4.04 relating to assets conveyed to the Owner Trust.

 

  

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Section 4.05   Reports to the Securities and Exchange Commission.  The Indenture Trustee shall, on behalf of the Issuing Entity, cause to be filed with the Securities and Exchange Commission all monthly reports on Form 8-K and annual reports on Form 10-K by EDGAR electronic format (or any successor format) required to be filed under the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission thereunder.  The Indenture Trustee shall obtain on behalf of the Issuing Entity, EDGAR access codes (or any successor codes) on behalf of the Issuing Entity required for filing with the Securities and Exchange Commission.  Upon the request of the Indenture Trustee, each of the Servicer, the Master Servicer and the Transferor shall cooperate with the Indenture Trustee in the preparation of any such report and shall provide to the Indenture Trustee in a timely manner all such information or documentation as the Indenture Trustee may reasonably request in connection with the performance of its duties and obligations under this Section 4.05.

 

ARTICLE V

 

ESTABLISHMENT OF TRUST ACCOUNTS

 

Section 5.01   Collection Account and Note Payment Account.

 

(a)           (1) Establishment of Collection Account.  The Master Servicer, for the benefit of the Securityholders, the Indenture Trustee and the Securities Insurer, shall cause to be established and maintained by the Indenture Trustee one or more Collection Accounts (collectively, the “Collection Account”), which shall be separate Eligible Accounts and may be interest-bearing, and which shall be entitled “Collection Account of                    , as Indenture Trustee, in trust for the                           Home Loan Asset Backed Notes, Series 20  -  ”.  The Collection Account may be maintained with the Indenture Trustee or any other depository institution, which satisfies the requirements set forth in the definition of Eligible Account.  The creation of any Collection Account other than one maintained with the Indenture Trustee shall be evidenced by a letter agreement between the Servicer and the depository institution acceptable to the Indenture Trustee and the Securities Insurer.  A copy of such letter agreement shall be furnished to the Securities Insurer and the Indenture Trustee.  Funds in the Collection Account shall be invested in accordance with Section 5.03 hereof.  The Collection Account shall be established, as of the Closing Date, with                            as an Eligible Account pursuant to the definition thereof.  The Collection Account may, upon written notice to the Indenture Trustee, and upon the written consent of the Securities Insurer, be transferred to a different depository institution so long as such transfer is to an Eligible Account acceptable to the Securities Insurer.

 

(2)           Establishment of Note Payment Account.  No later than the Closing Date, the Indenture Trustee, for the benefit of the Noteholders and the Securities Insurer, shall cause to be established and maintained with the Indenture Trustee one or more Note Payment Accounts (collectively, the “Note Payment Account”), which shall be separate Eligible Accounts and may be interest-bearing, and which shall be entitled “Note Payment Account of                        , as Indenture Trustee, in trust for the Home Loan Asset Backed Notes, Series 20  -  ”.  Funds in the Note Payment Account shall be invested in accordance with Section 5.03 hereof.

 

  

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(b)           (1) Deposits to Collection Account.  The Servicer shall use its best efforts to deposit or cause to be deposited (without duplication), within one (1) Business Day after receipt thereof, into the Collection Account and retain therein in trust for the benefit of the Noteholders and the Securities Insurer:

 

(i)           all payments of principal and interest on the Home Loans collected after the Cut-Off Date;

 

(ii)           all Net Liquidation Proceeds;

 

(iii)           all Property Insurance Proceeds;

 

(iv)           all Released Mortgaged Property Proceeds;

 

(v)           any amounts payable in connection with the repurchase of any Home Loan and the amount of any Substitution Adjustment pursuant to Section 3.05 hereof;

 

(vi)           the deposit of the Termination Price under Section 11.01 hereof;

 

(vii)           interest and gains on funds held in the Collection Account;

 

(viii)           Monthly Advances pursuant to Section 4.02(h) hereof; and

 

(ix)           Compensating Interest pursuant to Section 4.02(k) hereof.

 

The Servicer shall be entitled to retain and not deposit into the Collection Account any amounts received with respect to a Home Loan that constitute additional servicing compensation pursuant to Section 7.03 hereof.

 

(2)           Deposits to Note Payment Account.  By the close of business on the fourth Business Day prior to each Payment Date, the Master Servicer shall cause the Servicer to withdraw from the Collection Account the Available Collection Amount and deposit such into the Note Payment Account for such Payment Date.

 

(3)           Withdrawals from Collection Account.  The Master Servicer shall cause the Servicer to also make the following withdrawals from the Collection Account, in no particular order of priority:

 

(i)           to withdraw any amount not required to be deposited in the Collection Account or deposited therein in error;

 

(ii)           to withdraw any Servicing Advance Reimbursement Amounts and Monthly Advance Reimbursement Amounts; and

 

(iii)           to clear and terminate the Collection Account in connection with the termination of this Agreement.

 

  

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(c)           Initial Withdrawals from Note Payment Account.  To the extent funds are available in the Note Payment Account, the Indenture Trustee (based on the information provided by the Servicer contained in the Servicer’s Monthly Remittance Report for such Payment Date) shall make withdrawals therefrom by 9:00 a.m. (New York City time) on each Payment Date, for application in the following order of priority:

 

(i)           to distribute on such Payment Date the following amounts related to such Payment Date pursuant to the Indenture in the following order; (1) to the Indenture Trustee, an amount equal to the Indenture Trustee Fee and all unpaid Indenture Trustee Fees from prior Payment Dates; (2) to the Servicer an amount equal to the Servicing Compensation (net of the sum of any amounts retained prior to deposit into the Collection Account pursuant to subsection (b)(1) above) and all unpaid Servicing Compensation from prior Payment Dates; (3) to the Master Servicer an amount equal to the Master Servicer Compensation and all unpaid Master Servicer Compensation from prior Payment Dates; and (4) to the Securities Insurer, an amount equal to the Guaranty Insurance Premium and all unpaid Guaranty Insurance Premiums from prior Payment Dates; and

 

(ii)           subject to the priority of payments in Subsections 5.01(d) and (e) below, to deposit into the Certificate Distribution Account the applicable portions of the Available Payment Amount payable to the holders of the Residual Interest Certificates as calculated pursuant to Subsection 5.01(e) below on such Payment Date.

 

(d)           Regular Payment Amount Withdrawals from Note Payment Account.  On each Payment Date, the Indenture Trustee (based on the information provided by the Servicer contained in the Servicer’s Monthly Remittance Report for such Payment Date) shall distribute the Regular Payment Amount and any Deficiency Amount paid by the Securities Insurer in respect of such Payment Date from the Note Payment Account (in the case of all amounts distributable to Noteholders) and from the Certificate Distribution Account (in the case of all amounts distributable to Certificateholders), in the following order of priority:

 

(i)           to pay the holders of the Notes the Noteholders’ Interest Payment Amount for such Payment Date;

 

(ii)           to pay the holders of the Notes principal thereof in an amount up to the sum of the Regular Principal Payment Amount and the Noteholders’ Principal Deficiency Amount, until the Note Principal Balances thereof are reduced to zero;

 

(iii)           to apply any remaining amount together with Excess Spread in the manner specified in Subsection (e) below.

 

(e)           Excess Spread Withdrawals from Note Payment Account.  On each Payment Date, the Indenture Trustee (based on the information provided by the Servicer contained in the Servicer’s Monthly Remittance Report for such Payment Date) shall distribute the Excess Spread, if any, in the following order of priority (in each case after giving effect to all payments specified in Section 5.01(d) hereof):

 

  

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(i)           to pay the Securities Insurer in an amount up to the Securities Insurer Reimbursement Amount;

 

(ii)           to pay the holders of the Notes, as principal thereof, any remaining Excess Spread in an amount up to any Overcollateralization Deficiency Amount (after giving effect to payments made pursuant to subsection (d) above), until the Note Principal Balances thereof are reduced to zero;

 

(iii)           to pay the holder of the Notes, pro rata, the Noteholders’ Interest Carry-Forward Amount due and unpaid, if any; and

 

(iv)           to pay any remaining Excess Spread (A) first, concurrently to the Servicer in an amount equal to any outstanding Nonrecoverable Servicing Advances and to the Master Servicer in an amount equal to any outstanding Nonrecoverable Monthly Advances, (B) second, to repay the Servicer the Servicing Fee Recovery Amount, if any and (C) then, for deposit into the Certificate Distribution Account for payment to the holders of the Residual Interest Certificates any amount remaining after the preceding clauses (A) and (B).

 

(f)           All payments made on the Notes on each Payment Date will be made on a pro rata basis among the Noteholders of record of such Notes on the next preceding Record Date, without preference or priority of any kind, and, except as otherwise provided in the next sentence, shall be made by wire transfer of immediately available funds to the account of such Noteholder, if such Noteholder shall own of record Notes in original Denominations aggregating at least $250,000 and shall have so notified the Indenture Trustee, and otherwise by check mailed to the address of such Noteholder appearing in the Notes Register.  The final payment on each Note will be made in like manner, but only upon presentment and surrender of such Note at the location specified in the notice to Noteholders of such final payment.

 

Section 5.01A   Claims Under Guaranty Policy.

 

(a)           If, on the second Business Day prior to the related Payment Date a Deficiency Amount exists, the Indenture Trustee shall give notice to the Securities Insurer and to its direction by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day.

 

(b)           At the time of the execution and delivery of this Agreement, and for the purposes of this Agreement, the Indenture Trustee shall establish a separate special purpose trust account for the benefit of the Noteholders called the “Policy Payments Account” and over which the Indenture Trustee shall have exclusive control and sole right of withdrawal.  The Indenture Trustee shall deposit any amount paid under the Guaranty Policy in the Policy Payments Account and distribute such amount only for purposes of making the Insured Payments for which a claim was made.  Such amounts shall be disbursed by the Indenture Trustee to Noteholders in the same manner as principal and interest payments are to be made with respect to the Notes under Sections regarding payment of Notes hereof.  It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay Insured Payments with other funds available to make such payments. However, the amount of

 

  

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any payment of principal of or interest on the Notes to be paid from the Policy Payments Account shall be noted as provided in (d) below in the Payment Statement to be furnished to Noteholders.  Funds held in the Policy Payments Account shall not be invested by the Indenture Trustee.

 

(c)           Any funds received by the Indenture Trustee as a result of any claim under the Guaranty Policy shall be applied by the Indenture Trustee, subject to Section 3.03 of the Indenture, together with the funds, if any, to be withdrawn from the Note Payment Account, directly to the payment in full of the Insured Payments due on the Notes (including Notes held for the Indenture Trustee’s own account).  Funds received by the Indenture Trustee as a result of any claim under the Guaranty Policy shall be deposited by the Indenture Trustee in the Policy Payments Account and used solely for payment to the Noteholders and may not be applied to satisfy any costs, expenses or liabilities of the Indenture Trustee.  Any funds remaining in the Policy Payments Account following a Payment Date shall promptly be remitted to the Securities Insurer except for funds held for the payment of Noteholders pursuant to Section 3.03 of the Indenture.

 

(d)           The Indenture Trustee shall keep a complete and accurate record of all funds deposited by the Securities Insurer into the Policy Payments Account and the allocation of such funds to payment of interest on and principal paid in respect of any Note.  The Securities Insurer shall have the right to inspect such records at reasonable times upon one Business Day’s prior notice to the Indenture Trustee.

 

(e)           Subject to and conditioned upon payment of any interest or principal with respect to the Notes by or on behalf of the Securities Insurer, the Indenture Trustee shall assign to the Securities Insurer all rights to the payment of interest or principal on the Notes which are then due to the extent of all payments made by the Securities Insurer and the Securities Insurer may exercise any option, vote, right, power or the like with respect to the Notes to the extent it has made a principal payment pursuant to the Guaranty Policy.  The Indenture Trustee agrees that the Securities Insurer shall be subrogated to all of the rights to payment of the Noteholders or in relation thereto to the extent that any payment of principal or interest was made to such Holders with payments made under the Guaranty Policy by the Securities Insurer.

 

(f)           In the event that the Indenture Trustee has received a certified copy of an order of the appropriate court that any scheduled payment of principal of or interest on a Note has been voided in whole or in part as a Preference Amount, the Indenture Trustee shall so notify the Securities Insurer, shall comply with the provisions of the Guaranty Policy to obtain payment by the Securities Insurer of such voided scheduled payment, and shall, at the time it provides notice to the Securities Insurer, notify, by mail to Noteholders that, in the event that any Noteholder’s scheduled payment is so recovered, such Noteholders will be entitled to payment pursuant to the terms of the Guaranty Policy, a copy of which shall be made available through the Indenture Trustee, the Securities Insurer or the fiscal agent, if any, and the Indenture Trustee shall furnish to the Securities Insurer or its fiscal agent, if any, its records evidencing the payments of principal of and interest on the Notes, if any, which have been made by the Indenture Trustee and subsequently recovered from Noteholders, and the dates on which such payments were made.

 

  

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(g)           The Indenture Trustee shall promptly notify the Securities Insurer of either of the following as to which it has actual knowledge:  (i) the commencement of any proceeding by or against the Depositor or the Issuing Entity commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”) and (ii) the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer (a “Preference Claim”) of any payment of principal of, or interest on, the Notes.  Each Noteholder, by its purchase of Notes, and the Indenture Trustee hereby agree that, so long as a Securities Insurer Default shall not have occurred and be continuing, the Securities Insurer may at any time during the continuation of any Insolvency Proceeding direct all matters relating to such Insolvency Proceeding, including, without limitation, (i) all matters relating to any Preference Claim, (ii) the direction of any appeal of any order relating to any Preference Claim at the expense of the Securities Insurer but subject to reimbursement as provided in the Insurance Agreement and (iii) the posting of any surety, supersedes or performance bond pending any such appeal.  In addition, and without limitation of the foregoing, as set forth (i) hereinbelow, the Securities Insurer shall be subrogated to, and each Noteholder and the Indenture Trustee hereby delegate and assign, to the fullest extent permitted by law the rights of the Indenture Trustee and each Noteholder in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding action with respect to any court under issued in connection with any such Insolvency Proceeding.

 

(h)           The Indenture Trustee shall furnish to the Securities Insurer or its fiscal agent its records evidencing the payments of principal of and interest on the Notes which have been made by the Indenture Trustee and subsequently recovered from Noteholders, and the dates on which such payments were made.

 

(i)           Anything herein to the contrary notwithstanding, any payment with respect to the principal of or interest on the Notes which is made with moneys received pursuant to the terms of the Guaranty Policy shall not be considered payment by the Issuing Entity, shall not discharge the Issuing Entity in respect of its obligation to make such payment and shall not result in the payment of or the provision for the payment of the principal of or interest on the Notes within the meaning of Section 4.01 of the Indenture.  The Issuing Entity and the Indenture Trustee acknowledge that without the need for any further action on the part of the Securities Insurer, the Issuing Entity, or the Indenture Trustee (i) to the extent the Securities Insurer makes payments, directly or indirectly, on account of principal of or interest on the Notes to the Noteholders, the Securities Insurer will be fully subrogated to the rights of such Noteholders to receive such principal and interest from the Issuing Entity, and (ii) Noteholders shall be paid such principal and interest in their capacity as Noteholders but only from the sources and in the manner provided herein for the payment of such principal and interest.

 

Section 5.02   Certificate Distribution Account.

 

(a)           Establishment of Certificate Distribution Account.  No later than the Closing Date, the Master Servicer, for the benefit of the Certificateholders, shall cause to be established and maintained with the Indenture Trustee for the benefit of the Owner Trustee, on behalf of the Issuing Entity and the Certificateholders, one or more Certificate Distribution Accounts (collectively, the “Certificate Distribution Account”), which shall be separate Eligible

 

  

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Accounts and may be interest-bearing, entitled “Certificate Distribution Account,                           , as Indenture Trustee, in trust for the                 Home Loan Owner Trust Series 20  -  ”.  Funds in the Certificate Distribution Account shall be invested in accordance with Section 5.03 hereof.

 

(b)           Deposits to and Distributions from Certificate Distribution Account.  On each Payment Date the Indenture Trustee shall withdraw from the Note Payment Account all amounts required to be deposited into the Certificate Distribution Account with respect to such Payment Date pursuant to Section 5.01(c)(ii) hereof and, on behalf of the Owner Trustee, shall deposit such amounts into the Certificate Distribution Account.  The Indenture Trustee shall make payments of all remaining amounts on deposit in the Note Payment Account to the holders of the Notes to the extent of amounts due and unpaid on the Notes for principal thereof and interest thereon in accordance with Section 5.01(d) and (e) hereof.  The Indenture Trustee, on behalf of the Owner Trustee, shall distribute all amounts on deposit in the Certificate Distribution Account to the holders of the Residual Interest Certificates.  The Indenture Trustee, on behalf of the Owner Trustee, also shall withdraw from the Certificate Distribution Account any amount not required to be deposited in the Certificate Distribution Account or deposited therein in error.

 

(c)           Distributions on the Residual Interest Certificates.  All distributions made on the Residual Interest Certificates on each Payment Date will be made pro rata among the holders of the Residual Interest Certificates of record on the next preceding Record Date based on their percentage holdings in the Residual Interest, without preference or priority of any kind, and, except as otherwise provided in the next succeeding sentence, shall be made by wire transfer of immediately available funds to the account of each such holder, if such holder shall own of record a Residual Interest Certificate in an original denomination aggregating at least a 50% holding of the Residual Interest and shall have so notified the Indenture Trustee at least 5 Business Days prior thereto, and otherwise by check mailed to the address of such Residual Interest holder appearing in the Certificate Register.  The final distribution on each Residual Interest Certificate will be made in like manner, but only upon presentment and surrender of such Residual Interest Certificate at the location specified in the notice to holders of the Residual Interest Certificates of such final distribution.  Any amount distributed to the holders of the Residual Interest Certificates on any Payment Date shall not be subject to any claim or interest of holders of the other Notes.

 

Section 5.03   Trust Accounts; Trust Account Property.

 

(a)           Control of Trust Accounts.  Each of the Trust Accounts (or interests therein) established hereunder has been pledged by the Issuing Entity to the Indenture Trustee under the Indenture and shall be subject to the lien of the Indenture.  In addition to the provisions hereunder, each of the Trust Accounts shall also be established and maintained pursuant to the Indenture.  Amounts distributed from each Trust Account in accordance with the Indenture and this Agreement shall be released from the lien of the Indenture upon such distribution thereunder or hereunder.  Subject to Sections 5.01 and 5.02 hereof, the Indenture Trustee shall possess all right, title and interest in and to all funds on deposit from time to time in the Trust Accounts (other than the Certificate Distribution Account) and in all proceeds thereof (including all income thereon) and all such funds, investments, proceeds and income shall be part of the Trust

 

  

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Account Property and the Trust Estate.  If, at any time, any Trust Account ceases to be an Eligible Account, the Indenture Trustee (or the Servicer on its behalf) shall, within ten Business Days (or such longer period, not to exceed 30 calendar days, as to which each Rating Agency and the Securities Insurer may consent) (i) establish a new Trust Account as an Eligible Account, (ii) terminate the ineligible Trust Account, and (iii) transfer any cash and investments from such ineligible Trust Account to such new Trust Account.

 

With respect to the Trust Accounts (other than the Certificate Distribution Account), the Indenture Trustee agrees, by its acceptance hereof, that each such Trust Account shall be subject to the sole and exclusive custody and control of the Indenture Trustee for the benefit of the Securityholders, the Securities Insurer and the Issuing Entity, as the case may be, and the Indenture Trustee shall have sole signature and withdrawal authority with respect thereto.

 

In addition to this Agreement and the Indenture, the Certificate Distribution Account established hereunder shall also be subject to and established and maintained in accordance with the Owner Trust Agreement.  Subject to rights of the Indenture Trustee, the Noteholders and the Securities Insurer hereunder and under the Indenture, the Owner Trustee shall possess for the benefit of the Certificateholders and the Securities Insurer all right, title and interest in all funds on deposit from time to time in the Certificate Distribution Account and in all proceeds thereof (including all income thereon) and all such funds, investments, proceeds and income shall be part of the Trust Account Property and the Trust Estate.  Subject to the rights of the Indenture Trustee, the Noteholders and the Securities Insurer, the Owner Trustee agrees, by its acceptance hereof, that such Certificate Distribution Account shall be subject to the sole and exclusive custody and control of the Owner Trustee for the benefit of the Issuing Entity and the parties entitled to payments and distributions therefrom, including, without limitation, the Certificateholders and the Securities Insurer, and the Owner Trustee shall have sole signature and withdrawal authority with respect to the Certificate Distribution Account.  Notwithstanding the preceding, the distribution of amounts from the Certificate Distribution Account in accordance with Section 5.01(c)(ii) hereof shall also be made for the benefit of the Indenture Trustee (including without limitation with respect to its duties under the Indenture and this Agreement relating to the Trust Estate), and the Indenture Trustee (in its capacity as Indenture Trustee) shall have the right, but not the obligation, to take custody and control of the Certificate Distribution Account and to cause the distribution of amounts therefrom in the event that the Owner Trustee fails to distribute such amounts in accordance with subsections (b) and (c) of Section 5.02.

 

In accordance with Section 5.01 and 5.02 hereof, the Servicer or the Master Servicer shall have the power, revocable by the Indenture Trustee or by the Owner Trustee with the consent of the Indenture Trustee, to instruct the Indenture Trustee or Owner Trustee to make withdrawals and payments from the Trust Accounts for the purpose of permitting the Servicer, the Master Servicer or the Issuing Entity to carry out their respective duties hereunder or permitting the Indenture Trustee or Owner Trustee to carry out their respective duties herein or under the Indenture or the Owner Trust Agreement, as applicable.

 

(1)           Investment of Funds.  So long as no Master Servicer Event of Default shall have occurred and be continuing, the funds held in any Trust Account may be invested (to the extent practicable) in Permitted Investments, as directed by the Master Servicer.  Any directions for investment of funds in any Trust Account shall be made in

 

  

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writing or by telephone or facsimile transmission with confirmation in writing.  In any case, funds in any Trust Account must be available for withdrawal without penalty, and any Permitted Investments must mature or otherwise be available for withdrawal, not later than the Business Day immediately preceding the Payment Date next following the date of such investment and shall not be sold or disposed of prior to its maturity subject to subsection (a)(2) of this Section.  All interest and any other investment earnings on amounts or investments held in any Trust Account shall be deposited into such Trust Account immediately upon receipt by the Indenture Trustee.  All Permitted Investments in which funds in any Trust Account (other than the Certificate Distribution Account) are invested must be held by or registered in the name of                         , as Indenture Trustee, in trust for the Home Loan Asset Backed Notes, Series 20  -  .  While the Indenture Trustee holds the Certificate Distribution Account, on behalf of the Owner Trustee, all Permitted Investments in which funds in the Certificate Distribution Account are invested shall be held by or registered in the name                            , on behalf of the Owner Trustee, in trust for the                            Home Loan Asset Backed Notes, Series 20  -  .

 

(2)           Insufficiency and Losses in Trust Accounts.  If any amounts are needed for disbursement from any Trust Account held by or on behalf of the Indenture Trustee and sufficient uninvested funds are not available to make such disbursement, the Indenture Trustee shall cause to be sold or otherwise converted to cash a sufficient amount of the investments in such Trust Account.  The Indenture Trustee shall not be liable for any investment loss or other charge resulting therefrom, unless such loss or charge is caused by the failure of the Indenture Trustee or Owner Trustee, respectively, to perform in accordance with this Section 5.03 hereof or the Indenture Trustee is the obligor under the Permitted Investment and has defaulted thereon.

 

If any losses are realized in connection with any investment in any Trust Account pursuant to this Agreement and the Indenture, then the Master Servicer shall deposit the amount of such losses (to the extent not offset by income from other investments in such Trust Account) into such Trust Account immediately upon the realization of such loss.  All interest and any other investment earnings on amounts held in any Trust Account shall be the income of the Issuing Entity (or, when there is a single beneficial owner of a Residual Interest Certificate, such owner), and for federal and state income tax purposes the Issuing Entity (or such single beneficial owner) shall be the owner (or beneficial owner in the case of the Collection Account).

 

(b)           No Liability for Losses.  Subject to Section 6.01 of the Indenture, the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in any Trust Account held by the Indenture Trustee resulting from any investment loss on any Permitted Investment included therein (except to the extent that the Indenture Trustee is the obligor and has defaulted thereon).

 

  

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(c)           Delivery of Trust Account Property.  With respect to the Trust Account Property, the Indenture Trustee acknowledges and agrees that:

 

(1)           any Trust Account Property that is held in deposit accounts shall be held solely in the Eligible Accounts; and each such Eligible Account shall be subject to the sole and exclusive dominion, custody and control of the Indenture Trustee; [and, without limitation on the foregoing, the Indenture Trustee shall have sole signature authority with respect thereto;]

 

(2)           any Trust Account Property that constitutes property within clause (a) of the definition of “Delivery” in Section 1.1 hereof shall be delivered to and maintained by the Indenture Trustee in accordance with the definition of “Delivery” in Section 1.1 hereof and shall be held, pending maturity or disposition, solely by or on behalf of the Indenture Trustee; and

 

(3)           any Trust Account Property that is a book-entry security held through the Federal Reserve System pursuant to federal book-entry regulations shall be delivered to and maintained by the Indenture Trustee in accordance with the definition of “Delivery” in Section 1.1 hereof.

 

Section 5.04                         Allocation of Losses

 

.  In the event that Net Liquidation Proceeds, Property Insurance Proceeds or Released Mortgaged Property Proceeds on a Liquidated Home Loan are less than the related Principal Balance plus accrued interest thereon, or any Obligor makes a partial payment of any Monthly Payment due on a Home Loan, such Net Liquidation Proceeds, Property Insurance Proceeds, Released Mortgaged Property Proceeds or partial payment shall be applied to payment of the related Debt Instrument, first, to interest accrued at the Home Loan Interest Rate and, then, to principal.

 

ARTICLE VI

 

STATEMENTS AND REPORTS; WITHHOLDING

 

Section 6.01   Statements.

 

(a)           No later than each Determination Date, the Master Servicer shall cause the Servicer to deliver to the Indenture Trustee and the Master Servicer by facsimile, the receipt and legibility of which shall be confirmed by telephone, and with hard copy thereof to be delivered no later than one (1) Business Day after such Determination Date, the Servicer’s Monthly Remittance Report, setting forth the date of such Report (day, month and year), the name of the Issuing Entity (i.e., “                   Home Loan Owner Trust 20  -  ”), the Series designation of the Notes (i.e., “Series 20_-_”) and the date of this Agreement, all in substantially the form set out in Exhibit B hereto.  Furthermore, Master Servicer shall cause the Servicer to deliver to the Master Servicer and the Indenture Trustee no later than each Determination Date, a magnetic tape or computer disk providing such information regarding the Servicer’s activities in servicing the Home Loans during the related Due Period as the Indenture Trustee or the Master Servicer may

 

  

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reasonably require.  The Master Servicer shall also cause the Servicer to deliver any Loan Liquidation Reports pursuant to Section 4.10(a) hereof.

 

(b)           On each Payment Date, Indenture Trustee shall distribute, based on information provided by the Servicer, a monthly statement (the “Payment Statement”) to the Depositor, the Securities Insurer, the Master Servicer, the Securityholders and the Rating Agencies, stating the date of original issuance of the Notes (day, month and year), the name of the Issuing Entity (i.e., “                           Home Loan Owner Trust 20  -  ”), the Series designation of the Notes (i.e., “Series 20  -  ”), the date of this Agreement and the following information:

 

(1)           the Available Collection Amount, Available Payment Amount, the Regular Payment Amount and the Excess Spread for the related Payment Date;

 

(2)           the Note Principal Balance of the Notes before and after giving effect to payments made to the holders of such Notes on such Payment Date, and the Pool Principal Balance as of the first and last day of the related Due Period;

 

(3)           the Note Factor with respect to the Notes then outstanding;

 

(4)           the amount of principal, if any, and interest to be distributed to the Notes on the related Payment Date;

 

(5)           the Note Interest Rate and Noteholders’ Interest Carry-Forward Amount, if any, on the related Payment Date;

 

(6)           as of such Payment Date, the Overcollateralization Amount, the Overcollateralization Target Amount and any Overcollateralization Deficiency Amount or any Overcollateralization Reduction Amount, and any such amount to be distributed to the Noteholders or the holders of the Residual Interest on such Payment Date;

 

(7)           the Master Servicer Compensation, the Servicing Compensation, the Indenture Trustee Fee, and the Guaranty Insurance Premium, for such Payment Date;

 

(8)           as of such Payment Date, the Net Loan Losses incurred during the related Due Period, the cumulative Net Loan Losses as of such Payment Date;

 

(9)           the weighted average maturity of the Home Loans and the weighted average Home Loan Interest Rate of the Home Loans;

 

(10)           the number of and aggregate Principal Balance of all Home Loans in foreclosure proceedings and the percent of the aggregate Principal Balances of such Home Loans to the aggregate Principal Balances of all Home Loans, all as of the close of business on the last day of the related Due Period;

 

(11)           the number of and the aggregate Principal Balance of the Home Loans in bankruptcy proceedings and the percent of the aggregate Principal Balances of

 

  

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such Home Loans to the aggregate Principal Balances of all Home Loans, all as of the close of business on the last day of the related Due Period;

 

(12)           the number of Foreclosure Properties, the aggregate Principal Balance of the related Home Loans, the book value of such Foreclosure Properties and the percent of the aggregate Principal Balances of such Home Loans to the aggregate Principal Balances of all Home Loans, all as of the close of business on the last day of the related Due Period;

 

(13)           during the related Due Period (and cumulatively, from the Closing Date through the most current Due Period), the number and aggregate Principal Balance of Home Loans for each of the following:  (A) that became Defaulted Home Loans, (B) that became Liquidated Home Loans, (C) that became Deleted Home Loans pursuant to Section 3.05 hereof as a result of such Deleted Home Loans being Defective Home Loans, and (D) that became Deleted Home loans pursuant to Section 3.05 hereof as a result of such Deleted Home Loans being Defaulted Home Loans or a Home Loan in default or imminent default;

 

(14)           the scheduled principal payments and the principal prepayments received with respect to the Home Loans during the Due Period;

 

(15)           the number and aggregate Principal Balance of Home Loans that were 30, 60 or 90 days Delinquent as of the close of business on the last day of the related Due Period and the Six Month Average Delinquency, the Three-Month Average Annualized Losses and the cumulative Realized Losses;

 

(16)           the amount of any Insured Payment included in the amounts distributed to the Noteholders on such Payment Date; and

 

(17)           the amount of any Securities Insurer Reimbursement Amount to be paid to the Securities Insurer on such Payment Date and the amount of any Securities Insurer Reimbursement Amount remaining unsatisfied following such payment.

 

In the case of information furnished to Noteholders pursuant to subclause (b)(4) of this Section 6.01, the amounts shall be expressed as a dollar amount per Note with a $1,000 Denomination.

 

All reports prepared by the Indenture Trustee of the withdrawals from and deposits in the Collection Account will be based in whole or in part upon the information provided to the Indenture Trustee by the Servicer, and the Indenture Trustee may fully rely upon and shall have no liability with respect to such information provided by the Servicer.  In no event shall the Indenture Trustee be obligated to provide information required pursuant to this Section 6.01(b) if it has not timely received the necessary information form the Servicer to provide such information.

 

(c)           Within a reasonable period of time after the end of each calendar year, the Indenture Trustee shall prepare and distribute to each Person who at any time during the calendar year was a Noteholder such information as is reasonably necessary to provide to such Person a

 

  

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statement containing the information set forth in subclause (b) of this Section 6.01, aggregated for such calendar year or applicable portion thereof during which such Person was a Noteholder.

 

(d)           On each Payment Date, the Indenture Trustee shall forward to The Depository Trust Company and to the holders of the Residual Interest Certificates a copy of the Payment Statement in respect of such Payment Date and a statement setting forth the amounts actually distributed to such holders of the Residual Interest Certificates on such Payment Date, together with such other information as the Indenture Trustee deems necessary or appropriate.

 

(e)           Within a reasonable period of time after the end of each calendar year, the Indenture Trustee shall prepare and distribute to each Person who at any time during the calendar year was a holder of Residual Interest Certificates, if requested in writing by such Person, a statement containing the information provided pursuant to the previous paragraph aggregated for such calendar year or applicable portion thereof during which such Person was a holder of Residual Interest Certificates.

 

(f)           The Indenture Trustee shall forward to each Noteholder and each holder of a Residual Interest Certificate, during the term of this Agreement, such periodic, special or other reports, including information tax returns or reports required with respect to the Notes and the Residual Interest Certificates, as shall be necessary, reasonable, or appropriate with respect to the Noteholders or the holders of Residual Interest Certificates, or otherwise with respect to the purposes of this Agreement, all such reports or information in the case of the Residual Interest Certificates to be provided by and in accordance with such applicable instructions and directions as the Majority Residual Interestholders may reasonably require.

 

(g)           The Master Servicer promptly shall notify each Rating Agency if the Securities Insurer waives or changes the Overcollateralization Target Amount, the OC Trigger Increase Event, the Spread Squeeze Amount or the Step Down Test.

 

(h)           Reports and computer tapes furnished by the Servicer and the Indenture Trustee, to the Master Servicer and the Securities Insurer pursuant to this Agreement shall be deemed confidential and of a proprietary nature and shall not be copied or distributed except in connection with the purposes and requirements of this Agreement.  No Person entitled to receive copies of such reports or tapes shall use the information therein for the purpose of soliciting the customers of the Transferor or the Servicer or for any other purpose except as set forth in this Agreement.

 

Section 6.02   Withholding.  The Indenture Trustee shall comply with all requirements of the Code, and applicable state and local laws, with respect to the withholding from any payments made to any Noteholder of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith, giving due effect to any applicable exemptions from such withholding and effective certifications or forms provided by the recipient.  Any amounts withheld pursuant to this Section 6.02 shall be deemed to have been paid to the Noteholders for all purposes of this Agreement or the Indenture.

 

  

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ARTICLE VII

 

GENERAL SERVICING PROCEDURES

 

Section 7.01   Servicing Advances.  The Master Servicer shall cause the Servicer to make Servicing Advances under Section 6.7 of the Servicing Agreement.  The Indenture Trustee shall make any Servicing Advance that the Servicer fails to make.  The Indenture Trustee shall be reimbursed for funds so advanced out of Servicing Compensation on subsequent Payment Dates.

 

Section 7.02   Release of Home Loan Files.

 

(a)           If with respect to any Home Loan:

 

(i)           the outstanding Principal Balance of such Home Loan plus all interest accrued thereon shall have been paid;

 

(ii)           the Servicer shall have received, in escrow, payment in full of such Home Loan in a manner customary for such purposes;

 

(iii)           such Home Loan has become a Defective Loan and has been repurchased or a Qualified Substitute Home Loan has been conveyed to the Owner Trustee pursuant to Section 3.05 hereof;

 

(iv)           such Home Loan or the related Foreclosure Property has been sold in connection with the termination of the Issuing Entity pursuant to Section 11.01 hereof; or

 

(v)           such Home Loan is a Defaulted Home Loan or a Liquidated Home Loan that is liquidated or disposed of or the related Foreclosure Property has been sold.

 

then in each such case, an Officer’s Certificate of the Servicer pursuant to Section 4.5 of the Servicing Agreement to the effect that the Servicer has complied with all of its obligations under this Agreement and the Servicing Agreement with respect to such Home Loan and requesting that the Custodian release to the Servicer the related Indenture Trustee’s Home Loan File.  Upon the receipt of such Officer’s Certificate, the Custodian shall, within five Business Days or such shorter period as may be required by applicable law, release, or cause the applicable Custodian to release (unless such Indenture Trustee’s Home Loan File has previously been released), the related Indenture Trustee’s Home Loan File to the Servicer and execute and deliver such instruments of transfer or assignment, in each case without recourse, as shall be necessary to vest ownership of such Home Loan in the Servicer or such other Person as may be specified in such certificate, the forms of any such instrument to be appended to such certificate.

 

(b)           If a temporary release of the Indenture Trustee’s Home Loan File is necessary or appropriate for the servicing (which may include any modification or foreclosure) of any Home Loan, then upon the request of the Servicer pursuant to Section 3(b) of the Custodial Agreement the Custodian shall release the related Indenture Trustee’s Home Loan File (or any requested portion thereof) to the Servicer.

 

  

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Section 7.03   Servicing Compensation.  As compensation for its services under the Servicing Agreement, the Servicer shall be entitled to receive from the Collection Account the Servicing Fee, out of which the Servicer shall pay any subservicing fees to any subservicer.  Additional servicing compensation in the form of assumption fees, 80% of late charges collected, modification fees, and other administrative fees, insufficient funds charges shall be part of the Servicing Compensation payable to the Servicer hereunder and under Section 8.1 of the Servicing Agreement and shall be paid either by the Servicer retaining such additional servicing compensation prior to deposit in the Collection Account pursuant to Section 5.01(b)(1) hereof or, if deposited in the Collection Account, as part of the Servicing Compensation withdrawn from the Collection Account or Note Payment Account.

 

The Servicer shall be required to pay all expenses incurred by it in connection with its servicing activities hereunder and under the Servicing Agreement and shall not be entitled to reimbursement therefor except as specifically provided for herein or in Section 8.1 thereof.

 

Section 7.04   Statement as to Compliance and Financial Statements.  The Master Servicer will deliver or cause to be delivered to the Indenture Trustee, the Owner Trustee, the Depositor, the Securities Insurer, the Master Servicer and the Rating Agencies not later than 90 days following the end of each fiscal year of the Servicer (beginning with the fiscal year 20_), an Officer’s Certificate, required under Section 7.2 of the Servicing Agreement, stating that (i) a review of the activities of the Servicer during the preceding year and of performance under this Agreement and the Servicing Agreement has been made under such officer’s supervision and (ii) to the best of such officer’s knowledge, based on such review, the Servicer has fulfilled all of its obligations under this Agreement and the Servicing Agreement throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof and what action the Servicer proposes to take with respect thereto.

 

Contemporaneously with the submission of the Officer’s Certificate required by the preceding paragraph, the Master Servicer shall deliver or cause to be delivered to the Indenture Trustee, the Securities Insurer, the Master Servicer and the Owner Trustee a copy of the Servicer’s annual audited financial statements prepared in the ordinary course of business.  The Master Servicer shall, upon the request of the Depositor, deliver to such party any unaudited quarterly financial statements of the Servicer.

 

The Master Servicer shall also cause the Servicer to furnish and certify to the requesting party such other information as to (i) the Servicer’s organization, activities and personnel relating to the performance of the obligations of the Servicer hereunder, (ii) the Servicer’s financial condition, (iii) the Home Loans and (iv) the performance of the obligations of any subservicer under the any subservicing agreements, in each case as the Indenture Trustee, the Owner Trustee, the Master Servicer, the Securities Insurer or the Depositor may reasonably request from time to time.

 

Section 7.05   Independent Public Accountants’ Servicing Report.  Not later than 90 days following the end of each fiscal year of the Servicer (beginning with fiscal year 20_), the Master Servicer shall require that the Servicer comply with Section 7.3 of the Servicing Agreement and cause any nationally recognized firm of Independent Certified Public

 

  

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Accountants (which may also render other services to the Servicer) to furnish a statement to the Indenture Trustee, the Owner Trustee, the Rating Agencies, the Securities Insurer, the Master Servicer and the Depositor to the effect that such firm has examined certain documents and records relating to the servicing of the Home Loans under this Agreement, the Servicing Agreement or of mortgage loans under pooling or sale and servicing agreements (including the Home Loans and this Agreement) substantially similar to one another (such statement to have attached thereto a schedule setting forth the pooling or sale and servicing agreements covered thereby) and that, on the basis of such examination conducted substantially in compliance with the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC, such firm confirms that such servicing has been conducted in compliance with such pooling or sale and servicing agreements except for such significant exceptions or errors in records that, in the opinion of such firm, the Uniform Single Attestation Program for Mortgage Bankers or the Attestation Program for Mortgages serviced for FHLMC requires it to report, each of which errors and omissions shall be specified in such statement.  In rendering such statement, such firm may rely, as to matters relating to direct servicing of mortgage loans by subservicers, upon comparable statements for examinations conducted substantially in compliance with the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC (rendered within one year of such statement) of independent public accountants with respect to the related subservicer.

 

Section 7.06   Reports to the Indenture Trustee; Collection Account Statements.  If the Collection Account is not maintained with the Indenture Trustee, then not later than 25 days after each Record Date, the Master Servicer shall cause the Servicer to forward to the Indenture Trustee, the Securities Insurer and the Master Servicer, a statement, certified by a Servicing Officer, setting forth the status of the Collection Account as of the close of business on the preceding Record Date and showing, for the period covered by such statement, the aggregate of deposits into the Collection Account for each category of deposit specified in Section 5.01(b)(1) hereof, the aggregate of withdrawals from the Collection Account for each category of withdrawal specified in Section 5.01(b)(2) and (3) hereof, in each case, for the related Due Period.

 

Section 7.07   Financial Statements and Records of Servicer.  The Master Servicer shall require that the Servicer agree to provide the books, records or information, and/or access thereto, of the types required of the Master Servicer in Sections 9.07 and 9.08 herein, to the Indenture Trustee, the Owner Trustee, the Depositor, the Securities Insurer and each of their respective agents, upon terms substantially similar to the terms set forth in Sections 9.07 and 9.08.

 

  

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ARTICLE VIII

 

(RESERVED)

 

ARTICLE IX

 

THE MASTER SERVICER

 

Section 9.01   Indemnification; Third Party Claims.

 

(a)           The Master Servicer shall indemnify the Transferor, the Owner Trustee, the Issuing Entity, the Depositor, the Securities Insurer and the Indenture Trustee (each an “Indemnified Party”) and hold harmless each of them against any and all claims, losses, damages, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments, and other costs and expenses resulting from any claim, demand, defense or assertion based on or grounded upon, or resulting from, a breach of any of the Master Servicer’s representations and warranties and covenants contained in this Agreement or in any way relating to the failure of the Master Servicer to perform its duties and service the Home Loans in compliance with the terms of this Agreement.

 

(b)           The Transferor, the Depositor, the Owner Trustee, the Securities Insurer or the Indenture Trustee, as the case may be, shall promptly notify the Master Servicer if a claim is made by a third party with respect to a breach of any of the Master Servicer’s representations and warranties and covenants contained in this Agreement or in any way relating to the failure of the Master Servicer to perform its duties and service the Home Loans in compliance with the terms of this Agreement.  The Master Servicer shall promptly notify the Indenture Trustee, the Owner Trustee, the Securities Insurer and the Depositor of any claim of which it has been notified pursuant to this Section 9.01 by a Person other than the Depositor, and, in any event, shall promptly notify the Depositor of its intended course of action with respect to any claim.

 

(c)           The Master Servicer shall be entitled to participate in and, upon notice to the Indemnified Party, assume the defense of any such action or claim in reasonable cooperation with, and with the reasonable cooperation of, the Indemnified Party.  The Indemnified Party will have the right to employ its own counsel in any such action in addition to the counsel of the Master Servicer, but the fees and expenses of such counsel will be at the expense of such Indemnified Party, unless (i) the employment of counsel by the Indemnified Party at its expense has been authorized in writing by the Master Servicer, (ii) the Master Servicer has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both the Master Servicer and one or more Indemnified Parties, and the Indemnified Parties shall have been advised by counsel that there may be one or more legal defenses available to them which are different from or additional to those available to the Master Servicer.  The Master Servicer shall not be liable for any settlement of any such claim or action unless the Master Servicer shall have consented thereto or be in default on its obligations hereunder.  Any failure by an Indemnified Party to comply with the provisions of this Section 9.01 shall relieve the Master Servicer of liability only if such failure is

 

  

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materially prejudicial to the position of the Master Servicer and then only to the extent of such prejudice.

 

(d)           The provisions of this Section 9.01 shall survive the replacement of the Master Servicer; provided, that no successor master servicer shall be liable for (or required to indemnify any party for) any act or omission of any predecessor master servicer.

 

Section 9.02   Merger or Consolidation of the Master Servicer.  The Master Servicer shall keep in full effect its existence, rights and franchises as a corporation, and will obtain and preserve its authorization or qualification to do business as a foreign corporation and maintain, or cause an affiliate approved by the other parties hereto to maintain, such other licenses and permits in each jurisdiction necessary to protect the validity and enforceability of this Agreement or any of the Home Loans and to perform its duties under this Agreement; provided, however, that the Master Servicer may merge or consolidate with any other corporation upon the satisfaction of the conditions set forth in the following paragraph.

 

With the consent of the Securities Insurer, any Person into which the Master Servicer may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Master Servicer shall be a party, or any Person succeeding to the business of the Master Servicer, shall be an Eligible Servicer and shall be the successor of the Master Servicer, as applicable hereunder, 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.  The Master Servicer shall send notice of any such merger, conversion, consolidation or succession to the Indenture Trustee, the Owner Trustee, the Securities Insurer, the Servicer and the Issuing Entity.

 

Section 9.03   Limitation on Liability of the Master Servicer and Others.  The Master Servicer and any director, officer, employee or agent of the Master Servicer may rely on any document of any kind which it in good faith reasonably believes to be genuine and to have been adopted or signed by the proper authorities respecting any matters arising hereunder.  Subject to the terms of Section 9.01 hereof, the Master Servicer shall have no obligation to appear with respect to, prosecute or defend any legal action which is not incidental to the Master Servicer’s duty to service the Home Loans in accordance with this Agreement.

 

Section 9.04   Master Servicer Not to Resign; Assignment.  The Master Servicer shall not resign from the obligations and duties hereby imposed on it except (a) with the consent of the Owner Trustee, the Securities Insurer and Indenture Trustee or (b) upon determination that its duties hereunder are no longer permissible under applicable law.  Any such determination pursuant to clause (b) of the preceding sentence permitting the resignation of the Master Servicer shall be evidenced by an independent opinion of counsel to such effect delivered (at the expense of the Master Servicer) to the Owner Trustee, the Securities Insurer and the Indenture Trustee.  No resignation of the Master Servicer shall become effective until a successor master servicer appointed by the Depositor and acceptable to the Rating Agencies, the Securities Insurer and the Indenture Trustee shall have assumed the Master Servicer’s responsibilities, duties, liabilities (other than those liabilities arising prior to the appointment of such successor) and obligations under this Agreement.

 

  

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Except as expressly provided herein, the Master Servicer shall not assign or transfer any of its rights, benefits or privileges hereunder to any other Person, or delegate to or subcontract with, or authorize or appoint any other Person to perform any of the duties, covenants or obligations to be performed by the Master Servicer hereunder and any agreement, instrument or act purporting to effect any such assignment, transfer, delegation or appointment shall be void.

 

The Master Servicer agrees to cooperate with any successor master servicer in effecting the transfer of the Master Servicer’s servicing responsibilities and rights hereunder pursuant to the first paragraph of this Section 9.04.

 

Section 9.05    [Reserved].

 

Section 9.06   Relationship of Master Servicer to the Issuing Entity and the Indenture Trustee.  The relationship of the Master Servicer (and of any successor to the Master Servicer as master servicer under this Agreement) to the Issuing Entity and the Indenture Trustee under this Agreement is intended by the parties hereto to be that of an independent contractor and not of a joint venturer, agent or partner of the Issuing Entity or the Indenture Trustee.

 

Section 9.07   Master Servicer May Own Securities.  Each of the Master Servicer and any Affiliate of the Master Servicer may in its individual or any other capacity become the owner or pledgee of Securities with the same rights as it would have if it were not the Master Servicer or an Affiliate thereof except as otherwise specifically provided herein.  Securities so owned by or pledged to the Master Servicer or such Affiliate shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority, or distinction as among all of the Securities; provided, however, that any Securities owned by the Master Servicer or any Affiliate thereof, during the time such Securities are owned by them, shall be without voting rights for any purpose set forth in this Agreement.  The Master Servicer shall notify the Indenture Trustee and the Securities Insurer promptly after it or any of its Affiliates becomes the owner or pledgee of a Security.

 

Section 9.08   Right to Examine Master Servicer Records.  The Indenture Trustee, the Owner Trustee, the Depositor, the Securities Insurer and each of their respective agents shall have the right upon reasonable prior notice, during normal business hours and as often as reasonably required, to examine, audit and copy, at the expense of the Person making such examination, any and all of the books, records or other information of the Master Servicer (including, without limitation, the Servicer), whether held by the Master Servicer or by another on behalf of the Master Servicer, which may be relevant to the performance or observance by the Master Servicer of the terms, covenants or conditions of this Agreement.  In the case of the supervisory agents and examiners of the Issuing Entity, the Indenture Trustee, the Owner Trustee, the Securities Insurer and the Securityholders, access to the documentation regarding the Home Loans required by applicable state and federal regulations shall be afforded without charge but only upon reasonable request and during normal business hours at the offices of the Master Servicer designated by it.

 

The Master Servicer also agrees to make available on a reasonable basis to the Depositor, the Securityholders or any prospective Securityholder a knowledgeable financial or accounting officer for the purpose of answering reasonable questions respecting recent developments

 

  

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affecting the Servicer or the financial statements of the Servicer and to permit the Depositor, the Securityholders and any prospective Securityholder to inspect the Servicer’s servicing facilities during normal business hours for the purpose of satisfying that the Servicer has the ability to service the Home Loans in accordance with this Agreement.

 

Each Securityholder, the Indenture Trustee, the Securities Insurer, the Master Servicer and the Owner Trustee agree that any information obtained pursuant to the terms of this Agreement shall be held confidential.

 

Section 9.09   Financial Statements.  The Master Servicer understands that, in connection with the transfer of the Notes, Noteholders and the Securities Insurer may request that the Master Servicer make available to the Noteholders and to prospective Noteholders annual audited financial statements of the Servicer for one or more of the most recently completed five fiscal years for which such statements are available, which request shall not be unreasonably denied.

 

ARTICLE X

 

DEFAULT

 

Section 10.01   Master Servicer Events of Default.

 

(a)           Master Servicer Event of Default.  A Master Servicer Event of Default shall include the occurrence and continuation of one or more of the following:

 

(i)           (1) Any failure by the Servicer to deposit in the Collection Account in accordance with Section 5.01(b) hereof any payments in respect of the Home Loans received by the Servicer no later than the second Business Day following the day on which such payments were received; (2) any failure of the Servicer to pay when due any amount payable by it under the Servicing Agreement or this Agreement; or (3) the occurrence and continuance of any other Servicer Event of Default (as defined in Exhibit E hereto) which Servicer Event of Default continues unremedied for a period of 30 days after the date on which a Notice of Default requiring such failure to be remedied shall have been given (a) to the Servicer and the Master Servicer by the Indenture Trustee, or the Securities Insurer, or (b) to the Servicer, the Master Servicer, the Indenture Trustee, the Owner Trustee and the Securities Insurer by the Majority Noteholders.

 

(ii)           The failure by the Master Servicer duly to observe or perform, in any material respect, any other covenants, obligations or agreements of the Master Servicer as set forth in this Agreement, which failure continues unremedied for a period of 30 days after the date on which a Notice of Default requiring such failure to be remedied shall have been given (a) to the Master Servicer by the Indenture Trustee, the Owner Trustee or the Securities Insurer, or (b) to the Master Servicer, the Indenture Trustee, the Owner Trustee and the Securities Insurer by the Majority Noteholders.

 

(iii)           A decree or order of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any

 

  

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insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Master Servicer and such decree or order shall have remained in force, undischarged or unstayed for a period of 60 days.

 

(iv)           The Master Servicer shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to the Master Servicer or of or relating to all or substantially all of the Master Servicer’s property.

 

(v)           The Master Servicer shall admit in writing its inability to pay its debts as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations.

 

(vi)           The Majority Noteholders and the Securities Insurer, collectively, or the Securities Insurer, individually, shall determine, in their reasonable judgment and based upon published reports (including wire services), which they reasonably believe in good faith to be reliable, and shall give the Master Servicer a Notice of Default, that:

 

(1)           the Master Servicer or Servicer has experienced a material adverse change in its business, assets, liabilities, operations, condition (financial or otherwise) or prospects; or

 

(2)           the Master Servicer or Servicer or any of their subsidiaries or parent has defaulted on any of its material obligations; or

 

(3)           the Master Servicer is no longer able to discharge its duties under this Agreement or the Servicer is no longer able to discharge its duties under the Servicing Agreement; or

 

(4)           the Master Servicer has ceased to conduct its business in the ordinary course;

 

provided, however, that the Master Servicer shall have five Business Days from the receipt of such Notice of Default to cure such Master Servicer Event of Default by providing the foregoing parties with written assurances that, in a reasonable and good faith manner, substantiate the financial and operational well-being of the Master Servicer or Servicer, as appropriate, and adequately refute the occurrence of a material adverse change, including, without limitation, information, reports or written assurances obtained from certain of its lenders or lenders to the Servicer.

 

(vii)           An event of default has occurred and is continuing under the Indemnification Agreement.

 

(b)           Remedies.  If a Servicer Event of Default (as defined in Exhibit E hereto) shall occur and be continuing or the Servicer’s term of service has not been renewed pursuant to Section 3 of the Servicing Agreement, then, and in each and every such case, so long as such

 

  

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Servicer Event of Default shall not have been remedied, the Securities Insurer or the Indenture Trustee, the Owner Trustee or the Majority Noteholders, by a Notice of Default to the Master Servicer may, in addition to whatever rights such Person may have at law or in equity to damages, including injunctive relief and specific performance, with the consent of the Securities Insurer may require the Master Servicer to terminate all the rights and obligations of the Servicer under the Servicing Agreement and in and to the Home Loans and the proceeds thereof, as servicer under the Servicing Agreement.  Upon termination of the Servicer following such Notice of Default, all authority and power of the Servicer under the Servicing Agreement, whether with respect to the Home Loans or otherwise, shall, at the direction of the Securities Insurer, pass to, be transferred to, and be vested in either:  (1) a successor servicer acceptable to the Securities Insurer; or (2) the Master Servicer, or (3) the Indenture Trustee.  If a Master Servicer Event of Default shall occur and be continuing, then, and in each and every such case, so long as a Master Servicer Event of Default shall not have been remedied, the Securities Insurer or the Indenture Trustee, or the Majority Noteholders, by a Notice of Default to the Master Servicer may, in addition to whatever rights such Person may have at law or in equity to damages, including injunctive relief and specific performance, with the consent of the Securities Insurer, may terminate all the rights and obligations of the Master Servicer under this Agreement and in and to the Home Loans and the proceeds thereof, as Master Servicer under this Agreement.  Upon termination of the Master Servicer following such Notice of Default, all authority and power of the Master Servicer under this Agreement, whether with respect to the Home Loans or otherwise, shall, at the direction of the Securities Insurer pass to, be transferred to, and be vested in either:  (1) a successor master servicer reasonably acceptable to the Securities Insurer; or (2) the Indenture Trustee.

 

Upon the termination of the Master Servicer and transfer to a successor, master servicer, the Indenture Trustee is hereby authorized and empowered to execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments and do or cause to be done all other acts or things necessary or appropriate to effect the purposes of such notice of termination, including, but not limited to, the transfer and endorsement or assignment of the Home Loans and related documents.  The Master Servicer agrees to cooperate with the successor master servicer in effecting the termination of the Master Servicer’s responsibilities and rights hereunder.

 

Section 10.02    [Reserved].

 

Section 10.03   Waiver of Defaults.  The Securities Insurer, and the Majority Noteholders may with prior consent of the Securities Insurer, on behalf of all Noteholders, waive any events permitting removal of the Servicer or Master Servicer pursuant to this Article X; provided, however, that the Majority Noteholders may not waive a default in making a required payment on a Note or distribution on a Residual Interest Certificate without the consent of the related Noteholder or holder of the Residual Interest Certificate.  Upon any waiver of a past default, such default shall cease to exist and any Master Servicer Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement.  No such waiver shall extend to any subsequent or other default or impair any right consequent thereto except to the extent expressly so waived.

 

  

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Section 10.04   Accounting Upon Termination of Master Servicer.  Upon termination of the Master Servicer under this Article X, the Master Servicer shall, at its own expense execute and deliver such instruments and perform all acts reasonably requested in order to effect the orderly and efficient transfer of master servicing of the Home Loans to its successor and to more fully and definitively vest in such successor all rights, powers, duties, responsibilities, obligations and liabilities of the Master Servicer under this Agreement.

 

ARTICLE XI

 

TERMINATION

 

Section 11.01   Termination.  This Agreement shall terminate upon notice to the Indenture Trustee of either:

 

(a)           the later of (i) the satisfaction and discharge of the Indenture and the provisions thereof, or (ii) the disposition of all funds with respect to the last Home Loan and the remittance of all funds due hereunder and the payment of all amounts due and payable to the Servicer, the Indenture Trustee, the Owner Trustee, the Issuing Entity, the Master Servicer, the Securities Insurer and any Custodian; or

 

(b)           the mutual consent of the Servicer, the Master Servicer, the Depositor, the Transferor, the Securities Insurer and all Securityholders in writing.

 

Section 11.02   Optional Termination.  On or after any Payment Date on which the Pool Principal Balance declines to 10% or less of the Original Pool Principal Balance, then the Majority Residual Interestholders may, at their option, effect an early termination of the Issuing Entity.  On or after any Payment Date on which the Pool Principal Balance declines to 5% or less of the Original Pool Principal Balance, then the Securities Insurer or the Master Servicer may, at their respective options, effect an early termination of the Issuing Entity.  The Majority Residual Interestholders, the Securities Insurer or the Master Servicer, as applicable, shall effect such early termination by providing prior notice thereof to the Servicer, the Indenture Trustee, the Master Servicer, the Securities Insurer and Owner Trustee and by purchasing all of the Home Loans from the Issuing Entity at a purchase price, payable in cash, equal to or greater than the Termination Price.  The expense of any Independent appraiser required under this Section 11.02 shall be a nonreimbursable expense of Majority Residual Interestholders, the Securities Insurer or the Master Servicer, as applicable.

 

Any such early termination by the Majority Residual Interestholders, the Securities Insurer or the Master Servicer, as applicable, shall be accomplished by depositing into the Collection Account on the third Business Day prior to the Payment Date on which the purchase is to occur the amount of the Termination Price to be paid.  The Termination Price and any amounts then on deposit in the Collection Account (other than any amounts not required to have been deposited therein pursuant to Section 5.01(b)(1) hereof and any amounts withdrawn therefrom by the Indenture Trustee pursuant to Section 5.01(b)(3) hereof) shall be transferred to the Note Payment Account pursuant to Section 5.01(b)(2) hereof for payment to Noteholders and the Securities Insurer on the succeeding Payment Date; and any amounts received with respect to the Home Loans and Foreclosure Properties subsequent to the Due Period immediately preceding

 

  

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such final Payment Date shall belong to the purchaser thereof or the Securities Insurer, as applicable.  For purposes of calculating the Available Payment Amount for such final Payment Date, amounts transferred to the Note Payment Account immediately preceding such final Payment Date shall in all cases be deemed to have been received during the related Due Period, and amounts so transferred shall be applied pursuant to Section 5.01(d) and (e) hereof.

 

Section 11.03   Notice of Termination.  Notice of termination of this Agreement or of early redemption and termination of the Issuing Entity shall be sent (i) by the Indenture Trustee to the Noteholders and the Securities Insurer in accordance with Section 10.02 of the Indenture and (ii) by the Owner Trustee to the Certificateholders in accordance with Section 9.1(d) of the Owner Trust Agreement.

 

ARTICLE XII

 

MISCELLANEOUS PROVISIONS

 

Section 12.01   Acts of Noteholders.  Except as otherwise specifically provided herein, whenever action, consent or approval of the Noteholders is required under this Agreement, such action, consent or approval shall be deemed to have been taken or given on behalf of, and shall be binding upon, all Noteholders if the Majority Noteholders agree to take such action or give such consent or approval.

 

Section 12.02   Amendment.

 

(a)           This Agreement may be amended from time to time by the Depositor, the Master Servicer, the Transferor, the Indenture Trustee and the Issuing Entity by written agreement with notice thereof to the Securityholders, without the consent of any of the Securityholders, but with the consent of the Securities Insurer, to cure any error or ambiguity, to correct or supplement any provisions hereof which may be defective or inconsistent with any other provisions hereof or to add any other provisions with respect to matters or questions arising under this Agreement; provided, however, that such action will not adversely affect in any material respect the interests of the Noteholders.  An amendment described above shall be deemed not to adversely affect in any material respect the interests of the Noteholders if either (i) an Opinion of Counsel is obtained to such effect or (ii) the party requesting the amendment obtains the Ratings Confirmation with respect to such amendment.

 

(b)           This Agreement may also be amended from time to time by the Depositor, the Master Servicer, the Transferor, the Indenture Trustee and the Issuing Entity by written agreement, with the prior written consent of the Majority Noteholders and the Securities Insurer, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, or of modifying in any manner the rights of the Noteholders; provided, however, that no such amendment shall (i) reduce in any manner the amount of, or delay the timing of, collections of payments on Home Loans or distributions which are required to be made on any Note, without the consent of the holders of 100% of the Notes affected thereby and the Securities Insurer, (ii) adversely affect in any material respect the interests of the holders of any of the Notes or the Securities Insurer in any manner other than as described in clause (i), without the consent of the holders of 100% of such Notes or the Securities Insurer, or

 

  

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(iii) reduce the percentage of any of the Notes, the consent of which is required for any such amendment, without the consent of the holders of 100% of such Notes and the Securities Insurer.

 

(c)           It shall not be necessary for the consent of Noteholders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance thereof.

 

Prior to the execution of any amendment to this Agreement, the Issuing Entity and the Indenture Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement.  The Issuing Entity and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which affects the Issuing Entity’s own rights, duties or immunities of the Issuing Entity or the Indenture Trustee, as the case may be, under this Agreement.

 

Section 12.03   Recordation of Agreement.  To the extent permitted by applicable law, this Agreement, or a memorandum thereof if permitted under applicable law, is subject to recordation in all appropriate public offices for real property records in all of the counties or other comparable jurisdictions in which any or all of the Mortgaged Properties are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Servicer at the Noteholders’ expense on direction of the Majority Noteholders or the Securities Insurer, but only when accompanied by an Opinion of Counsel to the effect that such recordation materially and beneficially affects the interests of the Noteholders or is necessary for the administration or servicing of the Home Loans.

 

Section 12.04   Duration of Agreement.  This Agreement shall continue in existence and effect until terminated as herein provided.

 

Section 12.05   Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

 

Section 12.06   Notices.  All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered at or mailed by overnight mail, certified mail or registered mail, postage prepaid, to:

 

(a)           in the case of the Depositor, [                         ], [20 Park Avenue, New York, New York 10166], Attention:  [                      ], or such other addresses as may hereafter be furnished to the Securityholders and the other parties hereto in writing by the Depositor;

 

(b)           in the case of the Issuing Entity, at                          Home Loan Owner Trust 20  -  , c/o [                     ], [                      ], Attention:  [                             ], or such other address as may hereafter be furnished to the Securityholders and the other parties hereto;

 

(c)           in the case of the Transferor and Master Servicer,                               , [                    ], Attention:  [                           ], or such other address as may hereafter be

 

  

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furnished to the Securityholders and the other parties hereto in writing by the Servicer or the Transferor;

 

(d)           in the case of the Indenture Trustee,                             ,                                                     ;

 

(e)           in the case of the Securityholders, as set forth in the applicable Note Register;

 

(f)           [in the case of a claim under the Guaranty Policy,                                                          , or such other address as may be furnished to the Securityholders and the other parties hereto in writing by the Securities Insurer];

 

(g)           [in the case of the Securities Insurer,                           , Attention:  [                      ] (  Home Loan Asset Backed Notes, Series 20  -  );] or

 

(h)           in the case of the Servicer, to                                                          , Attention:                            ,                        Series 20  -  ; provided that during the period that the Master Servicer is acting as Servicer, notices shall be sent to the Master Servicer.

 

Any such notices shall be deemed to be effective with respect to any party hereto upon the receipt of such notice by such party, except that notices to the Securityholders shall be effective upon mailing or personal delivery.

 

Section 12.07   Severability of Provisions.  If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be held invalid for any reason whatsoever, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other covenants, agreements, provisions or terms of this Agreement.

 

Section 12.08   No Partnership.  Nothing herein contained shall be deemed or construed to create any partnership or joint venture between the parties hereto and the services of the Servicer shall be rendered as an independent contractor.

 

Section 12.09   Counterparts.  This Agreement may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same Agreement.

 

Section 12.10   Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the Servicer, the Transferor, the Depositor, the Indenture Trustee, the Issuing Entity, the Noteholders, the Securities Insurer, the Master Servicer and their respective successors and permitted assigns.

 

Section 12.11   Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

 

  

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Section 12.12   Actions of Securityholders.  (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in person or by agent duly appointed in writing; and except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Depositor, the Servicer, the Indenture Trustee or the Issuing Entity.  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and conclusive in favor of the Depositor, the Servicer, the Indenture Trustee and the Issuing Entity if made in the manner provided in this Section 12.12.

 

(b)           The fact and date of the execution by any Securityholder of any such instrument or writing may be proved in any reasonable manner, which the Depositor, the Servicer, the Indenture Trustee or the Issuing Entity deems sufficient.

 

(c)           Any request, demand, authorization, direction, notice, consent, waiver or other act by a Securityholder shall bind every holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, or omitted to be done, by the Depositor, the Servicer, the Indenture Trustee, the Securities Insurer or the Issuing Entity in reliance thereon, whether or not notation of such action is made upon such Security.

 

(d)           The Depositor, the Servicer, the Indenture Trustee or the Issuing Entity may require additional proof of any matter referred to in this Section 12.12 as it shall deem necessary.

 

Section 12.13   Reports to Rating Agencies.

 

(a)           The Indenture Trustee shall provide to each Rating Agency copies of statements, reports and notices, to the extent received or prepared in connection herewith, as follows:

 

(i)           copies of amendments to this Agreement;

 

(ii)           notice of any substitution or repurchase of any Home Loans;

 

(iii)           notice of any termination, replacement, succession, merger or consolidation of the Servicer, the Master Servicer, any Custodian or the Issuing Entity;

 

(iv)           notice of final payment on the Notes;

 

(v)           any Notice of Default;

 

(vi)           copies of the annual independent accountants’ report delivered pursuant to Section 7.05 hereof, and copies of any compliance reports delivered by the Servicer including under Section 7.04 hereof; and

 

  

75

  

(vii)           copies of any Payment Date Statement pursuant to Section 6.01(b) hereof.

 

(b)           With respect to the requirement of the Indenture Trustee to provide statements, reports and notices to the Rating Agencies, such statements, reports and notices shall be delivered to the Rating Agencies at the following addresses:  (i) if to Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, 55 Water Street, New York, New York, 10041, Attention:  Residential Mortgage Surveillance Group; (ii) if to Moody’s Investors Service, Inc., 99 Church Street, Pass-Through Group, New York, New York 10007, Attention:  Residential Mortgage; (iii) if to Fitch Ratings, Inc., One State Street Plaza, New York, New York 10007; and (iv) if to DBRS, Inc., 140 Broadway, 35th Floor, New York, New York 10005.

 

Section 12.14   Holders of the Residual Interest Certificates.

 

(a)           Any sums to be distributed or otherwise paid hereunder or under the Owner Trust Agreement to the holders of the Residual Interest Certificates shall be paid to such holders pro rata based on their percentage holdings in the Residual Interest;

 

(b)           Where any act or event hereunder is expressed to be subject to the consent or approval of the holders of the Residual Interest Certificates, such consent or approval shall be capable of being given by the holder or holders of not less than 51% of the Residual Interest in aggregate.

 

Section 12.15    [Grant of Noteholder Rights to Securities Insurer.  In consideration for the guarantee of the Insured Securities by the Securities Insurer pursuant to the Guaranty Policy, and by acceptance of an Insured Security, the Noteholders hereby grant to the Securities Insurer the right to act as the holder of 100% of the outstanding Insured Securities for the purpose of exercising the rights of the holders of the Insured Securities under this Agreement, without the consent of any such Noteholders, including the voting rights of such holders, but excluding those rights requiring the consent of all such holders under Section 12.02(b), and any rights of such holders to payments under Section 5.01 (d) and (e) hereof and under Section 8.02(c) of the Indenture; provided that the preceding grant of rights to the Securities Insurer by the Noteholders shall be subject to Section 12.17 hereof.  The rights of the Securities Insurer to direct certain actions and consent to certain actions of the Majority Noteholders hereunder will terminate at such time as the Principal Balance of Insured Securities have been reduced to zero and the Securities Insurer has been paid the Securities Insurer Reimbursement Amount in full and all other amounts owed under the Guaranty Policy and Insurance Agreement and the Securities Insurer has no further obligation under the Guaranty Policy.]

 

Section 12.16   Third Party Beneficiary.  The parties hereto acknowledge that the Securities Insurer is an express third party beneficiary hereof entitled to enforce any rights reserved to it hereunder as if it were actually a party hereto.

 

Section 12.17    [Suspension and Termination of Securities Insurer’s Rights.

 

(a)           During the continuation of a Securities Insurer Default, the rights granted or reserved to the Securities Insurer hereunder shall vest instead in the Majority Noteholders;

 

  

76

  

provided, however, that the Securities Insurer shall be entitled to any payments of the Securities Insurer Reimbursement Amount, and the Securities Insurer shall retain those rights under Section 11.01 to consent to the termination of this Agreement and Section 12.02 to consent to any amendment of this Agreement.

 

(b)           At such time as either (i) the Principal Balances of the Insured Securities have been reduced to zero or (ii) the Guaranty Policy has been terminated, and in either case of (i) or (ii) the Securities Insurer has been paid the Securities Insurer Reimbursement Amount in full and all other amounts owed under the Guaranty Policy and the Insurance Agreement (and the  Securities Insurer no longer has any obligation under the Guaranty Policy, except for breach thereof by the Securities Insurer), then the rights and benefits granted or reserved to the Securities Insurer hereunder (including the rights to direct certain actions and receive certain notices) shall terminate and the Noteholders (including in certain instances the Majority Noteholders) shall be entitled to the exercise of such rights and to receive such benefits of the Securities Insurer following such termination to the extent that such rights and benefits are applicable to the Noteholders (including the Majority Noteholders).]

 

  

77

  

IN WITNESS WHEREOF, the Issuing Entity, the Depositor, the Transferor, the Servicer, the Master Servicer and the Indenture Trustee have caused their names to be signed by their respective officers thereunto duly authorized, as of the day and year first above written, to this Sale and Servicing Agreement.

 

 

	 	 	 	
_______ HOME LOAN OWNER TRUST SERIES 

20 - , as Issuing Entity

	 
	
 

	 	 	
 

	 

 

	
 

	 	 	
By: [______________], not in its individual 

capacity but solely as Owner Trustee

	 
	
 

	 	 	
 

	 

 

	
  

	 	By:	
 

	 
	
  

	 	 	
Name:

	 
	 	 	 	Title:	 

 

  

	
  

	 	 	
[______________], as Depositor

	 
	
  

	 	 	
  

	 

 

	
  

	 	By:	
  

	 
	
  

	 	 	
Name:

	 
	 	 	 	Title:	 

 

  

	
  

	 	 	
_______  _______, as Transferor and

Master Servicer

	 
	
  

	 	 	
  

	 

 

  

	
  

	 	By:	
  

	 
	
  

	 	 	
Name:

	 
	 	 	 	Title:	 

 

  

	
  

	 	 	
______________,  not in its individual capacity but solely 

as Indenture Trustee

	 
	
  

	 	 	
  

	 

 

	
  

	 	By:	
  

	 
	
  

	 	 	
Name:

	 
	 	 	 	Title:	 

 

  

  

  

 

 

	 STATE OF 	)	 	 
	 	)	ss.:	 
	COUNTY OF	)	 	 

 

 

BEFORE ME, the undersigned authority, a Notary Public, on this             day of    20  , personally appeared                         , known to me to be a person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said [                              ], not in its individual capacity but in its capacity as Owner Trustee of                        HOME LOAN OWNER TRUST 20  -   as Issuing Entity, and that she executed the same as the act of such corporation for the purpose and consideration therein expressed, and in the capacity therein stated.

 

GIVEN UNDER MY HAND AND SEAL OF [                      ], this the      day of                    , 20  .

 

Notary Public, State of                     

 

  

  

  

 

	STATE OF 	)	 	 
	 	)	ss.:	 
	COUNTY OF	)	 	 

 

 

BEFORE ME, the undersigned authority, a Notary Public, on this      day of                         20  , personally appeared                           , known to me to be a person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said [                                    ], as the Depositor, and that he/she executed the same as the act of such corporation for the purpose and consideration therein expressed, and in the capacity therein stated.

 

GIVEN UNDER MY HAND AND SEAL OF [                      ], this the      day of                    , 20  .

 

Notary Public, State of                     

 

  

  

  

	STATE OF 	)	 	 
	 	)	ss.:	 
	COUNTY OF	)	 	 

  

 

BEFORE ME, the undersigned authority, a Notary Public, on this      day of                        20  , personally appeared                             , known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said                         , as the Transferor and Master Servicer, and that he executed the same as the act of such corporation for the purposes and consideration therein expressed, and in the capacity therein stated.

 

GIVEN UNDER MY HAND AND SEAL OF [                      ], this the      day of                    , 20  .

 

Notary Public, State of                     

 

  

  

  

	STATE OF 	)	 	 
	 	)	ss.:	 
	COUNTY OF	)	 	 

  

 

BEFORE ME, the undersigned authority, a Notary Public, on this      day of                        20  , personally appeared                         , known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of the said                                , not in its individual capacity, but in its capacity as Indenture Trustee, and that she executed the same as the act of such entity for the purposes and consideration

 

GIVEN UNDER MY HAND AND SEAL OF [                      ], this the      day of                    , 20  .

 

Notary Public, State of                     

 

  

  

  

EXHIBIT A

 

HOME LOAN SCHEDULE

 

 

Exh. A-1

 

 

  

  

  

EXHIBIT B

 

FORM OF SERVICER’S MONTHLY REMITTANCE REPORT

TO INDENTURE TRUSTEE

 

 

Exh. B-1

 

 

  

  

  

EXHIBIT C

 

FORM OF LOAN LIQUIDATION REPORT

 

	
Customer Name:  Account No.:

	  
	
Original Principal Balance:

	  
	
1.           Type of Liquidation (REO disposition/charge-off/short pay-off)

	
$____________________

	
Date last paid

	_____________________
	
Foreclosure

	_____________________
	
Date of Foreclosure

	_____________________
	
Date of REO

	_____________________
	
Date of REO Disposition

	_____________________
	
Property Sale Price/Estimated Market Value at disposition

	
$____________________

	
Settlement (short pay-off and collection actions)

	_____________________
	
Date of Settlement Payment

	_____________________
	
Defaulted Loan Sale

	_____________________
	
Date of Sale

	_____________________
	
Charge-off or Bankruptcy Date of Charge-off or Bankruptcy 

   Discharge

	_____________________
	
2.           Liquidation Proceeds

	_____________________
	
Principal Prepayment

	
$____________________

	
Property Sale Proceeds

	
$____________________

	
Insurance Proceeds

	
$____________________

	
Settlement Payment Loan Sale Proceeds

	
$____________________

	
Other (Itemize)

	
$____________________

	
Total Proceeds

	
$____________________

	
Liquidation Expenses Servicing Advances

	
$____________________

	
Servicing Fees

	
$____________________

	
Other Servicing Compensation

	
$____________________

	
Collection Agent or Attorney’s Fees

	
$____________________

	
Total Advances

	
$____________________

	
4.           Net Liquidation Proceeds (Item 2 minus Item 3)

	
$____________________

	
5.           Principal Balance of Mortgage Loan

	
$____________________

	
6.           Loss, if any (Item 5 minus Item 4)

	
$____________________

Exh. C-1

 

 

  

  

  

EXHIBIT D

 

FORM OF MASTER SERVICER RENEWAL NOTICE

 

[MASTER SERVICER]

 

Re:                                 Home Loan Asset Backed Notes, Series 20  -  

 

Dear Ladies and Gentlemen:

 

Reference is hereby made to the Sale and Servicing Agreement dated as of                       1, 20   (the “Agreement”) among                        Home Loan Owner Trust 20  -  , as Issuing Entity, [                              ], as Depositor,                            , as Transferor, Master Servicer, and as Servicer, and                            , as Indenture Trustee.  [The Indenture Trustee has not received notification from, as the Securities Insurer, that instructs the Indenture Trustee not to renew the term of as the Master Servicer under the Agreement.] Therefore, pursuant to Section 9.05 of the Agreement, the Indenture Trustee hereby notifies                             that its term as Master Servicer has been extended for a successive three calendar month period beginning with the month of                        ,             .

 

  

	
  

	 	 	
 

	 
	
  

	 	 	
             as Indenture Trustee

	 

	 	 	 	 	 
	 	 	 	 	 
	
  

	 	By:	
  

	 
	
  

	 	 	
Name:

	 
	 	 	 	Title:	 

 

cc:___[Securities Insurer]

 

[                                  ]

20 Park Avenue

New York, New York  10166

Attn:  [                            ]

 

                      Home Loan Owner Trust 20  -  

c/o [                           ]

[                                  ]

Attn:  [                            ]

 

Exh. D-1

 

 

  

  

  

EXHIBIT E

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exh. E-1ex101creditagreement6241

Loan No. 1005595            ACTIVE 201651983v.14    Execution copy      AMENDED AND RESTATED CREDIT AGREEMENT   Dated as of June 24, 2014   by and among   SAUL HOLDINGS LIMITED PARTNERSHIP,   as Borrower,   THE FINANCIAL INSTITUTIONS PARTY HERETO   AND THEIR ASSIGNEES UNDER SECTION 13.6.,   as Lenders,   WELLS FARGO BANK, NATIONAL ASSOCIATION,   as Administrative Agent,    and   JPMORGAN CHASE BANK, N.A.,   as Syndication Agent            WELLS FARGO SECURITIES, LLC,    as Sole Lead Arranger and Sole Bookrunner           

 

   - i -   TABLE OF CONTENTS   ARTICLE I. DEFINITIONS .................................................................................................................. 1   Section 1.1. Definitions. ...................................................................................................... 1   Section 1.2. General; References to Central Time. .............................................................. 28   Section 1.3. Financial Attributes of Non-Wholly Owned Subsidiaries. .............................. 28   Section 1.4. Pro Forma Calculations. .................................................................................. 28   Section 1.5. Amendment and Restatement of the Existing Credit   Agreement. ....................................................................................................... 29   ARTICLE II. CREDIT FACILITY ........................................................................................................ 29   Section 2.1. Revolving Loans. ............................................................................................. 29   Section 2.2. Letters of Credit. .............................................................................................. 30   Section 2.3. Swingline Loans. ............................................................................................. 34   Section 2.4. Rates and Payment of Interest on Loans. ......................................................... 36   Section 2.5. Number of Interest Periods. ............................................................................. 37   Section 2.6. Repayment of Loans. ....................................................................................... 37   Section 2.7. Prepayments. .................................................................................................... 37   Section 2.8. Continuation. ................................................................................................... 38   Section 2.9. Conversion. ...................................................................................................... 38   Section 2.10. Notes. ............................................................................................................... 39   Section 2.11. Voluntary Reductions of the Revolving Commitment. ................................... 39   Section 2.12. Extension of Revolving Termination Date. ..................................................... 40   Section 2.13. Expiration Date of Letters of Credit Past Revolving   Commitment Termination. ............................................................................... 40   Section 2.14. Amount Limitations. ........................................................................................ 40   Section 2.15. Funds Transfer Disbursements. ....................................................................... 41   Section 2.16. Increase in Revolving Commitments. .............................................................. 41   ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS .................................... 42   Section 3.1. Payments. ......................................................................................................... 42   Section 3.2. Pro Rata Treatment. ......................................................................................... 43   Section 3.3. Sharing of Payments, Etc. ................................................................................ 43   Section 3.4. Several Obligations. ......................................................................................... 44   Section 3.5. Fees. ................................................................................................................. 44   Section 3.6. Computations. .................................................................................................. 45   Section 3.7. Usury. ............................................................................................................... 45   Section 3.8. Statements of Account. .................................................................................... 46   Section 3.9. Defaulting Lenders. ......................................................................................... 46   Section 3.10. Taxes. ............................................................................................................... 49   ARTICLE IV. [RESERVED]. ................................................................................................................ 53   ARTICLE V. YIELD PROTECTION, ETC. ......................................................................................... 53   Section 5.1. Additional Costs; Capital Adequacy. ............................................................... 53   Section 5.2. Suspension of LIBOR Loans. .......................................................................... 54   Section 5.3. Illegality. .......................................................................................................... 55   Section 5.4. Compensation. ................................................................................................. 55   Section 5.5. Treatment of Affected Loans. .......................................................................... 55   Section 5.6. Affected Lenders.............................................................................................. 56     

 

   - ii -   Section 5.7. Change of Lending Office. .............................................................................. 57   Section 5.8. Assumptions Concerning Funding of LIBOR Loans. ...................................... 57   ARTICLE VI. CONDITIONS PRECEDENT ........................................................................................ 57   Section 6.1. Initial Conditions Precedent. ............................................................................ 57   Section 6.2. Conditions Precedent to All Loans and Letters of Credit. ............................... 59   ARTICLE VII. REPRESENTATIONS AND WARRANTIES ............................................................. 60   Section 7.1. Representations and Warranties. ...................................................................... 60   Section 7.2. Survival of Representations and Warranties, Etc............................................. 66   ARTICLE VIII. AFFIRMATIVE COVENANTS .................................................................................. 66   Section 8.1. Preservation of Existence and Similar Matters. ............................................... 66   Section 8.2. Compliance with Applicable Law. .................................................................. 67   Section 8.3. Maintenance of Property. ................................................................................. 67   Section 8.4. Conduct of Business. ....................................................................................... 67   Section 8.5. Insurance. ......................................................................................................... 67   Section 8.6. Payment of Taxes and Claims. ........................................................................ 68   Section 8.7. Books and Records; Inspections. ..................................................................... 68   Section 8.8. Use of Proceeds. .............................................................................................. 68   Section 8.9. Environmental Matters. ................................................................................... 69   Section 8.10. Further Assurances. ......................................................................................... 69   Section 8.11. Material Contracts............................................................................................ 69   Section 8.12. Guarantors. ....................................................................................................... 69   ARTICLE IX. INFORMATION............................................................................................................. 70   Section 9.1. Quarterly Financial Statements. ....................................................................... 70   Section 9.2. Year-End Statements. ...................................................................................... 70   Section 9.3. Compliance Certificate. ................................................................................... 71   Section 9.4. Other Information. ........................................................................................... 71   Section 9.5. Electronic Delivery of Certain Information. .................................................... 73   Section 9.6. Public/Private Information. .............................................................................. 74   Section 9.7. Patriot Act Notice; Compliance. ...................................................................... 74   ARTICLE X. NEGATIVE COVENANTS ............................................................................................ 74   Section 10.1. Financial Covenants. ........................................................................................ 74   Section 10.2. Liens; Negative Pledge. ................................................................................... 76   Section 10.3. Restrictions on Intercompany Transfers. ......................................................... 76   Section 10.4. Merger, Consolidation, Sales of Assets and Other   Arrangements. .................................................................................................. 76   Section 10.5. Plans. ................................................................................................................ 77   Section 10.6. Fiscal Year. ...................................................................................................... 77   Section 10.7. Modifications of Organizational Documents and Material   Contracts. ......................................................................................................... 77   Section 10.8. Subordinated Debt Prepayments; Amendments. ............................................. 78   Section 10.9. Transactions with Affiliates. ............................................................................ 78   Section 10.10. Environmental Matters. ................................................................................... 79   Section 10.11. Derivatives Contracts. ...................................................................................... 79   ARTICLE XI. DEFAULT ...................................................................................................................... 79   Section 11.1. Events of Default. ............................................................................................ 79     

 

   - iii -   Section 11.2. Remedies Upon Event of Default. ................................................................... 84   Section 11.3. Remedies Upon Default. .................................................................................. 85   Section 11.4. Marshaling; Payments Set Aside. .................................................................... 85   Section 11.5. Allocation of Proceeds. .................................................................................... 85   Section 11.6. Letter of Credit Collateral Account. ................................................................ 86   Section 11.7. Rescission of Acceleration by Requisite Lenders. ........................................... 87   Section 11.8. Rights Cumulative. .......................................................................................... 87   ARTICLE XII. THE ADMINISTRATIVE AGENT .............................................................................. 88   Section 12.1. Appointment and Authorization. ..................................................................... 88   Section 12.2. Wells Fargo as Lender. .................................................................................... 89   Section 12.3. Approvals of Lenders. ...................................................................................... 89   Section 12.4. Notice of Events of Default. ............................................................................ 90   Section 12.5. Administrative Agent’s Reliance. .................................................................... 90   Section 12.6. Indemnification of Administrative Agent. ....................................................... 91   Section 12.7. Lender Credit Decision, Etc. ............................................................................ 91   Section 12.8. Successor Administrative Agent. ..................................................................... 92   Section 12.9. Titled Agents.................................................................................................... 93   Section 12.10. Specified Derivatives Contracts. ...................................................................... 93   ARTICLE XIII. MISCELLANEOUS..................................................................................................... 93   Section 13.1. Notices. ............................................................................................................ 93   Section 13.2. Expenses. ......................................................................................................... 95   Section 13.3. Stamp, Intangible and Recording Taxes. ......................................................... 96   Section 13.4. Setoff. ............................................................................................................... 96   Section 13.5. Litigation; Jurisdiction; Other Matters; Waivers. ............................................ 97   Section 13.6. Successors and Assigns. .................................................................................. 98   Section 13.7. Amendments and Waivers. .............................................................................. 102   Section 13.8. Nonliability of Administrative Agent and Lenders.......................................... 104   Section 13.9. Confidentiality. ................................................................................................ 104   Section 13.10. Indemnification. ............................................................................................... 105   Section 13.11. Termination; Survival. ..................................................................................... 107   Section 13.12. Severability of Provisions. ............................................................................... 108   Section 13.13. GOVERNING LAW. ....................................................................................... 108   Section 13.14. Counterparts. .................................................................................................... 108   Section 13.15. Obligations with Respect to Loan Parties. ....................................................... 108   Section 13.16. Independence of Covenants. ............................................................................ 108   Section 13.17. Limitation of Liability. .................................................................................... 108   Section 13.18. Entire Agreement. ............................................................................................ 109   Section 13.19. Construction. .................................................................................................... 109   Section 13.20. Headings. ......................................................................................................... 109      SCHEDULE I Commitments   SCHEDULE 1.1. List of Loan Parties   SCHEDULE 7.1.(b) Ownership Structure   SCHEDULE 7.1.(f) Properties   SCHEDULE 7.1.(g) Indebtedness and Guaranties   SCHEDULE 7.1.(h) Material Contracts   SCHEDULE 7.1.(i) Litigation   SCHEDULE 7.1.(r) Affiliate Transactions   SCHEDULE 10.2. Certain Permitted Liens     

 

   - iv -   EXHIBIT A Form of Assignment and Assumption Agreement   EXHIBIT B Form of Guaranty   EXHIBIT C Form of Notice of Borrowing   EXHIBIT D Form of Notice of Continuation   EXHIBIT E Form of Notice of Conversion   EXHIBIT F Form of Notice of Swingline Borrowing   EXHIBIT G Form of Revolving Note   EXHIBIT H Form of Swingline Note   EXHIBIT I Form of Disbursement Instruction Agreement   EXHIBIT J Form of Opinion of Counsel   EXHIBIT K Form of Compliance Certificate        

 

            THIS AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) dated as of   June 24, 2014 by and among SAUL HOLDINGS LIMITED PARTNERSHIP, a limited partnership   formed under the laws of the State of Maryland (together with its successors and assigns, the   “Borrower”), each of the financial institutions initially a signatory hereto together with their successors   and assigns under Section 13.6. (the “Lenders”), the Lenders from time to time party hereto as Issuing   Banks, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the   “Administrative Agent”), and JPMORGAN CHASE BANK, N.A., as Syndication Agent (the   “Syndication Agent”).   WHEREAS, the Administrative Agent, the Issuing Banks and the Lenders desire to make   available to the Borrower a revolving credit facility in the initial amount of $275,000,000, with a   $30,000,000 swingline subfacility and a $40,000,000 letter of credit subfacility, on the terms and   conditions contained herein.   WHEREAS, the Borrower, the lenders party thereto, and Wells Fargo Bank, National   Association, as administrative agent, are currently party to that certain Credit Agreement, dated as of May   21, 2012 (as amended or otherwise modified immediately prior to the effectiveness of this Agreement, the   “Existing Credit Agreement”).   WHEREAS, the Borrower, the Lenders and the Administrative Agent have agreed to enter into   this Agreement in order to (i) amend and restate the Existing Credit Agreement in its entirety; (ii) re-   evidence the “Obligations” under, and as defined in, the Existing Credit Agreement, which shall be   repayable in accordance with the terms of this Agreement; and (iii) set forth the terms and conditions   under which the Lenders will, from time to time, make loans to or for the benefit of the Borrower.   WHEREAS, the parties hereto intend that this Agreement not constitute a novation of the   obligations and liabilities of the parties under the Existing Credit Agreement or be deemed to evidence or   constitute full repayment of such obligations and liabilities, but that this Agreement amend and restate in   its entirety the Existing Credit Agreement and re-evidence the obligations and liabilities of the Borrower   outstanding thereunder, which shall be payable in accordance with the terms hereof.   WHEREAS, the Borrower confirms that all obligations under the applicable “Loan Documents”   (as referred to and defined in the Existing Credit Agreement) shall continue in full force and effect as   modified or restated by the Loan Documents (as referred to and defined herein) and that, from and after   the Effective Date, all references to the “Credit Agreement” contained in any such existing “Loan   Documents” shall be deemed to refer to this Agreement.   NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which   are hereby acknowledged by the parties hereto, the parties hereto agree as follows:   ARTICLE I.  DEFINITIONS   Section 1.1.  Definitions.   In addition to terms defined elsewhere herein, the following terms shall have the following   meanings for the purposes of this Agreement:   “601 Pennsylvania Property” means the real property and improvements at 601 Pennsylvania   Avenue, N.W., Washington, D.C, comprised of approximately 225,000 square feet of office space and   ancillary ground floor retail space.     

 

   - 2 -   “Accession Agreement” means an Accession Agreement substantially in the form of Annex I to   the Guaranty.   “Additional Costs” has the meaning given that term in Section 5.1.(b).   “Adjusted EBITDA” means, for any Person for any given period, (a) the EBITDA of such   Person and its Subsidiaries determined on a consolidated basis for such period, minus (b) Capital   Reserves.   “Adjusted Total Asset Value” means Total Asset Value determined exclusive of assets that are   owned by Excluded Subsidiaries or Unconsolidated Affiliates.   “Administrative Agent” means Wells Fargo Bank, National Association as contractual   representative of the Lenders under this Agreement, or any successor Administrative Agent appointed   pursuant to Section 12.8.   “Administrative Questionnaire” means the Administrative Questionnaire completed by each   Lender and delivered to the Administrative Agent in a form supplied by the Administrative Agent to the   Lenders from time to time.   “Affected Lender” has the meaning given that term in Section 5.6.   “Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly   through one or more intermediaries, Controls or is Controlled by or is under common Control with the   Person specified.  In no event shall the Administrative Agent or any Lender be deemed to be an Affiliate   of the Borrower or the Parent.   “Agreement Date” means the date as of which this Agreement is dated.   “Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to   the Borrower or it Subsidiaries from time to time concerning or relating to bribery or corruption.   “Applicable Law” means all applicable provisions of federal, state and local statutes, treaties,   rules, guidelines, regulations, ordinances, codes, executive orders, and binding administrative or judicial   precedents or authorities, including the interpretation or administration thereof by any Governmental   Authority charged with the enforcement, interpretation or administration thereof, and all applicable   administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any   Governmental Authority, in each case having the force of law.   “Applicable Margin” means the percentage rate set forth below corresponding to the ratio of   Total Indebtedness of the Borrower and its Subsidiaries to Total Asset Value of the Borrower and its   Subsidiaries:      Level   Ratio of Total Indebtedness to   Total Asset Value Applicable   Margin for   LIBOR Loans   Applicable   Margin for   Base Rate   Loans   1 Less than 0.45 to 1.00 1.45% 0.45%   2   Greater than or equal to 0.45 to   1.00 but less than 0.50 to 1.00 1.55%   0.55%     

 

   - 3 -   3   Greater than or equal to 0.50 to   1.00 but less than 0.55 to 1.00 1.70%   0.70%   4   Greater than or equal to 0.55 to   1.00 2.00%   1.00%      The Applicable Margin for Loans shall be determined by the Administrative Agent from time to time,   based on the ratio of Total Indebtedness to Total Asset Value as set forth in the Compliance Certificate   most recently delivered by the Borrower pursuant to Section 9.3.  Any adjustment to the Applicable   Margin shall be effective as of the first day of the calendar month immediately following the month   during which the Borrower delivers to the Administrative Agent the applicable Compliance Certificate   pursuant to Section 9.3.  If the Borrower fails to deliver a Compliance Certificate pursuant to Section 9.3.,   the Applicable Margin shall equal the percentages corresponding to Level 4 until the first day of the   calendar month immediately following the month that the required Compliance Certificate is delivered.    Notwithstanding the foregoing, for the period from the Effective Date through but excluding the date on   which the Administrative Agent first determines the Applicable Margin for Loans as set forth above, the   Applicable Margin shall be determined based on Level 1.  Thereafter, such Applicable Margin shall be   adjusted from time to time as set forth in this definition.  The provisions of this definition shall be subject   to Section 2.4.(c).   “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an   Affiliate of a Lender, or (c) an entity or an Affiliate of any entity that administers or manages a Lender.   “Arranger” means Wells Fargo Securities, LLC, in its capacity as sole lead arranger and sole   bookrunner, and its successors.   “Assignment and Assumption” means an Assignment and Assumption Agreement among a   Lender, an Eligible Assignee and the Administrative Agent, substantially in the form of Exhibit A or any   other form approved by the Administrative Agent.   “Bankruptcy Code” means the Bankruptcy Code of 1978, as amended.   “Base Rate” means, at any time, the highest of (a) the Prime Rate, (b) the Federal Funds Rate   plus 0.50% and (c) the LIBOR Market Index Rate plus 1%.  Each change in the Base Rate shall take   effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds   Rate or the LIBOR Market Index Rate (provided that clause (c) shall not be applicable during any period   in which LIBOR is unavailable or unascertainable).   “Base Rate Loan” means a Revolving Loan (or any portion thereof) bearing interest at a rate   based on the Base Rate.   “Benefit Arrangement” means at any time an employee benefit plan within the meaning of   Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise   contributed to by any member of the ERISA Group.   “Borrower” has the meaning set forth in the introductory paragraph hereof.   “Borrower Information” has the meaning given that term in Section 2.4.(c).   “Business Day” means (a) for all purposes other than as set forth in clause (b) below, any day   (other than a Saturday, Sunday or legal holiday) on banks in Minneapolis, Minnesota and New York,   New York are open for the conduct of their commercial banking business, and (b) with respect to all     

 

   - 4 -   notices and determinations in connection with, and payments of principal and interest on, any LIBOR   Loan, or any Base Rate Loan as to which the interest rate is determined by reference to LIBOR, any day   that is a Business Day described in clause (a) and that is also a day for trading by and between banks in   Dollar deposits in the London interbank market.  Unless specifically referenced in this Agreement as a   Business Day, all references to “days” shall be to calendar days.   “Capital Reserves” means, for any period and with respect to any Property, an amount equal to   (a) the aggregate square footage of all completed space of such Property times (b) $0.15 times (c) the   number of days in such period divided by (d) 365.  If the term Capital Reserves is used without reference   to any specific Property, then it shall be determined on an aggregate basis with respect to all Properties   and the applicable Ownership Shares of all Properties of all Unconsolidated Affiliates.   “Capitalization Rate” means 7.00% for all Properties except with respect to Multifamily   Properties or Washington DC CBD Office Properties.  For Properties qualified as Multifamily Properties   or Washington DC CBD Office Properties, Capitalization Rate will mean 6.75%.  As of the Agreement   Date, the following three (3) Properties will be considered Washington DC CBD Office Properties and   Multifamily Properties: 601 Pennsylvania Property, the Clarendon Center Project and the Park Van Ness   Project.  For the avoidance of doubt, the Capitalization Rate of 6.75% shall apply with respect to all   income from each of the Clarendon Center Project and the Park Van Ness Project, including from the   multifamily portion and the other portions of such Properties.   “Capitalized Lease Obligations” means obligations under a lease (or other arrangement   conveying the right to use) to pay rent or other amounts, in each case that are required to be capitalized   for financial reporting purposes in accordance with GAAP.  The amount of a Capitalized Lease   Obligation is the capitalized amount of such obligation as would be required to be reflected on a balance   sheet of the applicable Person prepared in accordance with GAAP as of the applicable date.   “Cash Collateralize” means, to pledge and deposit with or deliver to the Administrative Agent,   for the benefit of the Issuing Banks or the Lenders, as collateral for Letter of Credit Liabilities or   obligations of Lenders to fund participations in respect of Letter of Credit Liabilities, cash or deposit   account balances or, if the Administrative Agent and the applicable Issuing Bank shall agree in their sole   discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory   to the Administrative Agent and such Issuing Bank.  “Cash Collateral” shall have a meaning correlative to   the foregoing and shall include the proceeds of such cash collateral and other credit support.   “Cash Equivalents” means: (a) securities issued, guaranteed or insured by the United States of   America or any of its agencies with maturities of not more than one year from the date acquired;   (b) certificates of deposit with maturities of not more than one year from the date acquired issued by a   United States federal or state chartered commercial bank of recognized standing, or a commercial bank   organized under the laws of any other country which is a member of the Organisation for Economic   Cooperation and Development, or a political subdivision of any such country, acting through a branch or   agency, which bank has capital and unimpaired surplus in excess of $500,000,000 and which bank or its   holding company has a short-term commercial paper rating of at least A-2 or the equivalent by S&P or at   least P-2 or the equivalent by Moody’s; (c) reverse repurchase agreements with terms of not more than   seven days from the date acquired, for securities of the type described in clause (a) above and entered into   only with commercial banks having the qualifications described in clause (b) above; (d) commercial paper   issued by any Person incorporated under the laws of the United States of America or any State thereof and   rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s, in   each case with maturities of not more than one year from the date acquired; and (e) investments in money   market funds registered under the Investment Company Act of 1940, as amended, which have net assets     

 

   - 5 -   of at least $500,000,000 and at least 85% of whose assets consist of securities and other obligations of the   type described in clauses (a) through (d) above.   “Clarendon Center Project” means a mixed use development comprised of approximately 244   rental apartment units, +/-170,000 square feet of office space and +/- 42,000 square feet of retail space   located on two parcels at the intersections of Clarendon Boulevard with North Highland and North   Garfield Streets in Clarendon, Arlington County, Virginia.   “Commitment” means, as to a Lender, such Lender’s Revolving Commitment.   “Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.) as   amended from time to time, and any successor statute.   “Compliance Certificate” has the meaning given that term in Section 9.3.   “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured   by net income (however denominated) or that are franchise Taxes or branch profits Taxes.   “Continue,” “Continuation” and “Continued” each refers to the continuation of a LIBOR Loan   from one Interest Period to another Interest Period pursuant to Section 2.8.   “Control” means 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.  “Controlling” and “Controlled” have meanings correlative thereto.   “Convert,” “Conversion” and “Converted” each refers to the conversion of a Loan of one Type   into a Loan of another Type pursuant to Section 2.9.   “Credit Event” means any of the following: (a) the making (or deemed making) of any Loan,   (b) the Conversion of a Base Rate Loan into a LIBOR Loan, (c) the Continuation of a LIBOR Loan and   (d) the issuance of a Letter of Credit or the amendment of a Letter of Credit that extends the maturity or   increases the Stated Amount of such Letter of Credit.   “Credit Rating” means the rating assigned by a Rating Agency to the senior unsecured long term   Indebtedness of a Person.   “Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship,   bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency,   reorganization, or similar Applicable Laws relating to the relief of debtors in the United States of America   or other applicable jurisdictions from time to time in effect.   “Default” means any of the events specified in Section 11.1., whether or not there has been   satisfied any requirement for the giving of notice, the lapse of time, or both.   “Defaulting Lender” means, subject to Section 3.9.(f), any Revolving Lender that (a) has failed   to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were   required to be funded hereunder unless such Revolving Lender notifies the Administrative Agent and the   Borrower in writing that such failure is the result of such Revolving Lender’s reasonable determination   that one or more conditions precedent to funding (each of which conditions precedent, together with any   applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the   Administrative Agent, any Issuing Bank, the Swingline Lender or any other Lender any other amount     

 

   - 6 -   required to be paid by it hereunder (including in respect of its participation in Letters of Credit or   Swingline Loans) within two (2) Business Days of the date when due, (b) has notified the Borrower, the   Administrative Agent, any Issuing Bank or the Swingline Lender in writing that it does not intend to   comply with its funding obligations hereunder, or has made a public statement to that effect (unless such   writing or public statement relates to such Revolving Lender’s obligation to fund a Loan hereunder and   states that such position is based on such Revolving Lender’s reasonable determination that a condition   precedent to funding (which condition precedent, together with any applicable default, shall be   specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three   (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in   writing to the Administrative Agent and the Borrower that it will comply with its prospective funding   obligations hereunder (provided that such Revolving Lender shall cease to be a Defaulting Lender   pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the   Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a   proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator,   trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization   or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other   state or federal regulatory authority acting in such a capacity; provided that a Revolving Lender shall not   be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that   Revolving Lender or any direct or indirect parent company thereof by a Governmental Authority so long   as such ownership interest does not result in or provide such Revolving Lender with immunity from the   jurisdiction of courts within the United States of America or from the enforcement of judgments or writs   of attachment on its assets or permit such Revolving Lender (or such Governmental Authority) to reject,   repudiate, disavow or disaffirm any contracts or agreements made with such Revolving Lender.  Any   determination by the Administrative Agent that a Revolving Lender is a Defaulting Lender under   clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Revolving   Lender shall be deemed to be a Defaulting Lender (subject to Section 3.9.(f)) upon delivery of written   notice of such determination to the Borrower, each Issuing Bank, the Swingline Lender and each   Revolving Lender.   “Derivatives Contract” means (a) any transaction (including any master agreement,   confirmation or other agreement with respect to any such transaction) now existing or hereafter entered   into by the Parent and the Borrower or any of their respective Subsidiaries (i) which is a rate swap   transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option,   equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign   exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction,   cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit   default swap, credit default option, total return swap, credit spread transaction, repurchase transaction,   reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index   transaction or forward purchase or sale of a security, commodity or other financial instrument or interest   (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is   similar to any transaction referred to in clause (i) above that is currently, or in the future becomes,   recurrently entered into in the financial markets (including terms and conditions incorporated by reference   in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates,   currencies, commodities, equity securities or other equity instruments, debt securities or other debt   instruments, economic indices or measures of economic risk or value, or other benchmarks against which   payments or deliveries are to be made, and (b) any combination of these transactions.  For the avoidance   of doubt, “Derivatives Contract” includes any “swap agreement” as defined in Section 101 of the   Bankruptcy Code.   “Derivatives Support Document” means (i) any Credit Support Annex comprising part of (and   as defined in) any Specified Derivatives Contract, and (ii) any document or agreement pursuant to which     

 

   - 7 -   cash, deposit accounts, securities accounts or similar financial asset collateral are pledged to or made   available for set-off by, a Specified Derivatives Provider, including any banker’s lien or similar right,   securing or supporting Specified Derivatives Obligation.   “Derivatives Termination Value” means, in respect of any one or more Derivatives Contracts,   after taking into account the effect of any legally enforceable netting agreement or provision relating   thereto, (a) for any date on or after the date such Derivatives Contracts have been terminated or closed   out, the termination amount or value determined in accordance therewith, and (b) for any date prior to the   date such Derivatives Contracts have been terminated or closed out, the then-current mark-to-market   value for such Derivatives Contracts, determined based upon one or more mid-market quotations or   estimates provided by any recognized dealer in Derivatives Contracts (which may include the   Administrative Agent, any Lender or any Affiliate of any thereof).   “Development Property” means a Property currently under development that has not achieved   an Occupancy Rate of 80.0% or more or, subject to the last sentence of this definition, on which the   improvements (other than tenant improvements on unoccupied space) related to the development have not   been completed. The term “Development Property” shall also include real property of the type described   in the immediately preceding sentence that satisfies both of the following conditions: (i) it is to be (but   has not yet been) acquired by the Borrower, any Subsidiary or any Unconsolidated Affiliate upon   completion of construction pursuant to a contract in which the seller of such real property is required to   develop or renovate prior to, and as a condition precedent to, such acquisition and (ii) a third party is   developing such property using the proceeds of a loan that is Guaranteed by, or is otherwise recourse to   the Borrower, any Subsidiary or any Unconsolidated Affiliate.  A Development Property on which all   improvements (other than tenant improvements on unoccupied space) related to the development of such   Property have been completed for at least twelve (12) months shall cease to constitute a Development   Property notwithstanding the fact that such Property has not achieved an Occupancy Rate of at least   80.0%.     “Disbursement Instruction Agreement” means a form substantially in the form of Exhibit I to   be delivered to the Administrative Agent pursuant to Section 6.1.(a), as the same may be amended,   restated or modified from time to time with the prior written approval of the Administrative Agent.   “Dollars” or “$” means the lawful currency of the United States of America.   “EBITDA” means, with respect to a Person for any period and without duplication, the sum of   (a) net income (loss) of such Person for such period determined on a consolidated basis excluding the   following (but only to the extent included in determining net income (loss) for such period):   (i) depreciation and amortization; (ii) interest expense; (iii) income tax expense; (iv) extraordinary or   nonrecurring items, including without limitation, gains and losses from the sale of operating Properties   (but not from the sale of Properties developed for the purpose of sale); and (v) equity in net income (loss)   of its Unconsolidated Affiliates plus (b) such Person’s Ownership Share of EBITDA of its   Unconsolidated Affiliates.  EBITDA shall be adjusted to remove any impact from amortization of   intangibles pursuant to FASB ASC 805.  For purposes of this definition, nonrecurring items shall be   deemed to include (x) gains and losses on early extinguishment of Indebtedness, and gains or losses on   hedging transactions relating to protection against variable interest rates on Indebtedness, (y) severance   and other restructuring charges and (z) transaction costs of acquisitions not permitted to be capitalized   pursuant to GAAP.   “Effective Date” means the later of (a) the Agreement Date and (b) the date on which all of the   conditions precedent set forth in Section 6.1. shall have been fulfilled or waived by all of the Lenders.     

 

   - 8 -   “Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and   (d) any other Person (other than a natural person) approved by the Administrative Agent (such approval   not to be unreasonably withheld or delayed).   “Eligible Property” means a Property which satisfies all of the following requirements: (a) such   Property is fully developed as a retail, office, industrial or mixed use Property; (b) such Property is either   (x) owned in fee simple by the Borrower, a Guarantor (other than the Parent) or a Wholly Owned   Subsidiary of the Borrower (other than an Excluded Subsidiary), (y) the following Property with respect   to which the Borrower, a Guarantor (other than the Parent) or a Wholly Owned Subsidiary (other than an   Excluded Subsidiary) of the Borrower owns a leasehold interest under a Ground Lease: Southdale Center   at 4R Mountain Road, Glen Burnie, Maryland 21061 or (z) any other Property with respect to which the   Borrower, a Guarantor (other than the Parent) or a Wholly Owned Subsidiary of the Borrower (other than   an Excluded Subsidiary) owns a leasehold interest under a Ground Lease which has been approved as an   “Eligible Property” by the Administrative Agent, such approval not to be unreasonably withheld or   delayed; provided, that to the extent the amount of Unencumbered Asset Value attributable to Eligible   Properties leased under Ground Leases, which are Eligible Properties under this clause (z), would exceed   10.0% of the aggregate Unencumbered Asset Value at any time, such excess shall be excluded; (c) such   Property is located in a State of the United States of America or in the District of Columbia; (d) neither   such Property, nor any interest of the Borrower, any Guarantor or any Wholly Owned Subsidiary of the   Borrower therein, is subject to (i) any Lien (other than Permitted Liens) or (ii) any Negative Pledge; (e) if   such Property is owned by a Guarantor or a Wholly Owned Subsidiary of the Borrower, neither the   Parent’s nor the Borrower’s direct or indirect ownership interest in such Guarantor or such Wholly   Owned Subsidiary of the Borrower, as applicable, is subject to (i) any Lien or (ii) any Negative Pledge;   (f) regardless of whether such Property is owned by the Borrower, a Guarantor or a Wholly Owned   Subsidiary, the Borrower or a Guarantor has the right directly, or indirectly through a Subsidiary, to take   the following actions without the need to obtain the consent of any Person: (i) to create Liens on such   Property as security for Indebtedness of the Borrower, such Guarantor or such Wholly Owned Subsidiary,   as applicable, and (ii) to sell, transfer or otherwise dispose of such Property; and (g) such Property is free   of all structural defects or major architectural deficiencies, title defects (other than Permitted Liens),   environmental conditions or other adverse matters except for defects, deficiencies, conditions or other   matters individually or collectively which are not material to the profitable operation of such Property.    The initial list of Eligible Properties shall be provided by the Borrower to the Administrative Agent and   the Lenders on the Agreement Date in the Officer’s Certificate.  For the avoidance of doubt, no Property   owned or leased by an Excluded Subsidiary shall be an “Eligible Property” hereunder.   “Environmental Laws” means any Applicable Law relating to environmental protection or the   manufacture, storage, remediation, disposal or clean-up of Hazardous Materials including, without   limitation, the following: Clean Air Act, 42 U.S.C. § 7401 et seq.; Federal Water Pollution Control Act,   33 U.S.C. § 1251 et seq.; Solid Waste Disposal Act, as amended by the Resource Conservation and   Recovery Act, 42 U.S.C. § 6901 et seq.; Comprehensive Environmental Response, Compensation and   Liability Act, 42 U.S.C. § 9601 et seq.; National Environmental Policy Act, 42 U.S.C. § 4321 et seq.;   regulations of the Environmental Protection Agency, any applicable rule of common law and any judicial   interpretation thereof relating primarily to the environment or Hazardous Materials, and any analogous or   comparable state or local laws, regulations or ordinances that concern Hazardous Materials or protection   of the environment, in each case to the extent constituting Applicable Law.   “Equity Interest” means, with respect to any Person, any share of capital stock of (or other   ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other   acquisition from such Person of any share of capital stock of (or other ownership or profit interests in)   such Person, whether or not certificated, any security convertible into or exchangeable for any share of   capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the     

 

   - 9 -   purchase or other acquisition from such Person of such shares (or such other interests), and any other   ownership or profit interest in such Person (including, without limitation, partnership, member or trust   interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or   other interest is authorized or otherwise existing on any date of determination.   “Equity Issuance” means any issuance or sale by a Person of any Equity Interest in such Person   and shall in any event include the issuance of any Equity Interest upon the conversion or exchange of any   security constituting Indebtedness that is convertible or exchangeable, or is being converted or   exchanged, for Equity Interests.   “ERISA” means the Employee Retirement Income Security Act of 1974, as in effect from time to   time.   “ERISA Event” means, with respect to the ERISA Group, (a) any “reportable event” as defined   in Section 4043 of ERISA with respect to a Plan (other than an event for which the 30-day notice period   is waived); (b) the withdrawal of a member of the ERISA Group from a 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) the incurrence by a member of the ERISA Group of any liability with respect to the withdrawal or   partial withdrawal from any Multiemployer Plan; (d) the incurrence by any member of the ERISA Group   of any liability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer   Plan; (e) the institution of proceedings to terminate a Plan or Multiemployer Plan by the PBGC; (f) the   failure by any member of the ERISA Group to make when due required contributions to a Multiemployer   Plan or Plan unless such failure is cured within 30 days or the filing pursuant to Section 412(c) of the   Internal Revenue Code or Section 302(c) of ERISA of an application for a waiver of the minimum   funding standard; (g) any other event or condition that might reasonably be expected to constitute grounds   under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any   Plan or Multiemployer Plan or the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the   receipt by any member of the ERISA Group of any notice or the  receipt by any Multiemployer Plan from   any member of the ERISA Group of any notice, concerning the imposition of Withdrawal Liability or a   determination that a Multiemployer Plan is, or is expected to be, insolvent (within the meaning of   Section 4245 of ERISA), in reorganization (within the meaning of Section 4241 of ERISA), or in   “critical” status (within the meaning of Section 432 of the Internal Revenue Code or Section 305 of   ERISA); (i)  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 any member of the ERISA Group or the   imposition of any Lien in favor of the PBGC under Title IV of ERISA; or (j) a determination that a Plan   is, or is reasonably expected to be, in “at risk” status (within the meaning of Section 430 of the Internal   Revenue Code or Section 303 of ERISA).   “ERISA Group” means the Parent, the Borrower, any Subsidiary of the Parent and all members   of a controlled group of corporations and all trades or businesses (whether or not incorporated) under   common control, which, together with the Parent, the Borrower or any such Subsidiary, are treated as a   single employer under Section 414 of the Internal Revenue Code.   “Event of Default” means any of the events specified in Section 11.1., provided that any   requirement for notice or lapse of time or any other condition has been satisfied.   “Excluded Subsidiary” means (1) any Subsidiary of the Borrower (a) holding title to assets that   are or are to become collateral for any Secured Indebtedness of such Subsidiary and (b) that is prohibited   from Guaranteeing the Indebtedness of any other Person pursuant to (i) any document, instrument or   agreement evidencing such Secured Indebtedness or (ii) a provision of such Subsidiary’s organizational     

 

   - 10 -   documents which provision was included in such Subsidiary’s organizational documents as a condition to   the extension of such Secured Indebtedness; (2) any Subsidiary of the Borrower which is otherwise   identified by the Borrower in writing to the Administrative Agent and approved in writing by the   Administrative Agent (such approval not to be unreasonably withheld or delayed) as an “Excluded   Subsidiary,” and whose Property is, effective as of the date of such designation (which designation shall   not have retroactive effect) not included in, or removed from, the calculation of Unencumbered Asset   Value, provided that for purposes of this clause (2), (i) immediately before and after such designation, no   Default or Event of Default shall have occurred and be continuing and (ii) immediately after giving  effect   to such designation, the Borrower shall be in compliance with the covenants set forth in Section 10.1. on a   pro forma basis in accordance with Section 1.4. (and upon the reasonable request of the Administrative   Agent the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable   detail the calculations demonstrating such compliance); and (3) any IDOT Finance Subsidiary. The initial   list of Excluded Subsidiaries shall be provided by the Borrower to the Administrative Agent and the   Lenders on the Agreement Date in the Officer’s Certificate.     “Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if,   and to the extent that, all or a portion of the liability of such Loan Party for or the Guarantee of such Loan   Party of, or the grant by such Loan Party of a Lien to secure, such Swap Obligation (or any liability or   guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or   order of the Commodity Futures Trading Commission (or the application or official interpretation of any   thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract   participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the   liability for or the Guarantee of such Loan Party or the grant of such Lien becomes effective with respect   to such Swap Obligation (such determination being made after giving effect to any applicable keepwell,   support or other agreement for the benefit of the applicable Loan Party, including under Section 31 of the   Guaranty). If a Swap Obligation arises under a master agreement governing more than one swap, such   exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which   such Guarantee or Lien is or becomes illegal for the reasons identified in the immediately preceding   sentence of this definition.   “Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient   or required to be withheld or deducted from a payment to a Recipient, (a) 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 Recipient 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 an Applicable Law in effect on the date on   which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an   assignment request by the Borrower under Section 5.6.) or (ii) such Lender changes its lending office,   except in each case to the extent that, pursuant to Section 3.10., 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 Recipient’s   failure to comply with Section 3.10.(g) and (d) any U.S. federal withholding Taxes imposed under   FATCA.   “Fair Market Value” means, (a) with respect to a security listed on a national securities   exchange or the NASDAQ National Market, the price of such security as reported on such exchange or   market by any widely recognized reporting method customarily relied upon by financial institutions and   (b) with respect to any other property, the price which could be negotiated in an arm’s-length free market   transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or     

 

   - 11 -   compulsion to complete the transaction.  Except as otherwise provided herein, Fair Market Value shall be   determined by the Responsible Officers of the Parent acting together in good faith and determining value   in accordance with GAAP, as conclusively evidenced by a certification thereof delivered to the   Administrative Agent or, with respect to any asset valued at no more than $1,000,000, such determination   may be made by the chief financial officer of the Parent evidenced by an officer’s certificate delivered to   the Administrative Agent.   “FASB ASC” means the Accounting Standards Codification of the Financial Accounting   Standards Board.   “FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this   Agreement (or any amended or successor version that is substantively comparable and not materially   more onerous to comply with) and any current or future regulations or official interpretations thereof and   any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code.   “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each   day during such period to the weighted average of the rates on overnight Federal funds transactions with   members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or,   if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of   New York, or, if such rate is not so published for any day which is a Business Day, the average of the   quotations for such day on such transactions received by the Administrative Agent from three Federal   Funds brokers of recognized standing selected by the Administrative Agent.   “Fees” means the fees and commissions provided for or referred to in Section 3.5. and any other   fees payable by the Borrower hereunder or under any other Loan Document.   “FIRREA” means the Financial Institution Recovery, Reform and Enforcement Act of 1989, as   amended.   “Fixed Charges” means, with respect to any Person and for a given period, the sum of (a) the   Interest Expense of such Person for such period, plus (b) the aggregate of all regularly scheduled principal   payments on Indebtedness payable by such Person during such period (excluding balloon, bullet or   similar payments of principal due upon the stated maturity of Indebtedness), plus (c) the aggregate   amount of all Preferred Dividends paid by such Person during such period.  Such Person’s Ownership   Share of the Fixed Charges of its Unconsolidated Affiliates will be included when determining the Fixed   Charges of such Person.   “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than   that in which the Borrower is resident for tax purposes.  For purposes of this definition, the United States   of America, each State thereof and the District of Columbia shall be deemed to constitute a single   jurisdiction.   “Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to an   Issuing Bank, such Defaulting Lender’s Revolving Commitment Percentage of the outstanding Letter of   Credit Liabilities with respect to Letters of Credit issued by such Issuing Bank other than Letter of Credit   Liabilities as to which such Defaulting Lender’s participation obligation has been reallocated to other   Revolving Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the   Swingline Lender, such Defaulting Lender’s Revolving Commitment Percentage of outstanding   Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation   obligation has been reallocated to other Revolving Lenders.     

 

   - 12 -   “Fund” means any Person (other than a natural person) that is (or will be) engaged in making,   purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the   ordinary course of its business.   “Funds From Operations” means, with respect to a Person and for a given period, Funds from   Operations as defined from time to time by National Association of Real Estate Investment Trusts, Inc.   “GAAP” means generally accepted accounting principles in the United States of America set   forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of   Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards   Board (including Statement of Financial Accounting Standards No. 168, “The FASB Accounting   Standards Codification”) or in such other statements by such other entity as may be approved by a   significant segment of the accounting profession in the United States of America, which are applicable to   the circumstances as of the date of determination.   “Governmental Approvals” means all authorizations, consents, approvals, licenses and   exemptions of, registrations and filings with, and reports to, all Governmental Authorities.   “Governmental Authority” means any national, state or local government (whether domestic or   foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial,   administrative, public or statutory instrumentality, authority, body, agency, bureau, commission, board,   department or other entity (including, without limitation, the Federal Deposit Insurance Corporation, the   Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority)   or any arbitrator with authority to bind a party at law.   “Ground Lease” means a ground lease containing the following terms and conditions: (a) a   remaining term (exclusive of any unexercised extension options) of forty (40) years or more from the   Agreement Date; (b) the right of the lessee to mortgage and encumber its interest in the leased property   without the consent of the lessor; (c) the obligation of the lessor to give the holder of any mortgage Lien   on such leased property written notice of any defaults on the part of the lessee and agreement of such   lessor that such lease will not be terminated until such holder has had a reasonable opportunity to cure or   complete foreclosures, and fails to do so; (d) reasonable transferability of the lessee’s interest under such   lease, including ability to sublease; and (e) such other rights customarily required by mortgagees making   a loan secured by the interest of the holder of the leasehold estate demised pursuant to a ground lease.   “Guaranteed Obligations” means, collectively, (a) the Obligations and (b) all existing or future   payment and other obligations owing by any Loan Party under any Specified Derivatives Contract (other   than any Excluded Swap Obligation).   “Guarantor” means any Person that is party to the Amended and Restated Guaranty as a   “Guarantor” and shall in any event include the Parent, Saul Subsidiary I Limited Partnership, Saul   Subsidiary II Limited Partnership and each Material Subsidiary (unless an Excluded Subsidiary).   “Guaranty,” “Guaranteed” or to “Guarantee” as applied to any obligation means and includes:    (a) a guaranty (other than by endorsement of negotiable instruments for collection in the ordinary course   of business), directly or indirectly, in any manner, of any part or all of such obligation, or (b) an   agreement, direct or indirect, contingent or otherwise, and whether or not constituting a guaranty, the   practical effect of which is to assure the payment or performance (or payment of damages in the event of   nonperformance) of any part or all of such obligation whether by: (i) the purchase of securities or   obligations, (ii) the purchase, sale or lease (as lessee or lessor) of property or the purchase or sale of   services primarily for the purpose of enabling the obligor with respect to such obligation to make any     

 

   - 13 -   payment or performance (or payment of damages in the event of nonperformance) of or on account of any   part or all of such obligation, or to assure the owner of such obligation against loss, (iii) the supplying of   funds to or in any other manner investing in the obligor with respect to such obligation, (iv) repayment of   amounts drawn down by beneficiaries of letters of credit (including Letters of Credit), or (v) the   supplying of funds to or investing in a Person on account of all or any part of such Person’s obligation   under a Guaranty of any obligation or indemnifying or holding harmless, in any way, such Person against   any part or all of such obligation.  Notwithstanding the foregoing, a guaranty of customary nonrecourse   carveouts shall not be deemed a “Guaranty” for purposes of this Agreement.  As the context requires,   “Guaranty” shall also mean the amended and restated guaranty executed and delivered pursuant to   Section 6.1. or 8.14. and substantially in the form of Exhibit B.   “Hazardous Materials” means all or any of the following: (a) substances that are defined or   listed in, or otherwise classified pursuant to, any applicable Environmental Laws as “hazardous   substances,” “hazardous materials,” “hazardous wastes,” “toxic substances” or any other formulation   intended to define, list or classify substances by reason of deleterious properties such as ignitability,   corrosivity, reactivity, carcinogenicity, reproductive toxicity, “TCLP” toxicity, or “EP toxicity”; (b) oil,   petroleum or petroleum derived substances, natural gas, natural gas liquids or synthetic gas and drilling   fluids, produced waters and other wastes associated with the exploration, development or production of   crude oil, natural gas or geothermal resources; (c) any flammable substances or explosives or any   radioactive materials; (d) asbestos in any form; (e) toxic mold; and (f) electrical equipment which   contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts   per million.   “IDOT Finance Subsidiary” means any Subsidiary of the Borrower that (i) has been formed   solely for the purpose of entering into financing transactions in the ordinary course of the Borrower’s and   its Subsidiaries’ business and consistent with past practice, and (ii) is not a Material Subsidiary.   “Indebtedness” means, with respect to a Person, at the time of computation thereof, all of the   following (without duplication): (a) all obligations of such Person in respect of money borrowed or for   the deferred purchase price of property or services, however excluding trade debt incurred in the ordinary   course of business), and excluding all accrued expenses; (b) all obligations of such Person, whether or not   for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing   extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting   purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar   instruments, upon which interest charges are customarily paid or that are issued or assumed as full or   partial payment for property or for services rendered; (c) Capitalized Lease Obligations of such Person;   (d) all reimbursement obligations (contingent or otherwise) of such Person under or in respect of any   letters of credit or acceptances (whether or not the same have been presented for payment); (e) all   Off-Balance Sheet Obligations of such Person; (f) all obligations of such Person to purchase, redeem,   retire, defease or otherwise make any payment in respect of any Mandatorily Redeemable Stock issued by   such Person or any other Person, valued at the greater of its voluntary or involuntary liquidation   preference plus accrued and unpaid dividends; (g) all obligations of such Person in respect of any   purchase obligation, repurchase obligation, takeout commitment or forward equity commitment, in each   case evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be   satisfied by the issuance of Equity Interests (other than Mandatorily Redeemable Stock)); (h) net   obligations under any Derivatives Contract not entered into as a hedge against variable interest rates on   Indebtedness, in an amount equal to the Derivatives Termination Value thereof at such time but in no   event shall be less than zero; (i) all Indebtedness of other Persons which such Person has Guaranteed or is   otherwise recourse to such Person (except for guaranties of customary exceptions for fraud,   misapplication of funds, environmental indemnities, voluntary bankruptcy, collusive involuntary   bankruptcy and other similar customary exceptions to non-recourse liability); (j) all Indebtedness of     

 

   - 14 -   another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent   or otherwise, to be secured by) any Lien on property or assets owned by such Person, even though such   Person has not assumed or become liable for the payment of such Indebtedness or other payment   obligation; and (k) such Person’s Ownership Share of the Indebtedness of any Unconsolidated Affiliate of   such Person.  Indebtedness of any Person shall include Indebtedness of any partnership or joint venture in   which such Person is a general partner or joint venturer to the extent of such Person’s Ownership Share of   such partnership or joint venture (except if such Indebtedness, or portion thereof, is recourse to such   Person, in which case the greater of such Person’s Ownership Share of such Indebtedness or the amount   of the recourse portion of the Indebtedness, shall be included as Indebtedness of such Person).  All Loans   and Letter of Credit Liabilities shall constitute “Indebtedness” of the Borrower.   “Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to   any payment made by or on account of any obligation of the Borrower or any other Loan Party under any   Loan Document and (b) to the extent not otherwise described in the immediately preceding clause (a),   Other Taxes.   “Intellectual Property” has the meaning given that term in Section 7.1.(s).   “Interest Expense” means, with respect to a Person for any period, without duplication, (a) total   interest expense of such Person, including capitalized interest not funded under a construction loan   interest reserve account, and in any event shall include all interest expense with respect to any   Indebtedness of Borrower and its Subsidiaries in respect of which such Person is wholly or partially liable   whether pursuant to any repayment, interest carry, performance guarantee or otherwise, determined on a   consolidated basis in accordance with GAAP for such period, plus (b) such Person’s Ownership Share of   Interest Expense of Unconsolidated Affiliates for such period.   “Interest Period” means with respect to each LIBOR Loan, each period commencing on the date   such LIBOR Loan is made, or in the case of the Continuation of a LIBOR Loan the last day of the   preceding Interest Period for such LIBOR Loan, and ending on the numerically corresponding day in the   first calendar month thereafter, as the Borrower may select in a Notice of Borrowing, Notice of   Continuation or Notice of Conversion, as the case may be, except that each Interest Period that   commences on the last Business Day of a calendar month (or on any day for which there is no   numerically corresponding day in the appropriate subsequent calendar month) shall end on the last   Business Day of the appropriate subsequent calendar month.  Notwithstanding the foregoing: (a) if any   Interest Period would otherwise end after the Termination Date, such Interest Period shall end on the   Termination Date and (b) each Interest Period that would otherwise end on a day which is not a Business   Day shall end on the immediately following Business Day (or, if such immediately following Business   Day falls in the next calendar month, on the immediately preceding Business Day).   “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.   “Investment” means, with respect to any Person, any acquisition or investment (whether or not   of a controlling interest) by such Person, by means of any of the following:  (a) the purchase or other   acquisition of any Equity Interest in another Person, (b) a loan, advance or extension of credit to, capital   contribution to, Guaranty of Indebtedness of, or purchase or other acquisition of any Indebtedness of,   another Person, including any partnership or joint venture interest in such other Person, or (c) the   purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person   that constitute the business or a division or operating unit of another Person. Any commitment to make an   Investment in any other Person, as well as any option of another Person to require an Investment in such   Person, shall constitute an Investment.  Except as expressly provided otherwise, for purposes of   determining compliance with any covenant contained in the Loan Documents, the amount of any     

 

   - 15 -   Investment shall be the amount actually invested, without adjustment for subsequent increases or   decreases in the value of such Investment.   “Issuing Bank” means Wells Fargo or any other Lender, each in its capacity as an issuer of   Letters of Credit pursuant to Section 2.2.   “L/C Commitment Amount” has the meaning given to that term in Section 2.2.(a).   “L/C Disbursement” has the meaning given to that term in Section 3.9.(b).   “Lender” means each financial institution from time to time party hereto as a “Lender,” together   with its respective successors and permitted assigns, and, as the context requires, includes the Swingline   Lender; provided, however, that except as otherwise expressly provided herein, the term “Lender” shall   exclude any Lender (or its Affiliates) in its capacity as a Specified Derivatives Provider.   “Lending Office” means, for each Lender and for each Type of Loan, the office of such Lender   specified in such Lender’s Administrative Questionnaire or in the applicable Assignment and   Assumption, or such other office of such Lender as such Lender may notify the Administrative Agent in   writing from time to time.   “Letter of Credit” has the meaning given that term in Section 2.2.(a).   “Letter of Credit Collateral Account” means a special deposit account maintained by the   Administrative Agent, for the benefit of the Administrative Agent, the Issuing Banks and the Lenders, and   under the sole dominion and control of the Administrative Agent.   “Letter of Credit Documents” means, with respect to any Letter of Credit, collectively, any   application therefor, any certificate or other document presented in connection with a drawing under such   Letter of Credit and any other agreement, instrument or other document governing or providing for (a) the   rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b) any   collateral security for any of such obligations.   “Letter of Credit Liabilities” means, without duplication, at any time and in respect of any   Letter of Credit, the sum of (a) the Stated Amount of such Letter of Credit plus (b) the aggregate unpaid   principal amount of all Reimbursement Obligations of the Borrower at such time due and payable in   respect of all drawings made under such Letter of Credit.  For purposes of this Agreement, a Lender   (other than the Lender then acting as the applicable Issuing Bank) shall be deemed to hold a Letter of   Credit Liability in an amount equal to its participation interest under Section 2.2. in the related Letter of   Credit, and the Lender then acting as the applicable Issuing Bank shall be deemed to hold a Letter of   Credit Liability in an amount equal to its retained interest in the related Letter of Credit after giving effect   to the acquisition by the Lenders (other than the Lender then acting as the applicable Issuing Bank) of   their participation interests under such Section.   “Level” has the meaning given that term in the definition of the term “Applicable Margin.”   “LIBOR” means, with respect to any LIBOR Loan for any Interest Period, the rate of interest   obtained by dividing (i) the rate of interest per annum determined on the basis of the rate for deposits in   Dollars for a period equal to the applicable Interest Period which appears on Reuters Screen LIBOR01   Page (or any applicable successor page) at approximately 11:00 a.m. (London time) two Business Days   prior to the first day of the applicable Interest Period by (ii) a percentage equal to 1 minus the stated   maximum rate (stated as a decimal) of all reserves, if any, required to be maintained with respect to     

 

   - 16 -   Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) as specified in Regulation D of   the Board of Governors of the Federal Reserve System (or against any other category of liabilities which   includes deposits by reference to which the interest rate on LIBOR Loans is determined or any applicable   category of extensions of credit or other assets which includes loans by an office of any Lender outside of   the United States of America).  If, for any reason, the rate referred to in the preceding clause (i) does not   appear on Reuters Screen LIBOR01 Page (or any applicable successor page), then the rate to be used for   such clause (i) shall be determined by the Administrative Agent to be the arithmetic average of the rate   per annum at which deposits in Dollars would be offered by first class banks in the London interbank   market to the Administrative Agent at approximately 11:00 a.m. (London time) two Business Days prior   to the first day of the applicable Interest Period for a period equal to such Interest Period.  Any change in   the maximum rate or reserves described in the preceding clause (ii) shall result in a change in LIBOR on   the date on which such change in such maximum rate becomes effective.   “LIBOR Loan” means a Revolving Loan (or any portion thereof) (other than a Base Rate Loan)   bearing interest at a rate based on LIBOR.   “LIBOR Market Index Rate” means, for any day, LIBOR as of that day that would be   applicable for a LIBOR Loan having a one-month Interest Period determined at approximately 10:00 a.m.   Central time for such day (rather than 11:00 a.m. (London time) two Business Days prior to the first day   of such Interest Period as otherwise provided in the definition of “LIBOR”), or if such day is not a   Business Day, the immediately preceding Business Day.  The LIBOR Market Index Rate shall be   determined on a daily basis.   “Lien” as applied to the property of any Person means:  (a) any security interest, encumbrance,   mortgage, deed to secure debt, deed of trust, assignment of leases and rents, pledge, lien, hypothecation,   assignment, charge or lease constituting a Capitalized Lease Obligation, conditional sale or other title   retention agreement, or other security title or encumbrance of any kind in respect of any property of such   Person, or upon the income, rents or profits therefrom; (b) any arrangement, express or implied, under   which any property of such Person is transferred, sequestered or otherwise identified for the purpose of   subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to   the payment of the general, unsecured creditors of such Person; and (c) the filing of any financing   statement under the UCC or its equivalent in any jurisdiction, other than any precautionary filing not   otherwise constituting or giving rise to a Lien, including a financing statement filed (i) in respect of a   lease not constituting a Capitalized Lease Obligation pursuant to Section 9-505 (or a successor provision)   of the Uniform Commercial Code or its equivalent as in effect in an applicable jurisdiction or (ii) in   connection with a sale or other disposition of accounts or other assets not prohibited by this Agreement in   a transaction not otherwise constituting or giving rise to a Lien.   “Loan” means a Revolving Loan or a Swingline Loan.   “Loan Document” means this Agreement, each Note, the Guaranty, each Letter of Credit   Document and each other document or instrument now or hereafter executed and delivered by a Loan   Party in connection with, pursuant to or relating to this Agreement (other than any Specified Derivatives   Contract).   “Loan Party” means each of the Borrower, the Parent and each other Person who guarantees all   or a portion of the Obligations.  Schedule 1.1. sets forth the Loan Parties in addition to the Borrower and   the Parent as of the Agreement Date.   “Mandatorily Redeemable Stock” means, with respect to any Person, any Equity Interest of   such Person which by the terms of such Equity Interest (or by the terms of any security into which it is     

 

   - 17 -   convertible or for which it is exchangeable or exercisable), upon the happening of any event or otherwise,   (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than   an Equity Interest to the extent redeemable in exchange for common stock or other equivalent common   Equity Interests at the option of the issuer of such Equity Interest), (b) is convertible into or exchangeable   or exercisable for Indebtedness or Mandatorily Redeemable Stock, or (c) is redeemable at the option of   the holder thereof, in whole or in part (other than an Equity Interest which is redeemable solely in   exchange for common stock or other equivalent common Equity Interests); in each case, on or prior to the   date on which all Loans are scheduled to be due and payable in full.   “Material Adverse Effect” means a materially adverse effect on (a) the business, assets,   liabilities, financial condition or results of operations of the Parent and its Subsidiaries taken as a whole,   (b) the ability of the Parent, the Borrower and the other Loan Parties, taken as a whole, to perform their   obligations under the Loan Documents, (c) the validity or enforceability of the Loan Documents taken as   a whole, or (d) the rights and remedies of the Lenders, the Issuing Banks and the Administrative Agent   under the Loan Documents taken as a whole.   “Material Contract” means (a) any Tenant Lease the termination of which, prior to the end of its   term, could reasonably be expected to cause a Material Adverse Effect and (b) any contract or other   arrangement (other than Loan Documents and Specified Derivatives Contracts), whether written or oral,   to which the Parent, the Borrower, any Subsidiary of the Borrower or any other Loan Party is a party as to   which the breach, nonperformance, cancellation or failure to renew (if renewable by its terms) by any   party thereto could reasonably be expected to have a Material Adverse Effect.   “Material Subsidiary” means any Subsidiary of the Parent having assets with a Fair Market   Value equal to or greater than $2,500,000.   “Moody’s” means Moody’s Investors Service, Inc. and its successors.   “Mortgage” means a mortgage, deed of trust, deed to secure debt or similar security instrument   made by a Person owning an interest in real estate granting a Lien on such interest in real estate as   security for the payment of Indebtedness.   “Mortgage Receivable” means a promissory note secured by a Mortgage of which the Parent,   the Borrower or a Subsidiary of the Parent is the holder and retains the rights of collection of all payments   thereunder.   “Multiemployer Plan” means at any time a multiemployer plan within the meaning of   Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an   obligation to make contributions or has within the preceding six plan years made contributions, including   for these purposes any Person which ceased to be a member of the ERISA Group during such six-year   period.   “Multifamily Property” means (a) the Clarendon Center Project, (b) the Park Van Ness Project   and (c) each other Property which is designated as such by the Administrative Agent and the Borrower   from time to time.   “Negative Pledge” means, with respect to a given asset, any provision of a document, instrument   or agreement (other than any Loan Document) which prohibits or purports to prohibit the creation or   assumption of any Lien on such asset as security for Indebtedness of the Person owning such asset or any   other Person; provided, however, that an agreement that conditions a Person’s ability to encumber its   assets upon the maintenance of one or more specified ratios that limit such Person’s ability to encumber     

 

   - 18 -   its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific   assets, shall not constitute a Negative Pledge.   “Net Operating Income” or “NOI”  means, for any Property and for a given period, the sum of   the following (without duplication and determined on a consistent basis with prior periods): (a) rents and   other revenues received in the ordinary course from such Property (including proceeds of rent loss or   business interruption insurance but excluding pre-paid rents and revenues and security deposits except to   the extent applied in satisfaction of tenants’ obligations for rent) minus (b) all expenses paid (excluding   interest but including an appropriate accrual for property taxes and insurance) related to the ownership,   operation or maintenance of such Property, including but not limited to property taxes, assessments and   the like, insurance, utilities, payroll costs, maintenance, repair and landscaping expenses, marketing   expenses, and general and administrative expenses (including an appropriate allocation for legal,   accounting, advertising, marketing and other expenses incurred in connection with such Property, but   specifically excluding general overhead expenses of the Parent or the Borrower and the Subsidiaries of the   Parent and any property management fees) minus (c) the Capital Reserves for such Property as of the end   of such period minus (d) the greater of (i) the actual property management fee paid during such period   with respect to such property, and (ii) an imputed management fee in the amount of 3% of the gross   revenues for such Property for such period.   “Net Proceeds” means with respect to an Equity Issuance by a Person, the aggregate amount of   all cash and the Fair Market Value of all other property (other than securities of such Person being   converted or exchanged in connection with such Equity Issuance) received by such Person in respect of   such Equity Issuance net of investment banking fees, legal fees, accountants’ fees, underwriting discounts   and commissions and other customary fees and expenses actually incurred by such Person in connection   with such Equity Issuance.   “Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at   such time.   “Nonrecourse Indebtedness” means, with respect to a Person, Indebtedness for borrowed money   in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of   funds, environmental indemnities, voluntary bankruptcy, collusive involuntary bankruptcy and other   similar customary exceptions to non-recourse liability) is contractually limited to specific assets of such   Person encumbered by a Lien securing such Indebtedness.   “Note” means a Revolving Note or a Swingline Note.   “Notice of Borrowing” means a notice substantially in the form of Exhibit C (or such other form   reasonably acceptable to the Administrative Agent and containing the information required in such   Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.1.(b) evidencing the   Borrower’s request for a borrowing of Revolving Loans.   “Notice of Continuation” means a notice substantially in the form of Exhibit D (or such other   form reasonably acceptable to the Administrative Agent and containing the information required in such   Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.8. evidencing the Borrower’s   request for the Continuation of a LIBOR Loan.   “Notice of Conversion” means a notice substantially in the form of Exhibit E (or such other form   reasonably acceptable to the Administrative Agent and containing the information required in such   Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.9. evidencing the Borrower’s   request for the Conversion of a Loan from one Type to another Type.     

 

   - 19 -   “Notice of Swingline Borrowing” means a notice substantially in the form of Exhibit F (or such   other form reasonably acceptable to the Administrative Agent and containing the information required in   such Exhibit) to be delivered to the Swingline Lender pursuant to Section 2.3.(b) evidencing the   Borrower’s request for a Swingline Loan.   “Obligations” means, individually and collectively: (a) the aggregate principal balance of, and all   accrued and unpaid interest on, all Loans; (b) all Reimbursement Obligations and all other Letter of   Credit Liabilities; and (c) all other indebtedness, liabilities, obligations, covenants and duties of the   Borrower and the other Loan Parties owing to the Administrative Agent, any Issuing Bank or any Lender   of every kind, nature and description, under or in respect of this Agreement or any of the other Loan   Documents, including, without limitation, the Fees and indemnification obligations, whether direct or   indirect, absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated, and   whether or not evidenced by any promissory note.  For the avoidance of doubt, “Obligations” shall not   include Specified Derivatives Obligations.   “Occupancy Rate” means, with respect to a Property at any time, the ratio, expressed as a   percentage, of (a) the net rentable square footage of such Property actually occupied by tenants that are   not affiliated with the Borrower and paying rent at rates not materially less than rates generally prevailing   at the time the applicable lease was entered into, pursuant to binding leases as to which no material   monetary default has occurred and has continued to the date of determination unremedied for 60 or more   days to (b) the aggregate net rentable square footage of such Property.  For the purposes of the definition   of “Occupancy Rate,” a tenant shall be deemed to actually occupy a Property notwithstanding a   temporary cessation of operations for renovation, repairs or other temporary reason, or for the purpose of   completing tenant build out or that is otherwise scheduled to be open for business within 180 days of such   date.   “OFAC” has the meaning given that term in Section 7.1.(x).   “Officer’s Certificate” means a certificate from the chief executive officer or chief financial   officer of the Parent certifying the “Eligible Properties” and “Excluded Subsidiaries” as of the Agreement   Date and a description of the “Permitted Ground Lease Encumbrance”.   “Off-Balance Sheet Obligations” means liabilities and obligations of the Parent, the Borrower,   any Subsidiary or any other Person in respect of “off-balance sheet arrangements” (as defined in   Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act) which the Parent would be   required to disclose in the “Management’s Discussion and Analysis of Financial Condition and Results of   Operations” section of the Parent’s report on Form 10-Q or Form 10-K (or their equivalents) which the   Parent is required to file with the Securities and Exchange Commission (or any Governmental Authority   substituted therefor).   “Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a   present or former connection between such Recipient and the jurisdiction imposing such Tax (other than   connections arising from such Recipient 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” means all present or future stamp, court or documentary, intangible, recording,   filing 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     

 

   - 20 -   otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes   imposed with respect to an assignment (other than an assignment made pursuant to Section 5.6.).   “Ownership Share” means, with respect to any Subsidiary of a Person (other than a Wholly   Owned Subsidiary) or any Unconsolidated Affiliate of a Person, the greater of (a) such Person’s relative   nominal direct and indirect ownership interest (expressed as a percentage) in such Subsidiary or   Unconsolidated Affiliate or (b) subject to compliance with Section 9.4.(n), such Person’s relative direct   and indirect economic interest (calculated as a percentage) in such Subsidiary or Unconsolidated Affiliate   determined in accordance with the applicable provisions of the declaration of trust, articles or certificate   of incorporation, articles of organization, partnership agreement, joint venture agreement or other   applicable organizational document of such Subsidiary or Unconsolidated Affiliate.   “Parent” means Saul Centers, Inc., a Maryland corporation, its successors and assigns.   “Park Van Ness Project” means a 271-unit residential project with approximately 9,000 square   feet of street-level retail located at 4455 Connecticut Avenue NW, Washington, DC.   “Participant” has the meaning given that term in Section 13.6.(d).   “Participant Register” has the meaning given that term in Section 13.6(c).   “Patriot Act” means The Uniting and Strengthening America by Providing Appropriate Tools   Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into   law October 26, 2001)).   “PBGC” means the Pension Benefit Guaranty Corporation and any successor agency.   “Permitted Ground Lease Encumbrance” means the encumbrance in respect of one of the   Properties owned by the Borrower and its Subsidiaries existing as of the Agreement Date and described in   the Officer’s Certificate.   “Permitted Liens” means, with respect to any asset or property of a Person, (a) Liens securing   taxes, assessments and other charges or levies imposed by any Governmental Authority (excluding any   Lien imposed pursuant to any of the provisions of ERISA or pursuant to any Environmental Laws), in all   cases which are not yet due or which are being contested in good faith and with respect to which adequate   reserves or other appropriate provisions are being maintained in accordance with GAAP; (b) the claims of   materialmen, mechanics, carriers, warehousemen or landlords for labor, materials, supplies or rentals   incurred in the ordinary course of business, which, in each case, are not at the time required to be paid or   discharged under Section 8.6.; (c) Liens consisting of deposits or pledges made, in the ordinary course of   business, in connection with, or to secure payment of, obligations under workers’ compensation,   unemployment insurance or similar Applicable Laws; (d) Liens consisting of encumbrances in the nature   of zoning restrictions, easements, customary declarations, and rights or restrictions of record or otherwise   imposed by an applicable Governmental Authority on the use of real property, which do not materially   detract from the value of such property or impair the intended use thereof in the business of such Person;   (e) the rights of tenants under leases or subleases (including customary “no build” restrictions) not   interfering with the ordinary conduct of business of such Person; and (f) Liens in favor of (x) any Loan   Party, existing as of the Agreement Date and set forth on Schedule 10.2. or (y) the Administrative Agent   for its benefit and the benefit of the Lenders and the Issuing Banks.   “Person” means any natural person, corporation, limited partnership, general partnership, joint   stock company, limited liability company, limited liability partnership, joint venture, association,     

 

   - 21 -   company, trust, bank, trust company, land trust, business trust or other organization, whether or not a   legal entity, or any other nongovernmental entity, or any Governmental Authority.   “Plan” means at any time an employee pension benefit plan (other than a Multiemployer Plan)   which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of   the Internal Revenue Code and either (a) is maintained, or contributed to, by any member of the ERISA   Group for employees of any member of the ERISA Group or (b) has at any time within the preceding six   years been maintained, or contributed to, by any Person which was at such time a member of the ERISA   Group for employees of any Person which was at such time a member of the ERISA Group.   “Post-Default Rate” means, in respect of any principal of any Loan or any Reimbursement   Obligation that is not paid when due, the rate otherwise applicable plus an additional five percent (5.0%)   per annum and with respect to any other Obligation that is not paid when due (whether at stated maturity,   by acceleration, by optional or mandatory prepayment or otherwise), a rate per annum equal to the Base   Rate as in effect from time to time plus the Applicable Margin for Base Rate Loans plus five percent   (5.0%).   “Preferred Dividends” means, for any period and without duplication, all Restricted Payments   paid during such period on Preferred Equity Interests issued by the Parent, the Borrower or any   Subsidiary.  Preferred Dividends shall not include dividends or distributions (a) paid or payable solely in   Equity Interests (other than Mandatorily Redeemable Stock) payable to holders of such class of Equity   Interests, (b) paid or payable to the Parent, the Borrower or a Subsidiary, or (c) constituting or resulting in   the redemption of Preferred Equity Interests, other than scheduled redemptions not constituting balloon,   bullet or similar redemptions in full.   “Preferred Equity Interest” means, with respect to any Person, Equity Interests in such Person   which are entitled to preference or priority over any other Equity Interest in such Person in respect of the   payment of dividends or distribution of assets upon liquidation or both.   “Prime Rate” means, at any time, the rate of interest per annum publicly announced from time to   time by the Administrative Agent as its prime rate. Each change in the Prime Rate shall be effective as of   the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge   that the rate announced publicly by the Administrative Agent as its prime rate is an index or base rate and   shall not necessarily be its lowest or best rate charged to its customers or other banks.   “Principal Office” means the office of the Administrative Agent located at 608 Second Avenue   S., 11th Floor, Minneapolis, Minnesota 55402-1916, or any other subsequent office that the   Administrative Agent shall have specified as the Principal Office by written notice to the Borrower and   the Lenders.   “Property” means a parcel (or group of related parcels) of real property developed (or to be   developed) by the Borrower, or any Subsidiary of the Borrower or any Unconsolidated Affiliate.   “Property Management Agreements” means, collectively, all agreements entered into by the   Borrower or any other Loan Party pursuant to which the Borrower or such other Loan Party engages a   Person to advise it with respect to the management of a given Property and/or to manage a given   Property.   “Pro Rata Share” means, as to each Lender, the ratio, expressed as a percentage of (a) the   amount of such Lender’s Revolving Commitment to (b) the aggregate amount of the Revolving   Commitments of all Lenders; provided, however, that if at the time of determination the Revolving     

 

   - 22 -   Commitments have terminated or been reduced to zero, the “Pro Rata Share” of each Lender shall be the   ratio, expressed as a percentage of (A) the sum of the unpaid principal amount of all outstanding   Revolving Loans, Swingline Loans and Letter of Credit Liabilities owing to such Lender as of such date   to (B) the sum of the aggregate unpaid principal amount of all outstanding Revolving Loans, Swingline   Loans and Letter of Credit Liabilities of all Lenders as of such date.   “Qualified Plan” means a Benefit Arrangement that is intended to be tax-qualified under   Section 401(a) of the Internal Revenue Code.   “Rating Agency” means S&P, Moody’s or any other nationally recognized securities rating   agency selected by the Borrower and approved of by the Administrative Agent in writing.   “Recipient” means (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, as   applicable.   “Register” has the meaning given that term in Section 13.6.(c).   “Regulatory Change” means, with respect to any Lender, any change effective after the   Agreement Date in Applicable Law (including without limitation, Regulation D of the Board of   Governors of the Federal Reserve System) or the adoption or making after such date of any interpretation,   directive or request applying to a class of banks, including such Lender, of or under any Applicable Law   (whether or not having the force of law and whether or not failure to comply therewith would be   unlawful) by any Governmental Authority or monetary authority charged with the interpretation or   administration thereof or compliance by any Lender with any request or directive regarding capital   adequacy or liquidity requirements.  Notwithstanding anything herein to the contrary, (a) the Dodd-Frank   Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives   thereunder or issued in connection therewith and (b) 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 “Regulatory Change,” regardless of the date   enacted, adopted or issued.   “Reimbursement Obligation” means the absolute, unconditional and irrevocable obligation of   the Borrower to reimburse the applicable Issuing Bank for any drawing honored by such Issuing Bank   under a Letter of Credit.   “REIT” means a Person qualifying for treatment as a “real estate investment trust” under the   Internal Revenue Code.   “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners,   directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.   “Requisite Lenders” means, as of any date, (a) Lenders having at least 66-2/3% of the aggregate   amount of the Revolving Commitments, or (b) if the Revolving Commitments have been terminated or   reduced to zero, Lenders holding at least 66-2/3% of the principal amount of the aggregate outstanding   Loans and Letter of Credit Liabilities; provided that (i) in determining such percentage at any given time,   all then existing Defaulting Lenders will be disregarded and excluded, and (ii) at all times when two or   more Lenders (excluding Defaulting Lenders) are party to this Agreement, the term “Requisite Lenders”   shall in no event mean less than two Lenders.  For purposes of this definition, a Lender shall be deemed to   hold a Swingline Loan or a Letter of Credit Liability to the extent such Lender has acquired a     

 

   - 23 -   participation therein under the terms of this Agreement and has not failed to perform its obligations in   respect of such participation.   “Responsible Officer” means with respect to the Parent, the Borrower or any other Subsidiary of   the Parent, the chief financial officer and President of the Parent, the Borrower or such Subsidiary, as   applicable.  For purposes of this Agreement, references to the Borrower’s or a Subsidiary’s Responsible   Officers shall be deemed to refer to the Parent’s Responsible Officers.   “Restricted Payment” means: (a) any dividend or other distribution, direct or indirect, on   account of any Equity Interest of the Parent, the Borrower or any of the Subsidiaries of the Parent now or   hereafter outstanding, except a dividend payable solely in shares of that class of Equity Interest to the   holders of that class; (b) any redemption, conversion, exchange, retirement, sinking fund or similar   payment, purchase or other acquisition for value, direct or indirect, of any Equity Interest of the Parent,   the Borrower or any of the Subsidiaries of the Parent now or hereafter outstanding; (c) any payment or   prepayment of principal of, premium, if any, or interest on, redemption, conversion, exchange, purchase,   retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Debt; and (d)   any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights   to acquire any Equity Interests of the Parent, the Borrower or any of the Subsidiaries of the Parent now or   hereafter outstanding.   “Revolving Commitment” means, as to each Lender (other than the Swingline Lender), such   Lender’s obligation to make Revolving Loans pursuant to Section 2.1., to issue (in the case of the Issuing   Banks) and to participate (in the case of the other Lenders) in Letters of Credit pursuant to Section 2.2.(i),   and to participate in Swingline Loans pursuant to Section 2.3.(e), in an amount up to, but not exceeding   the amount set forth for such Lender on Schedule I as such Lender’s “Revolving Commitment Amount”   or as set forth in any applicable Assignment and Assumption, or agreement executed by a Person   becoming a Lender in accordance with Section 2.16., as the same may be reduced from time to time   pursuant to Section 2.11. or increased or reduced as appropriate to reflect any assignments to or by such   Lender effected in accordance with Section 13.6. or increased as appropriate to reflect any increase   effected in accordance with Section 2.16.   “Revolving Commitment Percentage” means, as to each Lender with a Revolving   Commitment, the ratio, expressed as a percentage, of (a) the amount of such Lender’s Revolving   Commitment to (b) the aggregate amount of the Revolving Commitments of all Revolving Lenders;   provided, however, that if at the time of determination the Revolving Commitments have been terminated   or been reduced to zero, the “Revolving Commitment Percentage” of each Lender with a Revolving   Commitment shall be the “Revolving Commitment Percentage” of such Lender in effect immediately   prior to such termination or reduction.   “Revolving Credit Exposure” means, as to any Revolving Lender at any time, the aggregate   principal amount at such time of its outstanding Revolving Loans and such Revolving Lender’s   participation in Letter of Credit Liabilities and Swingline Loans at such time.   “Revolving Lender” means a Lender having a Revolving Commitment.   “Revolving Loan” means a loan made by a Lender to the Borrower pursuant to Section 2.1.(a).   “Revolving Note” means a promissory note of the Borrower substantially in the form of   Exhibit G, payable to the order of a Lender in a principal amount equal to the amount of such Lender’s   Revolving Commitment.     

 

   - 24 -   “Revolving Termination Date” means June 22, 2018, or such later date to which the Revolving   Termination Date may be extended pursuant to Section 2.12.   “S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC   business, and its successors.   “Saul Family” means B. Francis Saul II and his spouse, siblings, and lineal descendants and the   spouses of such siblings and lineal descendants and the heirs, beneficiaries, devisees or legatees that are   or were members of the same family by blood, marriage or adoption as any of the same or any of the   foregoing (and for purposes of this definition, any shares of Equity Interests which a Person no longer   owns as a result of death shall be deemed still to be owned by such Person unless not held by such   Person’s estate, trusts established under such Person’s will, or the heirs, beneficiaries, devisees or legatees   of such Person that are or were members of the same family by blood, marriage or adoption as such   Person).  Entities owned or controlled by members of the Saul Family shall be deemed owned by such   members for purposes of this Agreement.   “Secured Indebtedness” means, with respect to a Person as of an given date, the aggregate   principal amount of all Indebtedness of such Person outstanding on such date that is secured in any   manner by any Lien on any property, and in the case of the Borrower, shall include (without duplication),   the Borrower’s Ownership Share of the Secured Indebtedness of its Unconsolidated Affiliates, as   applicable.   “Secured Recourse Debt” means, with respect to any Person, Secured Indebtedness of such   Person (other than Nonrecourse Indebtedness of such Person) to the extent of recourse to the Borrower or   any other Loan Party.   “Securities Act” means the Securities Act of 1933, as amended from time to time, together with   all rules and regulations issued thereunder.   “Solvent” means, when used with respect to any Person, that (a) the fair value and the fair salable   value of its assets (excluding any Indebtedness due from any Affiliate of such Person) are each in excess   of the fair valuation of its total liabilities (including all contingent liabilities computed at the amount   which, in light of all facts and circumstances existing at such time, represents the amount that could   reasonably be expected to become an actual and matured liability); (b) such Person is able to pay its debts   or other obligations in the ordinary course as they mature; and (c) such Person has capital not   unreasonably small to carry on its business and all business in which it proposes to be engaged.   “Specified Derivatives Contract” means any Derivatives Contract, together with any   Derivatives Support Document relating thereto, that is made or entered into at any time, or in effect at any   time now or hereafter, whether as a result of an assignment or transfer or otherwise, between the   Borrower, the Parent or any other Loan Party and any Specified Derivatives Provider.   “Specified Derivatives Obligations” means all indebtedness, liabilities, obligations, covenants   and duties of the Parent, the Borrower or other Loan Party under or in respect of any Specified   Derivatives Contract, whether direct or indirect, absolute or contingent, due or not due, liquidated or   unliquidated, and whether or not evidenced by any written confirmation.   “Specified Derivatives Provider” means any Lender, or any Affiliate of a Lender that is a party   to a Derivatives Contract at the time the Derivatives Contract is entered into.     

 

   - 25 -   “Stated Amount” means the amount available to be drawn by a beneficiary under a Letter of   Credit from time to time, as such amount may be increased or reduced from time to time in accordance   with the terms of such Letter of Credit.   “Subordinated Debt” means Indebtedness for money borrowed of the Borrower or any of its   Subsidiaries that is subordinated in right of payment and otherwise to the Loans, the other Guaranteed   Obligations and the Specified Derivatives Obligations, if any, in a manner satisfactory to the   Administrative Agent in its sole and absolute discretion.   “Subsidiary” means, for any Person, any corporation, partnership, limited liability company or   other entity of which at least a majority of the Equity Interests having by the terms thereof ordinary voting   power to elect a majority of the board of directors or other individuals performing similar functions of   such corporation, partnership, limited liability company or other entity (without regard to the occurrence   of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or   more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, and   shall include all Persons the accounts of which are consolidated with those of such Person pursuant to   GAAP.   “Substantial Amount” means, at the time of determination thereof, an amount in excess of   20.0% of total consolidated assets (exclusive of depreciation) at such time of the Borrower and its   Subsidiaries determined on a consolidated basis.   “Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under   any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of   the Commodity Exchange Act.   “Swingline Commitment” means the Swingline Lender’s obligation to make Swingline Loans   pursuant to Section 2.3. in an amount up to, but not exceeding the amount set forth in the first sentence of   Section 2.3.(a), as such amount may be reduced from time to time in accordance with the terms hereof.   “Swingline Lender” means Wells Fargo Bank, National Association, together with its respective   successors and assigns.   “Swingline Loan” means a loan made by the Swingline Lender to the Borrower pursuant to   Section 2.3.   “Swingline Maturity Date” means the date which is seven (7) Business Days prior to the   Revolving Termination Date.   “Swingline Note” means the promissory note of the Borrower substantially in the form of   Exhibit H, payable to the order of the Swingline Lender in a principal amount equal to the amount of the   Swingline Commitment as originally in effect and otherwise duly completed.   “Tangible Net Worth” means, with respect to any Person as of a given date, the stockholders’   equity of such Person determined on a consolidated basis, plus accumulated depreciation and   amortization, minus (to the extent included when determining stockholders’ equity): (a) the amount of   any write-up in the book value of any assets reflected in any balance sheet resulting from revaluation   thereof or any write-up in excess of the cost of such assets acquired, and (b) the aggregate of all amounts   appearing on the assets side of any such balance sheet for franchises, licenses, permits, patents, patent   applications, copyrights, trademarks, service marks, trade names, goodwill, treasury stock, experimental     

 

   - 26 -   or organizational expenses and other like assets which would be classified as intangible assets under   GAAP, all determined as of such date on a consolidated basis.   “Taxes” means 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.   “Tenant Lease” means any lease entered into by the Borrower, any Loan Party or any Subsidiary   with respect to any portion of a Property.   “Total Asset Value” means, with respect to any Person at a given time, the sum (without   duplication) of all of the following of such Person determined on a consolidated basis in accordance with   GAAP applied on a consistent basis: (a) cash and cash equivalents (other than tenant deposits and other   cash and cash equivalents that are subject to a Lien or a Negative Pledge or the disposition of which is   restricted in any way); plus (b) with respect to all Properties owned (or leased pursuant to a Ground   Lease) by the Borrower or any Subsidiary for the immediately preceding period of twelve consecutive   calendar months ending on such date of determination, the quotient of (i) NOI of such Person for the   immediately preceding period of twelve consecutive calendar months divided by (ii) the Capitalization   Rate; plus (c) the GAAP book value, as of the date of acquisition, of Properties acquired during the   twelve consecutive calendar months most recently ended; plus (d) the GAAP book value of all   Development Properties; plus (e) the GAAP book value of Unimproved Land.  Notwithstanding the   foregoing, for the first twelve consecutive calendar months after a Property has ceased to be a   Development Property, NOI attributable to that Property shall be determined on the basis of its income   for the immediately preceding three calendar month period, annualized.  Such Person’s Ownership Share   of assets held by Unconsolidated Affiliates (excluding assets of the type described in the immediately   preceding clause (a)) will be included in the calculation of Total Asset Value consistent with the above   described treatment for wholly-owned assets.  NOI attributable to (x) Properties acquired or disposed of   during the three calendar month period ending immediately prior to any date of determination of Total   Asset Value or (y) Properties that were Development Properties at the end of such three calendar month   period, shall not be included in the calculation of Total Asset Value.  Notwithstanding the foregoing, for   purposes of determining Total Asset Value, to the extent the amount of Total Asset Value attributable to   Properties leased under Ground Leases, which are Eligible Properties under clause (z) of the definition of   “Eligible Property,” would exceed 10.0% of the aggregate Total Asset Value at any time, such excess   shall be excluded.   “Total Indebtedness” means, with respect to any Person, all Indebtedness of such Person and   such Person’s Ownership Share of all Indebtedness of all Subsidiaries of such Person.   “Treasury Rate” means, as of any date of determination, the yield on the Treasury Constant   Maturity Series with a ten-year maturity, as reported on the Business Day immediately preceding such   date in Federal Reserve Statistical Release H.15, Selected Interest Rates (“Release H.15”) of the Board of   Governors of the Federal Reserve System, or any successor publication. If for any reason Release H.15 is   no longer published, the Administrative Agent shall select a comparable publication to determine the   Treasury Rate.   “Type” with respect to any Revolving Loan, refers to whether such Loan or portion thereof is a   LIBOR Loan or a Base Rate Loan.   “UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.     

 

   - 27 -   “Unconsolidated Affiliate” means, with respect to any Person, any other Person in whom such   Person holds, either directly or indirectly through one or more Subsidiaries an Investment, which   Investment is accounted for in the financial statements of such Person on an equity basis of accounting   and whose financial results would not be consolidated under GAAP with the financial results of such   Person on the consolidated financial statements of such Person.   “Unencumbered Asset Value” means (a) the Unencumbered NOI (excluding NOI attributable to   Development Properties) for the immediately preceding period of twelve consecutive calendar months   divided by the Capitalization Rate, plus (b) the GAAP book value of all Properties acquired during the   twelve calendar month period most recently ended which Properties are not subject to any Lien (other   than Permitted Liens) or any Negative Pledge.  Notwithstanding the foregoing, for the first twelve   consecutive calendar months after a Property has ceased to be a Development Property, Unencumbered   NOI attributable to that Property shall be determined on the basis of its income for the immediately   preceding three calendar month period, annualized.  Unencumbered NOI attributable to Properties   disposed of during the three calendar month period ending immediately prior to any date of determination   of Unencumbered Asset Value shall not be included in the calculation of Unencumbered Asset Value.   “Unencumbered NOI”  means, for any period, NOI from all Eligible Properties.   “Unencumbered Pool Debt Service” means, with respect to any Person for any period, the   aggregate amount of principal and interest payments in respect of all Unsecured Indebtedness of such   Person that would be due and payable in respect thereof during such period, computed assuming a   thirty (30) year amortization schedule and a per annum interest rate equal to the greater of: (a) the   Treasury Rate plus 2.50% and (b) 6.50%.   “Unimproved Land” means land on which no development (other than improvements that are   not material and are temporary in nature) has occurred and for which no development is scheduled in the   following twelve (12) months.   “Unsecured Indebtedness” means, with respect to a Person, Indebtedness of such Person that is   not Secured Indebtedness; provided, however, that any Indebtedness that is secured only by a pledge of   Equity Interests shall be deemed to be Unsecured Indebtedness.   “U.S. Person” means any Person that is a “United States Person” as defined in Section   7701(a)(30) of the Internal Revenue Code.   “U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section   3.10.(g)(ii)(B)(III).   “Washington DC CBD Office Property” means (a) 601 Pennsylvania and (b) each other   Property which is designated as such by the Administrative Agent and the Borrower from time to time.   “Wells Fargo” means Wells Fargo Bank, National Association, and its successors and assigns.   “Wholly Owned Subsidiary” means any Subsidiary of a Person in respect of which all of the   Equity Interests (other than, in the case of a corporation, directors’ qualifying shares) are at the time   directly or indirectly owned or controlled by such Person or one or more other Subsidiaries of such   Person or by such Person and one or more other Subsidiaries of such Person.   “Withdrawal Liability” means any liability as a result of a complete or partial withdrawal from   a Multiemployer Plan as such terms are defined in Part I of Subtitle E of Title IV of ERISA.     

 

   - 28 -   “Withholding Agent” means (a) the Borrower, (b) any other Loan Party and (c) the   Administrative Agent, as applicable.   Section 1.2.  General; References to Central Time.   Unless otherwise indicated, all accounting terms, ratios and measurements shall be interpreted or   determined in accordance with GAAP as in effect as of the Agreement Date.  Notwithstanding the   preceding sentence, the calculation of liabilities shall not include any fair value adjustments to the   carrying value of liabilities to record such liabilities at fair value pursuant to electing the fair value option   election under FASB ASC 825-10-25 (formerly known as FAS 159, The Fair Value Option for Financial   Assets and Financial Liabilities) or other FASB standards allowing entities to elect fair value option for   financial liabilities. Accordingly, the amount of liabilities shall be the historical cost basis, which   generally is the contractual amount owed adjusted for amortization or accretion of any premium or   discount.  References in this Agreement to “Sections,” “Articles,” “Exhibits” and “Schedules” are to   sections, articles, exhibits and schedules herein and hereto unless otherwise indicated.  References in this   Agreement to any document, instrument or agreement (a) shall include all exhibits, schedules and other   attachments thereto, (b) shall include all documents, instruments or agreements issued or executed in   replacement thereof, to the extent permitted hereby and (c) shall mean such document, instrument or   agreement, or replacement or predecessor thereto, as amended, supplemented, restated or otherwise   modified from time to time to the extent not otherwise stated herein or prohibited hereby and in effect at   any given time.  Wherever from the context it appears appropriate, each term stated in either the singular   or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter   gender shall include the masculine, the feminine and the neuter.  Whenever reference is made to   Borrower’s knowledge, or a similar qualification, knowledge means the actual current knowledge of   Parent’s Responsible Officers.  Unless explicitly set forth to the contrary, a reference to “Subsidiary”   means a Subsidiary of the Borrower or a Subsidiary of such Subsidiary and a reference to an “Affiliate”   means a reference to an Affiliate of the Borrower, and a reference to an “Unconsolidated Affiliate” means   a reference to an Unconsolidated Affiliate of the Borrower.  Titles and captions of Articles, Sections,   subsections and clauses in this Agreement are for convenience only, and neither limit nor amplify the   provisions of this Agreement.  Unless otherwise indicated, all references to time are references to Central   time.   Section 1.3.  Financial Attributes of Non-Wholly Owned Subsidiaries.   When determining the Applicable Margin and compliance by the Parent or the Borrower with any   financial covenant contained in any of the Loan Documents (a) only the Ownership Share of the Parent or   the Borrower, as applicable, of the financial attributes of a Subsidiary that is not a Wholly Owned   Subsidiary shall be included and (b) the Parent’s Ownership Share of the Borrower shall be deemed to be   100.0%.   Section 1.4.  Pro Forma Calculations.   All pro forma computations required to be made hereunder giving effect to any transaction   (including any designation of a Subsidiary as an Excluded Subsidiary) shall be calculated giving pro   forma effect thereto (and to any other such transaction consummated since the first day of the period for   which such pro forma computation is being made and on or prior to the date of such computation) as if   such transaction had occurred on the first day of the period of twelve consecutive calendar months ending   with the most recent calendar month for which financial statements shall have been delivered pursuant to   Section 9.1 or 9.2 (or, prior to the delivery of any such financial statements, ending on March 31, 2014),   and, to the extent applicable, the historical earnings and cash flows associated with the assets subject to   such transaction and any related incurrence or reduction of Indebtedness.  If any Indebtedness bears a     

 

   - 29 -   floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be   calculated as if the rate in effect on the date of determination had been the applicable rate for the entire   period (taking into account any Derivatives Contract applicable to such Indebtedness).   Section 1.5.  Amendment and Restatement of the Existing Credit Agreement.   The parties to this Agreement agree that, upon (i) the execution and delivery by each of the   parties hereto of this Agreement and (ii) satisfaction of the conditions set forth in Section 6.1, the terms   and provisions of the Existing Credit Agreement shall be and hereby are amended, superseded and   restated in their entirety by the terms and provisions of this Agreement.  This Agreement is not intended   to and shall not constitute a novation.  All “Loans” made and “Obligations” incurred under the Existing   Credit Agreement which are outstanding on the Effective Date shall continue as Obligations under (and   shall be governed by the terms of) this Agreement and the other Loan Documents.  Without limiting the   foregoing, upon the effectiveness hereof: (a) all references in the “Loan Documents” (as defined in the   Existing Credit Agreement) to the “Administrative Agent”, the “Credit Agreement” and the “Loan   Documents” shall be deemed to refer to the Administrative Agent, this Agreement and the Loan   Documents, (b) all obligations constituting “Obligations” with any Lender or any Affiliate of any Lender   which are outstanding on the Effective Date shall continue as Obligations under this Agreement and the   other Loan Documents and (c) the Administrative Agent shall make such reallocations, sales, assignments   or other relevant actions in respect of each Lender’s credit and loan exposure under the Existing Credit   Agreement as are necessary in order that each such Lender’s outstanding Revolving Loans hereunder   reflect such Lender’s pro rata share of the outstanding aggregate Revolving Loans on the Effective Date.   ARTICLE II.  CREDIT FACILITY   Section 2.1.  Revolving Loans.   (a) Making of Revolving Loans.  Subject to the terms and conditions set forth in this   Agreement, including without limitation, Section 2.14., each Lender severally and not jointly agrees to   make Revolving Loans to the Borrower during the period from and including the Effective Date to but   excluding the Revolving Termination Date, in an aggregate principal amount at any one time outstanding   up to, but not exceeding, such Lender’s Revolving Commitment.  Each borrowing of Base Rate Loans   shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess   thereof.  Each borrowing and Continuation under Section 2.8. of, and each Conversion under Section 2.9.   of Base Rate Loans into, LIBOR Loans shall be in an aggregate minimum of $1,000,000 and integral   multiples of $100,000 in excess of that amount.  Notwithstanding the immediately preceding two   sentences but subject to Section 2.14., a borrowing of Revolving Loans may be in the aggregate amount   of the unused Revolving Commitments.  Within the foregoing limits and subject to the terms and   conditions of this Agreement, the Borrower may borrow, repay and reborrow Revolving Loans.   (b) Requests for Revolving Loans. Not later than 11:00 a.m. Central time at least one (1)   Business Day prior to a borrowing of Revolving Loans that are to be Base Rate Loans and not later than   11:00 a.m. Central time at least three (3) Business Days prior to a borrowing of Revolving Loans that are   to be LIBOR Loans, the Borrower shall deliver to the Administrative Agent a Notice of Borrowing or   telephone notice thereof.  Each Notice of Borrowing shall specify the aggregate principal amount of the   Revolving Loans to be borrowed, the date such Revolving Loans are to be borrowed (which must be a   Business Day), the use of the proceeds of such Revolving Loans, the Type of the requested Revolving   Loans, and if such Revolving Loans are to be LIBOR Loans, the initial Interest Period for such Revolving   Loans.  Any telephone notice shall include all information to be specified in a written notice of Borrowing   and shall be promptly confirmed in writing by the Borrower pursuant to a Notice of Borrowing sent to the   Agent by email on the same day as the giving of such telephonic notice.  Each Notice of Borrowing shall     

 

   - 30 -   be irrevocable once given and binding on the Borrower.  Prior to delivering a Notice of Borrowing, the   Borrower may (without specifying whether a Revolving Loan will be a Base Rate Loan or a LIBOR   Loan) request that the Administrative Agent provide the Borrower with the most recent LIBOR available   to the Administrative Agent.  The Administrative Agent shall provide such quoted rate to the Borrower on   the date of such request or as soon as possible thereafter.   (c) Funding of Revolving Loans.  Promptly after receipt of a Notice of Borrowing under the   immediately preceding subsection (b), the Administrative Agent shall notify each Lender of the proposed   borrowing.  Each Lender shall deposit an amount equal to the Revolving Loan to be made by such Lender   to the Borrower with the Administrative Agent at the Principal Office, in immediately available funds not   later than 11:00 a.m. Central time on the date of such proposed Revolving Loans.  Subject to fulfillment   of all applicable conditions set forth herein, the Administrative Agent shall make available to the   Borrower in the account specified in the Disbursement Instruction Agreement, not later than 2:00 p.m.   Central time on the date of the requested borrowing of Revolving Loans, the proceeds of such amounts   received by the Administrative Agent.   (d) Assumptions Regarding Funding by Lenders.  With respect to Revolving Loans to be   made after the Effective Date, unless the Administrative Agent shall have been notified by any Lender   that such Lender will not make available to the Administrative Agent a Revolving Loan to be made by   such Lender in connection with any borrowing, the Administrative Agent may assume that such Lender   will make the proceeds of such Revolving Loan available to the Administrative Agent in accordance with   this Section, and the Administrative Agent may (but shall not be obligated to), in reliance upon such   assumption, make available to the Borrower the amount of such Revolving Loan to be provided by such   Lender.  In such event, if such Lender does not make available to the Administrative Agent the proceeds   of such Revolving Loan, then such Lender and the Borrower severally agree to pay to the Administrative   Agent on demand the amount of such Revolving Loan with interest thereon, for each day from and   including the date such Revolving Loan is made available to the Borrower but excluding the date of   payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the   greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with   banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the   Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay the   amount of such interest to the Administrative Agent for the same or overlapping period, the   Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the   Borrower for such period.  If such Lender pays to the Administrative Agent the amount of such Revolving   Loan, the amount so paid shall constitute such Lender’s Revolving Loan included in the borrowing.  Any   payment by the Borrower shall be without prejudice to any claim the Borrower may have against a   Lender that shall have failed to make available the proceeds of a Revolving Loan to be made by such   Lender.   Section 2.2.  Letters of Credit.   (a) Letters of Credit.  Subject to the terms and conditions of this Agreement, including   without limitation, Section 2.14., each Issuing Bank, on behalf of the Lenders, agrees to issue for the   account of the Borrower during the period from and including the Effective Date to, but excluding, the   date thirty (30) days prior to the Revolving Termination Date, one or more standby letters of credit (each   a “Letter of Credit”) up to a maximum aggregate Stated Amount at any one time outstanding not to   exceed $40,000,000 as such amount may be reduced from time to time in accordance with the terms   hereof (the “L/C Commitment Amount”).   (b) Terms of Letters of Credit.  At the time of issuance, the amount, form, terms and   conditions of each Letter of Credit, and of any drafts or acceptances thereunder, shall be subject to     

 

   - 31 -   approval by the applicable Issuing Bank and the Borrower, which approval, in the case of each of such   Issuing Bank and the Borrower shall not unreasonably be withheld, conditioned or delayed.    Notwithstanding the foregoing, in no event may (i) the expiration date of any Letter of Credit extend   beyond the date that is thirty (30) days prior to the Revolving Termination Date, or (ii) any Letter of   Credit have an initial duration in excess of one year; provided, however, a Letter of Credit may contain a   provision providing for the automatic extension of the expiration date in the absence of a notice of non-   renewal from the applicable Issuing Bank but in no event shall any such provision permit the extension of   the expiration date of such Letter of Credit beyond the date that is thirty (30) days prior to the Revolving   Termination Date.  The initial Stated Amount of each Letter of Credit shall be at least $1,000,000 (or such   lesser amount as may be acceptable to the applicable Issuing Bank, the Administrative Agent and the   Borrower).   (c) Requests for Issuance of Letters of Credit.  The Borrower shall give the applicable   Issuing Bank and the Administrative Agent written notice (or telephonic notice promptly confirmed in   writing) at least five (5) Business Days prior to the requested date of issuance of a Letter of Credit, such   notice to describe in reasonable detail the proposed terms of such Letter of Credit and the nature of the   transactions or obligations proposed to be supported by such Letter of Credit, and in any event shall set   forth with respect to such Letter of Credit the proposed (i) initial Stated Amount, (ii) beneficiary, and   (iii) expiration date. The Borrower shall also execute and deliver such customary applications and   agreements for standby letters of credit, and other forms as requested from time to time by the applicable   Issuing Bank.  Provided the Borrower has given the notice prescribed by the first sentence of this   subsection and delivered such applications and agreements referred to in the preceding sentence, subject   to the other terms and conditions of this Agreement, including the satisfaction of any applicable   conditions precedent set forth in Article 6.2., the applicable Issuing Bank shall issue the requested Letter   of Credit on the requested date of issuance for the benefit of the stipulated beneficiary but in no event   prior to the date five (5) Business Days following the date after which such Issuing Bank has received all   of the items required to be delivered to it under this subsection.  No Issuing Bank shall at any time be   obligated to issue any Letter of Credit if such issuance would conflict with, or cause such Issuing Bank or   any Lender to exceed any limits imposed by, any Applicable Law.  References herein to “issue” and   derivations thereof with respect to Letters of Credit shall also include extensions or modifications of any   outstanding Letters of Credit, which modifications increase the obligations of the applicable Issuing Bank   in respect of such Letters of Credit, unless the context otherwise requires.  Upon the written request of the   Borrower, the applicable Issuing Bank shall deliver to the Borrower a copy of each issued Letter of Credit   within a reasonable time after the date of issuance thereof.  To the extent any term of a Letter of Credit   Document is inconsistent with a term of any Loan Document, the term of such Loan Document shall   control.   (d) Reimbursement Obligations.  Upon receipt by the applicable Issuing Bank from the   beneficiary of a Letter of Credit of any demand for payment under such Letter of Credit, such Issuing   Bank shall promptly notify the Borrower and the Administrative Agent of the amount to be paid by such   Issuing Bank as a result of such demand and the date on which payment is to be made by such Issuing   Bank to such beneficiary in respect of such demand; provided, however, that an Issuing Bank’s failure to   give, or delay in giving, such notice shall not discharge the Borrower in any respect from the applicable   Reimbursement Obligation.  The Borrower agrees to reimburse the applicable Issuing Bank on or prior to   each date on which such Issuing Bank notifies the Borrower that a draw has been paid under a Letter of   Credit in an amount equal to the amount of such draw paid.  The Borrower’s Reimbursement Obligations   shall be absolute, unconditional and irrevocable and irrespective of any setoff, counterclaim or defense to   payment the Borrower may have at any time against any Issuing Bank, the Administrative Agent or any   Lender, any beneficiary of a Letter of Credit or any other Person.  Upon receipt by the applicable Issuing   Bank of any payment in respect of any Reimbursement Obligation, such Issuing Bank shall promptly pay     

 

   - 32 -   to each Lender that has acquired a participation therein under the second sentence of the immediately   following subsection (i) such Lender’s Revolving Commitment Percentage of such payment.   (e) Manner of Reimbursement.  Upon its receipt of a notice referred to in the immediately   preceding subsection (d), the Borrower shall advise the Administrative Agent and the applicable Issuing   Bank whether or not the Borrower intends to borrow hereunder to finance its obligation to reimburse such   Issuing Bank for the amount of the related demand for payment and, if it does, the Borrower shall submit   a timely request for such borrowing as provided in the applicable provisions of this Agreement.  If the   Borrower fails to so advise the Administrative Agent and the applicable Issuing Bank, or if the Borrower   fails to reimburse such Issuing Bank for a demand for payment under a Letter of Credit by the date of   such payment, the failure of which such Issuing Bank shall promptly notify the Administrative Agent,   then (i) if the applicable conditions contained in Article VI. would permit the making of Revolving Loans,   the Borrower shall be deemed to have requested a borrowing of Revolving Loans (which shall be Base   Rate Loans) in an amount equal to the unpaid Reimbursement Obligation and the Administrative Agent   shall give each Revolving Lender prompt notice of the amount of the Revolving Loan to be made   available to the Administrative Agent not later than 12:00 noon Central time and (ii) if such conditions   would not permit the making of Revolving Loans, the provisions of subsection (j) of this Section shall   apply.  The limitations set forth in the second sentence of Section 2.1.(a) shall not apply to any borrowing   of Base Rate Loans under this subsection.   (f) Effect of Letters of Credit on Revolving Commitments.  Upon the issuance by the   applicable Issuing Bank of any Letter of Credit and until such Letter of Credit shall have expired or been   cancelled, the Revolving Commitment of each Lender shall be deemed to be utilized for all purposes of   this Agreement in an amount equal to the product of (i) such Lender’s Revolving Commitment   Percentage and (ii) the sum of (A) the Stated Amount of such Letter of Credit plus (B) any related   Reimbursement Obligations then outstanding.   (g) Issuing Bank’s Duties Regarding Letters of Credit; Unconditional Nature of   Reimbursement Obligations.  In examining documents presented in connection with drawings under   Letters of Credit and making payments under such Letters of Credit against such documents, the   applicable Issuing Bank shall only be required to use the same standard of care as it uses in connection   with examining documents presented in connection with drawings under letters of credit in which it has   not sold participations and making payments under such letters of credit.  The Borrower assumes all risks   of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such   Letters of Credit.  In furtherance and not in limitation of the foregoing, none of the Administrative Agent,   any of the Issuing Banks or any of the Lenders shall be responsible for, and the Borrower’s obligations in   respect of Letters of Credit shall not be affected in any manner by, (i) the form, validity, sufficiency,   accuracy, genuineness or legal effects of any document submitted by any party in connection with the   application for and issuance of or any drawing honored under any Letter of Credit even if such document   should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged;   (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or   assign any Letter of Credit, or the rights or benefits thereunder or proceeds thereof, in whole or in part,   which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any Letter of   Credit to comply fully with conditions required in order to draw upon such Letter of Credit; (iv) errors,   omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, electronic   mail, telecopy or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical   terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a   drawing under any Letter of Credit, or of the proceeds thereof; (vii) the misapplication by the beneficiary   of any Letter of Credit, or of the proceeds of any drawing under any Letter of Credit; or (viii) any   consequences arising from causes beyond the control of the Administrative Agent, the Issuing Banks or   the Lenders.  None of the above shall affect, impair or prevent the vesting of any of the Issuing Banks’ or     

 

   - 33 -   Administrative Agent’s rights or powers hereunder.  Any action taken or omitted to be taken by an   Issuing Bank under or in connection with any Letter of Credit, if taken or omitted in the absence of gross   negligence or willful misconduct (as determined by a court of competent jurisdiction in a final, non-   appealable judgment), shall not create against such Issuing Bank any liability to the Borrower, the   Administrative Agent, any other Issuing Bank or any Lender.  The obligation of the Borrower to   reimburse the applicable Issuing Bank for any drawing made under any Letter of Credit, and to repay any   Revolving Loan made pursuant to the second sentence of the immediately preceding subsection (e), shall   be absolute, unconditional and irrevocable and shall be paid strictly in accordance with the terms of this   Agreement and any other applicable Letter of Credit Document under all circumstances whatsoever,   including without limitation, the following circumstances: (A) any lack of validity or enforceability of   any Letter of Credit Document or any term or provisions therein; (B) any amendment or waiver of or any   consent to departure from all or any of the Letter of Credit Documents; (C) the existence of any claim,   setoff, defense or other right which the Borrower may have at any time against any Issuing Bank, the   Administrative Agent or any Lender, any beneficiary of a Letter of Credit or any other Person, whether in   connection with this Agreement, the transactions contemplated hereby or in the Letter of Credit   Documents or any unrelated transaction; (D) any breach of contract or dispute between the Borrower, any   Issuing Bank, the Administrative Agent, any Lender or any other Person; (E) any demand, statement or   any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or   insufficient in any respect or any statement therein or made in connection therewith being untrue or   inaccurate in any respect whatsoever; (F) any non-application or misapplication by the beneficiary of a   Letter of Credit or of the proceeds of any drawing under such Letter of Credit; (G) payment by the   applicable Issuing Bank under any Letter of Credit against presentation of a draft or certificate which does   not strictly comply with the terms of such Letter of Credit; and (H) any other act, omission to act, delay or   circumstance whatsoever that might, but for the provisions of this Section, constitute a legal or equitable   defense to or discharge of the Borrower’s Reimbursement Obligations.  Notwithstanding anything to the   contrary contained in this Section or Section 13.10., but not in limitation of the Borrower’s unconditional   obligation to reimburse the applicable Issuing Bank for any drawing made under a Letter of Credit as   provided in this Section and to repay any Revolving Loan made pursuant to the second sentence of the   immediately preceding subsection (e), the Borrower shall have no obligation to indemnify the   Administrative Agent, any Issuing Bank or any Lender in respect of any liability incurred by the   Administrative Agent, any Issuing Bank or such Lender arising solely out of the gross negligence or   willful misconduct of the Administrative Agent, such Issuing Bank or such Lender in respect of a Letter   of Credit as determined by a court of competent jurisdiction in a final, non-appealable judgment.  Except   as otherwise provided in this Section, nothing in this Section shall affect any rights the Borrower may   have with respect to the gross negligence or willful misconduct of the Administrative Agent, any Issuing   Bank or any Lender with respect to any Letter of Credit.   (h) Amendments, Etc.  The issuance by the applicable Issuing Bank of any amendment,   supplement or other modification to any Letter of Credit shall be subject to the same conditions applicable   under this Agreement to the issuance of new Letters of Credit (including, without limitation, that the   request therefor be made through such Issuing Bank), and no such amendment, supplement or other   modification shall be issued unless either (i) the respective Letter of Credit affected thereby would have   complied with such conditions had it originally been issued hereunder in such amended, supplemented or   modified form or (ii) the Administrative Agent and Requisite Lenders (or all of the Lenders if required by   Section 13.7.) shall have consented thereto.  In connection with any such amendment, supplement or   other modification, the Borrower shall pay the fees, if any, payable under the last sentence of   Section 3.5.(c).   (i) Lenders’ Participation in Letters of Credit.  Immediately upon the issuance by the   applicable Issuing Bank of any Letter of Credit each Lender shall be deemed to have absolutely,   irrevocably and unconditionally purchased and received from such Issuing Bank, without recourse or     

 

   - 34 -   warranty, an undivided interest and participation to the extent of such Lender’s Revolving Commitment   Percentage of the liability of such Issuing Bank with respect to such Letter of Credit and each Lender   thereby shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety,   and shall be unconditionally obligated to such Issuing Bank to pay and discharge when due, such   Lender’s Revolving Commitment Percentage of such Issuing Bank’s liability under such Letter of Credit.    In addition, upon the making of each payment by a Lender to the Administrative Agent for the account of   the applicable Issuing Bank in respect of any Letter of Credit pursuant to the immediately following   subsection (j), such Lender shall, automatically and without any further action on the part of such Issuing   Bank, Administrative Agent or such Lender, acquire (i) a participation in an amount equal to such   payment in the Reimbursement Obligation owing to such Issuing Bank by the Borrower in respect of such   Letter of Credit and (ii) a participation in a percentage equal to such Lender’s Revolving Commitment   Percentage in any interest or other amounts payable by the Borrower in respect of such Reimbursement   Obligation (other than the Fees payable to such Issuing Bank pursuant to the second and the last sentences   of Section 3.5.(c)).   (j) Payment Obligation of Lenders.  Each Lender severally agrees to pay to the   Administrative Agent, for the account of such Issuing Bank, on demand in immediately available funds in   Dollars the amount of such Lender’s Revolving Commitment Percentage of each drawing paid by the   applicable Issuing Bank under each Letter of Credit to the extent such amount is not reimbursed by the   Borrower pursuant to the immediately preceding subsection (d); provided, however, that in respect of any   drawing under any Letter of Credit, the maximum amount that any Lender shall be required to fund,   whether as a Revolving Loan or as a participation, shall not exceed such Lender’s Revolving   Commitment Percentage of such drawing.  If the notice referenced in the second sentence of Section   2.2.(e) is received by a Lender not later than 11:00 a.m. Central time, then such Lender shall make such   payment available to the Administrative Agent not later than 2:00 p.m. Central time on the date of   demand therefor; otherwise, such payment shall be made available to the Administrative Agent not later   than 1:00 p.m. Central time on the next succeeding Business Day.  Each Lender’s obligation to make such   payments to the Administrative Agent under this subsection, and the Administrative Agent’s right to   receive the same for the account of any Issuing Bank, shall be absolute, irrevocable and unconditional and   shall not be affected in any way by any circumstance whatsoever, including without limitation, (i) the   failure of any other Lender to make its payment under this subsection, (ii) the financial condition of the   Borrower or any other Loan Party, (iii) the existence of any Default or Event of Default, including any   Event of Default described in Section 11.1.(e) or (f) or (iv) the termination of the Revolving   Commitments.  Each such payment to the Administrative Agent for the account of any Issuing Bank shall   be made without any offset, abatement, withholding or deduction whatsoever.   (k) Information to Lenders.  Promptly following any change in Letters of Credit outstanding,   the applicable Issuing Bank shall deliver to the Administrative Agent, who shall promptly deliver the   same to each Lender and the Borrower, a notice describing the aggregate amount of all Letters of Credit   outstanding at such time.  Upon the request of any Lender from time to time, the applicable Issuing Bank   shall deliver any other information reasonably requested by such Lender with respect to each Letter of   Credit issued by such Issuing Bank then outstanding.  Other than as set forth in this subsection, no Issuing   Bank shall have any duty to notify the Lenders regarding the issuance or other matters regarding Letters   of Credit issued hereunder.  The failure of any Issuing Bank to perform its requirements under this   subsection shall not relieve any Lender from its obligations under the immediately preceding subsection   (j).   Section 2.3.  Swingline Loans.   (a) Swingline Loans.  Subject to the terms and conditions hereof, including without   limitation Section 2.14., the Swingline Lender agrees to make Swingline Loans to the Borrower, during     

 

   - 35 -   the period from the Effective Date to but excluding the Swingline Maturity Date, in an aggregate   principal amount at any one time outstanding up to, but not exceeding, $30,000,000, as such amount may   be reduced from time to time in accordance with the terms hereof.  If at any time the aggregate principal   amount of the Swingline Loans outstanding at such time exceeds the Swingline Commitment in effect at   such time, the Borrower shall immediately pay the Administrative Agent for the account of the Swingline   Lender the amount of such excess.  Subject to the terms and conditions of this Agreement, the Borrower   may borrow, repay and reborrow Swingline Loans hereunder.  The borrowing of a Swingline Loan shall   not constitute usage of any Lender’s Revolving Commitment for purposes of calculation of the fee   payable under Section 3.5.(b).   (b) Procedure for Borrowing Swingline Loans.  The Borrower shall give the Administrative   Agent and the Swingline Lender notice pursuant to a Notice of Swingline Borrowing or telephonic notice   of each borrowing of a Swingline Loan.  Each Notice of Swingline Borrowing shall be delivered to the   Swingline Lender no later than 11:00 a.m. Central time on the proposed date of such borrowing.  Any   telephonic notice shall include all information to be specified in a written Notice of Swingline Borrowing   and shall be promptly confirmed in writing by the Borrower pursuant to a Notice of Swingline Borrowing   sent to the Swingline Lender by telecopy on the same day of the giving of such telephonic notice.  Not   later than 1:00 p.m. Central time on the date of the requested Swingline Loan and subject to satisfaction   of the applicable conditions set forth in Article 6.2. for such borrowing, the Swingline Lender will make   the proceeds of such Swingline Loan available to the Borrower in Dollars, in immediately available   funds, at the account specified by the Borrower in the Notice of Swingline Borrowing.   (c) Interest.  Swingline Loans shall bear interest at a per annum rate equal to the Base Rate as   in effect from time to time plus the Applicable Margin or at such other rate or rates as the Borrower and   the Swingline Lender may agree from time to time in writing.  Interest on Swingline Loans is solely for   the account of the Swingline Lender (except to the extent a Revolving Lender acquires a participating   interest in a Swingline Loan pursuant to the immediately following subsection (e)).  All accrued and   unpaid interest on Swingline Loans shall be payable on the dates and in the manner provided in   Section 2.2. with respect to interest on Base Rate Loans (except as the Swingline Lender and the   Borrower may otherwise agree in writing in connection with any particular Swingline Loan).   (d) Swingline Loan Amounts, Etc.  Each Swingline Loan shall be in the minimum amount of   $1,000,000 and integral multiples of $100,000 in excess thereof, or such other minimum amounts agreed   to by the Swingline Lender and the Borrower.  Any voluntary prepayment of a Swingline Loan must be in   integral multiples of $100,000  or the aggregate principal amount of all outstanding Swingline Loans (or   such other minimum amounts upon which the Swingline Lender and the Borrower may agree) and in   connection with any such prepayment, the Borrower must give the Swingline Lender and the   Administrative Agent prior written notice thereof no later than 12:00 noon Central time on the day prior   to the date of such prepayment.  The Swingline Loans shall, in addition to this Agreement, be evidenced   by the Swingline Note.   (e) Repayment and Participations of Swingline Loans.  The Borrower agrees to repay each   Swingline Loan within one Business Day of demand therefor by the Swingline Lender and, in any event,   within five (5) Business Days after the date such Swingline Loan was made; provided, that the proceeds   of a Swingline Loan may not be used to pay a Swingline Loan.  Notwithstanding the foregoing, the   Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on,   the Swingline Loans on the Swingline Maturity Date (or such earlier date as the Swingline Lender and the   Borrower may agree in writing).  In lieu of demanding repayment of any outstanding Swingline Loan   from the Borrower, the Swingline Lender may, on behalf of the Borrower (which hereby irrevocably   directs the Swingline Lender to act on its behalf), request a borrowing of Revolving Loans that are Base   Rate Loans from the Lenders in an amount equal to the principal balance of such Swingline Loan.  The     

 

   - 36 -   amount limitations contained in the second sentence of Section 2.1.(a) shall not apply to any borrowing of   such Revolving Loans made pursuant to this subsection.  The Swingline Lender shall give notice to the   Administrative Agent of any such borrowing of Revolving Loans not later than 11:00 a.m. Central time at   least one Business Day prior to the proposed date of such borrowing.  Promptly after receipt of such   notice of borrowing of Revolving Loans from the Swingline Lender under the immediately preceding   sentence, the Administrative Agent shall notify each Lender of the proposed borrowing.  Not later than   11:00 a.m. Central time on the proposed date of such borrowing, each Lender will make available to the   Administrative Agent at the Principal Office for the account of the Swingline Lender, in immediately   available funds, the proceeds of the Revolving Loan to be made by such Lender.  The Administrative   Agent shall pay the proceeds of such Revolving Loans to the Swingline Lender, which shall apply such   proceeds to repay such Swingline Loan.  If the Revolving Lenders are prohibited from making Revolving   Loans required to be made under this subsection for any reason whatsoever, including without limitation,   the occurrence of any of the Defaults or Events of Default described in Sections 11.1.(e) or (f)), each   Revolving Lender shall purchase from the Swingline Lender, without recourse or warranty, an undivided   interest and participation to the extent of such Lender’s Revolving Commitment Percentage of such   Swingline Loan, by directly purchasing a participation in such Swingline Loan in such amount and   paying the proceeds thereof to the Administrative Agent for the account of the Swingline Lender in   Dollars and in immediately available funds.  A Lender’s obligation to purchase such a participation in a   Swingline Loan shall be absolute and unconditional and shall not be affected by any circumstance   whatsoever, including without limitation, (i) any claim of setoff, counterclaim, recoupment, defense or   other right which such Lender or any other Person may have or claim against the Administrative Agent,   the Swingline Lender or any other Person whatsoever, (ii) the occurrence or continuation of a Default or   Event of Default (including without limitation, any of the Defaults or Events of Default described in   Sections 11.1. (e) or (f)), or the termination of any Lender’s Revolving Commitment, (iii) the existence   (or alleged existence) of an event or condition which has had or could have a Material Adverse Effect,   (iv) any breach of any Loan Document by the Administrative Agent, any Lender, the Borrower or any   other Loan Party, or (v) any other circumstance, happening or event whatsoever, whether or not similar to   any of the foregoing.  If such amount is not in fact made available to the Swingline Lender by any Lender,   the Swingline Lender shall be entitled to recover such amount on demand from such Lender, together   with accrued interest thereon for each day from the date of demand thereof, at the Federal Funds Rate.  If   such Lender does not pay such amount forthwith upon the Swingline Lender’s demand therefor, and until   such time as such Lender makes the required payment, the Swingline Lender shall be deemed to continue   to have outstanding Swingline Loans in the amount of such unpaid participation obligation for all   purposes of the Loan Documents (other than those provisions requiring the other Lenders to purchase a   participation therein).  Further, such Lender shall be deemed to have assigned any and all payments made   of principal and interest on its Revolving Loans, and any other amounts due it hereunder, to the Swingline   Lender to fund Swingline Loans in the amount of the participation in Swingline Loans that such Lender   failed to purchase pursuant to this Section until such amount has been purchased (as a result of such   assignment or otherwise).   Section 2.4.  Rates and Payment of Interest on Loans.   (a) Rates.  The Borrower promises to pay to the Administrative Agent for the account of   each Lender interest on the unpaid principal amount of each Loan made by such Lender for the period   from and including the date of the making of such Loan to but excluding the date such Loan shall be paid   in full, at the following per annum rates:   (i) during such periods as such Loan is a Base Rate Loan, at the Base Rate (as in   effect from time to time), plus the Applicable Margin for Base Rate Loans; and     

 

   - 37 -   (ii) during such periods as such Loan is a LIBOR Loan, at LIBOR for such Loan for   the Interest Period therefor, plus the Applicable Margin for LIBOR Loans.   Notwithstanding the foregoing, while an Event of Default exists, the Borrower shall pay to the   Administrative Agent for the account of each Lender and each Issuing Bank, as the case may be, interest   at the Post-Default Rate on the outstanding principal amount of any Loan made by such Lender, on all   Reimbursement Obligations and on any other amount payable by the Borrower hereunder or under the   Notes held by such Lender to or for the account of such Lender (including without limitation, accrued but   unpaid interest to the extent permitted under Applicable Law).   (b) Payment of Interest. All accrued and unpaid interest on the outstanding principal amount   of each Loan shall be payable (i) monthly in arrears on the first day of each month, commencing with the   first full calendar month occurring after the Effective Date and (ii) on any date on which the principal   balance of such Loan is due and payable in full (whether at maturity, due to acceleration or otherwise).    Interest payable at the Post-Default Rate shall be payable from time to time on demand.  All   determinations by the Administrative Agent of an interest rate hereunder shall be conclusive and binding   on the Lenders and the Borrower for all purposes, absent manifest error.   (c) Borrower Information Used to Determine Applicable Interest Rates.  The parties   understand that the applicable interest rate for the Obligations and certain fees set forth herein may be   determined and/or adjusted from time to time based upon certain financial ratios and/or other information   to be provided or certified to the Lenders by the Borrower or the Parent on behalf of the Borrower (the   “Borrower Information”).  If it is subsequently determined that any such Borrower Information was   incorrect (for whatever reason, including without limitation because of a subsequent restatement of   earnings by the Borrower) at the time it was delivered to the Administrative Agent, and if the applicable   interest rate or fees calculated for any period were lower than they should have been had the correct   information been timely provided, then, such interest rate and such fees for such period shall be   automatically recalculated using correct Borrower Information.  The Administrative Agent shall promptly   notify the Borrower in writing of any additional interest and fees due because of such recalculation, and   the Borrower shall pay such additional interest or fees due to the Administrative Agent, for the account of   each Lender, within five (5) Business Days of receipt of such written notice.  Any recalculation of interest   or fees required by this provision shall survive the termination of this Agreement, and this provision shall   not in any way limit any of the Administrative Agent’s, any Issuing Bank’s, or any Lender’s other rights   under this Agreement.   Section 2.5.  Number of Interest Periods.   There may be no more than five (5) different Interest Periods for LIBOR Loans outstanding at the   same time.   Section 2.6.  Repayment of Loans.   The Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid   interest on, the Revolving Loans on the Revolving Termination Date.   Section 2.7.  Prepayments.   (a) Optional.  Subject to Section 5.4., the Borrower may prepay any Loan at any time   without premium or penalty.  The Borrower shall give the Administrative Agent at least two (2) Business   Day prior written notice of the prepayment of any Loan.  Each voluntary prepayment of Loans shall be in     

 

   - 38 -   an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess thereof or, if   less, the aggregate principal amount of Revolving Loans outstanding.   (b) Mandatory.   (i) Revolving Commitment Overadvance.  If at any time the aggregate principal   amount of all outstanding Revolving Loans and Swingline Loans, together with the aggregate   amount of all Letter of Credit Liabilities, exceeds the aggregate amount of the Revolving   Commitments, the Borrower shall immediately upon demand pay to the Administrative Agent   for the account of the Lenders then holding Revolving Commitments (or if the Revolving   Commitments have been terminated, then holding outstanding Revolving Loans, Swingline   Loans and/or Letter of Credit Liabilities), the amount of such excess.   (ii) Application of Mandatory Prepayments.  Amounts paid under the preceding   subsection (b)(i) shall be applied to pay all amounts of principal outstanding on the Loans and   any Reimbursement Obligations pro rata in accordance with Section 3.2. and if any Letters of   Credit are outstanding at such time, the remainder, if any, shall be deposited into the Letter of   Credit Collateral Account for application to any Reimbursement Obligations.  If the Borrower   is required to pay any outstanding LIBOR Loans by reason of this Section prior to the end of   the applicable Interest Period therefor, the Borrower shall pay all amounts due under   Section 5.4.   Section 2.8.  Continuation.   So long as no Default or Event of Default exists, the Borrower may on any Business Day, with   respect to any LIBOR Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan   by selecting a new Interest Period for such LIBOR Loan.  Each Continuation of a LIBOR Loan shall be in   an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess of that   amount, and each new Interest Period selected under this Section shall commence on the last day of the   immediately preceding Interest Period.  Each selection of a new Interest Period shall be made by the   Borrower giving to the Administrative Agent a Notice of Continuation not later than 11:00 a.m. Central   time on the third Business Day prior to the date of any such Continuation.  Such notice by the Borrower   of a Continuation shall be by telephone, promptly confirmed in writing, or by telecopy, electronic mail or   other similar form of communication in the form of a Notice of Continuation, specifying (a) the proposed   date of such Continuation, (b) the LIBOR Loans and portions thereof subject to such Continuation and   (c) the duration of the selected Interest Period, all of which shall be specified in such manner as is   necessary to comply with all limitations on Loans outstanding hereunder.  Each Notice of Continuation   shall be irrevocable by and binding on the Borrower once given.  Promptly after receipt of a Notice of   Continuation, the Administrative Agent shall notify each Lender of the proposed Continuation.  If the   Borrower shall fail to select in a timely manner a new Interest Period for any LIBOR Loan in accordance   with this Section, such Loan will automatically, on the last day of the current Interest Period therefor,   continue as a LIBOR Loan with an Interest Period of one month; provided, however that if a Default or   Event of Default exists, such Loan will automatically, on the last day of the current Interest Period   therefor, Convert into a Base Rate Loan notwithstanding the first sentence of Section 2.9. or the   Borrower’s failure to comply with any of the terms of such Section.   Section 2.9.  Conversion.   The Borrower may on any Business Day, upon the Borrower’s giving of a Notice of Conversion   to the Administrative Agent by telecopy, electronic mail or other similar form of communication, Convert   all or a portion of a Loan of one Type into a Loan of another Type; provided, however, a Base Rate Loan     

 

   - 39 -   may not be Converted into a LIBOR Loan if a Default or Event of Default exists.  Each Conversion of   Base Rate Loans into LIBOR Loans shall be in an aggregate minimum amount of $1,000,000 and integral   multiples of $100,000 in excess of that amount.  Each such Notice of Conversion shall be given not later   than 11:00 a.m. Central time three (3) Business Days prior to the date of any proposed Conversion.    Promptly after receipt of a Notice of Conversion, the Administrative Agent shall notify each Lender of   the proposed Conversion.  Subject to the restrictions specified above, each Notice of Conversion shall be   by telephone promptly confirmed in writing, or by telecopy, electronic mail or other similar form of   communication in the form of a Notice of Conversion specifying (a) the requested date of such   Conversion, (b) the Type of Loan to be Converted, (c) the portion of such Type of Loan to be Converted,   (d) the Type of Loan such Loan is to be Converted into and (e) if such Conversion is into a LIBOR Loan,   the requested duration of the Interest Period of such Loan.  Each Notice of Conversion shall be   irrevocable by and binding on the Borrower once given.   Section 2.10.  Notes.   (a) Notes.  The Revolving Loans made by each Revolving Lender shall, in addition to this   Agreement, also be evidenced by a Revolving Note, payable to the order of such Revolving Lender in a   principal amount equal to the amount of its Revolving Commitment as originally in effect and otherwise   duly completed.  The Swingline Loans made by the Swingline Lender to the Borrower shall, in addition   to this Agreement, also be evidenced by a Swingline Note payable to the order of the Swingline Lender.   (b) Records.  The date, amount, interest rate, Type and duration of Interest Periods (if   applicable) of each Loan made by each Lender to the Borrower, and each payment made on account of   the principal thereof, shall be recorded by such Lender on its books and such entries shall be binding on   the Borrower absent manifest error; provided, however, that (i) the failure of a Lender to make any such   record shall not affect the obligations of the Borrower under any of the Loan Documents and (ii) if there   is a discrepancy between such records of a Lender and the statements of accounts maintained by the   Administrative Agent pursuant to Section 3.8., in the absence of manifest error, the statements of account   maintained by the Administrative Agent pursuant to Section 3.8. shall be controlling.   (c) Lost, Stolen, Destroyed or Mutilated Notes.  Upon receipt by the Borrower of (i) written   notice from a Lender that a Note of such Lender has been lost, stolen, destroyed or mutilated, and   (ii)(A) in the case of loss, theft or destruction, an unsecured agreement of indemnity from such Lender in   form reasonably satisfactory to the Borrower, or (B) in the case of mutilation, upon surrender and   cancellation of such Note, the Borrower shall at its own expense execute and deliver to such Lender a   new Note dated the date of such lost, stolen, destroyed or mutilated Note.   Section 2.11.  Voluntary Reductions of the Revolving Commitment.   The Borrower shall have the right to terminate or reduce the aggregate unused amount of the   Revolving Commitments (for which purpose use of the Revolving Commitments shall be deemed to   include the aggregate amount of all Letter of Credit Liabilities and the aggregate principal amount of all   outstanding Swingline Loans) at any time and from time to time without penalty or premium upon not   less than five (5) Business Days prior written notice to the Administrative Agent of each such termination   or reduction, which notice shall specify the effective date thereof and the amount of any such reduction   (which in the case of any partial reduction of the Revolving Commitments shall not be less than   $10,000,000 and integral multiples of $5,000,000 in excess of that amount in the aggregate) and shall be   irrevocable once given and effective only upon receipt by the Administrative Agent (“Commitment   Reduction Notice”); provided, however, the Borrower may not reduce the aggregate amount of the   Revolving Commitments below $50,000,000 unless the Borrower is terminating the Revolving   Commitments in full.  Promptly after receipt of a Commitment Reduction Notice the Administrative     

 

   - 40 -   Agent shall notify each Lender of the proposed termination or Revolving Commitment reduction.  The   Revolving Commitments, once reduced or terminated pursuant to this Section, may not be increased or   reinstated.  Upon the effective date of such reduction or termination, the Borrower shall pay all interest   and fees on the Revolving Loans accrued to the date of such reduction or termination of the Revolving   Commitments to the Administrative Agent for the account of the Revolving Lenders, including but not   limited to any applicable compensation due to each Revolving Lender in accordance with Section 5.4.   Section 2.12.  Extension of Revolving Termination Date.   The Borrower shall have the right, exercisable one time, to extend the Revolving Termination   Date by one year.  The Borrower may exercise such right only by executing and delivering to the   Administrative Agent at least thirty (30) days but not more than one hundred twenty (120) days prior to   the current Revolving Termination Date, a written request for such extension (an “Extension Request”).    The Administrative Agent shall notify the Revolving Lenders if it receives an Extension Request   promptly upon receipt thereof.  Subject to satisfaction of the following conditions, the Revolving   Termination Date shall be extended for one year effective upon receipt by the Administrative Agent of the   Extension Request and payment of the fee referred to in the following clause (y): (x) immediately prior to   such extension and immediately after giving effect thereto, (A) no Default or Event of Default shall exist   and (B) the representations and warranties made or deemed made by the Borrower and each other Loan   Party in the Loan Documents to which any of them is a party, shall be true and correct in all material   respects on and as of the date of such extension with the same force and effect as if made on and as of   such date except to the extent that such representations and warranties expressly relate solely to an earlier   date (in which case such representations and warranties shall have been true and correct in all material   respects on and as of such earlier date) and except for changes in factual circumstances not expressly   prohibited under the Loan Documents and (y) the Borrower shall have paid the Fees payable under   Section 3.5.(d).  At any time prior to the effectiveness of any such extension, upon the Administrative   Agent’s request, the Borrower shall deliver to the Administrative Agent a certificate from the chief   executive officer or chief financial officer certifying the matters referred to in the immediately preceding   clauses (x)(A) and (x)(B).   Section 2.13.  Expiration Date of Letters of Credit Past Revolving Commitment Termination.   If on the date the Revolving Commitments are terminated or reduced to zero (whether   voluntarily, by reason of the occurrence of an Event of Default or otherwise), there are any Letters of   Credit outstanding hereunder, the Borrower shall, on such date, pay to the Administrative Agent, for its   benefit and the benefit of the Lenders and the Issuing Banks, an amount of money sufficient to cause the   balance of available funds on deposit in the Letter of Credit Collateral Account to equal the aggregate   Stated Amount of such Letters of Credit for deposit into the Letter of Credit Collateral Account.   Section 2.14.  Amount Limitations.   Notwithstanding any other term of this Agreement or any other Loan Document, no Lender shall   be required to make a Loan, no Issuing Bank shall not be required to issue a Letter of Credit and no   reduction of the Revolving Commitments pursuant to Section 2.11. shall take effect, if (a) immediately   after the making of such Loan, the issuance of such Letter of Credit or such reduction in the Revolving   Commitments, or (b) the aggregate principal amount of all outstanding Revolving Loans and Swingline   Loans, together with the aggregate amount of all Letter of Credit Liabilities, would exceed the aggregate   amount of the Revolving Commitments at such time.     

 

   - 41 -   Section 2.15.  Funds Transfer Disbursements.   The Borrower hereby authorizes the Administrative Agent to disburse the proceeds of any Loan   made by the Lenders or any of their Affiliates pursuant to the Loan Documents as requested by an   authorized representative of the Borrower to any of the accounts designated in the Disbursement   Instruction Agreement.     Section 2.16.  Increase in Revolving Commitments.   The Borrower shall have the right to request increases in the aggregate amount of the Revolving   Commitments by providing written notice to the Administrative Agent; provided, however, that after   giving effect to any such increases the aggregate amount of the Revolving Commitments shall not exceed   $375,000,000.  Each such increase in the Revolving Commitments must be an aggregate minimum   amount of $1,000,000 and integral multiples of $100,000 in excess thereof.  The Administrative Agent, in   consultation with the Borrower, shall manage all aspects of the syndication of such increase in the   Revolving Commitments, including decisions as to the selection of the existing Lenders and/or other   banks, financial institutions and other institutional lenders to be approached with respect to such increase   and the allocations of the increase in the Revolving Commitments among such existing Lenders and/or   other banks, financial institutions and other institutional lenders.  No Lender shall be obligated in any way   whatsoever to increase its Revolving Commitment or provide a new Revolving Commitment, and any   new Lender becoming a party to this Agreement in connection with any such requested increase must be   an Eligible Assignee and consented to by the Administrative Agent, each Issuing Bank and the Swingline   Lender.  If a new Lender becomes a party to this Agreement, or if any existing Lender is increasing its   Revolving Commitment, such Lender shall on the date it becomes a Lender hereunder (or in the case of   an existing Lender, increases its Revolving Commitment) (and as a condition thereto) purchase from the   other Lenders its Revolving Commitment Percentage (determined with respect to the Lenders’ respective   Revolving Commitments and after giving effect to the increase of Revolving Commitments) of any   outstanding Revolving Loans, by making available to the Administrative Agent for the account of such   other Lenders, in same day funds, an amount equal to (A) the portion of the outstanding principal amount   of such Revolving Loans to be purchased by such Lender, plus (B) the aggregate amount of payments   previously made by the other Revolving Lenders under Section 2.2.(j) that have not been repaid, plus   (C) interest accrued and unpaid to and as of such date on such portion of the outstanding principal amount   of such Revolving Loans.  The Borrower shall pay to the Revolving Lenders amounts payable, if any, to   such Revolving Lenders under Section 5.4. as a result of the prepayment of any such Revolving Loans.    Effecting the increase of the Revolving Commitments under this Section is subject to the following   conditions precedent:  (x) no Default or Event of Default shall be in existence on the effective date of   such increase, (y) the representations and warranties made or deemed made by the Borrower and any   other Loan Party in any Loan Document to which such Loan Party is a party shall be true and correct in   all material respects (except in the case of a representation or warranty qualified by materiality, in which   case such representation or warranty shall be true and correct in all respects) on the effective date of such   increase except to the extent that such representations and warranties expressly relate solely to an earlier   date (in which case such representations and warranties shall have been true and correct in all material   respects (except in the case of a representation or warranty qualified by materiality, in which case such   representation or warranty shall be true and correct in all respects) on and as of such earlier date) and   except for changes in factual circumstances specifically and expressly permitted hereunder, and (z)  the   Administrative Agent shall have received each of the following, in form and substance satisfactory to the   Administrative Agent:  (i) if not previously delivered to the Administrative Agent, copies certified by the   Secretary or Assistant Secretary of (A) all partnership or other necessary action taken by the Borrower to   authorize such increase and (B) all partnership, member or other necessary action taken by each   Guarantor authorizing the guaranty of such increase; (ii) an opinion of counsel to the Borrower and the   Guarantors, and addressed to the Administrative Agent and the Lenders covering such matters as     

 

   - 42 -   reasonably requested by the Administrative Agent; (iii) new Revolving Notes executed by the Borrower,   payable to any new Revolving Lenders and replacement Revolving Notes executed by the Borrower,   payable to any existing Revolving Lenders increasing their Revolving Commitments, in the amount of   such Revolving Lender’s Revolving Commitment at the time of the effectiveness of the applicable   increase in the aggregate amount of the Revolving Commitments; and (iv) a Compliance Certificate   calculated on a pro forma basis as of the last day of the Borrower’s most recently ended fiscal quarter.  In   connection with any increase in the aggregate amount of the Revolving Commitments pursuant to this   Section, any Lender becoming a party hereto shall (1) execute such documents and agreements as the   Administrative Agent may reasonably request and (2) in the case of any Lender that is organized under   the laws of a jurisdiction outside of the United States of America, provide to the Administrative Agent, its   name, address, tax identification number and/or such other information as shall be necessary for the   Administrative Agent to comply with “know your customer” and anti-money laundering rules and   regulations, including without limitation, the Patriot Act.     ARTICLE III.   PAYMENTS, FEES AND OTHER GENERAL PROVISIONS   Section 3.1.  Payments.   (a) Payments by Borrower.  Except to the extent otherwise provided herein, all payments of   principal, interest, Fees and other amounts to be made by the Borrower under this Agreement, the Notes   or any other Loan Document shall be made in Dollars, in immediately available funds, without setoff,   deduction or counterclaim (excluding Taxes required to be withheld pursuant to Section 3.10), to the   Administrative Agent at the Principal Office, not later than 1:00 p.m. Central time on the date on which   such payment shall become due (each such payment made after such time on such due date to be deemed   to have been made on the next succeeding Business Day).  Subject to Section 11.5., the Borrower shall, at   the time of making each payment under this Agreement or any other Loan Document, specify to the   Administrative Agent the amounts payable by the Borrower hereunder to which such payment is to be   applied.  Each payment received by the Administrative Agent for the account of a Lender under this   Agreement or any Note shall be paid to such Lender by wire transfer of immediately available funds in   accordance with the wiring instructions provided by such Lender to the Administrative Agent from time   to time, for the account of such Lender at the applicable Lending Office of such Lender.  Each payment   received by the Administrative Agent for the account of any Issuing Bank under this Agreement shall be   paid to such Issuing Bank by wire transfer of immediately available funds in accordance with the wiring   instructions provided by such Issuing Bank to the Administrative Agent from time to time, for the account   of such Issuing Bank.  In the event the Administrative Agent fails to pay such amounts to such Lender or   such Issuing Bank, as the case may be, within one Business Day of receipt of such amounts, the   Administrative Agent shall pay interest on such amount until paid at a rate per annum equal to the Federal   Funds Rate from time to time in effect.  If the due date of any payment under this Agreement or any other   Loan Document would otherwise fall on a day which is not a Business Day such date shall be extended to   the next succeeding Business Day and interest shall continue to accrue at the rate, if any, applicable to   such payment for the period of such extension.   (b) Presumptions Regarding Payments by Borrower.  Unless the Administrative Agent shall   have received notice from the Borrower prior to the date on which any payment is due to the   Administrative Agent for the account of the Lenders or any Issuing Bank hereunder that the Borrower   will not make such payment, the Administrative Agent may assume that the Borrower has made such   payment on such date in accordance herewith and may (but shall not be obligated to), in reliance upon   such assumption, distribute to the Lenders or any such Issuing Bank, as the case may be, the amount due.    In such event, if the Borrower has not in fact made such payment, then each of the Lenders or each such   Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent on demand that   amount so distributed to such Lender or such Issuing Bank, with interest thereon, for each day from and     

 

   - 43 -   including the date such amount is distributed to it to but excluding the date of payment to the   Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the   Administrative Agent in accordance with banking industry rules on interbank compensation.   Section 3.2.  Pro Rata Treatment.   Except to the extent otherwise provided herein: (a) each borrowing from the Revolving Lenders   under Sections 2.1.(a), 2.2.(e) and 2.3.(e) shall be made from the Revolving Lenders, each payment of the   fees under Sections 3.5.(a), 3.5.(b), the first sentence of 3.5.(c), and 3.5.(d) shall be made for the account   of the Revolving Lenders, and each termination or reduction of the amount of the Revolving   Commitments under Section 2.11. shall be applied to the respective Revolving Commitments of the   Revolving Lenders, pro rata according to the amounts of their respective Revolving Commitments;   (b) each payment or prepayment of principal of Revolving Loans shall be made for the account of the   Revolving Lenders pro rata in accordance with the respective unpaid principal amounts of the Revolving   Loans held by them, provided that, subject to Section 3.9., if immediately prior to giving effect to any   such payment in respect of any Revolving Loans the outstanding principal amount of the Revolving   Loans shall not be held by the Revolving Lenders pro rata in accordance with their respective Revolving   Commitments in effect at the time such Revolving Loans were made, then such payment shall be applied   to the Revolving Loans in such manner as shall result, as nearly as is practicable, in the outstanding   principal amount of the Revolving Loans being held by the Revolving Lenders pro rata in accordance   with their respective Revolving Commitments; (c) each payment of interest on Revolving Loans shall be   made for the account of the Revolving Lenders pro rata in accordance with the amounts of interest on   such Revolving Loans then due and payable to the respective Lenders; (d) the making, Conversion and   Continuation of Revolving Loans of a particular Type (other than Conversions provided for by   Sections 5.1.(c) and 5.5.) shall be made pro rata among the Revolving Lenders according to the amounts   of their respective Revolving Loans and the then current Interest Period for each Lender’s portion of each   such Loan of such Type shall be coterminous; (e) the Revolving Lenders’ participation in, and payment   obligations in respect of, Swingline Loans under Section 2.3., shall be in accordance with their respective   Revolving Commitment Percentages; and (f) the Revolving Lenders’ participation in, and payment   obligations in respect of, Letters of Credit under Section 2.2., shall be in accordance with their respective   Revolving Commitment Percentages.  All payments of principal, interest, fees and other amounts in   respect of the Swingline Loans shall be for the account of the Swingline Lender only (except to the extent   any Lender shall have acquired a participating interest in any such Swingline Loan pursuant to   Section 2.3.(e), in which case such payments shall be pro rata in accordance with such participating   interests).   Section 3.3.  Sharing of Payments, Etc.   If a Lender shall obtain payment of any principal of, or interest on, any Loan made by it to the   Borrower under this Agreement or shall obtain payment on any other Obligation owing by the Borrower   or any other Loan Party through the exercise of any right of set-off, banker’s lien, counterclaim or similar   right or otherwise or through voluntary prepayments directly to a Lender or other payments made by or   on behalf of the Borrower or any other Loan Party to a Lender (other than any payment in respect of   Specified Derivatives Obligations) not in accordance with the terms of  this Agreement and such payment   should be distributed to the Lenders in accordance with Section 3.2. or Section 11.5., as applicable, such   Lender shall promptly purchase from the other Lenders participations in (or, if and to the extent specified   by such Lender, direct interests in) the Loans made by the other Lenders or other Obligations owed to   such other Lenders in such amounts, and make such other adjustments from time to time as shall be   equitable, to the end that all the Lenders shall share the benefit of such payment (net of any reasonable   expenses which may actually be incurred by such Lender in obtaining or preserving such benefit) in   accordance with the requirements of Section 3.2. or Section 11.5., as applicable.  To such end, all the     

 

   - 44 -   Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or   otherwise) if such payment is rescinded or must otherwise be restored.  The Borrower agrees that any   Lender so purchasing a participation (or direct interest) in the Loans or other Obligations owed to such   other Lenders may exercise all rights of set-off, banker’s lien, counterclaim or similar rights with respect   to such participation as fully as if such Lender were a direct holder of Loans in the amount of such   participation.  Nothing contained herein shall require any Lender to exercise any such right or shall affect   the right of any Lender to exercise and retain the benefits of exercising, any such right with respect to any   other indebtedness or obligation of the Borrower.   Section 3.4.  Several Obligations.   No Lender shall be responsible for the failure of any other Lender to make a Loan or to perform   any other obligation to be made or performed by such other Lender hereunder, and the failure of any   Lender to make a Loan or to perform any other obligation to be made or performed by it hereunder shall   not relieve the obligation of any other Lender to make any Loan or to perform any other obligation to be   made or performed by such other Lender.   Section 3.5.  Fees.   (a) Closing Fee.  On the Effective Date, the Borrower agrees to pay to the Administrative   Agent and each Lender all loan fees as have been agreed to in writing by the Borrower and the   Administrative Agent.   (b) Unused Fees. During the period from the Effective Date to but excluding the Revolving   Termination Date, the Borrower agrees to pay to the Administrative Agent for the account of the   Revolving Lenders an unused facility fee equal to the sum of the daily amount (the “Unused Amount”)   by which the aggregate amount of the Revolving Commitments exceeds the aggregate outstanding   principal balance of Revolving Loans and Letter of Credit Liabilities set forth in the table below   multiplied by the corresponding per annum rate.  Such fee shall be computed on a daily basis and payable   quarterly in arrears on the first day of each January, April, July and October during the term of this   Agreement and on the Revolving Termination Date or any earlier date of termination of the Revolving   Commitments or reduction of the Revolving Commitments to zero.  For the avoidance of doubt, for   purposes of calculating an unused facility fee, the outstanding principal balance of Swingline Loans shall   not be factored into the computation.   Unused Amount Unused Fee   (percent per annum)   Greater than or equal to 50% of the aggregate amount of   Revolving Commitments   0.25%   Less than 50% of the aggregate amount of Revolving   Commitments   0.15%      (c) Letter of Credit Fees.  The Borrower agrees to pay to the Administrative Agent for the   account of each Revolving Lender a letter of credit fee at a rate per annum equal to the Applicable Margin   for LIBOR Loans times the daily average Stated Amount of each Letter of Credit for the period from and   including the date of issuance of such Letter of Credit (x) to and including the date such Letter of Credit   expires or is cancelled or (y) to but excluding the date such Letter of Credit is drawn in full.  In addition   to such fees, the Borrower shall pay to the applicable Issuing Bank solely for its own account, a fronting   fee in respect of each Letter of Credit equal to one-eighth of one percent (0.125%) of the initial Stated   Amount of such Letter of Credit; provided, however, in no event shall the aggregate amount of such fee in   respect of any Letter of Credit be less than $1,000.  The fees provided for in this subsection shall be     

 

   - 45 -   nonrefundable and payable, in the case of the fee provided for in the first sentence, in arrears (i) quarterly   on the first day of January, April, July and October, (ii) on the Revolving Termination Date, (iii) on the   date the Revolving Commitments are terminated or reduced to zero and (iv) thereafter from time to time   on demand of the Administrative Agent and in the case of the fee provided for in the second sentence, at   the time of issuance of such Letter of Credit.  The Borrower shall pay directly to the applicable Issuing   Bank from time to time on demand all commissions, charges, costs and expenses in the amounts   customarily charged or incurred by such Issuing Bank from time to time in like circumstances with   respect to the issuance, amendment, renewal or extension of any Letter of Credit or any other transaction   relating thereto.   (d) Revolving Credit Extension Fee.  If the Borrower exercises its right to extend the   Revolving Termination Date in accordance with Section 2.12., the Borrower agrees to pay to the   Administrative Agent for the account of each Revolving Lender a fee equal to three-twentieths of one   percent (0.15%) of the amount of such Revolving Lender’s Revolving Commitment (whether or not   utilized).  Such fee shall be due and payable in full on the date the Administrative Agent receives the   Extension Request pursuant to such Section.   (e) Administrative and Other Fees.  The Borrower agrees to pay the administrative and other   fees of the Administrative Agent as may be agreed to in writing from time to time by the Borrower and   the Administrative Agent.   Section 3.6.  Computations.   Unless otherwise expressly set forth herein, any accrued interest on any Loan, any Fees or any   other Obligations due hereunder shall be computed on the basis of a year of 360 days and the actual   number of days elapsed.   Section 3.7.  Usury.   In no event shall the amount of interest due or payable on the Loans or other Obligations exceed   the maximum rate of interest allowed by Applicable Law and, if any such payment is paid by the   Borrower or any other Loan Party or received by any Lender, then such excess sum shall be credited as a   payment of principal, unless the Borrower shall notify the respective Lender in writing that the Borrower   elects to have such excess sum returned to it forthwith.  It is the express intent of the parties hereto that   the Borrower not pay and the Lenders not receive, directly or indirectly, in any manner whatsoever,   interest in excess of that which may be lawfully paid by the Borrower under Applicable Law.  The parties   hereto hereby agree and stipulate that the only charge imposed upon the Borrower for the use of money in   connection with this Agreement is and shall be the interest specifically described in Section 2.4.(a)(i)   through (iv) and, with respect to Swingline Loans, in Section 2.3.(c).  Notwithstanding the foregoing, the   parties hereto further agree and stipulate that all agency fees, syndication fees, facility fees, closing fees,   letter of credit fees, underwriting fees, default charges, late charges, funding or “breakage” charges,   increased cost charges, attorneys’ fees and reimbursement for costs and expenses paid by the   Administrative Agent or any Lender to third parties or for damages incurred by the Administrative Agent   or any Lender, in each case, in connection with the transactions contemplated by this Agreement and the   other Loan Documents, are charges made to compensate the Administrative Agent or any such Lender for   underwriting or administrative services and costs or losses performed or incurred, and to be performed or   incurred, by the Administrative Agent and the Lenders in connection with this Agreement and shall under   no circumstances be deemed to be charges for the use of money.  All charges other than charges for the   use of money shall be fully earned and nonrefundable when due.     

 

   - 46 -   Section 3.8.  Statements of Account.   The Administrative Agent will account to the Borrower monthly with a statement of Loans,   accrued interest and Fees, charges and payments made pursuant to this Agreement and the other Loan   Documents, and such account rendered by the Administrative Agent shall be deemed conclusive upon the   Borrower absent manifest error.  The failure of the Administrative Agent to deliver such a statement of   accounts shall not relieve or discharge the Borrower from any of its obligations hereunder.   Section 3.9.  Defaulting Lenders.   Notwithstanding anything to the contrary contained in this Agreement, if any Revolving Lender   becomes a Defaulting Lender, then, until such time as such Revolving Lender is no longer a Defaulting   Lender, to the extent permitted by Applicable Law:   (a) Waivers and Amendments.  Such Defaulting Lender’s right to approve or disapprove any   amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the   definition of Requisite Lenders.  The rights and remedies of the Borrower against a Defaulting Lender   under this Section are in addition to any other rights and remedies Borrower may have against such   Defaulting Lender under this Agreement, any of the Loan Documents, Applicable Law or otherwise.   (b) Defaulting Lender Waterfall.  Any payment of principal, interest, Fees or other amounts   received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or   mandatory, at maturity, pursuant to Article XI. or otherwise) or received by the Administrative Agent   from a Defaulting Lender pursuant to Section 3.3. shall be applied at such time or times as may be   determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such   Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of   any amounts owing by such Defaulting Lender to the Issuing Banks or the Swingline Lender hereunder;   third, to Cash Collateralize each Issuing Bank’s Fronting Exposure with respect to such Defaulting   Lender in accordance with subsection (e) below; fourth, as the Borrower may request (so long as no   Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting   Lender has failed to fund its portion thereof as required by this Agreement, as determined by the   Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in   a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future   funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize each Issuing   Bank’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of   Credit issued under this Agreement, in accordance with subsection (e) below; sixth, to the payment of any   amounts owing to the Lenders, the Issuing Banks or the Swingline Lender as a result of any judgment of a   court of competent jurisdiction obtained by any Lender, any Issuing Bank or the Swingline Lender against   such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this   Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts   owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the   Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations   under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of   competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any   Loans or amounts owing by such Defaulting Lender under Section 2.2.(j) in respect of Letters of Credit   (such amounts “L/C Disbursements”), in respect of which such Defaulting Lender has not fully funded   its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time   when the conditions set forth in Article VI. were satisfied or waived, such payment shall be applied solely   to pay the Loans of, and L/C Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior   to being applied to the payment of any Loans of, or L/C Disbursements owed to, such Defaulting Lender   until such time as all Loans and funded and unfunded participations in Letter of Credit Liabilities and     

 

   - 47 -   Swingline Loans are held by the Revolving Lenders pro rata in accordance with their respective   Revolving Commitment Percentages (determined without giving effect to the immediately following   subsection (d)).  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender   that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant   to this subsection shall be deemed paid to and redirected by such Defaulting Lender, and each Lender   irrevocably consents hereto.   (c) Certain Fees.   (i) No Defaulting Lender shall be entitled to receive any Fee payable under   Section 3.5.(b) for any period during which that Lender is a Defaulting Lender (and the   Borrower shall not be required to pay any such fee that otherwise would have been required to   have been paid to that Defaulting Lender).   (ii) Each Defaulting Lender shall be entitled to receive letter of credit fees payable   under Section 3.5.(c) for any period during which that Lender is a Defaulting Lender only to the   extent allocable to its Revolving Commitment Percentage of the stated amount of Letters of   Credit for which it has provided Cash Collateral pursuant to the immediately following   subsection (e).   (iii) With respect to any Fee that would have been required to be paid to any   Defaulting Lender but for the immediately preceding clauses (i) or (ii), the Borrower shall   (x) pay to each Non-Defaulting Lender that portion of any such Fee otherwise payable to such   Defaulting Lender with respect to such Defaulting Lender’s participation in Letter of Credit   Liabilities or Swingline Loans that has been reallocated to such Non-Defaulting Lender   pursuant to the immediately following subsection (d), (y) pay to each Issuing Bank and   Swingline Lender, as applicable, the amount of any such Fee otherwise payable to such   Defaulting Lender to the extent allocable to such Issuing Bank’s or Swingline Lender’s   Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining   amount of any such Fee.   (d) Reallocation of Participations to Reduce Fronting Exposure.  All or any part of such   Defaulting Lender’s participation in Letter of Credit Liabilities and Swingline Loans shall be reallocated   among the Non-Defaulting Lenders in accordance with their respective Revolving Commitment   Percentages (determined without regard to such Defaulting Lender’s Revolving Commitment) but only to   the extent that (x) the conditions set forth in Article VI. are satisfied at the time of such reallocation (and,   unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower   shall be deemed to have represented and warranted that such conditions are satisfied at such time), and   (y) such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting   Lender to exceed such Non-Defaulting Lender’s Revolving Commitment.  No reallocation hereunder   shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender   arising from that Revolving Lender having become a Defaulting Lender, including any claim of a   Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such   reallocation.   (e) Cash Collateral, Repayment of Swingline Loans.   (i) If the reallocation described in the immediately preceding subsection (d) above   cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or   remedy available to it hereunder or under law, (x) first, prepay Swingline Loans in an amount   equal to the Swingline Lender’s Fronting Exposure and (y) second, Cash Collateralize each     

 

   - 48 -   Issuing Bank’s Fronting Exposure in accordance with the procedures set forth in this   subsection.   (ii) At any time that there shall exist a Defaulting Lender, within one (1) Business   Day following the written request of the Administrative Agent or the applicable Issuing Bank   (with a copy to the Administrative Agent), the Borrower shall Cash Collateralize such Issuing   Bank’s Fronting Exposure with respect to such Defaulting Lender (determined after giving   effect to the immediately preceding subsection (d) and any Cash Collateral provided by such   Defaulting Lender) in an amount not less than the aggregate Fronting Exposure of such Issuing   Bank with respect to Letters of Credit issued and outstanding at such time.  Such cash   collateralization may be provided by a borrowing of Revolving Loans if the conditions   precedent thereto are met.   (iii) The Borrower, and to the extent provided by any Defaulting Lender, such   Defaulting Lender, hereby grant to the Administrative Agent, for the benefit of all Issuing   Banks, and agree to maintain, a first priority security interest in all such Cash Collateral as   security for the Defaulting Lenders’ obligation to fund participations in respect of Letter of   Credit Liabilities, to be applied pursuant to the immediately following clause (iv).  If at any   time the Administrative Agent determines that Cash Collateral is subject to any right or claim   of any Person other than the Administrative Agent and the Issuing Banks as herein provided, or   that the total amount of such Cash Collateral is less than the aggregate Fronting Exposure of the   Issuing Banks with respect to Letters of Credit issued and outstanding at such time, the   Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the   Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such   deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).   (iv) Notwithstanding anything to the contrary contained in this Agreement, Cash   Collateral provided under this Section in respect of Letters of Credit shall be applied to the   satisfaction of the Defaulting Lender’s obligation to fund participations in respect of Letter of   Credit Liabilities (including, as to Cash Collateral provided by a Defaulting Lender, any   interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any   other application of such property as may otherwise be provided for herein.   (v) Cash Collateral (or the appropriate portion thereof) provided to reduce any   Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash Collateral   pursuant to this subsection following (x) the elimination of the applicable Fronting Exposure   (including by the termination of Defaulting Lender status of the applicable Revolving Lender),   or (y) the determination by the Administrative Agent and such Issuing Bank that there exists   excess Cash Collateral; provided that, subject to the immediately preceding subsection (b), the   Person providing Cash Collateral and such Issuing Bank may agree that Cash Collateral shall   be held to support future anticipated Fronting Exposure or other obligation; and provided   further that to the extent that such Cash Collateral was provided by the Borrower, such Cash   Collateral shall, solely to the extent otherwise applicable, remain subject to any security interest   granted pursuant to the Loan Documents.   (f) Defaulting Lender Cure.  If the Borrower, the Administrative Agent, the Swingline   Lender and the Issuing Banks agree in writing that a Revolving Lender is no longer a Defaulting Lender,   the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in   such notice and subject to any conditions set forth therein (which may include arrangements with respect   to any Cash Collateral), that Revolving Lender will, to the extent applicable, purchase at par that portion   of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may     

 

   - 49 -   determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit   and Swingline Loans to be held pro rata by the Revolving Lenders in accordance with their respective   Revolving Commitment Percentages (determined without giving effect to the immediately preceding   subsection (d)), whereupon such Revolving Lender will cease to be a Defaulting Lender; provided that no   adjustments will be made retroactively with respect to Fees accrued or payments made by or on behalf of   the Borrower while that Revolving Lender was a Defaulting Lender; and provided, further, that except to   the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting   Lender to Revolving Lender will constitute a waiver or release of any claim of any party hereunder   arising from that Revolving Lender’s having been a Defaulting Lender.   (g) New Swingline Loans/Letters of Credit.  So long as any Revolving Lender is a   Defaulting Lender, (i) the Swingline Lender shall not be required to fund any Swingline Loans unless it is   satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (ii) no   Issuing Bank shall be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied   that it will have no Fronting Exposure after giving effect thereto.   (h) Purchase of Defaulting Lender’s Commitment. During any period that a Lender is a   Defaulting Lender, the Borrower may, by the Borrower giving written notice thereof to the   Administrative Agent, such Defaulting Lender and the other Lenders, demand that such Defaulting   Lender assign its Commitment and Loans to an Eligible Assignee subject to and in accordance with the   provisions of Section 13.6.(b). No party hereto shall have any obligation whatsoever to initiate any such   replacement or to assist in finding an Eligible Assignee. In addition, any Lender who is not a Defaulting   Lender may, but shall not be obligated, in its sole discretion, to acquire the face amount of all or a portion   of such Defaulting Lender’s Commitment and Loans via an assignment subject to and in accordance with   the provisions of Section 13.6.(b). In connection with any such assignment, such Defaulting Lender shall   promptly execute all documents reasonably requested to effect such assignment, including an appropriate   Assignment and Assumption and, notwithstanding Section 13.6.(b), shall pay to the Administrative Agent   an assignment fee in the amount of $7,500. The exercise by the Borrower of its rights under this Section   shall be at the Borrower’s sole cost and expense and at no cost or expense to the Administrative Agent or   any of the Lenders.       Section 3.10.  Taxes.   (a) Issuing Banks. For purposes of this Section, the term “Lender” includes the Issuing   Banks and the term “Applicable Law” includes FATCA.   (b) Payments Free of Taxes. Any and all payments by or on account of any obligation of the   Borrower or any other Loan Party under any Loan Document shall be made without deduction or   withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined   in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of   any Tax from any such payment by a 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 Tax is an   Indemnified Tax, then the sum payable by the Borrower or other applicable Loan Party 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) the applicable Recipient receives   an amount equal to the sum it would have received had no such deduction or withholding been made.   (c) Payment of Other Taxes by the Borrower. The Borrower and the other Loan Parties shall   timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of   the Administrative Agent timely reimburse it for the payment of, any Other Taxes..     

 

   - 50 -   (d) Indemnification by the Borrower. The Borrower and the other Loan Parties shall jointly   and severally indemnify each Recipient, within 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) payable or paid by such Recipient or required to be withheld or deducted from   a payment to such Recipient 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 the   Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its   own behalf or on behalf of a Lender, shall be conclusive absent manifest error.   (e) Indemnification by the Lenders. Each Lender shall severally indemnify the   Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to   such Lender (but only to the extent that the Borrower or another Loan Party has not already indemnified   the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower   and the other Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with   the provisions of Section 13.6. 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 the Administrative Agent in   connection with any Loan Document, and any reasonable expenses arising therefrom or with respect   thereto, whether or not such 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 the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby   authorizes the Administrative 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 Administrative Agent to the Lender from   any other source against any amount due to the Administrative Agent under this subsection.   (f) Evidence of Payments. As soon as practicable after any payment of Taxes by the   Borrower or any other Loan Party to a Governmental Authority pursuant to this Section, the Borrower or   such other Loan Party shall deliver to the Administrative 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 the Administrative Agent.   (g) Status of Lenders.   (i) 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 Borrower and the   Administrative Agent, at the time or times reasonably requested by the Borrower or the   Administrative Agent, such properly completed and executed documentation reasonably   requested by the Borrower or the Administrative 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 the Borrower or the Administrative Agent, shall deliver such other documentation   prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative   Agent as will enable the Borrower or the Administrative 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 the immediately   following clauses (ii)(A), (ii)(B) and (ii)(D)) 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.        

 

   - 51 -   (ii) Without limiting the generality of the foregoing, in the event that the Borrower is   a U.S. Person:      (A) any Lender that is a U.S. Person shall deliver to the Borrower and the   Administrative 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 the   Borrower or the Administrative Agent), an electronic copy (or an original if requested by   the Borrower or the Administrative Agent) of an executed IRS Form W-9 (or any   successor form) certifying that such Lender is exempt from U.S. federal backup   withholding tax;      (B) any Foreign Lender shall, to the extent it is legally entitled to do so,   deliver to the Borrower and the Administrative Agent (in such number of copies as shall   be requested by the recipient) 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 the Borrower or the Administrative Agent), whichever of the   following is applicable:      (I) 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, an electronic copy (or an   original if requested by the Borrower or the Administrative Agent) of an   executed IRS 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;      (II) an electronic copy (or an original if requested by the Borrower or   the Administrative Agent) of an executed IRS Form W-8ECI;      (III) in the case of a Foreign Lender claiming the benefits of the   exemption for portfolio interest under Section 881(c) of the Internal Revenue   Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that   such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A)   of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within   the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a   “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal   Revenue Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals   of IRS Form W-8BEN; or      (IV) to the extent a Foreign Lender is not the beneficial owner, an   electronic copy (or an original if requested by the Borrower or the Administrative   Agent) of an executed 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 J-2 or Exhibit J-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     

 

   - 52 -   Lender may provide a U.S. Tax Compliance Certificate substantially in the form   of Exhibit J-4 on behalf of each such direct and indirect partner;      (C) any Foreign Lender shall, to the extent it is legally entitled to do so,   deliver to the Borrower and the Administrative Agent (in such number of copies as shall   be requested by the recipient) 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 the Borrower or the Administrative Agent), an electronic copy (or   an original if requested by the Borrower or the Administrative Agent) of any other form   prescribed by Applicable Law as a basis for claiming exemption from or a reduction in   U.S. federal withholding Tax, duly completed, together with such supplementary   documentation as may be prescribed by Applicable Law to permit the Borrower or the   Administrative Agent to determine the withholding or deduction required to be made; and      (D) if a payment made to a Lender under any Loan Document would be   subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail   to comply with the applicable reporting requirements of FATCA (including those   contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable),   such Lender shall deliver to the Borrower and the Administrative Agent at the time or   times prescribed by Applicable Law and at such time or times reasonably requested by   the Borrower or the Administrative Agent such documentation prescribed by Applicable   Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code)   and such additional documentation reasonably requested by the Borrower or the   Administrative Agent as may be necessary for the Borrower and the Administrative   Agent to comply with their obligations under FATCA and to determine that such Lender   has complied with such Lender’s obligations under FATCA or to determine the amount   to deduct and withhold from such payment. Solely for purposes of this clause (D),   “FATCA” shall include any amendments made to FATCA after the date of this   Agreement.      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 Borrower and   the Administrative Agent in writing of its legal inability to do so.      (h) Treatment of Certain Refunds.  If any party determines, in its sole discretion exercised in   good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this   Section (including by the payment of additional amounts pursuant to this Section), 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 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses   (including 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   subsection (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 subsection in no event will the indemnified party be   required to pay any amount to an indemnifying party pursuant to this subsection 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 indemnification payments or additional amounts giving rise to such refund had   never been paid. This paragraph shall not be construed to require any indemnified party to make available   its Tax returns (or any other information relating to its Taxes that it deems confidential) to the   indemnifying party or any other Person.     

 

   - 53 -   (i) Survival.  Each party’s obligations under this Section shall survive the resignation or   replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender,   the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under   any Loan Document.      ARTICLE IV.  [RESERVED].      ARTICLE V.  YIELD PROTECTION, ETC.   Section 5.1.  Additional Costs; Capital Adequacy.   (a) Capital Adequacy.  If any Lender determines that any Regulatory Change affecting such   Lender or any lending office of such Lender or such Lender’s holding company, if any, regarding capital   or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s   capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement,   the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or   Swingline Loans held by, such Lender, to a level below that which such Lender or such Lender’s holding   company could have achieved but for such Regulatory Change (taking into consideration such Lender’s   policies and the policies of such Lender’s holding company with respect to capital adequacy), then from   time to time, within thirty (30) days after written demand by such Lender or such Participant, the   Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or   such Lender’s holding company for any such reduction suffered.   (b) Additional Costs.  In addition to, and not in limitation of the immediately preceding   subsection, the Borrower shall promptly pay to the Administrative Agent for the account of a Lender from   time to time such amounts as such Lender may determine to be necessary to compensate such Lender for   any costs incurred by such Lender that it determines are attributable to its making or maintaining of any   LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any reduction in any amount   receivable by such Lender under this Agreement or any of the other Loan Documents in respect of any of   such LIBOR Loans or such obligation or the maintenance by such Lender of capital or liquidity in respect   of its LIBOR Loans or its Commitments (such increases in costs and reductions in amounts receivable   being herein called “Additional Costs”), resulting from any Regulatory Change that:  (i) changes the   basis of taxation of any amounts payable to such Lender under this Agreement or any of the other Loan   Documents in respect of any of such LIBOR Loans or its Commitments (other than Indemnified Taxes,   Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and Connection Income   Taxes), or (ii) imposes or modifies any reserve, special deposit, compulsory loan, insurance charge or   similar requirements (other than Regulation D of the Board of Governors of the Federal Reserve System   or other similar reserve requirement applicable to any other category of liabilities or category of   extensions of credit or other assets by reference to which the interest rate on LIBOR Loans is determined   to the extent utilized when determining LIBOR for such Loans) relating to any extensions of credit or   other assets of, or any deposits with or other liabilities of, or other credit extended by, or any other   acquisition of funds by such Lender (or its parent corporation), or any commitment of such Lender   (including, without limitation, the Commitments of such Lender hereunder) or (iii) imposes on any   Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting   this Agreement or the Loans made by such Lender.   (c) Lender’s Suspension of LIBOR Loans.  Without limiting the effect of the provisions of   the immediately preceding subsections (a) and (b), if by reason of any Regulatory Change, any Lender   either (i) incurs Additional Costs based on or measured by the excess above a specified level of the     

 

   - 54 -   amount of a category of deposits or other liabilities of such Lender that includes deposits by reference to   which the interest rate on LIBOR Loans is determined as provided in  this Agreement or a category of   extensions of credit or other assets of such Lender that includes LIBOR Loans or (ii) becomes subject to   restrictions on the amount of such a category of liabilities or assets that it may hold, then, if such Lender   so elects by notice to the Borrower (with a copy to the Administrative Agent), the obligation of such   Lender to make or Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended until   such Regulatory Change ceases to be in effect (in which case the provisions of Section 5.5. shall apply).   (d) Additional Costs in Respect of Letters of Credit.  Without limiting the obligations of the   Borrower under the preceding subsections of this Section (but without duplication), if as a result of any   Regulatory Change or any risk-based capital guideline or other requirement hereafter issued by any   Governmental Authority there shall be imposed, modified or deemed applicable (other than Indemnified   Taxes, Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and Connection   Income Taxes) after the Agreement Date, any tax, reserve, special deposit, capital adequacy or similar   requirement against or with respect to or measured by reference to Letters of Credit and the result shall be   to increase the cost to the applicable Issuing Bank of issuing (or any Lender of purchasing participations   in) or maintaining its obligation hereunder to issue (or purchase participations in) any Letter of Credit or   reduce any amount receivable by any Issuing Bank or any Lender hereunder in respect of any Letter of   Credit, then, upon demand by such Issuing Bank or such Lender, the Borrower shall pay promptly to such   Issuing Bank or, in the case of such Lender, to the Administrative Agent for the account of such Lender,   from time to time as specified by such Issuing Bank or such Lender, such additional amounts as shall be   sufficient to compensate such Issuing Bank or such Lender for such increased costs or reductions in   amount.   (e) Notification and Determination of Additional Costs.  Each of the Administrative Agent,   each Issuing Bank and each Lender, as the case may be, agrees to notify the Borrower (and in the case of   an Issuing Bank and or a Lender, to notify the Administrative Agent) of any event occurring after the   Agreement Date entitling the Administrative Agent, such Issuing Bank or such Lender to compensation   under any of the preceding subsections of this Section as promptly as practicable; provided, however, that   the failure of the Administrative Agent, any Issuing Bank or any Lender to give such notice shall not   release the Borrower from any of its obligations hereunder.  The Administrative Agent, each Issuing Bank   and each Lender, as the case may be, agrees to furnish to the Borrower (and in the case of an Issuing   Bank or a Lender to the Administrative Agent as well) a certificate setting forth the basis and amount of   each request for compensation under this Section.  Determinations by the Administrative Agent, an   Issuing Bank or such Lender, as the case may be, of the effect of any Regulatory Change shall be   conclusive and binding for all purposes, absent manifest error.    Notwithstanding anything to the contrary   contained in the preceding subsections of this Section 5.1., the Borrower shall not be required to   compensate any Lender or any Participant for any such increased costs or reduced return incurred by such   Lender or Participant more than one hundred eighty (180) days prior to such Lender’s or Participant’s   written request to the Borrower for such compensation (except that if the event giving rise to the   increased costs or reduced return is retroactive, then the one hundred eighty (180) day period referred to   above shall be extended to include the period of retroactive effect thereof).   Section 5.2.  Suspension of LIBOR Loans.   Anything herein to the contrary notwithstanding, if, on or prior to the determination of LIBOR for   any Interest Period:    (a) the Administrative Agent reasonably determines (which determination shall be   conclusive) that quotations of interest rates for the relevant deposits referred to in the definition of   LIBOR are not being provided in the relevant amounts or for the relevant maturities for purposes     

 

   - 55 -   of determining rates of interest for LIBOR Loans as provided herein or is otherwise unable to   determine LIBOR; or    (b) the Administrative Agent reasonably determines (which determination shall be   conclusive) that the relevant rates of interest referred to in the definition of LIBOR upon the basis   of which the rate of interest for LIBOR Loans for such Interest Period is to be determined are not   likely to adequately cover the cost to any Lender of making or maintaining LIBOR Loans for   such Interest Period;   then the Administrative Agent shall give the Borrower and each Lender prompt notice thereof and, so   long as such condition remains in effect, the Lenders shall be under no obligation to, and shall not, make   additional LIBOR Loans, Continue LIBOR Loans or Convert Loans into LIBOR Loans and the Borrower   shall, on the last day of each current Interest Period for each outstanding LIBOR Loan, either prepay such   Loan or Convert such Loan into a Base Rate Loan.   Section 5.3.  Illegality.   Notwithstanding any other provision of this Agreement, if any Lender shall determine (which   determination shall be conclusive and binding) that it is unlawful for such Lender to honor its obligation   to make or maintain LIBOR Loans hereunder, then such Lender shall promptly notify the Borrower   thereof (with a copy of such notice to the Administrative Agent) and such Lender’s obligation to make or   Continue, or to Convert Loans of any other Type into, LIBOR Loans shall be suspended until such time   as such Lender may again make and maintain LIBOR Loans (in which case the provisions of Section 5.5.   shall be applicable).   Section 5.4.  Compensation.   The Borrower shall pay to the Administrative Agent for the account of each Lender, upon the   request of the Administrative Agent, such amount or amounts as the Administrative Agent shall   determine in its sole discretion shall be sufficient to compensate such Lender for any loss, cost or expense   attributable to:    (a) any payment or prepayment (whether mandatory or optional) of a LIBOR Loan,   or Conversion of a LIBOR Loan, made by such Lender for any reason (including, without   limitation, acceleration) on a date other than the last day of the Interest Period for such Loan; or    (b) any failure by the Borrower for any reason (including, without limitation, the   failure of any of the applicable conditions precedent specified in Section 6.2. to be satisfied) to   borrow a LIBOR Loan from such Lender on the date for such borrowing, or to Convert a Base   Rate Loan into a LIBOR Loan or Continue a LIBOR Loan on the requested date of such   Conversion or Continuation.   Upon the Borrower’s request, the Administrative Agent shall provide the Borrower with a statement   setting forth the basis for requesting such compensation and the method for determining the amount   thereof.  Any such statement shall be conclusive absent manifest error.   Section 5.5.  Treatment of Affected Loans.   If the obligation of any Lender to make LIBOR Loans or to Continue, or to Convert Base Rate   Loans into, LIBOR Loans shall be suspended pursuant to Section 5.1.(c), Section 5.2. or Section 5.3. then   such Lender’s LIBOR Loans shall be automatically Converted into Base Rate Loans on the last day(s) of     

 

   - 56 -   the then current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion required by   Section 5.1.(c), Section 5.2., or Section 5.3. on such earlier date as such Lender or the Administrative   Agent, as applicable, may specify to the Borrower (with a copy to the Administrative Agent, as   applicable)) and, unless and until such Lender or the Administrative Agent, as applicable, gives notice as   provided below that the circumstances specified in Section 5.1., Section 5.2. or Section 5.3. that gave rise   to such Conversion no longer exist:    (a) to the extent that such Lender’s LIBOR Loans have been so Converted, all   payments and prepayments of principal that would otherwise be applied to such Lender’s LIBOR   Loans shall be applied instead to its Base Rate Loans; and    (b) all Loans that would otherwise be made or Continued by such Lender as LIBOR   Loans shall be made or Continued instead as Base Rate Loans, and all Base Rate Loans of such   Lender that would otherwise be Converted into LIBOR Loans shall remain as Base Rate Loans.   If such Lender or the Administrative Agent, as applicable, gives notice to the Borrower (with a copy to   the Administrative Agent, as applicable) that the circumstances specified in Section 5.1.(c), 5.2. or 5.3.   that gave rise to the Conversion of such Lender’s LIBOR Loans pursuant to this Section no longer exist   (which such Lender or the Administrative Agent, as applicable, agrees to do promptly upon such   circumstances ceasing to exist) at a time when LIBOR Loans made by other Lenders are outstanding, then   such Lender’s Base Rate Loans shall be automatically Converted, on the first day(s) of the next   succeeding Interest Period(s) for such outstanding LIBOR Loans, to the extent necessary so that, after   giving effect thereto, all Loans held by the Lenders holding LIBOR Loans and by such Lender are held   pro rata (as to principal amounts, Types and Interest Periods) in accordance with their respective   Commitments.   Section 5.6.  Affected Lenders.   If (a) a Lender requests compensation pursuant to Section 3.10. or 5.1., and the Requisite Lenders   are not also doing the same, or (b) the obligation of any Lender to make LIBOR Loans or to Continue, or   to Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 5.1.(b) or 5.3. but   the obligation of the Requisite Lenders shall not have been suspended under such Sections, or (c) a   Lender does not vote in favor of any amendment, modification or waiver to this Agreement or any other   Loan Document, which, pursuant to Section 13.7, requires the vote of such Lender, and the Requisite   Lenders shall have voted in favor of such amendment, modification or waiver, then, so long as there does   not then exist any Default or Event of Default, the Borrower may demand that such Lender (the “Affected   Lender”), and upon such demand the Affected Lender shall promptly, assign its Commitment to an   Eligible Assignee subject to and in accordance with the provisions of Section 13.6.(b) for a purchase price   equal to (x) the aggregate principal balance of all Loans then owing to the Affected Lender, plus (y) the   aggregate amount of payments previously made by the Affected Lender under Section 2.2.(j) that have   not been repaid, plus (z) any accrued but unpaid interest thereon and accrued but unpaid fees owing to the   Affected Lender, or any other amount as may be mutually agreed upon by such Affected Lender and   Eligible Assignee.  Each of the Administrative Agent and the Affected Lender shall reasonably cooperate   in effectuating the replacement of such Affected Lender under this Section, but at no time shall the   Administrative Agent, such Affected Lender nor any other Lender nor any Titled Agent be obligated in   any way whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee.  The   exercise by the Borrower of its rights under this Section shall be at the Borrower’s sole cost and expense   and at no cost or expense to the Administrative Agent, the Affected Lender or any of the other Lenders.    The terms of this Section shall not in any way limit the Borrower’s obligation to pay to any Affected   Lender compensation owing to such Affected Lender pursuant to this Agreement (including, without     

 

   - 57 -   limitation, pursuant to Sections 3.10., 5.1. or 5.4.) with respect to any period up to the date of   replacement.   Section 5.7.  Change of Lending Office.   Each Lender agrees that it will use reasonable efforts (consistent with its internal policy and legal   and regulatory restrictions) to designate an alternate Lending Office with respect to any of its Loans   affected by the matters or circumstances described in Sections 3.10., 5.1. or 5.3. to reduce the liability of   the Borrower or avoid the results provided thereunder, so long as such designation is not disadvantageous   to such Lender as determined by such Lender in its sole discretion, except that such Lender shall have no   obligation to designate a Lending Office located in the United States of America.   Section 5.8.  Assumptions Concerning Funding of LIBOR Loans.   Calculation of all amounts payable to a Lender under this Article shall be made as though such   Lender had actually funded LIBOR Loans through the purchase of deposits in the relevant market bearing   interest at the rate applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR   Loans and having a maturity comparable to the relevant Interest Period; provided, however, that each   Lender may fund each of its LIBOR Loans in any manner it sees fit and the foregoing assumption shall be   used only for calculation of amounts payable under this Article.   ARTICLE VI.   CONDITIONS PRECEDENT   Section 6.1.  Initial Conditions Precedent.   The obligation of the Lenders to effect or permit the occurrence of the first Credit Event   hereunder, whether as the making of a Loan or the issuance of a Letter of Credit, is subject to the   satisfaction or waiver of the following conditions precedent:   (a) The Administrative Agent shall have received each of the following, in form and   substance satisfactory to the Administrative Agent:   (i) counterparts of this Agreement executed by each of the parties hereto;   (ii) Revolving Notes executed by the Borrower, payable to each applicable Lender   and complying with the terms of Section 2.10.(a) and the Swingline Note executed by the   Borrower;   (iii) the Guaranty executed by each of the Guarantors initially to be a party thereto;   (iv) an opinion of Pillsbury Winthrop Shaw Pittman LLP, counsel to the Parent, the   Borrower and the other Loan Parties, addressed to the Administrative Agent and the Lenders   and in a form acceptable to the Administrative Agent;   (v) the certificate or articles of incorporation or formation, articles of organization,   certificate of limited partnership, declaration of trust or other comparable organizational   instrument (if any) of each Loan Party certified as of a recent date by the Secretary of State of   the state of formation of such Loan Party;   (vi) a certificate of good standing (or certificate of similar meaning) with respect to   each Loan Party issued as of a recent date by the Secretary of State of the state of formation of     

 

   - 58 -   each such Loan Party and certificates of qualification to transact business or other comparable   certificates issued as of a recent date by each Secretary of State (and any state department of   taxation, as applicable) of each state in which such Loan Party is required to be so qualified and   where failure to be so qualified could reasonably be expected to have a Material Adverse   Effect;   (vii) a certificate of incumbency signed by the Secretary or Assistant Secretary (or   other individual performing similar functions) of each Loan Party with respect to each of the   officers of such Loan Party authorized to execute and deliver the Loan Documents to which   such Loan Party is a party, and in the case of the Borrower, authorized to execute and deliver   on behalf of the Borrower Notices of Borrowing, Notices of Swingline Borrowing, requests for   Letters of Credit, Notices of Conversion and Notices of Continuation;   (viii) copies certified by the Secretary or Assistant Secretary (or other individual   performing similar functions) of each Loan Party of (A) the by-laws of such Loan Party, if a   corporation, the operating agreement, if a limited liability company, the partnership agreement,   if a limited or general partnership, or other comparable document in the case of any other form   of legal entity and (B) all corporate, partnership, member or other necessary action taken by   such Loan Party to authorize the execution, delivery and performance of the Loan Documents   to which it is a party;   (ix) a Compliance Certificate calculated on a pro forma basis for the Borrower’s   fiscal quarter ended March 31, 2014;   (x) a Disbursement Instruction Agreement effective as of the Agreement Date;   (xi) evidence that the Fees, if any, then due and payable under Section 3.5., together   with all other fees, expenses and reimbursement amounts due and payable to the Administrative   Agent and any of the Lenders, including without limitation, the fees and expenses of counsel to   the Administrative Agent, have been paid;   (xii) insurance certificates, or other evidence, providing that the insurance coverage   required under Section 8.5. (including, without limitation, both property and liability insurance)   is in full force and effect;   (xiii) the duly executed Officer’s Certificate; and   (xiv) such other documents, agreements and instruments as the Administrative Agent,   or any Lender through the Administrative Agent, may reasonably request.   (b) In the good faith judgment of the Administrative Agent:   (i) there shall not have occurred or become known to the Administrative Agent or   any of the Lenders any event, condition, situation or status since the date of the information   contained in the financial and business projections, budgets, pro forma data and forecasts   concerning the Borrower and its Subsidiaries delivered to the Administrative Agent and the   Lenders prior to the Agreement Date that has had or could reasonably be expected to result in a   Material Adverse Effect;   (ii) no litigation, action, suit, investigation or other arbitral, administrative or judicial   proceeding shall be pending or threatened which could reasonably be expected to (A) result in a     

 

   - 59 -   Material Adverse Effect or (B) restrain or enjoin, impose materially burdensome conditions on,   or otherwise materially and adversely affect, the ability of the Borrower or any other Loan   Party to fulfill its obligations under the Loan Documents to which it is a party;   (iii) the Borrower and its Subsidiaries shall have received all approvals, consents and   waivers, and shall have made or given all necessary filings and notices as shall be required to   consummate the transactions contemplated hereby without the occurrence of any default under,   conflict with or violation of (A) any Applicable Law or (B) any agreement, document or   instrument to which any Loan Party is a party or by which any of them or their respective   properties is bound, except for such approvals, consents, waivers, filings and notices the   receipt, making or giving of which could not reasonably be likely to (A) have a Material   Adverse Effect, or  (B) restrain or impose materially burdensome conditions on, or otherwise   materially and adversely effect the ability of the Borrower or any Loan Party to fulfill its   obligations under the Loan Documents to which it is a Party;   (iv) the Borrower and each other Loan Party shall have provided all information   requested by the Administrative Agent and each Lender in order to comply with applicable   “know your customer” and anti-money laundering rules and regulations, including without   limitation, the Patriot Act; and   (v) there shall not have occurred or exist any other material disruption of financial or   capital markets that could reasonably be expected to materially and adversely affect the   transactions contemplated by the Loan Documents.   Section 6.2.  Conditions Precedent to All Loans and Letters of Credit.   The obligations of (i) the Lenders to make any Loans and (ii) the Issuing Banks to issue Letters of   Credit are each subject to the further conditions precedent that: (a) no Default or Event of Default shall   exist as of the date of the making of such Loan or date of issuance of such Letter of Credit or would exist   immediately after giving effect thereto, and no violation of the limits described in Section 2.14. would   occur after giving effect thereto; (b) the representations and warranties made or deemed made by the   Borrower and each other Loan Party in the Loan Documents to which any of them is a party, shall be true   and correct in all material respects (except in the case of a representation or warranty qualified by   materiality, in which case such representation or warranty shall be true and correct in all respects) on and   as of the date of the making of such Loan or date of issuance of such Letter of Credit with the same force   and effect as if made on and as of such date except to the extent that such representations and warranties   expressly relate solely to an earlier date (in which case such representations and warranties shall have   been true and correct in all material respects (except in the case of a representation or warranty qualified   by materiality, in which case such representation or warranty shall be true and correct in all respects) on   and as of such earlier date) and except for changes in factual circumstances not expressly prohibited   hereunder and (c) in the case of the borrowing of Revolving Loans, the Administrative Agent shall have   received a timely Notice of Borrowing, or in the case of a Swingline Loan, the Swingline Lender shall   have received a timely Notice of Swingline Borrowing.  Each Credit Event shall constitute a certification   by the Borrower to the effect set forth in the preceding sentence (both as of the date of the giving of   notice relating to such Credit Event and, unless the Borrower otherwise notifies the Administrative Agent   prior to the date of such Credit Event, as of the date of the occurrence of such Credit Event).  In addition,   the Borrower shall be deemed to have represented to the Administrative Agent and the Lenders at the   time any Loan is made or any Letter of Credit is issued that all conditions to the making of such Loan or   issuing of such Letter of Credit contained in this Article VI. have been satisfied.  Unless set forth in   writing to the contrary, the making of its initial Loan by a Lender shall constitute a certification by such   Lender to the Administrative Agent and the other Lenders that the conditions precedent for initial Loans     

 

   - 60 -   set forth in Sections 6.1. and 6.2. that have not previously been waived by the Lenders in accordance with   the terms of this Agreement have been satisfied.   ARTICLE VII.  REPRESENTATIONS AND WARRANTIES   Section 7.1.  Representations and Warranties.   In order to induce the Administrative Agent and each Lender to enter into this Agreement and to   make Loans and, in the case of each Issuing Bank, to issue Letters of Credit, the Borrower represents and   warrants to the Administrative Agent, each Issuing Bank and each Lender as follows:   (a) Organization; Power; Qualification.  Each of the Parent and the Borrower, the other Loan   Parties and the other Subsidiaries of the Borrower is a corporation, partnership or other legal entity, duly   organized or formed, validly existing and in good standing under the jurisdiction of its incorporation or   formation, has the power and authority to own or lease its respective properties and to carry on its   respective business as now being and hereafter proposed to be conducted and is duly qualified and is in   good standing as a foreign corporation, partnership or other legal entity, and authorized to do business, in   each jurisdiction in which the character of its properties or the nature of its business requires such   qualification or authorization and where the failure to be so qualified or authorized could reasonably be   expected to have, in each instance, a Material Adverse Effect.   (b) Ownership Structure.  Part I of Schedule 7.1.(b) is, as of the Agreement Date, a complete   and correct list of all Subsidiaries of the Parent setting forth for each such Subsidiary, (i) the jurisdiction   of organization of such Subsidiary, (ii) each Person holding any Equity Interest in such Subsidiary,   (iii) the nature of the Equity Interests held by each such Person and (iv) the percentage of ownership of   such Subsidiary represented by such Equity Interests.  As of the Agreement Date, except as disclosed in   such Schedule (A), each of the Parent, the Borrower and the Subsidiaries of the Borrower owns, free and   clear of all Liens (except Permitted Liens under clauses (c) through (f) of the definition thereof), and has   the unencumbered right to vote, all outstanding Equity Interests in each Person shown to be held by it on   such Schedule, (B) all of the issued and outstanding capital stock of each such Person organized as a   corporation is validly issued, fully paid and nonassessable and (C) there are no outstanding subscriptions,   options, warrants, commitments, preemptive rights or agreements of any kind (including, without   limitation, any stockholders’ or voting trust agreements) for the issuance, sale, registration or voting of, or   outstanding securities convertible into, any additional shares of capital stock of any class, or partnership   or other ownership interests of any type in, any such Person.  As of the Agreement Date, Part II of   Schedule 7.1.(b) correctly sets forth all Unconsolidated Affiliates of the Parent, including the correct legal   name of such Person, the type of legal entity which each such Person is, and all Equity Interests in such   Person held directly or indirectly by the Parent.   (c) Authorization of Loan Documents and Borrowings.  The Borrower has the right and   power, and has taken all necessary action to authorize it, to borrow and obtain other extensions of credit   hereunder.  Each of the Parent and the Borrower and each other Loan Party has the right and power, and   has taken all necessary action to authorize it, to execute, deliver and perform each of the Loan Documents   to which it is a party in accordance with their respective terms and to consummate the transactions   contemplated hereby and thereby.  The Loan Documents to which the Parent, the Borrower or any other   Loan Party is a party have been duly executed and delivered by the duly authorized officers of such   Person and each is a legal, valid and binding obligation of such Person enforceable against such Person in   accordance with its respective terms, except as the same may be limited by bankruptcy, insolvency, and   other similar laws affecting the rights of creditors generally and the availability of equitable remedies for   the enforcement of certain obligations (other than the payment of principal) contained herein or therein   and as may be limited by equitable principles generally.     

 

   - 61 -   (d) Compliance of Loan Documents with Laws.  The execution, delivery and performance of   this Agreement,  the other Loan Documents to which any Loan Party is a party in accordance with their   respective terms and the borrowings and other extensions of credit hereunder do not and will not, by the   passage of time, the giving of notice, or both:  (i) require any Governmental Approval or violate any   Applicable Law (including all Environmental Laws) relating to the Parent, the Borrower or any other   Loan Party; (ii) conflict with, result in a breach of or constitute a default under the organizational   documents of any Loan Party, or any indenture, agreement or other instrument to which the Parent, the   Borrower or any other Loan Party is a party or by which it or any of its respective properties may be   bound; or (iii) result in or require the creation or imposition of any Lien upon or with respect to any   property now owned or to be hereafter acquired by any Loan Party other than the set off rights described   herein in favor of the Administrative Agent for its benefit and the benefit of the Lenders and the Issuing   Banks.   (e) Compliance with Law; Governmental Approvals.  Each of the Parent, the Borrower, the   other Loan Parties and the other Subsidiaries of the Borrower is in compliance with each Governmental   Approval and all other Applicable Laws relating to it except for noncompliances which, and   Governmental Approvals the failure to possess which, could not, individually or in the aggregate,   reasonably be expected to cause a Default or Event of Default or have a Material Adverse Effect.   (f) Title to Properties; Liens.  Schedule 7.1.(f) is, as of the Agreement Date, a complete and   correct listing of all real estate assets of the Borrower, each other Loan Party and each other Subsidiary of   the Borrower, setting forth, for each such Property, the current occupancy status of such Property and   whether such Property is a Development Property and, if such Property is a Development Property, the   status of completion of such Property.  Each of the Borrower and each Subsidiary of the Borrower has   good, marketable and legal title to, or a valid leasehold interest in, its respective assets.   (g) Existing Indebtedness; Total Indebtedness.  Part I of Schedule 7.1.(g) is, as of the   Agreement Date, a complete and correct listing of all Indebtedness (including all Guarantees other than   guarantees of customary nonrecourse carveouts) of each of the Borrower, and the Subsidiaries of the   Borrower, and if such Indebtedness is secured by any Lien, a description of all of the property subject to   such Lien. As of the Agreement Date, each of the Borrower, the other Loan Parties and the other   Subsidiaries of the Borrower have performed and are in compliance with all of the terms of such   Indebtedness and all instruments and agreements relating thereto in all material respects, and no material   default or event of default, or event or condition which with the giving of notice, the lapse of time, or   both, would constitute a material default or event of default, exists with respect to any such Indebtedness.    Part II of Schedule 7.1.(g) is, as of the Agreement Date, a complete and correct listing of all Total   Indebtedness of the Borrower, the other Loan Parties and the other Subsidiaries of the Parent (excluding   any Indebtedness set forth on Part I of such Schedule).   (h) Material Contracts.  Schedule 7.1.(h) is, as of the Agreement Date, a true, correct and   complete listing of all Material Contracts (other than Tenant Leases).  Each of the Borrower, the other   Loan Parties and the other Subsidiaries of the Borrower that is party to any Material Contract has   performed and is in compliance in all material respects with all of the terms of such Material Contract,   and no default or event of default, or event or condition which with the giving of notice, the lapse of time,   or both, would constitute such a default or event of default, exists with respect to any such Material   Contract to the extent any such default or event of default could reasonably be expected to have a   Material Adverse Effect.   (i) Litigation.  Except as set forth on Schedule 7.1.(i), there are no actions, suits or   proceedings pending (nor, to the knowledge of any Loan Party, are there any actions, suits or proceedings   threatened, nor is there any basis therefor) against or in any other way relating adversely to or affecting     

 

   - 62 -   the Parent, the Borrower, any other Loan Party, any other Subsidiary of the Parent or any of their   respective property in any court or before any arbitrator of any kind or before or by any other   Governmental Authority which, (i) could reasonably be expected to have a Material Adverse Effect or   (ii) in any manner draws into question the validity or enforceability of any Loan Document.  As of the   Agreement Date, there are no strikes, slow downs, work stoppages or walkouts or other labor disputes in   progress or threatened relating to, the Parent, the Borrower, any Loan Party or any other Subsidiary of the   Parent.   (j) Taxes.  All federal, state and other tax returns of each of the Parent, the Borrower, each   other Loan Party and each other Subsidiary of the Borrower required by Applicable Law to be filed have   been duly filed, and all federal, state and other taxes, assessments and other governmental charges or   levies upon, each of the Parent, the Borrower, each Loan Party, each other Subsidiary of the Parent and   their respective properties, income, profits and assets which are due and payable have been paid, except   any such nonpayment or non-filing which is at the time permitted under Section 8.6.  As of the   Agreement Date, none of the United States income tax returns of the Parent, the Borrower, any other   Loan Party or any other Subsidiary of the Parent is under audit.  All charges, accruals and reserves on the   books of the Parent, the Borrower, the other Loan Parties and the other Subsidiaries of the Parent in   respect of any taxes or other governmental charges are in accordance with GAAP.   (k) Financial Statements.  The Borrower has furnished to the Administrative Agent copies of   (i) (x) the audited consolidated balance sheet of the Parent and its consolidated Subsidiaries for the fiscal   years ended December 31, 2012 and December 31, 2013 and (y) the unaudited consolidated balance sheet   of the Parent and its consolidated Subsidiaries for the fiscal quarter and the portion of the fiscal year   ended March 31, 2014, and (ii) the related audited or unaudited, as applicable, consolidated statements of   operations, shareholders’ equity and cash flow for the fiscal years and fiscal quarter ended on such dates,   with, in the case of such annual financial statements, the opinion thereon of Ernst & Young LLP.  Such   financial statements (including in each case related schedules and notes) are complete and correct in all   material respects and present fairly, in accordance with GAAP consistently applied throughout the periods   involved, the consolidated financial position of the Parent  and its consolidated Subsidiaries as at their   respective dates and the results of operations and the cash flow for such periods (subject, as to interim   statements, to changes resulting from normal year-end audit adjustments and the absence of footnotes in   the case of the statements referred to in clause (i)(y) above).  None of the Parent, the Borrower or any of   their respective Subsidiaries has on the Agreement Date any material contingent liabilities, liabilities for   taxes, unusual or long-term commitments or unrealized or forward anticipated losses from any   unfavorable commitments that would be required to be set forth in its financial statements or notes thereto   pursuant to GAAP, except as referred to or reflected or provided for in said financial statements.   (l) No Material Adverse Change.  Since December 31, 2013, there has been no event,   change, circumstance or occurrence that could reasonably be expected to have a Material Adverse Effect.    Each of the Parent, the Borrower, the other Loan Parties and the other Subsidiaries of the Borrower is   Solvent.   (m) ERISA.   (i) Except as could not reasonably be expected, individually or in the aggregate to   have a Material Adverse Effect, each Benefit Arrangement is in compliance with the applicable   provisions of ERISA, the Internal Revenue Code and other Applicable Laws.  Except with   respect to Multiemployer Plans, each Qualified Plan (A) has received a favorable determination   from the Internal Revenue Service applicable to such Qualified Plan’s current remedial   amendment cycle (as defined in Revenue Procedure 2007-44 or “2007-44” for short), (B) has   timely filed for a favorable determination letter from the Internal Revenue Service during its     

 

   - 63 -   staggered remedial amendment cycle (as defined in 2007-44) and such application is currently   being processed by the Internal Revenue Service, (C) had filed for a determination letter prior   to its “GUST remedial amendment period” (as defined in 2007-44) and received such   determination letter and the staggered remedial amendment cycle first following the GUST   remedial amendment period for such Qualified Plan has not yet expired, or (D) is maintained   under a preapproved plan and may rely upon a favorable opinion letter issued by the Internal   Revenue Service with respect to such preapproved plan.  To the best knowledge of the   Borrower, as of the Agreement Date, nothing has occurred which would cause the loss of its   reliance on each Qualified Plan’s favorable determination letter or opinion letter.   (ii) With respect to any Benefit Arrangement that is a retiree welfare benefit   arrangement, all amounts have been accrued on the applicable ERISA Group’s financial   statements in accordance with FASB ASC 715.  The “benefit obligation” of all Plans does not   exceed the “fair market value of plan assets” for such Plans by more than $10,000,000 all as   determined by and with such terms defined in accordance with FASB ASC 715.   (iii) Except as could not reasonably be expected, individually or in the aggregate, to   have a Material Adverse Effect: (i) no ERISA Event has occurred or is expected to occur;   (ii) there are no pending, or to the best knowledge of the Borrower, threatened, claims, actions   or lawsuits or other action by any Governmental Authority, plan participant or beneficiary with   respect to a Benefit Arrangement; (iii) there are no violations of the fiduciary responsibility   rules with respect to any Benefit Arrangement; and (iv) no member of the ERISA Group has   engaged in a non-exempt “prohibited transaction,” as defined in Section 406 of ERISA and   Section 4975 of the Internal Revenue Code, in connection with any Plan, that would subject   any member of the ERISA Group to a tax on prohibited transactions imposed by Section 502(i)   of ERISA or Section 4975 of the Internal Revenue Code.   (n) Absence of Default.  None of the Loan Parties or any of the other Subsidiaries of   Borrower is in default under its certificate or articles of incorporation or formation, bylaws, partnership   agreement or other similar organizational documents, and no event has occurred, which has not been   remedied, cured or waived:  (i) which constitutes a Default or an Event of Default; or (ii) which   constitutes, or which with the passage of time, the giving of notice, or both, would constitute, a default or   event of default by, any Loan Party or any other Subsidiary under any agreement (other than this   Agreement) or judgment, decree or order to which any such Person is a party or by which any such   Person or any of its respective properties may be bound where such default or event of default could,   individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.   (o) Environmental Laws.  Each of the Borrower, each other Loan Party and each other   Subsidiary of the Borrower: (i) is in compliance with all Environmental Laws applicable to its business,   operations and the Properties owned or operated by it, (ii) has obtained all Governmental Approvals   which are required under Environmental Laws, and each such Governmental Approval is in full force and   effect, and (iii) is in compliance with all terms and conditions of such Governmental Approvals, where   with respect to each of the immediately preceding clauses (i) through (iii) the failure to obtain or to   comply with the same could (either individually or in the aggregate) reasonably be expected to have a   Material Adverse Effect.  Except for any of the following matters that could not (either individually or in   the aggregate) reasonably be expected to have a Material Adverse Effect, the Borrower does not have   knowledge of, and has not received notice of, any past, present, or pending releases, events, conditions,   circumstances, activities, practices, incidents, facts, occurrences, actions, or plans that, with respect to the   Borrower, any Loan Party or any other Subsidiary of the Borrower, their respective businesses, operations   or with respect to the Properties, may:  (x) cause or contribute to an actual or alleged violation of or   noncompliance with Environmental Laws, (y) cause or contribute to any other potential common-law or     

 

   - 64 -   legal claim or other liability, or (z) cause any of the Properties to become subject to any restrictions on   ownership, occupancy, use or transferability under any Environmental Law adversely affecting use or   value or require the filing or recording of any notice, approval or disclosure document under any   Environmental Law and, with respect to the immediately preceding clauses (x) through (z) is based on or   related to the on-site or off-site manufacture, generation, processing, distribution, use, treatment, storage,   disposal, transport, removal, clean up or handling, or the emission, discharge, release or threatened release   of any wastes or Hazardous Material, or any other requirement under Environmental Law.  As of the   Agreement Date, there is no civil, criminal, or administrative action, suit, demand, claim, hearing, notice,   or demand letter, mandate, order, lien, request, investigation, or proceeding pending or, to the Borrower’s   knowledge, threatened, against the Borrower, any other Loan Party or any other Subsidiary of the   Borrower with respect to any alleged violation of or liability under Environmental Laws which reasonably   could be expected to have a Material Adverse Effect.  None of the Properties is listed on or proposed for   listing on the National Priority List promulgated pursuant to the Comprehensive Environmental   Response, Compensation and Liability Act of 1980 and its implementing regulations, or any state or local   priority list promulgated pursuant to any analogous state or local law, to the extent any such listing could   reasonably be expected to have a Material Adverse Effect.   (p) Investment Company.  None of the Borrower, any other Loan Party or any other   Subsidiary of the Borrower is (i) an “investment company” or a company “controlled” by an “investment   company” within the meaning of the Investment Company Act of 1940, as amended, or (ii) subject to any   other Applicable Law which purports to regulate or restrict its ability to borrow money or obtain other   extensions of credit or to consummate the transactions contemplated by this Agreement or to perform its   obligations under any Loan Document to which it is a party.   (q) Margin Stock.  None of the Borrower or any Subsidiary of the Borrower is engaged   principally, or as one of its important activities, in the business of extending credit for the purpose,   whether immediate, incidental or ultimate, of buying or carrying “margin stock” within the meaning of   Regulation U of the Board of Governors of the Federal Reserve System.   (r) Affiliate Transactions.  Except as permitted by Section 10.9. or as otherwise set forth on   Schedule 7.1.(r), none of the Borrower or any Subsidiary of the Borrower is a party to or bound by any   agreement or arrangement  with any Affiliate.   (s) Intellectual Property.  Each of the Borrower and each Subsidiary of the Borrower owns or   has the right to use, under valid license agreements or otherwise, all patents, licenses, franchises,   trademarks, trademark rights, service marks, service mark rights,  trade names, trade name rights, trade   secrets and copyrights (collectively, “Intellectual Property”) necessary to the conduct of its businesses,   without conflict known to Borrower with any patent, license, franchise, trademark, trademark right,   service mark, service mark right, trade secret, trade name, copyright, or other proprietary right of any   other Person which conflict could reasonably be expected to have a Material Adverse Effect.  To   Borrower’s knowledge, all such Intellectual Property is fully protected and/or duly and properly   registered, filed or issued in the appropriate office and jurisdictions for such registrations, filing or   issuances.  As of the Agreement date, no material claim has been asserted by any Person against   Borrower or any other Loan Party or any other Subsidiary of Borrower with respect to the use of any such   Intellectual Property by the Borrower, any other Loan Party or any other Subsidiary of the Borrower, or   challenging or questioning the validity or effectiveness of any such Intellectual Property.  To Borrower’s   knowledge, the use of such Intellectual Property by the Borrower, the other Loan Parties and the other   Subsidiaries of the Borrower does not infringe on the rights of any Person, subject to such claims and   infringements as do not, in the aggregate, give rise to any liabilities on the part of the Borrower, any other   Loan Party or any other Subsidiary of the Borrower that could reasonably be expected to have a Material   Adverse Effect.     

 

   - 65 -   (t) Business.  As of the Agreement Date, the Borrower, the other Loan Parties and the other   Subsidiaries of the Borrower are engaged in the business of directly or indirectly owning, leasing,   managing, and operating real property, together with other business activities incidental thereto.   (u) Broker’s Fees.  To Borrower’s knowledge, no broker’s or finder’s fee, commission or   similar compensation will be payable with respect to the transactions contemplated hereby.  No other   similar fees or commissions will be payable by the Borrower, any other Loan Party or any other   Subsidiary of the Borrower for any other services rendered to the Borrower, any other Loan Party or any   other Subsidiary of the Parent ancillary to the transactions contemplated hereby.   (v) Accuracy and Completeness of Information.  All written information, reports and other   papers and data (other than financial projections and other forward looking statements), taken as a whole   as of the date of delivery thereof, furnished to the Administrative Agent or any Lender by, on behalf of, or   at the direction of the Borrower, any other Loan Party or any other Subsidiary of the Borrower were, at   the time the same were so furnished, complete and correct in all material respects, and, in the case of   financial statements, present fairly, in accordance with GAAP consistently applied throughout the periods   involved, the financial position of the Persons involved as at the date thereof and the results of operations   for such periods (subject, as to interim statements, to changes resulting from normal year end audit   adjustments and absence of full footnote disclosure).  All financial projections and other forward looking   statements prepared by or on behalf of the Borrower or any Subsidiary of the Borrower that have been or   may hereafter be made available to the Administrative Agent or any Lender were or will be prepared in   good faith based on reasonable assumptions.  No fact is known to the Borrower or any Subsidiary of the   Borrower which has had, or may in the future have (so far as any Loan Party can reasonably foresee), a   Material Adverse Effect which has not been set forth in the financial statements referred to in   Section 7.1.(k) or in such information, reports or other papers or data or otherwise disclosed in writing to   the Administrative Agent and the Lenders.  No document furnished or written statement made to the   Administrative Agent or any Lender in connection with the negotiation, preparation or execution of, or   pursuant to, this Agreement or any of the other Loan Documents, taken as a whole as of the date of   delivery thereof, contained or will contain any untrue statement of a material fact, or omits or will omit to   state a material fact necessary in order to make the statements contained therein, in light of the   circumstances in which they were made, not misleading.   (w) Not Plan Assets; No Prohibited Transactions.  None of the assets of the Parent, the   Borrower, any other Loan Party or any other Subsidiary of the Parent constitutes “plan assets” within the   meaning of ERISA, the Internal Revenue Code and the respective regulations promulgated thereunder.    Assuming that no Lender funds any amount payable by it hereunder with “plan assets,” as that term is   defined in 29 C.F.R. 2510.3-101, the execution, delivery and performance of this Agreement and the   other Loan Documents, and the extensions of credit and repayment of amounts hereunder, do not and will   not constitute “prohibited transactions” under ERISA or the Internal Revenue Code.   (x) OFAC.  None of the Parent, the Borrower, any of the other Loan Parties, any of the other   Subsidiaries, or, to the Parent’s or the Borrower’s knowledge, any other Affiliate of the Parent: (i) is a   person named on the list of Specially Designated Nationals or Blocked Persons maintained by the   U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) available at   http://www.treas.gov/offices/enforcement/ofac/index.shtml or as otherwise published from time to time;   (ii) is (A) an agency of the government of a country, (B) an organization controlled by a country, or (C) a   person resident in a country that is subject to a sanctions program identified on the list maintained by   OFAC and available at http://www.treas.gov/offices/enforcement/ofac/index.shtml, or as otherwise   published from time to time, as such program may be applicable to such agency, organization or person;   or (iii) derives any of its assets or operating income from investments in or transactions with any such   country, agency, organization or person; and none of the proceeds from any Loan, and to the Borrower’s     

 

   - 66 -   knowledge, no Letter of Credit, will be used to finance any operations, investments or activities in, or   make any payments to, any such country, agency, organization, or person or violate Anti-Corruption   Laws.   (y) REIT Status.  The Parent qualifies as, and has elected to be treated as, a REIT and is in   compliance with all requirements and conditions imposed under the Internal Revenue Code to allow the   Parent to maintain its status as a REIT.   (z) Unencumbered Properties.  Each Property included in calculations of the Unencumbered   Asset Value satisfies all of the requirements (including those in the definition of “Eligible Property”)   contained in this Agreement for the same to be included therein.   Section 7.2.  Survival of Representations and Warranties, Etc.   All statements contained in any certificate, financial statement or other instrument delivered by or   on behalf of the Borrower, any other Loan Party or any other Subsidiary of the Borrower to the   Administrative Agent or any Lender pursuant to or in connection with this Agreement or any of the other   Loan Documents (including, but not limited to, any such statement made in or in connection with any   amendment thereto or any statement contained in any certificate, financial statement or other instrument   delivered by or on behalf of any Loan Party prior to the Agreement Date and delivered to the   Administrative Agent or any Lender in connection with the underwriting or closing the transactions   contemplated hereby) shall constitute representations and warranties made by the Borrower under this   Agreement.  All representations and warranties made under this Agreement and the other Loan   Documents shall be deemed to be made at and as of the Agreement Date, the Effective Date, the date on   which any extension of the Revolving Termination Date is effectuated pursuant to Section 2.12., the date   on which any increase of the Revolving Commitments is effectuated pursuant to Section 2.16. and at and   as of the date of the occurrence of each Credit Event, except to the extent that such representations and   warranties expressly relate solely to an earlier date (in which case such representations and warranties   shall have been true and correct in all material respects (except in the case of a representation or warranty   qualified by materiality, in which case such representation or warranty shall be true and correct in all   respects) on and as of such earlier date) and except for changes in factual circumstances not expressly   prohibited hereunder.  All such representations and warranties shall survive the effectiveness of this   Agreement, the execution and delivery of the Loan Documents and the making of the Loans and the   issuance of the Letters of Credit.   ARTICLE VIII.  AFFIRMATIVE COVENANTS   For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant   to Section 13.7., all of the Lenders) shall otherwise consent in the manner provided for in Section 13.7.,   the Parent and the Borrower shall comply with the following covenants:   Section 8.1.  Preservation of Existence and Similar Matters.   Except as otherwise permitted under Section 10.4., each of the Parent and the Borrower shall, and   shall cause each other Loan Party and each other Subsidiary to, preserve and maintain its respective   existence, rights, franchises, licenses and privileges in the jurisdiction of its incorporation or formation   and qualify and remain qualified and authorized to do business in each jurisdiction in which the character   of its properties or the nature of its business requires such qualification and authorization and where the   failure to be so authorized and qualified could reasonably be expected to have a Material Adverse Effect.     

 

   - 67 -   Section 8.2.  Compliance with Applicable Law.   The Borrower shall, and shall cause each other Loan Party and each other Subsidiary of the   Borrower to, comply with all Applicable Law, including the obtaining of all Governmental Approvals, the   failure to comply with which could, individually or in the aggregate, reasonably be expected to have a   Material Adverse Effect.   Section 8.3.  Maintenance of Property.   In addition to the requirements of any of the other Loan Documents, the Borrower shall, and shall   cause each other Loan Party and each other Subsidiary of the Borrower to, (a) protect and preserve all of   its respective material properties, including, but not limited to, all Intellectual Property necessary to the   conduct of its respective business, and maintain in good repair, working order and condition all tangible   properties, ordinary wear and tear excepted, and (b) from time to time make or cause to be made all   material needed and appropriate repairs, renewals, replacements and additions to such properties, so that   the business carried on in connection therewith may be properly conducted at all times; provided that, to   the extent not otherwise prohibited under this Agreement and so long as (i) immediately before and after   such transfer or conveyance, no Default or Event of Default shall have occurred and be continuing and   (ii) immediately after giving  effect to such transfer or conveyance, the Borrower shall be in compliance   with the covenants set forth in Section 10.1. on a pro forma basis in accordance with Section 1.4. (and   upon the reasonable request of the Administrative Agent the Borrower shall deliver to the Administrative   Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance), the   Borrower and each of its Subsidiaries may transfer and convey their respective Properties in their sole   discretion, which Properties shall, if not conveyed to the Borrower or any other Subsidiary of the   Borrower (other than an Excluded Subsidiary), be removed, as of the date of such transfer or conveyance,   from the calculation of Unencumbered Asset Value.   Section 8.4.  Conduct of Business.   The Borrower shall, and shall cause each other Loan Party and each other Subsidiary of the   Borrower to, carry on its respective businesses as described in Section 7.1.(t) and in substantially the   same fashion as currently in effect (including acquiring Properties of the same quality as Properties   currently owned by the Borrower and its Subsidiaries and operating and maintaining Properties in   substantially the same manner and with the same standard of care and quality as is currently employed by   the Borrower and the other Loan Parties and the Subsidiaries of the Borrower and not enter into any line   of business that would adversely affect the REIT status of Parent; provided that, to the extent not   otherwise prohibited under this Agreement and so long as (i) immediately before and after such transfer   or conveyance, no Default or Event of Default shall have occurred and be continuing and (ii) immediately   after giving  effect to such transfer or conveyance, the Borrower shall be in compliance with the   covenants set forth in Section 10.1. on a pro forma basis in accordance with Section 1.4. (and upon the   reasonable request of the Administrative Agent the Borrower shall deliver to the Administrative Agent a   certificate setting forth in reasonable detail the calculations demonstrating such compliance), the   Borrower and each of its Subsidiaries may transfer and convey their respective Properties in their sole   discretion, which Properties shall, if not conveyed to the Borrower or any other Subsidiary of the   Borrower (other than an Excluded Subsidiary), be removed, as of the date of such transfer or conveyance,   from the calculation of Unencumbered Asset Value.   Section 8.5.  Insurance.   In addition to the requirements of any of the other Loan Documents, the Borrower shall, and shall   cause each other Loan Party and each other Subsidiary of the Borrower to, maintain insurance (on a     

 

   - 68 -   replacement cost basis) with financially sound and reputable insurance companies against such risks and   in such amounts as is customarily maintained by Persons engaged in similar businesses or as may be   required by Applicable Law. The Borrower shall from time to time deliver to the Administrative Agent   upon request a detailed list, together with copies of all policies of the insurance then in effect, stating the   names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration   thereof and the properties and risks covered thereby.   Section 8.6.  Payment of Taxes and Claims.   The Borrower shall, and shall cause each other Loan Party and each other Subsidiary of the   Borrower to, pay and discharge when due (a) all taxes, assessments and governmental charges or levies   imposed upon it or upon its income or profits or upon any properties belonging to it, and (b) all lawful   claims of materialmen, mechanics, carriers, warehousemen and landlords for labor, materials, supplies   and rentals which, if unpaid, might become a Lien on any properties of such Person that are included in   the calculation of the Unencumbered Asset Value; provided, however, that this Section shall not require   the payment or discharge of any such tax, assessment, charge, levy or claim which is being contested in   good faith by appropriate proceedings which operate to suspend the collection thereof and for which   adequate reserves have been established on the books of such Person in accordance with GAAP.   Section 8.7.  Books and Records; Inspections.   The Borrower shall, and shall cause each other Loan Party and each other Subsidiary of the   Borrower to, 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.  The Borrower shall, and shall   cause each other Loan Party and each other Subsidiary of the Borrower to, permit representatives of the   Administrative Agent or any Lender to visit and inspect any of their respective properties, to examine and   make abstracts from any of their respective books and records and to discuss their respective affairs,   finances and accounts with their respective officers, employees and independent public accountants (in   the presence of an officer of the Parent if an Event of Default does not then exist), all at such reasonable   times during business hours and as often as may reasonably be requested and so long as no Event of   Default exists, with reasonable prior notice ; provided that (a) no Loan Party shall be required to pay the   expense of any such visit, except to the extent such visit is made by the Administrative Agent or is made   during the continuance of an Event of Default and (b) unless an Event of Default exists, only one (1) such   visit shall be permitted at the Loan Parties’ expense during any fiscal year.  The Borrower shall be   obligated to reimburse the Administrative Agent and the Lenders for their costs and expenses incurred in   connection with the exercise of their rights under this Section only if such exercise occurs while a Default   or Event of Default exists.  If requested by the Administrative Agent, the Borrower shall cause the Parent   to execute an authorization letter addressed to its accountants authorizing the Administrative Agent or any   Lender to discuss the financial affairs of the Parent, the Borrower, any other Loan Party or any other   Subsidiary of the Borrower with the Parent’s accountants.   Section 8.8.  Use of Proceeds.   The Borrower will use the proceeds of Loans only (a) for the payment of pre-development and   development costs incurred in connection with Properties owned by the Borrower or any Subsidiary;   (b) to finance acquisitions otherwise permitted under this Agreement; (c) to finance capital expenditures   and the repayment of Indebtedness of the Borrower and its Subsidiaries; (d) to finance acquisitions of   Equity Interests permitted under this Agreement; and (e) to provide for the general working capital needs   of the Parent, the Borrower and the Subsidiaries of the Parent and for other general corporate purposes of   the Parent, the Borrower and the Subsidiaries of the Parent.  The Borrower shall only use Letters of Credit   for the same purposes for which it may use the proceeds of Loans.  The Borrower shall not, and shall not     

 

   - 69 -   permit any other Loan Party or any other Subsidiary to, use any part of such proceeds to purchase or   carry, or to reduce or retire or refinance any credit incurred to purchase or carry, any margin stock (within   the meaning of Regulation U or Regulation X of the Board of Governors of the Federal Reserve System)   or to extend credit to others for the purpose of purchasing or carrying any such margin stock.   Section 8.9.  Environmental Matters.   The Borrower shall, and shall cause each Subsidiary of the Borrower to, comply with all   Environmental Laws the failure to comply with which could, individually or in the aggregate,  reasonably   be expected to have a Material Adverse Effect.  The Borrower shall comply, and shall cause each   Subsidiary of the Borrower to comply, and the Borrower shall use, and shall cause each other Loan Party   and each other Subsidiary of the Borrower to use, commercially reasonable efforts to cause all other   Persons occupying the Properties to comply, with all Environmental Laws to the extent the failure to so   comply could reasonably be expected to cause a Material Adverse Effect.  The Borrower shall, and shall   cause each Subsidiary of the Borrower to, promptly take all actions and pay or arrange for the payment of   all costs necessary for it and for its Properties to comply in all material respects with all Environmental   Laws and all Governmental Approvals, including actions to remove and dispose of all Hazardous   Materials and to clean up the Properties as and to the extent required under Environmental Laws, to the   extent the failure to do so could reasonably be expected to have a Material Adverse Effect.  The Borrower   shall, and shall cause each Subsidiary of the Borrower to, promptly take all actions necessary to prevent   the imposition of any Liens on any of their respective properties arising out of or related to any   Environmental Laws to the extent any such lien could, individually or in the aggregate,  reasonably be   expected to cause a Material Adverse Effect.  Nothing in this Section shall impose any obligation or   liability whatsoever on the Administrative Agent or any Lender.   Section 8.10.  Further Assurances.   At the Borrower’s cost and expense and upon request of the Administrative Agent, the Borrower   shall, and shall cause each other Loan Party and each other Subsidiary of the Borrower to, duly execute   and deliver or cause to be duly executed and delivered, to the Administrative Agent such further   instruments, documents and certificates, and do and cause to be done such further acts that may be   reasonably necessary or advisable in the reasonable opinion of the Administrative Agent to carry out   more effectively the provisions and purposes of this Agreement and the other Loan Documents.   Section 8.11.  Material Contracts.   The Borrower shall, and shall cause each other Loan Party and each other Subsidiary of the   Borrower to, duly and punctually perform and comply in all material respects with any and all   representations, warranties, covenants and agreements expressed as binding upon any such Person under   any Material Contract.  The Borrower shall not, and shall not permit any other Loan Party or any other   Subsidiary of the Borrower to, do or knowingly permit to be done anything to impair materially the value   of any of the Material Contracts.   Section 8.12.  Guarantors.   (a) Within twenty (20) Business Days of any Person becoming a Material Subsidiary (other   than an Excluded Subsidiary) after the Agreement Date, the Parent and the Borrower shall deliver to the   Administrative Agent each of the following in form and substance reasonably satisfactory to the   Administrative Agent: (i) an Accession Agreement executed by such Subsidiary and (ii) the items that   would have been delivered under subsections (iv) through (viii), and (xiv) of Section 6.1.(a) if such   Subsidiary had been a Material Subsidiary on the Agreement Date; provided, however, promptly (and in     

 

   - 70 -   any event within twenty (20) Business Days) upon any Excluded Subsidiary ceasing to be an Excluded   Subsidiary, such Subsidiary shall comply with the provisions of this Section.   (b) The Borrower may request in writing that the Administrative Agent release, and upon   receipt of such request the Administrative Agent shall release, a Guarantor (other than the Parent) from   the Guaranty so long as: (i) such Guarantor is not otherwise required to be a party to the Guaranty under   the immediately preceding subsection (a); (ii) no Default or Event of Default shall then be in existence or   would occur as a result of such release, including without limitation, a Default or Event of Default   resulting from a violation of any of the covenants contained in Section 10.1.; (iii) the representations and   warranties made or deemed made by the Borrower and each other Loan Party in the Loan Documents to   which any of them is a party, shall be true and correct on and as of the date of such release with the same   force and effect as if made on and as of such date except to the extent that such representations and   warranties expressly relate solely to an earlier date (in which case such representations and warranties   shall have been true and correct on and as of such earlier date) and except for changes in factual   circumstances not expressly prohibited under the Loan Documents; and (iv) the Administrative Agent   shall have received such written request at least ten (10) Business Days (or such shorter period as may be   acceptable to the Administrative Agent) prior to the requested date of release.  Delivery by the Borrower   to the Administrative Agent of any such request shall constitute a representation by the Borrower that the   matters set forth in the preceding sentence (both as of the date of the giving of such request and as of the   date of the effectiveness of such request) are true and correct with respect to such request.   ARTICLE IX.  INFORMATION   For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant   to Section 13.7., all of the Lenders) shall otherwise consent in the manner set forth in Section 13.7., the   Parent and the Borrower shall furnish to the Administrative Agent for distribution to each of the Lenders:   Section 9.1.  Quarterly Financial Statements.   As soon as available and in any event within five (5) Business Days after the same is required to   be filed with the Securities and Exchange Commission (but in no event later than forty-five (45) days   after the end of each of the first, second and third fiscal quarters of the Parent), the unaudited consolidated   balance sheet of the Parent and its Subsidiaries as at the end of such period and the related unaudited   consolidated income statement and statement of cash flows of the Parent and its Subsidiaries for such   period, setting forth in each case in comparative form the figures as of the end of and for the   corresponding periods of the previous fiscal year, all of which shall be certified by the chief executive   officer or chief financial officer of the Parent, in his or her opinion, to present fairly, in accordance with   GAAP and in all material respects, the consolidated financial position of the Parent and its Subsidiaries as   at the date thereof and the results of operations for such period (subject to normal year-end audit   adjustments).   Section 9.2.  Year-End Statements.   As soon as available and in any event within five (5) Business Days after the same is required to   be filed with the Securities and Exchange Commission (but in no event later than ninety (90) days after   the end of each fiscal year of the Parent), the audited consolidated balance sheet of the Parent and its   Subsidiaries as at the end of such fiscal year and the related audited consolidated income statement and   statement of cash flows and statement of stockholders’ equity of the Parent and its Subsidiaries for such   fiscal year, setting forth in comparative form the figures as at the end of and for the previous fiscal year,   all of which shall be (a) certified by the chief executive officer or chief financial officer of the Parent, in   his or her opinion, to present fairly, in accordance with GAAP and in all material respects, the financial     

 

   - 71 -   position of the Parent and its Subsidiaries as at the date thereof and the result of operations for such   period and (b) accompanied by the report thereon of independent certified public accountants of   recognized national standing reasonably acceptable to the Administrative Agent, whose report shall be   unqualified and in scope and substance satisfactory to the Requisite Lenders and who shall have   authorized the Parent to deliver such financial statements and report thereon to the Administrative Agent   and the Lenders pursuant to this Agreement.   Section 9.3.  Compliance Certificate.   At the time the financial statements are furnished pursuant to Sections 9.1. and 9.2., a certificate   substantially in the form of Exhibit K (a “Compliance Certificate”) executed on behalf of the Borrower   by the chief financial officer of the Parent (a) setting forth in reasonable detail as of the end of such   quarterly accounting period or fiscal year, as the case may be, the calculations required to establish   whether the Borrower was in compliance with the covenants contained in Section 10.1.; (b) stating that no   Default or Event of Default exists, or, if such is not the case, specifying such Default or Event of Default   and its nature, when it occurred and the steps being taken by the Loan Parties with respect to such event,   condition or failure; (c) a statement of Funds From Operations for such quarterly accounting period or   fiscal year, as the case may be; and (d) a report of newly acquired Properties of the Borrower and the   Subsidiaries of the Borrower, including, with respect to each Property, the Net Operating Income,   purchase price and Mortgage debt, if any.   Section 9.4.  Other Information.   (a) Promptly upon receipt thereof, copies of all reports, if any, submitted to the Parent’s   Board of Directors by its independent public accountants including, without limitation, any management   report;   (b) Within five (5) Business Days of the filing thereof, copies of all registration statements   (excluding the exhibits thereto (unless requested by the Administrative Agent) and any registration   statements on Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K (or their equivalents)   and all other periodic reports which any Loan Party or any other Subsidiary of the Borrower shall file   with the Securities and Exchange Commission (or any Governmental Authority substituted therefor) or   any national securities exchange;   (c) Promptly upon the mailing thereof to the shareholders of the Parent generally, copies of   all financial statements, reports and proxy statements so mailed and promptly upon the issuance thereof   copies of all press releases issued by the Parent, the Borrower, any Subsidiary of the Borrower or any   other Loan Party;   (d) No later than thirty (30) days before the end of each fiscal year of the Parent ending prior   to the Revolving Termination Date, projected balance sheets, operating statements, profit and loss   projections and cash flow budgets of the Borrower and its Subsidiaries on a consolidated basis for each   quarter of the next succeeding fiscal year, all itemized in reasonable detail;   (e) If any ERISA Event shall occur that individually, or together with any other ERISA   Event that has occurred, could reasonably be expected to have a Material Adverse Effect, a certificate of   the chief executive officer or chief financial officer of the Parent setting forth details as to such   occurrence and the action, if any, which the Parent or applicable member of the ERISA Group is required   or proposes to take;     

 

   - 72 -   (f) To the extent the Borrower has knowledge of the same, prompt notice of the   commencement of any proceeding or investigation by or before any Governmental Authority and any   action or proceeding in any court or other tribunal or before any arbitrator against or in any other way   relating to, or affecting, the Borrower, any other Loan Party or any Subsidiary of the Borrower or any of   their respective properties, assets or businesses which could reasonably be expected to have a Material   Adverse Effect, and prompt notice of the receipt of notice that any United States income tax returns of the   Parent, the Borrower, any other Loan Party or any other Subsidiary of the Borrower are being audited;   (g) A copy of any amendment to the certificate or articles of incorporation or formation,   bylaws, partnership agreement or other similar organizational documents of the Parent, the Borrower, any   other Loan Party within twenty (20) Business Days after the approval thereof by the General Partner or   Manager thereof, or if later, the effectiveness thereof;   (h) Prompt notice of (i) any change in the executive senior management of the Parent (ii) any   material change in the overall business, assets, liabilities, financial condition, results of operations or   business prospects of the Parent, the Borrower, any other Loan Party or any other Subsidiary of the Parent   or (iii) the occurrence of any other event which, in the case of any of the immediately preceding   clauses (i) through (iii), has had, or could reasonably be expected to have, a Material Adverse Effect;   (i) Promptly after a Responsible Officer of Borrower has knowledge thereof, notice of the   occurrence of any Default or Event of Default or any event which constitutes or which with the passage of   time, the giving of notice, or otherwise, would constitute a material default or event of default by the   Parent, the Borrower, any other Loan Party or any other Subsidiary of the Parent under any Material   Contract to which any such Person is a party or by which any such Person or any of its respective   properties may be bound;   (j)  [RESERVED];   (k) Prompt notice of any order, judgment or decree in excess of $10,000,000 having been   entered against the Parent, the Borrower, any other Loan Party or any other Subsidiary of the Borrower or   any of their respective properties or assets;   (l) Within thirty (30) days after a Responsible Officer has knowledge thereof, any written    notification of a material violation of any Applicable Law shall have been received by the Borrower or   any other Loan Party from any Governmental Authority which violation, if proven, could reasonably be   expected to cause a Material Adverse Effect;   (m) Prompt notice of the acquisition, incorporation or other creation of any Material   Subsidiary of the Borrower, the purpose for such Subsidiary, the nature of the assets and liabilities thereof   and whether such Subsidiary is a Wholly Owned Subsidiary of the Borrower;   (n) Promptly upon the request of the Administrative Agent, evidence of the Borrower’s   calculation of the Ownership Share with respect to a Subsidiary or an Unconsolidated Affiliate, such   evidence to be in form and detail reasonably satisfactory to the Administrative Agent;   (o) Promptly, upon any change in the Borrower’s Credit Rating, a certificate stating that the   Borrower’s Credit Rating has changed and the new Credit Rating that is in effect;   (p) Promptly, upon each request, such information identifying the Parent, the Borrower, any   other Loan Party or any other Subsidiary of the Parent as a Lender may reasonably request in order to   comply with the Patriot Act;     

 

   - 73 -   (q) Promptly, and in any event within ten (10) Business Days after a Responsible Officer of   the Borrower obtains knowledge thereof, written notice of the occurrence of any of the following:  (i) the   Borrower or any other Loan Party shall receive written notice that any violation of or noncompliance with   any Environmental Law has or may have been committed or is threatened; (ii) the Borrower or any other   Loan Party shall receive written notice that any administrative or judicial complaint, order or petition has   been filed or other proceeding has been initiated, or is about to be filed or initiated against any such   Person alleging any violation of, noncompliance with or liability under any Environmental Law or   requiring any such Person to take any action in connection with the release or threatened release of   Hazardous Materials; (iii) the Parent, the Borrower, any other Loan Party or any other Subsidiary of the   Parent shall receive any notice from a Governmental Authority alleging that any such Person may be   liable or responsible for any costs associated with a response to, or remediation or cleanup of, a release or   threatened release of Hazardous Materials or any damages caused thereby; and the matters covered by   notices referred to in any of the immediately preceding clauses (i) through (iii), whether individually or in   the aggregate, could reasonably be expected to have a Material Adverse Effect; and   (r) From time to time and promptly upon each request, such data, certificates, reports,   statements, documents or further information regarding any Property or the business, assets, liabilities,   financial condition, results of operations or business prospects of the Borrower, any other Loan Party or   any other Subsidiary of the Borrower as the Administrative Agent or any Lender may reasonably request.   Section 9.5.  Electronic Delivery of Certain Information.   (a) Documents required to be delivered pursuant to the Loan Documents shall be delivered   by electronic communication and delivery, including, the Internet, e-mail or intranet websites to which   the Administrative Agent and each Lender have access (including a commercial, third-party website such   as www.sec.gov <http://www.sec.gov> or a website sponsored or hosted by the Administrative Agent, the   Parent or the Borrower) provided that the foregoing shall not apply to (i) notices to any Lender (or any   Issuing Bank) pursuant to Article II. and (ii) any Lender that has notified the Administrative Agent, the   Parent and the Borrower that it cannot or does not want to receive electronic communications, (iii) notices   of Default or Event of Default.  The Administrative Agent, the Parent or the Borrower may, in its   discretion, agree to accept notices and other communications to it hereunder by electronic delivery   pursuant to procedures approved by it for all or particular notices or communications.  Documents or   notices delivered electronically shall be deemed to have been delivered twenty-four (24) hours after the   date and time on which the Administrative Agent, the Parent or the Borrower posts such documents or the   documents become available on a commercial website and the Administrative Agent, the Parent or   Borrower notifies each Lender of said posting and provides a link thereto provided if such notice or other   communication is not sent or posted during the normal business hours of the recipient, said posting date   and time shall be deemed to have commenced as of 11:00 a.m. Central time on the opening of business on   the next business day for the recipient.  Notwithstanding anything contained herein, in every instance the   Parent or the Borrower shall be required to provide paper copies of the certificate required by Section 9.3.   to the Administrative Agent and shall deliver paper copies of any documents to the Administrative Agent   until a written request to cease delivering paper copies is given by the Administrative Agent.  Except for   the certificates required by Section 9.3., the Administrative Agent shall have no obligation to request the   delivery of or to maintain paper copies of the documents delivered electronically, and in any event shall   have no responsibility to monitor compliance by the Borrower with any such request for delivery.  Each   Lender shall be solely responsible for requesting delivery to it of paper copies and maintaining its paper   or electronic documents.   (b) Documents required to be delivered pursuant to Article II. may be delivered   electronically to a website provided for such purpose by the Administrative Agent pursuant to the   procedures provided to the Parent and the Borrower by the Administrative Agent.     

 

   - 74 -   Section 9.6.  Public/Private Information.   The Borrower shall cooperate with the Administrative Agent in connection with the publication   of certain materials and/or information provided by or on behalf of the Borrower.  Any information or   materials delivered pursuant to the Loan Documents will be considered Public Information if they are   filed by the Parent with the SEC and are publicly available or are posted on the Parent’s website.  All   other such information and materials will be considered Private Information unless otherwise indicated in   writing by Borrower.   Section 9.7.  Patriot Act Notice; Compliance.   The Patriot Act and federal regulations issued with respect thereto require all financial institutions   to obtain, verify and record certain information that identifies individuals or business entities which open   an “account” with such financial institution.  Consequently, a Lender (for itself and/or as agent for all   Lenders hereunder) may from time to time request, and the Borrower shall, and shall cause the other Loan   Parties to, provide to such Lender, such Loan Party’s name, address, tax identification number and/or   such other identification information as shall be necessary for such Lender to comply with federal law.    An “account” for this purpose may include, without limitation, a deposit account, cash management   service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other   financial services product.   ARTICLE X.  NEGATIVE COVENANTS   For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant   to Section 13.7., all of the Lenders) shall otherwise consent in the manner set forth in Section 13.7., the   Parent and the Borrower shall comply with the following covenants:   Section 10.1.  Financial Covenants.   (a) Maximum Leverage Ratio.  The Borrower shall not permit the ratio of (i) Total   Indebtedness of the Borrower and its Subsidiaries to (ii) Total Asset Value of the Borrower and its   Subsidiaries to exceed 0.60 to 1.00 at any time.   (b) Minimum Interest Coverage Ratio.  The Borrower shall not permit the ratio of   (i) Adjusted EBITDA of the Borrower and its Subsidiaries for the period of four consecutive fiscal   quarters most recently ending to (ii) Interest Expense of the Borrower and its Subsidiaries for such period,   to be less than 2.00 to 1.00 as of the last day of such period.   (c) Ratio of Adjusted EBITDA to Fixed Charges.  The Borrower shall not permit the ratio of   (i) Adjusted EBITDA of the Borrower and its Subsidiaries for any period of four consecutive fiscal   quarters most recently ending to (ii) Fixed Charges of the Borrower and its Subsidiaries for such period,   to be less than 1.30 to 1.00 as of the last day of such period.   (d) Ratio of Unsecured Indebtedness to Unencumbered Asset Value.  The Borrower shall not   permit the ratio of (i) Unsecured Indebtedness of the Borrower and its Subsidiaries to (ii) the   Unencumbered Asset Value to exceed 0.60 to 1.00 at any time.   (e) Unencumbered Pool Debt Service Coverage. The Borrower shall not permit the ratio of   (i) Unencumbered NOI of the Borrower and its Subsidiaries for any period of four consecutive fiscal   quarters most recently ended to (ii) Unencumbered Pool Debt Service of the Borrower and Subsidiaries   for such period to be less than 1.50 as of the last day of such period.     

 

   - 75 -   (f) Minimum Tangible Net Worth.  The Borrower shall not permit Tangible Net Worth of   the Parent and its Subsidiaries at any time to be less than (i) $542,100,000 plus (ii) 80% of the Net   Proceeds of all Equity Issuances effected at any time after March 31, 2014 by the Parent or any of its   Subsidiaries to any Person other than the Parent, the Borrower, or any of the Parent’s Wholly Owned   Subsidiaries.   (g) Unencumbered Asset Value.  The Borrower shall not permit:   (i) the weighted average aggregate Occupancy Rate (weighted on the basis of   aggregate square footage) of all Properties included in the Unencumbered Asset Value to be   less than 80% at any time; provided that, the Borrower may, at any time, designate (by written   notice to the Administrative Agent) any Property to be excluded from the group of Properties   included in the calculation of the Unencumbered Asset Value (i) so long as (x) immediately   before and after giving effect to such designation, the Borrower shall be in compliance with   subclauses (ii), (iii) and (iv) of this clause (g) immediately after giving effect thereto and no   Default or Event of Default (other than a Default or Event of Default related solely to this   clause (i)) shall have occurred and be continuing and (ii) immediately after giving effect to such   designation, the Borrower shall be in compliance with the covenants set forth in Section 10.1.   on a pro forma basis in accordance with Section 1.4. (and upon the reasonable request of the   Administrative Agent the Borrower shall deliver to the Administrative Agent a certificate   setting forth in reasonable detail the calculations demonstrating such compliance);   (ii) the Unencumbered Asset Value attributable to any single Property to exceed 40%   of the aggregate Unencumbered Asset Value at any time; provided, however, that any such   excess shall be excluded from the calculation of Unencumbered Asset Value but existence of   such excess shall not otherwise constitute a breach under this Section 10.1.(g)(ii);   (iii) there to be less than twelve (12) Properties included in the Unencumbered Asset   Value at any time; or   (iv) the Unencumbered Asset Value to be less than $200,000,000 at any time.   Subject to the requirements set forth in the preceding provisions of this subsection (g), the Borrower may,   at any time, designate (by written notice to the Administrative Agent) any Eligible Property to be   included in or excluded from the group of Eligible Properties included in the calculation of   Unencumbered Asset Value so long as (i) immediately before and after giving effect to such designation,   no Default or Event of Default shall have occurred and be continuing and (ii) immediately after   giving effect to such designation, the Borrower shall be in compliance with the covenants set forth in   Section 10.1. on a pro forma basis in accordance with Section 1.4. (and upon the reasonable request of the   Administrative Agent the Borrower shall deliver to the Administrative Agent a certificate setting forth in   reasonable detail the calculations demonstrating such compliance).   (h) Adjusted Total Asset Value.  The Borrower shall not permit the aggregate Adjusted Total   Asset Value attributable to assets directly or indirectly owned by the Borrower and the Guarantors to be   less than 90% of the Adjusted Total Asset Value at any time.   (i) Restricted Payments after Certain Defaults, Acceleration. If a Default or Event of Default   specified in Section 11.1.(a), Section 11.1.(f) or Section 11.1.(g) shall exist, or if as a result of the   occurrence of any other Event of Default any of the Obligations have been accelerated pursuant to   Section 11.2.(a), the Borrower shall not make any Restricted Payments and shall not permit any   Subsidiary of the Borrower to make any Restricted Payments to any Person other than to the Borrower.     

 

   - 76 -   (j) Secured Recourse Indebtedness. The Borrower shall not permit the aggregate outstanding   principal amount of Secured Recourse Indebtedness of the Borrower and the other Loan Parties to exceed   20% of Total Asset Value at any time.   Section 10.2.  Liens; Negative Pledge.   (a) The Borrower shall not, and shall not permit any Subsidiary of the Borrower (other than   an Excluded Subsidiary) to, create, assume, or incur any Lien (other than Permitted Liens, the Permitted   Ground Lease Encumbrance and Liens securing Indebtedness not prohibited under the Loan Documents)   upon any of its material properties, assets, income or profits of any character whether now owned or   hereafter acquired if immediately prior to the creation, assumption or incurring of such Lien, or   immediately thereafter, a Default or Event of Default is or would be in existence, including without   limitation, a Default or Event of Default resulting from a violation of any of the covenants contained in   Section 10.1.   (b) The Borrower shall not, and shall not permit any Subsidiary of the Borrower (other than   an Excluded Subsidiary) to, enter into, assume or otherwise be bound by any Negative Pledge except for a   Negative Pledge contained in (i) an agreement (x) evidencing Indebtedness which the Borrower or any   Subsidiary of the Borrower is not prohibited from creating, incurring, assuming, or permitting or suffering   to exist under this Agreement, (y) which Indebtedness is secured by a Lien not prohibited under the Loan   Documents, and (z) which prohibits the creation of any other Lien on only the property securing such   Indebtedness as of the date such agreement was entered into; or (ii) an agreement relating to the sale of a   Subsidiary or assets pending such sale, provided that in any such case the Negative Pledge applies only to   the Subsidiary or the assets that are the subject of such sale.   Section 10.3.  Restrictions on Intercompany Transfers.   The Borrower shall not, and shall not permit any Subsidiary of the Borrower (other than an   Excluded Subsidiary) to, create or otherwise cause or suffer to exist or become effective any consensual   encumbrance or restriction of any kind on the ability of any Subsidiary to: (a) pay dividends or make any   other distribution on any of such Subsidiary’s capital stock or other equity interests owned by the Parent,   the Borrower or any Subsidiary of the Borrower; (b) pay any Indebtedness owed to the Parent, the   Borrower or any Subsidiary of the Borrower; (c) make loans or advances to the Parent, the Borrower or   any Subsidiary of the Parent; or (d) transfer any of its property or assets to the Parent, the Borrower or   any Subsidiary of the Parent; other than (i) with respect to clauses (a) through (d) those encumbrances or   restrictions contained in  any Loan Document or, (ii) with respect to clause (d), customary provisions   restricting assignment of any agreement entered into by the Borrower or any Subsidiary of the Borrower   in the ordinary course of business.   Section 10.4.  Merger, Consolidation, Sales of Assets and Other Arrangements.   The Borrower shall not, and shall not permit any Subsidiary of the Borrower (other than an   Excluded Subsidiary) to, (a) enter into any transaction of merger or consolidation; (b) liquidate, windup   or dissolve itself (or suffer any liquidation or dissolution); (c) convey, sell, lease, sublease, transfer or   otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its   business or assets, or the capital stock of or other Equity Interests in any of its Subsidiaries, whether now   owned or hereafter acquired; or (d) acquire the assets of, or make an Investment in, any other Person, in   each case under this clause (d) in a Substantial Amount; provided, however, that:   (i) any Subsidiary of the Parent may merge with a Loan Party so long as such Loan   Party is the survivor;     

 

   - 77 -   (ii) any Subsidiary of the Parent may sell, transfer or dispose of its assets to a Loan   Party;   (iii) any Subsidiary of the Parent (other than the Borrower) may convey, sell, transfer   or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part   of its business or assets, or the capital stock of or other Equity Interests in any of its   Subsidiaries, and may thereafter liquidate, provided that immediately prior to any such   conveyance, sale, transfer, disposition or liquidation and immediately thereafter and after   giving effect thereto, no Default or Event of Default is or would be in existence;   (iv) any Loan Party and any other Subsidiary may, directly or indirectly, (A) acquire   (whether by purchase, acquisition of Equity Interests of a Person, or as a result of a merger or   consolidation) a Substantial Amount of the assets of, or make an Investment of a Substantial   Amount in, any other Person and (B) sell, lease or otherwise transfer, whether by one or a series   of transactions, a Substantial Amount of assets (including capital stock or other securities of   Subsidiaries) to any other Person, so long as, in each case, (1) the Borrower shall have given   the Administrative Agent and the Lenders at least thirty (30) days prior written notice of such   consolidation, merger, acquisition, Investment, sale, lease or other transfer; (2) immediately   prior thereto, and immediately thereafter and after giving effect thereto, no Default or Event of   Default is or would be in existence, including, without limitation, a Default or Event of Default   resulting from a breach of Section 10.1.; (3) in the case of a consolidation or merger involving   the Parent or the Borrower, the Parent or the Borrower, as applicable, shall be the survivor   thereof and (4) at the time the Borrower gives notice pursuant to clause (1) of this subsection,   the Borrower shall have delivered to the Administrative Agent for distribution to each of the   Lenders a Compliance Certificate, calculated on a pro forma basis, evidencing the continued   compliance by the Borrower or the Parent, as applicable, with the financial covenants contained   in Section 10.1., after giving effect to such consolidation, merger, acquisition, Investment, sale,   lease or other transfer; and   (v) the Borrower, the other Loan Parties and the other Subsidiaries of the Borrower   may lease and sublease their respective assets, as lessor or sublessor (as the case may be), in the   ordinary course of their business.   Section 10.5.  Plans.   The Borrower shall not, and shall not permit any Loan Party or any other Subsidiary of the   Borrower to, permit any of its respective assets to become or be deemed to be “plan assets” within the   meaning of ERISA, the Internal Revenue Code and the respective regulations promulgated thereunder.   Section 10.6.  Fiscal Year.   The Parent and the Borrower shall not, and shall not permit any other Loan Party or other   Subsidiary of the Borrower to, change its fiscal year from that in effect as of the Agreement Date.   Section 10.7.  Modifications of Organizational Documents and Material Contracts.   The Borrower shall not, and shall not permit any other Loan Party or any other Subsidiary of the   Borrower to, amend, supplement, restate or otherwise modify its certificate or articles of incorporation or   formation, by-laws, operating agreement, declaration of trust, partnership agreement or other applicable   organizational document if such amendment, supplement, restatement or other modification (a) is   materially adverse to the interest of the Administrative Agent, the Issuing Banks or the Lenders, in each     

 

   - 78 -   case in their role as such, or (b) could reasonably be expected to have a Material Adverse Effect.  The   Borrower shall not enter into, and shall not permit any other Loan Party or any other Subsidiary of the   Borrower to enter into, any amendment or modification to any Material Contract which could reasonably   be expected to have a Material Adverse Effect or default in the performance of any obligations of the   Borrower, any other Loan Party or any other Subsidiary of the Borrower in any Material Contract or   permit any Material Contract to be canceled or terminated prior to its stated maturity if such default or   cancellation could reasonably be expected to cause a Material Adverse Effect.   Section 10.8.  Subordinated Debt Prepayments; Amendments.   Except as provided in Sections 10.1.(j) and 11.1.(q), the Borrower shall not, and shall not permit   any Subsidiary of the Borrower to, prepay any principal of, or accrued interest on, any Subordinated Debt   or otherwise make any voluntary or optional payment with respect to any principal of, or accrued interest   on, any Subordinated Debt prior to the originally scheduled due date thereof or otherwise redeem or   acquire for value any Subordinated Debt.  Further, the Parent and the Borrower shall not, and shall not   permit any other Loan Party or other Subsidiary of the Parent to, amend or modify, or permit the   amendment or modification of, any agreement or instrument evidencing any Subordinated Debt where   such amendment or modification provides for the following or which has any of the following effects:   (a) increases the rate of interest accruing on such Subordinated Debt;   (b) increases the amount of any scheduled installment of principal or interest, or shortens the   date on which any such installment or principal or interest becomes due;   (c) shortens the final maturity date of such Subordinated Debt;   (d) increases the principal amount of such Subordinated Debt;   (e) amends any financial or other covenant contained in any document or instrument   evidencing any Subordinated Debt in a manner which is more onerous to the Borrower or such Subsidiary   or which requires the Borrower or such Subsidiary to improve its financial performance;   (f) provides for the payment of additional material fees or the increase in existing fees;   and/or   (g) otherwise could reasonably be expected to be materially adverse to the interests of the   Administrative Agent or the Lenders.   Section 10.9.  Transactions with Affiliates.   The Borrower shall not permit to exist or enter into, and shall not permit any Subsidiary of the   Borrower to permit to exist or enter into, any transaction (including the purchase, sale, lease or exchange   of any property or the rendering of any service) with any Affiliate, other than the Borrower or a Wholly   Owned Subsidiary of the Borrower, except (a) as set forth on Schedule 7.1.(r), (b) compensation, bonus   and benefit arrangements with employees and officers, directors and trustees as permitted by Applicable   Law, and (c) transactions in the ordinary course of and pursuant to the reasonable requirements of the   business of the Borrower, or such Subsidiary of the Borrower and upon fair and reasonable terms which   are no less favorable to the Borrower, or such Subsidiary of the Borrower than would be obtained in a   comparable arm’s length transaction with a Person that is not an Affiliate.  Notwithstanding the   foregoing, no payments may be made with respect to any items set forth on such Schedule 7.1.(r) if a   Default or Event of Default exists or would result therefrom.     

 

   - 79 -   Section 10.10.  Environmental Matters.   The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, use, generate,   discharge, emit, manufacture, handle, process, store, release, transport, remove, dispose of or clean up any   Hazardous Materials on, under or from the Properties in material violation of any Environmental Law or   in a manner that could reasonably be expected to lead to a Material Adverse Effect.  Nothing in this   Section shall impose any obligation or liability whatsoever on the Administrative Agent or any Lender.   Section 10.11.  Derivatives Contracts.   The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, enter into or   become obligated in respect of Derivatives Contracts other than Derivatives Contracts entered into by the   Borrower or any such Subsidiary of the Borrower in the ordinary course of business and which establish a   hedge that hedges interest rate risk in respect of specific Indebtedness of the Borrower or such Subsidiary   of the Borrower, as applicable.   ARTICLE XI.  DEFAULT   Section 11.1.  Events of Default.   Each of the following shall constitute an Event of Default, whatever the reason for such event and   whether it shall be voluntary or involuntary or be effected by operation of Applicable Law or pursuant to   any judgment or order of any Governmental Authority:   (a) Default in Payment.  The Borrower shall fail to pay when due under this Agreement or   any other Loan Document (whether upon demand, at maturity, by reason of acceleration or otherwise) the   principal of, or any interest on, any of the Loans or any Reimbursement Obligation, or shall fail to pay   any of the other payment Obligations owing by the Borrower under this Agreement or any other Loan   Document, or any other Loan Party shall fail to pay when due any payment obligation owing by such   Loan Party, as applicable, under any Loan Document to which it is a party and, in the case of interest or   any payment Obligation other than principal of any Loan prior to the Revolving Termination Date only,   such failure shall continue for a period of five (5) days after the due date thereof.   (b) Default in Performance.   (i) Any Loan Party shall fail to perform or observe any term, covenant, condition or   agreement on its part to be performed or observed and contained in Section 10.1. and such   failure shall continue for a period of ten (10) days; or   (ii) Any Loan Party shall fail to perform or observe any term, covenant, condition or   agreement contained in this Agreement or any other Loan Document to which it is a party and   not otherwise mentioned in this Section, and in the case of this subsection (b)(ii) only, such   failure shall continue for a period of thirty (30) days after the earlier of (x) the date upon which   a Responsible Officer of the Parent or the Borrower obtains knowledge of such failure or   (y) the date upon which the Borrower has received written notice of such failure from the   Administrative Agent; or   (iii) Any Loan Party shall fail to perform or observe any term, covenant, condition or   agreement set forth in Section 8.9. or 10.10. of this Agreement and in the case of this   subsection (b)(iii) only, such failure shall continue for a period of sixty (60) days after the date   upon which the Borrower has received written notice of such failure from the Administrative     

 

   - 80 -   Agent; provided, that in the event such failure is susceptible of cure but is not cured within said   sixty (60) days, so long as the Borrower or Subsidiary of Borrower is diligently and   continuously pursuing such cure, as evidenced to Administrative Agent’s reasonable   satisfaction, such cure period shall be extended for an additional one hundred twenty (120)   days.   (c) Misrepresentations.  Any written statement, representation or warranty made or deemed   made by or on behalf of any Loan Party under this Agreement or under any other Loan Document, or any   amendment hereto or thereto, or in any other document, certificate or financial statement at any time   furnished by, or at the direction of, any Loan Party to the Administrative Agent, any Issuing Bank or any   Lender in connection with the Loan Documents, shall at any time prove to have been incorrect or   misleading, in light of the circumstances in which made or deemed made, in any material respect when   furnished or made or deemed made.   (d) Indebtedness Cross-Default.   (i) The Borrower, any other Loan Party or any other Subsidiary of the Borrower   shall default, after any applicable notice and cure period, in the payment of principal or interest   in respect of any Indebtedness (other than (x) the Loans and Reimbursement Obligations and   (y) Nonrecourse Indebtedness) having an aggregate outstanding principal amount (or, in the   case of any Derivatives Contract, having, without regard to the effect of any close-out netting   provision, a Derivatives Termination Value), in each case individually or in the aggregate with   all other Indebtedness as to which such a default exists, of $10,000,000 or more (“Material   Indebtedness”); or   (ii)  (x) The maturity of any Material Indebtedness shall have been accelerated in   accordance with the provisions of any indenture, contract or instrument evidencing, providing   for the creation of or otherwise concerning such Material Indebtedness or (y) any Material   Indebtedness shall have been required to be prepaid or repurchased prior to the stated maturity   thereof, in either case, as a result of an event of default other than one described in subsection   (i) of this Section 11.1.(d); or   (iii) There occurs an “Event of Default” under and as defined in any Specified   Derivatives Contract as to which the Borrower or any Subsidiary of the Borrower is a   “Defaulting Party” (as defined therein), as a result of which there occurs an “Early Termination   Date” (as defined therein) in respect of any Specified Derivatives Contract as a result of a   “Termination Event” (as defined therein) as to which the Borrower or any of its Subsidiaries is   an “Affected Party” (as defined therein), in each case individually or in the aggregate with all   other Specified Derivative Contracts as to which such Events of Default have occurred and are   continuing, equals $10,000,000 or more; or   (iv) The Borrower, any other Loan Party or any other Subsidiary of the Borrower   shall default, after any applicable notice and cure period, in the payment of principal or interest   in respect of any Nonrecourse Indebtedness having an aggregate outstanding principal amount   (or, in the case of any Derivatives Contract, having, without regard to the effect of any   close-out netting provision, a Derivatives Termination Value), in each case individually or in   the aggregate with all other Indebtedness as to which such a default exists, of $50,000,000 or   more.   (e) Voluntary Bankruptcy Proceeding.  (x) The Borrower, any other Loan Party or any   Material Subsidiary of the Borrower shall:  (i) commence a voluntary case under the Bankruptcy Code or     

 

   - 81 -   other federal bankruptcy laws (as now or hereafter in effect); (ii) file a petition seeking to take advantage   of any other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization,   winding-up, or composition or adjustment of debts; (iii) consent to, or fail to contest in a timely and   appropriate manner, any petition filed against it in an involuntary case under such bankruptcy laws or   other Applicable Laws or consent to any proceeding or action described in the immediately following   subsection (f); (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the   appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a   substantial part of its property, domestic or foreign; (v) admit in writing its inability to pay its debts as   they become due; or (vi) make a general assignment for the benefit of creditors; or (y) the board of   directors (or similar  governing body) of the Borrower, any other Loan Party or any Material Subsidiary   of the Borrower or any committee thereof shall adopt any resolution or otherwise authorize any action to   approve any of the actions referred to in this clause (e).   (f) Involuntary Bankruptcy Proceeding.  A case or other proceeding shall be commenced   against the Borrower, any other Loan Party or any Material Subsidiary of the Borrower in any court of   competent jurisdiction seeking:  (i) relief under the Bankruptcy Code or other federal bankruptcy laws (as   now or hereafter in effect) or under any other Applicable Laws, domestic or foreign, relating to   bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; or (ii) the   appointment of a trustee, receiver, custodian, liquidator or the like of such Person, or of all or any   substantial part of the assets, domestic or foreign, of such Person, and in the case of either clause (i) or (ii)   such case or proceeding shall continue undismissed or unstayed for a period of 60 consecutive days, or an   order granting the remedy or other relief requested in such case or proceeding (including, but not limited   to, an order for relief under such Bankruptcy Code or such other federal bankruptcy laws) shall be   entered.   (g) Revocation of Loan Documents.  Any Loan Party shall (or shall attempt in writing to)   disavow, revoke or terminate any Loan Document to which it is a party or shall otherwise challenge or   contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or   enforceability of any Loan Document or any Loan Document shall cease to be in full force and effect   (except as a result of the express terms thereof).   (h) Judgment.   A judgment or order for the payment of money or for an injunction or other   non-monetary relief shall be entered against the Borrower, any other Loan Party, or any other Material   Subsidiary of the Borrower by any court or other tribunal and (i) such judgment or order shall continue   for a period of thirty (30) days without being paid, stayed or dismissed through appropriate appellate or   other judicial proceedings and (ii) either (A) the amount of such judgment or order for which insurance   has not been acknowledged in writing by the applicable insurance carrier (or the amount as to which the   insurer has denied liability) exceeds, individually or together with all other such judgments or orders   entered against the Loan Parties and the Material Subsidiaries of the Borrower, $10,000,000 or (B) in the   case of an injunction or other non-monetary relief, such injunction or judgment or order could reasonably   be expected to have a Material Adverse Effect.   (i) Attachment.  A non-appealable warrant, writ of attachment, execution or similar process   shall be issued by a court of competent jurisdiction against any property of the Borrower, any other Loan   Party or any other Material Subsidiary of the Borrower, which exceeds, individually or together with all   other such warrants, writs, executions and processes, $10,000,000 in amount and such warrant, writ,   execution or process shall not be paid, discharged, vacated, stayed or bonded for a period of thirty (30)   days.   (j) ERISA.     

 

   - 82 -   (i) Any ERISA Event shall have occurred that results or could reasonably be   expected to result in a Material Adverse Effect.   (ii) The “benefit obligation” of all Plans, to the extent the Borrower is liable therefor,   exceeds the “fair market value of plan assets” for such Plans by an amount, which if paid out by   the Borrower, could reasonably be expected to cause a Material Adverse Effect.   (k) Material Adverse Effect.  There shall occur a Material Adverse Effect with respect to any   Loan Party, as determined by the Administrative Agent in its sole discretion exercised in good faith.   (l) Change of Control/Change in Management.   (i) Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of   the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than members   of the Saul Family, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5   under the Exchange Act, except that a Person will be deemed to have “beneficial ownership” of   all securities that such Person has the right to acquire, whether such right is exercisable   immediately or only after the passage of time), directly or indirectly, of more than 25.0% of the   total voting power of the then outstanding voting stock of the Parent;   (ii) During any period of twelve (12) consecutive months ending after the Agreement   Date, individuals who at the beginning of any such 12-month period constituted the Board of   Directors of the Parent (together with any new directors whose election by such Board or   whose nomination for election by the shareholders of the Parent was approved by a vote of a   majority of the directors then still in office who were either directors at the beginning of such   period or whose election or nomination for election was previously so approved but excluding   any director whose initial nomination for, or assumption of office as, a director occurs as a   result of an actual or threatened solicitation of proxies or consents for the election or removal of   one or more directors by any person or group other than a solicitation for the election of one or   more directors by or on behalf of the Board of Directors) cease for any reason other than the   death or incapacity of a director to constitute a majority of the Board of Directors of the Parent   then in office;   (iii) The Parent shall cease to own and control, directly or indirectly, at least 51% of   the outstanding Equity Interests of the Borrower; or   (iv) The Parent or a Wholly Owned Subsidiary of the Parent shall cease to be the sole   general partner of the Borrower or shall cease to have the sole and exclusive power to exercise   all management and control over the Borrower.   (m) Unencumbered Properties.  The Borrower, any Loan Party or any Subsidiary of the   Borrower shall grant, consent to or permit a Lien (other than a Permitted Lien) in respect of, or otherwise   encumber, or shall sell, convey or otherwise transfer any Property included in the calculation of   Unencumbered Asset Value or any portion thereof (except with respect to any such sale, conveyance or   other transfer permitted pursuant to the terms of Sections 8.3., 8.4. or 10.4.) without the prior written   consent of the Administrative Agent.   (n) REIT Status.  The Parent shall fail to maintain its status as, and election to be treated as, a   REIT under the Internal Revenue Code.     

 

   - 83 -   (o) Listing of Shares.  The Parent shall fail to maintain at least one class of common shares   of the Parent having trading privileges on the New York Stock Exchange or the American Stock   Exchange or which is subject to price quotations on The NASDAQ Stock Market’s National Market   System.   (p) Investments. The Parent, the Borrower or any Subsidiary of the Borrower shall make an   Investment in or otherwise own the following items and the effect thereof is to cause the aggregate value   of such holdings of such Person in such assets to exceed such percentages set forth below of Total Asset   Value of the Borrower and its Subsidiaries, at any time (and such condition continues for a period of   ten (10) days):   (i) Investments in Unconsolidated Affiliates, such that the aggregate value of all   such Investments (such value to be equal to the lesser of (I) the purchase price paid for such   Investment and (II) the Fair Market Value of such Investment) in Unconsolidated Affiliates   exceeds 10.0% of Total Asset Value of the Borrower and its Subsidiaries;   (ii) Mortgage Receivables in favor of the Borrower, any other Loan Party or any   Subsidiary of the Borrower, such that the aggregate book value of any such Mortgage   Receivable exceeds 10.0% of Total Asset Value of the Borrower and its Subsidiaries;   (iii) Development Properties, such that the value of any such Development Property   (such value to be equal to the aggregate amount of all costs incurred and paid by the Borrower   or the applicable Subsidiary of the Borrower in connection therewith to date) exceeds 20.0% of   Total Asset Value of the Borrower and its Subsidiaries;   (iv) Unimproved Land (which shall not include (x) any Development Property or   (y) Unimproved Land acquired within the prior twelve (12) months that will become a   Development Property within twelve (12) months of its acquisition) such that the aggregate   book value of all such Unimproved Land (such value to be equal to the lesser of (I) the   purchase price paid for such acquisition and (II) the Fair Market Value of such real estate)   exceeds 10.0% of Total Asset Value of the Borrower and its Subsidiaries; or   (v) Investments of the type subject to limitation under the foregoing clauses (i), (ii),   (iii) and (iv) in excess of 25% of Total Asset Value of the Borrower and its Subsidiaries.   (q) Dividends and Other Restricted Payments.   The Parent, the Borrower or any Subsidiary   of the Borrower shall declare or make any Restricted Payment, other than any of the following Restricted   Payments so long as no Default or Event of Default would result therefrom (and such declaration or   payment of the Restricted Payment has not been rescinded, returned, unwound or otherwise cancelled for   a period of ten (10) days):   (i) the Borrower may pay cash dividends or distributions to the Parent and other   holders of partnership interests in the Borrower with respect to any fiscal year ending during   the term of this Agreement to the extent necessary for the Parent to distribute, and the Parent   may so distribute, cash dividends to its shareholders in an aggregate amount not to exceed the   greater of (a) the amount required to be distributed for the Parent to remain qualified as a REIT   for federal income tax purposes, or (b) 90% of Funds From Operations;   (ii) the Borrower may pay cash dividends or distributions to the Parent and other   holders of partnership interests in the Borrower with respect to any fiscal year ending during   the term of this Agreement to the extent necessary for the Parent to distribute, and the Parent     

 

   - 84 -   may so distribute cash distributions to its shareholders of capital gains resulting from gains   from certain asset sales to the extent necessary to avoid payment of taxes on such asset sales   imposed under Sections 857(b)(3) and 4981 of the Internal Revenue Code;   (iii) a Subsidiary that is not a Wholly Owned Subsidiary may make cash distributions   (ratably in accordance with the percentage of Equity Interests held) to holders of Equity   Interests issued by such Subsidiary; and   (iv) Subsidiaries may pay Restricted Payments to the Borrower or any other Loan   Party;   provided, however, and subject to the provisions of Section 10.1.(j), if a Default or Event of Default   exists, the Borrower may only declare and make cash distributions to the Parent and other holders of   partnership interests in the Borrower with respect to any fiscal year to the extent necessary for the Parent   to distribute, and the Parent may so distribute, an aggregate amount not to exceed the minimum amount   necessary for the Parent to remain qualified as a REIT for federal income tax purposes).   Section 11.2.  Remedies Upon Event of Default.   Upon the occurrence of an Event of Default the following provisions shall apply:   (a) Acceleration; Termination of Facilities.   (i) Automatic.  Upon the occurrence of an Event of Default specified in   Sections 11.1.(e) or 11.1.(f), (1)(A) the principal of, and all accrued interest on, the Loans and   the Notes at the time outstanding, (B) an amount equal to the Stated Amount of all Letters of   Credit outstanding as of the date of the occurrence of such Event of Default for deposit into the   Letter of Credit Collateral Account and (C) all of the other Obligations, including, but not   limited to, the other amounts owed to the Lenders and the Administrative Agent under this   Agreement, the Notes or any of the other Loan Documents shall become immediately and   automatically due and payable without presentment, demand, protest, or other notice of any   kind, all of which are expressly waived by the Parent and the Borrower, each on behalf of itself   and the other Loan Parties, and (2) the Commitments and the Swingline Commitment and the   obligation of the Issuing Banks to issue Letters of Credit hereunder, shall all immediately and   automatically terminate.   (ii) Optional.  If any other Event of Default shall exist, the Administrative Agent   may, and at the direction of the Requisite Lenders shall:  (1) declare (A) the principal of, and   accrued interest on, the Loans and the Notes at the time outstanding, (B) an amount equal to the   Stated Amount of all Letters of Credit outstanding as of the date of the occurrence of such   Event of Default for deposit into the Letter of Credit Collateral Account and (C) all of the other   Obligations, including, but not limited to, the other amounts owed to the Lenders and the   Administrative Agent under this Agreement, the Notes or any of the other Loan Documents to   be forthwith due and payable, whereupon the same shall immediately become due and payable   without presentment, demand, protest or other notice of any kind, all of which are expressly   waived by the Parent and the Borrower, each on behalf of itself and the other Loan Parties, and   (2) terminate the Commitments and the Swingline Commitment and the obligation of the   Issuing Banks to issue Letters of Credit hereunder.     

 

   - 85 -   (b) Loan Documents.  The Requisite Lenders may direct the Administrative Agent to, and   the Administrative Agent if so directed shall, exercise any and all of its rights under any and all of the   other Loan Documents.   (c) Applicable Law.  The Requisite Lenders may direct the Administrative Agent to, and the   Administrative Agent if so directed shall, exercise all other rights and remedies it may have under any   Applicable Law.   (d) Specified Derivatives Contract Remedies.  Notwithstanding any other provision of this   Agreement or other Loan Document, each Specified Derivatives Provider shall have the right, with   prompt notice to the Administrative Agent, but without the approval or consent of or other action by the   Administrative Agent or the Lenders, and without limitation of other remedies available to such Specified   Derivatives Provider under contract or Applicable Law, to undertake any of the following:  (a) to declare   an event of default, termination event or other similar event under any Specified Derivatives Contract and   to create an “Early Termination Date” (as defined therein) in respect thereof, (b) to determine net   termination amounts in respect of any and all Specified Derivatives Contracts in accordance with the   terms thereof, and to set off amounts among such contracts, (c) to set off or proceed against deposit   account balances, securities account balances and other property and amounts held by such Specified   Derivatives Provider pursuant to any Derivatives Support Document, including any “Posted Collateral”   (as defined in any credit support annex included in any such Derivatives Support Document to which such   Specified Derivatives Provider may be a party), and (d) to prosecute any legal action against the   Borrower, any Loan Party or other Subsidiary to enforce or collect net amounts owing to such Specified   Derivatives Provider pursuant to any Specified Derivatives Contract.  For the avoidance of doubt, none of   the events or remedies described above shall by itself constitute a Default or Event of Default hereunder.   Section 11.3.  Remedies Upon Default.   Upon the occurrence of an Event of Default specified in Section 11.1.(f), the Commitments shall   immediately and automatically terminate.   Section 11.4.  Marshaling; Payments Set Aside.   None of the Administrative Agent, any Issuing Bank, any Lender or any Specified Derivatives   Provider shall be under any obligation to marshal any assets in favor of any Loan Party or any other party   or against or in payment of any or all of the Guaranteed Obligations.  To the extent that any Loan Party   makes a payment or payments to the Administrative Agent, any Issuing Bank, any Lender or any   Specified Derivatives Provider, or the Administrative Agent, any Issuing Bank, any Lender or any   Specified Derivatives Provider enforce their security interests or exercise their rights of setoff, and such   payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently   invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee,   receiver or any other party under any bankruptcy law, state or federal law, common law or equitable   cause, then to the extent of such recovery, the Guaranteed Obligations, or part thereof originally intended   to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and   effect as if such payment had not been made or such enforcement or setoff had not occurred.   Section 11.5.  Allocation of Proceeds.   If an Event of Default exists, all payments received by the Administrative Agent under any of the   Loan Documents, in respect of any principal of or interest on the Obligations or any other amounts   payable by the Borrower hereunder or thereunder, shall be applied in the following order and priority:     

 

   - 86 -   (a) amounts due to the Administrative Agent, the Issuing Banks and the Lenders in   respect of expenses due under Section 13.2. until paid in full, and then Fees;   (b) payments of interest on Swingline Loans;   (c) payments of interest on all other Loans and Reimbursement Obligations to be   applied for the ratable benefit of the Lenders and the Issuing Banks;   (d) payments of principal of Swingline Loans;   (e) payments of principal of all other Loans, Reimbursement Obligations and other   Letter of Credit Liabilities, to be applied for the ratable benefit of the Lenders and the Issuing   Banks, in such order and priority as the Lenders and the Issuing Banks, may determine in their   sole discretion; provided, however, to the extent that any amounts available for distribution   pursuant to this subsection are attributable to the issued but undrawn amount of an outstanding   Letter of Credit, such amounts shall be paid to the Administrative Agent for deposit into the   Letter of Credit Collateral Account;   (f) amounts due to the Administrative Agent and the Lenders pursuant to   Sections 12.6. and 13.10.;    (g) payments of all other Obligations and other amounts due under any of the Loan   Documents, if any, to be applied for the ratable benefit of the Lenders; and   (h) any amount remaining after application as provided above, shall be paid to the   Borrower or whomever else may be legally entitled thereto.   Section 11.6.  Letter of Credit Collateral Account.   (a) As collateral security for the prompt payment in full when due of all Letter of Credit   Liabilities and the other Obligations, the Borrower hereby pledges and grants to the Administrative   Agent, for the ratable benefit of the Administrative Agent, the Issuing Banks and the Lenders as provided   herein, a security interest in all of its right, title and interest in and to the Letter of Credit Collateral   Account and the balances from time to time in the Letter of Credit Collateral Account (including the   investments and reinvestments therein provided for below).  The balances from time to time in the Letter   of Credit Collateral Account shall not constitute payment of any Letter of Credit Liabilities until applied   by the applicable Issuing Bank as provided herein.  Anything in this Agreement to the contrary   notwithstanding, funds held in the Letter of Credit Collateral Account shall be subject to withdrawal only   as provided in this Section.   (b) Amounts on deposit in the Letter of Credit Collateral Account shall be invested and   reinvested by the Administrative Agent in such Cash Equivalents as the Administrative Agent shall   determine in its sole discretion.  All such investments and reinvestments shall be held in the name of and   be under the sole dominion and control of the Administrative Agent for the ratable benefit of the   Administrative Agent, the Issuing Banks and the Lenders; provided, that all earnings on such investments   will be credited to and retained in the Letter of Credit Collateral Account.  The Administrative Agent   shall exercise reasonable care in the custody and preservation of any funds held in the Letter of Credit   Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment   substantially equivalent to that which the Administrative Agent accords other funds deposited with the   Administrative Agent, it being understood that the Administrative Agent shall not have any responsibility     

 

   - 87 -   for taking any necessary steps to preserve rights against any parties with respect to any funds held in the   Letter of Credit Collateral Account.   (c) If a drawing pursuant to any Letter of Credit occurs on or prior to the expiration date of   such Letter of Credit, the Borrower and the Lenders authorize the Administrative Agent to use the monies   deposited in the Letter of Credit Collateral Account to reimburse the applicable Issuing Bank for the   payment made by such Issuing Bank to the beneficiary with respect to such drawing or the payee with   respect to such presentment.   (d) If an Event of Default exists, the Administrative Agent may (and, if instructed by the   Requisite Lenders shall, in its further discretion), at any time and from time to time elect to liquidate any   such investments and reinvestments and apply the proceeds thereof to the Obligations in accordance with   Section 11.5.   (e) So long as no Default or Event of Default exists, and to the extent amounts on deposit in   or credited to the Letter of Credit Collateral Account exceed the aggregate amount of the Letter of Credit   Liabilities then due and owing, the Administrative Agent shall, from time to time, at the request of the   Borrower, deliver to the Borrower within ten (10) Business Days after the Administrative Agent’s receipt   of such request from the Borrower, against receipt but without any recourse, warranty or representation   whatsoever, such of amount of the credit balances in the Letter of Credit Collateral Account as exceeds   the aggregate amount of Letter of Credit Liabilities at such time.  When all of the Obligations shall have   been indefeasibly paid in full and no Letters of Credit remain outstanding, the Administrative Agent shall   deliver to the Borrower, against receipt but without any recourse, warranty or representation whatsoever,   the balances remaining in the Letter of Credit Collateral Account.   (f) The Borrower shall pay to the Administrative Agent from time to time such fees as the   Administrative Agent normally charges for similar services in connection with the Administrative   Agent’s administration of the Letter of Credit Collateral Account and investments and reinvestments of   funds therein.   Section 11.7.  Rescission of Acceleration by Requisite Lenders.   If at any time after acceleration of the maturity of the Loans and the other Obligations, the   Borrower shall pay all arrears of interest and all payments on account of principal of the Obligations   which shall have become due otherwise than by acceleration (with interest on principal and, to the extent   permitted by Applicable Law, on overdue interest, at the rates specified in this Agreement) and all Events   of Default and Defaults (other than nonpayment of principal of and accrued interest on the Obligations   due and payable solely by virtue of acceleration) shall become remedied or waived to the satisfaction of   the Requisite Lenders, then by written notice to the Borrower, the Requisite Lenders may elect, in the sole   discretion of such Requisite Lenders, to rescind and annul the acceleration and its consequences.  The   provisions of the preceding sentence are intended merely to bind all of the Lenders to a decision which   may be made at the election of the Requisite Lenders, and are not intended to benefit the Borrower and do   not give the Borrower the right to require the Lenders to rescind or annul any acceleration hereunder,   even if the conditions set forth herein are satisfied.   Section 11.8.  Rights Cumulative.   (a) Generally.  The rights and remedies of the Administrative Agent, the Issuing Banks, the   Lenders and the Specified Derivatives Providers under this Agreement, each of the other Loan   Documents and Specified Derivatives Contracts shall be cumulative and not exclusive of any rights or   remedies which any of them may otherwise have under Applicable Law.  In exercising their respective     

 

   - 88 -   rights and remedies the Administrative Agent, the Issuing Banks, the Lenders and the Specified   Derivatives Providers may be selective and no failure or delay by the Administrative Agent, any of the   Issuing Banks, any of the Lenders or any of the Specified Derivatives Providers in exercising any right   shall operate as a waiver of it, nor shall any single or partial exercise of any power or right preclude its   other or further exercise or the exercise of any other power or right.   (b) Enforcement by Administrative Agent.  Notwithstanding anything to the contrary   contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder   and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively   in, and all actions and proceedings at law in connection with such enforcement shall be instituted and   maintained exclusively by, the Administrative Agent in accordance with Article XI. for the benefit of all   the Lenders and the Issuing Banks; provided that the foregoing shall not prohibit (i) the Administrative   Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its   capacity as Administrative Agent) hereunder and under the other Loan Documents, (ii) any Issuing Bank   or the Swingline Lender from exercising the rights and remedies that inure to its benefit (solely in its   capacity as an Issuing Bank or Swingline Lender, as the case may be) hereunder or under the other Loan   Documents, (iii) any Specified Derivatives Provider from exercising the rights and remedies that inure to   its benefit under any Specified Derivatives Contract, (iv) any Lender from exercising setoff rights in   accordance with Section 13.3. (subject to the terms of Section 3.3.), or (v) any Lender from filing proofs   of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative   to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no   Person acting as Administrative Agent hereunder and under the other Loan Documents, then (x) the   Requisite Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to   Article XI. and (y) in addition to the matters set forth in clauses (ii), (iv) and (v) of the preceding proviso   and subject to Section 3.3., any Lender may, with the consent of the Requisite Lenders, enforce any rights   and remedies available to it and as authorized by the Requisite Lenders.   ARTICLE XII.  THE ADMINISTRATIVE AGENT   Section 12.1.  Appointment and Authorization.   Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to take such   action as contractual representative on such Lender’s behalf and to exercise such powers under this   Agreement and the other Loan Documents as are specifically delegated to the Administrative Agent by   the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Not in   limitation of the foregoing, each Lender authorizes and directs the Administrative Agent to enter into the   Loan Documents for the benefit of the Lenders.  Each Lender hereby agrees that, except as otherwise set   forth herein, any action taken by the Requisite Lenders in accordance with the provisions of this   Agreement or the Loan Documents, and the exercise by the Requisite Lenders of the powers set forth   herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized   and binding upon all of the Lenders.  Nothing herein shall be construed to deem the Administrative Agent   a trustee or fiduciary for any Lender or to impose on the Administrative Agent duties or obligations other   than those expressly provided for herein.  Without limiting the generality of the foregoing, the use of the   terms “Agent,” “Administrative Agent,” “agent” and similar terms in the Loan Documents with reference   to the Administrative Agent is not intended to connote any fiduciary or other implied (or express)   obligations arising under agency doctrine of any Applicable Law.  Instead, use of such terms is merely a   matter of market custom, and is intended to create or reflect only an administrative relationship between   independent contracting parties.  The Administrative Agent shall deliver to each Lender, promptly upon   receipt thereof by the Administrative Agent, copies of each of the financial statements, certificates,   notices and other documents delivered to the Administrative Agent pursuant to Article IX. that the   Borrower is not otherwise required to deliver directly to the Lenders.  The Administrative Agent will     

 

   - 89 -   furnish to any Lender, upon the request of such Lender, a copy (or, where appropriate, an original) of any   document, instrument, agreement, certificate or notice furnished to the Administrative Agent by the   Borrower, any other Loan Party or any other Affiliate of the Borrower, pursuant to this Agreement or any   other Loan Document not already delivered to such Lender pursuant to the terms of this Agreement or   any such other Loan Document.  As to any matters not expressly provided for by the Loan Documents   (including, without limitation, enforcement or collection of any of the Obligations), the Administrative   Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to   refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the   instructions of the Requisite Lenders (or all of the Lenders if explicitly required under any other provision   of this Agreement), and such instructions shall be binding upon all Lenders and all holders of any of the   Obligations; provided, however, that, notwithstanding anything in this Agreement to the contrary, the   Administrative Agent shall not be required to take any action which exposes the Administrative Agent to   personal liability or which is contrary to this Agreement or any other Loan Document or Applicable Law.    Not in limitation of the foregoing, the Administrative Agent may exercise any right or remedy it or the   Lenders may have under any Loan Document upon the occurrence of a Default or an Event of Default   unless the Requisite Lenders have directed the Administrative Agent otherwise.  Without limiting the   foregoing, no Lender shall have any right of action whatsoever against the Administrative Agent as a   result of the Administrative Agent acting or refraining from acting under this Agreement or any of the   other Loan Documents in accordance with the instructions of the Requisite Lenders, or where applicable,   all the Lenders.   Section 12.2.  Wells Fargo as Lender.   Wells Fargo, as a Lender or as a Specified Derivatives Provider, as the case may be, shall have   the same rights and powers under this Agreement and any other Loan Document and under any Specified   Derivatives Contract, as the case may be, as any other Lender or Specified Derivatives Provider and may   exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders”   shall, unless otherwise expressly indicated, include Wells Fargo in each case in its individual capacity.    Wells Fargo and its Affiliates may each accept deposits from, maintain deposits or credit balances for,   invest in, lend money to, act as trustee under indentures of, serve as financial advisor to, and generally   engage in any kind of business with the Borrower, any other Loan Party or any other Affiliate thereof as if   it were any other bank and without any duty to account therefor to any other Issuing Banks, other   Lenders, or any other Specified Derivatives Providers.  Further, the Administrative Agent and any   Affiliate may accept fees and other consideration from the Borrower for services in connection with this   Agreement or any Specified Derivatives Contract, or otherwise without having to account for the same to   the other Issuing Banks, the other Lenders or any other Specified Derivatives Providers.  The Issuing   Banks and the Lenders acknowledge that, pursuant to such activities, Wells Fargo or its Affiliates may   receive information regarding the Borrower, other Loan Parties, other Subsidiaries and other Affiliates   (including information that may be subject to confidentiality obligations in favor of such Person) and   acknowledge that the Administrative Agent shall be under no obligation to provide such information to   them.   Section 12.3.  Approvals of Lenders.   All communications from the Administrative Agent to any Lender requesting such Lender’s   determination, consent, approval or disapproval (a) shall be given in the form of a written notice to such   Lender, (b) shall be accompanied by a description of the matter or issue as to which such determination,   approval, consent or disapproval is requested, or shall advise such Lender where information, if any,   regarding such matter or issue may be inspected, or shall otherwise describe the matter or issue to be   resolved, (c) shall include, if reasonably requested by such Lender and to the extent not previously   provided to such Lender, written materials and, as appropriate, a brief summary of all oral information     

 

   - 90 -   provided to the Administrative Agent by the Borrower in respect of the matter or issue to be resolved, and   (d) shall include the Administrative Agent’s recommended course of action or determination in respect   thereof.  Unless a Lender shall give written notice to the Administrative Agent that it specifically objects   to the recommendation or determination of the Administrative Agent within ten (10) Business Days (or   such lesser or greater period as may be specifically required under the express terms of the Loan   Documents) of receipt of such communication, such Lender shall be deemed to have conclusively   approved of or consented to such recommendation or determination.   Section 12.4.  Notice of Events of Default.   The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a   Default or Event of Default unless the Administrative Agent has received notice from a Lender or the   Borrower referring to this Agreement, describing with reasonable specificity such Default or Event of   Default and stating that such notice is a “notice of default.”  If any Lender (excluding the Lender which is   also serving as the Administrative Agent) becomes aware of any Default or Event of Default, it shall   promptly send to the Administrative Agent such a “notice of default.”  Further, if the Administrative   Agent receives such a “notice of default,” the Administrative Agent shall give prompt notice thereof to   the Lenders.   Section 12.5.  Administrative Agent’s Reliance.   Notwithstanding any other provisions of this Agreement or any other Loan Documents, neither   the Administrative Agent nor any of its directors, officers, agents, employees or counsel shall be liable for   any action taken or not taken by it under or in connection with this Agreement or any other Loan   Document, except for its or their own gross negligence or willful misconduct in connection with its duties   expressly set forth herein or therein as determined by a court of competent jurisdiction in a final   non-appealable judgment.  Without limiting the generality of the foregoing, the Administrative Agent   may consult with legal counsel (including its own counsel or counsel for the Borrower or any other Loan   Party), independent public accountants and other experts selected by it and shall not be liable for any   action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel,   accountants or experts.  Neither the Administrative Agent nor any of its directors, officers, agents,   employees or counsel: (a) makes any warranty or representation to any Lender, any Issuing Bank or any   other Person, or shall be responsible to any Lender, any Issuing Bank or any other Person for any   statement, warranty or representation made or deemed made by the Borrower, any other Loan Party or   any other Person in or in connection with this Agreement or any other Loan Document; (b) shall have any   duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or   conditions of this Agreement or any other Loan Document or the satisfaction of any conditions precedent   under this Agreement or any Loan Document on the part of the Borrower or other Persons, or to inspect   the property, books or records of the Borrower or any other Person; (c) shall be responsible to any Lender   or any Issuing Bank for the due execution, legality, validity, enforceability, genuineness, sufficiency or   value of this Agreement or any other Loan Document, any other instrument or document furnished   pursuant thereto or any collateral covered thereby or the perfection or priority of any Lien in favor of the   Administrative Agent on behalf of the Lenders, the Issuing Banks and the Specified Derivatives Providers   in any such collateral; (d) shall have any liability in respect of any recitals, statements, certifications,   representations or warranties contained in any of the Loan Documents or any other document, instrument,   agreement, certificate or statement delivered in connection therewith; and (e) shall incur any liability   under or in respect of this Agreement or any other Loan Document by acting upon any notice, consent,   certificate or other instrument or writing (which may be by telephone, telecopy or electronic mail)   believed by it to be genuine and signed, sent or given by the proper party or parties.  The Administrative   Agent may execute any of its duties under the Loan Documents by or through agents, employees or   attorneys-in-fact and shall not be responsible for the negligence or misconduct of any agent or     

 

   - 91 -   attorney-in-fact that it selects in the absence of gross negligence or willful misconduct as determined by a   court of competent jurisdiction in a final non-appealable judgment.   Section 12.6.  Indemnification of Administrative Agent.   Each Lender agrees to indemnify the Administrative Agent (to the extent not reimbursed by the   Borrower and without limiting the obligation of the Borrower to do so) pro rata in accordance with such   Lender’s respective Pro Rata Share, from and against any and all liabilities, obligations, losses, damages,   penalties, actions, judgments, suits, reasonable out-of-pocket costs and expenses of any kind or nature   whatsoever which may at any time be imposed on, incurred by, or asserted against the Administrative   Agent (in its capacity as Administrative Agent but not as a Lender) in any way relating to or arising out of   the Loan Documents, any transaction contemplated hereby or thereby or any action taken or omitted by   the Administrative Agent under the Loan Documents (collectively, “Indemnifiable Amounts”);   provided, however, that no Lender shall be liable for any portion of such Indemnifiable Amounts to the   extent resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by   a court of competent jurisdiction in a final, non-appealable judgment; provided, however, that no action   taken in accordance with the directions of the Requisite Lenders (or all of the Lenders, if expressly   required hereunder) shall be deemed to constitute gross negligence or willful misconduct for purposes of   this Section.  Without limiting the generality of the foregoing, each Lender agrees to reimburse the   Administrative Agent (to the extent not reimbursed by the Borrower and without limiting the obligation   of the Borrower to do so) promptly upon demand for its ratable share of any out-of-pocket expenses   (including the reasonable fees and expenses of the counsel to the Administrative Agent) incurred by the   Administrative Agent in connection with the preparation, negotiation, execution, administration, or   enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice with   respect to the rights or responsibilities of the parties under, the Loan Documents, any suit or action   brought by the Administrative Agent to enforce the terms of the Loan Documents and/or collect any   Obligations, any “lender liability” suit or claim brought against the Administrative Agent and/or the   Lenders, and any claim or suit brought against the Administrative Agent and/or the Lenders arising under   any Environmental Laws.  Such out-of-pocket expenses (including counsel fees) shall be advanced by the   Lenders on the request of the Administrative Agent notwithstanding any claim or assertion that the   Administrative Agent is not entitled to indemnification hereunder upon receipt of an undertaking by the   Administrative Agent that the Administrative Agent will reimburse the Lenders if it is actually and finally   determined by a court of competent jurisdiction that the Administrative Agent is not so entitled to   indemnification.  The agreements in this Section shall survive the payment of the Loans and all other   amounts payable hereunder or under the other Loan Documents and the termination of this Agreement.  If   the Borrower shall reimburse the Administrative Agent for any Indemnifiable Amount following payment   by any Lender to the Administrative Agent in respect of such Indemnifiable Amount pursuant to this   Section, the Administrative Agent shall share such reimbursement on a ratable basis with each Lender   making any such payment.   Section 12.7.  Lender Credit Decision, Etc.   Each of the Lenders and each of the Issuing Banks expressly acknowledges and agrees that   neither the Administrative Agent nor any of its officers, directors, employees, agents, counsel,   attorneys-in-fact or other Affiliates has made any representations or warranties to such Issuing Bank or   such Lender and that no act by the Administrative Agent hereafter taken, including any review of the   affairs of the Borrower, any other Loan Party or any other Subsidiary or Affiliate, shall be deemed to   constitute any such representation or warranty by the Administrative Agent to any Issuing Bank or any   Lender.  Each of the Lenders and each of the Issuing Banks acknowledges that it has made its own credit   and legal analysis and decision to enter into this Agreement and the transactions contemplated hereby,   independently and without reliance upon the Administrative Agent, any other Issuing Bank, any other     

 

   - 92 -   Lender or counsel to the Administrative Agent, or any of their respective officers, directors, employees,   agents or counsel, and based on the financial statements of the Borrower, the other Loan Parties, the other   Subsidiaries and other Affiliates, and inquiries of such Persons, its independent due diligence of the   business and affairs of the Borrower, the other Loan Parties, the other Subsidiaries and other Persons, its   review of the Loan Documents, the legal opinions required to be delivered to it hereunder, the advice of   its own counsel and such other documents and information as it has deemed appropriate.  Each of the   Lenders and each of the Issuing Banks also acknowledges that it will, independently and without reliance   upon the Administrative Agent, any other Lender, any other Issuing Bank, or counsel to the   Administrative Agent or any of their respective officers, directors, employees and agents, and based on   such review, advice, documents and information as it shall deem appropriate at the time, continue to make   its own decisions in taking or not taking action under the Loan Documents.  The Administrative Agent   shall not be required to keep itself informed as to the performance or observance by the Borrower or any   other Loan Party of the Loan Documents or any other document referred to or provided for therein or to   inspect the properties or books of, or make any other investigation of, the Borrower, any other Loan Party   or any other Subsidiary.  Except for notices, reports and other documents and information expressly   required to be furnished to the Lenders and the Issuing Banks by the Administrative Agent under this   Agreement or any of the other Loan Documents, the Administrative Agent shall have no duty or   responsibility to provide any Lender or any Issuing Bank with any credit or other information concerning   the business, operations, property, financial and other condition or creditworthiness of the Borrower, any   other Loan Party or any other Affiliate thereof which may come into possession of the Administrative   Agent or any of its officers, directors, employees, agents, attorneys-in-fact or other Affiliates.  Each of the   Lenders and each of the Issuing Banks acknowledges that the Administrative Agent’s legal counsel in   connection with the transactions contemplated by this Agreement is only acting as counsel to the   Administrative Agent and is not acting as counsel to any Lender or any Issuing Bank.   Section 12.8.  Successor Administrative Agent.   The Administrative Agent may resign at any time as Administrative Agent under the Loan   Documents by giving written notice thereof to the Lenders and the Borrower.  Upon any such resignation,   the Requisite Lenders shall have the right to appoint a successor Administrative Agent which appointment   shall, provided no Default or Event of Default exists, be subject to the Borrower’s approval, which   approval shall not be unreasonably withheld or delayed (except that the Borrower shall, in all events, be   deemed to have approved each Lender as a successor Administrative Agent).  If no successor   Administrative Agent shall have been so appointed in accordance with the immediately preceding   sentence, and shall have accepted such appointment, within thirty (30) days after the current   Administrative Agent’s giving of notice of resignation, then the current Administrative Agent may, on   behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent, which shall be a   Lender, if any Lender shall be willing to serve, and otherwise shall be an Eligible Assignee; provided that   if the Administrative Agent shall notify the Borrower and the Lenders that no Lender has accepted such   appointment, then such resignation shall nonetheless become effective in accordance with such notice and   (1) the Administrative Agent shall be discharged from its duties and obligations hereunder and under the   other Loan Documents and (2) all payments, communications and determinations provided to be made by,   to or through the Administrative Agent shall instead be made to each Lender and each Issuing Bank   directly, until such time as a successor Administrative Agent has been appointed as provided for above in   this Section; provided, further that such Lenders and Issuing Banks so acting directly shall be and be   deemed to be protected by all indemnities and other provisions herein for the benefit and protection of the   Administrative Agent as if each such Lender or Issuing Bank were itself the Administrative Agent.  Upon   the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative   Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the   rights, powers, privileges and duties of the current Administrative Agent, and the current Administrative   Agent shall be discharged from its duties and obligations under the Loan Documents.  Any resignation by     

 

   - 93 -   an Administrative Agent shall also constitute the resignation as an Issuing Bank and as the Swingline   Lender by the Lender then acting as Administrative Agent (the “Resigning Lender”).  Upon the   acceptance of a successor’s appointment as Administrative Agent hereunder (i) the Resigning Lender   shall be discharged from all duties and obligations of an Issuing Bank and the Swingline Lender   hereunder and under the other Loan Documents and (ii) the successor Administrative Agent shall issue   letters of credit in substitution for all Letters of Credit issued by the Resigning Lender as Issuing Bank   outstanding at the time of such succession (which letters of credit issued in substitutions shall be deemed   to be Letters of Credit issued hereunder) or make other arrangements satisfactory to the Resigning Lender   to effectively assume the obligations of the Resigning Lender with respect to such Letters of Credit.  After   any Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this   Article XII. shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while   it was Administrative Agent under the Loan Documents.  Notwithstanding anything contained herein to   the contrary, the Administrative Agent may assign its rights and duties under the Loan Documents to any   of its Affiliates by giving the Borrower and each Lender prior written notice.   Section 12.9.  Titled Agents.   Each of the Arranger and the Syndication Agent (each a “Titled Agent”) in each such respective   capacity, assumes no responsibility or obligation hereunder, including, without limitation, for servicing,   enforcement or collection of any of the Loans, nor any duties as an agent hereunder for the Lenders.  The   titles given to the Titled Agents are solely honorific and imply no fiduciary responsibility on the part of   the Titled Agents to the Administrative Agent, any Lender, the Issuing Bank, the Borrower or any other   Loan Party and the use of such titles does not impose on the Titled Agents any duties or obligations   greater than those of any other Lender or entitle the Titled Agents to any rights other than those to which   any other Lender is entitled.   Section 12.10.  Specified Derivatives Contracts.   No Specified Derivatives Provider that obtains the benefits of Section 11.5. by virtue of the   provisions hereof or of any Loan Document shall have any right to notice of any action or to consent to,   direct or object to any action hereunder or under any other Loan Document or otherwise in respect of any   Loan Document other than in its capacity as a Lender and, in such case, only to the extent expressly   provided in the Loan Documents.  Notwithstanding any other provision of this Article to the contrary, the   Administrative Agent shall not be required to verify the payment of, or that other satisfactory   arrangements have been made with respect to, Specified Derivatives Contracts unless the Administrative   Agent has received written notice of such Specified Derivatives Contracts, together with such supporting   documentation as the Administrative Agent may request, from the applicable Specified Derivatives   Provider.   ARTICLE XIII.  MISCELLANEOUS   Section 13.1.  Notices.   Unless otherwise provided herein (including without limitation as provided in Section 9.5.),   communications provided for hereunder shall be in writing and shall be mailed or delivered as follows:   If to the Borrower:   Saul Holdings Limited Partnership   7501 Wisconsin Avenue   Suite 1500 E     

 

   - 94 -   Bethesda, MD 20814-6522   Attn:  Scott V. Schneider, Chief Financial Officer   Telephone Number: (301) 986-6220   Email: scott.schneider@saulcenters.com   With a copy to:   Debra Stencel   General Counsel   B. F. Saul Company   7501 Wisconsin Avenue   Suite 1500 E   Bethesda, Maryland 20814-6522   Telephone Number:  (301) 986-6083   Email: debra.stencel@bfsaulco.com       And a copy to:   Jeffrey Grill and Eric Green   Pillsbury Winthrop Shaw Pittman   2300 N Street, N.W.   Washington, D.C. 20037   Telephone Number:  (202) 663-9022   Email: Jeffrey.grill@pillsburylaw.com and eric.green@pillsburylaw.com   If to the Administrative Agent:   Wells Fargo Bank, National Association   10 South Wacker Drive, 32nd Floor   Chicago, IL 60606   Attn:  Sam Supple, REIT Finance Group   Telephone Number: (312) 269-4817   Email: sam.supple@wellsfargo.com   with a copy to:   Wells Fargo Bank, N.A.   Commercial Real Estate Portfolio Services   1750 H Street, N.W., Suite 400   Washington, DC 20006   Attn:  Loan Administration Manager   Telephone Number:  (202) 303-3020   If to the Administrative Agent under Article II.:   Wells Fargo Bank, National Association   Minneapolis Loan Center   MAC N9303-110   608 Second Avenue S., 11th Floor   Minneapolis, Minnesota 55402-1916   Attn:  Disbursement Administrator     

 

   - 95 -   Telephone Number: (612) 667-4507   If to Wells Fargo Bank, National Association as Issuing Bank:   Wells Fargo Bank, National Association   401 Linden Street   Winston-Salem, North Carolina 27101   Attn: Standby Letter of Credit Department   Telephone Number:       (800) 776-3862   Email:  sblc-new@wellsfargo.com    Include reference to Letter of Credit Number      If to any other Lender or Issuing Bank:   To such Lender’s or Issuing Bank’s address or telecopy number or email address as set   forth in the applicable Administrative Questionnaire   or, as to each party at such other address as shall be designated by such party in a written notice to the   other parties delivered in compliance with this Section; provided, a Lender or an Issuing Bank shall only   be required to give notice of any such other address to the Administrative Agent and the Borrower.  All   such notices and other communications shall be effective (i) if mailed, upon the first to occur of receipt or   the expiration of three (3) Business Days after the deposit in the United States Postal Service certified   mail, postage prepaid and addressed to the address of the Borrower or the Administrative Agent, the   Issuing Banks and the Lenders at the addresses specified; (ii) if emailed, upon the next Business Day,   provided that such notice is delivered by overnight courier on the next Business Day following such   emailed confirmation; (iii) if hand delivered or sent by overnight courier, when delivered; or (iv) if   delivered in accordance with Section 9.5. to the extent applicable; provided, however, that, in the case of   the immediately preceding clauses (i), (ii) and (iii), non-receipt of any communication as of the result of   any change of address of which the sending party was not notified or as the result of a refusal to accept   delivery shall be deemed receipt of such communication.  Notwithstanding the immediately preceding   sentence, all notices or communications to the Administrative Agent, any Issuing Bank or any Lender   under Article II. shall be effective only when actually received.  None of the Administrative Agent, any   Issuing Bank or any Lender shall incur any liability to any Loan Party (nor shall the Administrative Agent   incur any liability to the Issuing Banks or the Lenders) for acting upon any telephonic notice referred to in   this Agreement which the Administrative Agent, such Issuing Bank or such Lender, as the case may be,   believes in good faith to have been given by a Person authorized to deliver such notice or for otherwise   acting in good faith hereunder.  Failure of a Person designated to get a copy of a notice to receive such   copy shall not affect the validity of notice properly given to another Person.   Section 13.2.  Expenses.   The Borrower agrees (a) to pay or reimburse the Administrative Agent for all of its reasonable   out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution   of, and any amendment, supplement or modification to, any of the Loan Documents (including due   diligence expense and reasonable travel expenses related to closing), and the consummation of the   transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel   to the Administrative Agent and all costs and expenses of the Administrative Agent in connection with   the use of IntraLinks, SyndTrak or other similar information transmission systems in connection with the   Loan Documents, (b) to pay or reimburse the Administrative Agent, the Issuing Banks and the Lenders   for all their reasonable costs and expenses incurred in connection with the enforcement or preservation of   any rights under the Loan Documents, including the reasonable fees and disbursements of their respective     

 

   - 96 -   counsel (including the allocated fees and expenses of in-house counsel, to the extent in substitution for,   and not in duplication of, outside counsel) and any payments in indemnification or otherwise payable by   the Lenders to the Administrative Agent pursuant to the Loan Documents; provided, however, that the   Borrower shall not be required to pay the expenses of more than one counsel to the Administrative Agent   and one separate counsel for the Lenders (in addition to the expenses for any local or special counsel) in   connection with such enforcement or preservation unless the Lenders reasonably determine that joint   representation is not appropriate under the circumstances, (c) to pay, and indemnify and hold harmless the   Administrative Agent, the Issuing Banks and the Lenders from, any and all recording and filing fees and   any and all liabilities with respect to, or resulting from any failure to pay or delay in paying, documentary,   stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in   connection with the execution and delivery of any of the Loan Documents, or consummation of any   amendment, supplement or modification of, or any waiver or consent under or in respect of, any Loan   Document and (d) to the extent not already covered by any of the preceding subsections, to pay or   reimburse the fees and disbursements of counsel to the Administrative Agent, any Issuing Bank and any   Lender incurred in connection with the representation of the Administrative Agent, such Issuing Bank or   such Lender in any matter relating to or arising out of any bankruptcy or other proceeding of the type   described in Sections 11.1.(e) or 11.1.(f), including, without limitation (i) any motion for relief from any   stay or similar order, (ii) the negotiation, preparation, execution and delivery of any document relating to   the Obligations and (iii) the negotiation and preparation of any debtor-in-possession financing or any plan   of reorganization of the Borrower or any other Loan Party, whether proposed by the Borrower, such Loan   Party, the Lenders or any other Person, and whether such fees and expenses are incurred prior to, during   or after the commencement of such proceeding or the confirmation or conclusion of any such proceeding;   provided, however, that the Borrower shall not be required to pay the expenses of more than one counsel   to the Administrative Agent and one separate counsel for the Lenders (in addition to the expenses for any   local or special counsel) in connection with such enforcement or preservation unless the Lenders   reasonably determine that joint representation is not appropriate under the circumstances.  If the Borrower   shall fail to pay any amounts required to be paid by it pursuant to this Section, the Administrative Agent   and/or the Lenders may pay such amounts on behalf of the Borrower and such amounts shall be deemed   to be Obligations owing hereunder.   Section 13.3.  Stamp, Intangible and Recording Taxes.   The Borrower will pay any and all stamp, excise, intangible, registration, recordation and similar   taxes, fees or charges and shall indemnify the Administrative Agent and each Lender against any and all   liabilities with respect to or resulting from any delay in the payment or omission to pay any such taxes,   fees or charges, which may be payable or determined to be payable in connection with the execution,   delivery, recording, performance or enforcement of this Agreement, the Notes and any of the other Loan   Documents, the amendment, supplement, modification or waiver of or consent under this Agreement, the   Notes or any of the other Loan Documents or the perfection of any rights or Liens under this Agreement,   the Notes or any of the other Loan Documents.   Section 13.4.  Setoff.   Subject to Section 3.3. and in addition to any rights now or hereafter granted under Applicable   Law and not by way of limitation of any such rights, the Borrower hereby authorizes the Administrative   Agent, each Issuing Bank, each Lender, each Affiliate of the Administrative Agent, each Issuing Bank or   any Lender, at any time or from time to time while an Event of Default is continuing, without prior notice   to the Borrower or to any other Person, any such notice being hereby expressly waived, but in the case of   an Issuing Bank, a Lender, an Affiliate of an Issuing Bank or a Lender, subject to receipt of the prior   written consent of the Requisite Lenders exercised in their sole discretion, to set off and to appropriate   and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced     

 

   - 97 -   by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or   owing by the Administrative Agent, such Issuing Bank, such Lender, any Affiliate of the Administrative   Agent, such Issuing Bank or such Lender, to or for the credit or the account of the Borrower against and   on account of any of the Obligations, irrespective of whether or not any or all of the Loans and all other   Obligations have been declared to be, or have otherwise become, due and payable as permitted by   Section 11.2., and although such Obligations shall be contingent or unmatured.  Notwithstanding anything   to the contrary in this Section, if any Defaulting Lender shall exercise any such right of setoff, (x) all   amounts so set off shall be paid over immediately to the Administrative Agent for further application in   accordance with the provisions of Section 3.9. and, pending such payment, shall be segregated by such   Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative   Agent, the Issuing Bank and the Lenders and (y) such Defaulting Lender shall provide promptly to the   Administrative Agent a statement describing in reasonable detail the Obligations owing to such   Defaulting Lender as to which it exercised such right of setoff.   Section 13.5.  Litigation; Jurisdiction; Other Matters; Waivers.   (a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR   CONTROVERSY BETWEEN OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT,   ANY OF THE ISSUING BANKS OR ANY OF THE LENDERS WOULD BE BASED ON DIFFICULT   AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND EXPENSE   TO THE PARTIES.  ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW,   EACH OF THE LENDERS, THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND THE   BORROWER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR   PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN   ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING OUT OF   THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR BY REASON OF ANY OTHER SUIT,   CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG THE BORROWER,   THE ADMINISTRATIVE AGENT, ANY OF THE ISSUING BANKS OR ANY OF THE LENDERS   OF ANY KIND OR NATURE RELATING TO ANY OF THE LOAN DOCUMENTS.   (b) THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND   UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION   OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY,   WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE   AGENT, ANY LENDER, ANY ISSUING BANK, OR ANY RELATED PARTY OF THE   FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN   DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM   OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK   COUNTY, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF   NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE   PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE   JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY   SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH   NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE   LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL,   NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING   SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON   THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS   AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE   ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK MAY OTHERWISE HAVE   TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY     

 

   - 98 -   OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR   ITS PROPERTIES IN THE COURTS OF ANY APPROPRIATE JURISDICTION.  EACH PARTY   FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE   VENUE OF ANY ACTION BROUGHT IN ACCORDANCE WITH THE FIRST SENTENCE OF THIS   SUBSECTION (b) OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR   PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO   PLEAD OR CLAIM THE SAME.  THE CHOICE OF FORUM SET FORTH IN THIS SECTION   SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE   ADMINISTRATIVE AGENT, ANY ISSUING BANK OR ANY LENDER OR THE ENFORCEMENT   BY THE ADMINISTRATIVE AGENT, ANY ISSUING BANK OR ANY LENDER OF ANY   JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.   (c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH   PARTY WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE   LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS   AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN   DOCUMENTS, THE TERMINATION OR EXPIRATION OF ALL LETTERS OF CREDIT AND THE   TERMINATION OF THIS AGREEMENT.   Section 13.6.  Successors and Assigns.   (a) Successors and Assigns Generally.  The provisions of this Agreement shall be binding   upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted   hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of   its rights or obligations hereunder without the prior written consent of the Administrative Agent and each   Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except   (i) to an Eligible Assignee in accordance with the provisions of the immediately following subsection (b),   (ii) by way of participation in accordance with the provisions of the immediately following subsection (d)   or (iii) by way of pledge or assignment of a security interest subject to the restrictions of the immediately   following subsection (f) (and, subject to the last sentence of the immediately following subsection (b),   any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this   Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties   hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in the   immediately following subsection (d) and, to the extent expressly set forth herein, the Related Parties of   the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by   reason of this Agreement.   (b) Assignments by Lenders.  Any Lender may at any time assign to one or more Eligible   Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of   its Commitment and the Loans at the time owing to it); provided that any such assignment shall be   subject to the following conditions:   (i) Minimum Amounts.   (A) in the case of an assignment of the entire remaining amount of an    assigning Revolving Lender’s Revolving Commitment and the Loans at the time owing   to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved   Fund, no minimum amount need be assigned; and   (B) in any case not described in the immediately preceding subsection (A),   the aggregate amount of the Revolving Commitment (which for this purpose includes     

 

   - 99 -   Loans outstanding thereunder) or, if the applicable Revolving Commitment is not then in   effect, the principal outstanding balance of the Loans of the assigning Lender subject to   each such assignment (in each case, determined as of the date the Assignment and   Assumption with respect to such assignment is delivered to the Administrative Agent or,   if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date)   shall not be less than $15,000,000 in the case of any assignment of a Revolving   Commitment, unless each of the Administrative Agent and, so long as no Default or   Event of Default shall exist, the Borrower otherwise consents (each such consent not to   be unreasonably withheld or delayed); provided, however, that if, after giving effect to   such assignment, the amount of the Commitment held by such assigning Lender or the   outstanding principal balance of the Loans of such assigning Lender, as applicable, would   be less than $10,000,000 in the case of a Commitment or Revolving Loans, then such   assigning Lender shall assign the entire amount of its Commitment and the Loans at the   time owing to it.   (ii) Proportionate Amounts.  Each partial assignment shall be made as an assignment   of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement   with respect to the Loan or the Revolving Commitment assigned.   (iii) Required Consents.  No consent shall be required for any assignment except to   the extent required by clause (i)(B) of this subsection (b) and, in addition:   (A) the consent of the Borrower (such consent not to be unreasonably   withheld or delayed) shall be required unless (x) a Default or Event of Default shall exist   at the time of such assignment or (y) such assignment is to a Lender; provided that the   Borrower shall be deemed to have consented to any such assignment unless it shall object   thereto by written notice to the Administrative Agent within five (5) Business Days after   having received notice, by delivery of a paper copy, or by email, thereof;   (B) the consent of the Administrative Agent (such consent not to be   unreasonably withheld or delayed) shall be required for assignments in respect of a   Revolving Commitment if such assignment is to a Person that is not already a Lender   with a Commitment, an Affiliate of such a Lender or an Approved Fund with respect to   such a Lender; and   (C) the consent of the Swingline Lender and the Issuing Banks (such consent   not to be unreasonably withheld or delayed) shall be required for any assignment in   respect of a Revolving Commitment.   (iv) Assignment and Acceptance; Notes.  The parties to each assignment shall   execute and deliver to the Administrative Agent an Assignment and Acceptance, together with   a processing and recordation fee (which, other than in connection with an assignment pursuant   to Section 5.6., shall not be borne by the Borrower) of $4,500 for each assignment (or $7,500 if   the assignor is a Defaulting Lender), and the assignee, if it is not a Lender, shall deliver to the   Administrative Agent an Administrative Questionnaire.  If requested by the transferor Lender   or the Assignee, upon the consummation of any assignment, the transferor Lender, the   Administrative Agent and the Borrower shall make appropriate arrangements so that new Notes   are issued to the Assignee and such transferor Lender, as appropriate.   (v) No Assignment to Certain Persons.  No such assignment shall be made to (A) the   Borrower or any of the Borrower’s Affiliates or Subsidiaries or (B) to any Defaulting Lender or     

 

   - 100 -   any of its Subsidiaries, or to any Person who, upon becoming a Lender hereunder, would   constitute any of the foregoing Persons described in this clause (B).   (vi) No Assignment to Natural Persons.  No such assignment shall be made to a   natural person.   (vii) Certain Additional Payments.  In connection with any assignment of rights and   obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless   and until, in addition to the other conditions thereto set forth herein, the parties to the   assignment shall make such additional payments to the Administrative Agent in an aggregate   amount sufficient, upon distribution thereof as appropriate (which may be outright payment,   purchases by the assignee of participations or subparticipations, or other compensating actions,   including funding, with the consent of the Borrower and the Administrative Agent, the   applicable pro rata share of Loans previously requested but not funded by the Defaulting   Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to   (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the   Administrative Agent, the Issuing Banks, the Swingline Lender and each other Lender   hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro   rata share of all Loans and participations in Letters of Credit and Swingline Loans in   accordance with its Revolving Commitment Percentage.  Notwithstanding the foregoing, in the   event that any assignment of rights and obligations of any Defaulting Lender hereunder shall   become effective under Applicable Law without compliance with the provisions of this   paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all   purposes of this Agreement until such compliance occurs.      (viii) Assignments by Specified Derivatives Provider.  If the assigning Lender (or its   Affiliate) is a Specified Derivatives Provider and if after giving effect to such assignment such   Lender will hold no further Loans or Revolving Commitments under this Agreement, such   Lender shall undertake such assignment only contemporaneously with an assignment by such   Lender (or its Affiliate, as the case may be) of all of its Specified Derivatives Contracts to the   Assignee or another Lender (or Affiliate thereof).   Subject to acceptance and recording thereof by the Administrative Agent pursuant to the immediately   following subsection (c), from and after the effective date specified in each Assignment and Assumption,   the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by   such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and   the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and   Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment   and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such   Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 5.4.,   13.2. and 13.10. and the other provisions of this Agreement and the other Loan Documents as provided in   Section 13.11. with respect to facts and circumstances occurring prior to the effective date of such   assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no   assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder   arising from that Lender having been a Defaulting Lender.  Any assignment or transfer by a Lender of   rights or obligations under this Agreement that does not comply with this paragraph shall be treated for   purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in   accordance with the immediately following subsection (d).     

 

   - 101 -   (c) Register.  The Administrative Agent, acting solely for this purpose as an agent of the   Borrower, shall maintain at the Principal Office a copy of each Assignment and Assumption delivered to   it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of,   and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time   (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative   Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the   terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the   contrary.  The Register shall be available for inspection by the Borrower and any Lender, at any   reasonable time and from time to time upon reasonable prior notice.  Each Lender that sells a participation   as described in Section 13.6.(d) shall, acting solely for this purpose as a non-fiduciary agent of the   Borrower, maintain a register on which it enters the name and address of each Participant and the   principal amounts (and stated interest) of each Participant's interest in the Loans or other obligations   under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to   disclose all or any portion of the Participant Register to any Person (including the identity of any   Participant or any information relating to a Participant's interest in any Commitments, Loans, or its other   obligations under this Agreement) except to the extent that such disclosure is necessary to establish that   such Commitment, Loan, or other obligation is in registered form under Section 5f.103-1(c) of the   Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error,   and such Lender shall treat each person whose name is recorded in the Participant Register as the owner   of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For   the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no   responsibility for maintaining a Participant Register.   (d) Participations.  Any Lender may at any time, without the consent of, or notice to, the   Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the   Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of   such Lender’s rights and/or obligations under this Agreement (including all or a portion of its   Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this   Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties   hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the   Issuing Banks and the Lenders shall continue to deal solely and directly with such Lender in connection   with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant   to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to   enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this   Agreement; provided that such agreement or instrument may provide that such Lender will not, without   the consent of the Participant, agree to (w) increase such Lender’s Commitment, (x) extend the date fixed   for the payment of principal on the Loans or portions thereof owing to such Lender, (y) reduce the rate at   which interest is payable thereon or (z) release any Guarantor from its Obligations under the Guaranty, in   each case, as applicable to that portion of such Lender’s rights and/or obligations that are subject to the   participation.  The Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.10.,   5.1., 5.4. (subject to the requirements and limitations therein, including the requirements under   Section 3.10.(g) (it being understood that the documentation required under Section 3.10.(g) shall be   delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its   interest by assignment pursuant to subsection (b) of this Section; provided that such Participant (A) agrees   to be subject to the provisions of Section 5.6. as if it were an assignee under subsection (b) of this   Section; and (B) shall not be entitled to receive any greater payment under Sections 5.1. or 3.10., with   respect to any participation, than its participating Lender would have been entitled to receive, except to   the extent such entitlement to receive a greater payment results from a Regulatory Change that occurs   after the Participant acquired the applicable participation.  Each Lender that sells a participation agrees, at   the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate     

 

   - 102 -   the provisions of Section 5.6. with respect to any Participant.  To the extent permitted by law, each   Participant also shall be entitled to the benefits of Section 13.3. as though it were a Lender.   (e) Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or   any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge   or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or   assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee   or assignee for such Lender as a party hereto or entitled to the rights of an assignee hereunder.   (f) No Registration.  Each Lender agrees that, without the prior written consent of the   Borrower and the Administrative Agent, it will not make any assignment hereunder in any manner or   under any circumstances that would require registration or qualification of, or filings in respect of, any   Loan or Note under the Securities Act or any other securities laws of the United States of America or of   any other jurisdiction.   (g) USA Patriot Act Notice; Compliance.  In order for the Administrative Agent to   comply with “know your customer” and anti-money laundering rules and regulations, including   without limitation, the Patriot Act, prior to any Lender that is organized under the laws of a   jurisdiction outside of the United States of America becoming a party hereto, the Administrative   Agent may request, and such Lender shall provide to the Administrative Agent, its name,   address, tax identification number and/or such other identification information as shall be   necessary for the Administrative Agent to comply with federal law.      Section 13.7.  Amendments and Waivers.   (a) Generally.  Except as otherwise expressly provided in this Agreement, (i) any consent or   approval required or permitted by this Agreement or any other Loan Document to be given by the   Lenders may be given, (ii) any term of this Agreement or of any other Loan Document may be amended,   (iii) the performance or observance by the Borrower, any other Loan Party or any other Subsidiary of any   terms of this Agreement or such other Loan Document may be waived, and (iv) the continuance of any   Default or Event of Default may be waived (either generally or in a particular instance and either   retroactively or prospectively) with, but only with, the written consent of the Requisite Lenders (or the   Administrative Agent at the written direction of the Requisite Lenders), and, in the case of an amendment   to any Loan Document, the written consent of each Loan Party which is party thereto.  Subject to the   immediately following subsections (c) and (d), any term of this Agreement or of any other Loan   Document relating to the rights or obligations of the Revolving Lenders, and not any other Lenders, may   be amended, and the performance or observance by the Borrower or any other Loan Party or any   Subsidiary of any such terms may be waived (either generally or in a particular instance and either   retroactively or prospectively) with, and only with, the written consent of the Requisite Lenders (and, in   the case of an amendment to any Loan Document, the written consent of each Loan Party a party thereto).   (b) Consent of Lenders Directly Affected.  In addition to the foregoing requirements, no   amendment, waiver or consent shall, unless in writing, and signed by each of the Lenders directly and   adversely affected thereby (or the Administrative Agent at the written direction of such Lenders), do any   of the following:   (i) increase the Commitments of any Lender (excluding any increase as a result of   an assignment of Commitments permitted under Section 13.6.) or subject any Lender to any   additional obligations to lend money or issue or participate in letters of credit without the   written consent of such Lender;     

 

   - 103 -   (ii) reduce the principal of, or interest that has accrued or the rates of interest that   will be charged on the outstanding principal amount of, any Loans or other Obligations without   the written consent of each Lender directly affected thereby; provided, however, only the   written consent of the Requisite Lenders shall be required for the waiver of interest payable at   the Post-Default Rate, retraction of the imposition of interest at the Post-Default Rate and   amendment of the definition of “Post-Default Rate”;   (iii) reduce the amount of any Fees payable to any Lender hereunder without the   written consent of such Lender;   (iv) modify the definition of “Revolving Termination Date” (except in accordance   with Section 2.12.), otherwise postpone any date fixed for any payment of principal of, or   interest on, any Loans or for the payment of Fees or any other Obligations, or extend the   expiration date of any Letter of Credit beyond the Revolving Termination Date, in each case   without the written consent of each Lender;   (v) modify the definitions of “Revolving Commitment Percentage” or “Pro Rata   Share” or amend or otherwise modify the provisions of Section 3.2., without the written   consent of each Lender;   (vi) amend this Section or amend the definitions of the terms used in this Agreement   or the other Loan Documents insofar as such definitions affect the substance of this Section,   without the written consent of each Lender;   (vii) modify the definition of the term “Requisite Lenders” or modify in any other   manner the number or percentage of the Lenders required to make any determinations or waive   any rights hereunder or to modify any provision of this Agreement, without the written consent   of each Lender;   (viii) release any Guarantor from its obligations under the Guaranty except as   contemplated by Section 8.12.(b), without the written consent of each Lender;   (ix) waive a Default or Event of Default under Section 11.1.(a), except as provided in   Section 11.7.; or   (x) amend, or waive the Borrower’s compliance with, Section 2.14., without the   written consent of each Lender.   (c) Amendment or Waiver by Administrative Agent.  The Administrative Agent may, subject   to the terms of subsection (b) above, (i) approve any amendment to this Agreement that is administrative   in nature or is otherwise determined by the Administrative Agent in good faith not to be material, and   (ii) waive any obligation or waive or confirm as cured any default of any Loan Party hereunder or under   any of the Loan Documents, to the extent such waiver is determined by the Administrative Agent to be   administrative in nature or such obligation or default is not material.   (d) Amendment of Administrative Agent’s Duties, Etc.  No amendment, waiver or consent   unless in writing and signed by the Administrative Agent, in addition to the Lenders required hereinabove   to take such action (but without duplication), shall affect the rights or duties of the Administrative Agent   under this Agreement or any of the other Loan Documents.  Any amendment, waiver or consent relating   to Section 2.3. or the obligations of the Swingline Lender under this Agreement or any other Loan   Document shall, in addition to the Lenders required hereinabove to take such action (but without     

 

   - 104 -   duplication), require the written consent of the Swingline Lender.  Any amendment, waiver or consent   relating to Section 2.2. or the obligations of the Issuing Banks under this Agreement or any other Loan   Document shall, in addition to the Lenders required hereinabove to take such action (but without   duplication), require the written consent of the Issuing Banks.  Any amendment, waiver or consent with   respect to any Loan Document that (i) diminishes the rights of a Specified Derivatives Provider in a   manner or to an extent dissimilar to that affecting the Lenders or (ii) increases the liabilities or obligations   of a Specified Derivatives Provider shall, in addition to the Lenders required hereinabove to take such   action, require the consent of the Lender that is (or having an Affiliate that is) such Specified Derivatives   Provider.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to   approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or   consent which by its terms requires the consent of all Lenders or each affected Lender may be effected   with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the   Commitments of any Defaulting Lender may not be increased, reinstated or extended without the written   consent of such Defaulting Lender and (y) any waiver, amendment or modification requiring the consent   of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than   other affected Lenders shall require the written consent of such Defaulting Lender.  No waiver shall   extend to or affect any obligation not expressly waived or impair any right consequent thereon and any   amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose   set forth therein.  No course of dealing or delay or omission on the part of the Administrative Agent or   any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto.    Any Event of Default occurring hereunder shall continue to exist until such time as such Event of Default   is waived in writing in accordance with the terms of this Section, notwithstanding any attempted cure or   other action by the Borrower, any other Loan Party or any other Person subsequent to the occurrence of   such Event of Default.  Within fifteen (15) Business Days following written request therefor from the   Borrower (together with such additional information as the Administrative Agent and the Lenders shall   reasonably request in respect thereof), the Administrative Agent and the Lenders shall use commercially   reasonable efforts to respond to any request for a waiver, amendment or other modification of the Loan   Documentation in respect of any Default or Event of Default, provided that the failure of the   Administrative Agent or any Lender to so respond shall not constitute a waiver, amendment or other   modification, or release of any claim under any Loan Document, in respect of any such Default or Event   of Default.  Except as otherwise explicitly provided for herein or in any other Loan Document, no notice   to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar   or other circumstances.   Section 13.8.  Nonliability of Administrative Agent and Lenders.   The relationship between the Borrower, on the one hand, and the Lenders, the Issuing Banks and   the Administrative Agent, on the other hand, shall be solely that of borrower and lender.  None of the   Administrative Agent, any Issuing Bank or any Lender shall have any fiduciary responsibilities to the   Borrower and no provision in this Agreement or in any of the other Loan Documents, and no course of   dealing between or among any of the parties hereto, shall be deemed to create any fiduciary duty owing   by the Administrative Agent, any Issuing Bank or any Lender to any Lender, the Borrower, any   Subsidiary or any other Loan Party.  None of the Administrative Agent, any Issuing Bank or any Lender   undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in   connection with any phase of the Borrower’s business or operations.   Section 13.9.  Confidentiality.   Except as otherwise provided by Applicable Law, the Administrative Agent, each Issuing Bank   and each Lender shall maintain the confidentiality of all Information (as defined below) in accordance   with its customary procedure for handling confidential information of this nature and in accordance with     

 

   - 105 -   safe and sound banking practices but in any event may make disclosure: (a) to its Affiliates and to its and   its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives   that have a need to know in connection with the transactions contemplated by this Agreement and the   other Loan Documents (provided that the Persons to whom such disclosure is made shall be informed of   the confidential nature of such Information and instructed to keep such Information confidential);   (b) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any   actual or proposed Assignee, Participant or other transferee in connection with a potential transfer of any   Commitment or participation therein as permitted hereunder, or (ii) any actual or prospective counterparty   (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations; (c) as   required or requested by any Governmental Authority or representative thereof or pursuant to legal   process or in connection with any legal proceedings, or as otherwise required by Applicable Law; (d) to   the Administrative Agent’s, such Issuing Bank’s or such Lender’s independent auditors and other   professional advisors (provided they shall be notified of the confidential nature of the information); (e) in   connection with the exercise of any remedies under any Loan Document (or any Specified Derivatives   Contract) or any action or proceeding relating to any Loan Document (or any such Specified Derivatives   Contract) or the enforcement of rights hereunder or thereunder; (f) to the extent such Information   (i) becomes publicly available other than as a result of a breach of this Section by the Administrative   Agent, such Issuing Bank or such Lender or (ii) becomes available to the Administrative Agent, any   Issuing Bank, any Lender or any Affiliate of the Administrative Agent, any Issuing Bank or any Lender   on a nonconfidential basis from a source other than the Borrower or any Affiliate of the Borrower which   source is not actually known by the Administrative Agent, such Issuing Bank or such Lender, as   applicable, to be subject to a confidentiality obligation in respect thereof; (g) to the extent requested by, or   required to be disclosed to, any nationally recognized rating agency or regulatory or similar authority   (including any self-regulatory authority, such as the National Association of Insurance Commissioners)   having or purporting to have jurisdiction over it; (h) to bank trade publications, such information to   consist of deal terms and other information customarily found in such publications; (i) to any other party   hereto; and (j) with the consent of the Borrower.  Notwithstanding the foregoing, the Administrative   Agent, each Issuing Bank and each Lender may disclose any such confidential information, to   Governmental Authorities in connection with any regulatory examination of the Administrative Agent,   such Issuing Bank or such Lender or in accordance with the generally applicable regulatory compliance   policy of the Administrative Agent, such Issuing Bank or such Lender.  As used in this Section, the term   “Information” means all information received from the Borrower, any other Loan Party, any other   Subsidiary or Affiliate relating to any Loan Party or any of their respective businesses, other than any   such information that is available to the Administrative Agent, any Lender or any Issuing Bank on a   nonconfidential basis prior to disclosure by the Borrower, any other Loan Party, any other Subsidiary or   any Affiliate.  Any Person required to maintain the confidentiality of Information as provided in this   Section shall be considered to have complied with its obligation to do so if such Person has exercised the   same degree of care to maintain the confidentiality of such Information as such Person would accord to its   own confidential information.   Section 13.10.  Indemnification.   (a) The Borrower shall and hereby agrees to indemnify, defend and hold harmless the   Administrative Agent, the Issuing Banks, the Lenders, all of the Affiliates of each of the Administrative   Agent, any of the Issuing Banks or any of the Lenders, and their respective directors, officers,   shareholders, agents, employees and counsel (each referred to herein as an “Indemnified Party”) from   and against any and all of the following (collectively, the “Indemnified Costs”):  losses, costs, claims,   penalties, damages, liabilities, deficiencies, judgments or reasonable expenses of every kind and nature   (including, without limitation, amounts paid in settlement, court costs and the fees and disbursements of   counsel incurred in connection with any litigation, investigation, claim or proceeding or any advice   rendered in connection therewith, but excluding Indemnified Costs indemnification in respect of which is     

 

   - 106 -   specifically covered by Section 3.10. or 5.1. or expressly excluded from the coverage of such Sections)   incurred by an Indemnified Party in connection with, arising out of, or by reason of, any suit, cause of   action, claim, arbitration, investigation or settlement, consent decree or other proceeding (the foregoing   referred to herein as an “Indemnity Proceeding”) which is in any way related directly or indirectly to:   (i) this Agreement or any other Loan Document or the transactions contemplated thereby; (ii) the making   of any Loans or issuance of Letters of Credit hereunder; (iii) any actual or proposed use by the Borrower   of the proceeds of the Loans or Letters of Credit; (iv) the Administrative Agent’s, any Issuing Bank’s or   any Lender’s entering into this Agreement; (v) the fact that the Administrative Agent, the Issuing Banks   and the Lenders have established the credit facility evidenced hereby in favor of the Borrower pursuant to   the Loan Documents; (vi) the fact that the Administrative Agent, the Issuing Banks and the Lenders are   creditors of the Borrower and have or are alleged to have information regarding the financial condition,   strategic plans or business operations of the Borrower and the Subsidiaries pursuant to the Loan   Documents; (vii) the fact that the Administrative Agent, the Issuing Banks and the Lenders are material   creditors of the Borrower and are alleged to influence directly or indirectly the business decisions or   affairs of the Borrower and the Subsidiaries or their financial condition; (viii) the exercise of any right or   remedy the Administrative Agent, the Issuing Banks or the Lenders may have under this Agreement or   the other Loan Documents; (ix) any civil penalty or fine assessed by the OFAC against, and all costs and   expenses (including reasonable counsel fees and disbursements) incurred in connection with defense   thereof by, the Administrative Agent, any Issuing Bank or any Lender as a result of conduct of the   Borrower, any other Loan Party or any other Subsidiary that violates a sanction administered or enforced   by the OFAC; or (x) any violation or non-compliance by the Borrower or any Subsidiary of any   Applicable Law (including any Environmental Law) including, but not limited to, any Indemnity   Proceeding commenced by (A) the Internal Revenue Service or state taxing authority or (B) any   Governmental Authority or other Person under any Environmental Law, including any Indemnity   Proceeding commenced by a Governmental Authority or other Person seeking remedial or other action to   cause the Borrower or its Subsidiaries (or its respective properties) (or the Administrative Agent and/or   the Lenders and/or the Issuing Banks as successors to the Borrower) to be in compliance with such   Environmental Laws; provided, however, that the Borrower shall not be obligated to indemnify any   Indemnified Party for any acts or omissions of such Indemnified Party in connection with matters   described in this subsection to the extent arising from (x) the gross negligence or willful misconduct of   any Indemnified Party, as determined by a court of competent jurisdiction in a final, non-appealable   judgment or (y) any dispute solely among the Indemnified Parties (other than claims against an   Indemnified Party in its capacity as the Administrative Agent) and not arising out of any act or omission   of the Parent, the Borrower, any other Loan Party or any other Subsidiary of the Parent or any of their   respective Affiliates.   (b) The Borrower’s indemnification obligations under this Section shall apply to all   Indemnity Proceedings arising out of, or related to, the foregoing whether or not an Indemnified Party is a   named party in such Indemnity Proceeding.  In this connection, this indemnification shall cover all   Indemnified Costs of any Indemnified Party in connection with any deposition of any Indemnified Party   or compliance with any subpoena (including any subpoena requesting the production of documents).  This   indemnification shall, among other things, apply to any Indemnity Proceeding commenced by other   creditors of the Borrower or any Subsidiary, any shareholder of the Borrower or any Subsidiary (whether   such shareholder(s) are prosecuting such Indemnity Proceeding in their individual capacity or derivatively   on behalf of the Borrower), any account debtor of the Borrower or any Subsidiary or by any   Governmental Authority.  If indemnification is to be sought hereunder by an Indemnified Party, then such   Indemnified Party shall promptly notify the Borrower of the commencement of any Indemnity   Proceeding; provided, however, that the failure to so notify the Borrower shall not otherwise relieve the   Borrower from any liability that it may have to such Indemnified Party pursuant to this Section 13.10.     

 

   - 107 -   (c) This indemnification shall apply to any Indemnity Proceeding arising during the   pendency of any bankruptcy proceeding filed by or against the Borrower and/or any Subsidiary.   (d) All out-of-pocket fees and expenses of, and all amounts paid to third persons by, an   Indemnified Party shall be advanced by the Borrower at the request of such Indemnified Party   notwithstanding any claim or assertion by the Borrower that such Indemnified Party is not entitled to   indemnification hereunder upon receipt of an undertaking by such Indemnified Party that such   Indemnified Party will reimburse the Borrower if it is actually and finally determined by a court of   competent jurisdiction that such Indemnified Party is not so entitled to indemnification hereunder.   (e) An Indemnified Party may conduct its own investigation and defense of, and may   formulate its own strategy with respect to, any Indemnity Proceeding covered by this Section and, as   provided above, all Indemnified Costs incurred by such Indemnified Party shall be reimbursed by the   Borrower.  No action taken by legal counsel chosen by an Indemnified Party in investigating or defending   against any such Indemnity Proceeding shall vitiate or in any way impair the obligations and duties of the   Borrower hereunder to indemnify and hold harmless each such Indemnified Party; provided, however,   that if (i) the Borrower is required to indemnify an Indemnified Party pursuant hereto and (ii) the   Borrower has provided evidence reasonably satisfactory to such Indemnified Party that the Borrower has   the financial wherewithal to reimburse such Indemnified Party for any amount paid by such Indemnified   Party with respect to such Indemnity Proceeding, such Indemnified Party shall not settle or compromise   any such Indemnity Proceeding without the prior written consent of the Borrower (which consent shall   not be unreasonably withheld or delayed).  Notwithstanding the foregoing, an Indemnified Party may   settle or compromise any such Indemnity Proceeding without the prior written consent of the Borrower   where (x) no monetary relief is sought against such Indemnified Party in such Indemnity Proceeding or   (y) there is an allegation of a violation of law by such Indemnified Party.   (f) If and to the extent that the obligations of the Borrower under this Section are   unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the   payment and satisfaction of such obligations which is permissible under Applicable Law.   (g) The Borrower’s obligations under this Section shall survive any termination of this   Agreement and the other Loan Documents and the payment in full in cash of the Obligations, and are in   addition to, and not in substitution of, any of the other obligations set forth in this Agreement or any other   Loan Document to which it is a party.   References in this Section 13.10. to “Lender” or “Lenders” shall be deemed to include such Persons (and   their Affiliates) in their capacity as Specified Derivatives Providers.   Section 13.11.  Termination; Survival.   This Agreement shall terminate at such time as (a) all of the Commitments have been terminated,   (b) all Letters of Credit have terminated or expired or been canceled, (c) none of the Lenders is obligated   any longer under this Agreement to make any Loans and none of the Issuing Banks is obligated any   longer under this Agreement to issue Letters of Credit and (d) all Obligations (other than obligations   which survive as provided in the following sentence) have been paid and satisfied in full. The indemnities   to which the Administrative Agent, the Issuing Banks and the Lenders are entitled under the provisions of   Sections 3.10., 5.1., 5.4., 12.6., 13.2. and 13.10. and any other provision of this Agreement and the other   Loan Documents, and the provisions of Section 13.5., shall continue in full force and effect and shall   protect the Administrative Agent, the Issuing Banks and the Lenders (i) notwithstanding any termination   of this Agreement, or of the other Loan Documents, against events arising after such termination as well     

 

   - 108 -   as before and (ii) at all times after any such party ceases to be a party to this Agreement with respect to all   matters and events existing on or prior to the date such party ceased to be a party to this Agreement.   Section 13.12.  Severability of Provisions.   If any provision of this Agreement or the other Loan Documents shall be determined by a court of   competent jurisdiction to be invalid or unenforceable, that provision shall be deemed severed from the   Loan Documents, and the validity, legality and enforceability of the remaining provisions shall remain in   full force as though the invalid, illegal, or unenforceable provision had never been part of the Loan   Documents.   Section 13.13.  GOVERNING LAW.   THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE   WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED,   AND TO BE FULLY PERFORMED, IN SUCH STATE.   Section 13.14.  Counterparts.   To facilitate execution, this Agreement and any amendments, waivers, consents or supplements   may be executed in any number of counterparts as may be convenient or required (which may be   effectively delivered in portable document format (“PDF”) or other similar electronic means).  It shall not   be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required   to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single   document.  It shall not be necessary in making proof of this document to produce or account for more   than a single counterpart containing the respective signatures of, or on behalf of, each of the parties   hereto.   Section 13.15.  Obligations with Respect to Loan Parties.   The obligations of the Borrower to direct or prohibit the taking of certain actions by the other   Loan Parties as specified herein shall be absolute and not subject to any defense the Borrower may have   that the Borrower does not control such Loan Parties.   Section 13.16.  Independence of Covenants.   All covenants hereunder shall be given in any jurisdiction independent effect so that if a   particular action or condition is prohibited by any of such covenants, the fact that it would be permitted   by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the   occurrence of a Default or an Event of Default if such action is taken or condition exists contrary to such   prohibition.   Section 13.17.  Limitation of Liability.   None of the Administrative Agent, any Issuing Bank or any Lender, or any Affiliate, officer,   director, employee, attorney, or agent of the Administrative Agent, any Issuing Bank or any Lender shall   have any liability with respect to, and the Borrower hereby waives, releases, and agrees not to sue any of   them upon, any claim for any special, indirect, incidental, consequential or punitive damages suffered or   incurred by the Borrower in connection with, arising out of, or in any way related to, this Agreement, any   of the other Loan Documents, or any of the transactions contemplated by this Agreement or any of the   other Loan Documents.  The Borrower shall not have any liability with respect to any claim for any     

 

   - 109 -   special, indirect, incidental, consequential or punitive damages suffered or incurred by the Administrative   Agent, any Issuing Bank or any Lender or any of the Administrative Agent’s, any Issuing Bank’s or any   Lender’s Affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of   any claim in connection with, arising out of, or in any way related to, this Agreement, any of the other   Loan Documents, or any of the transactions contemplated by this Agreement or financed hereby (other   than punitive damages of a third party awarded against any Indemnified Party for which the Borrower   may be responsible to the extent covered by Section 13.10.).   Section 13.18.  Entire Agreement.   This Agreement, the Notes, the other Loan Documents embody the final, entire agreement among   the parties hereto and supersede any and all prior commitments, agreements, representations, and   understandings, whether written or oral, relating to the subject matter hereof and thereof and may not be   contradicted or varied by evidence of prior, contemporaneous, or subsequent oral agreements or   discussions of the parties hereto.  There are no oral agreements among the parties hereto.   Section 13.19.  Construction.   The Administrative Agent, each Issuing Bank, the Borrower and each Lender acknowledge that   each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity   to review this Agreement and the other Loan Documents with its legal counsel and that this Agreement   and the other Loan Documents shall be construed as if jointly drafted by the Administrative Agent, each   Issuing Bank, the Borrower and each Lender.   Section 13.20.  Headings.   The paragraph and section headings in this Agreement are provided for convenience of reference   only and shall not affect its construction or interpretation.   NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT AND THE OTHER   LOAN DOCUMENTS, THE AGENT AND THE LENDERS SHALL LOOK SOLELY TO THE   BORROWER AND THE OTHER LOAN PARTIES FOR THE ENFORCEMENT OF ANY CLAIM   AGAINST THE BORROWER AND SUCH LOAN PARTY UNDER OR IN RESPECT OF ANY OF   THE LOAN DOCUMENTS AND ACCORDINGLY NEITHER THE DIRECTORS, OFFICERS,   EMPLOYEES, NOR SHAREHOLDERS OF THE BORROWER OR ANY OTHER LOAN PARTY   SHALL HAVE ANY PERSONAL LIABILITY FOR OBLIGATIONS ENTERED INTO BY OR ON   BEHALF OF THE BORROWER OR ANY OTHER LOAN PARTY.   [Signatures on Following Pages]        

 

      IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Credit   Agreement to be executed by their authorized officers all as of the day and year first above written.   SAUL HOLDINGS LIMITED PARTNERSHIP   By: Saul Centers, Inc., General Partner   By:  /s/ B. Francis Saul II    Name: B. Francis Saul II    Title: Chairman and CEO   [Signatures Continued on Next Page]     

 

      [Signature Page to Amended and Restated Credit Agreement with Saul Holdings Limited   Partnership]   WELLS FARGO BANK, NATIONAL ASSOCIATION,   as Administrative Agent, as an Issuing Bank and as a   Lender   By:  /s/ Sam Supple    Name: Sam Supple    Title: Senior Vice President   [Signatures Continued on Next Page]     

 

      [Signature Page to Amended and Restated Credit Agreement with Saul Holdings Limited   Partnership]   JPMORGAN CHASE BANK, NATIONAL   ASSOCIATION, as a Lender and as Syndication Agent   By: /s/ Elizabeth Johnson    Name: Elizabeth Johnson    Title: Authorized Officer   [Signatures Continued on Next Page]     

 

      [Signature Page to Amended and Restated Credit Agreement with Saul Holdings Limited   Partnership]   CAPITAL ONE, N.A., as a Lender    By: /s/ Paula W. Simon    Name: Paula W. Simon    Title: Vice President   [Signatures Continued on Next Page]     

 

      [Signature Page to Amended and Restated Credit Agreement with Saul Holdings Limited   Partnership]   CITIZENS BANK OF PENNSYLVANIA, as a Lender    By: /s/ P. Zach David    Name: P. Zach David    Title: Senior Vice President           

 

      SCHEDULE I   Commitments      Lender Revolving Commitment   Wells Fargo Bank, National Association $100,000,000   JPMorgan Chase Bank, National Association $85,000,000   Capital One, N.A. $60,000,000   Citizens Bank of Pennsylvania $30,000,000   Total $275,000,000     

 

      SCHEDULE 1.1.   List of Loan Parties      1. 11503 Rockville Pike LLC (DE)   2. 1500 Rockville Pike LLC (DE)   3. Avenel VI, Inc. (MD)   4. Briggs Chaney Plaza, LLC (MD)   5. Kentlands Lot 1, LLC (MD)   6. Rockville Pike Holdings LLC (DE)   7. Saul Subsidiary I Limited Partnership (MD)   8. Saul Subsidiary II Limited Partnership (MD)   9. Smallwood Village Center LLC (DE)   10. Westview Village Center LLC (DE)     

 

      SCHEDULE 7.1.(b)   Ownership Structure      (See attached)     

 

    

 

      SCHEDULE 7.1.(f)   Properties      (See attached)     

 

    

 

    

 

    

 

      SCHEDULE 7.1.(g)   Indebtedness and Guaranties      (See attached)     

 

    

 

      SCHEDULE 7.1.(h)   Material Contracts      1. Saul Subsidiary II Limited Partnership promissory note dated October 25, 2013, to State Farm   Life Insurance Company (Van Ness construction loan with no outstanding amounts as of the date of the   Credit Agreement).     

 

      SCHEDULE 7.1.(i)   Litigation      None.     

 

      SCHEDULE 7.1.(r)   Affiliate Transactions      1. Shared Services Agreement, dated as of July 1, 2004, between B. F. Saul Company and Saul   Centers, Inc., as amended.   2. Corporate headquarters sublease by B. F. Saul Company to Saul Holdings Limited Partnership, as   amended.     

 

      SCHEDULE 10.2.   Certain Permitted Liens      A. Saul Holdings Limited Partnership Property Loans:   1. AEGON USA Realty Advisors, Inc: Broadlands Village   2. AEGON USA Realty Advisors, Inc: The Glen   3. AEGON USA Realty Advisors, Inc: Kentlands Square I   4. AEGON USA Realty Advisors, Inc: Olde Forte Village   5. AEGON USA Realty Advisors, Inc: Cranberry Square   6. Aviva: Leesburg Pike   7. Aviva: Avenel Business Park   8. Metropolitan Life Insurance Company: Washington Square   9. Metropolitan Life Insurance Company: Palm Springs Center   10. Metropolitan Life Insurance Company: Jamestown Place   11. Metropolitan Life Insurance Company: Briggs Chaney Marketplace   12. Metropolitan Life Insurance Company: Ashburn Village   13. Nationwide Life Insurance Company: Orchard Park   14. Teachers Insurance and Annuity Association: Boca Valley Plaza   15. Teachers Insurance and Annuity Association: Hunt Club Corners   16. Teachers Insurance and Annuity Association: Lansdowne Town Center   17. Teachers Insurance and Annuity Association: Shops at Monocacy   18. Allstate Life Insurance Company: Boulevard & Shops at Fairfax   19. Allstate Life Insurance Company: Countryside   20. Allstate Life Insurance Company: BJ’s Warehouse   21. Thrivent Financial for Lutherans: Great Falls Center   22. Thrivent Financial for Lutherans: Village Center   23. Wells Fargo: Thruway    24. Principal Life Insurance: Ravenwood   25. Principal Life Insurance: Severna Park   26. Capital One Bank: Metro Pike Center   27. Capital One Bank: Northrock   28. Prudential Life: Clarendon Center   29. Prudential Life: Kentlands Square II   30. Prudential Life: Seven Corners Center   31. Prudential Life: Beacon Center   32. Prudential Life: Seabreeze Plaza   B. Saul Subsidiary I Limited Partnership Property Loan   1. John Hancock Real Estate Finance Group: White Oak   2. RiverSource Life: Hampshire Langley   C. Saul Subsidiary II Limited Partnership Property Loan   1. State Farm Life: Park Van Ness              

 

      D. Other Liens:      A number of the properties are subject to restrictions and obligations common to commercial and retail   properties that Borrower believes fit within the definition of Permitted Liens, but arise from a variety of   sources, such as leases of major tenants, deeds of subdivision and owner’s dedications, building   restriction lines set forth in recorded plats, and requirements of local jurisdictions in connection with   development of a property.  In addition, in one case, a purchase money deed of trust in favor of the   Borrower was recorded as a place holder for recordation tax purposes.      We also note that the Sears ground lease of a portion of the White Oak property includes a purchase   option and a right to encumber the ground leased property.     

 

      EXHIBIT A      FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT      THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of _______, 20__ (the   “Agreement”) by and among _________________________ (the “Assignor”),   _________________________ (the “Assignee”), SAUL HOLDINGS LIMITED PARTNERSHIP (the   “Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the   “Administrative Agent”).      WHEREAS, the Assignor is a Lender under that certain Amended and Restated Credit   Agreement dated as of June 24, 2014 (as amended, restated, supplemented or otherwise modified from   time to time, the “Credit Agreement”), by and among the Borrower, the Lenders from time to time parties   thereto, the Issuing Banks from time to time parties thereto, the Administrative Agent, and the other   parties thereto;      WHEREAS, the Assignor desires to assign to the Assignee all or a portion of the Assignor’s   Revolving Commitment under the Credit Agreement, all on the terms and conditions set forth herein and   therein; and      WHEREAS, the [Borrower and the] Administrative Agent consent[s] to such assignment on the   terms and conditions set forth herein.      NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which   hereby are acknowledged by the parties hereto, the parties hereto hereby agree as follows:      Section 1.  Assignment.        (a) Subject to the terms and conditions of this Agreement and in consideration of the   payment to be made by the Assignee to the Assignor pursuant to Section 2 of this Agreement, effective as   of ____________, 20__ (the “Assignment Date”) the Assignor hereby irrevocably sells, transfers and   assigns to the Assignee, without recourse, a $__________ interest (such interest being the “Assigned   Commitment”) in and to the Assignor’s Revolving Commitment, and all of the other rights and   obligations of the Assignor under the Credit Agreement, such Assignor’s Revolving Note, and the other   Loan Documents, representing ______% in respect of the aggregate amount of all Lenders’ Revolving   Commitments, including without limitation, a principal amount of outstanding Revolving Loans equal to   $_________, all voting rights of the Assignor associated with the Assigned Commitment, all rights to   receive interest on such amount of Loans and all Fees with respect to the Assigned Commitment and other   rights of the Assignor under the Credit Agreement and the other Loan Documents with respect to the   Assigned Commitment, all as if the Assignee were an original Lender under and signatory to the Credit   Agreement having a Revolving Commitment equal to the amount of the Assigned Commitment.  The   Assignee, subject to the terms and conditions hereof, hereby assumes all obligations of the Assignor with   respect to the Assigned Commitment as if the Assignee were an original Lender under and signatory to   the Credit Agreement having a Revolving Commitment equal to the Assigned Commitment, which   obligations shall include, but shall not be limited to, the obligation of the Assignor to make Revolving   Loans to the Borrower with respect to the Assigned Commitment and the obligation to indemnify the   Administrative Agent as provided in the Credit Agreement (the foregoing obligations, together with all   other similar obligations more particularly set forth in the Credit Agreement and the other Loan   Documents, shall be referred to hereinafter, collectively, as the “Assigned Obligations”).  The Assignor     

 

   A-2        shall have no further duties or obligations with respect to, and shall have no further interest in, the   Assigned Obligations or the Assigned Commitment from and after the Assignment Date.      (b) The assignment by the Assignor to the Assignee hereunder is without recourse to the   Assignor.  The Assignee makes and confirms to the Administrative Agent, the Assignor, and the other   Lenders all of the representations, warranties and covenants of a Lender under Article XII of the Credit   Agreement.  Not in limitation of the foregoing, the Assignee acknowledges and agrees that, except as set   forth in Section 4. below, the Assignor is making no representations or warranties with respect to, and the   Assignee hereby releases and discharges the Assignor for any responsibility or liability for: (i) the present   or future solvency or financial condition of the Borrower, any other Loan Party or any other Subsidiary,   (ii) any representations, warranties, statements or information made or furnished by the Borrower, any   other Loan Party or any other Subsidiary in connection with the Credit Agreement or otherwise, (iii) the   validity, efficacy, sufficiency, or enforceability of the Credit Agreement, any Loan Document or any   other document or instrument executed in connection therewith, or the collectibility of the Assigned   Obligations, (iv) the perfection, priority or validity of any Lien with respect to any collateral at any time   securing the Obligations or the Assigned Obligations under the Notes or the Credit Agreement and (v) the   performance or failure to perform by the Borrower or any other Loan Party of any obligation under the   Credit Agreement or any other Loan Document.  Further, the Assignee acknowledges that it has,   independently and without reliance upon the Administrative Agent, any other Lender or counsel to the   Administrative Agent or any of their respective officers, directors, employees and agents and based on the   financial statements supplied by the Borrower and such other documents and information as it has   deemed appropriate, made its own credit analysis and decision to become a Lender under the Credit   Agreement.  The Assignee also acknowledges that it will, independently and without reliance upon the   Administrative Agent or any other Lender and based on such documents and information as it shall deem   appropriate at the time, continue to make its own credit decisions in taking or not taking action under the   Credit Agreement or any Note or pursuant to any other obligation.  The Administrative Agent shall have   no duty or responsibility whatsoever, either initially or on a continuing basis, to provide the Assignee   with any credit or other information with respect to the Borrower, any other Loan Party or any other   Subsidiary or to notify the undersigned of any Default or Event of Default except as expressly provided in   the Credit Agreement.  The Assignee has not relied on the Administrative Agent as to any legal or factual   matter in connection therewith or in connection with the transactions contemplated thereunder.      Section 2.  Payment by Assignee.  In consideration of the assignment made pursuant to Section 1.   of this Agreement, the Assignee agrees to pay to the Assignor on the Assignment Date, an amount equal   to $_________ representing the aggregate principal amount outstanding of the Revolving Loans owing to   the Assignor under the Credit Agreement and the other Loan Documents being assigned hereby.        Section 3.  Payments by Assignor.  The Assignor agrees to pay to the Administrative Agent on   the Assignment Date the administrative fee payable under Section 13.6.(b)(iv) of the Credit Agreement.      Section 4.  Representations and Warranties of Assignor.  The Assignor hereby represents and   warrants to the Assignee that (a) as of the Assignment Date (i) the Assignor is a Lender under the Credit   Agreement having a Revolving Commitment under the Credit Agreement immediately prior to the   Assignment Date, equal to $____________ and that the Assignor is not in default of its obligations under   the Credit Agreement; and (ii) the outstanding balance of Revolving Loans owing to the Assignor    (without reduction by any assignments thereof which have not yet become effective) is $____________;   and (b) it is the legal and beneficial owner of the Assigned Commitment which is free and clear of any   adverse claim created by the Assignor.        

 

   A-3        Section 5.  Representations, Warranties and Agreements of Assignee.  The Assignee   (a) represents and warrants that it is (i) legally authorized to enter into this Agreement; (ii) an “accredited   investor” (as such term is used in Regulation D of the Securities Act) and (iii) an Eligible Assignee;   (b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent   financial statements delivered pursuant thereto and such other documents and information (including   without limitation the Loan Documents) as it has deemed appropriate to make its own credit analysis and   decision to enter into this Agreement; (c) appoints and authorizes the Administrative Agent to take such   action as contractual representative on its behalf and to exercise such powers under the Loan Documents   as are delegated to the Administrative Agent by the terms thereof together with such powers as are   reasonably incidental thereto; (d) agrees that it will become a party to and shall be bound by the Credit   Agreement and the other Loan Documents to which the other Lenders are a party on the Assignment Date   and will perform in accordance therewith all of the obligations which are required to be performed by it as   a Lender; and (e) is either (i) not organized under the laws of a jurisdiction other than that in which the   Borrower is a resident for tax purposes or (ii) has delivered to the Administrative Agent (with an   additional copy for the Borrower) such items required under Section 3.10. of the Credit Agreement.      Section 6.  Recording and Acknowledgment by the Administrative Agent.  Following the   execution of this Agreement, the Assignor will deliver to the Administrative Agent (a) a duly executed   copy of this Agreement for acknowledgment and recording by the Administrative Agent and (b) the   Assignor’s Revolving Note.  Upon such acknowledgment and recording, from and after the Assignment   Date, the Administrative Agent shall make all payments in respect of the interest assigned hereby   (including payments of principal, interest, fees and other amounts) to the Assignee.  The Assignor and   Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods   prior to the Assignment Date directly between themselves.        Section 7.  Addresses.  The Assignee specifies as its address for notices and its Lending Office   for all Loans, the offices set forth below:                      Attention:       Telephone No.:      Telecopy No.:          Section 8.  Payment Instructions.  All payments to be made to the Assignee under this Agreement   by the Assignor, and all payments to be made to the Assignee under the Credit Agreement, shall be made   as provided in the Credit Agreement in accordance with the following instructions:                                         Section 9.  Effectiveness of Assignment.  This Agreement, and the assignment and assumption   contemplated herein, shall not be effective until (a) this Agreement is executed and delivered by each of   the Assignor, the Assignee, the Administrative Agent and if required, the Borrower, and (b) the payment   to the Assignor of the amounts owing by the Assignee pursuant to Section 2. hereof and (c) the payment   to the Administrative Agent of the amounts owing by the Assignor pursuant to Section 3. hereof.  Upon   recording and acknowledgment of this Agreement by the Administrative Agent, from and after the   Assignment Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in     

 

   A-4        this Agreement, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the   extent provided in this Agreement, relinquish its rights (except as otherwise provided in Section 13.11 of   the Credit Agreement) and be released from its obligations under the Credit Agreement; provided,   however, that if the Assignor does not assign its entire interest under the Loan Documents, it shall remain   a Lender entitled to all of the benefits and subject to all of the obligations thereunder with respect to its   Commitment.      Section 10.  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND   CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK   APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH   STATE.      Section 11.  Counterparts.  This Agreement may be executed in any number of counterparts each   of which, when taken together, shall constitute one and the same agreement.      Section 12.  Headings.  Section headings have been inserted herein for convenience only and   shall not be construed to be a part hereof.      Section 13.  Amendments; Waivers.  This Agreement may not be amended, changed, waived or   modified except by a writing executed by the Assignee and the Assignor.      Section 14.  Entire Agreement.  This Agreement embodies the entire agreement between the   Assignor and the Assignee with respect to the subject matter hereof and supersedes all other prior   arrangements and understandings relating to the subject matter hereof.      Section 15.  Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the   parties hereto and their respective successors and permitted assigns.      Section 16.  Definitions.  Terms not otherwise defined herein are used herein with the respective   meanings given them in the Credit Agreement.      [Include this Section only if the Borrower’s consent is required under Section 13.6.(b) of the   Credit Agreement] Section 17.  Agreements of the Borrower.  The Borrower hereby agrees that the   Assignee shall be a Lender under the Credit Agreement having a Revolving Commitment equal to the   Assigned Commitment.  The Borrower agrees that the Assignee shall have all of the rights and remedies   of a Lender under the Credit Agreement and the other Loan Documents as if the Assignee were an   original Lender under and signatory to the Credit Agreement, including, but not limited to, the right of a   Lender to receive payments of principal and of interest accruing after the effectiveness of this Assignment   with respect to the Assigned Obligations, if any, and to the Revolving Loans made by the Lenders after   the date hereof and to receive the Fees accruing after the effectiveness of this Assignment payable to the   Lenders as provided in the Credit Agreement.  Further, the Assignee shall be entitled to the benefit of the   indemnification provisions from the Borrower in favor of the Lenders as provided in the Credit   Agreement and the other Loan Documents.  The Borrower further agrees, upon the execution and delivery   of this Agreement and surrender to the Administrative Agent of the original Revolving Note by the   Assignor and cancellation thereof by the Administrative Agent or other provision in respect thereof in   accordance with Section 2.10. of the Credit Agreement, to execute in favor of the Assignee a Revolving   Note in an initial amount equal to the Assigned Commitment.  Further, the Borrower agrees that, upon the   execution and delivery of this Agreement, the Borrower shall owe the Assigned Obligations to the   Assignee as if the Assignee were the Lender originally making such Loans and entering into such other   obligations.     

 

   A-5           [Signatures on Following Page]     

 

   A-6         IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment and   Assumption Agreement as of the date and year first written above.      ASSIGNOR:      [NAME OF ASSIGNOR]         By: ________________________________         Name: ___________________________         Title: ____________________________       Payment Instructions      [Bank]   [Address]   ABA No. :   Account No.:   Account Name:    Reference:        ASSIGNEE:      [NAME OF ASSIGNEE]         By: ________________________________         Name: ___________________________         Title: ____________________________       Payment Instructions      [Bank]   [Address]   ABA No. :   Account No.:   Account Name:    Reference:           [Signatures continued on Following Page]                 

 

   A-7        Agreed and Consented to as of the date first written above.      [Include signature of the Borrower only if required under   Section 13.6.(c) of the Credit Agreement]      BORROWER:      SAUL HOLDINGS LIMITED PARTNERSHIP      By: Saul Centers, Inc., its General Partner      By: ________________________________         Name: ___________________________         Title: ____________________________       Accepted as of the date first written above.      ADMINISTRATIVE AGENT:      WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent      By: _____________________________         Name: ________________________         Title: _________________________      

 

   B-1   EXHIBIT B   FORM OF GUARANTY       THIS AMENDED AND RESTATED GUARANTY dated as of June 24, 2014 (the “Guaranty”)   executed and delivered by each of the undersigned and the other Persons from time to time party hereto   pursuant to the execution and delivery of an Accession Agreement in the form of Annex I hereto (all of   the undersigned, together with such other Persons each a “Guarantor” and collectively, the “Guarantors”)   in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as Administrative   Agent (the “Administrative Agent”) for the Lenders under that certain Amended and Restated Credit   Agreement dated as of June 24, 2014 (as amended, restated, supplemented or otherwise modified from   time to time, the “Credit Agreement”), by and among Saul Holdings Limited Partnership (the   “Borrower”), the Lenders from time to time parties thereto (the “Lenders”), the Issuing Banks from time   to time parties thereto (the “Issuing Banks”), the Administrative Agent, and the other parties thereto, for   its benefit and the benefit of the Lenders, the Issuing Banks and the Specified Derivatives Providers (the   Administrative Agent, the Lenders, the Issuing Banks and the Specified Derivatives Providers, each   individually a “Guarantied Party” and collectively, the “Guarantied Parties”).       WHEREAS, the Guarantors are currently party to that certain Guaranty dated as of May 21, 2012   (as amended or otherwise modified immediately prior to the effectiveness of this Agreement, the   “Existing Guaranty”)  and have agreed to enter into this Guaranty in order to amend and restate the   Existing Guaranty in its entirety;      WHEREAS, pursuant to the Credit Agreement, the Administrative Agent and the Lenders have   agreed to make available to the Borrower certain financial accommodations on the terms and conditions   set forth in the Credit Agreement;       WHEREAS, each Guarantor is owned or controlled by the Borrower, or is otherwise an Affiliate   of the Borrower;       WHEREAS, the Borrower, each Guarantor and the other Subsidiaries of the Borrower, though   separate legal entities, are mutually dependent on each other in the conduct of their respective businesses   as an integrated operation and have determined it to be in their mutual best interests to obtain financing   from the Administrative Agent, the Lenders and the Issuing Banks, and to enter into Specified Derivatives   Contracts,  through their collective efforts;       WHEREAS, each Guarantor acknowledges that it will receive direct and indirect benefits from   the Administrative Agent, the Lenders and the Issuing Banks making such financial accommodations   available to the Borrower under the Credit Agreement and from the Specified Derivatives Providers   entering into Specified Derivatives Contracts and, accordingly, each Guarantor is willing to guarantee the   Borrower’s obligations to the Administrative Agent, the Lenders and the Issuing Banks and the   Borrower’s and/or any Subsidiary’s obligations to the Specified Derivatives Providers on the terms and   conditions contained herein; and       WHEREAS, each Guarantor’s execution and delivery of this Guaranty is a condition to the   Administrative Agent and the other Guarantied Parties’ making, and continuing to make, such financial   accommodations to the Borrower.       NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which   are hereby acknowledged by each Guarantor, each Guarantor agrees as follows:        

 

   B-2    Section 1.  Guaranty.  Each Guarantor hereby absolutely, irrevocably and unconditionally   guaranties the due and punctual payment and performance when due, whether at stated maturity, by   acceleration or otherwise, of all of the following (collectively referred to as the “Guarantied Obligations”   (provided, however, that the definition of “Guarantied Obligations” shall not create any guarantee by any   Guarantor of (or grant of security interest by any Guarantor to support, as applicable) any Excluded Swap   Obligations of such Guarantor for purposes of determining any obligations of any Guarantor)): (a) all   indebtedness and obligations owing by the Borrower or any other Loan Party to any Lender or the   Administrative Agent under or in connection with the Credit Agreement and any other Loan Document to   which the Borrower or such other Loan Party is a party, including without limitation, the repayment of all   principal of the Revolving Loans and Swingline Loans, all Letter of Credit Liabilities, and the payment of   all interest, fees, charges, reasonable attorneys’ fees and other amounts payable to any Lender, the Issuing   Banks or the Administrative Agent thereunder or in connection therewith; (b) all Specified Derivatives   Obligations; (c) any and all extensions, renewals, modifications, amendments or substitutions of the   foregoing; (d) all expenses, including, without limitation, reasonable attorneys’ fees and disbursements,   that are incurred by the Administrative Agent or any other Guarantied Party in the enforcement of any of   the foregoing or any obligation of such Guarantor hereunder; and (e) all other Obligations.       Section 2.  Guaranty of Payment and Not of Collection.  This Guaranty is a guaranty of payment,   and not of collection, and a debt of each Guarantor for its own account.  Accordingly, the Guarantied   Parties shall not be obligated or required before enforcing this Guaranty against any Guarantor: (a) to   pursue any right or remedy the Guarantied Parties may have against the Borrower, any other Loan Party   or any other Person or commence any suit or other proceeding against the Borrower, any other Loan Party   or any other Person in any court or other tribunal; (b) to make any claim in a liquidation or bankruptcy of   the Borrower, any other Loan Party or any other Person; (c) to make demand of the Borrower, any other   Loan Party or any other Person; or (d) to enforce or seek to enforce or realize upon any collateral security   held by the Guarantied Parties which may secure any of the Guarantied Obligations.         Section 3.  Guaranty Absolute.  Each Guarantor guarantees that the Guarantied Obligations will   be paid strictly in accordance with the terms of the documents evidencing the same, regardless of any   Applicable Law now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of   the Guarantied Parties with respect thereto.  The liability of each Guarantor under this Guaranty shall be   absolute, irrevocable and unconditional in accordance with its terms and shall remain in full force and   effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise   affected by, any circumstance or occurrence whatsoever, including without limitation, the following   (whether or not such Guarantor consents thereto or has notice thereof):       (a) (i) any change in the amount, interest rate or due date or other term of any of the   Guarantied Obligations, (ii) any change in the time, place or manner of payment of all or any portion of   the Guarantied Obligations, (iii) any amendment or waiver of, or consent to the departure from or other   indulgence with respect to, the Credit Agreement, any other Loan Document or any other document or   instrument evidencing or relating to any Guarantied Obligations, or (iv) any waiver, renewal, extension,   addition, or supplement to, or deletion from, or any other action or inaction under or in respect of, the   Credit Agreement, any of the other Loan Documents, or any other documents, instruments or agreements   relating to the Guarantied Obligations or any other instrument or agreement referred to therein or   evidencing any Guarantied Obligations or any assignment or transfer of any of the foregoing;       (b) any lack of validity or enforceability of the Credit Agreement, any of the other Loan   Documents, or Specified Derivatives Contracts (the “Credit Documents”) or any other document,   instrument or agreement referred to therein or evidencing any Guarantied Obligations or any assignment   or transfer of any of the foregoing;     

 

   B-3       (c) any furnishing to the Guarantied Parties of any security for the Guarantied Obligations,   or any sale, exchange, release or surrender of, or realization on, any collateral securing any of the   Guarantied Obligations;       (d) any settlement or compromise by the Borrower or any other Loan Party of any of the   Guarantied Obligations, any security therefor, or any liability of any other party with respect to the   Guarantied Obligations, or any subordination of the payment of the Guarantied Obligations to the   payment of any other liability of the Borrower or any other Loan Party;       (e) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,   liquidation or other like proceeding relating to such Guarantor, the Borrower, any other Loan Party or any   other Person, or any action taken with respect to this Guaranty by any trustee or receiver, or by any court,   in any such proceeding;       (f) any act or failure to act by the Borrower, any other Loan Party or any other Person which   may adversely affect such Guarantor’s subrogation rights, if any, against the Borrower or any other Loan   Party to recover payments made under this Guaranty;       (g) any nonperfection or impairment of any security interest or other Lien on any collateral,   if any, securing in any way any of the Guarantied Obligations;       (h) any application of sums paid by the Borrower, any Guarantor or any other Person with   respect to the liabilities of the Borrower to the Guarantied Parties, regardless of what liabilities of the   Borrower remain unpaid;       (i) any defect, limitation or insufficiency in the borrowing powers of the Borrower or in the   exercise thereof; or       (j) any other circumstance which might otherwise constitute a defense available to, or a   discharge of, a Guarantor hereunder (other than indefeasible payment in full in cash or release or   termination of the obligations of any Guarantor hereunder by the Guarantied Parties pursuant to the terms   of the Credit Agreement).         Section 4.  Action with Respect to Guarantied Obligations.  The Guarantied Parties may, at any   time and from time to time, without the consent of, or notice to, any Guarantor, and without discharging   any Guarantor from its obligations hereunder, take any and all actions described in Section 3. and may   otherwise: (a) amend, modify, alter or supplement the terms of any of the Guarantied Obligations,   including, but not limited to, extending or shortening the time of payment of any of the Guarantied   Obligations or changing the interest rate that may accrue on any of the Guarantied Obligations;   (b) amend, modify, alter or supplement the Credit Agreement or any other Credit Document; (c) sell,   exchange, release or otherwise deal with all, or any part, of any collateral securing any of the Guarantied   Obligations; (d) release any Loan Party or other Person liable in any manner for the payment or collection   of the Guarantied Obligations; (e) exercise, or refrain from exercising, any rights against the Borrower,   any other Loan Party or any other Person; and (f) apply any sum, by whomsoever paid or however   realized, to the Guarantied Obligations in such order as the Guarantied Parties shall elect, in the case of   each of the foregoing clauses (a) through (e) above, pursuant to the terms of the Credit Agreement and the   other Loan Documents.        

 

   B-4    Section 5.  Representations and Warranties.  Each Guarantor hereby makes to the Administrative   Agent and the other Guarantied Parties all of the representations and warranties made by the Borrower   with respect to such Guarantor in the Credit Agreement and the other Loan Documents, as if the same   were set forth herein in full mutatis mutandis.       Section 6.  Covenants.  Each Guarantor will comply with all covenants with which the Borrower   is to cause such Guarantor to comply under the terms of the Credit Agreement or any of the other Loan   Documents.       Section 7.  Waiver.  Each Guarantor, to the fullest extent permitted by Applicable Law, hereby   waives notice of acceptance hereof or any presentment, demand, protest or notice of any kind, other than   demand for payment hereunder, and any other act or thing, or omission or delay to do any other act or   thing, which in any manner or to any extent might vary the risk of such Guarantor or which otherwise   might operate to discharge such Guarantor from its obligations hereunder.       Section 8.  Inability to Accelerate Loan.  If the Guarantied Parties or any of them are prevented   under Applicable Law or otherwise from demanding or accelerating payment of any of the Guarantied   Obligations by reason of any automatic stay or otherwise, the Administrative Agent and/or the other   Guarantied Parties shall be entitled to receive from each Guarantor, upon demand therefor, the sums   which otherwise would have been due had such demand or acceleration occurred.       Section 9.  Reinstatement of Guarantied Obligations.  If claim is ever made on the Administrative   Agent or any other Guarantied Party for repayment or recovery of any amount or amounts received in   payment or on account of any of the Guarantied Obligations, and the Administrative Agent or such other   Guarantied Party repays all or part of said amount by reason of (a) any judgment, decree or order of any   court or administrative body of competent jurisdiction, or (b) any settlement or compromise of any such   claim effected by the Administrative Agent or such other Guarantied Party with any such claimant   (including the Borrower or a trustee in bankruptcy for the Borrower), then and in such event each   Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding on it,   notwithstanding any revocation hereof or the cancellation of the Credit Agreement, any of the other Loan   Documents, or any other instrument evidencing any liability of the Borrower, and such Guarantor shall be   and remain liable to the Administrative Agent or such other Guarantied Party for the amounts so repaid or   recovered to the same extent as if such amount had never originally been paid to the Administrative   Agent or such other Guarantied Party, except to the extent such amount is determined, in a final, non-   appealable judgment by a court of competent jurisdiction, to have been collected by the Administrative   Agent or such other Guarantied Party in violation of the Credit Agreement or other Loan Document.       Section 10.  Subrogation.  Upon the making by any Guarantor of any payment hereunder for the   account of the Borrower, such Guarantor shall be subrogated to the rights of the payee against the   Borrower; provided, however, that such Guarantor shall not enforce any right or receive any payment by   way of subrogation or otherwise take any action in respect of any other claim or cause of action such   Guarantor may have against the Borrower arising by reason of any payment or performance by such   Guarantor pursuant to this Guaranty, unless and until all of the Guarantied Obligations have been   indefeasibly paid and performed in full.  If any amount shall be paid to such Guarantor on account of or   in respect of such subrogation rights or other claims or causes of action, such Guarantor shall hold such   amount in trust for the benefit of the Guarantied Parties and shall forthwith pay such amount to the   Administrative Agent to be credited and applied against the Guarantied Obligations, whether matured or   unmatured, in accordance with the terms of the Credit Agreement or to be held by the Administrative   Agent as collateral security for any Guarantied Obligations existing.        

 

   B-5    Section 11. Payments Free and Clear.  All sums payable by each Guarantor hereunder, whether of   principal, interest, fees, expenses, premiums or otherwise, shall be paid in full, without set-off or   counterclaim or any deduction or withholding whatsoever (including any Taxes, subject to Section 3.10.   of the Credit Agreement), and if such Guarantor is required by Applicable Law or by any Governmental   Authority to make any such deduction or withholding such Guarantor shall pay to the Administrative   Agent and the Lenders such additional amount as will result in the receipt by the Administrative Agent   and the Lenders of the full amount payable hereunder had such deduction or withholding not occurred or   been required.      Section 12.  Set-off.  In addition to any rights now or hereafter granted under any of the other   Loan Documents or Applicable Law and not by way of limitation of any such rights, each Guarantor   hereby authorizes each Guarantied Party, at any time while an Event of Default exists, without any prior   notice to such Guarantor or to any other Person, any such notice being hereby expressly waived, but in   the case of a Lender, a Specified Derivatives Provider, or an Issuing Bank subject to receipt of the prior   written consent of the Administrative Agent and Requisite Lenders, exercised in their sole discretion, to   set-off and to appropriate and to apply any and all deposits (general or special, including, but not limited   to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other   indebtedness at any time held or owing by the Administrative Agent, such Issuing Bank, such Lender or   such Specified Derivatives Provider, any affiliate of the Administrative Agent, such Issuing Bank, or such   Lender to or for the credit or the account of the Borrower against and on account of any of the Guarantied   Obligations, although such obligations shall be contingent or unmatured.        Section 13.  Subordination.  Each Guarantor hereby expressly covenants and agrees for the   benefit of the Guarantied Parties that all obligations and liabilities of the Borrower to such Guarantor of   whatever description, including without limitation, all intercompany receivables of such Guarantor from   the Borrower (collectively, the “Junior Claims”) shall be subordinate and junior in right of payment to all   Guarantied Obligations.  If an Event of Default shall exist, then no Guarantor shall accept any direct or   indirect payment (in cash, property or securities, by setoff or otherwise) from the Borrower on account of   or in any manner in respect of any Junior Claim until all of the Guarantied Obligations have been   indefeasibly paid in full.       Section 14.  Avoidance Provisions.  It is the intent of each Guarantor, the Administrative Agent   and the other Guarantied Parties that in any Proceeding, such Guarantor’s maximum obligation hereunder   shall equal, but not exceed, the maximum amount which would not otherwise cause the obligations of   such Guarantor hereunder (or any other obligations of such Guarantor to the Guarantied Parties) to be   avoidable or unenforceable against such Guarantor in such Proceeding as a result of Applicable Law,   including without limitation, (a) Section 548 of the Bankruptcy Code of 1978, as amended (the   “Bankruptcy Code”) and (b) any state fraudulent transfer or fraudulent conveyance act or statute applied   in such Proceeding, whether by virtue of Section 544 of the Bankruptcy Code or otherwise.  The   Applicable Laws under which the possible avoidance or unenforceability of the obligations of such   Guarantor hereunder (or any other obligations of such Guarantor to the Guarantied Parties) shall be   determined in any such Proceeding are referred to as the “Avoidance Provisions”.  Accordingly, to the   extent that the obligations of any Guarantor hereunder would otherwise be subject to avoidance under the   Avoidance Provisions, the maximum Guarantied Obligations for which such Guarantor shall be liable   hereunder shall be reduced to that amount which, as of the time any of the Guarantied Obligations are   deemed to have been incurred under the Avoidance Provisions, would not cause the obligations of any   Guarantor hereunder (or any other obligations of such Guarantor to the Guarantied Parties), to be subject   to avoidance under the Avoidance Provisions.  This Section is intended solely to preserve the rights of the   Administrative Agent and the other Guarantied Parties hereunder to the maximum extent that would not   cause the obligations of any Guarantor hereunder to be subject to avoidance under the Avoidance     

 

   B-6   Provisions, and no Guarantor or any other Person shall have any right or claim under this Section as   against the Guarantied Parties that would not otherwise be available to such Person under the Avoidance   Provisions.       Section 15.  Information.  Each Guarantor assumes all responsibility for being and keeping itself   informed of the financial condition of the Borrower and the other Loan Parties, and of all other   circumstances bearing upon the risk of nonpayment of any of the Guarantied Obligations and the nature,   scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that neither of   the Administrative Agent nor any other Guarantied Party shall have any duty whatsoever to advise any   Guarantor of information regarding such circumstances or risks.       Section 16.  Governing Law.  THIS GUARANTY SHALL BE GOVERNED BY, AND   CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK   APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH   STATE.       SECTION 17.  WAIVER OF JURY TRIAL.        (a) EACH GUARANTOR, AND EACH OF THE ADMINISTRATIVE AGENT AND THE   OTHER GUARANTIED PARTIES BY ACCEPTING THE BENEFITS HEREOF, ACKNOWLEDGES   THAT ANY DISPUTE OR CONTROVERSY BETWEEN SUCH GUARANTOR, THE   ADMINISTRATIVE AGENT OR ANY OF THE OTHER GUARANTIED PARTES WOULD BE   BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN   DELAY AND EXPENSE TO THE PARTIES.  ACCORDINGLY, TO THE EXTENT PERMITTED BY   APPLICABLE LAW, EACH OF THE GUARANTORS, THE ADMINISTRATIVE AGENT AND THE   OTHER GUARANTIED PARTIES HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY   ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN   WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING   OUT OF THIS GUARANTY.       (b) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT   IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR   DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR   OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, ANY ISSUING BANK,   OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS   GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING   HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW   YORK SITTING IN NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT OF   THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY   THEREOF, AND EACH OF THE PARTIES HERETO, AND EACH OF THE ADMINISTRATIVE   AGENT AND THE OTHER GUARANTIED PARTIES BY ACCEPTING THE BENEFITS HEREOF,   IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH   COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION   OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT   OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL   COURT.  EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR   HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH   COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT   FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME.  THE CHOICE OF   FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE     

 

   B-7   BRINGING OF ANY ACTION BY THE ADMINISTRATIVE AGENT OR ANY OTHER   GUARANTIED PARTY OR THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT OR ANY   OTHER GUARANTIED PARTY OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY   OTHER APPROPRIATE JURISDICTION.       (c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH   PARTY WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE   LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS   AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN   DOCUMENTS, THE TERMINATION OR EXPIRATION OF ALL LETTERS OF CREDIT AND THE   TERMINATION OF THIS GUARANTY.       Section 18.  Loan Accounts.  The Administrative Agent and each Lender may maintain books and   accounts setting forth the amounts of principal, interest and other sums paid and payable with respect to   the Guarantied Obligations arising under or in connection with the Credit Agreement, and in the case of   any dispute relating to any of the outstanding amount, payment or receipt of any of the Guarantied   Obligations or otherwise, the entries in such books and accounts shall constitute prima facie evidence of   amounts and other matters set forth therein.  The failure of the Administrative Agent or any Lender to   maintain such books and accounts shall not in any way relieve or discharge any Guarantor of any of its   obligations hereunder.       Section 19.  Waiver of Remedies.  No delay or failure on the part of the Administrative Agent or   any other Guarantied Party in the exercise of any right or remedy it may have against any Guarantor   hereunder or otherwise shall operate as a waiver thereof, and no single or partial exercise by the   Administrative Agent or any other Guarantied Party of any such right or remedy shall preclude any other   or further exercise thereof or the exercise of any other such right or remedy.       Section 20.  Termination.  This Guaranty shall remain in full force and effect with respect to each   Guarantor until payment in full in cash of the Guarantied Obligations and the other Obligations and the   termination or cancellation of the Credit Agreement and all Specified Derivatives Contracts in accordance   with their respective terms.       Section 21.  Successors and Assigns.  Each reference herein to the Administrative Agent or any   other Guarantied Party shall be deemed to include such Person’s respective successors and assigns   (including, but not limited to, any holder of the Guarantied Obligations) in whose favor the provisions of   this Guaranty also shall inure, and each reference herein to each Guarantor shall be deemed to include   such Guarantor’s successors and assigns, upon whom this Guaranty also shall be binding.  The   Guarantied Parties may, in accordance with the applicable provisions of the Credit Agreement and   Specified Derivatives Contracts, assign, transfer or sell any Guarantied Obligation, or grant or sell   participations in any Guarantied Obligations, to any Person without the consent of, or notice to, any   Guarantor and without releasing, discharging or modifying any Guarantor’s obligations hereunder.    Subject to Section 13.9. of the Credit Agreement, each Guarantor hereby consents to the delivery by the   Administrative Agent and any other Guarantied Party to any Eligible Assignee or Participant (or any   prospective Eligible Assignee or Participant) of any financial or other information regarding the Borrower   or any Guarantor.  No Guarantor may assign or transfer its obligations hereunder to any Person without   the prior written consent of all Lenders and any such assignment or other transfer to which all of the   Lenders have not so consented shall be null and void.       Section 22.  JOINT AND SEVERAL OBLIGATIONS.  THE OBLIGATIONS OF THE   GUARANTORS HEREUNDER SHALL BE JOINT AND SEVERAL, AND ACCORDINGLY, EACH     

 

   B-8   GUARANTOR CONFIRMS THAT IT IS LIABLE FOR THE FULL AMOUNT OF THE   “GUARANTIED OBLIGATIONS” AND ALL OF THE OBLIGATIONS AND LIABILITIES OF EACH   OF THE OTHER GUARANTORS HEREUNDER.       Section 23.  Amendments.  This Guaranty may not be amended except in writing signed by the   Administrative Agent and each Guarantor, subject to Section 13.7 of the Credit Agreement.       Section 24.  Payments.  All payments to be made by any Guarantor pursuant to this Guaranty   shall be made in Dollars, in immediately available funds to the Administrative Agent at its Principal   Office, not later than 1:00 p.m. Central time, on the date one Business Day after demand therefor.       Section 25.  Notices.  All notices, requests and other communications hereunder shall be in   writing (including facsimile transmission or similar writing) and shall be given (a) to each Guarantor at its   address set forth below its signature hereto, (b) to the Administrative Agent or any other Guarantied Party   at its address for notices provided for in the Credit Agreement or Specified Derivatives Contracts, as   applicable, or (c) as to each such party at such other address as such party shall designate in a written   notice to the other parties.  Each such notice, request or other communication shall be effective (i) if   mailed, when received; (ii) if telecopied, when transmitted (with confirmation); or (iii) if hand delivered,   when delivered; provided, however, that any notice of a change of address for notices shall not be   effective until received.       Section 26.  Severability.  In case any provision of this Guaranty shall be invalid, illegal or   unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions   shall not in any way be affected or impaired thereby.       Section 27.  Headings.  Section headings used in this Guaranty are for convenience only and shall   not affect the construction of this Guaranty.       Section 28.  Limitation of Liability. Neither the Administrative Agent nor any other   Guarantied Party, nor any affiliate, officer, director, employee, attorney, or agent of the Administrative   Agent or any other Guarantied Party, shall have any liability with respect to, and each Guarantor hereby   waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or   consequential damages suffered or incurred by a Guarantor in connection with, arising out of, or in any   way related to, this Guaranty or any of the other Credit Documents, or any of the transactions   contemplated by this Guaranty, the Credit Agreement or any of the other Loan Documents.  Each   Guarantor hereby waives, releases, and agrees not to sue the Administrative Agent or any other   Guarantied Party or any of the Administrative Agent’s or any other Guarantied Party’s affiliates, officers,   directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection   with, arising out of, or in any way related to, this Guaranty, the Credit Agreement or any of the other   Credit Documents, or any of the transactions contemplated by thereby.       Section 29. Electronic Delivery of Certain Information.  Each Guarantor acknowledges and   agrees that information regarding the Guarantor may be delivered electronically pursuant to Section 9.5 of   the Credit Agreement.        Section 30.  Definitions. (a) For the purposes of this Guaranty:       “Proceeding” means any of the following: (x) any Guarantor shall:  (i) commence a voluntary   case under the Bankruptcy Code or other federal bankruptcy laws (as now or hereafter in effect); (ii) file a   petition seeking to take advantage of any other Applicable Laws, domestic or foreign, relating to     

 

   B-9   bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; (iii) consent   to, or fail to contest in a timely and appropriate manner, any petition filed against it in an involuntary case   under such bankruptcy laws or other Applicable Laws or consent to any proceeding or action described in   the immediately following subsection (z); (iv) apply for or consent to, or fail to contest in a timely and   appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or   liquidator of itself or of a substantial part of its property, domestic or foreign; (v) admit in writing its   inability to pay its debts as they become due; or (vi) make a general assignment for the benefit of   creditors; (y) the board of directors (or similar  governing body) of any Guarantor or any committee   thereof shall adopt any resolution or otherwise authorize any action to approve any of the actions referred   to in this definition of “Proceeding”; or (z) a case or other proceeding shall be commenced against any   Guarantor in any court of competent jurisdiction seeking:  (i) relief under the Bankruptcy Code or other   federal bankruptcy laws (as now or hereafter in effect) or under any other Applicable Laws, domestic or   foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of   debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of such Person, or of   all or any substantial part of the assets, domestic or foreign, of such Person, and in the case of either   clause (i) or (ii) such case or proceeding shall continue undismissed or unstayed for a period of 60   consecutive days, or an order granting the remedy or other relief requested in such case or proceeding   (including, but not limited to, an order for relief under such Bankruptcy Code or such other federal   bankruptcy laws) shall be entered.       (b) Terms not otherwise defined herein are used herein with the respective meanings given   them in the Credit Agreement.      Section 31.  Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely,   unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from   time to time by each other Guarantor to honor all of its obligations under this Guaranty in respect of   Specified Derivatives Contracts (provided, however, that each Qualified ECP Guarantor shall only be   liable under this Section for the maximum amount of such liability that can be hereby incurred without   rendering its obligations under this Section or otherwise under this Guaranty voidable under applicable   law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The   obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until   a discharge of such Qualified ECP Guarantor’s Guarantied Obligations in accordance with the terms   hereof and the other Loan Documents.  Each Qualified ECP Guarantor intends that this Section constitute,   and this Section shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of   each other Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.  As   used herein, “Qualified ECP Guarantor” means, in respect of any Specified Derivatives Contract, each   Guarantor that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the   relevant security interest becomes or would become effective with respect to such Specified Derivatives   Contract or such other Person as constitutes an ECP and can cause another Person to qualify as an ECP at   such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.      [Signatures on Following Page]     

 

   B-10    IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this Guaranty as of   the date and year first written above.      [GUARANTOR]         By: ________________________________         Name: ___________________________         Title: ____________________________          Address for Notices for all Guarantors:      c/o SAUL CENTERS, INC.   7501 Wisconsin Ave., Suite 1500 E   Bethesda, MD 20814   Attention: Scott V. Schneider    Facsimile: (301) 986-6023   Telephone: (301) 986-6022           

 

   B-11   ANNEX I      FORM OF ACCESSION AGREEMENT       THIS ACCESSION AGREEMENT dated as of ____________, ____, executed and delivered by   ______________________, a _____________ (the “New Guarantor”) in favor of WELLS FARGO   BANK, NATIONAL ASSOCIATION, in its capacity as Administrative Agent (the “Administrative   Agent”) for the Lenders under that certain Amended and Restated Credit Agreement dated as of June 24,   2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit   Agreement”), by and among Saul Holdings Limited Partnership (the “Borrower”), the Lenders from time   to time parties thereto (the “Lenders”), the Issuing Banks from time to time parties thereto (the “Issuing   Banks”), Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”),   and the other parties thereto, for its benefit and the benefit of the Lenders, the Issuing Banks and the   Specified Derivatives Providers (the Administrative Agent, the Lenders, the Issuing Banks and the   Specified Derivatives Providers, each individually a “Guarantied Party” and collectively, the “Guarantied   Parties”).       WHEREAS, pursuant to the Credit Agreement, the Administrative Agent and the Lenders have   agreed to make available to the Borrower certain financial accommodations on the terms and conditions   set forth in the Credit Agreement;       WHEREAS, the Specified Derivatives Providers may from time to time enter into Specified   Derivatives Contracts with the Borrower and/or its Subsidiaries;      WHEREAS, New Guarantor is owned or controlled by the Borrower, or is otherwise an Affiliate   of the Borrower;       WHEREAS, the Borrower, the New Guarantor and the other Subsidiaries of the Borrower,   though separate legal entities, are mutually dependent on each other in the conduct of their respective   businesses as an integrated operation and have determined it to be in their mutual best interests to obtain   financing from the Administrative Agent, the Lenders and the Issuing Banks, and to enter into Specified   Derivatives Contracts, through their collective efforts;      WHEREAS, New Guarantor acknowledges that it will receive direct and indirect benefits from   the Administrative Agent, the Lenders and the Issuing Banks making such financial accommodations   available to the Borrower under the Credit Agreement and from the Specified Derivatives Providers   entering into Specified Derivatives Contracts and, accordingly, New Guarantor is willing to guarantee the   Borrower’s obligations to the Administrative Agent, the Lenders and the Issuing Banks and the   Borrower’s and/or any Subsidiary’s obligations to the Specified Derivatives Providers on the terms and   conditions contained herein; and       WHEREAS, the New Guarantor’s execution and delivery of this Agreement is a condition to the   Administrative Agent and the Lenders continuing to make such financial accommodations to the   Borrower.       NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which   are hereby acknowledged by the New Guarantor, the New Guarantor agrees as follows:       Section 1.  Accession to Guaranty.  The New Guarantor hereby agrees that it is a “Guarantor”   under that certain Amended and Restated Guaranty dated as of June 24, 2014 (as amended, restated,     

 

   B-12   supplemented or otherwise modified from time to time, the “Guaranty”) made by each of the Guarantors   party thereto in favor of the Administrative Agent and the other Guarantied Parties and assumes all   obligations of a “Guarantor” thereunder, all as if the New Guarantor had been an original signatory to the   Guaranty.  Without limiting the generality of the foregoing, the New Guarantor hereby:       (a) irrevocably and unconditionally guarantees the due and punctual payment and   performance when due, whether at stated maturity, by acceleration or otherwise, of all Guarantied   Obligations (as defined in the Guaranty);       (b) makes to the Administrative Agent and the other Guarantied Parties as of the date hereof   each of the representations and warranties contained in Section 5 of the Guaranty as to itself as a   Guarantor and agrees to be bound by each of the covenants contained in Section 6 of the Guaranty; and       (c) consents and agrees to each provision set forth in the Guaranty.       SECTION 2.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND   CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK   APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH   STATE.       Section 3.  Definitions.  Capitalized terms used herein and not otherwise defined herein shall have   their respective defined meanings given them in the Credit Agreement.         [Signatures on Next Page]        

 

   B-13    IN WITNESS WHEREOF, the New Guarantor has caused this Accession Agreement to be duly   executed and delivered under seal by its duly authorized officers as of the date first written above.      [NEW GUARANTOR]         By: ________________________________         Name: ___________________________         Title: ____________________________        (CORPORATE SEAL)      Address for Notices:      c/o SAUL CENTERS, INC.   7501 Wisconsin Ave., Suite 1500 E   Bethesda, MD 20814   Attention: Scott V. Schneider    Facsimile: (301) 986-6023   Telephone: (301) 986-6022         Accepted:      WELLS FARGO BANK, NATIONAL       ASSOCIATION,  as Administrative Agent         By:             Name:            Title:               

 

   C-1   EXHIBIT C      FORM OF NOTICE OF BORROWING      ____________, 20__      Wells Fargo Bank, National Association   Minneapolis Loan Center   733 Marquette Avenue, 10th Floor   Minneapolis, MN 55402   Attention:  ______________         Ladies and Gentlemen:      Reference is made to that certain Amended and Restated Credit Agreement dated as of June 24,   2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit   Agreement”), by and among Saul Holdings Limited Partnership (the “Borrower”), the Lenders from time   to time parties thereto (the “Lenders”), the Issuing Banks from time to time parties thereto, Wells Fargo   Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties   thereto.  Capitalized terms used herein, and not otherwise defined herein, have their respective meanings   given them in the Credit Agreement.      1. Pursuant to Section 2.1(b) of the Credit Agreement, the Borrower hereby requests that the   Lenders make Revolving Loans to the Borrower in an aggregate amount equal to   $___________________.      2. The Borrower requests that such Revolving Loans be made available to the Borrower on   ____________, 20__.      3. The Borrower hereby requests that such Revolving Loans be of the following Type:      [Check one box only]      Base Rate Loan     LIBOR Loan, with an initial Interest Period for a duration of:      [Check one box only]     one month     two months     three months     six months     other: ____________________      The Borrower hereby certifies to the Administrative Agent and the Lenders that as of the date   hereof, as of the date of the making of the requested Revolving Loans, and after making such Revolving   Loans, (a) no Default or Event of Default exists or would exist, and none of the limits specified in Section   2.14. would be violated; and (b) the representations and warranties made or deemed made by the   Borrower and each other Loan Party in the Loan Documents to which any of them is a party, are and shall   be true and correct in all material respects (except in the case of any representation or warranty qualified   by materiality, in which case such representation and warranty shall be true and correct in all respects)     

 

   C-2   with the same force and effect as if made on and as of such date except to the extent that such   representations and warranties expressly relate solely to an earlier date (in which case such   representations and warranties shall have been true and correct in all material respects (except in the case   of any representation or warranty qualified by materiality, in which case such representation and warranty   shall be true and correct in all respects) on and as of such earlier date) and except for changes in factual   circumstances not expressly prohibited under the Loan Documents.  In addition, the Borrower certifies to   the Administrative Agent and the Lenders that all conditions to the making of the requested Revolving   Loans contained in Article VI. of the Credit Agreement will have been satisfied (or waived in accordance   with the terms of the Credit Agreement) at the time such Revolving Loans are made.      SAUL HOLDINGS LIMITED PARTNERSHIP      By: Saul Centers, Inc., its General Partner      By: ________________________________         Name: ___________________________         Title: ____________________________                                 

 

   D-1   EXHIBIT D      FORM OF NOTICE OF CONTINUATION      ____________, 20__      Wells Fargo Bank, National Association   Minneapolis Loan Center   733 Marquette Avenue, 10th Floor   Minneapolis, MN 55402   Attention:  ______________            Ladies and Gentlemen:      Reference is made to that certain Amended and Restated Credit Agreement dated as of June 24,   2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit   Agreement”), by and among Saul Holdings Limited Partnership (the “Borrower”), the Lenders from time   to time parties thereto (the “Lenders”), the Issuing Banks from time to time parties thereto, Wells Fargo   Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties   thereto.  Capitalized terms used herein, and not otherwise defined herein, have their respective meanings   given them in the Credit Agreement.      Pursuant to Section 2.8. of the Credit Agreement, the Borrower hereby requests a Continuation of   Loans under the Credit Agreement, and in that connection sets forth below the information relating to   such Continuation as required by such Section of the Credit Agreement:      1. The requested date of such Continuation is ____________, 20__.      2. The aggregate principal amount of the Loans subject to the requested Continuation is   $________________________ and the portion of such principal amount as to which such   Continuation is requested is $__________________________.      3. The current Interest Period of the Loans subject to such Continuation ends on   ________________, 20__.      4. The duration of the Interest Period for the Loans or portion thereof subject to such   Continuation is:       [Check one box only]        one month     two months     three months     six months      [Continued on next page]     

 

   D-2      The Borrower hereby certifies to the Administrative Agent and the Lenders that as of the date   hereof, as of the proposed date of the requested Continuation, and after giving effect to such   Continuation, no Default or Event of Default exists or will exist.       If notice of the requested Continuation was given previously by telephone, this notice shall be   considered the written confirmation of such telephone notice required under Section 2.8. of the Credit   Agreement.         SAUL HOLDINGS LIMITED PARTNERSHIP      By: Saul Centers, Inc., its General Partner      By: ________________________________         Name: ___________________________         Title: ____________________________                                    

 

   E-1   EXHIBIT E      FORM OF NOTICE OF CONVERSION      ____________, 20__      Wells Fargo Bank, National Association   Minneapolis Loan Center   733 Marquette Avenue, 10th Floor   Minneapolis, MN 55402   Attention:  ______________         Ladies and Gentlemen:      Reference is made to that certain Amended and Restated Credit Agreement dated as of June 24,   2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit   Agreement”), by and among Saul Holdings Limited Partnership (the “Borrower”), the Lenders from time   to time parties thereto (the “Lenders”), the Issuing Banks from time to time parties thereto, Wells Fargo   Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties   thereto.  Capitalized terms used herein, and not otherwise defined herein, have their respective meanings   given them in the Credit Agreement.      Pursuant to Section 2.9. of the Credit Agreement, the Borrower hereby requests a Conversion of   Loans of one Type into Loans of another Type under the Credit Agreement, and in that connection sets   forth below the information relating to such Conversion as required by such Section of the Credit   Agreement:      1. The requested date of such Conversion is ______________, 20__.      2. The Type of Loans to be Converted pursuant hereto is currently:      [Check one box only]         Base Rate Loan     LIBOR Loan      3. The aggregate principal amount of the Loans subject to the requested Conversion is   $_____________________ and the portion of such principal amount as to which such   Conversion is requested is $___________________.      4. The amount of such Loans to be so Converted is to be converted into Loans of the   following Type:       [Check one box only]      Base Rate Loan     LIBOR Loan, with an initial Interest Period for a duration of:        

 

   E-2   [Check one box only]     one month     two months     three months     six months     other: ____________________      The Borrower hereby certifies to the Administrative Agent and the Lenders that as of the date   hereof, as of the proposed date of the requested Conversion, and after giving effect to such Conversion,   no Default or Event of Default exists or will exist.       If notice of the requested Conversion was given previously by telephone, this notice shall be   considered the written confirmation of such telephone notice required under Section 2.9. of the Credit   Agreement.      SAUL HOLDINGS LIMITED PARTNERSHIP      By: Saul Centers, Inc., its General Partner      By: ________________________________         Name: ___________________________         Title: ____________________________                  

 

   F-1   EXHIBIT F      FORM OF NOTICE OF SWINGLINE BORROWING      ____________, 20___      Wells Fargo Bank, National Association   Minneapolis Loan Center   733 Marquette Avenue, 10th Floor   Minneapolis, MN 55402   Attention:  ______________         Ladies and Gentlemen:      Reference is made to that certain Amended and Restated Credit Agreement dated as of June 24,   2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit   Agreement”), by and among Saul Holdings Limited Partnership (the “Borrower”), the Lenders from time   to time parties thereto (the “Lenders”), the Issuing Banks from time to time parties thereto, Wells Fargo   Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties   thereto.  Capitalized terms used herein, and not otherwise defined herein, have their respective meanings   given them in the Credit Agreement.      1. Pursuant to Section 2.4(b) of the Credit Agreement, the Borrower hereby requests that the   Swingline Lender make a Swingline Loan to the Borrower in an amount equal to   $___________________.      2. The Borrower requests that such Swingline Loan be made available to the Borrower on   ____________, 20___.      3. The Borrower requests that the proceeds of such Swingline Loan be made available to the   Borrower by ____________________.       The Borrower hereby certifies to the Administrative Agent, the Swingline Lender and the other   Lenders that as of the date hereof, as of the date of the making of the requested Swingline Loan, and after   the making of such Swingline Loan, (a) no Default or Event of Default exists or would exist, and none of   the limits specified in Section 2.14. of the Credit Agreement would be violated; and (b) the   representations and warranties made or deemed made by the Borrower and each other Loan Party in the   Loan Documents to which any of them is a party, are and shall be true and correct in all material respects   (except in the case of any representation or warranty qualified by materiality, in which case such   representation and warranty shall be true and correct in all respects) with the same force and effect as if   made on and as of such date except to the extent that such representations and warranties expressly relate   solely to an earlier date (in which case such representations and warranties shall have been true and   correct in all material respects (except in the case of any representation or warranty qualified by   materiality, in which case such representation and warranty shall be true and correct in all respects) on   and as of such earlier date) and except for changes in factual circumstances not expressly prohibited under   the Loan Documents.  In addition, the Borrower certifies to the Administrative Agent and the Lenders that   all conditions to the making of the requested Swingline Loan contained in Article VI. of the Credit   Agreement will have been satisfied (or waived in accordance with the terms of the Credit Agreement) at   the time such Swingline Loan is made.     

 

   F-2      [Continued on next page]     

 

   F-3    If notice of the requested borrowing of this Swingline Loan was previously given by telephone,   this notice is to be considered the written confirmation of such telephone notice required by Section   2.3(b) of the Credit Agreement.      SAUL HOLDINGS LIMITED PARTNERSHIP      By: Saul Centers, Inc., its General Partner      By: ________________________________         Name: ___________________________         Title: ____________________________            

 

   G-1   EXHIBIT G      FORM OF REVOLVING NOTE      $______________ _________, 20__      FOR VALUE RECEIVED, the undersigned, SAUL HOLDINGS LIMITED PARTNERSHIP (the   “Borrower”) hereby unconditionally promises to pay to the order of ___________________________   (the “Lender”), in care of Wells Fargo Bank, National Association, as Administrative Agent (the   “Administrative Agent”), to its address at Minneapolis Loan Center of Administrative Agent, 733   Marquette Avenue, 10th Floor, Minneapolis, MN 55402, or at such other address as may be specified by   the Administrative Agent to the Borrower, the principal sum of ___________________ AND ___/100   DOLLARS ($_____________), or such lesser amount as may be the then outstanding and unpaid balance   of all Revolving Loans made by the Lender to the Borrower pursuant to, and in accordance with the terms   of, the Credit Agreement.      The Borrower further agrees to pay interest at said office, in Dollars, on the unpaid principal   amount owing hereunder from time to time on the dates and at the rates and at the times specified in the   Credit Agreement.      This Revolving Note is one of the “Revolving Notes” referred to in that certain Amended and   Restated Credit Agreement dated as of June 24, 2014 (as amended, restated, supplemented or otherwise   modified from time to time, the “Credit Agreement”), by and among the Borrower, the Lenders from time   to time parties thereto (the “Lenders”), the Issuing Banks from time to time parties thereto, the   Administrative Agent, and the other parties thereto, and is subject to, and entitled to, all provisions and   benefits thereof.  Capitalized terms used herein and not defined herein shall have the respective meanings   given to such terms in the Credit Agreement.  The Credit Agreement, among other things, (a) provides for   the making of Revolving Loans by the Lender to the Borrower from time to time in an aggregate amount   not to exceed at any time outstanding the Dollar amount first above mentioned, (b) permits the   prepayment of the Loans by the Borrower subject to certain terms and conditions and (c) provides for the   acceleration of the Revolving Loans upon the occurrence of certain specified events.      The Borrower hereby waives presentment, demand, protest and notice of any kind.  No failure to   exercise, and no delay in exercising any rights hereunder on the part of the holder hereof shall operate as   a waiver of such rights.      Time is of the essence for this Note.      [This Note is given in replacement of the Revolving Note dated _____ __, 20__, in the original   principal amount of $_______ previously delivered to the Lender under the Credit Agreement.  THIS   NOTE IS NOT INTENDED TO BE, AND SHALL NOT BE CONSTRUED TO BE, A NOVATION OF   ANY OF THE OBLIGATIONS OWING UNDER OR IN CONNECTION WITH THE OTHER NOTE.]1        THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,   THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND   TO BE FULLY PERFORMED, IN SUCH STATE.                                                               1 Language to be included in case of an assignment and need to issue a replacement note to an existing Lender,   either because such Lender’s Commitment has increased or decreased from what it was initially.       

 

   G-2        

 

   G-3   IN WITNESS WHEREOF, the undersigned has executed and delivered this Revolving Note   under seal as of the date first written above.      SAUL HOLDINGS LIMITED PARTNERSHIP      By: Saul Centers, Inc., its General Partner      By: ________________________________         Name: ___________________________         Title: ____________________________            

 

   H-1   EXHIBIT H      FORM OF SWINGLINE NOTE         $________________ ___________ ___, 20__       FOR VALUE RECEIVED, the undersigned, SAUL HOLDINGS LIMITED PARTNERSHIP (the   “Borrower”), hereby promises to pay to the order of WELLS FARGO BANK, NATIONAL   ASSOCIATION (the “Swingline Lender”) to its address at Minneapolis Loan Center of Administrative   Agent, 733 Marquette Avenue, 10th Floor, Minneapolis, MN 55402, or at such other address as may be   specified by the Swingline Lender to the Borrower, the principal sum of __________________ AND   NO/100 DOLLARS ($________________) (or such lesser amount as shall equal the aggregate unpaid   principal amount of Swingline Loans made by the Swingline Lender to the Borrower under the Credit   Agreement), on the dates and in the principal amounts provided in the Credit Agreement, and to pay   interest on the unpaid principal amount owing hereunder, at the rates and on the dates provided in the   Credit Agreement.       The date, amount of each Swingline Loan, and each payment made on account of the principal   thereof, shall be recorded by the Swingline Lender on its books and, prior to any transfer of this   Swingline Note (this “Note”), endorsed by the Swingline Lender on the schedule attached hereto or any   continuation thereof, provided that the failure of the Swingline Lender to make any such recordation or   endorsement shall not affect the obligations of the Borrower to make a payment when due of any amount   owing under the Credit Agreement or hereunder in respect of the Swingline Loans.       This Note is the “Swingline Note” referred to in that certain Amended and Restated Credit   Agreement dated as of June 24, 2014 (as amended, restated, supplemented or otherwise modified from   time to time, the “Credit Agreement”), by and among the Borrower, the Lenders from time to time parties   thereto (the “Lenders”), the Issuing Banks from time to time parties thereto, Wells Fargo Bank, National   Association, as Administrative Agent, and the other parties thereto, and evidences Swingline Loans made   to the Borrower thereunder.  Terms used but not otherwise defined in this Note have the respective   meanings assigned to them in the Credit Agreement.       The Credit Agreement provides for the acceleration of the maturity of this Note upon the   occurrence of certain events and for prepayments of Swingline Loans upon the terms and conditions   specified therein.       THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,   THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND   TO BE FULLY PERFORMED, IN SUCH STATE.       The Borrower hereby waives presentment for payment, demand, notice of demand, notice of   non-payment, protest, notice of protest and all other similar notices.      Time is of the essence for this Note.     

 

   H-2   IN WITNESS WHEREOF, the undersigned has executed and delivered this Swingline Note   under seal as of the date first written above.      SAUL HOLDINGS LIMITED PARTNERSHIP      By: Saul Centers, Inc., its General Partner      By: ________________________________         Name: ___________________________         Title: ____________________________            

 

   H-3      SCHEDULE OF SWINGLINE LOANS       This Note evidences Swingline Loans made under the within-described Credit Agreement to the   Borrower, on the dates and in the principal amounts set forth below, subject to the payments and   prepayments of principal set forth below:         Date of Loan   Principal   Amount of   Loan   Amount Paid   or Prepaid   Unpaid   Principal   Amount   Notation    Made By                 

 

 Loan No. 1005595      I-1   EXHIBIT I      DISBURSEMENT INSTRUCTION AGREEMENT            Borrower:  Saul Holdings Limited Partnership         Administrative Agent:  Wells Fargo Bank, National Association          Loan:  Loan number 1005595 made pursuant to that certain “Amended and Restated Credit Agreement” dated as of   June 24, 2014 between Borrower, Administrative Agent, Wells Fargo Securities, LLC and the Lenders, as amended   from time to time         Effective Date:  [_______], 20[__]         Check applicable box:       New – This is the first Disbursement Instruction Agreement submitted in connection with the Loan.    Replace Previous Agreement – This is a replacement Disbursement Instruction Agreement.  All prior   instructions submitted in connection with this Loan are cancelled as of the Effective Date set forth above.         This Agreement must be signed by the Borrower and is used for the following purposes:      (1) to designate an individual or individuals with authority to request disbursements of Loan proceeds, whether   at the time of Loan closing/origination or thereafter;   (2) to designate an individual or individuals with authority to request disbursements of funds from Restricted   Accounts (as defined in the Terms and Conditions attached to this Agreement), if applicable; and   (3) to provide Administrative Agent with specific instructions for wiring or transferring funds on Borrower’s   behalf.      Any of the disbursements, wires or transfers described above are referred to herein as a “Disbursement.”      Specific dollar amounts for Disbursements must be provided to Administrative Agent at the time of the applicable   Disbursement in the form of a signed closing statement or an email instruction or other written communication   (each, a “Disbursement Request”) from an applicable Authorized Representative (as defined in the Terms and   Conditions attached to this Agreement).      A new Disbursement Instruction Agreement must be completed and signed by the Borrower if (i) all or any portion   of a Disbursement is to be transferred to an account or an entity not described in this Agreement or (ii) Borrower   wishes to add or remove any Authorized Representatives.       See the Additional Terms and Conditions attached hereto for additional information and for definitions of   certain capitalized terms used in this Agreement.     

 

 Loan No. 1005595      I-2      Disbursement of Loan Proceeds at Origination/Closing         Closing Disbursement Authorizers:  Administrative Agent is authorized to accept one or more Disbursement   Requests from any of the individuals named below (each, a “Closing Disbursement Authorizer”) to disburse Loan   proceeds on or about the date of the Loan origination/closing and to initiate Disbursements in connection therewith   (each, a “Closing Disbursement”):       Individual’s Name Title   1.     2.     3.        Describe Restrictions, if any, on the authority of the Closing Disbursement Authorizers (dollar amount limits,   wire/deposit destinations, etc.):   N/A   If there are no restrictions described here, any Closing Disbursement Authorizer may submit a Disbursement   Request for all available Loan proceeds.         Permitted Wire Transfers:  Disbursement Requests for the Closing Disbursement(s) to be made by wire transfer   must specify the amount and applicable Receiving Party.  Each Receiving Party included in any such Disbursement   Request must be listed below.  Administrative Agent is authorized to use the wire instructions that have been   provided directly to Administrative Agent by the Receiving Party or Borrower and attached as the Closing Exhibit.    All wire instructions must be in the format specified on the Closing Exhibit.       Names of Receiving Parties for the Closing Disbursement(s) (may include as many parties as needed; wire   instructions for each Receiving Party must be attached as the Closing Exhibit)   1.    2.    3.          Direct Deposit:  Disbursement Requests for the Closing Disbursement(s) to be deposited into an account at Wells   Fargo Bank, N.A. must specify the amount and applicable account.  Each account included in any such   Disbursement Request must be listed below.        Name on Deposit Account:    Wells Fargo Bank, N.A. Deposit Account Number:    Further Credit Information/Instructions:         

 

 Loan No. 1005595      I-3      Disbursements of Loan Proceeds Subsequent to Loan Closing/Origination         Subsequent Disbursement Authorizers:  Administrative Agent is authorized to accept one or more Disbursement   Requests from any of the individuals named below (each, a “Subsequent Disbursement Authorizer”) to disburse   Loan proceeds after the date of the Loan origination/closing and to initiate Disbursements in connection therewith   (each, a “Subsequent Disbursement”):       Individual’s Name Title   1.     2.     3.        Describe Restrictions, if any, on the authority of the Subsequent Disbursement Authorizers (dollar amount limits,   wire/deposit destinations, etc.):     N/A   If there are no restrictions described here, any Subsequent Disbursement Authorizer may submit a   Disbursement Request for all available Loan proceeds.         Permitted Wire Transfers:  Disbursement Requests for Subsequent Disbursements to be made by wire transfer must   specify the amount and applicable Receiving Party.  Each Receiving Party included in any such Disbursement   Request must be listed below.  Administrative Agent is authorized to use the wire instructions that have been   provided directly to Administrative Agent by the Receiving Party or Borrower and attached as the Subsequent   Disbursement Exhibit. All wire instructions must be in the format specified on the Subsequent Disbursement   Exhibit.       Names of Receiving Parties for Subsequent Disbursements (may include as many parties as needed; wire   instructions for each Receiving Party must be attached as the Subsequent Disbursement Exhibit)   1.    2.    3.          Direct Deposit:  Disbursement Requests for Subsequent Disbursements to be deposited into an account at Wells   Fargo Bank, N.A. must specify the amount and applicable account.  Each account included in any such   Disbursement Request must be listed below.        Name on Deposit Account:    Wells Fargo Bank, N.A. Deposit Account Number:    Further Credit Information/Instructions:         

 

 Loan No. 1005595      I-4      Restricted Account Disbursements          Restricted Account Disbursement Authorizers:  Administrative Agent is authorized to accept one or more   Disbursement Requests from any of the individuals named below (each, a “Restricted Account Disbursement   Authorizer”) to disburse funds from a Restricted Account and to initiate Disbursements in connection therewith   (each, a “Restricted Account Disbursement”):       Individual’s Name Title   1.     2.     3.        Describe Restrictions, if any, on the authority of the Restricted Account Disbursement Authorizers (dollar amount   limits, wire/deposit destinations, etc.):   N/A   If there are no restrictions described here, any Restricted Account Disbursement Authorizer may submit a   Disbursement Request for all available funds.         Permitted Wire Transfers:  Disbursement Requests for Restricted Account Disbursements to be made by wire   transfer must specify the amount and applicable Receiving Party.  Each Receiving Party included in any such   Disbursement Request must be listed below.  Administrative Agent is authorized to use the wire instructions that   have been provided directly to Administrative Agent by the Receiving Party or Borrower and attached as the   Restricted Account Disbursement Exhibit. All wire instructions must be in the format specified on the   Restricted Account Disbursement Exhibit.       Names of Receiving Parties for Restricted Account Disbursements (may include as many parties as needed;   wire instructions for each Receiving Party must be attached as the Restricted Account Disbursement Exhibit)   1.    2.    3.          Direct Deposit:  Disbursement Requests for Restricted Account Disbursements to be deposited into an account at   Wells Fargo Bank, N.A. must specify the amount and applicable account.  Each account included in any such   Disbursement Request must be listed below.        Name on Deposit Account:    Wells Fargo Bank, N.A. Deposit Account Number:    Further Credit Information/Instructions:         

 

 Loan No. 1005595      I-5   Borrower acknowledges that all of the information in this Agreement is correct and agrees to the terms and   conditions set forth herein and in the Additional Terms and Conditions on the following page.      SAUL HOLDINGS LIMITED PARTNERSHIP      By: Saul Centers, Inc., its General Partner      By: ________________________________         Name: ___________________________         Title: ____________________________         

 

 Loan No. 1005595      I-6   Additional Terms and Conditions to the Disbursement Instruction Agreement      Definitions.  The following capitalized terms shall have the meanings set forth below:      “Authorized Representative” means any or all of the Closing Disbursement Authorizers, Subsequent Disbursement Authorizers and   Restricted Account Disbursement Authorizers, as applicable.   “Receiving Bank” means the financial institution where a Receiving Party maintains its account.   “Receiving Party” means the ultimate recipient of funds pursuant to a Disbursement Request.   “Restricted Account” means an account at Wells Fargo Bank, N.A. associated with the Loan to which Borrower’s access is   restricted.      Capitalized terms used in these Additional Terms and Conditions to Disbursement Instruction Agreement and not otherwise defined herein shall   have the meanings given to such terms in the body of the Agreement.      Disbursement Requests. Except as expressly provided in the Amended and Restated Credit Agreement, Administrative Agent must receive   Disbursement Requests in writing.    Disbursement Requests will only be accepted from the applicable Authorized Representatives designated in   the Disbursement Instruction Agreement. Disbursement Requests will be processed subject to satisfactory completion of Administrative Agent’s   customer verification procedures. Administrative Agent is only responsible for making a good faith effort to execute each Disbursement Request   and may use agents of its choice to execute Disbursement Requests.  Funds disbursed pursuant to a Disbursement Request may be transmitted   directly to the Receiving Bank, or indirectly to the Receiving Bank through another bank, government agency, or other third party that   Administrative Agent considers to be reasonable.  Administrative Agent will, in its sole discretion, determine the funds transfer system and the   means by which each Disbursement will be made.  Administrative Agent may delay or refuse to accept a Disbursement Request if the   Disbursement would: (i) violate the terms of this Agreement; (ii) require use of a bank unacceptable to Administrative Agent or Banks or   prohibited by government authority; (iii) cause Administrative Agent or Banks to violate any Federal Reserve or other regulatory risk control   program or guideline; or (iv) otherwise cause Administrative Agent or Banks to violate any applicable law or regulation.      Limitation of Liability. Administrative Agent and Banks shall not be liable to Borrower or any other parties for: (i) errors, acts or failures to act   of others, including other entities, banks, communications carriers or clearinghouses, through which Borrower’s requested Disbursements may be   made or information received or transmitted, and no such entity shall be deemed an agent of the Administrative Agent or any Bank; (ii) any loss,   liability or delay caused by fires, earthquakes, wars, civil disturbances, power surges or failures, acts of government, labor disputes, failures in   communications networks, legal constraints or other events beyond Administrative Agent’s or any Bank’s control; or (iii) any special,   consequential, indirect or punitive damages, whether or not (A) any claim for these damages is based on tort or contract or (B) Administrative   Agent, any Bank or Borrower knew or should have known the likelihood of these damages in any situation.  Neither Administrative Agent, nor   any Bank makes any representations or warranties other than those expressly made in this Agreement.  IN NO EVENT WILL   ADMINISTRATIVE AGENT OR ANY BANK BE LIABLE FOR DAMAGES ARISING DIRECTLY OR INDIRECTLY IF A   DISBURSEMENT REQUEST IS EXECUTED BY ADMINISTRATIVE AGENT IN GOOD FAITH AN IN ACCORDANCE WITH THE   TERMS OF THIS AGREEMENT.      Reliance on Information Provided. Administrative Agent is authorized to rely on the information provided by Borrower or any Authorized   Representative in or in accordance with this Agreement when executing a Disbursement Request until Administrative Agent has received a new   Agreement signed by Borrower.  Borrower agrees to be bound by any Disbursement Request: (i) authorized or transmitted by Borrower; or (ii)   made in Borrower’s name and accepted by Administrative Agent in good faith and in compliance with this Agreement, even if not properly   authorized by Borrower.  Administrative Agent may rely solely (i) on the account number of the Receiving Party, rather than the Receiving   Party’s name, and (ii) on the bank routing number of the Receiving Bank, rather than the Receiving Bank’s name, in executing a Disbursement   Request.  Administrative Agent is not obligated or required in any way to take any actions to detect errors in information provided by Borrower or   an Authorized Representative.  If Administrative Agent takes any actions in an attempt to detect errors in the transmission or content of transfers   or requests or takes any actions in an attempt to detect unauthorized Disbursement Requests, Borrower agrees that, no matter how many times   Administrative Agent takes these actions, Administrative Agent will not in any situation be liable for failing to take or correctly perform these   actions in the future, and such actions shall not become any part of the Disbursement procedures authorized herein, in the Loan Documents, or in   any agreement between Administrative Agent and Borrower.      International Disbursements. A Disbursement Request expressed in US Dollars will be sent in US Dollars, even if the Receiving Party or   Receiving Bank is located outside the United States. Administrative Agent will not execute Disbursement Requests expressed in foreign currency   unless permitted by the Amended and Restated Credit Agreement.     

 

 Loan No. 1005595      I-7      Errors. Borrower agrees to notify Administrative Agent of any errors in the Disbursement of any funds or of any unauthorized or improperly   authorized Disbursement Requests within fourteen (14) days after Administrative Agent’s confirmation to Borrower of such Disbursement.       Finality of Disbursement Requests. Disbursement Requests will be final and will not be subject to stop payment or recall; provided that   Administrative Agent may, at Borrower’s request, make an effort to effect a stop payment or recall but will incur no liability whatsoever for its   failure or inability to do so.        

 

 Loan No. 1005595      I-8   CLOSING EXHIBIT   WIRE INSTRUCTIONS         All wire instructions must contain the following information:         Transfer/Deposit Funds to (Receiving Party Account Name)      Receiving Party Deposit Account Number      Receiving Bank Name, City and State        Receiving Bank Routing (ABA) Number   Further identifying information, if applicable (title escrow number, borrower name, loan number,   etc.)           

 

 Loan No. 1005595      I-9   SUBSEQUENT DISBURSEMENT EXHIBIT   WIRE INSTRUCTIONS         All wire instructions must contain the following information:         Transfer/Deposit Funds to (Receiving Party Account Name)      Receiving Party Deposit Account Number      Receiving Bank Name, City and State        Receiving Bank Routing (ABA) Number   Further identifying information, if applicable (title escrow number, borrower name, loan number,   etc.)           

 

 Loan No. 1005595      I-10   RESTRICTED ACCOUNT DISBURSEMENT EXHIBIT   WIRE INSTRUCTIONS         All wire instructions must contain the following information:         Transfer/Deposit Funds to (Receiving Party Account Name)      Receiving Party Deposit Account Number      Receiving Bank Name, City and State        Receiving Bank Routing (ABA) Number   Further identifying information, if applicable (title escrow number, borrower name, loan number,   etc.)              

 

   J-1   EXHIBIT J      FORM OF OPINION OF COUNSELTO THE BORROWER AND GUARANTORS      [ATTACHED]     

 

   K-1   EXHIBIT K      FORM OF COMPLIANCE CERTIFICATE          Reference is made to that certain Amended and Restated Credit Agreement dated as of June   24, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit   Agreement”), by and among Saul Holdings Limited Partnership (the “Borrower”), the Lenders from   time to time parties thereto (the “Lenders”), Wells Fargo Bank, National Association, as   Administrative Agent (the “Administrative Agent”), and the other parties thereto.  Capitalized terms   used herein, and not otherwise defined herein, have their respective meanings given to them in the   Credit Agreement.       Pursuant to Section 9.3 of the Credit Agreement, the undersigned hereby certifies to the   Administrative Agent and the Lenders that:       1. (a) The undersigned has reviewed the terms of the Credit Agreement and has made a   review of the transactions, financial condition and other affairs of the Borrower and its Subsidiaries as   of, and during the [quarterly][annual] accounting period ending on _______________, 20__ and (b)   such review has not disclosed the existence during such accounting period, and the undersigned does   not have knowledge of the existence, as of the date hereof, of any condition or event constituting a   Default or Event of Default [except as set forth on Attachment A hereto, which accurately describes   the nature of the conditions(s) or event(s) that constitute (a) Default(s) or (an) Event(s) of Default and   the actions which the Borrower (is taking)(is planning to take) with respect to such condition(s) or   event(s)].       2. Schedule 1 attached hereto accurately and completely sets forth the calculations   required to establish compliance with Section 10.1 of the Credit Agreement on the date of the financial   statements for the accounting period set forth above.       3. Borrower’s Funds from Operations for such [quarterly][annual] accounting period   ending on _______________, 20__ were $_________ (subject to correction arising in the course of   audit).       4. The representations and warranties of the Borrower and the other Loan Parties   contained in the Credit Agreement and the other Loan Documents are true and correct in all material   respects (except in the case of any representation or warranty qualified by materiality, in which case   such representation and warranty shall be true and correct in all respects), except to the extent such   representations or warranties expressly relate solely to an earlier date (in which case such   representations and warranties shall have been true and correct in all material respects (except in the   case of any representation or warranty qualified by materiality, in which case such representation and   warranty shall be true and correct in all respects) on and as of such earlier date) and except for changes   in factual circumstances not expressly prohibited under the Credit Agreement or the other Loan   Documents.        

 

   K-2    IN WITNESS WHEREOF, the undersigned has signed this Compliance Certificate on and as   of ___________, 20__.         SAUL HOLDINGS LIMITED PARTNERSHIP      By: Saul Centers, Inc., its General Partner      By: _________________________    Name:   ______________________    Title:  Chief Financial Officer

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