Document:

EX-10.1

 

Exhibit 10.1

CREDIT AGREEMENT

Dated as of November 12, 2004

among

MUNIMAE TEI HOLDINGS, LLC,

MMA CONSTRUCTION FINANCE, LLC,

and

MIDLAND MORTGAGE INVESTMENT CORPORATION

as the Borrowers,

MUNICIPAL MORTGAGE & EQUITY, LLC,

as the Guarantor,

BANK OF AMERICA, N.A.,

as the Administrative Agent,

U.S. BANK NATIONAL ASSOCIATION, RBC CAPITAL MARKETS,

CITICORP USA, INC.,

as

Co-Syndication Agents,

The Other Lenders Party Hereto

and

BANC OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 
	 	 	Page	 
	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 
	 	 	1	 
	1.01. Defined Terms 
	 	 	1	 
	1.02. Other Interpretive Provisions 
	 	 	18	 
	1.03. Accounting Terms; Changes in GAAP
	 	 	18	 
	1.04. Rounding 
	 	 	19	 
	1.05. References to Agreements and Laws 
	 	 	19	 
	1.06. Times of Day 
	 	 	19	 
	ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS 
	 	 	19	 
	2.01. Committed Loans 
	 	 	19	 
	2.02. Borrowings, Conversions and Continuations of Committed Loans 
	 	 	20	 
	2.03. Prepayments 
	 	 	21	 
	2.04. Termination or Reduction of Commitments 
	 	 	22	 
	2.05. Repayment of Loans 
	 	 	22	 
	2.06. Interest 
	 	 	22	 
	2.07. Fees 
	 	 	23	 
	2.08. Computation of Interest and Fees 
	 	 	23	 
	2.09. Evidence of Debt 
	 	 	23	 
	2.10. Payments Generally 
	 	 	23	 
	2.11. Sharing of Payments 
	 	 	25	 
	2.12. Extension of Maturity Date 
	 	 	26	 
	ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 
	 	 	26	 
	3.01. Taxes
	 	 	26	 
	3.02. Illegality
	 	 	27	 
	3.03. Inability to Determine Rates
	 	 	28	 
	3.04. Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans
	 	 	28	 
	3.05. Funding Losses
	 	 	29	 
	3.06. Matters Applicable to all Requests for Compensation
	 	 	29	 
	3.07. Survival
	 	 	30	 
	ARTICLE IV CONDITIONS PRECEDENT TO Credit Extensions
	 	 	30	 
	4.01. Conditions of Initial Credit Extension
	 	 	30	 
	4.02. Conditions to all Credit Extensions
	 	 	32	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES
	 	 	33	 
	5.01. Existence, Qualification and Power; Compliance with Laws
	 	 	33	 
	5.02. Authorization; No Contravention
	 	 	33	 
	5.03. Governmental Authorization; Other Consents
	 	 	33	 
	5.04. Binding Effect
	 	 	33	 
	5.05. Financial Statements; No Material Adverse Effect; Solvency
	 	 	34	 
	5.06. Litigation
	 	 	34	 
	5.07. No Default
	 	 	34	 
	5.08. Ownership of Property; Liens
	 	 	35	 
	5.09. Environmental Compliance
	 	 	35	 
	5.10. Insurance
	 	 	35	 

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	5.11. Taxes 
	 	 	35	 
	5.12. ERISA Compliance 
	 	 	35	 
	5.13. Subsidiaries 
	 	 	36	 
	5.14. Margin Regulations; Investment Company Act; Public Utility Holding Company Act 
	 	 	36	 
	5.15. Disclosure 
	 	 	36	 
	5.16. Compliance with Laws 
	 	 	36	 
	5.17. Tax Shelter Regulations 
	 	 	37	 
	5.18. Intellectual Property; Licenses, Etc 
	 	 	37	 
	5.19. Underwriting and Servicing Procedures 
	 	 	37	 
	ARTICLE VI AFFIRMATIVE COVENANTS 
	 	 	38	 
	6.01. Financial Statements 
	 	 	38	 
	6.02. Certificates; Other Information 
	 	 	39	 
	6.03. Notices 
	 	 	40	 
	6.04. Payment of Obligations 
	 	 	41	 
	6.05. Preservation of Existence, Etc 
	 	 	41	 
	6.06. Maintenance of Properties 
	 	 	41	 
	6.07. Maintenance of Insurance 
	 	 	41	 
	6.08. Compliance with Laws 
	 	 	42	 
	6.09. Books and Records 
	 	 	42	 
	6.10. Inspection Rights 
	 	 	42	 
	6.11. Use of Proceeds 
	 	 	42	 
	6.12. Escrow Deposits 
	 	 	42	 
	6.13. Ownership of the Borrowers; NYSE Listing 
	 	 	42	 
	ARTICLE VII NEGATIVE COVENANTS 
	 	 	42	 
	7.01. Liens
	 	 	42	 
	7.02. Fundamental Changes 
	 	 	43	 
	7.03. Investments 
	 	 	43	 
	7.04. Dispositions 
	 	 	43	 
	7.05. Restricted Payments 
	 	 	43	 
	7.06. Change in Nature of Business 
	 	 	44	 
	7.07. Transactions with Affiliates
	 	 	44	 
	7.08. Use of Proceeds
	 	 	44	 
	7.09. Financial Covenants of Guarantor
	 	 	44	 
	ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
	 	 	44	 
	8.01. Events of Default
	 	 	44	 
	8.02. Remedies Upon Event of Default
	 	 	46	 
	8.03. Application of Funds
	 	 	47	 
	ARTICLE IX ADMINISTRATIVE AGENT
	 	 	47	 
	9.01. Appointment and Authorization of Administrative Agent
	 	 	47	 
	9.02. Delegation of Duties
	 	 	48	 
	9.03. Liability of Administrative Agent
	 	 	48	 
	9.04. Reliance by Administrative Agent
	 	 	48	 
	9.05. Notice of Default
	 	 	49	 
	9.06. Credit Decision; Disclosure of Information by Administrative Agent
	 	 	49	 
	9.07. Indemnification of Administrative Agent
	 	 	50	 

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	9.08. Administrative Agent in its Individual Capacity
	 	 	50	 
	9.09. Successor Administrative Agent 
	 	 	50	 
	9.10. Administrative Agent May File Proofs of Claim 
	 	 	51	 
	9.11. Collateral and Guaranty Matters 
	 	 	52	 
	9.12. Other Agents; Arrangers and Managers 
	 	 	52	 
	ARTICLE X MISCELLANEOUS 
	 	 	52	 
	10.01. Amendments, Etc 
	 	 	52	 
	10.02. Notices and Other Communications; Facsimile Copies
	 	 	53	 
	10.03. No Waiver; Cumulative Remedies 
	 	 	54	 
	10.04. Attorney Costs, Expenses and Taxes 
	 	 	54	 
	10.05. Indemnification by the Borrowers 
	 	 	55	 
	10.06. Payments Set Aside 
	 	 	56	 
	10.07. Successors and Assigns 
	 	 	56	 
	10.08. Confidentiality 
	 	 	58	 
	10.09. Set-off 
	 	 	59	 
	10.10. Interest Rate Limitation 
	 	 	59	 
	10.11. Counterparts 
	 	 	60	 
	10.12. Integration 
	 	 	60	 
	10.13. Survival of Representations and Warranties 
	 	 	60	 
	10.14. Severability 
	 	 	60	 
	10.15. Tax Forms
	 	 	61	 
	10.16. Replacement of Lenders
	 	 	62	 
	10.17. Governing Law
	 	 	63	 
	10.18. Waiver of Right to Trial by Jury
	 	 	64	 
	10.19. USA Patriot Act Notice
	 	 	64	 
	10.20. NATURE OF OBLIGATIONS
	 	 	64	 

-iii

 

	 	 	 	 	 
	SCHEDULES
	 	 	 	 
	 
	 	 	 	 
	2.01 Commitments and Pro Rata Shares
	 	 	 	 
	2.02 Applicable Rates; Borrowing Base; Financial Covenants
	 	 	 	 
	5.13 Subsidiaries and Other Equity Investments
	 	 	 	 
	5.18 Trademarks and Trade Names;
	 	 	 	 
	10.02 Administrative Agent’s Office, Certain Addresses for Notices
	 	 	 	 

EXHIBITS

	 	 	 
	A

	 	Committed Loan Notice
	B

	 	Note
	C

	 	Compliance Certificate
	D

	 	Assignment and Assumption
	E

	 	Guaranty
	F

	 	Opinion Matters
	G

	 	Borrowing Base Report
	H

	 	Borrowing Base Submission Package

-iv

 

CREDIT AGREEMENT

     This CREDIT AGREEMENT (“Agreement”) is entered into as of November 12,
2004, among MUNIMAE TEI HOLDINGS, LLC, a Maryland limited liability company,
MMA CONSTRUCTION FINANCE, LLC, a Maryland limited liability company, and
MIDLAND MORTGAGE INVESTMENT CORPORATION, a Florida corporation (collectively,
the “Borrowers”), MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited
liability company, as Guarantor (the “Guarantor”) each lender from time to
time party hereto (collectively, the “Lenders” and individually, a “Lender”),
and BANK OF AMERICA, N.A., as Administrative Agent.

     The Borrowers and the Guarantor have requested that the Lenders provide a
revolving credit facility, and the Lenders are willing to do so on the terms
and conditions set forth herein.

     In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

     1.01. Defined Terms. As used in this Agreement, the following terms shall
have the meanings set forth below:

“Administrative Agent” means Bank of America in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.

“Administrative Agent’s Office” means the Administrative Agent’s address and,
as appropriate, account as set forth on Schedule 10.02, or such other address
or account as the Administrative Agent may from time to time notify the
Borrowers and the Lenders.

“Administrative Questionnaire” means an Administrative Details Reply Form in
the form supplied by the Administrative Agent in the Offering Memorandum, dated
September 2004, issued in connection with the credit facility evidenced hereby.

“Affiliate” means, with respect to any 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. “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.

“Agent-Related Persons” means the Administrative Agent, together with its
Affiliates (including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 1

 

 

“Aggregate Commitments” means the Commitments of all the Lenders, which shall
not exceed an aggregate amount equal to $250,000,000.00.

“Agreement” has the meaning set forth in the introductory paragraph hereto.

“Applicable Rate” means, from time to time, the percentages per annum set
forth in Schedule 2.02(1) attached hereto.

“Approved Permanent Commitment” means a permanent commitment, in form and
substance satisfactory to the Administrative Agent, issued by a permanent
lender acceptable to the Administrative Agent, and which can be and is
collaterally assigned to the Lenders together with the related Taxable
Construction Loan.

“Approved Subordinate Debt” means Indebtedness which is unsecured and
subordinated to payment of the Obligations in a manner acceptable to
Administrative Agent in its sole discretion.

“Arranger” means Banc of America Securities LLC, in its capacity as sole lead
arranger and sole book manager.

“Assignment and Assumption” means an Assignment and Assumption substantially
in the form of Exhibit E.

“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel and, without
duplication, the reasonable allocated cost of internal legal services and all
reasonable expenses and disbursements of internal counsel.

“Attributable Indebtedness” means, on any date, (a) in respect of any capital
lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP
if such lease were accounted for as a capital lease.

“Audited Financial Statements” means the audited consolidated balance sheet of
each Loan Party and Related Party and its Subsidiaries, as applicable, for the
fiscal year ended December 31, 2003, and the related consolidated statements
of income or operations, shareholders’ equity and cash flows for such fiscal
year of each Loan Party and Related Party, including the notes thereto.

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, and (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.04.

“Bank of America” means Bank of America, N.A, and its successors.

“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.” The “prime rate” is a rate set by Bank of America based
upon various factors including Bank of America’s costs and

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 2

 

 

desired return, general economic conditions and other factors, and is used as
a reference point for pricing some loans, which may be priced at, above, or
below such announced rate. Any change in such rate announced by Bank of
America shall take effect at the opening of business on the day specified in
the public announcement of such change.

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

“Bond Specialist” means a Person acceptable to the Administrative Agent which
is not the Guarantor or any Affiliate thereof, and specializes in evaluating
unrated tax-exempt, private activity bonds.

“Bond Valuation Report means a report, in form and substance satisfactory to
the Administrative Agent, showing information related to the Tax-Exempt Bonds,
including, without limitations, the Market Values of such bonds as designated
by a Bond Specialist.

“Borrowers” has the meaning specified in the introductory paragraph hereto.

“Borrower Security Agreement” means a security agreement in form and substance
satisfactory to Administrative Agent by which the Borrowers grant to the
Lenders a Lien on all of their Tax-Exempt Bonds and Taxable Construction
Loans.

“Borrowing” means a borrowing consisting of simultaneous Committed Loans of
the same Type and, in the case of Eurodollar Rate Loans, having the same
Interest Period made by each of the Lenders pursuant to Section 2.01.

“Borrowing Base” means at any time an amount determined pursuant to
calculation described on Schedule 2.02(2) hereof.

“Borrowing Base Report” means a report of the Borrowers to the Administrative
Agent in the form of Exhibit G hereto.

“Borrowing Base Submission Package” means the items delineated in Exhibit H
hereof.

“Borrowing Base Value” means the amount of each Qualified Tax-Exempt Bond and
each Qualified Taxable Construction Loan included in the Borrowing Base after
applying the appropriate percentage discount and appropriate valuation set
forth in the definition of Borrowing Base.

“Business Day” means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in
fact closed in, the state where the Administrative Agent’s Office is located
and, if such day relates to any Eurodollar Rate Loan, means any such day on
which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.

“Change of Control” means, with respect to any Person, an event or series of
events by which:

     (a) any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but
excluding any employee benefit plan

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 3

 

 

of such person or its subsidiaries, and any person or entity acting in
its capacity as trustee, agent or other fiduciary or administrator of any
such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934, except that a person or
group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire (such right, an
“option right”), whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of 25% or more of the
equity securities of such Person entitled to vote for members of the
board of directors or equivalent governing body of such Person on a
fully-diluted basis (and taking into account all such securities that
such person or group has the right to acquire pursuant to any option
right); or

     (b) during any period of 12 consecutive months, a majority of the
members of the board of directors or other equivalent governing body of
such Person cease to be composed of individuals (i) who were members of
that board or equivalent governing body on the first day of such period,
(ii) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body or (iii) whose
election or nomination to that board or other equivalent governing body
was approved by individuals referred to in clauses (i) and (ii) above
constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the
case of both clause (ii) and clause (iii), any individual whose initial
nomination for, or assumption of office as, a member of that board or
equivalent governing body 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).

“Closing Date” means the first date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 4.01 (or, in the case
of Section 4.01 (b), waived by the Person entitled to receive the applicable
payment).

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” means all property in which Administrative Agent now or hereafter
holds a security interest pursuant to the Borrower Security Agreement,
including, without limitation, all Tax-Exempt Bonds, Taxable Construction
Loans and the collateral securing any such bonds or loans.

“Commitment” means, as to each Lender, its obligation to make Committed Loans
to the Borrowers pursuant to Section 2.01.

“Committed Loan” has the meaning specified in Section 2.01.

“Committed Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of
Committed Loans from one Type to the other, or (c) a continuation of
Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing,
shall be substantially in the form of Exhibit A.

“Completion of Construction” means the completion of construction of a Project
as evidenced by (a) delivery of a certificate of substantial completion from
the Project’s architect and (b) the

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 4

 

 

issuance of a final certificate of occupancy for such Project from the
appropriate Governmental Authority.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.

“Consolidated CAD” means, for any period of determination, the cash available
for distribution for such period, as determined in accordance with Guarantor’s
policies and procedures for determining cash available for distribution (a) as
reflected in its earnings packages furnished to the SEC as supporting
documentation for the financial information contained in its periodic filings
on Form 10-K or Form 10-Q or any relevant filings on Form 8-K or (b) as
otherwise made available to Guarantor’s investors and research analysts from
time to time.

“Consolidated Debt” means the total liabilities minus deferred taxes of
Guarantor and its Subsidiaries, all as determined on a consolidated basis in
accordance with GAAP, excluding any liabilities of Guarantor and its
Subsidiaries existing solely as a result of the application of FIN46.

“Consolidated Interest Charges and Distributions” means, for any period, for
the Guarantor and its Subsidiaries on a consolidated basis, the sum of (a) all
interest, premium payments, debt discounts, fees, charges and related expenses
of the Guarantor and its Subsidiaries in connection with borrowed money
(including capitalized interest) or in connection with the deferred purchase
price of assets, in each case to the extent treated as interest in accordance
with GAAP, (b) the portion of rent expense of the Guarantor and its
Subsidiaries with respect to such period under capital leases that is treated
as interest in accordance with GAAP, and (c) Restricted Payments made with
respect to the preferred shares of Guarantor and its Subsidiaries provided,
that there shall be excluded any interest which would otherwise have been
included herein solely as a result of the application of FIN 46.

“Consolidated Interest and Distributions Coverage Ratio” means, as of any date
of determination, the ratio of (a) Consolidated CAD for the four fiscal
quarters most recently ended for which the Guarantor has delivered or should
have delivered financial statements pursuant to Section 6.01 (a) or (b), plus
Consolidated Interest Charges and Distributions for such period to (b)
Consolidated Interest Charges and Distributions for such period.

“Consolidated Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Debt as of such date to (b) Consolidated Tangible
Net Worth as of such date.

“Consolidated Senior Indebtedness” means, as of any date of determination, the
aggregate amount of the following liabilities which would be shown on the
consolidated balance sheet of the Guarantor and its Subsidiaries prepared in
accordance with GAAP: (a) the outstanding principal amount of all obligations,
whether current or long term, for borrowed money (including Obligations
hereunder) and all obligations evidenced by bonds, debentures, notes, loan
agreements or other similar instruments, (b) all purchase money Indebtedness,
(c) all obligations in respect of the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of
business), (d) Attributable Indebtedness in respect of capital leases and
Synthetic Lease Obligations, and (e) all Indebtedness of the types referred to
in clauses (a) through (d) above of any partnership or joint venture (other
than a joint venture that is itself a corporation or limited liability company)
in which the Guarantor or a Subsidiary is a

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 5

 

 

general partner or joint venturer, unless such Indebtedness is expressly made
non-recourse to the Borrowers or such Subsidiary, excluding, however (i)
Approved Subordinate Debt and (ii) any such Indebtedness which exists solely
as a result of the application of FIN 46.

“Consolidated Tangible Net Worth” means, as of any date of determination, for
the Guarantor and its Subsidiaries on a consolidated basis, Shareholders’
Equity of the Guarantor and its Subsidiaries on that date minus the Intangible
Assets of the Guarantor and its Subsidiaries on that date, provided, that the
determination of Consolidated Tangible Net Worth shall be adjusted to exclude
the effect of FIN 46.

“Construction Phase” means the period from commencement of construction of a
particular Project to the Permanent Phase.

“Contingent Obligation” means, as to any Person, (a) any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determinable amount of
the related primary obligation, or portion thereof, in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith.

“Contractual Obligation” means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

“Control” has the meaning specified in the definition
of “Affiliate.”

“Credit Extension” means the making of
Committed Loans.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights
of creditors generally.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 6

 

 

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the
Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum;
provided, however, that with respect to a Eurodollar Rate Loan, the Default
Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each
case to the fullest extent permitted by applicable Laws.

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Committed Loans required to be funded by it hereunder within one Business
Day of the date required to be funded by it hereunder, (b) has otherwise failed
to pay over to the Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within one Business Day of the date when
due, unless the subject of a good faith dispute, or (c) has been deemed
insolvent or become the subject of a bankruptcy or insolvency proceeding.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with
or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.

“Dollar” and “$” mean lawful money of the United States.

“PUS Guide” means the Fannie Mae Delegated Underwriting and Servicing Guide,
as amended, supplemented, modified or reissued from time to time, including
any DUS lender memos, announcements or guide updates issued pursuant thereto.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, and (c)
any other Person (other than a natural person) approved by (i) the
Administrative Agent, and (ii) unless an Event of Default has occurred and is
continuing, the Borrowers (each such approval not to be unreasonably withheld
or delayed); provided that notwithstanding the foregoing, “Eligible Assignee”
shall not include any Loan Party or any of the Loan Parties’ Affiliates or
Subsidiaries.

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or
the release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or
public systems.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of any Loan Party or any of their respective
Subsidiaries directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 7

 

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

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

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b)
a withdrawal by any Borrower, the Guarantor or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by any Borrower, the
Guarantor or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under
Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the
PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, upon any Borrower, the Guarantor or any ERISA Affiliate.

“Eurodollar Base Rate” has the meaning set forth in the definition of
Eurodollar Rate.

“Eurodollar Rate” means for any Interest Period with respect to a Eurodollar
Rate Loan, a rate per annum determined by the Administrative Agent pursuant to
the following formula:

	 	 	 
	

	 	Eurodollar Base Rate
	Eurodollar Rate =

	 	

	

	 	1.00 – Eurodollar Reserve Percentage

Where,

“Eurodollar Base Rate” means, for such Interest Period (rounded upwards,
as necessary, to the nearest 1/100 of 1%) the rate per annum equal to the
British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source providing quotations of
BBA LIBOR as designated by the Administrative Agent from time to time) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery
on the first day of such Interest Period) with a term equivalent to such
Interest Period. If such rate is not available at such time for any
reason, then the “Eurodollar Base Rate” for such Interest Period shall be
the rate per annum determined by the Administrative Agent to be the rate
at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the
Eurodollar Rate Loan being made, continued or converted by Bank of
America and with a term equivalent to such Interest Period would be
offered by Bank of America’s London Branch to major banks in the London
interbank eurodollar market at their request at approximately 11:00 a.m.
(London time) two Business Days prior to the commencement of such
Interest Period.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 8

 

 

“Eurodollar Reserve Percentage” means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, carried out to
five decimal places) in effect on such day, whether or not applicable to
any Lender, under regulations issued from time to time by the Board of
Governors of the Federal Reserve System of the United States for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as “Eurocurrency
liabilities”). The Eurodollar Rate for each outstanding Eurodollar Rate
Loan shall be adjusted automatically as of the effective date of any
change in the Eurodollar Reserve Percentage.

“Eurodollar Rate Loan” means a Committed Loan that bears interest at a rate
based on the Eurodollar Rate.

“Eurodollar Reserve Percentage” has the meaning set forth in the definition of
Eurodollar Rate.

“Event of Default” has the meaning specified in Section 8.01.

“Existing Tax-Exempt Bond” means a Tax-Exempt Bond which is not originally
funded by any Borrower or Affiliate thereof and includes, without limitation,
any Existing Tax-Exempt Bonds which are refunded or refinanced by any
Borrower.

“Fannie Mae” means the Federal National Mortgage Association, which is
authorized to do business as “Fannie Mae.”

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

“Fee Letter” means the letter agreement, dated May 19, 2004, among the
Borrowers, the Administrative Agent and the Arranger.

“FIN 46” means the Interpretation of Accounting Research Bulletin no.
51, Consolidated Financial Statements, promulgated by the Financial Accounting
Standards Board, as the same may be restated, modified or changed from time to
time.

“Foreign, Lender” has the meaning specified in Section 10.15(a)(i).

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

“Freddie Mac” means the Federal Home Loan Mortgage Corporation.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 9

 

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Guarantor” has the meaning specified in the introductory paragraph hereto.

“Guaranty” means the Guaranty made by the Guarantor in favor of the
Administrative Agent on behalf of the Lenders, substantially in the form of
Exhibit E.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all
other substances or wastes of any nature regulated pursuant to any
Environmental Law.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

     (a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes, loan agreements
or other similar instruments;

     (b) all direct or contingent obligations of such Person arising
under letters of credit (including standby and commercial), bankers’ acceptances,
bank guaranties, surety bonds and similar instruments;

     (c) net obligations of such Person under any Swap Contract;

     (d) all obligations of such Person to pay the deferred purchase
price of property or services (other than trade accounts payable in the
ordinary course of business);

     (e) indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention agreements), whether or
not such indebtedness shall have been assumed by such Person or is limited in recourse;

     (f) capital leases and Synthetic Lease Obligations; and

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 10

 

 

     (g) all Contingent Obligations of such Person in respect of
any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such
Person is a general partner or a joint venturer, unless such Indebtedness is
expressly made non-recourse to such Person. The amount of any net obligation
under any Swap Contract on any date shall be deemed to be the Swap Termination
Value thereof as of such date. The amount of any capital lease or Synthetic
Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.

“Indemnified Liabilities” has the meaning set forth in
Section 10.05.

“Indemnities” has the meaning set forth
in Section 10.05.

“Intangible Assets” means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, computer software, copyrights,
trade names, trademarks, patents, franchises, licenses, unamortized deferred
charges, and unamortized debt discount.

“Interest Payment Date” means the first Business Day of each month and the
Maturity Date.

“Interest Period” means, as to each Eurodollar Rate Loan, the period
commencing on the date
such Eurodollar Rate Loan is disbursed or converted to or continued as a
Eurodollar Rate Loan and ending on the date one, two or three months
thereafter, as selected by the Borrowers in their Committed Loan Notice;
provided that:

(i) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Business Day;

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

(iii) no Interest Period shall extend beyond the Maturity Date.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Contingent Obligation or assumption of debt
of, or purchase or other acquisition of any other debt or equity participation
or interest in, 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 a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 11

 

 

“IRS” means the United States Internal Revenue Service.

“Laws” means, collectively, all international, foreign, Federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authority.

“Lender” has the meaning specified in the introductory paragraph hereto.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrowers and
the Administrative Agent.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic
effect as any of the foregoing).

“Loan” means an extension of credit by a Lender to the Borrowers under Article
II in the form of a Committed Loan.

“Loan Documents” means this Agreement, each Note, the Fee Letter, the
Guaranty, the Borrower Security Agreement, and all other collateral
assignments, pledges, deeds of trust, security agreements and other documents,
instruments and agreements evidencing or securing the Obligations.

“Loan Parties” means, collectively, the Borrowers and the Guarantor.

“Market Value” means the market value of the Tax-Exempt Bonds as determined by
a Bond Specialist, on a quarterly basis.

“Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
liabilities (actual or contingent), condition (financial or otherwise) or
prospects of any Borrower and its Subsidiaries, taken as a whole, or the
Guarantor and its Subsidiaries, taken as a whole; (b) a material impairment of
the ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party; (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party; or (d) the occurrence of any event
which would have a material adverse effect on the Collateral or Lenders’ Liens
in the Collateral.

“Maturity Date”
means the later of (a) November 12, 2006 and (b) if the maturity
is extended
pursuant to Section 2.12, such extended maturity date as determined pursuant to
such Section.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 12

 

 

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

“Note” means a promissory note made by the Borrowers in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibits.

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest, costs, expenses and fees
that accrue after the commencement by or against any Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in such proceeding, regardless of whether such interest,
costs, expenses and fees are allowed claims in such proceeding.

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Outstanding Amount” means with respect to Committed Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Committed Loans occurring on such
date.

“Participant” has the meaning specified in Section
10.07(d).

“PBGC” means the Pension Benefit Guaranty
Corporation.

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

“Permanent Phase” means with respect to a Project the date on which
amortization payments have commenced on the project loan and there shall have
occurred (a) Completion of Construction, (b) Stabilization and (c) if required
or provided for under the applicable bond documents, a Resizing of the
applicable Tax-Exempt Bond.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 13

 

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

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

“Pro Rata Share” means, with respect to each Lender at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of the Commitment of such Lender at such time
and the denominator of which is the amount of the Aggregate Commitments at
such time; provided that if the commitment of each Lender to make Loans has
been terminated pursuant to Section 8.02, then the Pro Rata Share of each
Lender shall be determined based on the Pro Rata Share of such Lender
immediately prior to such termination and after giving effect to any
subsequent assignments made pursuant to the terms hereof. The initial Pro Rata
Share of each Lender is set forth opposite the name of such Lender on Schedule
2.01 or in the Assignment and Assumption pursuant to which such Lender becomes
a party hereto, as applicable.

“Project” means the real estate and improvements thereon, including, without
limitation, the improvements to be constructed thereon, the construction of
which, or the acquisition and rehabilitation of which, is funded by a
Tax-Exempt Bond or Taxable Construction Loan.

“Qualified Tax-Exempt Bonds” means those Tax-Exempt Bonds approved by the
Administrative Agent (a) which are owned by any Borrower, (b) on which Lenders
have a first and prior Lien, including, without limitation, a Lien on all
rights of such Borrower to the collateral securing such bonds (if any), and (c)
with respect to which the Borrowers have provided to the satisfaction of the
Administrative Agent, all of the items related thereto required by the
applicable Borrowing Base Submission Package; provided, that, a Tax-Exempt Bond
shall no longer be considered a Qualified Tax-Exempt Bond on the earlier of (i)
the first day of the 13th month following the Resizing of such bond, (ii) the
first day of the 25th month following Completion of Construction of the Project
securing such Tax-Exempt Bond (so long as such bond is not an Existing
Tax-Exempt Bond), (iii) the first day of the 13th month following the admission
of any such bond in the Borrowing Base if such bond is an Existing Tax-Exempt
Bond, (iv) the first day of the 49th month following the date such Tax-Exempt
Bond is first included in the Borrowing Base, and (v) the date on which there
shall occur a payment default on such bond, without regard to any grace or cure
period provided in the underlying bond documents, or the occurrence of any
event which constitutes a non-payment default thereunder which results in an
acceleration of the maturity thereof.

“Qualified Taxable Construction Loans” means those Taxable Construction Loans
approved by the Administrative Agent (a) which are owned by any Borrower, (b)
which have been collaterally assigned to Lenders such that Lenders have a
first and prior Lien thereon (including, without limitation, all collateral
securing such loans), (c) which have been underwritten to comply with the DUS
Guide promulgated by Fannie Mae or the Freddie Mac permanent loan standards
and are anticipated to be delivered upon stabilization to Fannie Mae or
Freddie Mac and converted to a permanent loan in accordance with the
applicable Approved Permanent Commitment, and (d) with respect to which the
Borrowers have provided to the satisfaction of

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 14

 

 

\

the Administrative Agent, all of the items related thereto required by the
applicable Borrowing Base Submission Package; provided, that, a Taxable
Construction Loan shall no longer be considered a Qualified Taxable
Construction Loan on the earlier of (i) the first day of the
25th month
following Completion of Construction, (ii) the first day of the
13th month
following the month in which Stabilization of the underlying Project occurs,
(iii) the first day of the 49th month following the date such Taxable
Construction Loan is first included in the Borrowing Base, and (iv) the date
on which there shall occur a payment default on such loan, without regard to
any grace or cure period provided in the underlying loan documents, or the
occurrence of any event which constitutes a non-payment default thereunder
which results in an acceleration of the maturity thereof.

“Register” has the meaning set forth in Section
10.07(c).

“Related Party” means MuniMae TE Bond
Subsidiary, LLC.

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

“Request for Credit Extension” means a Committed Loan Notice.

“Required Lenders” means, as of any date of determination, Lenders having at
least 66-2/3% of the Aggregate Commitments or, if the commitment of each Lender
to make Loans has been terminated pursuant to Section 8.02, Lenders holding in
the aggregate at least 66-2/3% of the Total Outstandings; provided that the
Commitment of, and the portion of the Total Outstandings held or deemed held
by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders.

“Resizing” means there has occurred a mandatory redemption of a Tax-Exempt
Bond resulting from a reduction (by prepayment or otherwise) of the underlying
project loan to reflect a debt service coverage of at least 1.10 as selected
by the Borrowers, for such project loan based on the then current operating
income generated by the applicable Project.

“Responsible Officer” means (a) relating to the delivery of any Compliance
Certificate and the certificate required by Section 2.12(b), the chief
executive officer, president, chief financial officer or controller of a Loan
Party, and (b) relating to all other submissions and deliveries, any duly
elected officer or authorized employee of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

“Restricted Payment” means any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock or other
equity interest of any Loan Party or any Subsidiary thereof, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such capital stock or other
equity interest or of any option, warrant or other right to acquire any such
capital stock or other equity interest.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 15

 

 

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

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions,

“Section 42 LIHTC Equity” means the equity which is made available to pay
acquisition or construction costs of a Project as a result of a sale of the
low income housing tax credit made available pursuant to Section 42 of the
Code.

“Shareholders’ Equity” means consolidated shareholders’ equity of the
Guarantor and its Subsidiaries as of the date of determination computed in
accordance with GAAP.

“Stabilization” means the applicable project has achieved 90% occupancy for
ninety consecutive days.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries
of the Borrowers.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master
Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the
date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 16

 

 

other readily available quotations provided by any recognized dealer in such
Swap Contracts (which may include a Lender or any Affiliate of a Lender).

“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do
not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of
such Person (without regard to accounting treatment).

“Tax-Exempt Bonds” means tax-exempt revenue bonds issued by state or local
governments or quasi governmental entities to finance affordable multifamily
housing developments.

“Taxable Construction Loans” means floating rate construction loans for
multifamily housing investments, including those supported by 9% Section 42
LIHTC Equity and market rate, student and senior housing projects.

“Threshold Amount” means $10,000,000, except that for the purpose of the Event
of Default set forth in Section 8.01(e) the Threshold Amount for non-recourse
Debt shall be $20,000,000.

“Total Outstanding” means the aggregate Outstanding Amount of all Loans.

“Type” means, with respect to a Committed Loan, its character as a Base Rate
Loan or a Eurodollar Rate Loan.

“Unencumbered Liquidity” means, as of any date of determination, for any
Person, the aggregate market value of the following assets owned by such
Person and which are neither (i) the subject of any Lien nor (it) being held
for the benefit of third parties or otherwise restricted:

     (a) cash, and obligations issued or guaranteed by the United States
of America,

     (b) marketable direct obligations issued or guaranteed by any
Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America pursuant to authority granted by the Congress of
the United States, and maturing within one year of the date of acquisition thereof,

     (c) certificates of deposit issued, or banker’s acceptances drawn on
and accepted by, or money market accounts or time deposits in,
commercial banks which are members of the Federal Deposit Insurance Corporation and which have
a combined capital, surplus and undistributed profits of at least $50,000,000,
and maturing within one year of the date of acquisition thereof,

     (d) repurchase agreements maturing within one year of the date of
acquisition thereof with any such commercial bank, or with broker-dealers or
other institutions, that are secured by marketable direct obligations issued or guaranteed by
the United States of America or an agency or instrumentality thereof,

	 	 	 
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	 	Page 17

 

 

     (e) other money market instruments and mutual funds, substantially
all of the
assets of which are invested in any or all of the investments
described in clauses (a)
through (d) above, and

     (f) commercial paper (other than commercial paper issued by any
Borrower
or any of its Affiliates), maturing no more than ninety (90) days
after the date of creation
thereof, and with a rating of at least P-l by Moody’s or A-l by S&P
on the date of
acquisition (the value of which shall be determined in accordance
with generally accepted
accounting principles).

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

“United States” and “U.S.” mean the United States of America.

     1.02. Other Interpretive Provisions. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other Loan
Document:

     (a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.

     (b) (i) The words “herein,” “hereto,” “hereof and “hereunder” and
words of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof.

     (ii) Article, Section, Exhibit and Schedule references are to the
Loan Document in which such reference appears.

     (iii) The term “including” is by way of example and not
limitation.

     (iv) The term “documents” includes any and all instruments,
documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or
electronic form.

     (c) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and including.”

     (d) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.

     1.03. Accounting Terms; Changes in GAAP.

     (a) All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial

	 	 	 
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	 	Page 18

 

 

calculations) required to be submitted pursuant to this Agreement shall be
prepared in conformity with, GAAP applied on a consistent basis, as in effect
from time to time, applied in a manner consistent with that used in preparing
the Audited Financial Statements, except as otherwise specifically prescribed
herein.

     (b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrowers or the Required Lenders shall so request, the Administrative Agent,
the Lenders and the Borrowers shall negotiate in good faith to amend such ratio
or requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of the Required Lenders); provided that, until
so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein, provided that in the event
any such change in GAAP is the sole cause of the Guarantor being in violation
of any financial covenant set forth in Section 7.09, such violation shall not
cause a Default unless such violation continues to exist as of the first day of
the fiscal quarter immediately following the fiscal quarter in which such
violation was first reported, and (ii) the Borrowers shall provide to the
Administrative Agent and the Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting
forth a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.

     1.04. Rounding. Any financial ratios required to be maintained by the
Borrowers
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the
other component, carrying the result to one place more than the number of
places by which such
ratio is expressed herein and rounding the result up or down to the
nearest number (with a
rounding-up if there is no nearest number).

     1.05. References to Agreements and Laws. Unless otherwise expressly
provided
herein, (a) references to Organization Documents, agreements (including
the Loan Documents)
and other contractual instruments shall be deemed to include all
subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but
only to the extent that
such amendments, restatements, extensions, supplements and other
modifications are not
prohibited by any Loan Document; and (b) references to any Law shall
include all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such
Law.

     1.06. Times of Day. Unless otherwise specified, all references herein to
times of day
shall be references to Central time (daylight or standard, as applicable).

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

     2.01. Committed Loans. Subject to the terms and conditions set forth
herein, each Lender severally agrees to make loans (each such loan, a
“Committed Loan”) to the Borrowers from time to time, on any Business Day
during the Availability Period, in an aggregate amount not to exceed at any
time outstanding the amount of such Lender’s Commitment; provided, however,
that after giving effect to any Credit Extension, (i) the Total Outstandings
shall not exceed the lesser of the Aggregate Commitments and the Borrowing
Base, and (ii) the aggregate

	 	 	 
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	 	Page 19

 

 

Outstanding Amount of the
Committed Loans of any Lender, shall not exceed such Lender’s Commitment. Within the limits of each Lender’s
Commitment, and subject to the other terms  and conditions hereof, the Borrowers may borrow under
this Section 2.01, prepay under Section 2.03, and reborrow under this
Section 2.01. Committed Loans may be Base Rate Loans or Eurodollar
Rate Loans, as further provided herein.

	Outstanding Amount of the Committed Loans of any Lender, shall not exceed such
Lender’s Commitment. Within the limits of each Lender’s Commitment, and
subject to the other terms and conditions hereof, the Borrowers may borrow
under this Section 2.01, prepay under Section 2.03, and reborrow under this
Section 2.01. Committed Loans may be Base Rate Loans or Eurodollar Rate Loans,
as further provided herein.

     2.02. Borrowings, Conversions and Continuations of Committed Loans.

     (a) Each Borrowing, each conversion of Committed Loans from one Type to
the
other, and each continuation of Eurodollar Rate Loans shall be made upon
the Borrowers’
irrevocable written notice by delivery to the Administrative Agent of a
written Committed Loan
Notice, appropriately completed and signed by a Responsible Officer of the
Borrowers. Each
such notice must be received by the Administrative Agent not later than
11:00 a.m. (1) five
Business Days prior to the requested date of any Borrowing if such
Borrowing includes an
addition of Tax-Exempt Bonds or Taxable Construction Loans to the
Borrowing Base or (2) if no
Tax-Exempt Bonds or Taxable Construction Loans are to be added to the
Borrowing Base, then
(i) three Business Days prior to the requested date of the Borrowing of,
conversion to or
continuation of Eurodollar Rate Loans or of any conversion of Eurodollar
Rate Loans to Base
Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate
Loans. Each
Committed Loan Notice shall be accompanied by a Borrowing Base Report
which includes a representation as of such date signed by a Responsible Officer to the
effect that they are in
compliance with the Borrowing Base as of the date of such Borrowing, and a
Borrowing Base
Submission Package if Tax-Exempt Bonds or Taxable Construction Loans are
being delivered at
such time for inclusion in the Borrowing Base. Each Borrowing of,
conversion to or
continuation of Eurodollar Rate Loans shall be in a minimum principal
amount of $1,000,000.
Each Borrowing of or conversion to Base Rate Loans shall be in a minimum
principal amount of
$500,000. Each Committed Loan Notice shall specify (i) whether the
Borrowers are requesting a
Borrowing, a conversion of Committed Loans from one Type to the other, or
a continuation of
Eurodollar Rate Loans, (ii) the requested date of the Borrowing,
conversion or continuation, as
the case may be (which shall be a Business Day), (iii) the principal
amount of Committed Loans
to be borrowed, converted or continued, (iv) the Type of Committed Loans
to be borrowed or to
which existing Committed Loans are to be converted, and (v) if applicable,
the duration of the
Interest Period with respect thereto. If the Borrowers fail to specify a
Type of Committed Loan
in a Committed Loan Notice or if the Borrowers fail to give a timely
notice requesting a
conversion or continuation, then the applicable Committed Loans shall be
made as, or converted
to, Base Rate Loans. Any such automatic conversion to Base Rate Loans
shall be effective as of
the last day of the Interest Period then in effect with respect to the
applicable Eurodollar Rate
Loans. If the Borrowers request a Borrowing of, conversion to, or
continuation of Eurodollar
Rate Loans in any such Committed Loan Notice, but fails to specify an
Interest Period, it will be
deemed to have specified an Interest Period of one month.

     (b) Following receipt of a Committed Loan Notice, the Administrative Agent
shall promptly notify each Lender of the amount of its Pro Rata Share of the
applicable Committed Loans, and if no timely notice of a conversion or continuation is provided
by the Borrowers, the Administrative Agent shall notify each Lender of the details of any
automatic conversion to Base Rate Loans described in the preceding
subsection. In the case of a
Borrowing, each Lender shall make the amount of its Committed Loan available to the Administrative
Agent in immediately

	 	 	 
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	 	Page 20

 

 

available funds at the Administrative Agent’s Office not later than 1:00 p.m.
on the Business Day specified in the applicable Committed Loan Notice. Upon
satisfaction of the applicable conditions set forth in Section 4.02 (and, if
such Borrowing is the initial Credit Extension, Section 4.01), the
Administrative Agent shall make all funds so received available to the
Borrowers in like funds as received by the Administrative Agent either by (i)
crediting the account of the Borrowers on the books of Bank of America with
the amount of such funds or (ii) wire transfer of such funds, in each case in
accordance with instructions provided to (and reasonably acceptable to) the
Administrative Agent by the Borrowers.

     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such Eurodollar
Rate Loan. During the existence of a Default, no Loans may be requested as, converted to or
continued as Eurodollar Rate Loans without the consent of the
Required Lenders.

     (d) The Administrative Agent shall promptly notify the Borrowers and the
Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate
Loans upon determination of such interest rate. The determination of the Eurodollar Rate by the
Administrative Agent shall be conclusive in the absence of manifest error. At any time that Base
Rate Loans are outstanding, the Administrative Agent shall notify the Borrowers and the
Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly
following the public announcement of such change.

     (e) After giving effect to all Borrowings, all conversions of Committed
Loans from one Type to the other, and all continuations of Committed Loans as the
same Type, there shall not be more than eight Interest Periods in effect with respect to
Eurodollar Rate Loans.

     2.03. Prepayments.

     (a) The Borrowers may, upon notice to the Administrative Agent, at any
time or from time to time voluntarily prepay Committed Loans in whole or in
part without premium or penalty; provided that (i) such notice must be received
by the Administrative Agent not later than 11:00 a.m. (A) three Business Days
prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of
prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans
shall be in a minimum principal amount of $1,000,000; and (iii) any prepayment
of Base Rate Loans shall be in a minimum principal amount of $500,000 or, in
each case, if less, the entire principal amount thereof then outstanding. Each
such notice shall specify the date and amount of such prepayment and the
Type(s) of Committed Loans to be prepaid. The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of the
amount of such Lender’s Pro Rata Share of such prepayment. If such notice is
given by the Borrowers, the Borrowers shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of a Eurodollar Rate Loan shall be
accompanied by all accrued interest thereon, together with any additional
amounts required pursuant to Section 3.05. Each such prepayment shall be
applied to the Committed Loans of the Lenders in accordance with their
respective Pro Rata Shares.

	 	 	 
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	 	Page 21

 

 

     (b) If for any reason the Total Outstandings at any time exceeds the
lesser of the Aggregate Commitments or the Borrowing Base then in effect, the
Borrowers shall immediately prepay Loans in an aggregate amount equal to such
excess.

     2.04. Termination or Reduction of Commitments. The Borrowers may, upon
notice to the Administrative Agent, terminate the Aggregate Commitments, or from
time to time permanently reduce the Aggregate Commitments; provided that (i) any such
notice shall be received by the Administrative Agent not later than 11:00 a.m. five
Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be
in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, and
(iii) the Borrowers shall not terminate or reduce the Aggregate Commitments if, after giving
effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed
the Aggregate Commitments. The Administrative Agent will promptly notify the Lenders of
any such notice of termination or reduction of the Aggregate Commitments. Any reduction of
the Aggregate Commitments shall be applied to the Commitment of each Lender according to
its Pro Rata Share. All fees accrued until the effective date of any termination
of the Aggregate Commitments shall be paid on the effective date of such termination.

     2.05. Repayment of Loans. The Borrowers shall repay to the Lenders on the
Maturity Date the aggregate principal amount of Committed Loans outstanding on such date.

     2.06. Interest.

     (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar
Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate
per annum equal to the Eurodollar Rate for such Interest Period plus the
Applicable Rate; and (ii)
each Base Rate Loan shall bear interest on the outstanding principal
amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate
plus the Applicable Rate.

     (b) If any amount payable by the Borrowers under any Loan Document is not
paid
when due (without regard to any applicable grace periods), whether at
stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate
per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable
Laws. Furthermore, upon the request of the Required Lenders, while any
Event of Default
exists, the Borrowers shall pay interest on the principal amount of all
outstanding Obligations
hereunder at a fluctuating interest rate per annum at all times equal to
the Default Rate to the
fullest extent permitted by applicable Laws. Accrued and unpaid interest
on past due amounts
(including interest on past due interest) shall be due and payable upon
demand.

     (c) Interest on each Loan shall be due and payable in arrears on each
Interest
Payment Date applicable thereto and at such other times as may be
specified herein. Interest
hereunder shall be due and payable in accordance with the terms hereof
before and after
judgment, and before and after the commencement of any proceeding under
any Debtor Relief
Law.

	 	 	 
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	 	Page 22

 

 

     2.07. Fees.

     (a) Unused Fee. The Borrowers shall pay to the Administrative Agent for
the
account of each Lender in accordance with its Pro Rata Share, an unused
fee equal to the
Applicable Rate times the actual daily amount by which the Aggregate
Commitment exceeds the
Outstanding Amount. The unused fee shall accrue at all times during the
Availability Period,
including at any time during which one or more of the conditions in
Article IV is not met, and
shall be due and payable quarterly in arrears on the fifth Business Day of
each calendar quarter
for the preceding quarter, commencing with the first such date to occur
after the Closing Date,
and on the Maturity Date. The unused fee shall be calculated quarterly in
arrears, and if there is
any change in the Applicable Rate during any quarter, the actual daily
amount shall be computed
and multiplied by the Applicable Rate separately for each period during
such quarter that such
Applicable Rate was in effect.

     (b) Other Fees. The Borrowers shall pay to the Arranger and the
Administrative
Agent for their own respective accounts fees in the amounts and at the
times specified in the Fee
Letter. Such fees shall be fully earned when paid and shall not be
refundable for any reason
whatsoever.

     2.08. Computation of Interest and Fees. All computations of fees and
interest shall
be made on the basis of a 360-day year and actual days elapsed (which
results in more fees or
interest, as applicable, being paid than if computed on the basis of a
365-day year). Interest shall
accrue on each Loan for the day on which the Loan is made, and shall not
accrue on a Loan, or
any portion thereof, for the day on which the Loan or such portion is
paid, provided that any
Loan that is repaid on the same day on which it is made shall, subject to
Section 2.10( a), bear
interest for one day.

     2.09. Evidence of Debt. The Credit Extensions made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and
by the
Administrative Agent in the ordinary course of business. The accounts or
records maintained by
the Administrative Agent and each Lender shall be conclusive absent
manifest error of the
amount of the Credit Extensions made by the Lenders to the Borrowers and
the interest and
payments thereon. Any failure to so record or any error in doing so shall
not, however, limit or
otherwise affect the obligation of the Borrowers hereunder to pay any
amount owing with respect
to the Obligations. In the event of any conflict between the accounts and
records maintained by
any Lender and the accounts and records of the Administrative Agent in
respect of such matters,
the accounts and records of the Administrative Agent shall control in the
absence of manifest
error. Upon the request of any Lender made through the Administrative
Agent, the Borrowers
shall execute and deliver to such Lender (through the Administrative
Agent) a Note, which shall
evidence such Lender’s Loans in addition to such accounts or records. Each
Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable),
amount and maturity of
its Loans and payments with respect thereto.

     2.10. Payments Generally.

     (a) All payments to be made by the Borrowers shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 23

 

 

provided herein, all payments by the Borrowers hereunder shall be made to the
Administrative Agent, for the account of the respective Lenders to which such
payment is owed, at the Administrative Agent’s Office in Dollars and in
immediately available funds not later than 2:00 p.m. on the date specified
herein. The Administrative Agent will promptly distribute to each Lender its
Pro Rata Share (or other applicable share as provided herein) of such payment
in like funds as received by wire transfer to such Lender’s Lending Office.
All payments received by the Administrative Agent after 2:00 p.m. shall be
deemed received on the next succeeding Business Day and any applicable
interest or fee shall continue to accrue.

     (b) If any payment to be made by the Borrowers shall come due on a day
other than a
Business Day, payment shall be made on the next following Business Day,
and such extension of
time shall be reflected in computing interest or fees, as the case may be.

     (c) Unless the Borrowers or any Lender have notified the Administrative
Agent, prior
to the date any payment is required to be made by it to the Administrative
Agent hereunder, that
the Borrowers or such Lender, as the case may be, will not make such
payment, the
Administrative Agent may assume that the Borrowers or such Lender, as the
case may be, have
timely made such payment and may (but shall not be so required to), in
reliance thereon, make
available a corresponding amount to the Person entitled thereto. If and
to the extent that such
payment was not in fact made to the Administrative Agent in immediately
available funds, then:

     (i) if the Borrowers failed to make such payment, each Lender shall
forthwith on demand repay to the Administrative Agent the portion of
such assumed payment that was made available to such Lender in
immediately available funds, together with interest thereon in respect
of each day from and including the date such amount was made available
by the Administrative Agent to such Lender to the date such amount is
repaid to the Administrative Agent in immediately available funds at the
Federal Funds Rate from time to time in effect; and

     (ii) if any Lender failed to make such payment, such Lender shall
forthwith on demand pay to the Administrative Agent the amount thereof
in immediately available funds, together with interest thereon for the
period from the date such amount was made available by the
Administrative Agent to the Borrowers to the date such amount is
recovered by the Administrative Agent (the “Compensation Period”) at a
rate per annum equal to the Federal Funds Rate from time to time in
effect. If such Lender pays such amount to the Administrative Agent,
then such amount shall constitute such Lender’s Committed Loan included
in the applicable Borrowing. If such Lender does not pay such amount
forthwith upon the Administrative Agent’s demand therefor, the
Administrative Agent may make a demand therefor upon the Borrowers, and
the Borrowers shall pay such amount to the Administrative Agent,
together with interest thereon for the Compensation Period at a rate per
annum equal to the rate of interest applicable to the applicable
Borrowing. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights which
the Administrative Agent or the Borrowers may have against any Lender as
a result of any default by such Lender hereunder.

	 	 	 
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	 	Page 24

 

 

A notice of the Administrative Agent to any Lender or the Borrowers with
respect to any amount owing under this subsection (c) shall be conclusive,
absent manifest error.

     (d) If any Lender makes available to the Administrative Agent funds for
any Loan to
be made by such Lender as provided in the foregoing provisions of this
Article II, and such funds
are not made available to the Borrowers by the Administrative Agent
because the conditions to
the applicable Credit Extension set forth in Article IV are not satisfied
or waived in accordance
with the terms hereof, the Administrative Agent shall return such funds
(in like funds as received
from such Lender) to such Lender, without interest, within one Business
Day after the date such
conditions were not satisfied.

     (e) The obligations of the Lenders hereunder to make Committed Loans are
several
and not joint. The failure of any Lender to make any Committed Loan on
any date required
hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such
date, and no Lender shall be responsible for the failure of any other
Lender to so make its
Committed Loan.

     (f) Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any
Loan in any particular place or manner or to constitute a representation
by any Lender that it has
obtained or will obtain the funds for any Loan in any particular place or
manner.

     2.11. Sharing of Payments. If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of the Committed Loans made by it,
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Lenders such
participations in the Committed Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment in respect of such
Committed Loans, pro rata with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing
Lender under any of the circumstances described in Section 10.06 (including
pursuant to any settlement entered into by the purchasing Lender in its
discretion), such purchase shall to that extent be rescinded and each other
Lender shall repay to the purchasing Lender the purchase price paid therefor,
together with an amount equal to such paying Lender’s ratable share (according
to the proportion of (i) the amount of such paying Lender’s required repayment
to (ii) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered, without further interest thereon. The Borrowers
agree that any Lender so purchasing a participation from another Lender may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.09) with respect to
such participation as fully as if such Lender were the direct creditor of the
Borrowers in the amount of such participation. The Administrative Agent will
keep records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased under this Section and will in each case
notify the Lenders following any such purchases or repayments. Each Lender that
purchases a participation pursuant to this Section shall from and after such
purchase have the right to give all notices, requests, demands, directions and
other communications under this Agreement with respect to the portion of the
Obligations purchased

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 25

 

 

to the same extent as though the purchasing Lender were the original owner of
the Obligations purchased.

     2.12. Extension of Maturity Date.

     (a) Not earlier than 60 days prior to, nor later than 30 days prior to,
each anniversary
of this Agreement, the Borrowers may, upon notice to the Administrative
Agent (which shall
promptly notify the Lenders), request a one-year extension of the Maturity
Date then in effect.
Within 30 days of delivery of such notice, each Lender shall notify the
Administrative Agent
whether or not it consents to such extension (which consent may be given
or withheld in such
Lender’s sole and absolute discretion). Any Lender not responding within
the above time period
shall be deemed not to have consented to such extension. The
Administrative Agent shall
promptly notify the Borrowers and the Lenders of the Lenders’ responses.
If any Lender
declines, or is deemed to have declined, to consent to such extension, the
Borrowers may cause
any such Lender to be replaced as a Lender pursuant to Section 10.16.

     (b) The Maturity Date shall be extended only if all Lenders (after giving
effect to any
replacements of Lenders permitted herein) (the “Consenting Lenders”) have
consented thereto.
If so extended, the Maturity Date, as to the Consenting Lenders, shall be
extended to the same
date in the following year, effective as of the Maturity Date then in
effect (such existing Maturity
Date being the “Extension Effective Date”). The Administrative Agent and
the Borrowers shall
promptly confirm to the Lenders such extension, and the Extension
Effective Date. As a
condition precedent to each such extension, the Borrowers shall pay to the
Administrative Agent
for the pro rata benefit of the consenting Lenders based on their
respective Commitments an
aggregate extension fee equal to .20% of the Aggregate Commitments as of
the applicable
Extension Effective Date and deliver to the Administrative Agent a
certificate of each Loan Party
dated as of the Extension Effective Date (in sufficient copies for each
Lender) signed by a
Responsible Officer of such Loan Party (i) certifying and attaching the
resolutions adopted by
such Loan Party approving or consenting to such extension and (ii) in the
case of the Borrowers,
certifying that, before and after giving effect to such extension, (A) the
representations and
warranties contained in Article V and the other Loan Documents are true
and correct on and as
of the Extension Effective Date, except to the extent that such
representations and warranties
specifically refer to an earlier date, in which case they are true and
correct as of such earlier date,
and except that for purposes of this Section 2.12, the representations and
warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the
most recent statements
furnished pursuant to subsections (a) and (b), respectively, of Section
6.01. and (B) no Default
exists.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

     3.01. Taxes.

     (a) Any and all payments by the Borrowers to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto,

	 	 	 
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	 	Page 26

 

 

excluding, in the case of the Administrative Agent and each Lender, taxes
imposed on or measured by its overall net income, and franchise taxes imposed
on it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which the Administrative Agent or such
Lender, as the case may be, is organized or maintains a lending office (all
such non-excluded taxes, duties, levies, imposts, deductions, assessments,
fees, withholdings or similar charges, and liabilities being hereinafter
referred to as “Taxes”). If the Borrowers shall be required by any Laws to
deduct any Taxes from or in respect of any sum payable under any Loan Document
to the Administrative Agent or any Lender, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section), each of
the Administrative Agent and such Lender receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrowers
shall make such deductions, (iii) the Borrowers shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable Laws, and (iv) within 30 days after the date of such payment,
the Borrowers shall furnish to the Administrative Agent (which shall forward
the same to such Lender) the original or a certified copy of a receipt
evidencing payment thereof.

     (b) In addition, the Borrowers agree to pay any and all present or future
stamp, court
or documentary taxes and any other excise or property taxes or charges or
similar levies which
arise from any payment made under any Loan Document or from the execution,
delivery,
performance, enforcement or registration of, or otherwise with respect to,
any Loan Document
(hereinafter referred to as “Other Taxes”).

     (c) If the Borrowers shall be required to deduct or pay any Taxes or Other
Taxes
from or in respect of any sum payable under any Loan Document to the
Administrative Agent or
any Lender, the Borrowers shall also pay to the Administrative Agent or to
such Lender, as the
case may be, at the time interest is paid, such additional amount that the
Administrative Agent or
such Lender specifies is necessary to preserve the after-tax yield (after
factoring in all taxes,
including taxes imposed on or measured by net income) that the
Administrative Agent or such
Lender would have received if such Taxes or Other Taxes had not been
imposed.

     (d) The Borrowers agree to indemnify the Administrative Agent and each
Lender for
(i) the full amount of Taxes and Other Taxes (including any Taxes or Other
Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section) paid
by the Administrative
Agent and such Lender, (ii) amounts payable under Section 3.01 (c) and
(iii) any liability
(including additions to tax, penalties, interest and expenses) arising
therefrom or with respect
thereto, in each case whether or not such Taxes or Other Taxes were
correctly or legally imposed
or asserted by the relevant Governmental Authority. Payment under this
subsection (d) shall be
made within 30 days after the date the Lender or the Administrative Agent
makes a demand
therefor.

     3.02. Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, then, on notice thereof by such Lender to the Borrowers
through the Administrative Agent, any obligation of such Lender to make or
continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate
Loans shall be

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 27

 

 

suspended until such Lender notifies the Administrative Agent and the Borrowers
that the circumstances giving rise to such determination no longer exist. Upon
receipt of such notice, the Borrowers shall, upon demand from such Lender (with
a copy to the Administrative Agent), prepay or, if applicable, convert all
Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day
of the Interest Period therefor, if such Lender may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender
may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such
prepayment or conversion, the Borrowers shall also pay accrued interest on the
amount so prepaid or converted. Each Lender agrees to designate a different
Lending Office if such designation will avoid the need for such notice and will
not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender.

     3.03. Inability to Determine Rates. If the Required Lenders determine
that for any
reason adequate and reasonable means do not exist for determining the
Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan,
or that the Eurodollar
Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not
adequately and fairly reflect the cost to such Lenders of funding such
Loan, the Administrative
Agent will promptly so notify the Borrowers and each Lender. Thereafter,
the obligation of the
Lenders to make or maintain Eurodollar Rate Loans shall be suspended until
the Administrative
Agent (upon the instruction of the Required Lenders) revokes such notice.
Upon receipt of such
notice, the Borrowers may revoke any pending request for a Borrowing of,
conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to
have converted such
request into a request for a Borrowing of Base Rate Loans in the amount
specified therein.

     3.04. Increased Cost and Reduced Return; Capital Adequacy;
Reserves on
Eurodollar Rate Loans.

     (a) If any Lender determines that as a result of the introduction of or
any change in or
in the interpretation of any Law, or such Lender’s compliance therewith,
there shall be any
increase in the cost to such Lender of agreeing to make or making, funding
or maintaining
Eurodollar Rate Loans, or a reduction in the amount received or receivable
by such Lender in
connection with any of the foregoing (excluding for purposes of this
subsection (a) any such
increased costs or reduction in amount resulting from (i) Taxes or Other
Taxes (as to which
Section 3.01 shall govern), (ii) changes in the basis of taxation of
overall net income or overall
gross income by the United States or any foreign jurisdiction or any
political subdivision of
either thereof under the Laws of which such Lender is organized or has its
Lending Office, and
(iii) reserve requirements contemplated by Section 3.04(c) utilized in the
determination of the
Eurodollar Rate), then from time to time upon demand of such Lender (with
a copy of such
demand to the Administrative Agent), the Borrowers shall pay to such
Lender such additional
amounts as will compensate such Lender for such increased cost or
reduction.

     (b) If any Lender determines that the introduction of any Law regarding
capital
adequacy or any change therein or in the interpretation thereof, or
compliance by such Lender (or
its Lending Office) therewith, has the effect of reducing the rate of
return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender’s
obligations hereunder (taking into consideration its policies with respect
to capital adequacy and
such Lender’s desired return on capital), then from time to time upon
demand of such Lender

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 28

 

 

(with a copy of such demand to the Administrative Agent), the Borrowers shall
pay to such Lender such additional amounts as will compensate such Lender for
such reduction.

     (c) The Borrowers shall pay to each Lender, as long as such Lender shall
be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as
“Eurocurrency liabilities”), additional interest on the unpaid principal
amount of each Eurodollar Rate Loan equal to the actual costs of such reserves
allocated to such Loan by such Lender (as determined by such Lender in good
faith, which determination shall be conclusive), which shall be due and
payable on each date on which interest is payable on such Loan, provided the
Borrowers shall have received at least 15 days’ prior notice (with a copy to
the Administrative Agent) of such additional interest from such Lender. If a
Lender fails to give notice 15 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 15 days from receipt
of such notice.

     3.05. Funding Losses. Upon demand of any Lender (with a copy to the
Administrative
Agent) from time to time, the Borrowers shall promptly compensate such
Lender for and hold
such Lender harmless from any loss, cost or expense incurred by it as a
result of:

     (a) any continuation, conversion, payment or prepayment of any Loan other
than a
Base Rate Loan on a day other than the last day of the Interest Period for
such Loan (whether
voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

     (b) any failure by the Borrowers (for a reason other than the failure of

such Lender to
make a Loan) to prepay, borrow, continue or convert any Loan other than a
Base Rate Loan on
the date or in the amount notified by the Borrowers; or

     (c) any assignment of a Eurodollar Rate Loan on a day other than the last
day of the
Interest Period therefor as a result of a request by the Borrowers
pursuant to Section 10.16;

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan
or from fees payable to terminate the deposits from which such funds were
obtained. The Borrowers shall also pay any customary administrative fees
charged by such Lender in connection with the foregoing.

     For purposes of calculating amounts payable by the Borrowers to the
Lenders under this Section 3.05, each Lender shall be deemed to have funded
each Eurodollar Rate Loan made by it by a matching deposit or other borrowing
in the London interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Eurodollar Rate Loan was in fact so
funded.

     3.06. Matters Applicable to all Requests for Compensation.

     (a) A certificate of the Administrative Agent or any Lender claiming
compensation under this Article III and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Administrative Agent or such
Lender may use any reasonable averaging and attribution methods.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 29

 

 

     (b) The Borrowers shall not be required to make any payments to any Lender
for any additional amounts pursuant to Section 3.01 or 3.04 unless (i) such
Lender is imposing similar costs on all borrowers under other loans similar to
the Loan and of the Type with respect to which such compensation is requested
and (ii) such Lender has given written notice to the Borrowers, through the
Administrative Agent, of its intent to request such payments prior to or within
60 days after the date on which such Lender became entitled to claim such
amounts. Each Lender agrees that, upon the occurrence of any event giving rise
to the operation of Section 3.01 or 3.04 with respect to such Lender, it will,
if requested by any Borrower and to the extent permitted by law or by the
relevant Governmental Authority, endeavor in good faith to avoid or minimize
the increase in costs or reduction in payments resulting from such event
(including, without limitation, endeavoring to change its applicable Lending
Office); provided that such avoidance or minimization can be made in such a
manner that such Lender, in its sole determination, suffers no economic, legal
or regulatory disadvantage. If any Lender requests compensation from the
Borrowers under Section, 3.01 or 3.04, the Borrowers may replace such Lender
pursuant to Section 10.16, suspend the obligation of such Lender thereafter to
make or continue Loans of the Type with respect to which such compensation is
requested, or to convert Loans of any other Type into Loans of such Type, until
the Law giving rise to such request ceases to be in effect;
provided that such
suspension shall not affect the right of such Lender to receive the
compensation so requested.

     3.07. Survival. All of the Borrowers’ obligations under this Article III
shall survive termination of the Aggregate Commitments and repayment of all
other Obligations hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

     4.01. Conditions of Initial Credit Extension. The obligation of each
Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions precedent:

     (a) Unless waived by all the Lenders (or by the Administrative Agent with
respect to immaterial matters), the Administrative Agent’s receipt of the
following, each of which shall be originals or facsimiles (followed promptly by
originals) unless otherwise specified, each properly executed by a Responsible
Officer of the signing Loan Party, each dated the Closing Date (or, in the case
of certificates of governmental officials, a recent date before the Closing
Date) and each in form and substance satisfactory to the Administrative Agent
and its legal counsel:

     (i) executed counterparts of this Agreement, the Guaranty, the
Borrower Security Agreement and any other pledges, collateral assignments
and other documents or agreements required by the Administrative Agent to
create a first and prior lien in the Collateral, sufficient in number for
distribution to the Administrative Agent, each Lender and the Borrowers;

     (ii) a Note executed by the Borrowers in favor of each Lender requesting a
Note;

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 30

 

 

     (iii) such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each
Loan Party as the Administrative Agent may require evidencing the
identity, authority and capacity of each Responsible Officer thereof
authorized to act as a Responsible Officer in connection with this
Agreement and the other Loan Documents to which such Loan Party is a
party;

     (iv) such documents and certifications as the Administrative Agent
may reasonably require to evidence that each Loan Party is duly organized
or formed, and that each of the Borrowers and Guarantor is validly
existing, in good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect;

     (v) a favorable opinion of counsel to the Loan Parties, addressed to
the Administrative Agent and each Lender, as to the matters set forth in
Exhibit F and such other matters concerning the Loan Parties and the Loan
Documents as the Required Lenders may reasonably request, subject to
customary assumptions and qualifications;

     (vi) a certificate of a Responsible Officer of each Loan Party
either (A) attaching copies of all consents, licenses and approvals
required in connection with the execution, delivery and performance by
such Loan Party and the validity against such Loan Party of the Loan
Documents to which it is a party, and such consents, licenses and
approvals shall be in full force and effect, or (B) stating that no such
consents, licenses or approvals are so required;

     (vii) a certificate signed by a Responsible Officer of the Borrowers
certifying (A) that the conditions specified in Sections 4.02(a) and (b)
have been satisfied, and (B) that there has been no event or circumstance
since the date of the Audited Financial Statements that has had or could
be reasonably expected to have, either individually or in the aggregate,
a Material Adverse Effect;

     (viii) Uniform Commercial Code financing statements authorized by
the Borrowers (and executed if necessary) and covering such Collateral as
the Administrative Agent may request;

     (ix) A duly completed Borrowing Base Report dated the Closing Date,
together with each of the items referenced on the Borrowing Base
Submission Package;

     (x) The results of a Uniform Commercial Code search showing all
financing statements and other documents or instruments on file against
the Borrowers in the office of the Secretary of State of Maryland;

     (xi) Copies of the Organizational Documents for each Loan Party
certified by a Responsible Officer of the applicable Loan Party as being
a true and correct copy thereof and that the same is in full force and
effect without modification or amendment except as disclosed to the
Administrative Agent; and

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 31

 

 

     (xii) such other assurances, certificates, documents, consents
or opinions as the Administrative Agent or the Required Lenders
reasonably may require.

     (b) Any fees required to be paid on or before the Closing Date shall have
been paid.

     (c) Unless waived by the Administrative Agent, the Borrowers shall have
paid all
Attorney Costs of the Administrative Agent to the extent invoiced prior to
or on the Closing
Date, plus such additional amounts of Attorney Costs as shall constitute
its reasonable estimate
of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that
such estimate shall not thereafter preclude a final settling of accounts
between the Borrowers and
the Administrative Agent).

     4.02. Conditions to all Credit Extensions. The obligation of each Lender
to honor any Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Committed Loans to the other Type, or a
continuation of Eurodollar Rate Loans) is subject to the following conditions
precedent:

     (a) The representations and warranties of the Borrowers and each other
Loan Party
contained in Article V or any other Loan Document, or which are contained
in any document
furnished at any time under or in connection herewith or therewith, shall
be true and correct on
and as of the date of such Credit Extension, except to the extent that
such representations and
warranties specifically refer to an earlier date, in which case they shall
be true and correct as of
such earlier date, and except that for purposes of this Section 4.02, the
representations and
warranties contained in subsections (a) and (b) of Section 5.05 shall be
deemed to refer to the
most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 6.01.

     (b) No Default or Event of Default shall exist, or would result from such
proposed
Credit Extension.

     (c) The Administrative Agent shall have received a Request for Credit
Extension in
accordance with the requirements hereof.

     (d) The Administrative Agent shall have received, in form and substance
satisfactory
to it, such other assurances, certificates, documents or consents related
to the foregoing as the
Administrative Agent or the Required Lenders reasonably may require.

     (e) At least (i) five (5) Business Days prior to the date of the requested
Credit
Extension if such Credit Extension includes an addition of any Tax-Exempt
Bonds or Taxable
Construction Loans to the Borrowing Base, or (ii) three (3) Business Days
prior to the date of the
requested Credit Extension if such Credit Extension does not include an
addition of any Tax-
Exempt Bonds or Taxable Construction Loans to the Borrowing Base, the
Administrative Agent
shall have received a Borrowing Base Report dated the date of such Credit
Extension which shall
include a representation that Borrowers are in compliance with the
Borrowing Base after giving
effect to the requested Credit Extension and, if such Credit Extension
includes an addition of any
Tax-Exempt Bonds or Taxable Construction Loans, all items referenced in
Exhibit H attached,
including, without limitation, any original notes or bonds (or evidence
that any such original note
or bond is being held pursuant to a bailment agreement acceptable to the
Administrative Agent),
and copies of guarantees, permanent loan commitments, mortgages/deeds of
trust, and title

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 32

 

 

insurance policies, such related documents as Administrative Agent may
request, and the Administrative Agent shall have approved same.

Each Request for Credit Extension submitted by the Borrowers shall be deemed
to be a representation and warranty that the conditions specified in
Sections 4.02(3) and (b) have been satisfied on and as of the date of the
applicable Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

     The Borrowers and the Guarantor represent and warrant to the
Administrative Agent and the Lenders that:

     5.01. Existence, Qualification and Power; Compliance with Laws. Each Loan
Party
(a) is a corporation, partnership or limited liability company duly
organized or formed, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses,
authorizations, consents and approvals to (i) own its assets and carry on
its business and (ii)
execute, deliver and perform its obligations under the Loan Documents to
which it is a party, (c)
is duly qualified and is licensed and in good standing under the Laws of
each jurisdiction where
its ownership, lease or operation of properties or the conduct of its
business requires such
qualification or license, and (d) is in compliance with all Laws; except
in each case referred to in
clause (b)(i), (c) or (d), to the extent that failure to do so could not
reasonably be expected to
have a Material Adverse Effect.

     5.02. Authorization; No Contravention. The execution, delivery and
performance by
each Loan Party of each Loan Document to which such Person is party, have
been duly
authorized by all necessary corporate or other organizational action, and
do not and will not (a)
contravene the terms of any of such Person’s Organization Documents; (b)
conflict with or result
in any breach or contravention of, or the creation of any Lien (other than
Liens securing the
Obligations) under, (i) any Contractual Obligation to which such Person is
a party or (ii) any
order, injunction, writ or decree of any Governmental Authority or any
arbitral award to which
such Person or its property is subject; or (c) violate any Law.

     5.03. Governmental Authorization; Other Consents. No approval,
consent,
exemption, authorization, or other action by, or notice to, or filing
with, any Governmental
Authority or any other Person is necessary or required in connection with
the execution, delivery
or performance by, or enforcement against, any Loan Party of this
Agreement or any other Loan
Document.

     5.04. Binding Effect. This Agreement has been, and each other Loan
Document, when
delivered hereunder, will have been, duly executed and delivered by each
Loan Party that is
party thereto. This Agreement constitutes, and each other Loan Document
when so delivered
will constitute, a legal, valid and binding obligation of such Loan Party,
enforceable against each
Loan Party that is party thereto in accordance with its terms.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 33

 

 

     5.05. Financial Statements; No Material Adverse Effect; Solvency.

     (a) The Audited Financial Statements (i) were prepared in accordance with
GAAP
consistently applied throughout the period covered thereby, except as
otherwise expressly noted
therein; (ii) fairly present the consolidated financial condition of the
applicable Loan Party as of
the date thereof and their results of operations for the period covered
thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly
noted therein; and (iii) show all material indebtedness and other
liabilities, direct or contingent,
of the applicable Loan Party, on a consolidated basis, as of the date
thereof, including liabilities
for taxes, material commitments and Indebtedness.

     (b) The unaudited consolidated balance sheet of each Borrower (other than
MuniMae
TEI Holdings, LLC) dated June 30, 2004, and the Guarantor dated June 30,
2004, and the related
consolidated statements of income or operations and shareholders’ equity
for the fiscal quarter
ended on that date (i) were prepared in accordance with GAAP consistently
applied throughout
the period covered thereby, except as otherwise expressly noted therein,
and (ii) fairly present the
consolidated financial condition of the applicable Loan Party, as of the
date thereof and their
results of operations for the period covered thereby, subject, in the case
of clauses (i) and (ii), to
the absence of footnotes, to normal year-end audit adjustments and to
adjustments required by
Loan Parties’ public accountants in order to comply with FIN 46, provided
that such change does
not cause a Material Adverse Effect or cause any Loan Party to be in
violation of the financial
statements herein contained.

     (c) Since the date of the Audited Financial Statements, there has been no
event or
circumstance, either individually or in the aggregate, that has had or
could reasonably be
expected to have a Material Adverse Effect.

     (d) The aggregate fair market value of each of the Borrower’s and the
Guarantor’s
assets exceeds its liabilities. Each of the Borrowers and the Guarantor
has sufficient cash flow to
enable it to pay its Indebtedness as it matures. Each of the Borrowers
and the Guarantor has a
reasonable amount of capital to conduct its business as presently
contemplated.

     5.06. Litigation. There are no actions, suits, proceedings, claims or
disputes pending
or, to the knowledge of the Borrowers and the Guarantor after due and
diligent investigation,
threatened or contemplated, at law, in equity, in arbitration or before
any Governmental
Authority, by or against any Borrower, the Guarantor or any of their
Subsidiaries or against any
of their properties or revenues that (a) purport to affect or pertain to
this Agreement or any other
Loan Document, or any of the transactions contemplated hereby, or (b)
either individually or in
the aggregate, if determined adversely, could reasonably be expected to
have a Material Adverse
Effect.

     5.07. No Default. None of the Borrowers, the Guarantor or any of their
Subsidiaries is
in default under or with respect to any Contractual Obligation that could,
either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
No Default has
occurred and is continuing or would result from the consummation of the
transactions
contemplated by this Agreement or any other Loan Document.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 34

 

 

     5.08. Ownership of Property; Liens. Each of the Borrowers and each
Subsidiary has
good record and marketable title in fee simple to, or valid leasehold
interests in, all real property
necessary or used in the ordinary conduct of its business, except for such
defects in title as could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
The property of the Borrowers and their Subsidiaries is subject to no
Liens, other than Liens
permitted by Section 7.01.

     5.09. Environmental Compliance. The Borrowers and their Subsidiaries
conduct in
the ordinary course of business a review of the effect of existing
Environmental Laws and claims
alleging potential liability or responsibility for violation of any
Environmental Law on their
respective businesses, operations and properties, and as a result thereof
the Borrowers have
reasonably concluded that such Environmental Laws and claims could not,
individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     5.10. Insurance. The properties of the Borrowers and their Subsidiaries
are insured
with financially sound and reputable insurance companies not Affiliates of
the Borrowers, in
such amounts, with such deductibles and covering such risks as are
customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where the
Borrowers or the applicable Subsidiary operates.

     5.11. Taxes. Each Loan Party has filed all Federal, state and other
material tax returns
and reports required to be filed, and have paid all Federal, state and
other material taxes,
assessments, fees and other governmental charges levied or imposed upon
them or their
properties, income or assets otherwise due and payable, except those which
are being contested
in good faith by appropriate proceedings diligently conducted and for
which adequate reserves
have been provided in accordance with GAAP. There is no proposed tax
assessment against any
Loan Party that would, if made, have a Material Adverse Effect.

     5.12. ERISA Compliance.

     (a) Each Plan is in compliance in all material respects with the
applicable provisions
of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under
Section 401(a) of the Code has received a favorable determination letter
from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to
the knowledge of the Borrowers and the Guarantor, nothing has occurred
which would prevent,
or cause the loss of, such qualification. The Borrowers, the Guarantor and
each ERISA Affiliate
have made all required contributions to each Plan subject to Section 412
of the Code, and no
application for a funding waiver or an extension of any amortization
period pursuant to Section
412 of the Code has been made with respect to any Plan.

     (b) There are no pending or, to the knowledge of the Borrowers and the
Guarantor,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to
any Plan that could be reasonably be expected to have a Material Adverse
Effect. There has
been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to
any Plan that has resulted or could reasonably be expected to result in a
Material Adverse Effect.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 35

 

 

     (c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) none of the
Borrowers, the Guarantor or any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) none of the Borrowers, the Guarantor or any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to
a Multiemployer Plan; and (v) none of the Borrowers, the Guarantor or any
ERISA Affiliate has engaged in a transaction that could be subject to Sections
4069 or 4212(c) of ERISA.

     5.13. Subsidiaries. The Borrowers have no Subsidiaries other than those
specifically
disclosed in Part (a) of Schedule 5.13 and have no equity investments in
any other corporation or
entity other than interests in securitizations and those equity
investments specifically disclosed in
Part(b) of Schedule 5.13.

     5.14. Margin Regulations; Investment Company Act; Public Utility
Holding
Company Act.

     (a) None of the Borrowers is engaged nor will any Borrower engage,
principally or as
one of its important activities, in the business of purchasing or carrying
margin stock (within the
meaning of Regulation U issued by the FRB), or extending credit for the
purpose of purchasing
or carrying margin stock.

     (b) Neither Loan Party, any Person Controlling any Loan Party, or any
Subsidiary of
either Loan Party (i) is a “holding company,” or a “subsidiary company” of
a “holding
company,” or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding
company,” within the meaning of the Public Utility Holding Company Act of
1935, or (ii) is or is
required to be registered as an “investment company” under the Investment
Company Act of
1940.

     5.15. Disclosure. Each Loan Party disclosed to the Administrative Agent
and the
Lenders all agreements, instruments and corporate or other restrictions to
which it or any of its
Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. No
written report, financial
statement, certificate or other written information furnished by or on
behalf of any Loan Party to
the Administrative Agent or any Lender in connection with the transactions
contemplated hereby
and the negotiation of this Agreement or delivered hereunder (as modified
or supplemented by
other information so furnished) contains any material misstatement of fact
or omits to state any
material fact necessary to make the statements therein, in the light of
the circumstances under
which they were made, not misleading; provided that, with respect to
projected financial
information, the Borrowers represent only that such information was
prepared in good faith
based upon assumptions believed to be reasonable at the time.

     5.16. Compliance with Laws. Each Loan Party and its Subsidiaries are in
compliance
in all material respects with the requirements of all Laws and all orders,
writs, injunctions and
decrees applicable to it or to its properties, except in such instances in
which (a) such

	 	 	 
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	 	Page 36

 

 

requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted or (b) the failure
to comply therewith, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

     5.17. Tax Shelter Regulations. The Borrowers do not intend to treat the
Loans and
related transactions as being a “reportable transaction” (within the
meaning of Treasury
Regulation section 1.6011-4). If the Borrowers determine to take any
action inconsistent with
such intention, it will promptly notify the Administrative Agent thereof.

     The Borrowers acknowledge that the Administrative Agent and/or one or
more of the Lenders may treat the Loans as part of a transaction that is
subject to Treasury Regulation section 1.6011-4 or section 301.6112-1, and the
Administrative Agent and such Lender or Lenders, as applicable, may file such
IRS forms or maintain such lists and other records as they may determine is
required by such Treasury Regulations.

     5.18. Intellectual Property; Licenses, Etc. The Borrowers and their
Subsidiaries own,
or possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents,
patent rights, franchises, licenses and other intellectual property rights
that are reasonably
necessary for the operation of their respective businesses, without
conflict with the rights of any
other Person, including, without limitation the trademarks and trade names
set forth on Schedule
5.18 hereof. To the best knowledge of the Borrowers, no slogan or other
advertising device,
product, process, method, substance, part or other material now employed,
or now contemplated
to be employed, by the Borrowers or any Subsidiary infringes upon any
rights held by any other
Person. No claim or litigation regarding any of the foregoing is
pending or, to the best
knowledge of the Borrowers, threatened, which, either individually or in
the aggregate, could
reasonably be expected to have a Material Adverse Effect.

     5.19. Underwriting and Servicing Procedures. The due diligence, collateral
control,
collection, credit and underwriting procedures used by the Borrowers in
the conduct of their
business with respect to the Collateral are no less stringent than those
used by comparable
companies engaged in similar business lines and those in effect on the
Closing Date, including,
but not limited to, requirements that (i) there be in existence such
builder’s risk, hazard, liability
and other insurance on each Project that is typical in the industry, with
certificates thereof having
been delivered to the applicable Borrower showing the applicable Borrower,
or trustee in
connection with a Tax-Exempt Bond, as an additional insured or loss payee
as applicable; (ii) if
applicable, the Project be constructed pursuant to the Project budget, and
construction and
architect’s contracts, and in substantial accordance with plans and
specifications all as approved
by the applicable Borrower, any Governmental Authority and any permanent
lender under any
applicable Approved Permanent Commitment, (iii) the Project developer
shall have obtained and
delivered copies to the applicable Borrower of any permits, certificates,
licenses or other
appropriate requirements, by any applicable Governmental Authority for the
construction and/or
ownership of the applicable Project, (iv) the applicable Borrower shall
have received and
approved a survey and commitment for title insurance in form, and with
such endorsements,
typically required in the industry for each Project, (v) the applicable
Borrower shall have
received and approved a form lease related to the Project, which shall be
a form with terms
standard in the industry for similar properties, and shall have received
and approved a

	 	 	 
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management agreement for each Project, and (vi) the applicable Borrower shall
have received certificates, instruments and opinions showing the valid
existence, good standing and authority of the Project owner and Persons acting
on its behalf.

ARTICLE VI

AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, each Loan Party
shall:

     6.01. Financial Statements. Deliver to the Administrative Agent and
each Lender, in form and detail satisfactory to the Administrative Agent and
the Required Lenders:

     (a) as soon as available, but in any event within 120 days after the end
of each fiscal
year of each Loan Party, consolidated balance sheets of the applicable
Loan Party (other than
MuniMae TEI Holdings, LLC) and its Subsidiaries as at the end of such
fiscal year, and the
related consolidated statements of income or operations, shareholders’
equity and cash flows for
such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal
year, as well as describing any adjustments made due to FIN 46, all in
reasonable detail and
prepared in accordance with GAAP, audited and accompanied by a report and
opinion of an
independent certified public accountant of nationally recognized standing
reasonably acceptable
to the Required Lenders, which report and opinion shall be prepared in
accordance with
generally accepted auditing standards and shall not be subject to any
“going concern” or like
qualification or exception or any qualification or exception as to the
scope of such audit;

     (b) as soon as available, but in any event within 60 days after the end of
each of the
first three fiscal quarters of each fiscal year of each Loan Party,
unaudited consolidated balance
sheets of the applicable Loan Party (other than MuniMae TEI Holdings, LLC)
and its
Subsidiaries as at the end of such fiscal quarter, and the related
unaudited consolidated
statements of income or operations, shareholders’ equity for such fiscal
quarter and for the
portion of the applicable Loan Party’s fiscal year then ended, setting
forth in each case in
comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and
the corresponding portion of the previous fiscal year, as well as
describing any adjustments made
due to FIN 46, all in reasonable detail and certified by a Responsible
Officer of the applicable
Loan Party, as fairly presenting the financial condition, results of
operations and shareholders’
equity of the applicable Loan Party and its Subsidiaries, in accordance
with GAAP, subject only
to normal year-end audit adjustments and the absence of footnotes;

     (c) as soon as available, but in any event within 120 days after the end
of each fiscal
year of the Related Party, consolidated balance sheets of the Related
Party and its Subsidiaries as
at the end of such fiscal year, and the related consolidated statements of
income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in
each case in comparative
form the figures for the previous fiscal year, as well as describing any
adjustments made due to
FIN 46, all in reasonable detail and prepared in accordance with GAAP,
audited and
accompanied by a report and opinion of an independent certified public
accountant of nationally
recognized standing reasonably acceptable to the Required Lenders, which
report and opinion
shall be prepared in accordance with generally accepted auditing standards
and shall not be

	 	 	 
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	 	Page 38

 

 

subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit; and

     (d) as soon as available, but in any event within 60 days after the end
of each of the first three fiscal quarters of each fiscal year of the Related
Party, consolidated balance sheets of the Related Party and its Subsidiaries
as at the end of such fiscal quarter, and the related consolidated statements
of income or operations and shareholders’ equity for such fiscal quarter and
for the portion of the Related Party’s fiscal year then ended, setting forth
in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, as well as describing any adjustments made due to FIN
46, all in reasonable detail and certified by a Responsible Officer of the
Related Party, as fairly presenting the financial condition and results of
operations and shareholders’ equity of the Related Party and its Subsidiaries,
in accordance with GAAP, subject only to normal year-end audit adjustments and
the absence of footnotes.

     6.02. Certificates; Other Information. Deliver to the Administrative
Agent in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

     (a) concurrently with the delivery of the financial statements
referred to in
Section 6.01 (a) and (c), a certificate of its independent certified
public accountants certifying
such financial statements and stating that in making the examination
necessary therefor no
knowledge was obtained of any Default under the financial covenants set
forth herein or, if any
such Default shall exist, stating the nature and status of such event;

     (b) concurrently with the delivery of the financial statements
referred to in
Sections 6.01, a duly completed Compliance Certificate signed by a
Responsible Officer of the
applicable Loan Party or Related Party, and, concurrently with the
delivery of the financial
statements referred to in Section 6.01 (b), a Bond Valuation Report
showing, inter alia, the
Market Value of the Tax-Exempt Bonds as designated by a Bond Specialist;

     (c) as soon as available, and in any event within twenty-five (25) days
after the end of
each calendar month, a Borrowing Base Report in substantially the form of
Exhibit G hereto,
certified by a Responsible Officer of the Borrowers, together with (i) the
accompanying
documentation required as set forth on Exhibit H hereto and (ii) a schedule
of all Qualified Tax-
Exempt Bonds and Qualified Taxable Construction Loans in the Borrowing
Base as of such date;

     (d) upon request by Administrative Agent, promptly after the furnishing
thereof,
copies of any financial statement or report received by either Loan Party
from Fannie Mae or
Freddie Mac or furnished to Fannie Mae or Freddie Mac by either Loan
Party, pursuant to the
terms of any indenture, loan, or credit or similar agreement (excluding
agreements by the
Borrowers or the Guarantor to make loans) and not otherwise required to be
furnished to the
Administrative Agent pursuant to any other clause of this Section;

     (e) promptly after any request by the Administrative Agent or any Lender,
copies of
any detailed audit reports, management letters or recommendations
submitted to the board of
directors (or the audit committee of the board of directors) of either
Loan Party by independent

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 39

 

 

accountants in connection with the accounts or books of either Loan Party or
any Subsidiary thereof, or any audit of any of them;

     (f) promptly after the Borrowers have notified the Administrative Agent of
any
intention by the Borrowers to treat the Loans and related transactions as
being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4),
a duly completed
copy of IRS Form 8886 or any successor form;

     (g) promptly after the filing thereof, a true, correct and complete copy
of each Form
10-K and Form 10-Q and all other material documents or material
correspondence filed by the
Guarantor or any of its Subsidiaries with, or received by the Guarantor or
any of its Subsidiaries
from, the SEC; and

     (h) promptly, such additional information regarding the business,
financial or corporate affairs of either Loan Party or any Subsidiary thereof,
or compliance with the terms of the Loan Documents, as the Administrative Agent
or any Lender may from time to time reasonably request.

     Documents required to be delivered pursuant to Section 6.01(a) or (b) may
be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which either Loan Party posts such documents, or
provides a link thereto on either Loan Party’s website on the Internet at the
website address listed on Schedule 10.02; or (ii) on which such documents are
posted on either Loan Party’s behalf on IntraLinks/IntraAgency or another
relevant website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that: (i) the applicable Loan Party shall
deliver paper copies of such documents to the Administrative Agent or any
Lender that requests the applicable Loan Party to deliver such paper copies
until a written request to cease delivering paper copies is given by the
Administrative Agent or such Lender and (ii) the applicable Loan Party shall
notify (which may be by facsimile or electronic mail) the Administrative Agent
of the posting of any such documents and provide to the Administrative Agent
by electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the applicable
Loan Party shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(b) and the Borrowing Base Report
required by Section 6.02(c) to the Administrative Agent. Administrative Agent
shall deliver to the Lenders copies of any documents received pursuant to this
Section 6.02, or make such documents available to the Lenders if posted
electronically.

     6.03. Notices. Promptly notify the Administrative Agent:

     (a) of the occurrence of any Default or Event of Default;

     (b) of any matter (including (i) breach or non-performance of, or any
default under, a
Contractual Obligation of either Loan Party or any Subsidiary thereof;
(ii) any dispute, litigation,
investigation, proceeding or suspension between either Loan Party or any
Subsidiary thereof and
any Governmental Authority; or (iii) the commencement of, or any material
development in, any
litigation or proceeding affecting either Loan Party or any Subsidiary
thereof, including pursuant

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 40

 

 

     to any applicable Environmental Laws) that has resulted or could reasonably be
expected to result in a Material Adverse Effect;

     (c) of the occurrence of any ERISA Event; and

     (d) of any material change in accounting policies or financial reporting
practices by
either Loan Party or any Subsidiary thereof.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the applicable Loan Party setting forth details of the
occurrence referred to therein and stating what action the applicable Loan
Party has taken and proposes to take with respect thereto. Each notice pursuant
to Section 6.03(a) shall describe with particularity any and all provisions of
this Agreement and any other Loan Document that have been breached.
Administrative Agent shall deliver to the Lenders copies of any notices
received pursuant to this Section 6.03, or make such documents available to
the Lenders if posted electronically.

     6.04. Payment of Obligations. Pay and discharge as the same shall become
due and
payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless
the same are being
contested in good faith by appropriate proceedings diligently conducted
and adequate reserves in
accordance with GAAP are being maintained by the applicable Loan Party or
Subsidiary; (b) all
lawful claims which, if unpaid, would by law become a Lien upon its
property; and (c) all
Indebtedness, as and when due and payable, but subject to any
subordination provisions
contained in any instrument or agreement evidencing such Indebtedness,
except to the extent that
failure to do so could not reasonably be expected to have a Material
Adverse Effect.

     6.05. Preservation of Existence, Etc. (a) Preserve, renew and maintain in
full force
and effect its legal existence and good standing under the Laws of the
jurisdiction of its
organization except in a transaction permitted by Section 7.04 or 7.05;
(b) take all reasonable
action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in
the normal conduct of its business, except to the extent that failure to
do so could not reasonably
be expected to have a Material Adverse Effect; and (c) preserve or renew
all of its registered
patents, trademarks, trade names and service marks, the non-preservation
of which could
reasonably be expected to have a Material Adverse Effect.

     6.06. Maintenance of Properties. (a) Maintain, preserve and protect all of
its material
properties and equipment necessary in the operation of its business in
good working order and
condition, ordinary wear and tear excepted; (b) make all necessary repairs
thereto and renewals
and replacements thereof except where the failure to do so could not
reasonably be expected to
have a Material Adverse Effect; and (c) use the standard of care typical
in the industry in the
operation and maintenance of its facilities.

     6.07. Maintenance of Insurance. Maintain with financially sound and
reputable
insurance companies not Affiliates of the either Loan Party, insurance
with respect to its
properties and business against loss or damage of the kinds customarily
insured against by
Persons engaged in the same or similar business, of such types and in such
amounts as are
customarily carried under similar circumstances by such other Persons.

	 	 	 
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	 	Page 41

 

 

     6.08. Compliance with Laws. Comply in all material respects with the
requirements
of all Laws and all orders, writs, injunctions and decrees applicable to
it or to its business or
property, except in such instances in which (a) such requirement of Law or
order, write,
injunction or decree is being contested in good faith by appropriate
proceedings diligently
conducted; or (b) the failure to comply therewith could not reasonably be
expected to have a
Material Adverse Effect.

     6.09. Books and Records. (a) Maintain proper books of record and account,
in which
full, true and correct entries in conformity with GAAP consistently
applied shall be made of all
financial transactions and matters involving the assets and business of
each Loan Party or
Subsidiary thereof, as the case may be; and (b) maintain such books of
record and account in
material conformity with all applicable requirements of any Governmental
Authority having
regulatory jurisdiction over either Loan Party or any Subsidiary thereof,
as the case may be.

     6.10. Inspection Rights. Permit representatives and independent
contractors of the
Administrative Agent to visit and inspect any of its properties, to
examine its corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and
to discuss its affairs,
finances and accounts with its directors, officers, and independent public
accountants, all at the
expense of the Borrowers and at such reasonable times during normal
business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Borrowers; provided,
however, that when an Event of Default exists the Administrative Agent or
any Lender (or any of
their respective representatives or independent contractors) may do any of
the foregoing at the
expense of the Borrowers at any time during normal business hours and
without advance notice.

     6.11. Use of Proceeds. Use the proceeds of the Credit Extensions solely
for the
(a) origination and acquisition of Qualified Tax-Exempt Bonds, (b)
acquisition of Existing Tax-Exempt Bonds from the secondary market, and (c) origination and funding of
Qualified Taxable
Construction Loans.

     6.12. Escrow Deposits. Cause all escrow deposits (including, without limitation,
deposits for insurance, real estate taxes and replacement reserves) for
any Project to be
maintained with the Administrative Agent unless otherwise required by any
local housing
agency/bond issuer or as agreed to by Administrative Agent.

     6.13. Ownership of the Borrowers; NYSE Listing. Cause the Guarantor to
at all
times own, directly or indirectly, all of the capital stock and all other
equity interests of each of
the Borrowers and cause the Guarantor to at all times maintain its
eligibility for and listing on the
New York Stock Exchange.

ARTICLE VII

NEGATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, no Loan Party
shall:

     7.01. Liens. Allow the Borrowers or any of their Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of the Collateral
other than Liens securing the Obligations.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 42

 

 

     7.02. Fundamental Changes. Merge, dissolve, liquidate, consolidate with
or into
another Person, convert its equity securities or Dispose of (whether in
one transaction or in a
series of transactions) all or substantially all of its assets (whether
now owned or hereafter
acquired) to or in favor of any Person, except that, so long as no Default
exists or would result
therefrom:

     (a) any Subsidiary of the Guarantor may merge with the Guarantor or
another
Subsidiary of the Guarantor, provided that, if any such merger is with
Guarantor, the Guarantor
shall be the continuing or surviving Person; and

     (b) any Subsidiary of the Guarantor may Dispose of all or substantially
all of its
assets (upon voluntary liquidation or otherwise) to the Guarantor or to
another Subsidiary of the
Guarantor; provided that if the transferor in such a transaction is a
wholly-owned Subsidiary of
the Guarantor, then the transferee must either be the Guarantor or a
wholly-owned Subsidiary of
the Guarantor.

     7.03. Investments. Allow the Borrowers or any of their Subsidiaries to make any
Investments, except:

     (a) Investments in the form of cash equivalents;

     (b) Investments in any wholly-owned Subsidiary;

     (c) Investments consisting of extensions of credit in the nature of
accounts receivable
or notes receivable arising from the grant of trade credit in the ordinary
course of business, and
Investments received in satisfaction or partial satisfaction thereof from
financially troubled
account debtors to the extent reasonably necessary in order to prevent or
limit loss;

     (d) Investments consisting of Tax-Exempt Bonds and Taxable Construction
Loans;
and

     (e) Subject to Section 7.07 below, Investments consisting of loans made in
the
ordinary course of business to Affiliates.

     7.04. Dispositions. Allow any of the Borrowers or any of their
Subsidiaries to make
any Disposition or enter into any agreement to make any Disposition with
respect to the
Collateral, except as otherwise permitted under the Loan Documents.

     7.05. Restricted Payments. Declare or make, directly or indirectly, any
Restricted
Payment, or incur any obligation (contingent or otherwise) to do so,
except that (a) each
Subsidiary of the Guarantor may make Restricted Payments to the Guarantor
and, except for the
Borrowers, to wholly-owned Subsidiaries of the Guarantor, (b) the
Guarantor and its Subsidiaries
may make Restricted Payments so long as no Default or Event of Default has
occurred pursuant
to Section 8.01(a), (f), (g) or (l) and after giving effect to any such
Restricted Payment, the
Guarantor complies with the covenants set forth in Section 7.09, and (c)
the Related Party may
make Restricted Payments which are payable to the holders of all series of
preferred shares
issued by the Related Party.

	 	 	 
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	 	Page 43

 

 

     7.06. Change in Nature of Business. Engage in any material line of
business
substantially different from those lines of business conducted by the Loan
Parties and their
Subsidiaries on the date hereof or any business substantially related or
incidental thereto.

     7.07. Transactions with Affiliates. Enter into any transaction of any
kind with any
Affiliate of the Guarantor, whether or not in the ordinary course of
business, other than on fair
and reasonable terms substantially as favorable to the applicable Loan
Party or its Subsidiary as
would be obtainable by such Loan Party or its Subsidiary at the time in a
comparable arm’s
length transaction with a Person other than an Affiliate.

     7.08. Use of Proceeds. Use the proceeds of any Credit Extension, whether
directly or
indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry margin
stock (within the meaning of Regulation U of the FRB) or to extend credit
to others for the
purpose of purchasing or carrying margin stock or to refund indebtedness
originally incurred for
such purpose.

     7.09. Financial Covenants of Guarantor.

     (a) Unencumbered Liquidity. Permit the Unencumbered Liquidity of the
Guarantor
to be less than the amount set forth on Schedule 2.02(3) at any time.

     (b) Minimum Consolidated Tangible Net Worth. Permit the Consolidated
Tangible
Net Worth of the Guarantor to be less than the amount set forth on
Schedule 2.02(3) at any time.

     (c) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio
of the
Guarantor to be greater than the ratio set forth on Schedule 2.02(3) at
any time.

     (d) Consolidated Senior Indebtedness to Consolidated Tangible Net Worth.
Permit
the ratio of Consolidated Senior Indebtedness of the Guarantor to
Consolidated Tangible Net
Worth of the Guarantor to exceed the ratio set forth on Schedule 2.02(3)
at any time.

     (e) Consolidated Interest and Distribution Coverage Ratio. Permit the
Consolidated
Interest and Distribution Coverage Ratio of the Guarantor to be less than
the ratio set forth on
Schedule 2.02(3) at any time.

     ARTICLE VIII

     EVENTS
OF DEFAULT AND REMEDIES

     8.01. Events of Default. Any of the following shall constitute an
Event of Default:

     (a) Non-Payment. The Borrowers or any other Loan Party fail to pay (i)
when and as required to be paid herein, any amount of principal of any Loan,
or (ii) within three days after the same becomes due, any interest on any
Loan, or other fee due hereunder, or (iii) within five days after the same
becomes due, any other amount payable hereunder or under any other Loan
Document; or

	 	 	 
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     (b) Specific Covenants. The applicable Loan Party fails to perform or
observe any
term, covenant or agreement contained in any of Section 6.01,
6.02, 6.03,
6.05, 6.10, or 6.11; or
Article VII; or

     (c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or
agreement (not specified in subsection (a) or (b) above) contained in any
Loan Document on its
part to be performed or observed and such failure continues for 30 days
following written notice
of such failure from the Administrative Agent; or

     (d) Representations and Warranties. Any representation, warranty,
certification or
statement of fact made or deemed made by or on behalf of the Borrowers or
any other Loan
Party herein, in any other Loan Document, or in any document delivered in
connection herewith
or therewith shall be incorrect or misleading in any material respect when
made or deemed
made; or

     (e) Cross-Default, (i) Any Loan Party or any Subsidiary thereof (A)
fails to make
any payment when due, after giving effect to any applicable cure period,
(whether by scheduled
maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any
Indebtedness or Contingent Obligation (other than Indebtedness hereunder
and Indebtedness
under Swap Contracts) having an aggregate principal amount of more than
the Threshold
Amount, or (B) fails to observe or perform any other agreement or
condition relating to any such
Indebtedness or Contingent Obligation or contained in any instrument or
agreement evidencing,
securing or relating thereto, or any other event occurs, the effect of
which default or other event
is to cause, or to permit the holder or holders of such Indebtedness or
the beneficiary or
beneficiaries of such Contingent Obligation (or a trustee or agent on
behalf of such holder or
holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such
Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or
redeemed (automatically or otherwise), or an offer to repurchase, prepay,
defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Contingent
Obligation to become
payable or cash collateral in respect thereof to be demanded; or (ii)
there occurs under any Swap
Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any
event of default under such Swap Contract as to which the Borrowers or any
Subsidiary is the
Defaulting Party (as defined in such Swap Contract) or (B) any Termination
Event (as so
defined) under such Swap Contract as to which any of the Borrowers or any
Subsidiary is an
Affected Party (as so defined) and, in either event, the Swap Termination
Value owed by the
Borrowers or such Subsidiary as a result thereof is greater than the
Threshold Amount; or

     (f) Insolvency Proceedings. Etc. Any Loan Party or any of its Subsidiaries
institutes
or consents to the institution of any proceeding under any Debtor Relief
Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or for all
or any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator,
rehabilitator or similar officer is appointed without the application or
consent of such Person and
the appointment continues undischarged or unstayed for 60 calendar days;
or any proceeding
under any Debtor Relief Law relating to any such Person or to all or any
material part of its
property is instituted without the consent of such Person and continues
undismissed or unstayed
for 60 calendar days, or an order for relief is entered in any such
proceeding; or

	 	 	 
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	 	Page 45

 

 

     (g) Inability
to Pay Debts; Attachment. (i) Any Loan Party becomes unable
or admits in writing its inability or fails generally to pay its debts as they
become due, or (ii) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property
of any such Person and is not released, vacated or fully bonded within 30 days
after its issue or levy; or

     (h) Judgments. There is entered against any Loan Party or any Subsidiary
thereof (i) a final judgment or order for the payment of money in an aggregate
amount exceeding the Threshold Amount (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage), or (ii) any one or more non-monetary final judgments that have, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a
period of 30 consecutive days during which a stay of enforcement of such
judgment, by reason of a pending appeal or otherwise, is not in effect; or

     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Loan Party under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the
Threshold Amount, or (ii) any Loan Party or any ERISA Affiliate fails to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of the Threshold
Amount; or

     (j) Invalidity of Loan Documents. Any Loan Document, at any time after
its execution and delivery and for any reason other than satisfaction in full
of all the Obligations, ceases to be in full force and effect; or any Loan
Party or any other Person contests in any manner the validity or
enforceability of any Loan Document; or any Loan Party denies that it has any
or further liability or obligation under any Loan Document, or purports to
revoke, terminate or rescind any Loan Document;

     (k) Change of Control. There occurs any Change of Control with respect to

the Guarantor; or

     (l) Material Adverse Effect. There occurs any event or circumstance that
has a Material Adverse Effect.

     8.02. Remedies Upon Event of Default. If any Event of Default occurs and
is continuing, the Administrative Agent shall, at the request of, or may, with
the consent of, the Required Lenders, take any or all of the following
actions:

     (a) declare the commitment of each Lender to make Loans terminated
whereupon
such commitments and obligation shall be terminated;

     (b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued
and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan
Document to be immediately due and payable, without presentment, demand,
protest or other
notice of any kind, all of which are hereby expressly waived by the Borrowers;

	 	 	 
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     (c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to any Loan Party under the Bankruptcy Code of
the United States, the obligation of each Lender to make Loans shall
automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable, in each case without further act of the Administrative Agent or
any Lender.

     8.03. Application of Funds. After the exercise of remedies provided for
in Section 8.02 (or after the Loans have automatically become immediately due
and payable) any amounts received on account of the Obligations shall be
applied by the Administrative Agent in the following order:

     First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and amounts
payable under Article III) payable to the Administrative Agent in its capacity
as such;

     Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to
the Lenders (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause
Second payable to them;

     Third, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans, ratably among the Lenders in proportion to
the respective amounts described in this clause Third payable to them;

     Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Fourth held by them;

     Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full and all Commitments terminated, to the Borrowers or
as otherwise required by Law.

ARTICLE IX

ADMINISTRATIVE AGENT

     9.01. Appointment and Authorization of Administrative Agent. Each Lender
hereby irrevocably appoints, designates and authorizes the Administrative Agent
to take such action on its behalf under and subject to the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere
herein or in any other Loan Document, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein, nor
shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative

	 	 	 
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Agent. Without limiting the generality of the foregoing sentence, the use of
the term “agent” herein and in the other 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, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.

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

     9.03. Liability of Administrative Agent. No Agent-Related Person shall (a)
be liable
for any action taken or omitted to be taken by any of them under or in
connection with this
Agreement or any other Loan Document or the transactions contemplated
hereby (except for its
own gross negligence or willful misconduct in connection with its duties
expressly set forth
herein), or (b) be responsible in any manner to any Lender or participant
for any recital,
statement, representation or warranty made by any Loan Party or any
officer thereof, contained
herein or in any other Loan Document, or in any certificate, report,
statement or other document
referred to or provided for in, or received by the Administrative Agent
under or in connection
with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of
any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any
Lender or participant
to ascertain or to inquire as to the observance or performance of any of
the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties,
books or records of any Loan Party or any Affiliate thereof except as
requested by the Required
Lenders but subject to the terms and conditions of the Agreement and the
other Loan Documents.

     9.04. Reliance by Administrative Agent.

     (a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, electronic mail message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any Loan
Party), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under any Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Required Lenders (or
such greater number of Lenders as may be expressly

	 	 	 
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required hereby in any instance) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.

     (b) For purposes of determining compliance with the conditions specified
in Section 4.01, each Lender that has signed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

     9.05. Notice of Default. The Administrative Agent shall not be deemed to
have
knowledge or notice of the occurrence of any Default, except with respect
to defaults in the
payment of principal, interest and fees required to be paid to the
Administrative Agent for the
account of the Lenders, unless the Administrative Agent shall have
received written notice from
a Lender or the Borrowers referring to this Agreement, describing such
Default and stating that
such notice is a “notice of default.” The Administrative Agent will
promptly notify the Lenders
of its receipt of any such notice. The Administrative Agent shall take
such action with respect to
such Default as may be directed by the Required Lenders in accordance with
Article VIII;
provided, however, that unless and until the Administrative Agent has
received any such
direction, the Administrative Agent may (but shall not be obligated to)
take such action, or
refrain from taking such action, with respect to such Default as it shall
deem advisable or in the
best interest of the Lenders.

     9.06. Credit Decision; Disclosure of Information by Administrative Agent.
Each
Lender acknowledges that no Agent-Related Person has made any
representation or warranty to
it, and that no act by the Administrative Agent hereafter taken, including
any consent to and
acceptance of any assignment or review of the affairs of any Loan Party or
any Affiliate thereof,
shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have
disclosed material
information in their possession. Each Lender represents to the
Administrative Agent that it has,
independently and without reliance upon any Agent-Related Person and
based on such
documents and information as it has deemed appropriate, made its own
appraisal of and
investigation into the business, prospects, operations, property,
financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries,
and all applicable bank or
other regulatory Laws relating to the transactions contemplated hereby,
and made its own
decision to enter into this Agreement and to extend credit to the
Borrowers and the other Loan
Parties hereunder. Each Lender also represents that it will,
independently and without reliance
upon any Agent-Related Person and based on such documents and information
as it shall deem
appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in
taking or not taking action under this Agreement and the other Loan
Documents, and to make
such investigations as it deems necessary to inform itself as to the
business, prospects,
operations, property, financial and other condition and creditworthiness
of the Borrowers and the
other Loan Parties. Except for notices, reports and other documents
expressly required to be
furnished to the Lenders by the Administrative Agent herein, the
Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or
other information
concerning the business, prospects, operations, property, financial and
other condition or

	 	 	 
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creditworthiness of any of the Loan Parties or any of their respective
Affiliates which may come into the possession of any Agent-Related Person.

     9.07. Indemnification of Administrative Agent. Whether or not the
transactions
contemplated hereby are consummated, the Lenders shall indemnify upon
demand each Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan
Party and without
limiting the obligation of any Loan Party to do so), pro rata, and hold
harmless each Agent-
Related Person from and against any and all Indemnified Liabilities
incurred by it; provided,
however, that no Lender shall be liable for the payment to any
Agent-Related Person of any
portion of such Indemnified Liabilities to the extent determined in a
final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person’s
own gross negligence or willful misconduct; provided, however, that no
action taken in
accordance with the directions of the Required Lenders shall be deemed to
constitute gross
negligence or willful misconduct for purposes of this Section. Without
limitation of the
foregoing, each Lender shall reimburse the Administrative Agent upon
demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the
Administrative Agent in connection with the preparation, execution,
delivery, administration,
modification, amendment or enforcement (whether through negotiations,
legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities
under, this Agreement, any
other Loan Document, or any document contemplated by or referred to
herein, to the extent that
the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrowers.
The undertaking in this Section shall survive termination of the Aggregate
Commitments, the
payment of all other Obligations and the resignation of the Administrative
Agent.

     9.08. Administrative Agent in its Individual Capacity. Bank of America
and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from,
acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory,
underwriting or other business with each of the Loan Parties and their
respective Affiliates as
though Bank of America were not the Administrative Agent hereunder and
without notice to or
consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Bank of
America or its Affiliates may receive information regarding any Loan Party
or its Affiliates
(including information that may be subject to confidentiality obligations
in favor of such Loan
Party or such Affiliate) and acknowledge that the Administrative Agent
shall be under no
obligation to provide such information to them. With respect to its Loans,
Bank of America shall
have the same rights and powers under this Agreement as any other Lender
and may exercise
such rights and powers as though it were not the Administrative Agent, and
the terms “Lender”
and “Lenders” include Bank of America in its individual capacity. In
addition, nothing
contained herein shall limit the ability of any Lender to make loans to,
issue letters of credit for
the account of, accept deposits from, acquire entity interests in, and
generally engage in any kind
of banking, trust, financial advisory, underwriting, or other business
with each of the Loan
Parties and their respective Affiliates.

     9.09. Successor Administrative Agent. The Administrative Agent may, and
at the
request of the Required Lenders for good cause shall, resign as
Administrative Agent upon 30
days’ notice to the Lenders. If the Administrative Agent resigns under
this Agreement, the
Required Lenders shall appoint from among the Lenders a successor
administrative agent for the
Lenders, which successor administrative agent shall be consented to by the
Borrowers at all

	 	 	 
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times other than during the existence of an Event of Default (which consent of
the Borrowers shall not be unreasonably withheld or delayed). If no successor
administrative agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may appoint,
after consulting with the Lenders and the Borrowers, a successor administrative
agent from among the Lenders. Upon the acceptance of its appointment as
successor administrative agent hereunder, the Person acting as such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term “Administrative Agent” shall mean
such successor administrative agent and the retiring Administrative Agent’s
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent’s notice of
resignation, the retiring Administrative Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.

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

     (a) to file and prove a claim for the whole amount of the principal and
interest owing
and unpaid in respect of the Loans and all other Obligations that are
owing and unpaid and to file
such other documents as may be necessary or advisable in order to have the
claims of the
Lenders and the Administrative Agent (including any claim for the
reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative
Agent and their
respective agents and counsel and all other amounts due the Lenders and
the Administrative
Agent under Sections 2.07 and 10.04) allowed in such judicial proceeding;
and

     (b) to collect and receive any monies or other property payable or
deliverable on any
such claims and to distribute the same in accordance with the provisions
of the Loan Documents;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the
event that the Administrative Agent shall consent to the making of such
payments directly to the Lenders, to pay to the Administrative Agent any
amount due for the reasonable compensation, expenses, disbursements and
advances of the Administrative Agent and its agents and counsel, and any other
amounts due the Administrative Agent under Sections 2.07 and 10.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement,

	 	 	 
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adjustment or composition affecting the Obligations or the rights of any
Lender or to authorize the Administrative Agent to vote in respect of the
claim of any Lender in any such proceeding.

     9.11. Collateral and Guaranty Matters. The Lenders irrevocably
authorize the
Administrative Agent to release any Lien on any property granted to
or held by the
Administrative Agent under any Loan Document (i) upon termination of the
Aggregate
Commitments and payment in full of all Obligations (other than contingent
indemnification
obligations), (ii) that is sold or to be sold as part of or in connection
with any sale expressly
permitted hereunder or under any other Loan Document, (iii) subject to
Section 10.01, if
approved, authorized or ratified in writing by the Required Lenders, or
(iv) as provided in the
Borrower Security Agreement upon payment in full of any Taxable
Construction Loan or
redemption of any Tax-Exempt Bond or as otherwise permitted under the
Borrower Security
Agreement.

Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release its interest
in particular types or items of property, or release the Guarantor from its
obligations under the Guaranty pursuant to this Section 9.11.

     9.12. Other Agents; Arrangers and Managers. None of the Lenders or other
Persons
identified on the facing page or signature pages of this Agreement as a
“syndication agent,”
“documentation agent,” “co-agent,” “book manager,” “lead manager,”
“arranger,” “lead
arranger” or “co-arranger” shall have any right, power, obligation,
liability, responsibility or duty
under this Agreement other than, in the case of such Lenders, those
applicable to all Lenders as
such. Without limiting the foregoing, none of the Lenders or other
Persons so identified shall
have or be deemed to have any fiduciary relationship with any Lender.
Each Lender
acknowledges that it has not relied, and will not rely, on any of the
Lenders or other Persons so
identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.

ARTICLE X

MISCELLANEOUS

     10.01. Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrowers or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrowers or the applicable
Loan Party, as the case may be, and acknowledged by the Administrative Agent,
and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no such amendment, waiver or consent shall:

     (a) waive any condition set forth in Sections 4.01(a) and (b) without the
written
consent of each Lender;

     (b) extend or increase the Commitment of any Lender (or reinstate any
Commitment
terminated pursuant to Section 8.02) without the written consent of such
Lender, or increase the
Aggregate Commitment without the written consent of each Lender;

	 	 	 
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     (c) postpone any date fixed by this Agreement or any other Loan Document
for any
payment or mandatory prepayment of principal, interest, fees or other
amounts due to the
Lenders (or any of them) hereunder or under any other Loan Document
without the written
consent of each Lender directly affected thereby;

     (d) reduce the principal of, or the rate of interest specified herein on,
any Loan, or any
fees or other amounts payable hereunder or under any other Loan Document
without the written
consent of each Lender directly affected thereby; provided, however, that
only the consent of the
Required Lenders shall be necessary to amend the definition of “Default
Rate” or to waive any
obligation of the Borrowers to pay interest at the Default Rate;

     (e) change Section 2.11 or Section 8.03 in a manner that would alter the
pro rata
sharing of payments required thereby without the written consent of each
Lender;

     (f) change any provision of this Section or the definition of “Required
Lenders” or
any other provision hereof specifying the number or percentage of Lenders
required to amend,
waive or otherwise modify any rights hereunder or make any determination
or grant any consent
hereunder, without the written consent of each Lender;

     (g) release the Guarantor from the Guaranty without the written consent of
each
Lender; or

     (h) change Section 9.07 without the written consent of
each Lender.

     10.02. Notices and Other Communications;
Facsimile Copies.

     (a) General. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including by
facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the applicable address, facsimile number or (subject to subsection
(c) below) electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

     (i) if to the Borrowers or the Administrative Agent, the address,
facsimile number, electronic mail address or telephone number specified
for such Person on Schedule 10.02 or to such other address, facsimile
number, electronic mail address or telephone number as shall be
designated by such party in a notice to the other parties; and

     (ii) if to any other Lender, to the address, facsimile number,
electronic mail address or telephone number specified in its
Administrative Questionnaire or to such other address, facsimile number,
electronic mail address or telephone number as shall be designated by
such party in a notice to the Borrowers and the Administrative Agent.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto
and (ii) (A) if delivered by hand or by courier, when signed for by or on
behalf of the relevant party hereto; (B) if delivered by mail, four Business
Days after deposit in the mails, postage prepaid; (C) if delivered by
facsimile, when sent and receipt has been confirmed by telephone; and (D) if
delivered by electronic mail

	 	 	 
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(which form of delivery is subject to the provisions of subsection (c) below),
when delivered; provided, however, that notices and other communications to
the Administrative Agent, pursuant to Article II shall not be effective until
actually received by such Person. In no event shall a voicemail message be
effective as a notice, communication or confirmation hereunder.

     (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents
may be
transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures
shall, subject to applicable Law, have the same force and effect as
manually-signed originals and
shall be binding on all Loan Parties, the Administrative Agent and the
Lenders. The
Administrative Agent may also require that any such documents and
signatures be confirmed by
a manually-signed original thereof; provided, however, that the failure to
request or deliver the
same shall not limit the effectiveness of any facsimile document or
signature.

     (c) Limited Use of Electronic Mail. Electronic mail and Internet and
intranet
websites may be used only to distribute routine communications, such as
financial statements
and other information as provided in Section 6.02, and to distribute Loan
Documents for
execution by the parties thereto, and may not be used for any other
purpose.

     (d) Reliance by Administrative Agent and Lenders. The Administrative
Agent and
the Lenders shall be entitled to rely and act upon any notices (including
telephonic Committed
Loan Notices) purportedly given by or on behalf of the Borrowers even if
(i) such notices were
not made in a manner specified herein, were incomplete or were not
preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof, as
understood by the recipient,
varied from any confirmation thereof. The Borrowers shall indemnify
each Agent-Related
Person and each Lender from all losses, costs, expenses and liabilities
resulting from the reliance
by such Person on each notice purportedly given by or on behalf of the
Borrowers. All
telephonic notices to and other communications with the Administrative
Agent may be recorded
by the Administrative Agent, and each of the parties hereto hereby
consents to such recording.
Any notices given by the Administrative Agent or the Lenders to any
Borrower shall be deemed
given to all the Borrowers.

     10.03. No Waiver; Cumulative Remedies. No failure by any
Lender or the
Administrative Agent to exercise, and no delay by any such Person in
exercising, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights,
remedies,, powers and privileges herein provided are cumulative and not
exclusive of any rights,
remedies, powers and privileges provided by law.

     10.04. Attorney Costs, Expenses and Taxes. The Borrowers agree (a) to pay or
reimburse the Administrative Agent for all costs and expenses incurred in
connection with the
development, preparation, negotiation and execution of this Agreement and
the other Loan
Documents and any amendment, waiver, consent or other modification of the
provisions hereof
and thereof (whether or not the transactions contemplated hereby or
thereby are consummated),
and the consummation and administration of the transactions contemplated
hereby and thereby,
including all Attorney Costs, and (b) to pay or reimburse the
Administrative Agent and each
Lender for all costs and expenses incurred in connection with the
enforcement, attempted

	 	 	 
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enforcement, or preservation of any rights or remedies under this Agreement or
the other Loan Documents (including all such costs and expenses incurred
during any “workout” or restructuring in respect of the Obligations and during
any legal proceeding, including any proceeding under any Debtor Relief Law),
including all Attorney Costs. The foregoing costs and expenses shall include
all search, filing, recording, title insurance and appraisal charges and fees
and taxes related thereto, and other out-of-pocket expenses incurred by the
Administrative Agent and the cost of independent public accountants and other
outside experts retained by the Administrative Agent or any Lender. All
amounts due under this Section 10.04 shall be payable within ten Business
Days after demand therefor. The agreements in this Section shall survive the
termination of the Aggregate Commitments and repayment of all other
Obligations.

     10.05. Indemnification by the Borrowers. Whether or not the transactions
contemplated hereby are consummated, the Borrowers shall indemnify and hold
harmless each Agent-Related Person, each Lender and their respective
Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the “Indemnitees”) from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses and disbursements (including Attorney Costs)
of any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against any such Indemnitee in any way relating to or arising
out of or in connection with (a) the execution, delivery, enforcement,
performance or administration of any Loan Document or any other agreement,
letter or instrument delivered in connection with the transactions contemplated
thereby or the consummation of the transactions contemplated thereby, (b) any
Commitment, Loan or the use or proposed use of the proceeds therefrom, (c) any
actual or alleged presence or release of Hazardous Materials on or from any
property currently or formerly owned or operated by any Borrower, any
Subsidiary or any other Loan Party, or any Environmental Liability related in
any way to any Borrower, any Subsidiary or any other Loan Party, or (d) any
actual or prospective claim, litigation, investigation or proceeding relating
to any of the foregoing, whether based on contract, tort or any other theory
(including any investigation of, preparation for, or defense of any pending or
threatened claim, investigation, litigation or proceeding) and regardless of
whether any Indemnitee is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”), in all cases, whether or not caused by or arising,
in whole or in part, out of the negligence of the Indemnitee; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such liabilities, obligations, losses, damages, penalties, claims, demands,
actions, judgments, suits, costs, expenses or disbursements are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee. No
Indemnitee shall be liable for any damages arising from the use by others of
any information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnitee have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date), All amounts due under this Section 10.05 shall be payable within
ten Business Days after demand therefor. The agreements in this Section shall
survive the resignation of the Administrative Agent, the replacement of any
Lender, the termination of the Aggregate Commitments and the repayment,
satisfaction or discharge of all the other Obligations.

	 	 	 
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     10.06. Payments Set Aside. To the extent that any payment by or on behalf
of the
Borrowers is made to the Administrative Agent or any Lender, or the
Administrative Agent or
any Lender exercises its right of set-off, and such payment or the
proceeds of such set-off or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or
required (including pursuant to any settlement entered into by the
Administrative Agent or such
Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with
any proceeding under any Debtor Relief Law or otherwise, then (a) to the
extent of such
recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and
continued in full force and effect as if such payment had not been made or
such set-off had not
occurred, and (b) each Lender severally agrees to pay to the
Administrative Agent upon demand
its applicable share of any amount so recovered from or repaid by the
Administrative Agent, plus
interest thereon from the date of such demand to the date such payment is
made at a rate per
annum equal to the Federal Funds Rate from time to time in effect.

     10.07. Successors and Assigns.

     (a) 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 the
Borrowers may not assign or otherwise transfer any of their rights or
obligations hereunder
without the prior written consent of 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 subsection (b) of this Section, (ii) by way of
participation in accordance with
the provisions of subsection (d) of this Section, or (iii) by way of
pledge or assignment of a
security interest subject to the restrictions of subsection (f) of this
Section (and 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 subsection (d) of this Section and, to the extent expressly
contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

     (b) Any Lender may at any time, without any cost or expense to the Loan
Parties,
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 (i) except in the case of an assignment of the entire
remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it, the
aggregate amount of
the Commitment (which for this purpose includes Loans outstanding
thereunder) subject to each
such assignment, 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
$5,000,000 unless each
of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing,
the Borrowers otherwise consent (each such consent not to be unreasonably
withheld or
delayed); (ii) 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 Loans
or the Commitment assigned; (iii) any assignment of a Commitment must be
approved by the
Administrative Agent (which approval shall not be unreasonably withheld or
delayed), unless the
Person that is the proposed assignee is itself a Lender (whether or not
the proposed assignee
would otherwise qualify as an Eligible Assignee); (iv) prior to the
occurrence of a Default, in no

	 	 	 
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event shall either party to such assignment which continues to be a Lender
have an aggregate Commitment less than $10,000,000 after giving effect to any
such assignment; (v) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500; provided however, if the assignment
is made to a Lender or an Affiliate of a Lender, the $3,500 fee will be waived
the first time a Lender elects to assign to another Lender or Affiliate
thereof, so long as assignor pays all legal expenses associated with such
assignment; and (vi) prior to the occurrence of a Default, the Administrative
Agent and its Affiliates shall retain at all times an aggregate Commitment
which is never less than $25,000,000.00. Subject to acceptance and recording
thereof by the Administrative Agent pursuant to subsection (c) of this
Section, from and after the effective date specified in each Assignment and
Assumption, the Eligible 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 3.01, 3.04, 3.05, 10.04 and 10.05 with
respect to facts and circumstances occurring prior to the effective date of
such assignment). Upon request, the Borrowers (at their expense) shall execute
and deliver a Note to the assignee Lender. Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this subsection 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 subsection (d) of this Section.

     (c) The Administrative Agent, acting solely for this purpose as an agent
of the
Borrowers, shall maintain at the Administrative Agent’s 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 Borrowers, 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 Borrowers and any
Lender, at any reasonable
time and from time to time upon reasonable prior notice.

     (d) Any Lender may at any time, without the consent of, or notice to, the
Borrowers
or the Administrative Agent, sell participations to any Person (other than
a natural person or the
Borrowers or any of the Borrowers’ 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, (iii) the Loan
Parties shall not incur any cost or expense in connection therewith, and
(iv) the Borrowers, the
Administrative Agent and the other 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,

	 	 	 
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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 any amendment, waiver or other
modification described in the first proviso to Section 10.01 that directly
affects such Participant. Subject to subsection (e) of this Section, the
Borrowers agree that each Participant shall be entitled to the benefits of
Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to subsection (b) of this
Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section. 10.09 as though it were a Lender,
provided such Participant agrees to be subject to Sections 2.11, 3.06(b) and
10.16 as though it were a Lender.

     (e) A Participant shall not be entitled to receive any greater payment
under Section
3.01 or 3.04 than the applicable Lender would have been entitled to
receive with respect to the
participation sold to such Participant, unless the sale of the
participation to such Participant is
made with the Borrowers’ prior written consent. A Participant that would
be a Foreign Lender if
it were a Lender shall not be entitled to the benefits of Section 3.01
unless the Borrowers are
notified of the participation sold to such Participant and such
Participant agrees, for the benefit of
the Borrowers, to comply with Section 10.15 as though it were a Lender.

     (f) Any Lender may at any time and without the consent of any Person
pledge or
assign a security interest in all or any portion of its rights under this
Agreement (including under
its Note, if any) 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.

     10.08. Confidentiality. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with
the exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrowers and their obligations, (g)
with the consent of the Borrowers or (h) to the extent such Information (x)
becomes publicly available other than as a result of a breach of this Section
or (y) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrowers. For purposes of
this Section, “Information” means all information received from any Loan Party
relating to any Loan Party or any of their respective businesses, other than
any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis prior to disclosure by any Loan Party,
provided that, in the case of

	 	 	 
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information received from a Loan Party after the date hereof, such information
is clearly identified at the time of delivery as confidential. 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.

Notwithstanding anything herein to the contrary, “Information” shall not
include, and the Borrowers, the other Loan Parties, the Administrative Agent,
each Lender and the respective Affiliates of each of the foregoing (and the
respective partners, directors, officers, employees, agents, advisors and
other representatives of each of the foregoing and their Affiliates) may
disclose to any and all Persons, without limitation of any kind (a) any
information with respect to the U.S. federal and state income tax treatment of
the transactions contemplated hereby and any facts that may be relevant to
understanding such tax treatment, which facts shall not include for this
purpose the names of the parties or any other Person named herein, or
information that would permit identification of the parties or such other
Persons, or any pricing terms or other nonpublic business or financial
information that is unrelated to such tax treatment or facts, and (b) all
materials of any kind (including opinions or other tax analyses) relating to
such tax treatment or facts that are provided to any of the Persons referred
to above.

In addition, the Administrative Agent may disclose to any agency or
organization that assigns standard identification numbers to loan facilities
such basic information describing the facilities provided hereunder as is
necessary to assign unique identifiers (and, if requested, supply a copy of
this Agreement), it being understood that the Person to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to make available to the public only such Information as such
person normally makes available in the course of its business of assigning
identification numbers.

     10.09. Set-off. In addition to any rights and remedies of the Lenders
provided by law,
upon the occurrence and during the continuance of any Event of Default,
each Lender is
authorized at any time and from time to time, without prior notice to the
Borrowers or any other
Loan Party, any such notice being waived by the Borrowers (on its own
behalf and on behalf of
each Loan Party) to the fullest extent permitted by law, to set off and
apply any and all deposits
(general or special, time or demand, provisional or final) at any time
held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the
respective Loan Parties against any and all Obligations owing to such
Lender hereunder or under
any other Loan Document, now or hereafter existing, irrespective of
whether or not the
Administrative Agent or such Lender shall have made demand under this
Agreement or any
other Loan Document and although such Obligations may be contingent or
unmatured or
denominated in a currency different from that of the applicable deposit or
indebtedness. Each
Lender agrees promptly to notify the Borrowers and the Administrative
Agent after any such set-
off and application made by such Lender; provided, however, that the
failure to give such notice
shall not affect the validity of such set-off and application.

     10.10. Interest Rate Limitation. Notwithstanding anything to the contrary
contained in
any Loan Document, the interest paid or agreed to be paid under the Loan
Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable
Law (the “Maximum

	 	 	 
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Rate”). If the Administrative Agent or any Lender shall receive interest in an
amount that exceeds the Maximum Rate, the excess interest shall be applied to
the principal of the Loans or, if it exceeds such unpaid principal, refunded
to the Borrowers. In determining whether the interest contracted for, charged,
or received by the Administrative Agent or a Lender exceeds the Maximum Rate,
such Person may, to the extent permitted by applicable Law, (a) characterize
any payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations
hereunder.

     10.11. Counterparts. This Agreement may be executed in one or more
counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

     10.12. Integration. This Agreement, together with the other Loan
Documents,
comprises the complete and integrated agreement of the parties on the
subject matter hereof and
thereof and supersedes all prior agreements, written or oral, on such
subject matter. In the event
of any conflict between the provisions of this Agreement and those of any
other Loan Document,
the provisions of this Agreement shall control; provided that the
inclusion of supplemental rights
or remedies in favor of the Administrative Agent or the Lenders in any
other Loan Document
shall not be deemed a conflict with this Agreement. Each Loan Document was
drafted with the
joint participation of the respective parties thereto and shall be
construed neither against nor in
favor of any party, but rather in accordance with the fair meaning
thereof.

     10.13. Survival of Representations and Warranties. All
representations and
warranties made hereunder and in any other Loan Document or other document
delivered
pursuant hereto or thereto or in connection herewith or therewith shall
survive the execution and
delivery hereof and thereof. Such representations and warranties have
been or will be relied
upon by the Administrative Agent and each Lender, regardless of any
investigation made by the
Administrative Agent or any Lender or on their behalf and
notwithstanding that the
Administrative Agent or any Lender may have had notice or knowledge of any
Default at the
time of any Credit Extension, and shall continue in full force and effect
as long as any Loan.

     10.14. Severability. If any provision of this Agreement or the other Loan
Documents is
held to be illegal, invalid or unenforceable, (a) the legality, validity
and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall
not be affected or
impaired thereby and (b) the parties shall endeavor in good faith
negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which
comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The
invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable
such provision in any other jurisdiction.

	 	 	 
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     10.15. Tax Forms.

     (a) The following provisions shall apply to Foreign Lenders (as
herein defined):

     (i) Each Lender that is not a “United States person” within the
meaning of Section 7701(a)(30) of the Code (a “Foreign Lender”) shall
deliver to the Administrative Agent, prior to receipt of any payment
subject to withholding under the Code (or upon accepting an assignment of
an interest herein), two duly signed completed copies of either IRS Form
W-8BEN or any successor thereto (relating to such Foreign Lender and
entitling it to an exemption from, or reduction of, withholding tax on all
payments to be made to such Foreign Lender by the Borrowers pursuant to
this Agreement) or IRS Form W-8ECI or any successor thereto (relating to
all payments to be made to such Foreign Lender by the Borrowers pursuant
to this Agreement) or such other evidence satisfactory to the Borrowers
and the Administrative Agent that such Foreign Lender is entitled to an
exemption from, or reduction of, U.S. withholding tax, including any
exemption pursuant to Section 881(c) of the Code. Thereafter and from time
to time, each such Foreign Lender shall (A) promptly submit to the
Administrative Agent such additional duly completed and signed copies of
one of such forms (or such successor forms as shall be adopted from time
to time by the relevant United States taxing authorities) as may then be
available under then current United States laws and regulations to avoid,
or such evidence as is satisfactory to the Borrowers and the
Administrative Agent of any available exemption from or reduction of,
United States withholding taxes in respect of all payments to be made to
such Foreign Lender by the Borrowers pursuant to this Agreement, (B)
promptly notify the Administrative Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction,
and (C) take such steps as shall not be materially disadvantageous to it,
in the reasonable judgment of such Lender, and as may be reasonably
necessary (including the re-designation of its Lending Office) to avoid
any requirement of applicable Laws that the Borrowers make any deduction
or withholding for taxes from amounts payable to such Foreign Lender.

     (ii) Each Foreign Lender, to the extent it does not act or ceases
to act for its own account with respect to any portion of any sums paid
or payable to such Lender under any of the Loan Documents (for example,
in the case of a typical participation by such Lender), shall deliver to
the Administrative Agent on the date when such Foreign Lender ceases to
act for its own account with respect to any portion of any such sums
paid or payable, and at such other times as may be necessary in the
determination of the Administrative Agent (in the reasonable exercise of
its discretion), (A) two duly signed completed copies of the forms or
statements required to be provided by such Lender as set forth above, to
establish the portion of any such sums paid or payable with respect to
which such Lender acts for its own account that is not subject to U.S.
withholding tax, and (B) two duly signed completed copies of IRS Form
W-8IMY (or any successor thereto), together with any information such
Lender chooses to transmit with such form, and any other certificate or
statement of exemption required under the Code, to establish that such
Lender is not acting for its own account with respect to a portion of
any such sums payable to such Lender.

	 	 	 
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     (iii) The Borrowers shall not be required to pay any additional
amount to any Foreign Lender under Section 3.01 (A) with respect to any
Taxes required to be deducted or withheld on the basis of the
information, certificates or statements of exemption such Lender
transmits with an IRS Form W-8IMY pursuant to this Section 10.15(a) or
(B) if such Lender shall have failed to satisfy the foregoing provisions
of this Section 10.15(a); provided that if such Lender shall have
satisfied the requirement of this Section 10.15(a) on the date such
Lender became a Lender or ceased to act for its own account with respect
to any payment under any of the Loan Documents, nothing in this Section
10.15(a) shall relieve the Borrowers of their obligation to pay any
amounts pursuant to Section 3.01 in the event that, as a result of any
change in any applicable law, treaty or governmental rule, regulation or
order, or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing the fact
that such Lender or other Person for the account of which such Lender
receives any sums payable under any of the Loan Documents is not subject
to withholding or is subject to withholding at a reduced rate.

     (iv) The Administrative Agent may, without reduction, withhold any
Taxes required to be deducted and withheld from any payment under any of
the Loan Documents with respect to which the Borrowers are not required
to pay additional amounts under this Section 10.15(a).

     (b) Upon the request of the Administrative Agent, each Lender that is a
“United
States person” within the meaning of Section 7701(a)(30) of the Code shall
deliver to the
Administrative Agent two duly signed completed copies of IRS Form W-9. If
such Lender fails
to deliver such forms, then the Administrative Agent may withhold from any
interest payment to
such Lender an amount equivalent to the applicable back-up withholding tax
imposed by the
Code, without reduction.

     (c) If any Governmental Authority asserts that the Administrative Agent
did not
properly withhold or backup withhold, as the case may be, any tax or other
amount from
payments made to or for the account of any Lender, such Lender shall
indemnify the
Administrative Agent therefor, including all penalties and interest, any
taxes imposed by any
jurisdiction on the amounts payable to the Administrative Agent under this
Section, and costs
and expenses (including Attorney Costs) of the Administrative Agent. The
obligation of the
Lenders under this Section shall survive the termination of the Aggregate
Commitments,
repayment of all other Obligations hereunder and the resignation of the
Administrative Agent.

     10.16. Replacement of Lenders. Under any circumstances set forth herein
providing that the Borrowers shall have the right to replace a Lender as a
party to this Agreement, the Borrowers may, upon notice to such Lender and with
the approval of the Administrative Agent, such approval not be unreasonably
withheld, replace such Lender by causing such Lender to assign its Commitment
(with the assignment fee to be paid by the Borrowers in such instance) pursuant
to Section 10.07(b) to one or more other Lenders or Eligible Assignees procured
by the Borrowers; provided, however, that if the Borrowers elect to exercise
such right with respect to any Lender pursuant to Section 3.06(b), they shall
be obligated to replace all Lenders that have made similar requests for
compensation pursuant to Section 3.01 or 3.04. The Borrowers shall

	 	 	 
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(y) pay in full all principal, interest, fees and other amounts owing to such
Lender through the date of replacement (including any amounts payable pursuant
to Section 3.05), and (z) release such Lender from its obligations under the
Loan Documents. Any Lender being replaced shall execute and deliver an
Assignment and Assumption with respect to such Lender’s Commitment and
outstanding Loans.

     10.17. Governing Law.

     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE
(INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW,
BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES);
PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

     (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF (I) THE STATE OF TEXAS SITTING IN DALLAS COUNTY OR OF THE
UNITED STATES FOR THE NORTHERN DISTRICT OF TEXAS OR (II) THE STATE OF
NEW YORK OR OF THE UNITED STATES SITTING IN NEW YORK, NEW YORK OR
(III) ANY COUNTY AND STATE SELECTED BY THE ADMINISTRATIVE AGENT OR
THE REQUIRED LENDERS . BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE BORROWERS EACH CONSENT, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS LISTED IN
CLAUSES (I) AND (II) OF THE IMMEDIATELY PRECEDING SENTENCE AND THE
BORROWERS IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING
OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION LISTED IN CLAUSES (I)
AND (II) OF THE IMMEDIATELY PRECEDING SENTENCE IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWERS EACH
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH
STATES.

     NOTWITHSTANDING THE FOREGOING, ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN SUCH
JURISDICTION SELECTED BY THE ADMINISTRATIVE AGENT OR AS OTHERWISE DIRECTED
BY THE REQUIRED LENDERS (IN WHICH CASE THE ADMINISTRATIVE AGENT WILL BRING
SUCH LEGAL ACTION OR PROCEEDING IN THE JURISDICTION SELECTED BY THE
REQUIRED LENDERS).

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 63

 

 

     10.18. Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY
LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY
TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     10.19. USA Patriot Act Notice. Each Lender and the Administrative Agent
(for itself
and not on behalf of any Lender) hereby notifies the Borrowers that
pursuant to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the
“Act”), it is required to obtain, verify and record information that
identifies the Borrowers, which
information includes the name and address of the Borrowers and other
information that will
allow such Lender or the Administrative Agent, as applicable, to identify
the Borrowers in
accordance with the Act. Each Loan Party covenants, represents and
warrants to Lenders and
Administrative Agent that (a) such Loan Party is not, nor shall be at any
time until the Loans are
repaid by a Person with whom any of the Lenders is prohibited from
transacting business of the
type contemplated by this Agreement pursuant to the Act and any executive
orders and lists
published by the Office of Foreign Assets Control, U.S. Department of
Treasury with respect to
Specially Designated Nationals and Blocked Persons, (b) it has taken, and
shall continue to take
until the Loans are fully repaid, such measures as are required by Law to
assure that the funds
invested in the Borrowers and/or used to make payments on the Loans are
derived (i) from
transactions that do not violate United States Law nor, to the extent such
funds originate outside
the United States, do not violate the Laws of the jurisdiction in which
they originated; and (ii)
from permissible sources under United States Law or to the extent such
funds originate outside
the United States, under the Laws of the jurisdiction in which they
originated; and (c) such Loan
Party is in compliance with the Act in all material respects.

     10.20. NATURE OF OBLIGATIONS. ALL OF THE REPRESENTATIONS AND
AGREEMENTS OF THE BORROWERS ARE JOINT AND SEVERAL OBLIGATIONS OF
ALL BORROWERS. ANY DOCUMENT RELATED TO THE LOANS WHICH IS
EXECUTED BY ANY OF THE BORROWERS SHALL BE BINDING UPON ALL OF THE
BORROWERS AS THOUGH IT WAS EXECUTED BY ALL OF THE BORROWERS.

	 	 	 
	CREDIT AGREEMENT (MuniMae)

	 	Page 64

 

 

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

	 	 	 	 	 
	 	 	BORROWERS:
	 
	 	 	 	 
	 	 	MUNIMAE TEI HOLDINGS, LLC,
	 	 	a Maryland limited liability company
	 
	 	 	 	 
	 	 	By: Municipal Mortgage & Equity, LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gary A. Mentesana
	

	 	 	 	
 
	

	 	Name:
	 	Gary A. Mentesana
	

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	MMA CONSTRUCTION FINANCE, LLC,
	 	 	a Maryland limited liability company
	 
	 	 	 	 
	 	 	By: MuniMae Investment Services Corporation
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gary A. Mentesana
	

	 	 	 	
 
	

	 	Name:
	 	Gary A. Mentesana
	

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	MIDLAND MORTGAGE INVESTMENT

CORPORATION, a Florida corporation
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gary A. Mentesana
	

	 	 	 	
 
	

	 	Name:
	 	Gary A. Mentesana
	

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	GUARANTOR:
	 
	 	 	 	 
	 	 	MUNICIPAL MORTGAGE & EQUITY LLC,
	 	 	a Delaware limited liability company
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gary A. Mentesana
	

	 	 	 	
 
	

	 	Name:
	 	Gary A. Mentesana
	

	 	Title:
	 	Executive Vice President

	 	 	 
	Credit Agreement (MuniMae)

	 	Signature Page

 

 

	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as
	 	 	Administrative Agent and a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Jeff Journey
	

	 	 	 	
 
	

	 	Name:
	 	Jeff Journey
	

	 	Title:
	 	Senior Vice President

	 	 	 
	Credit Agreement (MuniMae)

	 	Signature Page

 

 

	 	 	 	 	 
	 	 	U.S. BANK NATIONAL
ASSOCIATION,
	 	 	as Co-Syndication Agent
and a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Michael Raarup
	

	 	 	 	
 
	

	 	Name:
	 	Michael Raarup
	

	 	Title:
	 	Senior Vice President

	 	 	 
	Credit
Agreement (MuniMae)

	 	Signature Page

 

 

	 	 	 	 	 
	 	 	ROYAL BANK OF CANADA,
	 	 	as a Lender
	

	 	 	 	 
	

	 	By:
	 	/s/ Gordon MacArthur
	

	 	 	 	
 
	

	 	Name:
	 	Gordon MacArthur
	

	 	Title:
	 	 Authorized Signatory

	 	 	 
	Credit Agreement (MuniMae)

	 	Signature Page

 

 

	 	 	 	 	 
	 	 	CITICORP USA,
INC., as Co-Syndication
	 	 	Agent and a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Maria Mckeon
	

	 	 	 	
 
	

	 	Name:
	 	Maria Mckeon
	

	 	Title:
	 	Vice President

	 	 	 
	Credit Agreement (MuniMae)

	 	Signature Page

 

 

	 	 	 	 	 
	 	 	COMERICA BANK, N.A., as a Lender
	 
	

	 	By:
	 	/s/ Lisa M. Kotula
	

	 	 	 	
 
	

	 	Name:
	 	Lisa M. Kotula
	

	 	Title:
	 	Vice President

	 	 	 
	Credit Agreement (MuniMae)

	 	Signature Page<PAGE>
                                                                     EXHIBIT 4.2

                               SECURITY AGREEMENT

                                      among

                             COINMACH SERVICE CORP.,

                          COINMACH LAUNDRY CORPORATION

                                       and

                              THE BANK OF NEW YORK,
                               as Collateral Agent

                         Dated as of November [ ], 2004
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----
<S>                 <C>                                                                                          <C>
                                    ARTICLE I

                               SECURITY INTERESTS

Section 1.1.        Grant of Security Interests................................................................... 2
Section 1.2.        Power of Attorney............................................................................. 3

                                   ARTICLE II

                GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.1.        Necessary Filings............................................................................. 3
Section 2.2.        No Liens...................................................................................... 4
Section 2.3.        Other Financing Statements.................................................................... 4
Section 2.4.        Chief Executive Office; Records; Corporate Name; Jurisdiction of Incorporation................ 4
Section 2.5.        Location of Inventory and Equipment........................................................... 4
Section 2.6.        Recourse...................................................................................... 5
Section 2.7.        Trade Names; Change of Name................................................................... 5
Section 2.8.        Benefit to Laundry Corp....................................................................... 5

                                   ARTICLE III

                          SPECIAL PROVISIONS CONCERNING

                     ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS

                      AND CERTAIN OTHER TYPES OF COLLATERAL

Section 3.1.        Additional Representations and Warranties..................................................... 5
Section 3.2.        Maintenance of Records........................................................................ 6
Section 3.3.        Direction to Account Debtors; Contracting Parties, etc........................................ 6
Section 3.4.        Modification of Terms, etc.................................................................... 6
Section 3.5.        Collection.................................................................................... 7
Section 3.6.        Further Actions............................................................................... 7
Section 3.7.        Special Provisions Regarding Certain Types of Collateral...................................... 7

                                   ARTICLE IV

                       SPECIAL PROVISIONS CONCERNING MARKS

Section 4.1.        Additional Representations and Warranties.................................................... 11
Section 4.2.        Licenses and Assignments..................................................................... 11
Section 4.3.        Infringements................................................................................ 11
Section 4.4.        Preservation of Trademarks................................................................... 12
</TABLE>

                                      -i-
<PAGE>
<TABLE>
<S>                 <C>                                                                                          <C>
Section 4.5.        Maintenance of Registration.................................................................. 12
Section 4.6.        Future Registered Marks...................................................................... 12
Section 4.7.        Remedies..................................................................................... 12

                                    ARTICLE V

                          SPECIAL PROVISIONS CONCERNING

                             PATENTS AND COPYRIGHTS

Section 5.1.        Additional Representations and Warranties.................................................... 13
Section 5.2.        Licenses and Assignments..................................................................... 13
Section 5.3.        Infringements................................................................................ 13
Section 5.4.        Maintenance of Patents....................................................................... 13
Section 5.5.        Prosecution of Patent Application............................................................ 14
Section 5.6.        Other Patents and Copyrights................................................................. 14
Section 5.7.        Remedies..................................................................................... 14

                                   ARTICLE VI

                      PROVISIONS CONCERNING ALL COLLATERAL

Section 6.1.        Protection of Collateral Agent's Security.................................................... 14
Section 6.2.        Warehouse Receipts Non-negotiable............................................................ 15
Section 6.3.        Further Actions.............................................................................. 15
Section 6.4.        Financing Statements......................................................................... 15

                                   ARTICLE VII

                  REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT

Section 7.1.        Remedies; Obtaining the Collateral Upon Default.............................................. 15
Section 7.2.        Remedies; Disposition of the Collateral...................................................... 17
Section 7.3.        Waiver of Claims............................................................................. 18
Section 7.4.        Application of Proceeds...................................................................... 18
Section 7.5.        Remedies Cumulative.......................................................................... 19
Section 7.6.        Discontinuance of Proceedings................................................................ 19
Section 7.7.        Additional Remedies With Respect to Collateral Located in Louisiana.......................... 19

                                  ARTICLE VIII

                                    INDEMNITY

Section 8.1.        Indemnity.................................................................................... 21
Section 8.2.        Indemnity Obligations Secured by Collateral; Survival........................................ 22
</TABLE>

                                      -ii-
<PAGE>
<TABLE>
<S>                 <C>                                                                                          <C>
                                   ARTICLE IX

                                   DEFINITIONS

                                    ARTICLE X

                                  MISCELLANEOUS

Section 10.1.       Notices...................................................................................... 28
Section 10.2.       Waiver; Amendment............................................................................ 29
Section 10.3.       Obligations Absolute......................................................................... 29
Section 10.4.       Successors and Assigns....................................................................... 29
Section 10.5.       Headings Descriptive......................................................................... 29
Section 10.6.       Severability................................................................................. 29
Section 10.7.       GOVERNING LAW................................................................................ 29
Section 10.8.       Pledgor's Duties............................................................................. 29
Section 10.9.       Termination; Release......................................................................... 30
Section 10.10.      Counterparts................................................................................. 30
Section 10.11.      The Collateral Agent......................................................................... 30
Section 10.12       Intercreditor Agreement...................................................................... 31
</TABLE>

                                     -iii-
<PAGE>
                               SECURITY AGREEMENT

            SECURITY AGREEMENT (as amended, modified or supplemented from time
to time, this "Agreement"), dated as of November [ ], 2004, by COINMACH SERVICE
CORP. (the "Company"), a Delaware corporation having an office at 303 Sunnyside
Boulevard, Plainview, New York 11803, and COINMACH LAUNDRY CORPORATION ("Laundry
Corp." and, together with the Company, the "Pledgors") in favor of THE BANK OF
NEW YORK ("BNY"), as Collateral Agent (in such capacity and together with any
successors in such capacity, the "Collateral Agent") for the benefit of the
Secured Creditors (as defined below). Except as otherwise defined herein, all
capitalized terms used herein and defined in the indenture, dated as of the date
hereof (as amended, modified or supplemented from time to time (the
"Indenture"), between the Company, the subsidiary guarantors party thereto from
time to time and BNY as trustee (the "Trustee") and as Collateral Agent shall be
used herein as so defined.

                                R E C I T A L S:
                                - - - - - - - -

            1. The Company intends to issue on the date hereof $[ ] million
aggregate principal amount of its [ ]% Senior Secured Notes due 2024 (the
"Senior Secured Notes") pursuant to the Indenture, and may issue additional
Senior Secured Notes from time to time in accordance with the Indenture.

            2. The obligations of the Company under the Indenture and the Senior
Secured Notes will be guaranteed by Laundry Corp. in accordance with the
Indenture.

            3. Laundry Corp. will receive substantial benefits from the proceeds
of the Senior Secured Notes and has agreed to grant to the Collateral Agent
Liens on and security interests in the Collateral owned by it to secure its
Obligations (as defined below).

            4. Laundry Corp. has previously granted a Lien and pledged all of
its right, title and interest in and relating to the Capital Stock of Coinmach
Corporation ("Coinmach Corp."), a Delaware corporation, and Proceeds thereof
(collectively, the "Shared Collateral") in favor of Deutsche Bank Trust Company
Americas ("DB Trust"), as collateral agent (the "Credit Agreement Collateral
Agent") under the Credit Agreement (as amended, modified or supplemented from
time to time, the "Credit Agreement") dated as of January 25, 2002, among
Laundry Corp., Coinmach Corp., the lenders party thereto from time to time in
their capacities as lenders thereunder, DB Trust, as administrative agent and
the Credit Agreement Collateral Agent.

            5. It is a condition precedent to the purchase of the Senior
Secured Notes that the Pledgors shall have executed and delivered this
Agreement to the Collateral Agent for the benefit of the Collateral Agent, the
Trustee and the Holders from time to time of the Senior Secured Notes
(collectively, the "Secured Creditors").

            6. It is a condition precedent to the effectiveness of certain
amendments to the Credit Agreement and to the Holdings Pledge Agreement (as
defined therein) necessary to permit the grant by Laundry Corp. hereunder of
the Liens in favor of the Collateral Agent on the Shared Collateral that
Laundry Corp. shall have executed and delivered a certain intercreditor
agreement (the "Intercreditor Agreement") dated as of the date hereof (as the
same may be amended, supplemented or otherwise modified from time to time)
among Laundry Corp., the Collateral Agent and                    .

            7. The Pledgors desire to enter into this Agreement in order to
satisfy the condition described in the preceding paragraph and to secure the
payment and performance of all the Obligations.

                               A G R E E M E N T:
                               - - - - - - - - -

            NOW, THEREFORE, in consideration of the above-described extensions
of credit to be made to the Pledgors and other benefits accruing to the
Pledgors, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows:

                                      S-1
<PAGE>
                                   ARTICLE I

                               SECURITY INTERESTS

  Section 1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of the Obligations, each
Pledgor does hereby collaterally assign and transfer unto the Collateral Agent
for the benefit of the Secured Creditors, and does hereby grant to the
Collateral Agent for the benefit of the Secured Creditors a continuing security
interest of first priority (subject to Liens evidenced by Permitted Filings and
other Permitted Liens) in, all of the right, title and interest of such Pledgor
in, to and under all of the following, whether now existing or hereafter from
time to time acquired (collectively, the "Collateral"):

            (i) all Equipment;

            (ii) all Inventory;

            (iii) all Contracts, together with all Contract Rights thereunder;

            (iv) all Instruments;

            (v) all General Intangibles;

            (vi) all Accounts;

            (vii) all Insurance Policies;

            (viii) all Intellectual Property;

            (ix) all Chattel Paper;

            (x) all Investment Property and Financial Assets;

            (xi) all Deposit Accounts, including, without limitation, the Cash
      Collateral Account established for the Pledgors and all monies, securities
      and instruments deposited or required to be deposited in such Cash
      Collateral Account;

            (xii) all Letter-of-Credit Rights;

            (xiii) all Goods;

            (xiv) all Commercial Tort Claims, including, without limitation,
      each Specified Commercial Tort Claim;

            (xv) all Documents;

            (xvi) all Fixtures;

                                      -2-
<PAGE>
            (xvii) all Supporting Obligations relating to any and all of the
      foregoing;

            (xviii) all books, records, ledgers, printouts, computer recording
      media, data files, tapes, file materials and other papers containing
      information relating to any and all items of Collateral; and

            (xix) to the extent not covered by clauses (i) through (xviii) of
      this sentence, all other personal property whether tangible or intangible
      wherever located; and

            (xx) all Proceeds of any and all of the foregoing.

                        (b) The security interests of the Collateral Agent under
            this Agreement extends to all Collateral of the kind which is the
            subject of this Agreement which each Pledgor may acquire at any time
            during the continuation of this Agreement.

            Section 1.2. Power of Attorney. Each Pledgor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Pledgor or as otherwise provided herein), in the
Collateral Agent's reasonable discretion, to take any action and to execute any
instrument which the Collateral Agent may reasonably deem necessary or advisable
to accomplish the purposes of this Agreement, which appointment as attorney is
coupled with an interest.

                                   ARTICLE II

                GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

            Each Pledgor represents, warrants and covenants, as of the date
hereof, which representations, warranties and covenants shall survive execution
and delivery of this Agreement, as follows:

            Section 2.1. Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by each Pledgor to the Collateral Agent hereby in
respect of the Collateral are set forth in Schedule 8 to the Perfection
Certificate. To the knowledge of each Pledgor, such filings, registrations and
recordings have been filed, registered or recorded or concurrently herewith are
being filed, registered or recorded, and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral constitutes
or shall constitute, upon such filing, registration or recordings, a perfected
security interest therein prior to the rights of all other Persons therein and
subject to no other Liens (except that the Collateral may be subject to the
security interests evidenced by the financing statements disclosed on Schedule 6
to the Perfection Certificate (the "Permitted Filings") and to any other
Permitted Liens), and is or shall be entitled to all the rights, priorities and
benefits afforded by the Uniform Commercial Code to the extent complied with or
other relevant law as enacted in any relevant jurisdiction to perfected security
interests.

                                      -3-
<PAGE>
            Section 2.2. No Liens. Each Pledgor is, and as to Collateral
acquired by it from time to time after the date hereof such Pledgor will be, the
owner of all of the Collateral pledged by it hereunder free from any Lien,
security interest, encumbrance or other right, title or interest of any Person
(other than Liens created hereby, Permitted Liens or Liens evidenced by the
Permitted Filings), and such Pledgor shall use its good faith efforts to defend
the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Collateral Agent.

            Section 2.3. Other Financing Statements. As of the date hereof,
there is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) on file or of record in any
relevant jurisdiction covering or purporting to cover any interest of any kind
in the Collateral except as disclosed in Schedules 6 and 8 to the Perfection
Certificate and as may be filed in connection with Permitted Liens. So long as
the Termination Date has not occurred, no Pledgor shall execute or authorize to
be filed in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be filed in
respect of and covering the security interests granted hereby by such Pledgor or
in respect of Permitted Liens.

            Section 2.4. Chief Executive Office; Records; Corporate Name;
Jurisdiction of Incorporation. (a) As of the date hereof, the chief executive
office of each Pledgor is located at the location indicated on Schedule 2(a) to
the Perfection Certificate.

            (b) The exact legal name, type of organization and jurisdiction of
organization (together with the organizational identification number, if any,
issued by such jurisdiction to each Pledgor) of each Pledgor is set forth in
Schedule 1(a) to the Perfection Certificate. No Pledgor shall "reincorporate" or
"reorganize" or otherwise cause the Collateral to be transferred to a Person
incorporated or organized in another state except to the extent (i) permitted
pursuant to the provisions of the Indenture, (ii) it shall have given to the
Collateral Agent not less than 10 days' prior written notice of its intention so
to do, clearly describing such transaction and providing such other information
in connection therewith as the Collateral Agent may reasonably request, (iii)
with respect to such transaction, such Pledgor shall have taken all action to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted and perfected hereby at all times fully perfected and in
full force and effect and (iv) the Collateral Agent shall have received
reasonably satisfactory evidence that all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such actions) have been taken, in order to perfect (and maintain
the perfection and priority of) the security interest granted hereby.

            Section 2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Pledgor is located at one of the
locations shown on the Schedules to Section 2 of the Perfection Certificate. No
Pledgor shall establish a new location for Equipment and/or Inventory that shall
cause the security interest of the Collateral Agent in such Equipment and/or
Inventory granted hereby (x) to be unperfected or (y) to lose its priority.

                                      -4-
<PAGE>
            Section 2.6. Recourse. This Agreement is made with full recourse to
each Pledgor and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Pledgor contained herein or in the
Senior Secured Notes or the Indenture, and otherwise in writing in connection
herewith or therewith.

            Section 2.7. Trade Names; Change of Name. No Pledgor has or operates
in any jurisdiction under, or in the preceding 5 years has not had or has not
operated in any jurisdiction under, any trade names, fictitious names or other
names (including, without limitation, any names of divisions or operations)
except its legal name and such other trade, fictitious or other names as are
listed on Schedules 1(b) and 1(c) to the Perfection Certificate. No Pledgor
shall change its legal name or assume or operate in any jurisdiction under any
trade, fictitious or other name in any manner which might make any financing
statement or continuation statement filed in connection therewith seriously
misleading within the meaning of Section 9-507 of the UCC except those names
listed on Schedule 1(b) and 1(c) to the Perfection Certificate and new names
(including, without limitation, any names of divisions or operations)
established in accordance with the last sentence of this Section 2.7. No Pledgor
shall assume or operate in any jurisdiction under any new trade, fictitious or
other name that would make any financing statement or continuation statement
filed in connection therewith, seriously misleading within the meaning of
Section 9-507 of the UCC until (i) it shall have given to the Collateral Agent
not less than 10 days' prior written notice of its intention so to do, clearly
describing such new name and the jurisdictions in which such new name shall be
used and providing such other information in connection therewith as the
Collateral Agent may reasonably request and (ii) with respect to such new name,
it shall have taken all reasonable action to maintain the security interest of
the Collateral Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect.

            Section 2.8. Benefit to Laundry Corp. Laundry Corp. will receive
substantial benefits from the proceeds of the Senior Secured Notes.

                                  ARTICLE III

                          SPECIAL PROVISIONS CONCERNING
                     ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS
                      AND CERTAIN OTHER TYPES OF COLLATERAL

            Section 3.1. Additional Representations and Warranties. As of the
time when each of its Accounts arises, each Pledgor shall be deemed to have
represented and warranted that such Account, and all records, papers and
documents relating thereto (if any) are genuine and in all material respects
what they purport to be, and that all papers and documents (if any) relating
thereto to the actual knowledge of such Pledgor (i) will represent the genuine,
legal, valid and binding obligation of the account debtor evidencing
indebtedness unpaid and owed by the respective account debtor arising out of the
performance of labor or services or the sale or lease and delivery of the
merchandise listed therein, or both, (ii) will be the only original writings
evidencing and embodying such obligation of the account debtor named therein
(other than copies created for general accounting purposes), (iii) will evidence
true and valid obligations, enforceable in accordance with their respective
terms and (iv) will be in compliance and will conform in

                                      -5-
<PAGE>
each case in all material respects with all applicable federal, state and local
laws and applicable laws of any relevant foreign jurisdiction.

            Section 3.2. Maintenance of Records. Each Pledgor will keep and
maintain at its own cost and expense satisfactory and complete records of its
Accounts and Contracts, including, but not limited to, the originals or copies
of all documentation (including each Contract) with respect thereto, records of
all payments received, all credits granted thereon, all merchandise returned and
all other dealings therewith, and such Pledgor will make the same available on
such Pledgor's premises to the Collateral Agent for inspection, at such
Pledgor's own cost and expense, at any and all reasonable times; provided,
however, if no Event of Default has occurred and is then continuing, the
Collateral Agent shall give such Pledgor reasonable prior written notice of any
such inspection. Upon the occurrence and during the continuance of an Event of
Default and upon the reasonable request of the Collateral Agent, each Pledgor
shall, at its own cost and expense, deliver all tangible evidence of its
Accounts and Contract Rights (including, without limitation, all documents
evidencing the Accounts and all Contracts) and such books and records to the
Collateral Agent or to its representatives (copies of which evidence and books
and records may be retained by such Pledgor). Upon the occurrence and during the
continuance of an Event of Default and the delivery by the Collateral Agent of
notice thereof to the Company in accordance with Article Six of the Indenture to
the extent such notice is required pursuant to Article Six of the Indenture, if
the Collateral Agent so directs, each Pledgor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Accounts and the Contracts,
as well as all books, records and documents of such Pledgor evidencing or
pertaining to such Accounts and Contracts with an appropriate reference to the
fact that such Accounts and Contracts have been assigned to the Collateral Agent
and that the Collateral Agent has a security interest therein.

            Section 3.3. Direction to Account Debtors; Contracting Parties, etc.
Upon the occurrence and during the continuance of an Event of Default and
delivery of notice thereof to the Company in accordance with Article Six of the
Indenture to the extent such notice is required pursuant to Article Six of the
Indenture, and if the Collateral Agent so directs each Pledgor, to the extent
permitted by applicable law, each Pledgor agrees (x) to cause all payments on
account of the Accounts and Contracts to be made directly to the Cash Collateral
Account, (y) that the Collateral Agent may, at its option, directly notify the
obligors with respect to any Accounts and/or under any Contracts to make
payments with respect thereto as provided in preceding clause (x), and (z) that
the Collateral Agent may enforce collection of any such Accounts and Contracts
and may adjust, settle or compromise the amount of payment thereof, in the same
manner and to the same extent as such Pledgor. Without notice to or assent by
any Pledgor, the Collateral Agent may apply any or all amounts then in, or
thereafter deposited in, the Cash Collateral Account which application shall be
effected in the manner provided in Section 7.4 of this Agreement. The reasonable
costs and expenses (including reasonable attorneys' fees) of collection, whether
incurred by any Pledgor or the Collateral Agent, shall be borne by the Pledgors.

            Section 3.4. Modification of Terms, etc. Except as otherwise
provided in the Indenture, no Pledgor shall rescind or cancel any indebtedness
evidenced by any Account or under any Contract, or modify any term relating to
such indebtedness or make any adjustment with

                                      -6-
<PAGE>
respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Account or Contract, or interest therein, without the prior written consent of
the Collateral Agent (not to be unreasonably withheld), except as permitted by
Section 3.5. Except as otherwise provided in the Indenture, each Pledgor will
duly fulfill all obligations on its part to be fulfilled under or in connection
with the Accounts and Contracts and will do nothing to impair in any material
respect the rights of the Collateral Agent in the Accounts or Contracts.

            Section 3.5. Collection. Each Pledgor shall endeavor to cause to be
collected from the account debtor named in each of its Accounts or obligor under
any of its Contracts, as and when due (including, without limitation, amounts
which are delinquent, such amounts to be collected in accordance with generally
accepted lawful collection procedures) any and all amounts owing under or on
account of such Account or Contract, and apply forthwith upon receipt thereof
all such amounts as are so collected to the outstanding balance of such Account
or under such Contract, except that, unless an Event of Default has occurred and
is continuing and the Collateral Agent has delivered notice thereof to the
Company in accordance with Article Six of the Indenture to the extent such
notice is required pursuant to Article Six of the Indenture, such Pledgor may
allow in the ordinary course of business as adjustments to amounts owing under
its Accounts and Contracts (i) an extension or renewal of the time or times of
payment, or settlement for less than the total unpaid balance, as such Pledgor
finds appropriate in accordance with sound business judgment and (ii) a refund
or credit due as a result of returned or damaged merchandise or improperly
performed services. The reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) of collection, whether incurred by any
Pledgor or the Collateral Agent, shall be borne by the Pledgors.

            Section 3.6. Further Actions. Each Pledgor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Accounts, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require.

            Section 3.7. Special Provisions Regarding Certain Types of
Collateral.

            (a) Deposit Accounts, Securities Accounts and Commodity Accounts.
      (i) Each Pledgor hereby represents, warrants and covenants that (A) it
      does not maintain any Securities Accounts or Commodity Accounts with any
      Securities Intermediary or Commodity Intermediary other than the
      Securities Accounts and/or Commodity Accounts listed in Schedule 15 to the
      Perfection Certificate and (B) it shall not in the future maintain any
      Securities Accounts or Commodity Accounts except with any Securities
      Intermediary or Commodity Intermediary in accordance with the provisions
      of this Section 3.7. Each Pledgor hereby represents and warrants that it
      does not maintain any Deposit Accounts other than the Deposit Accounts
      listed in Schedule 15 to the Perfection Certificate (the "Existing Deposit
      Accounts"). Each Pledgor agrees that, consistent with its existing
      practice, it shall (i) deposit all amounts collected in the ordinary
      course of its busi-

                                      -7-
<PAGE>
      ness into the Existing Deposit Accounts and (ii) ensure that no funds in
      an aggregate amount exceeding $500,000 are on deposit for more than
      five (5) Business Days in any Deposit Account with respect to which the
      Collateral Agent does not have control and that no funds in an aggregate
      amount exceeding $3,000,000 are on deposit for more than five (5)
      Business Days in all Deposit Accounts with respect to which the
      Collateral Agent does not have control. No Pledgor shall hereafter
      establish and maintain any Deposit Account, Securities Account or
      Commodity Account with any Depository Bank, Securities Intermediary or
      Commodity Intermediary, respectively, unless (1) such Pledgor shall have
      given the Collateral Agent 15 days' prior written notice of its
      intention to establish such new Deposit Account, Securities Accounts or
      Commodity Accounts with such Depository Bank, Securities Intermediary or
      Commodity Intermediary, (2) such Depository Bank, Securities
      Intermediary or Commodity Intermediary shall be reasonably acceptable to
      the Collateral Agent and (3) in the case of a new Deposit Account,
      Securities Account or Commodity Account, the Pledgor shall have used
      commercially reasonable efforts to cause such Depository Bank,
      Securities Intermediary or Commodity Intermediary to enter into a
      Control Agreement. Each Pledgor shall accept any cash and Investment
      Property in trust for the benefit of the Collateral Agent and within
      three (3) Business Day of actual receipt thereof, deposit any cash or
      Investment Property and any new securities, instruments, documents or
      other property by reason of ownership of the Investment Property received
      by it into a Deposit Account, Securities Account or Commodity Account
      subject to Collateral Agent's control.

            (ii) Each Pledgor hereby acknowledges and agrees that
      notwithstanding any provisions hereof or any other circumstance to the
      contrary, the Pledgors will use commercial reasonable efforts to cause the
      Collateral Agent at all times to (A) have "control" (as defined in Section
      8-106 of the UCC) of all Investment Property, as confirmed in one or more
      Control Agreements in respect thereof, and (B) be authorized to direct the
      applicable Securities Intermediary or Commodity Intermediary with respect
      to such Investment Property to comply without further consent of such
      Pledgor or any investment manager or any other Person acting or purporting
      to act for any Pledgor being required, with all Entitlement Orders
      originated by the Collateral Agent with respect to the Investment
      Property. The Collateral Agent hereby agrees that it shall not issue any
      Entitlement Orders to any Securities Intermediary or Commodity
      Intermediary in respect of the Investment Property except in connection
      with the Collateral Agent's exercise of remedies upon the occurrence of an
      Event of Default.

            (iii) Each Pledgor hereby acknowledges and agrees that
      notwithstanding any provisions hereof or any other circumstance to the
      contrary, the Pledgors will use commercially reasonable efforts to cause
      the Collateral Agent at all times to (A) have "control" (as defined in
      Section 9-104 of the UCC) of all Deposit Accounts, as confirmed in the
      Control Agreement in respect thereof, and (B) be authorized to direct the
      institution maintaining such Deposit Account to comply without further
      consent of any Pledgor or any person acting or purporting to act for any
      Pledgor being required, with all instructions originated by the Collateral
      Agent directing disposition of the funds in such Deposit Account. The
      Collateral Agent hereby agrees that it shall not issue any such
      instructions

                                      -8-
<PAGE>
      to the institution maintaining the Deposit Account except in connection
      with the Collateral Agent's exercise of remedies upon the occurrence of an
      Event of Default.

            (iv) So long as no Event of Default has occurred and is continuing,
      each Pledgor may trade, sell, exchange, lend, apply or transfer funds or
      Investment Property from any Deposit Account, Securities Account or
      Commodity Account, in each case to the extent not inconsistent with the
      other provisions hereof or the provisions of the Indenture; and

            (v) As between the Collateral Agent and each Pledgor, such Pledgor
      shall bear the investment risk with respect to the Investment Property,
      and the risk of loss of, damage to, or the destruction of any cash or the
      Investment Property, whether in the possession of, or maintained as a
      security entitlement or deposit by, or subject to the control of, the
      Collateral Agent, a Securities Intermediary, a Commodity Intermediary or a
      Depository Bank, such Pledgor or any other Person; provided, however, that
      nothing contained in this Section 3.7(a)(v) shall release or relieve any
      Securities Intermediary, Commodity Intermediary or Depository Bank of its
      duties and obligations to such Pledgors or any other Person under the
      applicable Control Agreement or under applicable law. Each Pledgor shall
      promptly pay all charges and fees of whatever kind or nature with respect
      to the cash or Investment Property pledged by it or under this Agreement.
      In the event such Pledgor shall fail to make such payment contemplated in
      the immediately preceding sentence, the Collateral Agent may do so for the
      account of such Pledgor and such Pledgor shall promptly reimburse and
      indemnify the Collateral Agent from all costs and expenses incurred by the
      Collateral Agent under this Section 3.7(a)(v) in accordance with Section
      8.1 hereof.

               (b) Instruments and Tangible Chattel Paper. If any amount
      payable under or in connection with any of the Collateral shall be
      evidenced by any Instrument or Tangible Chattel Paper in an amount in
      excess of $250,000, the Pledgor acquiring such Instrument or Tangible
      Chattel Paper shall forthwith endorse, assign and deliver the same to
      the Collateral Agent, accompanied by such instruments of transfer or
      assignment duly executed in blank as the Collateral Agent may from time
      to time specify. As of the date hereof, such Instruments and Tangible
      Chattel Paper are set forth on Schedule 11 to the Perfection
      Certificate.

               (c) Electronic Chattel Paper and Transferable Records. If any
      amount payable under or in connection with any of the Pledged
      Collateral shall be evidenced by any Electronic Chattel Paper or any
      "transferable record," as that term is defined in Section 201 of the
      Federal Electronic Signatures in Global and National Commerce Act, or
      in Section 16 of the Uniform Electronic Transactions Act as in effect
      in any relevant jurisdiction, the Pledgor acquiring such Electronic
      Chattel Paper or Transferable record shall promptly notify the
      Collateral Agent thereof and, at the request of the Collateral Agent,
      shall take such action as the Collateral Agent may reasonably request
      to vest in the Collateral Agent control under UCC Section 9-105 of such
      Electronic Chattel Paper or control under Section 201 of the Federal
      Electronic Signatures in Global and National Commerce Act or, as the
      case may be, Section 16 of the Uniform Electronic Transactions Act,

                                      -9-
<PAGE>
      as so in effect in such jurisdiction, of such transferable record. The
      Collateral Agent agrees with each Pledgor that the Collateral Agent
      will arrange, pursuant to procedures satisfactory to the Collateral
      Agent and so long as such procedures will not result in the Collateral
      Agent's loss of control, for such Pledgor to make alterations to the
      Electronic Chattel Paper or transferable record permitted under UCC
      Section 9-105 or, as the case may be, Section 201 of the Federal
      Electronic Signatures in Global and National Commerce Act or Section 16
      of the Uniform Electronic Transactions Act for a party in control to
      allow without loss of control, unless an Event of Default has occurred
      and is continuing or would occur after taking into account any action
      by any Pledgor with respect to such electronic chattel paper or
      transferable record.

               (d) Letter-of-Credit Rights. If any Pledgor is at any time a
      beneficiary under a Letter of Credit now or hereafter issued in favor
      of such Pledgor, such Pledgor shall promptly notify the Collateral
      Agent thereof and, at the request and option of the Collateral Agent,
      such Pledgor shall, pursuant to an agreement in form and substance
      reasonably satisfactory to the Collateral Agent arrange for the issuer
      and any confirmer of such Letter of Credit to consent to an assignment
      to the Collateral Agent of the proceeds of any drawing under the Letter
      of Credit.

               (e) Commercial Tort Claims. If any Pledgor shall at any time
      hold or acquire a Commercial Tort Claim, such Pledgor shall immediately
      notify the Collateral Agent in writing signed by such Pledgor of the
      brief details thereof and grant to the Collateral Agent in such writing
      a security interest therein and in the Proceeds thereof, all upon the
      terms of this Agreement, with such writing to be in form and substance
      satisfactory to the Collateral Agent.

               (f) Motor Vehicles. At any time after the occurrence and
      during the continuance of an Event of Default, each Pledgor shall, upon
      the request of the Collateral Agent, deliver to the Administrative
      Agent originals of the certificates of title or ownership for the motor
      vehicles (and any other Equipment covered by Certificates of Title or
      ownership owned by it) with the Collateral Agent listed as lienholder
      therein.

               (g) Intercompany Note and Intercompany Note Guaranty. No
      Pledgor shall:

            (i) sell, convey, transfer or assign (or otherwise engage in any
      other transfer for value of) the Intercompany Note or Intercompany Note
      Guaranty or any of its interest therein;

            (ii) amend, supplement, or waive any provision of the Intercompany
      Note or the Intercompany Note Guaranty, other than any amendment,
      supplement or waiver which would not have an adverse effect on the
      interests of the Collateral Agent or any other Secured Creditor, the
      Indenture or the Senior Secured Notes, or subordinate its rights under
      the Intercompany Note or the Intercompany Note Guaranty to the rights of
      any other creditor of Coinmach Corp.;

                                      -10-
<PAGE>
            (iii) compromise, reduce, forgive or release or extend the time for
      payment of any obligation of Coinmach Corp. under the Intercompany Note or
      of any Intercompany Note Guarantor under the Intercompany Note Guaranty;
      or

            (iv) take or omit to take any action the taking or the omission of
      which would result in any material impairment or alteration of any
      obligation of Coinmach Corp. under the Intercompany Note or any
      Intercompany Note Guarantor under the Intercompany Note Guaranty.

                                   ARTICLE IV

                       SPECIAL PROVISIONS CONCERNING MARKS

            Section 4.1. Additional Representations and Warranties. Each Pledgor
represents and warrants that, as of the date hereof, it is the true and lawful
exclusive owner of its Trademarks listed in Schedule 13(a) to the Perfection
Certificate and that said listed Trademarks include all the United States
federal registrations or applications registered in the United States Patent and
Trademark Office. Each Pledgor represents and warrants that, to the best of its
knowledge, it owns or is licensed to use or is not prohibited from using all
Trademarks that it uses. Each Pledgor further warrants that it is aware of no
third party claim that any aspect of such Pledgor's present or contemplated
business operations infringes or will infringe any Trademark. Each Pledgor
represents and warrants that it is the owner of record of all United States
registrations and applications listed in Schedule 13(a) to the Perfection
Certificate and that said registrations are valid, subsisting, have not been
canceled and that such Pledgor is not aware of any third-party claim that any of
said registrations is invalid or unenforceable. Each Pledgor hereby grants to
the Collateral Agent an absolute power of attorney to sign, upon the occurrence
and during the continuance of an Event of Default and delivery of notice thereof
to the Company in accordance with Article Six of the Indenture to the extent
such notice is required pursuant to Article Six of the Indenture, any document
which may be required by the United States Patent and Trademark Office in order
to effect an absolute assignment of all right, title and interest in each
Trademark and associated Goodwill, and record the same.

            Section 4.2. Licenses and Assignments. Other than the license
agreements listed on Schedule 13(a) to the Perfection Certificate and any
extensions or renewals thereof, each Pledgor hereby agrees not to divest itself
of any right under any Significant Trademark absent prior written consent of the
Collateral Agent, which consent shall not be unreasonably withheld.

            Section 4.3. Infringements. Each Pledgor agrees, promptly upon
learning thereof, to notify the Collateral Agent in writing of the name and
address of, and to furnish such pertinent information that may be available with
respect to, any party who may be infringing or otherwise violating any of such
Pledgor's rights in and to any Significant Trademark, or with respect to any
party claiming that such Pledgor's use of any Significant Trademark violates any
property right of that party, in each case to the extent that such Pledgor
reasonably believes that such infringement or violation is material to its
business. Each Pledgor further agrees, if consistent with good business practice
and unless otherwise agreed by the Collateral Agent, diligently

                                      -11-
<PAGE>
to prosecute any Person infringing any Significant Trademark to the extent that
such Pledgor reasonably believes that such infringement is material to its
business.

            Section 4.4. Preservation of Trademarks. Each Pledgor agrees to use
its Significant Marks in interstate commerce during the time in which this
Agreement is in effect, sufficiently to preserve such Significant Trademarks as
trademarks or service marks registered under the laws of the United States.

            Section 4.5. Maintenance of Registration. Each Pledgor shall, at its
own expense, diligently process all documents required by the Trademark Act of
1946, 15 U.S.C. Sections 1051 et seq. to maintain trademark registration,
including but not limited to affidavits of use and applications for renewals of
registration in the United States Patent and Trademark Office for all of its
Significant Trademarks pursuant to 15 U.S.C. Sections 1058(a), 1059 and
1065, and shall pay all fees and disbursements in connection therewith and shall
not abandon any such filing of affidavit of use or any such application of
renewal prior to the exhaustion of all reasonable administrative and judicial
remedies without the prior written consent of the Collateral Agent, which
consent shall not be unreasonably withheld.

            Section 4.6. Future Registered Marks. If any Trademark registration
issues hereafter to any Pledgor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within thirty (30)
days of receipt of such certificate such Pledgor shall deliver a copy of such
certificate, and a grant of security interest in such Trademark to the
Collateral Agent, confirming the grant thereof hereunder, the form of such
confirmatory grant to be substantially the same as the form hereof.

            Section 4.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may, upon delivery to the Company of written
notice thereof in accordance with Article Six of the Indenture to the extent
such notice is required by Article Six of the Indenture, take any or all of the
following actions: (i) declare the entire right, title and interest of each
Pledgor in and to each of the Trademarks and the Goodwill of the business
associated therewith, together with all trademark rights and rights of
protection to the same, vested, in which event such rights, title and interest
shall immediately vest, in the Collateral Agent for the benefit of the Secured
Creditors, in which case the Collateral Agent shall be entitled to exercise the
power of attorney referred to in Section 4.1 to execute, cause to be
acknowledged and notarized and record said absolute assignment with the
applicable agency; (ii) take and use or sell the Trademarks and the Goodwill of
each Pledgor's business symbolized by the Trademarks and the right to carry on
the business and use the assets of each Pledgor in connection with which the
Trademarks have been used; and (iii) direct each Pledgor to refrain, in which
event such Pledgor shall refrain, from using the Trademarks in any manner
whatsoever, directly or indirectly, and, if requested by the Collateral Agent,
change such Pledgor's corporate name to eliminate therefrom any use of any
Trademark and execute such other and further documents that the Collateral Agent
may request to further confirm this and to transfer ownership of the Trademarks
and registrations and any pending trademark application in the United States
Patent and Trademark Office or any equivalent government agency or office in any
foreign jurisdiction to the Collateral Agent.

                                      -12-

<PAGE>
                                   ARTICLE V

                          SPECIAL PROVISIONS CONCERNING
                             PATENTS AND COPYRIGHTS

      Section 5.1. Additional Representations and Warranties. Each Pledgor
represents and warrants that to the best of its knowledge, as of the date
hereof, it is the true and lawful exclusive owner of all rights in its Patents
listed in Schedule 13(a) to the Perfection Certificate and in the Copyrights
listed in Schedule 13(b) to the Perfection Certificate hereto, that said Patents
include all the United States patents and applications for United States patents
that such Pledgor now owns and that said Copyrights constitute all the United
States Copyrights registered with the United States Copyright Office and
applications for United States copyrights that the Pledgor now owns. Each
Pledgor represents and warrants that to the best of its knowledge, as of the
date hereof, it owns or is licensed to practice under all Patents and Copyrights
that it now uses or practices under. Such Pledgor further warrants that it is
aware of no third party claim that any aspect of such Pledgor's present or
contemplated business operations infringes or will infringe any Patent or any
Copyright. Each Pledgor hereby grants to the Collateral Agent an absolute power
of attorney to sign, upon the occurrence and during the continuance of any Event
of Default and delivery of notice thereof to the Company in accordance with
Article Six of the Indenture to the extent such notice is required pursuant to
Article Six of the Indenture, any document which may be required by the United
States Patent and Trademark Office or the United States Copyright Office in
order to effect an absolute assignment of all right, title and interest in each
Patent and Copyright, and record the same.

      Section 5.2. Licenses and Assignments. Other than the license agreements
listed on Schedules 13(a) and 13(b) to the Perfection Certificate and any
extensions or renewals thereof, each Pledgor hereby agrees not to divest itself
of any right under any Significant Patent or Significant Copyright absent prior
written consent of the Collateral Agent, which consent shall not be unreasonably
withheld.

      Section 5.3. Infringements. Each Pledgor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Pledgor with respect to any infringement or other
violation of such Pledgor's rights in any Significant Patent or Significant
Copyright, or with respect to any claim that practice of any Significant Patent
or Significant Copyright violates any property right of that party, in each case
to the extent that such Pledgor reasonably believes that such infringement or
violation is material to its business. Each Pledgor further agrees, consistent
with good business practice and absent direction of the Collateral Agent to the
contrary, diligently to prosecute any Person infringing any Significant Patent
or Significant Copyright to the extent that such Pledgor reasonably believes
that such infringement is material to its business, which consent shall not be
unreasonably withheld.

      Section 5.4. Maintenance of Patents. At its own expense, each Pledgor
shall make timely payment of all post-issuance fees required pursuant to 15
U.S.C. Section 41 to maintain in force rights under each Significant Patent.

                                      -13-
<PAGE>
      Section 5.5. Prosecution of Patent Application. At its own expense, each
Pledgor shall diligently prosecute all applications for Significant Patents
listed in Schedule 13(a) to the Perfection Certificate and shall not abandon any
such application prior to exhaustion of all reasonable administrative and
judicial remedies, absent written consent of the Collateral Agent, which consent
shall not be unreasonably withheld.

      Section 5.6. Other Patents and Copyrights. Within 30 days of acquisition
of any Patent or Copyright, or of filing of an application for any Patent or
Copyright, each Pledgor shall deliver to the Collateral Agent a copy of such
Patent or Copyright or such application, as the case may be, with a grant of
security as to such Patent or Copyright, as the case may be, confirming the
grant thereof hereunder, the form of such confirmatory grant to be substantially
the same as the form hereof.

      Section 5.7. Remedies. If an Event of Default shall occur and be
continuing and Collateral Agent has delivered notice thereof to the Company in
accordance with Article Six of the Indenture to the extent such notice is
required pursuant to Article Six of the Indenture, the Collateral Agent may by
written notice to the Company, take any or all of the following actions: (i)
declare the entire right, title, and interest of each Pledgor in each of its
Patents and Copyrights vested, in which event such right, title, and interest
shall immediately vest in the Collateral Agent for the benefit of the Secured
Creditors, in which case the Collateral Agent shall be entitled to exercise the
power of attorney referred to in Section 5.1 to execute, cause to be
acknowledged and notarized and record said absolute assignment with the
applicable agency; (ii) take and practice or sell the Patents and Copyrights;
and (iii) direct each Pledgor to refrain, in which event such Pledgor shall
refrain, from practicing the Patents and Copyrights directly or indirectly, and
such Pledgor shall execute such other and further documents as the Collateral
Agent may request further to confirm this and to transfer ownership of the
Patents and Copyrights to the Collateral Agent for the benefit of the Secured
Creditors.

                                   ARTICLE VI

                      PROVISIONS CONCERNING ALL COLLATERAL

      Section 6.1. Protection of Collateral Agent's Security. No Pledgor will do
anything to impair in any material respect the rights of the Collateral Agent in
the Collateral. Each Pledgor will at all times keep its Inventory and Equipment
insured in favor of the Collateral Agent, at such Pledgor's own expense to the
extent and in the manner provided in the Indenture. If such Pledgor shall fail
to insure its Inventory and Equipment in accordance with the preceding sentence,
or if such Pledgor shall fail to so endorse and deposit all policies with
respect thereto, the Collateral Agent shall have the right (but shall be under
no obligation), upon prior notice to such Pledgor, to procure such insurance and
such Pledgor agrees to promptly reimburse the Collateral Agent for all
reasonable costs and expenses of procuring such insurance. The Collateral Agent
shall, at the time such proceeds of such insurance are distributed to the
Secured Creditors, apply such proceeds in accordance with Section 7.4 or as
otherwise provided in the Indenture. Each Pledgor assumes all liability and
responsibility in connection with the Collateral acquired by it and the
liability of such Pledgor to pay the Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any

                                      -14-
<PAGE>
reason whatsoever unavailable to such Pledgor unless such loss or damage is
finally judicially determined to have been incurred by reason of the gross
negligence or willful misconduct of any Secured Creditor or any agent of any
Secured Creditor or the failure of a Secured Creditor, in exercising its
remedies hereunder, to act in a commercially reasonable manner.

      Section 6.2. Warehouse Receipts Non-negotiable. Each Pledgor agrees that
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued with respect to any of its Inventory, such warehouse receipt or receipt
in the nature thereof shall not be "negotiable" (as such term is used in Section
7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction
or under other relevant law).

      Section 6.3. Further Actions. Each Pledgor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral in accordance with the terms hereof.

      Section 6.4. Financing Statements. Each Pledgor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary in the reasonable opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest (subject to Permitted Liens) in the Collateral as
provided herein and the other rights and security contemplated hereby all in
accordance with the Uniform Commercial Code as enacted in any and all applicable
jurisdictions or any other applicable law. Each Pledgor will pay any applicable
filing fees, recordation taxes and related expenses. Each Pledgor authorizes the
Collateral Agent to file any such financing statements without the signature of
such Pledgor where permitted by law including, without limitation, the filing of
financing statements describing the Collateral as "all assets in which the
Debtor now owns or hereafter acquires rights."

                                  ARTICLE VII

                REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT

      Section 7.1. Remedies; Obtaining the Collateral Upon Default. Each Pledgor
agrees that, if any Event of Default shall have occurred and be continuing and
the Collateral Agent shall have delivered to the Company notice thereof in
accordance with Article Six of the Indenture to the extent such notice is
required pursuant to Article Six of the Indenture, then and in every such case,
subject to any mandatory requirements of applicable law then in effect, the
Collateral Agent, in addition to any rights now or hereafter existing under
applicable law, shall have all rights as a secured creditor under the Uniform
Commercial Code in all applicable juris-

                                      -15-
<PAGE>
dictions and may also (subject to laws and regulations governing the national
security of the United States):

      (a) personally, or by agents or attorneys, immediately retake possession
of the Collateral or any part thereof, from such Pledgor or any other Person who
then has possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon such Pledgor's premises where any of
the Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of such
Pledgor; possession of machinery shall, however, be subject to the terms of the
Location Leases; and

      (b) instruct the obligor or obligors on any agreement, instrument or other
obligation (including, without limitation, the Accounts and the Contracts)
constituting the Collateral to make any payment required by the terms of such
agreement, instrument or other obligation directly to the Collateral Agent and
may exercise any and all remedies of such Pledgor in respect of such Collateral;
and

      (c) withdraw all monies, securities and instruments in the Cash Collateral
Account for application to the Obligations in accordance with Section 7.4; and

      (d) sell, assign or otherwise liquidate, or direct such Pledgor to sell,
assign or otherwise liquidate, any or all of its Collateral or any part thereof,
and take possession of the proceeds of any such sale or liquidation; and

      (e) take possession of the Collateral or any part thereof, by directing
such Pledgor in writing to deliver the same to the Collateral Agent at any
commercially reasonable place or places designated by the Collateral Agent, in
which event such Pledgor shall at its own expense:

            (i) forthwith cause the Collateral pledged by it to be moved to the
      place or places so designated by the Collateral Agent and there delivered
      to the Collateral Agent, and

            (ii) store and keep any Collateral so delivered to the Collateral
      Agent at such place or places pending further action by the Collateral
      Agent as provided in Section 7.2, and

            (iii) while the Collateral shall be so stored and kept, provide such
      guards and maintenance services as shall be necessary to protect the same
      and to preserve and maintain them in good condition; and

      (f) license or sublicense (to the extent not in violation of the license),
whether on an exclusive or nonexclusive basis, any Trademarks, Patents or
Copyrights included in the Collateral for such term and on such conditions and
in such manner as the Collateral Agent shall in its commercially reasonable
judgment determine;

                                      -16-
<PAGE>
it being understood that such Pledgor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Pledgor of said obligation.

      Section 7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 and any
other Collateral whether or not so repossessed by the Collateral Agent, may be
sold, assigned, leased or otherwise disposed of under one or more contracts or
as an entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine;
provided that such terms shall be commercially reasonable. Any of the Collateral
may be sold, leased or otherwise disposed of, in the condition in which the same
existed when taken by the Collateral Agent or after any commercially reasonable
overhaul or repair made by or at the direction of the Collateral Agent. To the
extent permitted by any requirement of law, the Collateral Agent and the Secured
Creditors or any of their respective Affiliates may be the purchaser, licensee,
assignee or recipient of any or all of the Collateral at any such sale and shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold, assigned or
licensed at such sale, to use and apply any of the Obligations owed to such
Person as a credit on account of the purchase price of any Collateral payable by
such Person at such sale. Each purchaser, assignee, licensee or recipient at any
such sale shall acquire the property sold, assigned or licensed absolutely free
from any claim or right on the part of any Pledgor, and each Pledgor hereby
waives, to the fullest extent permitted by law, all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. The Collateral
Agent shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Each Pledgor hereby waives, to the fullest
extent permitted by law, any claims against the Collateral Agent arising by
reason of the fact that the price at which any Collateral may have been sold,
assigned or licensed at such a private sale was less than the price which might
have been obtained at a public sale, even if the Collateral Agent accepts the
first offer received and does not offer such Pledged Collateral to more than one
offeree. Each Pledgor acknowledges and agrees that, to the extent notice of sale
shall be required by law, ten days' notice to such Pledgor of the time and place
of any public sale or of the time after which any private sale or other intended
disposition is to take place shall be commercially reasonable notification of
such matters. No notification need be given to any Pledgor if it has signed,
after the occurrence of an Event of Default, a statement renouncing or modifying
any right to notification of sale or other intended disposition. Each Pledgor
agrees to do or cause to be done all such other acts and things as may be
reasonably necessary to make such sale or sales of all or any portion of the
Collateral valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at such Pledgor's
reasonable expense.

                                      -17-
<PAGE>
      Section 7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH PLEDGOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH PLEDGOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Pledgor hereby further waives, to the extent permitted
by law:

      (a) all damages occasioned by such taking of possession except any damages
which are the direct result of the Collateral Agent's gross negligence or
willful misconduct or failure to act, in exercising its remedies hereunder, in a
commercially reasonable manner;

      (b) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral Agent's
rights hereunder; and

      (c) all rights of redemption, appraisement, valuation, stay, extension or
moratorium now or hereafter in force under any applicable law in order to
prevent or delay the enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and each Pledgor, for itself and all who may
claim under it, insofar as it or they now or hereafter lawfully may, hereby
waives the benefit of all such laws unless such action or threatened action is
not commercially reasonable.

Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of each Pledgor therein and thereto, and
shall be a perpetual bar both at law and in equity against such Pledgor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
such Pledgor other than any Collateral remaining after the occurrence of the
Termination Date.

      Section 7.4. Application of Proceeds(i) . (a) All moneys collected by the
Collateral Agent (or, to the extent any Pledge Agreement or any other Collateral
Agreement to which any Pledgor is a party requires proceeds of Collateral under
such agreement to be applied in accordance with the provisions of this
Agreement, the pledgee or secured creditor under such other agreement) upon any
sale or other disposition of the Collateral, together with all other moneys
received by the Collateral Agent hereunder, shall be applied in the order set
forth in Section 6.10 of the Indenture. Any balance of such Proceeds remaining
after the occurrence of the Termination Date, shall be paid over to the
applicable Pledgor or to whomsoever may be lawfully entitled to receive the
same.

      (b) It is understood and agreed that each Pledgor shall remain liable to
the extent of any deficiency between the amount of the proceeds of the
Collateral hereunder and the aggregate amount of the Obligations, except to the
extent that such proceeds are not applied by the Collateral Agent in accordance
with this Agreement and the Indenture.

                                      -18-
<PAGE>
      Section 7.5. Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, the
Senior Secured Notes or the Indenture or now or hereafter existing at law or in
equity, or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed
expedient by the Collateral Agent. All such rights, powers and remedies shall
be cumulative and the exercise or the beginning of exercise of one shall not be
deemed a waiver of the right to exercise of any other or others. No delay or
omission of the Collateral Agent in the exercise of any such right, power or
remedy, renewal or extension of any of the Obligations and no course of dealing
between any Pledgor and the Collateral Agent or any holder of any of the
Obligations shall impair any such right, power or remedy or shall be construed
to be a waiver of any Default or Event of Default or an acquiescence therein.
No notice to or demand on any Pledgor in any case shall entitle it to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Collateral Agent to any other or further
action in any circumstances without notice or demand. In the event that the
Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover expenses, including reasonable attorneys' fees, and the amounts thereof
shall be included in such judgment.

      Section 7.6. Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case each
Pledgor, the Collateral Agent and each holder of any of the Obligations shall be
restored to their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this Agreement, and
all rights, remedies and powers of the Collateral Agent shall continue as if no
such proceeding had been instituted.

      Section 7.7. Additional Remedies With Respect to Collateral Located in
Louisiana. Upon the occurrence and during the continuance of any Event of
Default and provided that the Collateral Agent shall have delivered to the
Company notice thereof in accordance with Article Six of the Indenture to the
extent such notice is required pursuant to Article Six of the Indenture, the
Collateral Agent shall be entitled to exercise any one or more of the following
remedies (all of which are cumulative):

      (a) Default Remedies. In addition to the rights of the Collateral Agent
with respect to possessory collateral, the Collateral Agent shall have the
right, in accordance with the Indenture, to accelerate payment of all amounts
that each Pledgor may then owe to the Secured Creditors, which will then entitle
the Collateral Agent to foreclose under this Agreement under ordinary or
executory process procedures, or under the seizure and disposition remedies set
forth in R.S. 6:965 et seq. (where applicable), and to cause the Collateral to
be immediately seized wherever found, and sold with or without appraisal, in
regular session of court or in vacation, in accordance with applicable Louisiana
law, without the necessity of further demanding payment from such Pledgor, or of
notifying such Pledgor, or placing such Pledgor in default. For pur-

                                      -19-
<PAGE>
poses of foreclosure under Louisiana executory process procedures, such Pledgor
confesses judgment and acknowledges to be indebted to the Secured Creditors up
to the full amount of the Obligations, in principal, interest, costs, expenses,
attorney's fees and other fees and charges and all other amounts secured by this
Agreement. To the extent permitted under applicable Louisiana law, each Pledgor
additionally: (A) waives any benefit of appraisal as provided under Articles
2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and all
other laws with regard to appraisal upon judicial sale, recognizing that no
appraisal shall be required prior to sale; (B) waives the demand and three days'
delay as provided under Articles 2639 and 2721 of the Louisiana Code of Civil
Procedure; (C) waives the notice of seizure as provided under Articles 2293 and
2721 of the Louisiana Code of Civil Procedure; (D) waives the three (3) days'
delay provided under Articles 2331 and 2722 of the Louisiana Code of Civil
Procedure; and (E) waives all other benefits provided under Articles 2331, 2722
and 2723 of the Louisiana Code of Civil Procedure and all other Articles not
specifically mentioned above. Each Pledgor further agrees that any declaration
of fact made by authentic act before a Notary Public by a person declaring that
such facts are within his or her knowledge shall constitute authentic evidence
of such facts for purposes of foreclosure under applicable Louisiana law, such
Pledgor further agrees that the Collateral Agent may appoint a keeper of the
Collateral in the event of foreclosure.

      Should the Collateral for any reason be located in another state at or
following any Event of Default, each Pledgor agrees that the Collateral Agent
may, in accordance with the terms hereof, take possession of the Collateral in
any manner then permitted under the laws of the state in which the Collateral is
then located or under the laws of Louisiana as then applicable, including R.S.
6:965 et seq. Should the Collateral Agent for any reason have or acquire
possession of the Collateral at or following default, the Collateral Agent may
sell the Collateral at public or private sale as authorized by Louisiana law or
the applicable provisions of the Uniform Commercial Code or similar laws in
effect in the state where the Collateral is then located. If the Collateral
Agent is required by law to give any Pledgor notice of the public or private
sale of the Collateral, each Pledgor agrees that the requirements of reasonable
notice shall be met if the Collateral Agent mails such notice to such Pledgor at
the Company's address as shown in this Agreement at least ten (10) days before
the time of any public sale or, if disposition is by private sale, at least ten
(10) days before the time after which private sale may occur. If public sale is
held, there will be sufficient compliance with all requirements of notice to the
public by a single publication in a newspaper in general circulation in the
parish or county where the Collateral is then located. This notice should
include the time and place of sale, and a brief description of the property to
be sold.

      (b) Proceeds; Surplus; Deficiencies. The Collateral Agent shall apply any
proceeds derived or to be derived from the sale, collection or other disposition
of the Collateral in the manner provided in Section 7.4 hereof. The Pledgors
shall be entitled to any surplus if one results after application of the
proceeds and the Pledgors shall remain liable for any deficiency.

                                      -20-
<PAGE>
                                  ARTICLE VIII

                                    INDEMNITY

      Section 8.1. Indemnity. (a) Each Pledgor agrees to indemnify, reimburse
and hold the Collateral Agent, each Secured Creditor and their respective
successors, assigns, employees, agents and servants (hereinafter in this Section
8.1 referred to individually as an "Indemnitee" and collectively as
"Indemnitees") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the purposes of this Section 8.1 the foregoing are collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnities arising out of this Agreement, the Notes or
the Indenture or any other document executed in connection herewith and
therewith or in any other way connected with the administration of the
transactions contemplated hereby and thereby or the enforcement of any of the
terms of, or the preservation of any rights under any thereof, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), any contract claim or, to the maximum extent permitted under
applicable law, the violation of the laws of any country, state or other
governmental body or unit, or any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage); provided that no Indemnitee shall be indemnified pursuant to this
Section 8.1(a) for expenses to the extent finally judicially determined to have
been incurred by reason of the gross negligence or willful misconduct of such
Indemnitee. Each Pledgor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, such Pledgor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its commercially
reasonable efforts to promptly notify the Company of any such assertion of which
such Indemnitee has knowledge.

      (b) Without limiting the application of Section 8.1(a), each Pledgor
agrees to pay, or reimburse the Collateral Agent for any and all reasonable
fees, costs and expenses of whatever kind or nature incurred in connection with
the creation, preservation or protection of the Collateral Agent's Liens on, and
security interest in, the Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon or
in respect of the Collateral, reasonable premiums for insurance with respect to
the Collateral and all other reasonable fees, costs and expenses in connection
with protecting, maintaining or preserving the Collateral and the Collateral
Agent's interest therein, whether through judicial proceedings or otherwise, or
in defending or prosecuting any actions, suits or proceedings arising out of or
relating to the Collateral as set forth herein and in the Indenture.

      (c) Without limiting the application of Section 8.1(a) or (b), each
Pledgor agrees to pay, indemnify and hold each Indemnitee harmless from and
against any loss, costs,

                                      -21-
<PAGE>
damages and expenses which such Indemnitee may suffer, expend or incur in
consequence of or growing out of any material misrepresentation by such Pledgor
in this Agreement or the Indenture, or in any writing contemplated by or made or
delivered pursuant to or in connection with this Agreement or the Indenture as
set forth herein and in the Indenture.

      (d) If and to the extent that the obligations of any Pledgor under this
Section 8.1 are unenforceable for any reason, such Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.

      Section 8.2. Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnification obligations of each Pledgor contained in this Article VIII shall
continue in full force and effect notwithstanding the occurrence of the
Termination Date.

                                   ARTICLE IX

                                   DEFINITIONS

      (a) The following terms which are capitalized herein shall have the
meanings given to them in the Uniform Commercial Code. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.

                        "Account"

                        "Chattel Paper"

                        "Commercial Tort Claim"

                        "Commodity Account"

                        "Commodity Intermediary"

                        "Deposit Account"

                        "Documents"

                        "Electronic Chattel Paper"

                        "Entitlement Holder"

                        "Entitlement Order"

                        "Equipment"

                        "Financial Asset"

                                      -22-
<PAGE>
                        "Fixtures"

                        "General Intangibles"

                        "Goods"

                        "Inventory"

                        "Investment Property"

                        "Letter-of-Credit Right"

                        "Letter of Credit"

                        "Payment Intangible"

                        "Securities Account"

                        "Securities Intermediary"

                        "Security"

                        "Security Entitlement"

                        "Supporting Obligations"

                        "Tangible Chattel Paper"

      (b) The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.

      "Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.

      "Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with the Collateral Agent for the benefit of the
Secured Creditors.

      "Coinmach Corp." shall have the meaning provided in the fourth paragraph
of this Agreement.

      "Collateral" shall have the meaning provided in Section 1.1(a) of this
Agreement.

      "Collateral Agent" shall have the meaning provided in the first paragraph
of this Agreement.

      "Company" shall have the meaning provided in the first paragraph of this
Agreement.

      "Contract Rights" shall mean all rights of each Pledgor (including,
without limitation, all rights to payment) under each Contract.

                                      -23-
<PAGE>
      "Contracts" shall mean all contracts between each Pledgor and one or more
additional parties (including, without limitation, (i) each partnership
agreement to which such Pledgor is a party and (ii) any Interest Swap
Obligations), but excluding (x) licenses to the extent that the terms thereof
prohibit the assignment of, or granting of a security interest in, such licenses
and (y) location contracts which have not, with the Collateral Agent's approval,
been assigned to the Collateral Agent but, in each of the cases described in
clauses (x) and (y) of this definition, excluding the right to receive any
payment (including, without limitation, Accounts, General Intangibles and
Payment Intangibles) or any other rights referred to in Sections 9-406(f),
9-407(a) or 9-408(a) of the Uniform Commercial Code (or any successor provisions
of any jurisdiction or any other applicable law); provided, however, that at
such time as such license is no longer subject to such prohibition, such license
shall (without any act or delivery by any Person) constitute a Contract
hereunder.

      "Control Agreement" shall mean an agreement in form and substance
reasonably acceptable to the Administrative Agent sufficient to establish
"control" (as defined in Section 8-106 of the Uniform Commercial Code with
respect to Securities Accounts, as defined in Section 9-104 of the Uniform
Commercial Code with respect to Deposit Accounts, and as defined in Section
9-106 of the Uniform Commercial Code with respect to Commodity Accounts) over
any applicable Investment Property (including, without limitation, any
Securities Account or Commodity Account) or Deposit Account.

      "Copyrights" shall mean, collectively, with respect to each Pledgor, all
copyrights (whether statutory or common law and whether established or
registered in the United States or any other country) now owned or hereafter
created or acquired by or assigned to such Pledgor, whether published or
unpublished, and all copyright registrations and applications made by such
Pledgor including, without limitation, the copyrights, registrations and
applications listed in Schedule 13(b) to the Perfection Certificate, together
with any and all (i) rights and privileges arising under applicable law with
respect to such Pledgor's use of any copyrights, (ii) reissues, renewals,
continuations and extensions thereof, (iii) income, fees, royalties, damages,
claims and payments now or hereafter due and/or payable with respect thereto,
including, without limitation, damages and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the world
and (v) rights to sue for past, present or future infringements thereof.

      "Credit Agreement Collateral Agent" shall have the meaning provided in the
fourth paragraph of this Agreement.

      "Depository Bank" shall have the meaning provided to the term "bank" in
Article 9 of the Uniform Commercial Code.

      "Existing Deposit Accounts" shall have the meaning provided in Section 3.7
of this Agreement.

      "Goodwill" shall mean, collectively, with respect to each Pledgor, the
goodwill connected with such Pledgor's business including, without limitation,
(i) all goodwill connected with the use of and symbolized by any of the
Intellectual Property in which such Pledgor has any interest and (ii) all
know-how, trade secrets, customer and supplier lists, proprietary information,
inventions, methods, procedures, formulae, descriptions, compositions, technical
data, drawings, specifications, name plates, catalogs, confidential information
and the right to limit the use or

                                      -24-
<PAGE>
disclosure thereof by any person or entity, pricing and cost information,
business and marketing plans and proposals, consulting agreements, engineering
contracts and such other assets which relate to such goodwill.

      "Holders" shall have the meaning provided in the first paragraph of this
Agreement.

      "Indemnitee" shall have the meaning provided in Section 8.1(a) of this
Agreement.

      "Indenture" shall have the meaning provided in the first paragraph of this
Agreement.

      "Instrument" shall have the meaning provided to such term in Article 9 of
the Uniform Commercial Code as in effect on the date hereof in the State of New
York but shall not include any Location Leases.

      "Insurance Policies" shall mean, collectively, with respect to each
Pledgor, all insurance policies held by such Pledgor or naming such Pledgor as
insured, additional insured or loss payee, all such insurance policies entered
into after the date hereof, other than insurance policies (or certificates of
insurance evidencing such insurance policies) relating to health and welfare
insurance and life insurance policies in which such Pledgor is not named as
beneficiary (i.e., insurance policies that are not "Key Man" insurance policies)
and all rights, claims and recoveries relating thereto (including, without
limitation, all dividends, returned premiums and other rights to receive money
in respect of any of the foregoing).

      "Intellectual Property" shall mean, collectively, the Patents, Trademarks,
Copyrights, Licenses and Goodwill.

      "Intercreditor Agreement" shall have the meaning provided in the sixth
paragraph of this Agreement.

      "Laundry Corp." shall have the meaning provided in the first paragraph of
this Agreement.

      "Licenses" shall mean, collectively, with respect to each Pledgor, all
license and distribution agreements and covenants not to sue with any other
party with respect to any Patent, Trademark, or Copyright or any other patent,
trademark or copyright, whether such Pledgor is a licensor or licensee,
distributor or distributee under any such license or distribution agreement,
including, without limitation, the license and distribution agreements listed in
Schedules 13(a) and 13(b) to the Perfection Certificate, together with any and
all (i) renewals, extensions, supplements and continuations thereof, (ii)
income, fees, royalties, damages, claims and payments now and hereafter due
and/or payable thereunder and with respect thereto including, without
limitation, damages and payments for past, present or future infringements or
violations thereof, (iii) rights to sue for past, present and future
infringements or violations thereof and (iv) any other rights to use, exploit or
practice any or all of the Patents, Trademarks or Copyrights or any other
patents, trademarks or copyrights.

      "Location Leases" shall mean leases, licenses or other agreements pursuant
to which any Pledgor leases, licenses or otherwise obtains the right to use any
real property at which Collateral constituting personal property is located.

      "Senior Secured Notes" shall have the meaning provided in the first
paragraph of this Agreement.

                                      -25-

<PAGE>
      "Obligations" shall mean the collective reference to the unpaid principal
of and interest on the Senior Secured Notes and all other obligations and
liabilities of any Pledgor (including, without limitation, any increase in the
aggregate principal amount of the Senior Secured Notes, together with any
interest accruing at the then applicable rate provided in the Indenture or the
Senior Secured Notes after the maturity of the Notes and interest accruing at
the then applicable rate provided in the Indenture after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Company, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) to the Collateral Agent
or any Secured Creditor, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Indenture, the Senior Secured Notes, the
Guarantees, this Agreement, or any other document made, delivered or given in
connection with any of the foregoing, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel that are required to be paid by such Pledgor pursuant to the terms of
any of the foregoing agreements).

      "Patents" shall mean, collectively, with respect to each Pledgor, all
patents issued or assigned to and all patent applications and registrations made
by such Pledgor (whether established or registered or recorded in the United
States or any other country), including, without limitation, the patents, patent
applications, registrations and recordings listed in Schedule 13(a) to the
Perfection Certificate, together with any and all (i) rights and privileges
arising under applicable law with respect to such Pledgor's use of any patents,
(ii) inventions and improvements described and claimed therein, (iii) reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, (iv) income, fees, royalties, damages, claims and payments now or
hereafter due and/or payable thereunder and with respect thereto including,
without limitation, damages and payments for past, present or future
infringements thereof, (v) rights corresponding thereto throughout the world,
and (vi) rights to sue for past, present or future infringements thereof.

      "Perfection Certificate" shall mean that certain Perfection Certificate
dated the Closing Date, delivered by the Company and Laundry Corp. in favor of
the Collateral Agent (for the benefit of the Secured Creditors).(1)

      "Permitted Filings" shall have the meaning provided in Section 2.1 of this
Agreement.

      "Pledgors" shall have the meaning provided in the first paragraph of this
Agreement.

      "Proceeds" shall have the meaning provided to such term in the Uniform
Commercial Code as in effect in the State of New York on the date hereof or
under other relevant law

--------

1    Discuss how updated/supplemented.

                                      -26-
<PAGE>
and, in any event, shall include, but not be limited to, (i) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to the
Collateral Agent or any Pledgor from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to any Pledgor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any person acting under color of
Governmental Authority) (iii) instruments representing obligations to pay
amounts in respect of any Collateral, (iv) products of the Collateral and (v)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.

      "Secured Creditors" shall have the meaning provided in the fifth paragraph
of this Agreement.

      "Significant Copyrights" shall mean those Copyrights which each Pledgor
believes in its reasonable judgment to be material to its business.

      "Significant Patents" shall mean those Patents which each Pledgor believes
in its reasonable judgment to be material to its business.

      "Significant Trademarks" shall mean those Trademarks which each Pledgor
believes in its reasonable judgment to be material to its business.

      "Specified Commercial Tort Claims" shall mean each Commercial Tort Claim
with respect to which the applicable Pledgor has complied with the provisions of
Section 3.8(e).

      "Termination Date" means the earliest to occur of the date on which (a)
all Obligations have been paid in full in cash; (b) the Company exercises its
legal defeasance option or covenant defeasance option described in Section 8.01
of the Indenture; (c) the satisfaction and discharge of the Indenture occurs in
accordance with Section 8.02 thereof and (d) the Merger Event occurs.

      "Trademarks" shall mean, collectively, with respect to each Pledgor, all
trademarks (including service marks), slogans, logos, designs, certification
marks, trade dress, uniform resource locations (URLs), domain names, corporate
names and trade names, whether registered or unregistered, owned by or assigned
to such Pledgor and all registrations and applications for the foregoing
(whether statutory or common law and whether established or registered in the
United States or any other country) including, without limitation, the
registrations and applications listed in Schedule 13(a) to the Perfection
Certificate, together with any and all (i) rights and privileges arising under
applicable law with respect to such Pledgor's use of any trademarks, (ii)
reissues, continuations, extensions and renewals thereof, (iii) income, fees,
royalties, damages and payments now and hereafter due and/or payable thereunder
and with respect thereto, including, without limitation, damages, claims and
payments for past, present or future infringements thereof, (iv) rights
corresponding thereto throughout the world and (v) rights to sue for past,
present and future infringements thereof.

      "Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect on the date hereof in the State of New York; provided, however, that if
by reason of manda-

                                      -27-
<PAGE>
tory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any item or portion of the Pledged
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "Uniform Commercial Code" shall
also mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.

                                   ARTICLE X

                                  MISCELLANEOUS

      Section 10.1. Notices. All such notices and communications hereunder shall
be telecopied or delivered by messenger or overnight courier service and all
such notices and communications shall, when mailed, telegraphed, telecopied, or
cabled or sent by overnight courier, be effective when delivered to the
telegraph company, cable company or as overnight courier, as the case may be, or
sent by overnight, telecopier and when mailed shall be effective three Business
Days following deposit in the mail with proper postage, except that notices and
communications to the Collateral Agent shall not be effective until received by
the Collateral Agent. All notices, requests, demands or other communications
shall be in writing and addressed as follows:

      (a) if to any Pledgor, at:

                  Coinmach Service Corp.
                  303 Sunnyside Boulevard, Suite 70
                  Plainview, New York 11803
                  Attention:  Robert M. Doyle

                  with a copy to:

                  Coinmach Corporation
                  521 East Morehead Street
                  Charlotte, North Carolina  28202
                  Attention:  Stephen R. Kerrigan

                  with a copy to:

                  Mayer, Brown, Rowe & Maw LLP
                  1675 Broadway
                  New York, New York  10019
                  Attention:  Ronald S. Brody, Esq.

      (b) if to the Collateral Agent:

                  The Bank of New York
                  101 Barclay Street
                  Floor 8W
                  New York, New York  10286
                  Attention:  Corporate Trust Administration

                                      -28-
<PAGE>
      Section 10.2. Waiver; Amendment. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied any manner whatsoever
except in accordance with Article Nine of the Indenture.

      Section 10.3. Obligations Absolute. The obligations of each Pledgor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Pledgor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or the Indenture except as
specifically set forth in a waiver granted pursuant to Section 10.2 hereof; or
(c) any amendment to or modification of the Senior Secured Notes or the
Indenture or any security for any of the Obligations; whether or not such
Pledgor shall have notice or knowledge of any of the foregoing.

      Section 10.4. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns and shall inure
to the benefit of the Collateral Agent, each Secured Creditor and each Pledgor
and their respective successors and assigns, provided that no Pledgor may
transfer or assign any or all of its rights or obligations hereunder without the
written consent of the Collateral Agent or otherwise in compliance with the
Indenture. All agreements, statements, representations and warranties made by
each Pledgor herein or in any certificate or other instrument delivered by such
Pledgor or on its behalf under this Agreement shall be considered to have been
relied upon by the Secured Creditors and shall survive the execution and
delivery of this Agreement, the Senior Secured Notes and the Indenture
regardless of any investigation made by the Secured Creditors or on their
behalf.

      Section 10.5. Headings Descriptive. The headings of the several sections
of this Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.

      Section 10.6. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

      Section 10.7. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.

      Section 10.8. Pledgor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Pledgor shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this

                                      -29-
<PAGE>
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of such Pledgor under or with
respect to any Collateral except to the extent directly resulting from the
Collateral Agent's gross negligence or willful misconduct or failure to act, in
exercising its remedies hereunder, in a commercially reasonable manner.

      Section 10.9. Termination; Release. (a) On the Termination Date, this
Agreement and the security interest created hereby shall terminate, and the
Collateral Agent shall, at the request and expense of the Pledgors, promptly
execute and deliver to the applicable Pledgor as promptly thereafter as
reasonably practicable a proper instrument or instruments (including Uniform
Commercial Code termination statements on form UCC-3) acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to the applicable Pledgor (without recourse and without any
representation or warranty) such of the Collateral of such Pledgor as may be in
the possession of the Collateral Agent or any of its sub-agents and has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any proceeds of Collateral at the time held by the
Collateral Agent or any of its sub-agents hereunder.

      (b) In the event that any part of the Collateral is sold in connection
with a sale not prohibited by the Indenture or released in accordance with
Article Eleven of the Indenture and the proceeds of such sale or sales or from
such release are applied in accordance with, and to the extent required by, the
Indenture, to the extent required to be so applied, such Collateral will be
sold or released, free and clear of the Liens created by this Agreement and the
Collateral Agent, at the request and expense of the applicable Pledgor, will
duly assign, transfer and deliver to such Pledgor (without recourse and without
any representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in the possession of the Collateral
Agent and has not theretofore been released pursuant to this Agreement.

      (c) At any time that any Pledgor desires that the Collateral Agent take
any action to acknowledge or give effect to any release of Collateral pursuant
to the foregoing Section 10.9(b), it shall deliver to the Collateral Agent a
certificate signed by its chief financial officer stating that the release of
the respective Collateral is permitted pursuant to Section 10.9(a) or (b).

      (d) The Collateral Agent shall have no liability whatsoever to any Holder
as a result of any release of Collateral by it in accordance with this Section
10.9.

      Section 10.10. Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the Company
and the Collateral Agent.

      Section 10.11. The Collateral Agent. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed by the parties
hereto and each Secured Creditor, by accepting the benefits of this Agreement
acknowledges and agrees that the obligations of the Collateral Agent as holder
of the Collateral and interests therein and with respect to the disposition
thereof,

                                      -30-
<PAGE>
and otherwise under this Agreement, are only those expressly set forth in this
Agreement. The Collateral Agent shall act hereunder on the terms and conditions
set forth in Article Seven of the Indenture.

Section 10.12 Intercreditor Agreement

     (a)  The Liens granted hereunder in favor of the Collateral Agent for the
benefit of the Secured Creditors in respect of the Shared Collateral and the
exercise of any right related thereto thereby shall be subject, in each case,
to the terms of the Intercreditor Agreement.

     (b)  In the event of any direct conflict between the express terms and
provisions of this Agreement and of the Intercreditor Agreement, the terms and
provisions of the Intercreditor Agreement shall control.

     (c)  Notwithstanding anything to the contrary herein, any provision hereof
that requires any Pledgor to (i) deliver any Shared Collateral to the
Collateral Agent, or (ii) provide that the Collateral Agent have control over
such Shared Collateral may be satisfied by (A) the delivery of such Shared
Collateral by such Pledgor to the Credit Agreement Collateral Agent for the
benefit of the Lenders and the Collateral Agent for the benefit of the Secured
Creditors pursuant to Section 5.4 of the Intercreditor Agreement and (B)
providing that the Credit Agreement Collateral Agent be provided with control
with respect to such Shared Collateral of such Pledgor for the benefit of the
Lenders and the Collateral Agent for the benefit of Secured Creditors pursuant
to Section 5.4 of the Intercreditor Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -31-
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.

                                    COINMACH SERVICE CORP,
                                        as the Company and a Pledgor

                                    By:
                                         ---------------------------------------
                                         Name.
                                         Title

                                    COINMACH LAUNDRY CORPORATION,
                                        as Guarantor and Pledgor

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title

                                    THE BANK OF NEW YORK,
                                        as Collateral Agent

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:

                                      S-1

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