Document:

Exhibit

OCCIDENTAL PETROLEUM CORPORATION
MODIFIED DEFERRED COMPENSATION PLAN
(Effective December 31, 2006 
Amended and Restated Effective January 1, 2019)

OCCIDENTAL PETROLEUM CORPORATION
MODIFIED DEFERRED COMPENSATION PLAN
(Effective December 31, 2006
Amended and Restated Effective January 1, 2019)
 
ARTICLE I
PURPOSE
Effective December 31, 2006, the Occidental Petroleum Corporation Deferred Compensation Plan 2 (the “DCP2”) was merged with and into the Occidental Petroleum Corporation 2005 Deferred Compensation Plan (the “2005 DCP”), which was amended and restated as the Occidental Petroleum Corporation Modified Deferred Compensation Plan (the “Plan”).  Effective December 31, 2006, for each Participant making a Special Transition Rule Election under Section 5.11, the Deferral Account (if any) of such Participant under the DCP2 was merged with the Deferral Account (if any) of such Participant under the 2005 DCP, the Savings Plan Restoration Account (if any) of such Participant under the DCP2 was merged with the Savings Plan Restoration Account (if any) of such Participant under the 2005 DCP, the SEDCP Deferral Account (if any) of such Participant under the DCP2 was transferred to the 2005 DCP, and all such accounts are governed by the terms of this Plan.  For Participants not making such an election, any Deferral Account, Savings Plan Restoration Account, or SEDCP Deferral Account of such Participant under the DCP2 or 2005 DCP is subject to the terms of this Plan but maintained separate from each other.  The Plan was amended and restated effective November 1, 2008 and was subsequently amended and restated effective January 1, 2017 and again effective January 1, 2018.  This January 1, 2019 restatement of the Plan is generally effective as of January 1, 2019, except as otherwise specifically set forth herein.  

The purpose of the Plan is to provide a tax-deferred opportunity for key management and highly compensated employees of Occidental Petroleum Corporation and its Affiliates (as defined below) to accumulate additional retirement income through deferrals of compensation.  

This Plan is intended to satisfy the requirements of Section 409A of the Internal Revenue Code, and any regulations promulgated thereunder, so that the taxation to Participants or Beneficiaries of any compensation deferred under this Plan is deferred.  

ARTICLE II
DEFINITIONS
Whenever the following words and phrases are used in this Plan with the first letter capitalized, they shall have the meanings specified below:

Affiliate.  “Affiliate” means (i) any corporation that is a member of a controlled group of corporations (within the meaning of Code Section 1563(a), determined without regard to Code Sections 1563(a)(4) and (e)(3)(C), and with the phrase “more than 50%” substituted for the 

    

phrase “at least 80%” each place it appears in Code Section 1563(a)) of which Occidental Petroleum Corporation is a component member, or (ii) any entity (whether or not incorporated) that is under common control with Occidental Petroleum Corporation (as defined in Code Section 414(c) and the Treasury Regulations thereunder, and with the phrase “more than 50%” substituted for the phrase “at least 80%” each place it appears in the Treasury Regulations under Code Section 414(c)).

Alternate Payee.  “Alternate Payee” means a former spouse of a Participant who is recognized by a Divorce Order as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to such Participant.  

Amortization Method.  “Amortization Method” means an annual installment method of paying a Participant’s benefits under which the Company will pay the Participant an initial payment in an amount equal to (i) plus (ii) divided by (iii), where (i) is the value of the Participant’s Deferral Accounts as of the end of the month preceding such payment, (ii) is the amount of interest that would accrue during the entire payout period on the unpaid balance credited to the Participant’s Deferral Accounts immediately following such initial payment if the Declared Rate then in effect remained unchanged and (iii) is the number of years over which annual installments are to be paid.  For each Plan Year after the initial benefit payment is made, the annual benefit payment will be determined under the same equation where (i) is the value of the Participant’s Deferral Accounts as of the end of the month preceding the benefit payment, (ii) is the amount of interest that would accrue during the remaining payout period on the unpaid balance credited to the Participant’s Deferral Accounts immediately following such annual payment if the Declared Rate then in effect remained unchanged and (iii) is the number of annual payments remaining.  Notwithstanding anything in the Plan to the contrary, the Amortization Method shall not be available with respect to benefits earned on or after January 1, 2017.

Base Salary.  “Base Salary” means the base salary earned by a Participant during pay periods ending in a Plan Year, excluding Bonus, all severance allowances, forms of incentive compensation, Savings Plan, Retirement Plan or other Company qualified plan contributions or benefits, retainers, insurance premiums or benefits, reimbursements, and all other payments, prior to reduction for any deferrals under this Plan or any other plan of the Company or reductions under the Company’s Savings Plan allowed under Code Section 401(k).

Beneficiary.  “Beneficiary” means the person or persons designated as such in accordance with Article VI.

Beneficiary Benefit.  “Beneficiary Benefit” means the payment to a Participant’s Beneficiary of the value of the Participant’s Deferral Accounts pursuant to Section 5.2 on account of the Participant’s death.

Board.  “Board” means the Board of Directors of Occidental Petroleum Corporation.

Bonus.  “Bonus” means the bonus earned by a Participant under a regular annual incentive compensation plan (excluding without limitation a special individual or group bonus, a 

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project bonus, and any other special bonus) during a Plan Year prior to reduction for any deferral under this Plan or any other plan of the Company. 

Change in Control.  “Change in Control” means (i) for purposes of Sections 8.1 and 8.2(a), any event described in  (a), (b), (c) or (d) below, and (ii) for purposes of Section 5.6, any  event that constitutes a “change in control event” for purposes of Code Section 409A and Treas. Reg. § 1.409A-3(i)(5) (or any successor provisions) and that is described in subsection (a), (b), (c) or (d) below:     

(a)    Approval by the stockholders of Occidental Petroleum Corporation (or, if no stockholder approval is required, by the Board) of the dissolution or liquidation of Occidental Petroleum Corporation, other than in the context of a transaction that does not constitute a Change in Control under subsection (b) below;
(b)    Consummation of a merger, consolidation, or other reorganization, with or into, or the sale of all or substantially all of Occidental Petroleum Corporation’s business and/or assets as an entirety to, one or more entities that are not subsidiaries or other affiliates of Occidental Petroleum Corporation (a “Business Combination”), unless (i) as a result of the Business Combination, more than 50% of the outstanding voting power of the surviving or resulting entity or a parent thereof (the “Successor Entity”) immediately after the Business Combination is, or will be, owned, directly or indirectly, by holders of Occidental Petroleum Corporation’s voting securities immediately before the Business Combination; (ii) no “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended from time (the “Exchange Act”)), excluding the Successor Entity or any employee benefit plan of Occidental Petroleum Corporation and any trustee or other fiduciary holding securities under an Occidental Petroleum Corporation employee benefit plan or any person described in and satisfying the conditions of Rule 13d-1(b)(i) of the Exchange Act (an “Excluded Person”), beneficially owns, directly or indirectly, more than 20% of the outstanding shares or the combined voting power of the outstanding voting securities of the Successor Entity, after giving effect to the Business Combination, except to the extent that such ownership existed prior to the Business Combination; and (iii) at least 50% of the members of the board of directors of the entity resulting from the Business Combination were members of the Board at the time of the execution of the initial agreement or of the action of the Board approving the Business Combination;
(c)    Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any Excluded Person) is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Occidental Petroleum Corporation representing 20% or more of the combined voting power of Occidental Petroleum Corporation’s then outstanding voting securities, other than as a result of (i) an acquisition directly from Occidental Petroleum Corporation; (ii) an acquisition by Occidental Petroleum Corporation; or (iii) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by Occidental Petroleum Corporation or a Successor Entity; or
(d)    During any period not longer than two consecutive years, individuals who at the beginning of such period constituted the Board cease to constitute at least a majority thereof, unless the election, or the nomination for election by Occidental Petroleum Corporation’s stockholders, of each new Board member was approved by a vote of at least two-thirds (2/3) of 

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the Board members then still in office who were Board members at the beginning of such period (including for these purposes, new members whose election or nomination was so approved), but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board.
Class Year Subaccount.  “Class Year Subaccount” means each subaccount of a Participant’s Deferral Account established for distribution purposes to separately account for deferred Base Salary and/or Bonus and/or any related Savings Plan Restoration Contributions (and interest credited thereto) for each Plan Year beginning on or after January 1, 2018. 

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

Committee.  “Committee” means the administrative committee appointed to administer the Plan pursuant to Article III.

Company.  “Company” means Occidental Petroleum Corporation, or any successor thereto, and any Affiliates. 

Company Management.  “Company Management” means the Chairman of the Board, President or any Executive Vice President of Occidental Petroleum Corporation.

Compensation.  “Compensation” means Base Salary and/or Bonus.

DCP Deferral Account.  “DCP Deferral Account” means the account maintained on the books of account of the Company for each Participant pursuant to Article IV to account for amounts deferred under the 1988 DCP prior to January 1, 1999, and the amounts subsequently deferred under the Prior Plan, the DCP2, the 2005 DCP and this Plan.

DCP Deferral Amount.  “DCP Deferral Amount” means an amount of a Participant’s Base Salary and/or Bonus that is deferred under the Plan, including amounts deferred under the 1988 DCP, the Prior Plan, the DCP2, the 2005 DCP and this Plan.

DCP2.  “DCP2” means the Occidental Petroleum Corporation Deferred Compensation Plan 2, effective as of October 12, 2006.  

Declared Rate.  “Declared Rate” with respect to any Plan Year means the rate at which interest will be credited on Deferral Accounts for such Plan Year.  The Declared Rate for each Plan Year commencing on or after January 1, 2009, will be the monthly yield on 5-year Treasury Constant Maturities plus 2%.  Notwithstanding the foregoing, the Declared Rate for DCP Deferral Amounts that were earned and deferred prior to 1994 under the 1988 DCP (including bonuses which were earned for 1993), together with accumulated interest thereon, will in no event be less than 8% for any Plan Year.  Accordingly, the Declared Rate for any Plan Year may 

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be different for DCP Deferral Amounts that were earned and deferred under the 1988 DCP prior to January 1, 1994 than for DCP Deferral Amounts earned after such date.  

Deferral Account(s).  “Deferral Account(s)” means a Participant’s DCP Deferral Account and/or SEDCP Deferral Account (if any) and/or Savings Plan Restoration Account (if any) maintained on the books of account of the Company for each Participant pursuant to Article IV.

Deferral Election Form.  “Deferral Election Form” means a paper or electronic election form provided by the Committee on which an Eligible Employee may elect to defer Base Salary and/or Bonus in accordance with Article IV. 

Distribution Election Form.  “Distribution Election Form” means a paper or electronic election form provided by the Committee on which a Participant may elect the form of payment of his benefits in accordance with Articles IV and V.  

Divorce Order.  “Divorce Order” means any judgment, decree, or order (including judicial approval of a property settlement agreement) that relates to the settlement of marital property rights between a Participant and his former spouse pursuant to state domestic relations law (including, without limitation and if applicable, community property law), as described in Treas. Reg. § 1.409A-3(j)(4)(ii).  
  
Early Payment Benefit.  “Early Payment Benefit” means a benefit paid to a Participant in an Early Payment Year beginning prior to the Participant’s Separation from Service pursuant to Section 5.4.

Early Payment Year.  “Early Payment Year” means any year beginning prior to a Participant’s Separation from Service that a Participant elects pursuant to Section 4.1(c) to have an Early Payment Benefit paid or commenced to be paid.

Early Payment Year Subaccount.  “Early Payment Year Subaccount” means any subaccount of a Participant’s DCP Deferral Account established to separately account for deferred Base Salary and/or Bonus and/or any Savings Plan Restoration Contributions (and interest credited thereto) that is subject to an Early Payment Benefit election. 

Eligible Employee.  “Eligible Employee” means each key management employee or other highly compensated employee of the Company who is selected by Company Management to participate in the Plan.

Emergency Benefit.  “Emergency Benefit” means the payment to a Participant of part or all of his Deferral Accounts in the event that the Participant has an Unforeseeable Emergency pursuant to Section 5.5.  

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

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Fractional Method.  “Fractional Method” means an installment method of paying a Deferral Account or subaccount under which the Company will determine the amount of each annual installment by dividing the value of the Deferral Account or subaccount as of the end of the month preceding the payment date by the number of annual installments remaining to be paid.  

1988 DCP.  “1988 DCP” means the Occidental Petroleum Corporation 1988 Deferred Compensation Plan.  

Participant.  “Participant” means (i) each individual who, as of December 30, 2006, was a participant in the 2005 DCP or DCP2 and has not received a complete distribution of the benefits accrued under those plans, (ii) an Eligible Employee who has filed a completed and fully executed Deferral Election Form with the Committee and is participating in the Plan in accordance with the provisions of Article IV, and (iii) any person who has a Deferral Account by reason of his prior status as an Eligible Employee.  Under no circumstances shall “Participant” mean any Alternate Payee.  

Plan Year.  “Plan Year” means the calendar year beginning on January 1 and ending on December 31.  

Pre-2018 Subaccount.  “Pre-2018 Subaccount” means the subaccount of a Participant’s Deferral Account established for distribution purposes to separately account for amounts credited to the Participant’s Deferral Account for all periods prior to January 1, 2018 (including the entire balance of a Participant’s SEDCP Deferral Account).    

Prior Plan.  “Prior Plan” means the Occidental Petroleum Corporation Deferred Compensation Plan as amended and restated as of January 1, 2003, under which deferrals ceased as of December 31, 2004.  

Qualified Divorce Order.  “Qualified Divorce Order” means a Divorce Order that (a) creates or recognizes the existence of an Alternate Payee’s right to, or assigns to an Alternate Payee the right to, receive all or a portion of the benefits payable to a Participant under this Plan; (b) clearly specifies (i) the name and the last known mailing address of the Participant and the name and mailing address of the Alternate Payee covered by the order, (ii) the amount or percentage of the Participant’s benefits to be paid by this Plan to the Alternate Payee, or the manner in which such amount or percentage is to be determined, (iii) the number of payments or period to which such order applies, and (iv) that it applies to this Plan; and (c) does not (i) require this Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan, (ii) require this Plan to provide increased benefits, or (iii) require the payment of benefits to an Alternate Payee that are required to be paid to another Alternate Payee under another Divorce Order previously determined to be a Qualified Divorce Order.  

Retirement.  “Retirement” means the Participant’s Separation from Service for reasons other than death after the Participant attains age 55.  Notwithstanding the foregoing, with respect 

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to Participants who executed a consulting agreement with the Company prior to October 3, 2004, “Retirement” means the termination date of the Participant’s consulting agreement.

Retirement Benefit.  “Retirement Benefit” means the payment to a Participant of the value of the Participant’s Pre-2018 Subaccount and Class Year Subaccounts, as applicable, pursuant to Section 5.1 following Retirement. 
 
Retirement Plan.  “Retirement Plan” means the Occidental Petroleum Corporation Retirement Plan, as amended from time to time.

SEDCP.  “SEDCP” means the Occidental Petroleum Corporation Senior Executive Deferred Compensation Plan under which certain Company executives deferred compensation. 
 
SEDCP Deferral Account.  “SEDCP Deferral Account” means the account maintained on the books of account of the Company for certain Participants pursuant to Article IV to account for amounts deferred under the SEDCP.  

Savings Plan.  “Savings Plan” means the Occidental Petroleum Corporation Savings Plan, as amended from time to time.

Savings Plan Restoration Account.  “Savings Plan Restoration Account” means the account maintained on the books of account of the Company to reflect Savings Plan Restoration Contributions made by the Company pursuant to Section 4.6.

Savings Plan Restoration Contribution.  “Savings Plan Restoration Contribution” means the amount credited to a Participant’s Savings Plan Restoration Account pursuant to Section 4.6. 

Separation from Service.  “Separation from Service” means a Participant’s “separation from service” as defined under Code Section 409A and Treas. Reg. § 1.409A-1(h) (or successor provisions).  A Participant shall have a Separation from Service if the Participant ceases to be an employee of both:

(i)     The Company that employs the Participant; and 

(ii)     All Affiliates with whom such Company would be considered a single employer under Code Section 414(b) or 414(c).  

For this purpose, a Participant who ceases to be an employee of an entity described in (i) or (ii) above shall not be considered to have a Separation from Service if such cessation of employment is followed immediately by his commencement of employment with another entity described in (i) or (ii) above. 

A Participant shall have a Separation from Service if it is reasonably anticipated that no further services shall be performed by the Participant, or that the level of services the Participant shall perform shall permanently decrease to no more than 20 percent of the average level of 

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services performed by the Participant over the immediately preceding 36-month period (or the Participant’s full period of service, if the Participant has been performing services for less than 36 months).

For avoidance of doubt, the transfer of employment of a CRC Deferred Compensation Beneficiary, as that term is defined in the Employee Matters Agreement between Occidental Petroleum Corporation and California Resources Corporation, from Occidental Petroleum Corporation to California Resources Corporation shall not be a Separation from Service.

Specified Employee.  “Specified Employee” means an Employee who is a “specified employee” within the meaning of Section 409A and Treas. Reg. § 1.409A-1(i) (or successor provisions) and as determined pursuant to any rules adopted for such purposes by Occidental Petroleum Corporation.
 
Termination Benefit.  “Termination Benefit” means the payment to a Participant of the value of the Participant’s Pre-2018 Subaccount and Class Year Subaccounts, as applicable, pursuant to Section 5.1 on account of the Participant’s Separation from Service other than due to Retirement or death.

2005 DCP.  “2005 DCP” means the Occidental Petroleum Corporation 2005 Deferred Compensation Plan, restated as of January 1, 2005 and as subsequently amended.  
2005 DSP.  “2005 DSP” means the Occidental Petroleum Corporation 2005 Deferred Stock Program, as amended from time to time.
Unforeseeable Emergency.  “Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2) and (d)(1)(B)) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  

 
ARTICLE III
ADMINISTRATION OF THE PLAN
A Committee shall be appointed by the Board to administer the Plan and establish, adopt, or revise such rules and regulations as the Committee may deem necessary or advisable for the administration of the Plan and to interpret the provisions of the Plan, and, except as otherwise indicated herein, any such interpretations shall be conclusive and binding.  All decisions of the Committee shall be by vote of at least two of the Committee members and shall be final.  The Committee may appoint any agent and delegate to such agent such powers and duties in connection with the administration of the Plan as the Committee may from time to time prescribe.  The Plan is intended to comply with the requirements of Code Section 409A and shall be interpreted and administered accordingly.

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Members of the Committee shall be eligible to participate in the Plan while serving as members of the Committee, but a member of the Committee shall not vote or act upon any matter which relates solely to such member’s interest in the Plan as a Participant.

 
ARTICLE IV
PARTICIPATION
4.1    Election to Participate.  
(a)    Deferral Elections.  An Eligible Employee may elect to participate in the Plan and elect to defer annual Base Salary and/or Bonus under the Plan by filing with the Committee a completed and fully executed Deferral Election Form prior to the beginning of the Plan Year during which the Eligible Employee performs the services for which such Base Salary and Bonus are to be earned, or at such other time as the Committee may permit in accordance with the regulations promulgated under Code Section 409A.  Deferral Election Forms must be filed in accordance with the instructions set forth in the Deferral Election Forms.  
Prior to December 1, 2016, an employee who first becomes an Eligible Employee during a Plan Year may make an initial deferral election under this Plan within 30 days after the date the employee becomes an Eligible Employee provided that such Eligible Employee has not previously become eligible to participate in any other account balance plan that is required to be aggregated with this Plan as described in Treas. Reg. § 1.409A-1(c)(2) (or any successor provision).  Any such election shall apply to Base Salary earned for services performed after the 30-day election window described in the previous sentence and to that portion of the Bonus earned during such Plan Year equal to the total amount of the Bonus multiplied by the ratio of the number of days remaining in the Plan Year after the 30-day election window described in the previous sentence ends over the total number of days in the Plan Year.  Effective December 1, 2016, Eligible Employees may no longer make initial deferral elections pursuant to the rule in this paragraph.  As of that date, Eligible Employees may only commence or resume participation in the Plan on January 1 of a Plan Year, which shall require the filing of a Deferral Election Form prior to the beginning of such Plan Year as provided in the first paragraph of this Section 4.1.     

A Deferral Election Form filed for a Plan Year shall be effective for Base Salary and/or Bonus to be earned during that Plan Year only.  For each subsequent Plan Year, an Eligible Employee who wishes to defer Base Salary and/or Bonus must file a new complete and fully executed Deferral Election Form in accordance with the instructions set forth in the Deferral Election Form but in any event prior to January 1 of such Plan Year. 

Each Deferral Election Form will designate the DCP Deferral Amounts as a fixed dollar amount or fixed percentage (in increments of 1%) of Base Salary and/or (i) a fixed dollar amount or a fixed percentage of Bonus or (ii) 100% of any Bonus exceeding a specified dollar amount, as elected by the Participant.  Deferrals of Base Salary will normally be deducted ratably during the Plan Year, except as otherwise determined by the Committee to take into account special circumstances; provided that in no event will the Committee’s action alter the total amount of 

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Deferrals for the Plan Year.  In its sole discretion, the Committee may also permit amounts that an Eligible Employee has previously elected to defer under other plans or agreements with the Company to be transferred to this Plan and credited to his Deferral Accounts that are maintained hereunder, provided that no change shall be made in the time or form of payment of such transferred amounts except as may be permitted by Code Section 409A.

(A)    Minimum Deferral.  For each Plan Year, the minimum amount of Base Salary that a Participant may elect to defer is $5,000, if expressed as a dollar amount, or 5% of Base Salary, if expressed as a percentage, and the minimum amount of Bonus that a Participant may elect to defer is any of the following:  (I) $5,000, (II) 5% of Bonus, or (III) 100% of that portion of any Bonus that exceeds a dollar amount specified by the Participant on his Deferral Election Form.

(B)    Maximum Deferral.  For each Plan Year, the maximum amount of Base Salary that a Participant may elect to defer is 75% of Base Salary, and the maximum amount of Bonus that a Participant may elect to defer is 90% of Bonus; provided that, with respect to amounts earned after 2018, the maximum total amount of Compensation that a Participant may elect to defer is $150,000 in a Plan Year.  The $150,000 limit shall apply to amounts of Base Salary and Bonus earned in any one Plan Year.  For example, in Plan Year 2019, the $150,000 limit shall first apply to deferrals of Base Salary that would have otherwise been paid in 2019 and then to deferrals of Bonus that are earned in 2019 and would otherwise be payable in 2020.
    
(C)    Deferral Account Balance.  Notwithstanding anything herein to the contrary, effective with respect to amounts earned in 2019 and thereafter, if as of December 31 of any Plan Year, a Participant’s total Deferral Account balance is $2,000,000 or more, then the Participant may not defer any compensation earned in the following Plan Year and any election to do so shall be considered void.  If as of December 31 of any Plan Year, a Participant’s total Deferral Account balance is less than $2,000,000, then the Participant may defer compensation earned in the following Plan Year in accordance with this Article IV.  Amounts earned in Plan Years prior to 2019 shall be subject to the limitations described in the Plan document then in effect.  For purposes of this provision, a Participant’s Deferral Account balance shall exclude the balance in the Participant’s Savings Plan Restoration Account, if any.

(b)    Distribution Elections.  
(i)    Distribution Elections for 2018 and Subsequent Plan Years.  An Eligible Employee who files a Deferral Election Form for any Plan Year beginning on or after January 1, 2018 also may file a Distribution Election Form with each such Deferral Election Form to elect to have all deferrals for such Plan Year paid either (A) in a lump sum or annual payments for any other number of years between two (2) and 20 years following his Retirement or (B) as an Early Payment Benefit in accordance with Section 4.1(c).  Such Distribution Election Form shall apply to all Base Salary and/or Bonus deferred for such Plan Year, and shall also apply to any Savings Plan Restoration Contributions attributable to such deferred Base 

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Salary and/or Bonus (as described further in Section 4.1(c) below).  Subject to Section 5.1(d), a Distribution Election Form filed for a Plan Year shall become irrevocable no later than December 31 of the immediately preceding Plan Year.  A Distribution Election Form filed for a Plan Year shall be effective for deferrals for that Plan Year only.  If an Eligible Employee fails to file a Distribution Election Form for any Plan Year, he or she shall be deemed to have elected to have the deferrals for such Plan Year paid in a single lump sum following Separation from Service as provided in Section 5.1(a).    
(ii)    Pre-2018 Distribution Elections.  With respect to deferrals for Plan Years beginning prior to January 1, 2018, an Eligible Employee was permitted to file a Distribution Election Form simultaneously with the Eligible Employee’s first Deferral Election Form to elect the form of payment of all such deferrals to the extent paid as a Retirement Benefit.  In addition, a Participant could elect either the Fractional Method or Amortization Method for calculating installments for benefits earned before January 1, 2017.  Each Plan Year, an Eligible Employee also had the opportunity to make an election to receive all or a portion of the deferrals for such Plan Year as an Early Payment Benefit in accordance with Section 4.1(c).                    
(c)    Early Payment Benefit Election.  With respect to Base Salary and/or Bonus earned after December 31, 2007, an Eligible Employee may irrevocably elect to receive Base Salary and/or Bonus deferred pursuant to Section 4.1(a) prior to Separation from Service in an Early Payment Year.  An Early Payment Benefit election filed for the Plan Year beginning January 1, 2008, or for any subsequent Plan Year, shall be effective for the deferred Base Salary and/or Bonus earned during that Plan Year only.  A Participant may make an election for an Early Payment Benefit with respect to deferred Base Salary and/or Bonus earned in any future Plan Year by filing a new Early Payment Benefit election with the Committee prior to January 1 of such Plan Year.   
Effective January 1, 2017, an Early Payment Benefit election filed with respect to all or a portion of the deferred Base Salary and/or Bonus to be earned during a Plan Year shall also apply to the same portion of any Savings Plan Restoration Contributions attributable to such deferred Base Salary and/or Bonus.  For example: (i) any Early Payment Benefit election made by the Participant with respect to deferred Base Salary earned by the Participant for the 2017 Plan Year shall also apply to the portion of the Savings Plan Restoration Contribution made on behalf of a Participant for the 2017 Plan Year that is attributable to such deferred Base Salary and (ii) any Early Payment Benefit election made by the Participant with respect to deferred Bonus earned by the Participant for the 2017 Plan Year and paid during the 2018 Plan Year shall also apply to the portion of the Savings Plan Restoration Contribution made on behalf of a Participant for the 2018 Plan Year that is attributable to such deferred Bonus.

The following additional rules shall apply to Early Payment Benefit elections:
(A)    In an Early Payment Benefit election filed for any Plan Year beginning on or after January 1, 2018, a Participant may elect to have all deferrals for such Plan Year paid in the form of a lump sum prior to Separation from Service in an Early Payment Year.  For prior Plan Years, (I) a Participant’s Early Payment Benefit 

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election could apply to all or a portion of the deferrals for such Plan Year, as designated by the Participant, (II) a Participant’s Early Payment Benefit election could designate both an Early Payment Year prior to Separation from Service and a form of payment, with the available forms being a lump sum payment or annual installments over two (2) to five (5) years, (III) a Participant who elected an installment form also could elect the Amortization Method or Fractional Method for Early Payment Benefits earned before January 1, 2017, (IV) the Early Payment Year elected was required to be a year beginning at least two (2) years after the end of the Plan Year for which the election was made, and (V) the default form of distribution if the Participant failed to designate a payment form was a lump sum.  

(B)    Prior to January 1, 2018, a Participant could not at any time have Early Payment Benefits scheduled for more than two Early Payment Years.  However, after an Early Payment Year occurred and all payments with respect to the corresponding Early Payment Year election were completed, a Participant could elect a new Early Payment Year for future deferrals. Effective January 1, 2018, this restriction on the number of Early Payment Years no longer applies.

4.2    DCP Deferral Accounts.  The Committee shall establish and maintain a separate DCP Deferral Account for each Participant.  A DCP Deferral Amount shall be credited by the Company to the Participant’s DCP Deferral Account, subject to the Committee’s authority in Section 4.1(a), as of the date that the Participant’s Base Salary and/or Bonus would otherwise have been paid.  Such DCP Deferral Account shall be debited by the amount of any payments made by the Company to the Participant or the Participant’s Beneficiary therefrom as of the date of payment.  With respect to Early Payment Benefits earned prior to January 1, 2018, the Committee shall establish an Early Payment Year Subaccount within a Participant’s DCP Deferral Account for each Early Payment Year elected by that Participant.  Any such Early Payment Year Subaccount shall be debited by the amount of any Early Payment Benefit paid by the Company to the Participant in such Early Payment Year pursuant to Section 5.4 as of the date of payment.  
Effective January 1, 2018, for distribution purposes, the Committee shall establish a separate Class Year Subaccount within a Participant’s Deferral Account for each Plan Year beginning on or after January 1, 2018 for which the Participant has deferrals under the Plan and a Pre-2018 Subaccount within a Participant’s Deferral Account for all previously deferred amounts.  A Class Year Subaccount shall be further designated as an Early Payment Year Subaccount for each Plan Year beginning on or after January 1, 2018 for which a Participant makes an Early Payment Benefit election in accordance with Section 4.1(c). All such subaccounts shall be debited by the amount of any payments made by the Company to the Participant or the Participant’s Beneficiary therefrom as of the date of payment pursuant to Article V. 
4.3    SEDCP Deferral Accounts.  The Committee shall maintain a separate SEDCP Deferral Account for each Participant who was a participant in the SEDCP on December 31, 1998.  The balance of such Participant’s accounts under the SEDCP as of December 31, 1998 

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remained credited to each such Participant’s SEDCP Deferral Account under the Occidental Petroleum Corporation Deferred Compensation Plan, a predecessor to this Plan, as of January 1, 1999.  SEDCP Deferral Accounts shall be debited by the amount of any payments made by the Company to the Participant or the Participant’s Beneficiary therefrom as of the date of payment.
4.4    Interest.  Each Deferral Account of a Participant shall be deemed to bear interest on the monthly balance of such Deferral Account at the Declared Rate, compounded monthly.  Except as provided in Section 5.2(a), with respect to SEDCP Deferral Accounts for Participants who die prior to becoming eligible for Retirement, interest will be credited to each Deferral Account on a monthly basis on the last day of each month as long as any amount remains credited to such Deferral Account.  Amounts of deferred Compensation that are credited to a DCP Deferral Account and amounts of Savings Plan Restoration Contributions that are credited to a Savings Plan Restoration Account prior to the end of a calendar month shall accrue interest from the date of crediting, computed from date of crediting to the end of the month.  Effective August 1, 2016, interest shall be credited to Deferral Accounts at the Declared Rate on a daily basis with monthly compounding. 
4.5    Valuation of Deferral Accounts.  The value of a Deferral Account as of any date shall equal the amounts previously credited to such Deferral Account less any payments debited to such Deferral Account plus the interest deemed to be earned on such Deferral Account in accordance with Section 4.4 through such date.  When payments are made from a DCP Deferral Account for any reason other than an Early Payment Benefit elected after January 1, 1994, such payments shall be deemed to be made on a proportionate or pro-rata basis from DCP Deferral Amounts (including accumulated interest thereon) that were earned and deferred under the 1988 DCP prior to January 1, 1994, and DCP Deferral Amounts (including accumulated interest thereon) that were earned and deferred after that date.  
4.6    Savings Plan Restoration Contribution.  
(a)    General Rule.  Effective for Plan Years beginning on and after January 1, 2017, the Company shall credit to the Savings Plan Restoration Account of any Participant an amount equal to the amount by which the contribution that would otherwise have been made by the Company on behalf of the Participant to the Savings Plan for such Plan Year is reduced by reason of the reduction in the Participant’s Base Salary for such Plan Year and/or the Participant’s Annual Bonus (as defined in the Savings Plan) paid in such Plan Year because of deferrals under this Plan, assuming that the Participant’s contribution percentage under the Savings Plan for the Plan Year is 5 percent.  The Savings Plan Restoration Contribution shall be credited to the Savings Plan Restoration Account of each Participant for each Plan Year at the same time as the Company contribution for such Plan Year is made to the Savings Plan.  With respect to Plan Years beginning prior to January 1, 2017, Savings Plan Restoration Contributions were credited to Participants’ Savings Plan Restoration Accounts under this Plan for periods prior to January 1, 2009, but not for the period from January 1, 2009 through December 31, 2016 (during which period such contributions were instead credited under the Occidental Petroleum Corporation Supplemental Retirement Plan II). 

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(b)    Vesting.  A Participant’s interest in credits to his Savings Plan Restoration Account attributable to periods prior to January 1, 2009 and earnings thereon shall vest at the same rate and at the same time as would have been the case had such contribution been made to the Savings Plan.  As of January 1, 2017, all amounts credited to a Participant’s Savings Plan Restoration Account, including credits attributable to periods prior to January 1, 2009, credits attributable to periods on and after January 1, 2017 and credits under paragraph (c) below are 100% vested at all times.  
(c)    Transfer of Non-Vested Savings Plan Restoration Account from Prior Plan.  Effective as of January 1, 2005, that portion of a Participant’s Savings Plan Restoration Account under the Prior Plan that was not vested as of December 31, 2004, was transferred to and credited to such Participant’s Savings Plan Restoration Account under the 2005 DCP and is governed by the terms of this Plan, including any Distribution Election Form filed under the 2005 DCP on or before December 31, 2005.  If the Participant was not participating in the 2005 DCP in 2005, the Participant could nevertheless make an election in accordance with Section 5.1(b) and 5.2 of the 2005 DCP if such election was made by December 31, 2005.  If the Participant did not file a Distribution Election Form on or before December 31, 2005, with respect to such amount, together with interest, the Participant was deemed to have made an election to receive distribution in accordance with Section 5.1(a).  
4.7    Statement of Deferral Accounts.  The Committee shall submit to each Participant, within 120 days after the close of each Plan Year, a statement in such form as the Committee deems desirable, setting forth the Participant’s Deferral Account(s).
4.8    Pre-Merger Payment Elections.  Any payment elections made or deemed to be made by a Participant under the DCP2 or the 2005 DCP and in effect immediately prior to the merger of the two plans on December 31, 2006 shall remain in effect with respect to the portions of the applicable Deferral Accounts attributable to amounts deferred under each plan and shall continue in effect unless and until changed in accordance with the terms of this Plan.  The Committee shall establish and maintain separate subaccounts for each Deferral Account as may be necessary to account for amounts subject to different payout elections.
ARTICLE V
BENEFITS
5.1    Separation from Service for a Reason other than Death.
(a)    Form and Time of Benefit.  Except as otherwise provided in Sections 5.1 and 5.4, upon a Participant’s Separation from Service for a reason other than death (including Retirement), the Company shall pay to the Participant in a single lump sum within the first 90 days of the calendar year following the year of the Participant’s Separation from Service an amount equal to the value of the Participant’s Deferral Accounts as of the end of the month preceding payment.  To the extent that a Retirement Benefit is paid in annual installments pursuant to Section 5.1(b) or 5.1(c), each installment shall be paid within the first 90 days of each calendar year, beginning with the year following the Participant’s Retirement and shall be determined based on the value of the Deferral Account or subaccount as of the last day of the 

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month preceding payment.  Notwithstanding anything herein to the contrary, in the event that a Participant who is a Specified Employee is entitled to a distribution from the Plan upon or by virtue of such Participant’s Separation from Service for a reason other than death, the lump sum payment or the first annual installment payment, as the case may be, shall be paid in the month next following the date that is six (6) months after the date of the Participant’s Separation from Service, if later than the time provided above.  Any additional installment payments shall be paid within the first 90 days of each subsequent calendar year.
(b)    Payment of Class Year Subaccounts.  On a Distribution Election Form filed in accordance with the requirements set forth in Section 4.1(b) hereof, a Participant may elect to have a Class Year Subaccount (other than a Class Year Subaccount designated as an Early Payment Year Subaccount), if paid as a Retirement Benefit, paid to him following Retirement in a lump sum or annual payments for any other number of years between two (2) and 20 years.  The amount of any installments shall be determined using the Fractional Method.  If a Participant’s Separation from Service is for any reason other than Retirement or death, then all of the Participant’s Class Year Subaccounts shall be paid as a Termination Benefit in a lump sum as provided in Section 5.1(a).   
(c)    Payment of Pre-2018 Subaccounts. 
(i)    Retirement Benefit.  A Participant who commenced participation in the Plan prior to January 1, 2018 and has a Pre-2018 Subaccount was permitted to elect, on a Distribution Election Form filed simultaneously with and in the same manner as the first Deferral Election Form that the Participant was required to file in accordance with the requirements set forth in Section 4.1 hereof,  (A)  to have the Pre-2018 Subaccount, but which will not include any amounts attributable to an Early Payment Year Subaccount if Separation from Service occurs after beginning of the relevant Early Payment Year, if paid as a Retirement Benefit, paid to him in a lump sum or annual payments for any other number of years between two (2) and 20 years, and (B) to have the amount of each annual installment determined under either the Amortization Method (if permitted hereunder) or the Fractional Method.  If such a Participant failed to elect either the Amortization Method or the Fractional Method, such Participant is deemed to have elected the Fractional Method.  
Notwithstanding the foregoing, in the case of an Eligible Employee who commences or resumes participation in the Plan in 2017, (A) the only payment forms that such Participant could elect with respect to his Retirement Benefit were a lump sum or annual payments over five (5), ten (10), fifteen (15) or twenty (20) years and (B) only the Fractional Method for determining installments is available. 
(ii)    Termination Benefit. If a Participant’s Separation from Service is for any reason other than Retirement or death, then the Participant’s Pre-2018 Subaccount shall be paid as a Termination Benefit in a lump sum as provided in Section 5.1(a).

(iii)    Effect of Pre-Retirement Separation from Service on Spousal Survivor Benefits.  Spousal survivor benefits (if any) under Section 5.3 of the Plan shall not be 

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payable to the spouse of a Participant whose Separation from Service occurs prior to Retirement and receives a Termination Benefit under this Section 5.1(c).

(d)    Payment Election Changes.  
(i)      Single Payment.  Notwithstanding anything herein to the contrary, an election to receive distribution in a series of annual installments shall be treated as a single payment for purposes of Code Section 409A.  
(ii)     Permitted Changes.  Subject to paragraph (iii) below, a Participant may change his election as to the form of payment of any Class Year Subaccount or Pre-2018 Subaccount, to the extent paid as a Retirement distribution, subject to the following conditions:  (A) the election shall not be effective until twelve (12) months after the election is filed with the Committee; (B) the election must defer the lump sum payment or the initial amount of an installment payment for a period of at least five (5) years from the date that the lump sum payment or initial amount of the installment payment, as the case may be, was otherwise payable; and (C) the election must be made at least twelve (12) months prior to the beginning of the calendar year in which the lump sum payment or initial amount of the installment payment, as the case may be, would have been payable if no change as to the form of distribution were ever made.
(iii)     Additional Rules.  Effective January 1, 2017, a Participant may only make one change pursuant to this Section 5.1(d).  Effective January 1, 2018, this limitation shall apply separately to each Class Year Subaccount (other than a Class Year Subaccount designated as an Early Payment Year Subaccount) and any Pre-2018 Subaccount within a Participant’s Deferral Account. Effective January 1, 2018, the available forms of payment under this Section 5.1(d) shall be a lump sum or annual installments for any number of years between two (2) and 20 years and only the Fractional Method shall be available. Such change must satisfy all of the requirements of this Section 5.1(d). Changes to Class Year Subaccounts that are designated as an Early Payment Year Subaccount must satisfy all the requirements of Section 5.4.  No change may be made following a Participant’s Separation from Service.     
5.2    Beneficiary Benefits. 

(a)    Payment of Class Year Subaccounts and Pre-2018 Subaccounts.

(i)     General Rules. If Participant’s Separation from Service is due to death, the Company will pay to the Participant’s Beneficiary in a single lump sum a Beneficiary Benefit that is an amount equal to the aggregate value of the Participant’s Class Year Subaccounts and Pre-2018 Subaccount (other than his or her SEDCP Deferral Account (if any) and amounts in any Early Payment Year Subaccount attributable to an Early Payment Year beginning before the date of the Participant’s death (if any)).  If such Participant also has an SEDCP Deferral Account, the Company will also pay to the Participant’s Beneficiary annual payments over the greater of (A) 10 years or (B) until the Participant would have attained age 65 equal to 25% of the amount deferred under the SEDCP (excluding any interest on such 

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deferrals), which payments shall be in full satisfaction of the benefits payable with respect to the Participant’s SEDCP Deferral Account.  Notwithstanding the foregoing, the Participant’s Beneficiary shall instead be paid the amount credited to the Participant’s SEDCP Deferral Account as of the end of the month in which his death occurred plus interest at a rate of 8% per annum, compounded annually, from the end of such month and credited annually on each anniversary of the end of such month payable in equal installments (using the Amortization Method) over the period described in the preceding sentence, if the Committee determines that the present value of such benefit is greater than the present value of the benefit described in the preceding sentence.  In comparing the present value of these two alternative benefits, the Committee shall use in each case a discount factor of 8%. 
(ii)    Death after Attaining Age 55.  Notwithstanding the foregoing, if a Participant’s Separation from Service is due to death after attaining age 55, payment to his Beneficiary of his Class Year Subaccounts and Pre-2018 Subaccount (other than payment of his or her SEDCP Deferral Account (if any) and amounts in any Early Payment Year Subaccount attributable to an Early Payment Year beginning before the date of the Participant’s death (if any)) shall be made in the same form or forms as payment of the Participant’s Retirement Benefit would have been made to the Participant if he were living.  
(iii)    Beneficiary Distribution Elections.  Notwithstanding the foregoing, a Participant who commenced participation in the Plan before January 1, 2017 could elect, on a Beneficiary Distribution Election Form filed simultaneously with and in the same manner as the first Deferral Election Form that the Participant was required to file in accordance with the requirements set forth in Section 4.1 hereof, that, if his Separation from Service is due to death prior to attaining age 55, payment to his Beneficiary of his Class Year Subaccounts and Pre-2018 Subaccount (other than payment of his or her SEDCP Deferral Account (if any) and amounts in any Early Payment Year Subaccount attributable to an Early Payment Year beginning before the date of the Participant’s death (if any)) shall be made in any form and calculated in any other manner described in Section 5.1(c) (which may be different than the form of payment elected by the Participant for his Retirement Benefit).  Such a Participant may change his election as to the form of payment to his Beneficiary subject to the following conditions:  (A) the election shall not be effective until twelve (12) months after the election is filed with the Committee;(B) the election must be made at least twelve (12) months prior to the beginning of the calendar year in which the lump sum payment or initial amount of the installment payment, as the case may be, would have been payable if no change as to the form of distribution were ever made; and (C) payment must be calculated using the Fractional Method.  Each such change must satisfy all of the requirements of this Section 5.2(a)(iii).  
Notwithstanding the foregoing, in the case of an Eligible Employee who commences or resumes participation in the Plan on or after January 1, 2017, the elections described above in this Section 5.2(a)(iii) shall not be available. In the event of such a Participant’s Separation from Service due to death prior to attaining age 55, payment to his Beneficiary of his Class Year Subaccounts and Pre-2018 Subaccount instead shall be made as provided in Section 5.2(a)(i) above.    

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(iv)    Death after Separation from Service.  If a Participant dies after Separation from Service but before commencement or completion of his Class Year Subaccounts and Pre-2018 Subaccount under the Plan, payment to his Beneficiary shall be made in the same amount, at the same time and in the same form as payment would have been made to the Participant if he were living under this Plan.  If installment payments to the Participant have already commenced, then the remaining installments (if any) shall be paid to his Beneficiary in the same amounts and at the same times as such remaining installments would have been paid to the Participant if he were living.      
(v)    Timing of Payments to Beneficiary.  The payment or payments to a Beneficiary of a deceased Participant under this Section 5.2(a) (including payments with respect to the SEDCP Deferral Account) shall be made or commence during the period beginning on the date of the Participant’s death and ending on December 31 of the first calendar year following the calendar year in which the Participant’s death occurs.  If payment is to be made in installments, the first installment only shall be made during the period specified in the preceding sentence, with any subsequent installments paid within the first 90 days of each subsequent calendar year. The amount of any such payment shall be equal to, or determined based on, the value of the Participant’s Class Year Subaccounts and Pre-2018 Subaccount as of the end of the month preceding payment.
(b)    Death of Beneficiary before Completion of Payments.  Effective January 1, 2017, in the event that the Beneficiary of a deceased Participant dies prior to the completion of payments under this Plan to that Beneficiary, then the remaining benefit shall be paid in a lump sum to the person or persons designated by the Beneficiary in accordance with procedures established by the Committee or, if no such person has been designated, then to the Beneficiary’s estate.  Such lump sum payment shall be made during the period beginning on the date of the Beneficiary’s death and ending on December 31 of the first calendar year following the calendar year in which the Beneficiary’s death occurs.  
(c)    Prior Elections.  Any election as to the form and manner of payment to a Beneficiary in effect under the terms of the DCP2 or the 2005 DCP immediately prior to the merger of the two plans on December 31, 2006, shall remain in effect with respect to the portions of the applicable Deferral Accounts attributable to amounts deferred under each plan and shall continue in effect unless or until changed in accordance with the terms of this Plan.  The Committee shall establish and maintain separate subaccounts for each Deferral Account as may be necessary to account for amounts subject to different beneficiary payout elections.
5.3    Spousal Survivor Benefits with Respect to SEDCP Deferral Accounts.  If a Participant who has an SEDCP Deferral Account dies after becoming eligible for Retirement or after commencement of payment of his Retirement Benefit and a spouse to whom he had been married to for at least one (1) year prior to his death survives beyond completion of payment of the Participant’s SEDCP Deferral Account balance, the Company shall pay such spouse a lump sum payment in an amount equal to 10% of the Participant’s SEDCP Deferral Account balance valued as of the earlier of the date of the Participant’s Retirement or death.  Such lump sum spousal survivor benefit shall be paid 120 days following the later of the completion of payment 

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of the Participant’s SEDCP Deferral Account balance or the Participant’s death.  No benefit shall be payable under this Section 5.3 if the Participant’s spouse does not survive beyond completion of payment of the Participant’s SEDCP Deferral Account balance.  Notwithstanding the foregoing, no spousal survivor benefit shall be payable to the spouse of any Participant who received benefits pursuant to Section 5.1(c)(ii) (Termination Benefit) or Section 5.6 (Immediate Payment on Change in Control).
5.4    Early Payment.  Payment of the amounts credited to any Early Payment Year Subaccount of a Participant shall be paid or commence to be paid within the first 90 days of the year elected as the Early Payment Year in accordance with the Participant’s election under Section 4.1(c), with any subsequent annual payments paid in the first 90 days of each applicable year.  The amount of each annual installment will be determined under the Fractional Method unless the Participant otherwise irrevocably elects the Amortization Method at the time of making the Early Payment Benefit election. A Participant may not elect the Amortization Method for Early Payment Benefits earned on or after January 1, 2017.  A Participant may not elect installment payments for Early Payment Benefits earned on or after January 1, 2018. 
Effective January 1, 2018, a Participant may change his or her election as to the Early Payment Year for any Early Payment Year Subaccount subject to the following conditions:  (a) the election shall not be effective until twelve (12) months after the election is filed with the Committee; (b) the election must defer the lump sum payment or initial amount of the installment payment for a period of at least five (5) years from the date that the lump sum payment or initial amount of the installment payment was otherwise payable; and (c) the election must be made at least twelve (12) months prior to the beginning of the calendar year in which the lump sum payment or initial amount of the installment payment would have been payable if no change as to the form of distribution were ever made.  In addition, if a Participant makes an election pursuant to this provision, payment of the Early Payment Year Subaccount subject to such election must be made in a lump sum payment in the new Early Payment Year. There is no limit on the number of changes a Participant may make pursuant to this provision.
Notwithstanding the foregoing, if a Participant has a Separation from Service for any reason prior to the Early Payment Year elected by the Participant in accordance with Section 4.1(c) or the preceding paragraph, the election made by the Participant to receive the Early Payment Benefit shall terminate.  In the case of an Early Payment Benefit Subaccount established for any Plan Year beginning on or after January 1, 2018, the amount credited to the Early Payment Year Subaccount shall be paid according to the Retirement election made at the same time as the Early Payment election, as set forth in Section 5.1(a) or Section 5.2(a), as applicable, unless the Participant has not yet reached age 55, in which case the Early Payment benefit will be paid in a single lump sum following the Participants’ Separation from Service In the case of Early Payment Benefits earned before January 1, 2018, the amount credited to the Participant’s Early Payment Year Subaccount shall be paid, together with the other amounts credited to the Participant’s Pre-2018 Subaccount, as set forth in Section 5.1 or 5.2, as the case may be.  If the Participant has a Separation from Service for any reason after the start of the Early Payment Year but before the commencement or completion of the Early Payment Benefit, the benefit or remaining benefit attributable to the relevant Early Payment Year Subaccount shall 

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be paid to the Participant (or his Beneficiary) in accordance with the Participant’s Early Payment Benefit election without regard to the Participant’s Separation from Service (i.e., once the Early Payment Year is reached, the Participant’s subsequent Separation from Service for any reason shall not affect the payment of the relevant Early Payment Year Subaccount). 

5.5    Emergency Benefit.  In the event that the Committee, upon written petition of the Participant, determines in its sole discretion that the Participant has suffered an Unforeseeable Emergency, the Company shall pay to the Participant, within 60 days following such determination, an Emergency Benefit that does not exceed the amount reasonably necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets to the extent the liquidation of such assets would not itself cause severe financial hardship and the additional compensation available to the Participant upon the termination of the Participant’s current deferral elections under the Plan, as described in the following paragraph of this Section 5.5.  Such Emergency Benefit shall be taken pro rata from each of the Participant's Deferral Accounts, including the Participant's DCP Deferral Account, SEDCP Deferral Account and Savings Plan Restoration Account, as applicable, and pro rata from any subaccounts, such as an Early Payment Year Subaccount, within any such Deferral Account.  
Whenever a Participant receives a distribution under this Section 5.5, the Participant will be deemed to have revoked all current deferral elections under the Plan effective as of the date of the distribution.  The Participant will not be permitted to participate in the next enrollment period under the Plan and will be precluded from electing to make new deferrals under the Plan for a minimum period of one (1) year (or such lesser period as the Committee may permit) following receipt of the distribution.  Such new election shall comply with the provisions of Section 4.1(a).

5.6    Effect of Change in Control.  In the event of a Change in Control, the Board may, in its sole discretion, within the 30 days preceding such Change in Control, irrevocably take action to terminate and liquidate the Plan, provided that the requirements of Treas. Reg. § 1.409A-3(j)(4)(ix)(B) (or any successor provision) are satisfied.
5.7    Small Benefit.  Notwithstanding any election by a Participant to receive payment of a Class Year Subaccount or Pre-2018 Subaccount maintained for the Participant under the Plan in an installment payment form, if the aggregate value of all of the Participant’s Class Year Subaccounts and Pre-2018 Subaccounts with the same scheduled commencement date and same installment form is less than $50,000 on the scheduled commencement date,  then all such subaccounts shall be paid to the Participant in a single lump sum on the scheduled commencement date.  This provision shall not apply to  any Early Payment Year Subaccount that is being paid pursuant to an Early Payment Benefit election to the extent permissible under Code Code Section 409A.     

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5.8    Tax Withholding and Reporting.  
(a)    To the extent required by the law in effect at the time payments are made, the Company shall withhold from payments made hereunder the taxes required to be withheld by Federal, state and local law.
(b)    The Company shall have the right at its option to (i) require a Participant to pay or provide for payment of the amount of any taxes that the Company may be required to withhold with respect to interest or other amounts that the Company credits to a Participant’s Deferral Accounts or (ii) deduct from any amount of salary, bonus or other payment otherwise payable in cash to the Participant the amount of any taxes that the Company may be required to withhold with respect to interest or other amounts that the Company credits to a Participant’s Deferral Accounts.  In addition, as permitted by Treas. Reg. § 1.409A-3(j)(4)(vi) (or any successor provision), payments may be made under the Plan to pay any Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101 and 3121(v)(2) on the Participant’s Deferral Accounts, and to pay any income tax imposed under Code Section 3401 (i.e., wage withholding) or the corresponding withholding provisions of applicable state or local law as a result of payment of the FICA amount, as well as to pay the additional income tax attributable to the pyramiding wages and taxes.  The total payment may not exceed the aggregate FICA tax amount and the income tax withholding related to such FICA tax amount. 

5.9    Reemployment.  
(a)    If, after a Participant’s Separation from Service, such Participant is reemployed by the Company prior to the scheduled payment of any benefits in a cash lump sum payment or while he is receiving benefits in the form of annual installment payments, the payment of the lump sum amount or the future installments, as the case may be, shall be made as scheduled without regard to the Participant’s reemployment. 
(b)    A reemployed Participant may elect to again participate in this Plan and to defer additional Base Salary and/or Bonus as provided in Section 4.1, in which case a new Deferral Account shall be established for such Participant to which allocations relating to the period following the Participant’s re-employment shall be credited.  A Participant who was reemployed before January 1, 2018 was permitted to file a new Distribution Election Form with respect to his Pre-2018 Subaccount, simultaneously with and in the same manner as the first Deferral Election Form filed by the Participant upon his reemployment, governing the payment of his new Retirement Benefit in accordance with Section 5.1(c) and payment to his Beneficiary in accordance with Section 5.2(a)(iii) (provided that payment of any amounts previously forfeited pursuant to Section 4.6 and restored upon the Participant’s reemployment shall be made in the form applicable at the time of his prior termination in accordance with the rules set forth herein).  A Participant shall be permitted to file a separate Distribution Election Form for each Class Year Subaccount established following the Participant’s reemployment as provided in Section 4.1.  

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5.10    Qualified Divorce Orders.  Subject to the policies and procedures established by the Committee under Section 9.3(b) hereof and the provisions of this Plan, benefits may be paid from the balance of a Participant’s Deferral Account(s) in accordance with a Qualified Divorce Order.  
5.11    Special 2006 Transition Rule Elections.  
(a)    Notwithstanding anything herein to the contrary, pursuant to the transition rules under Code Section 409A and the regulations and guidance thereunder, each Participant who has not separated from service as of October 12, 2006 may make a new payment election (a “Special Transition Rule Election”) with respect to (i) the balance of his Deferral Accounts as of December 31, 2006 together with interest credited thereto prior to distribution (his “December 31 Balance”) and/or (ii) any deferred 2006 bonus (i.e., that portion of any bonus earned in 2006 and payable in 2007 that the Participant elected to defer under this Plan) plus interest credited thereto prior to distribution (his “2006 Deferred Bonus”).  As part of such election, the Participant may elect to receive his Retirement Benefit in any form described in Section 5.1 and calculated under either the Amortization Method or the Fractional Method.  In addition, the Participant may elect up to two Early Payment Years with installment payments (if any) calculated under the Amortization Method or the Fractional Method.  Notwithstanding the provisions of Section 4.1 or Section 5.4 to the contrary, a Participant may elect any Early Payment Year other than 2006 regardless of the year in which the Compensation was deferred, except that (i) the earliest Early Payment Year that a Participant may elect with respect to his 2006 Deferred Bonus is 2008, and (ii) if a Participant elects 2007 as an Early Payment Year with respect to his December 31 Balance, payment will be made in July of 2007.  A Participant may elect that all, any portion or no portion of his December 31 Balance and/or all, any portion or no portion of his 2006 Deferred Bonus be paid in an Early Payment Year, but (i) the Participant may not select more than two Early Payment Years under this Special Transition Rule Election and may not elect any additional Early Payment Years under Section 4.1 if such election would result in more than two scheduled Early Payment Years and (ii) the Participant may not make different elections with respect to the form or manner of calculation of his Retirement Benefit with respect to his December 31 Balance and his 2006 Deferred Bonus.  
(b)    Notwithstanding anything herein to the contrary, if a Participant has separated from service due to Retirement as of October 12, 2006, he may make a new payment election with respect to his December 31 Balance.  As part of such election, the Participant may elect (i) to receive a lump sum distribution of his entire Deferral Account balance in July of 2007 or (ii) to change the number of Retirement Benefit installment payments as permitted under Section 5.1, provided that the Participant may not extend the number of installments to more than twenty annual installments (including installment payments that have already been made).  
(c)    If a Participant elects 2007 as an Early Payment Year for his December 31 Balance, he may not elect to defer any Compensation earned in 2007 under this Plan. 
(d)    In addition, as part of the special election hereunder, a Participant may change the form and manner of calculation of the payment of benefits to his Beneficiary in the 

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event that the Participant dies while employed by the Company after becoming eligible for Retirement.
(e)    A Participant must elect the same form and manner of calculating his Retirement Benefit under (a) or (b) above and the same form and manner of calculating his Beneficiary Benefit under (d) above as he elects for such benefits under the 2005 DCP and the DCP2.  
(f)    Any election hereunder must be made by November 3, 2006, or such later date as permitted by the Committee, but in no event later than December 31, 2006.    
(g)    A Participant’s election hereunder shall supersede any previous election made or deemed to be made under this Plan, the 2005 DCP, or the DCP2.  If a Participant does not timely make an election hereunder, the elections he otherwise made or makes or was deemed to make shall apply and may be changed only in accordance with the other terms of this Plan and any Compensation deferred on or after January 1, 2007, shall be subject to the Participant’s election under the 2005 DCP (or, the DCP2 if the Participant was a participant in the DCP2 but not the 2005 DCP) or as subsequently amended in accordance with the other terms of this Plan.  However, any distribution election that had not become effective by October 12, 2006, shall be null and void.  

5.12    Plan Provisions Control.
(a)    Payment Commencement Prior to November 1, 2008.  Notwithstanding anything herein to the contrary, if installment payments to a Participant or Beneficiary have commenced prior to November 1, 2008 in accordance with the prior provisions of the Plan, the Participant’s remaining account shall be paid over the remaining number of installments in accordance with the rules set forth herein (i.e., within the first 90 days of 2009 and each subsequent calendar year, except as otherwise provided herein).
(b)    Distribution Elections Made Prior to November 1, 2008.  Notwithstanding anything herein to the contrary, if a Participant has made a distribution election, including a beneficiary distribution election, prior to November 1, 2008, and such election remains in effect on and after that date, including without limitation under Section 4.8 or Section 5.2(g), distributions to such Participant (or his Beneficiary) shall commence and be made in accordance with the rules set forth herein, with such distribution election used only to determine the applicable form of payment (i.e., whether distribution shall be made in a lump sum or installments and, if installments, the number of such installments and the method used for calculating such installments). 

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ARTICLE VI
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any person or persons as the Beneficiary to whom payments under this Plan shall be made in the event of the Participant’s death prior to complete distribution to the Participant of the benefits due under the Plan.  Each Beneficiary designation shall become effective only when filed in writing with the Committee during the Participant’s lifetime on a paper form prescribed by the Committee.  Any Beneficiary designation made by a Participant under the DCP2 and/or the 2005 DCP shall continue to apply under this Plan until the Participant files a new Beneficiary designation form with the Committee.  Notwithstanding the preceding sentence, if a Participant had selected different Beneficiaries under the DCP2 and the 2005 DCP, the following rules shall apply:

(a)    If the Participant does not make a new election under Section 5.11, the Beneficiary designation under the DCP2 shall apply to the subaccount for the DCP2 under this Plan and the Beneficiary designation under the 2005 DCP shall apply to the subaccount for the 2005 DCP under this Plan unless or until the Participant files a new Beneficiary designation form with the Committee.

(b)    If the Participant does make a new election under Section 5.11, the Participant will be treated as having no Beneficiary designation on file until the Participant files a new Beneficiary designation with the Committee.  

The filing of a new Beneficiary designation form will cancel any inconsistent Beneficiary designation previously filed.

If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, any benefits remaining unpaid shall be paid in accordance with the Participant’s Beneficiary designation under the Company’s Retirement Plan, and if there is no such valid Beneficiary designation, to the Participant’s then surviving spouse, or if none, to the Participant’s estate, unless directed otherwise by the court that has jurisdiction over the assets belonging to the Participant’s probate estate.

 
ARTICLE VII
CLAIMS PROCEDURE
7.1    Applications for Benefits.  All applications for benefits under the Plan shall be submitted to Occidental Petroleum Corporation, Attention:  Deferred Compensation Committee, 5 Greenway Plaza, Suite 110, Houston, TX 77046-0521.  Applications for benefits must be in writing on the forms prescribed by the Committee and must be signed by the Participant, or in the case of a Beneficiary Benefit, by the Beneficiary or legal representative of the deceased Participant.  

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7.2    Claims Procedure.  
(a)    Within a reasonable period of time, but not later than 90 days after receipt of a claim for benefits, the Committee or its delegate shall notify the claimant of any adverse benefit determination on the claim, unless special circumstances require an extension of time for processing the claim.  In no event may the extension period exceed 90 days from the end of the initial 90-day period.  If an extension is necessary, the Committee or its delegate shall provide the claimant with a written notice to this effect prior to the expiration of the initial 90-day period.  The notice shall describe the special circumstances requiring the extension and the date by which the Committee or its delegate expects to render a determination on the claim. 
 
(b)    In the case of an adverse benefit determination, the Committee or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant (i) the specific reason or reasons for the adverse benefit determination; (ii) reference to the specific Plan provisions on which the adverse benefit determination is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why the material or information is necessary; and (iv) a description of the Plan’s claim review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with Section 7.4.  

(c)    Within 60 days after receipt by the claimant of notification of the adverse benefit determination, the claimant or his duly authorized representative, upon written application to the Committee, may request that the Committee fully and fairly review the adverse benefit determination.  On review of an adverse benefit determination, upon request and free of charge, the claimant shall have reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits.  The claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits.  The Committee’s (or delegate’s) review shall take into account all comments, documents, records, and other information submitted regardless of whether the information was previously considered in the initial adverse benefit determination.  

(d)    Within a reasonable period of time, but not later than 60 days after receipt of such request for review, the Committee or its delegate shall notify the claimant of any final benefit determination on the claim, unless special circumstances require an extension of time for processing the claim.  In no event may the extension period exceed 60 days from the end of the initial 60-day period.  If an extension is necessary, the Committee or its delegate shall provide the claimant with a written notice to this effect prior to the expiration of the initial 60-day period.  The notice shall describe the special circumstances requiring the extension and the date by which the Committee or its delegate expects to render a final determination on the request for review.  In the case of an adverse final benefit determination, the Committee or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant (i) the specific reason or reasons for the adverse final benefit determination; (ii) reference to the specific Plan provisions on which the adverse final benefit 

25

determination is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits; and (iv) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with Section 7.4.  

7.3    Section 409A Compliance.  Any claim for benefits under this Article must be made by the claimant no later than the time prescribed by Treas. Reg. § 1.409A-3(g) (or any successor provision).  If a claimant’s claim or appeal is approved, any resulting payment of benefits will be made no later than the time prescribed for payment of benefits by Treas. Reg. § 1.409A-3(g) (or any successor provision).   
7.4    Limitations on Actions.  No legal action may be commenced prior to the completion of the benefit claims procedure described herein.  In addition, no legal action may be commenced after the later of (a) 180 days after receiving the written response of the Committee to an appeal, or (b) 365 days after an applicant’s original application for benefits.  
ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN
8.1    Amendment.  The Board may amend the Plan in whole or in part at any time for any reason, including but not limited to, tax, accounting or other changes, which may result in termination of the Plan for future deferrals.  The Executive Compensation and Human Resources Committee of the Board may amend the Plan to (a) ensure that this Plan complies with the requirements of Code Section 409A for deferral of taxation on compensation deferred hereunder until the time of distribution and (b) add provisions for changes to deferral elections and elections as to time and manner of distributions and other changes that comply with the requirements of Code Section 409A for the deferral of taxation on deferred compensation until the time of distribution.  The Committee appointed pursuant to Article III, in its discretion, may amend the Plan if the Committee determines that such amendment does not significantly increase or decrease Plan benefits or costs.  Notwithstanding the foregoing, except for any amendment required to preserve the deferral of taxation of amounts deferred under this Plan, no amendment shall (a) reduce the amounts that have been credited to the Deferral Account(s) of any Participant prior to the date such amendment is adopted or (b) eliminate the spousal survivor benefit under Section 5.3.  Any amendment that would change the terms of the amendment provisions of this Section 8.1 or the terms of the termination provisions of Section 8.2, shall not be effective prior to the date that is two years after the date such amendment is adopted, unless the amendment is required by a change in the tax or other applicable laws or accounting rules, or the amendment is required in order to preclude any amounts deferred under this Plan from being included in the income of Participants prior to a date of distribution as specified under this Plan.  Notwithstanding the foregoing, following a Change in Control, no amendment shall (a) reduce the amounts that have been credited to the Deferral Account(s) of any Participant prior to the date such amendment is adopted; (b) eliminate the spousal survivor benefits under Section 5.3; or (c) change the terms of the amendment provisions of this Section 8.1 or the terms of the termination provisions of Section 8.2.  

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8.2    Termination.
(a)    Company’s Right to Terminate.  The Board may terminate the Plan at any time, if in the Board’s judgment, the continuance of the Plan would not be in the Company’s best interest due to tax, accounting or other effects thereof, or potential payouts thereunder, or other reasons, provided that any termination of the Plan shall not be effective prior to the date that is two years after the date the Board adopts a resolution to terminate the Plan, unless (i) the termination of the Plan is required by a change in the tax or other applicable laws or accounting rules, or (ii) the Participants have become subject to tax on the amounts deferred under the Plan.  Notwithstanding the foregoing, following a Change in Control, the Plan may not be terminated prior to the date that is three years after the date the Change in Control occurs, or, if earlier, the date on which amounts deferred under the Plan have become taxable to Participants.  In the event the Board adopts a resolution terminating the Plan, the Board or the Committee shall determine the date as of which deferral elections shall cease to have effect in accordance with the requirements of Code Section 409A.
(b)    Payments Upon Termination.  Distributions to the Participants or their Beneficiaries shall be made on the dates on which the Participants or their Beneficiaries would receive benefits hereunder without regard to the termination of the Plan, except that payments may, in the discretion of the Board, be accelerated if:
(i)    The Plan is terminated and liquidated pursuant to Section 5.6 of the Plan;  

(ii)    Accelerated payment is otherwise permitted by Treas. Reg. § 1.409A‐3(j)(4)(ix) (or any successor provision) or other guidance issued by the Secretary of the Treasury, or 

(iii)    The Plan is terminated because Participants have become subject to tax on their deferrals due to the Plan’s failure to satisfy the requirements of Code Section 409A.  Payment to a Participant may not exceed the amount required to be included in income as a result of such failure.

ARTICLE IX
MISCELLANEOUS
9.1    Unsecured General Creditor.  The rights of a Participant, Beneficiary, or their heirs, successors, and assigns, as relates to any Company promises hereunder, shall not be secured by any specific assets of the Company, nor shall any assets of the Company be designated as attributable or allocated to the satisfaction of such promises.
9.2    Trust Fund.  The Company shall be responsible for the payment of all benefits provided under the Plan.  At its discretion, the Company may establish one or more trusts, with such trustees as the Board or Committee may approve, for the purpose of providing for the payment of such benefits.  Such trust or trusts may be irrevocable, but the assets thereof shall be 

27

subject to the claims of the Company’s creditors.  To the extent any benefits provided under the Plan are actually paid from any such trust, the Company shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Company.  No assets shall be transferred to a trust if such transfer would result in the taxation of benefits prior to distribution under Code Section 409A(b). 
9.3    Nonassignability.  
(a)    Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable and non-transferable.  No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.  
(b)    Notwithstanding subsection (a), the right to benefits payable with respect to a Participant pursuant to a Qualified Divorce Order may be created, assigned, or recognized.  The Committee shall establish appropriate policies and procedures to determine whether a Divorce Order presented to the Committee constitutes a Qualified Divorce Order under this Plan, and to administer distributions pursuant to the terms of Qualified Divorce Orders.  In the event that a Qualified Divorce Order exists with respect to benefits payable under the Plan, such benefits otherwise payable to the Participant specified in the Qualified Divorce Order shall be payable to the Alternate Payee specified in such Qualified Divorce Order.  
9.4    Release from Liability to Participant.  A Participant’s right to receive benefits under the Plan shall be reduced to the extent that any portion of a Participant’s Deferral Account(s) has been paid or set aside for payment to an Alternate Payee pursuant to a Qualified Divorce Order.  The Participant shall be deemed to have released the Company and the Plan from any claim with respect to such amounts in any case in which (a) the Company, the Plan, or any Plan representative has been served with legal process or otherwise joined in a proceeding relating to such amounts, and (b) the Participant fails to obtain an order of the court in the proceeding relieving the Company and the Plan from the obligation to comply with the judgment, decree or order.  
9.5    Employment Not Guaranteed.  Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant any right to be retained in employment with the Company.  Accordingly, subject to the terms of any written employment agreement to the contrary, the Company shall have the right to terminate or change the terms of employment of a Participant at any time and for any reason whatsoever, with or without cause.
9.6    Gender, Singular & Plural.  All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine as the identity of the person or persons may require.  As the context may require, the singular may be read as the plural and the plural as the singular.

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9.7    Captions.  The captions of the articles, sections, and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
9.8    Validity.  In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan.
9.9    Notice.  Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company.  Such notice shall be deemed given as to the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
9.10    Applicable Law.  The Plan shall be governed by and construed in accordance with Code Section 409A, and any regulations promulgated thereunder.  To the extent that the Plan covers individuals who first became Participants prior to January 1, 2017 (including their Beneficiaries and others claiming benefits through such Participants), it shall be governed in accordance with the laws of the State of California to the extent such laws are not preempted by ERISA.  To the extent that the Plan covers individuals who first become Participants on or after January 1, 2017 (including their Beneficiaries and others claiming benefits through such Participants), it shall be governed in accordance with the laws of the State of Texas to the extent such laws are not preempted by ERISA.

29amendmentno3topropertyma

                                                               Execution Version           AMENDMENT NO. 3 TO THE SECOND AMENDED AND RESTATED             PROPERTY MANAGEMENT AND SERVICING AGREEMENT          This Amendment No. 3 to the Second Amended and Restated Property Management and   Servicing Agreement (this “Amendment”), is entered into as of this 1st day of November, 2018,   by and among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding   III, LLC, Spirit Master Funding VI, LLC and Spirit Master Funding VIII, LLC, each as an issuer   (each, an “Issuer” and, collectively, the “Issuers”), Spirit Realty, L.P. (“Spirit Realty”), as   property manager and special servicer (together with its successors in such capacities, the   “Property Manager” and “Special Servicer,” respectively), Midland Loan Services, a division   of PNC Bank, National Association, as Back-Up Manager (together with its successors in such  capacity, the “Back-Up Manager”).                                    WITNESSETH:          WHEREAS, the Issuers, the Property Manager, the Special Servicer and the Back-Up   Manager entered into that certain Second Amended and Restated Property Management and   Servicing Agreement, dated as of May 20, 2014 (as amended by Amendment No. 1 thereto, dated   as of November 26, 2014 and Amendment No. 2 thereto, dated as of December 14, 2017, the   “Property Management Agreement”);          WHEREAS, Article VIII of the Second Amended and Restated Master Indenture, dated as   of May 20, 2014, as amended by Amendment No. 1 thereto, dated as of November 26, 2014,   Amendment No. 2 thereto, dated as of December 14, 2017, Amendment No. 3 thereto, dated as of   January 29, 2018 and Amendment No. 4 thereto, dated as of the date hereof (as so amended, the   “Master Indenture”), among the Issuers and the Indenture Trustee, and Section 9.01 of the   Property Management Agreement permit amendments to the Property Management Agreement   subject to certain conditions set forth therein;          WHEREAS, the Issuers have entered into that certain Series 2018-1 Supplement to the   Master Indenture related to the issuance by the Issuers of $50,000,000 Net-Lease Mortgage   Notes, Series 2018-1, Class A (the  “Series 2018-1 Notes”) on the date hereof (the “Series 2018-  1 Notes Issuance”), which constitutes a New Issuance (as defined in the Master Indenture);                  WHEREAS,  Section 8.04 of the Master Indenture authorizes the Issuers and the other  parties thereto to amend, modify or supplement any of the Transaction Documents, including the   Property Management Agreement, without the consent of the Noteholders, in connection with any   New Issuance, including the Series 2018-1 Notes Issuance; provided that consent of holders of   100% of the Aggregate Series Principal Balance affected by such amendment, modification or   supplement is required if the related amendments, modifications or supplements to such  Transaction Document is set forth in Section 8.04(a)(1)-(7) of the Master Indenture;         WHEREAS, the parties hereto desire, in accordance with Article VIII of the Master  Indenture and Section 9.01 of the Property Management Agreement, to amend the Property  Management Agreement as provided herein, which amendments, modifications and supplements  are not enumerated in Section 8.04(a)(1)-(7) of the Master Indenture; and         US-DOCS\102978699.3  

 

      NOW, THEREFORE, based upon the mutual promises and agreements contained herein,  and for other good and valuable consideration, the receipt and sufficiency of which are hereby  acknowledged, the undersigned, intending to be legally bound, hereby agree as follows:                                  AGREEMENTS         1.    Defined Terms.  All capitalized terms not otherwise defined herein shall have the  meanings assigned thereto in the Property Management Agreement and if not defined therein, shall  have the meaning assigned thereto in the Master Indenture.         2.    Amendments to the Property Management Agreement. As of the date hereof, the  Property Management Agreement is hereby amended to delete the stricken text (indicated textually  in the same manner as the following example: stricken text) and to add the bold and double- underlined text (indicated textually in the same manner as the following example: bold and  double-underlined text) as set forth on the pages of the Property Management Agreement  attached as Exhibit A hereto (the “Amended Property Management Agreement”).         3.    Reference to and Effect on the Property Management Agreement; Ratification.         (a)   Except as specifically amended above, the Property Management Agreement is and  shall continue to be in full force and effect and is hereby ratified and confirmed in all respects.         (b)   Except as expressly set forth above, the execution, delivery and effectiveness of   this Amendment shall not operate as a waiver of any right, power or remedy of any party hereto   under the Master Indenture or the Property Management Agreement, or constitute a waiver of   any provision of any other agreement.         (c)   Upon the effectiveness hereof, each reference in the Property Management to “this   Agreement”, “Property Management Agreement”, “Second Amended and Restated Property   Management and Servicing Agreement”, “hereto”, “hereunder”, “hereof” or words of like   import referring to the Property Management Agreement, and each reference in any other   Transaction Document to “Property Management Agreement”, “Second Amended and Restated   Property Management Agreement”, “thereto”, “thereof”, “thereunder” or words of like import   referring to the Property Management Agreement shall mean and be a reference to the Property   Management Agreement as amended hereby.         4.    Effectiveness. This Amendment shall be effective upon delivery of executed  signature pages by all parties hereto. The parties hereto agree and acknowledge that the  amendments, modifications set forth herein are being made in connection with a New Issuance  and that the related amendments, modifications and supplements are not of the type described in  Section 8.04(a)(1)-(7) of the Master Indenture.         5.    Counterparts; Facsimile Signature. This Amendment may be executed  simultaneously in any number of counterparts, each of which shall be deemed to be an original,  and all such counterparts shall constitute but one and the same instrument. Delivery of an executed  counterpart of a signature page of this Amendment in Portable Document Format (PDF) or by  facsimile transmission shall be as effective as delivery of a manually executed original counterpart  of this Amendment.                                         2  US-DOCS\102978699.3  

 

      6.    Governing Law.  THIS AMENDMENT SHALL BE CONSTRUED IN  ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE                OF NEW YORK  APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE  (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES), AND THE  OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL  BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.         7.    Headings.  The descriptive headings of the various sections of this Amendment are  inserted for convenience of reference only and shall not be deemed to affect the meaning or  construction of any of the provisions thereof.         8.    Severability.  The failure or unenforceability of any provision hereof shall not affect  the other provisions of this Amendment. Whenever possible each provision of this Amendment  shall be interpreted in such manner as to be effective and valid under applicable law, but if any  provision of this Amendment shall be prohibited by or invalid under applicable law, such provision  shall be ineffective to the extent of such prohibition or invalidity, without invalidating the  remainder of such provision or the remaining provisions of this Amendment.         9.    Interpretation.  Whenever the context and construction so require, all words used  in the singular number herein shall be deemed to have been used in the plural, and vice versa, and  the masculine gender shall include the feminine and neuter and the neuter shall include the  masculine and feminine.                  [Remainder of Page Intentionally Blank; Signature Pages Follow]                                         3  US-DOCS\102978699.3  

 

           IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be  duly executed by their respective officers or representatives all as of the day and year first above  written.                                      SPIRIT MASTER FUNDING, LLC, as Issuer                                      By: SMTA SPE Manager, LLC, a Delaware limited                                        liability company                                     Its: Manager                                      By: ------F--lf------­                                       Name:  Ricardo Rodriguez                                        Title: Authorized Signatory                                      SPIRIT MASTER FUNDING II, LLC, as Issuer                                      By: SMTA SPE Manager, LLC, a Delaware limited                                        liability company                                     Its: Manager                                      By: ____<".....: =====~,;2::f!=~ =-------                                       Name:  Ricardo~guez                                        Title: Authorized Signatory                                      SPIRIT MASTER FUNDING III, LLC, as Issuer                                      By: SMTA SPE Manager, LLC, a Delaware limited                                        liability company                                     Its: Manager                                      By:                                        Name:  Ricardo f odriguez                                        Title: Authorized Signatory    [Amendment No. 3 to the Second Amended and Restated Property Management and Sen,icing Agreement]  

 

                                   SPIRIT MASTER FUNDING VI,  LLC, as Issuer                                      By: SMTA SPE Manager, LLC, a Delaware limited                                        liability company                                     Its: Manager                                       B~ N~ ~- e-: -~~~-fil~~~R- o-~- -~- e_z ___                                         Title: Authorized Signatory                                      SPIRIT MASTER FUNDING VIII, LLC, as Issuer                                      By: SMTA  SPE Manager, LLC, a Delaware limited                                        liability company                                     Its: Manager                                       By: -----11:/:,=l=--...:::;._-----                                       N~e:                                        Title:    [Amendment No. 3 to the Second Amended and Restated Property Management and Servicing Agreement]  

 

                                   SPIRIT REALTY, L.P.                                     By: Spirit General OP Holdings, LLC, a Delaware                                     limited liability company                                     lffi: Gen~     ~c                                     ;--?~----                                       Name: Michael Hughes                                        Title: Executive Vice President, Chief                                             Financial Officer and Treasurer    [Amendment No. 3 to the Second Amended and Restated Property Management and Servicing Agreement]  

 

                                    MIDLAND LOAN SERVICES, A                                      DIVISION OF PNC BANK, NATIONAL                                      ASSOCIATION, as Back-Up Manager                                        By:    C/J;:.,t c. -tEz__                                          Name:  David A Eckels                                          Title: Senior Vice President    [Amendment No. 3 to the Second Amended and Restated Property Management and Servicing Agreement]  

 

                                                                                                                  EXHIBIT A                                                                Amended Property Management Agreement                                                                            [See attached.]      US-DOCS\102978699.3  

 

                                Conformed Copy of Property Management Agreement         (reflects updates pursuant to Amendment No. 13 dated as of November 26 1, 2014 2018)                              and Amendment No. 2 dated as of December 14, 2017)    SPIRIT MASTER FUNDING, LLC, SPIRIT MASTER FUNDING II, LLC AND SPIRIT                         MASTER FUNDING III, LLC                                each, as Issuer,                                     and                            EACH JOINING PARTY                               each, as Issuer,                             SPIRIT REALTY, L.P.                    as Property Manager and Special Servicer and        MIDLAND LOAN SERVICES, A DIVISION OF PNC BANK, NATIONAL                               ASSOCIATION                             as Back-Up Manager        SECOND AMENDED AND RESTATED PROPERTY MANAGEMENT AND                          SERVICING AGREEMENT                            Dated as of May 20, 2014                             Net-Lease Mortgage Notes   US-DOCS\ 96557504.7 102826315.7 

 

                          TABLE OF CONTENTS                                                                      Page  Article I DEFINITIONS                                                 1        Section 1.01 Defined Terms                                      1       Section 1.02 Other Definitional Provisions                     32       Section 1.03 Certain Calculations in Respect of the Leases and the Mortgage                  Loans                                               33       Section 1.04 Fee Calculations; Interest Calculations           34  Article II REPRESENTATIONS AND WARRANTIES; RECORDINGS AND       FILINGS; BOOKS AND RECORDS; DEFECT, BREACH, CURE,       REPURCHASE AND SUBSTITUTION; FINANCIAL COVENANTS               35        Section 2.01 Representations and Warranties of the Property Manager and the                  Back-Up Manager                                     35       Section 2.02 Representations and Warranties of the Issuers     38       Section 2.03 Recordings and Filings; Books and Records         39       Section 2.04 Repurchase or Transfer for Collateral Defects and Breaches of                  Representations and Warranties                      41       Section 2.05 Non-Petition                                      43  Article III ADMINISTRATION AND SERVICING OF MORTGAGED PROPERTIES       AND LEASES                                                     44        Section 3.01 Administration of the Mortgaged Properties, Leases and Mortgage                  Loans                                               44       Section 3.02 Collection of Lease Payments and Loan Payments; Lockbox                  Accounts; Lockbox Transfer Accounts                 45       Section 3.03 Collection of Real Estate Taxes and Insurance Premiums; Servicing                  Accounts; Property Protection Advances; P&I Advances;                  Emergency Property Expenses                         46       Section 3.04 Collection Account; Release Account; Exchange Reserve Account 52       Section 3.05 Withdrawals From the Collection Account and the Release Account 54       Section 3.06 Investment of Funds in the Collection Account and the Release                  Account                                             55       Section 3.07 Maintenance of Insurance Policies; Errors and Omissions and Fidelity                  Coverage                                            57       Section 3.08 Enforcement of Alienation Clauses; Consent to Assignment 60       Section 3.09 Realization Upon Specially Serviced Assets.       60       Section 3.10 Issuers, Custodian and Indenture Trustee to Cooperate; Release of                  Lease Files and Loan Files                          63       Section 3.11 Servicing Compensation; Interest on Property Protection Advances 65       Section 3.12 Property Inspections; Collection of Financial Statements; Delivery of                  Certain Reports                                     68                                      i US-DOCS\ 96557504.7 102826315.7 

 

      Section 3.13 Annual Statement as to Compliance                 69       Section 3.14 Reports by Independent Public Accountants.        69       Section 3.15 Access to Certain Information; Delivery of Certain Information 69       Section 3.16 Title to REO Property                             70       Section 3.17 Management of REO Properties and Mortgaged Properties relating                  to Defaulted Assets                                 70       Section 3.18 Sale and Exchange of Mortgage Loans, Leases and Mortgaged                  Properties                                          71       Section 3.19 Modifications, Waivers, Amendments and Consents.  72       Section 3.20 Transfer of Servicing Between Property Manager and Special                  Servicer; Record Keeping                            73       Section 3.21 Sub-Management Agreements                         74  Article IV REPORTS                                                   76        Section 4.01 Reports to the Issuers, the Indenture Trustee and the Insurers 76       Section 4.02 Use of Agents                                     77  Article V THE PROPERTY MANAGER AND THE SPECIAL SERVICER              78        Section 5.01 Liability of the Property Manager and the Special Servicer 78       Section 5.02 Merger, Consolidation or Conversion of the Property Manager and                  the Special Servicer                                78       Section 5.03 Limitation on Liability of the Property Manager, the Special Servicer                  and the Back-Up Manager; Environmental Liabilities  78       Section 5.04 Term of Service; Property Manager and Special Servicer Not to                  Resign                                              79       Section 5.05 Rights of Certain Persons in Respect of the Property Manager and the                  Special Servicer                                    80       Section 5.06 [Reserved]                                        81       Section 5.07 Property Manager or Special Servicer as Owner of Notes 81  Article VI SERVICER REPLACEMENT EVENTS                               81        Section 6.01 Servicer Replacement Events                       81       Section 6.02 Successor Property Manager                        86       Section 6.03 Additional Remedies of the Issuers and the Indenture Trustee upon a                  Servicer Replacement Event                          88       Section 6.04 Replacement of the Servicer.                      88  Article VII TRANSFERS AND EXCHANGES OF MORTGAGED PROPERTIES AND       MORTGAGE LOANS BY THE APPLICABLE ISSUERS; RELEASE OF       MORTGAGED PROPERTIES AND MORTGAGE LOANS BY THE       APPLICABLE ISSUERS.                                            89        Section 7.01 Released Mortgage Loans and Released Mortgaged Properties 89                                      ii US-DOCS\ 96557504.7 102826315.7 

 

      Section 7.02 Third Party Purchase Options; Release of Mortgaged Properties to                  Affiliates under Defaulted or Delinquent Assets; Early Refinancing                  Prepayment; Other Sales or Exchanges                94       Section 7.03 Transfer of Lease to New Mortgaged Property.      95       Section 7.04 Criteria Applicable to all Mortgage Properties and Mortgage Loans                  included in the Collateral Pool                     96       Section 7.05 Restrictions on Environmental Condition Mortgaged Properties 96       Section 7.06 Terminated Lease Property.                        96  Article VIII TERMINATION                                             97        Section 8.01 Termination Upon Repurchase or Liquidation of All Mortgaged                  Properties or Discharge of Indenture                97  Article IX MISCELLANEOUS PROVISIONS                                  97        Section 9.01 Amendment.                                        97       Section 9.02 Counterparts.                                     97       Section 9.03 GOVERNING LAW                                     97       Section 9.04 Notices                                           98       Section 9.05 Severability of Provisions                        99       Section 9.06 Effect of Headings and Table of Contents          99       Section 9.07 Notices to Rating Agencies                        99       Section 9.08 Successors and Assigns: Beneficiaries            100       Section 9.09 Complete Agreement                               100       Section 9.10 [Reserved].                                      100       Section 9.11 Consent to Jurisdiction                          100       Section 9.12 No Proceedings                                   100                                      iii US-DOCS\ 96557504.7 102826315.7 

 

                               EXHIBITS  EXHIBIT A-1    MORTGAGED PROPERTY SCHEDULE  EXHIBIT A-2    MORTGAGE LOAN SCHEDULE  EXHIBIT B      FORM OF REQUEST FOR RELEASE — PROPERTY MANAGER  EXHIBIT C      FORM OF REQUEST FOR RELEASE — SPECIAL SERVICER  EXHIBIT D      FORM OF LIMITED POWERS OF ATTORNEY FROM ISSUER OR                INDENTURE TRUSTEE  EXHIBIT E      CALCULATION OF FIXED CHARGE COVERAGE RATIOS  EXHIBIT F      FORM OF DETERMINATION DATE REPORT  EXHIBIT G      FORM OF JOINDER AGREEMENT  EXHIBIT H      INDENTURE                                      iv US-DOCS\ 96557504.7 102826315.7 

 

      This SECOND AMENDED AND RESTATED PROPERTY MANAGEMENT AND SERVICING AGREEMENT, dated as of May 20, 2014 (as amended, modified or otherwise modified, the “ Agreement ”), is made among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC, and each Joining Party, each as an issuer (each, an “Issuer ” and, collectively, the “ Issuers ”), Spirit Realty, L.P. (“ Spirit Realty ”), as property manager and special servicer (together with its successors in such capacities, the “ Property Manager ” and “ Special Servicer ,” respectively), and Midland Loan Services, a division of PNC Bank, National Association, as Back-Up Manager (together with its successors in such capacity, the “ Back-Up Manager ”).                          PRELIMINARY STATEMENT        As of the Applicable Series Closing Date, the Issuers own the Mortgaged Properties and related Leases as indicated on Exhibit A-1  and the Mortgage Loans as indicated on Exhibit A-2 and each Issuer has pledged such Mortgaged Properties, Leases and Mortgage Loans owned by it to the Indenture Trustee as security for the indebtedness evidenced by the Indenture and each Series of Notes issued under the Indenture. Spirit Realty has agreed to provide property management services with respect to the Mortgaged Properties and to service the Leases and the Mortgage Loans as set forth herein.                                   ARTICLE I                                DEFINITIONS        Section 1.01 Defined Terms .        Whenever used in this Agreement, including in the Preliminary Statement, the words and phrases set forth below, unless the context otherwise requires, shall have the meanings specified in this Section 1.01 . Capitalized terms used in this Agreement, including the Preliminary Statement, and not defined herein, unless the context otherwise requires, shall have the respective meanings specified in Section 1.01 of the Indenture (as defined below).        “30/360 Basis ”: The accrual of interest calculated on the basis of a 360-day year consisting of twelve 30-day months.        “Account Control Agreement ”: An agreement with respect to a deposit account or a securities account, in form and substance satisfactory to the Indenture Trustee, pursuant to which the institution at which such account is maintained agrees to follow the instructions or entitlement orders, as the case may be, of the Indenture Trustee with respect thereto.        “Additional Rent ”: With respect to any Lease, in addition to fixed rent or base rent thereunder, rent, if any, calculated as a percentage of the total sales generated by the related Tenant at the related Mortgaged Property.                                      1 US-DOCS\ 96557504.7 102826315.7 

 

      “Additional Servicing Compensation ”: Property Manager Additional Servicing Compensation and/or Special Servicer Additional Servicing Compensation, as the context may require.        “Advance ”: Any Property Protection Advance and/or P&I Advance, as the context may require.        “Advance Interest ”: Interest accrued on any unreimbursed Advance at the Reimbursement Rate and payable to the Property Manager, Indenture Trustee or the Back-Up Manager, as the case may be, in accordance with the terms hereof.        “Aggregate Collateral Value ”: As defined in the Indenture.        “Aggregate Collateral Value of Post-Closing Properties ”: Unless otherwise specified  in the applicable Series Supplement, $282,440,000.        “Aggregate Note Principal Balance ”: As defined in the Indenture.        “Aggregate Series Principal Balance ”: As defined in the Indenture.        “Allocated Loan Amount ”: For any Mortgage Loan or Mortgaged Property (that does  not otherwise secure a Mortgage Loan) as of any date of determination, the product of (i) the  Aggregate Series Principal Balance and (ii) a fraction, (a) the numerator of which is the  Collateral Value of such Mortgage Loan or Mortgaged Property, as applicable and (b) the  denominator of which is the Aggregate Collateral Value.         “ Applicable Series Closing Date ”: May 20, 2014.        “Appraised Value ”:  (X) For any Mortgaged Property included (or to be included) in the Collateral Pool or securing a Mortgage Loan included (or to be included) in the Collateral Pool other than an Equipment Loan, an appraised value determined pursuant to an independent MAI appraisal in accordance with the Uniform Standards of Professional Appraisal Practice (as recognized by the Financial Institutions Reform, Recovery and Enforcement Act of 1989) and which takes into account the leased fee value of the related buildings and land of such Mortgaged Property, consistent with industry standards, and excludes the value of equipment and other tangible personal property and business enterprise value, and (1) with respect to any Mortgage Loan (other than an Equipment Loan) included in the Collateral Pool as of a Series Closing Date (including the Applicable Series Closing Date), is the most recent full narrative (complete summary) or limited scope (limited restricted) MAI appraisal obtained by the Property Manager with respect to the related Mortgaged Property, (2) with respect to any Mortgaged Property included in the Collateral Pool as of a Series Closing Date (including the Applicable Series Closing Date), is the most recent full narrative (complete summary) or limited scope (limited restricted) MAI appraisal obtained by the Property Manager with respect to such Mortgaged Property or (3) with respect to any Qualified Substitute Mortgage Loan or Qualified Substitute Mortgaged Property added (or to be added) to the Collateral Pool since the most recent Series Closing Date (including the Applicable Series Closing Date), is either (a) a full narrative (complete summary) MAI appraisal or (b) with respect to a related Mortgaged Property operated within the Restaurant/Casual Dining Business Sector (as defined in the Indenture), a                                     2 US-DOCS\ 96557504.7 102826315.7 

 

limited scope (limited restricted) MAI appraisal obtained within 12 months prior to the date such Qualified Substitute Mortgage Loan or Qualified Substitute Mortgaged Property is pledged as part of the Collateral Pool; provided , that, in the event that, at any time subsequent to a Series Closing Date, in accordance with the Servicing Standard, the Property Manager or Special Servicer determines that obtaining a new Appraised Value is necessary, a full narrative (complete summary) or, with respect to a related Mortgaged Property operated within the Restaurant/Quick Service Business Sector, limited scope (limited restricted) MAI appraisal obtained by the Property Manager or the Special Servicer with respect to such Mortgaged Property or (Y) for any Equipment Loan included or to be included in the Collateral Pool, as specified in the most recent Series Supplement.        “Asset File ”: A Loan File or a Lease File, as the context requires.        “Assignment of Leases ”: With respect to any Mortgage Loan, any assignment of leases, rents and profits or similar document or instrument executed by the Borrower in connection with the origination or subsequent modification or amendment of the related Mortgage Loan.        “Authorized Officer ”: With respect to an Issuer, any person who is authorized to act for such Issuer and who is identified on the list delivered by such Issuer to the Indenture Trustee on each Series Closing Date (as such list may be modified or supplemented from time to time thereafter by the Issuer).        “Available Amount ”: The Available Amount for any Payment Date will consist of the aggregate of all amounts received in respect of the Collateral Pool during the immediately preceding Collection Period and on deposit in the Collection Account on the immediately preceding Determination Date, including amounts earned, if any, on the investment of such funds on deposit in the Collection Account  and , the Release Account and the Exchange Reserve Account  during the immediately preceding Collection Period, Unscheduled Proceeds, amounts received on account of payments under any Guaranties, and any amounts received on account of payments under the Performance Undertakings and the Environmental Indemnity Agreements, any amounts released from the Liquidity Reserve Account to be treated as Available Amounts in accordance with the Indenture on such Payment Date, and any amounts released from the Cashflow Coverage Reserve Account to be treated as Available Amounts in accordance with the Indenture on such Payment Date and any other amounts deposited in the Payment Account in order to be applied as Available Amounts on such Payment Date, but excluding (i) amounts on deposit in the Release Account and not transferred to the Collection Account for such Payment Date, (ii) the amount of any collections allocated to Companion Loans, if any, as provided in the applicable Pari Passu Co-Lender Agreements, (iii) the amount of any Additional Servicing Compensation, (iv) amounts received on account of Excess Cashflow (so long as no Early Amortization Event or Sweep Period has occurred and is continuing), (v) amounts withdrawn from the Collection Account to reimburse the Property Manager, the Back-Up Manager or the Indenture Trustee, as applicable, for any unreimbursed Advances (plus interest thereon) and to pay the Property Management Fee, the Back-Up Fee, any Special Servicing Fee, Workout Fees or Liquidation Fees and any Emergency Property Expenses, (vi) amounts required to be paid by any Issuer as the lessor under the related Leases in respect of sales taxes, (vii) Third Party Option Expenses, (viii) any amount received from a Tenant or Borrower as reimbursement for any cost paid by or on behalf of any Issuer as lessor or lender under a related Lease or Mortgage Loan, as                                     3 US-DOCS\ 96557504.7 102826315.7 

 

applicable, and (ix) any amounts collected by or on behalf of any Issuer as lender or lessor and held in escrow or impound to pay future obligations due under a Mortgage Loan or Lease, as applicable.  For the avoidance of doubt, proceeds of draws under Variable Funding Notes shall not constitute Available Amounts.        “Average Cashflow Coverage Ratio ”: With respect to any Determination Date, the average of the Cashflow Coverage Ratios for such Determination Date and each of the two immediately preceding Determination Dates; provided, however, that the Average Cashflow Ratio shall not be calculated until the third Determination Date following the Applicable Series Closing Date.        “Back-Up Fee ”: With respect to each Mortgage Loan and each Mortgaged Property (that does not otherwise secure a Mortgage Loan), the fee payable to the Back-Up Manager pursuant to Section 3.11(h) .        “Back-Up Fee Rate ”: With respect to each Mortgage Loan and each Mortgaged Property, a fixed percentage rate equal to 0.0100% per annum.        “Back-Up Manager ”: Midland Loan Services, a division of PNC Bank, National Association, a Delaware corporation, or its successor in interest.        “Balloon Loan ”: Mortgage Loans which have substantial payments of principal (relative to the initial principal balance of such Mortgage Loan) due at their stated maturities.        “Bankruptcy Code ”: The federal Bankruptcy Code of 1978, Title 11 of the United States Code, as amended from time to time.        “Borrower ”: For any Mortgage Loan, the obligor or obligors on the related Mortgage Note, including any Person that has acquired the related collateral and assumed the obligations of the original obligor or obligors under such Mortgage Note.        “Business Day ”: Any day other than a Saturday, a Sunday or a day on which banking institutions are authorized or obligated by law or executive order to remain closed in New York, New York, Scottsdale, Arizona, or any other city in which is located the principal office of an Issuer, the Primary Servicing Office of the Property Manager or the Special Servicer or the Indenture Trustee’s office.        “Cashflow Coverage Ratio ”: With respect to any Determination Date and the Collateral Pool, the ratio, expressed as a fraction, the numerator of which is the Cashflow Coverage Ratio Numerator for such Determination Date, and the denominator of which is the Total Debt Service for such Determination Date.        “Cashflow Coverage Ratio Numerator ”: With respect to any Determination Date, the sum of (i) the Monthly Loan Payments and the Monthly Lease Payments received during the Collection Period ending on such Determination Date, (ii) any income earned from the investment of funds on deposit in the Collection Account and the Release Account during the Collection Period ending on such Determination Date, (iii) any Liquidity Reserve Amounts and                                     4 US-DOCS\ 96557504.7 102826315.7 

 

(iv) any net payments received by any Issuer under the applicable hedge agreements for any Series of Notes for the Payment Date relating to such Determination Date.        “Cashflow Coverage Reserve Account ”: As defined in the Indenture.        “CERCLA ”: The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.        “Closing Date Period ” means the period from (and including) the most recent Series Closing Date until (and excluding) the next occurring Series Closing Date; provided , that the initial Closing Date Period shall commence on the Applicable Series Closing Date.        “Code ”: The Internal Revenue Code of 1986, as amended.        “Collateral ”: As defined in the Indenture.        “Collateral Agent ”: As defined in the Indenture.        “Collateral Defect ”: As defined in Section 2.04(a) .        “Collateral Pool ”: As defined in the Indenture.        “Collateral Value ”: As of any determination date (i) with respect to each Mortgaged Property (that does not otherwise secure a Mortgage Loan), the Appraised Value of such Mortgaged Property as of the First Collateral Date with respect thereto, (ii) with respect to each Mortgage Loan, the lesser of (a) the Appraised Value of the related Mortgaged Property or Mortgaged Properties securing such Mortgage Loan and (b) the outstanding principal balance of such Mortgage Loan, or (iii) with respect to each potential Post-Closing Property identified on Exhibit I, until the earlier of the Post-Closing Acquisition Date and the Post-Closing Deadline, the “Collateral Value” specified for such property on Exhibit I; provided , that, with respect to clause (i) and (ii), in the event that the Property Manager has caused a Global Appraisal Event to occur, the “Appraised Value” of such Mortgaged Property will be the Re-Appraised Value determined with respect to such Mortgaged Property in connection with such Global Appraisal Event.        “Collection Account ”: The segregated account or accounts created and maintained by the Property Manager in the name of the Indenture Trustee, held on behalf of the Noteholders, for the collection of payments on the Mortgage Loans and Leases.        “Collection Account Agreement ”: As defined in Section 3.04(a) .        “Collection Account Bank ”: As defined in Section 3.04(a) .        “Collection Period ”: With respect to any Payment Date, the period commencing immediately after the Determination Date in the month preceding the month in which such Payment Date occurs and ending on (and including) the Determination Date related to such Payment Date.                                     5 US-DOCS\ 96557504.7 102826315.7 

 

      “Companion Loans ”: A mortgage loan or leasehold interest which is secured, on a pari passu  basis by the same Mortgaged Property that secures a Mortgage Loan included in the Collateral Pool.        “Condemnation Proceeds ”: All proceeds received in connection with the condemnation or remediation of, or granting an easement on, any Mortgaged Property other than proceeds applied to the restoration of such Mortgaged Property or released to the related Tenant or Borrower in accordance with the Servicing Standard.        “Control Person ”: With respect to any Person, anyone that constitutes a “controlling person” of such Person within the meaning of the Securities Act of 1933, as amended.        “Controlling Party ”: As defined in the Indenture.        “Corporate Asset Management Agreement ”: A management agreement entered into by Spirit Realty and Spirit MTA in connection with the Spin-Off pursuant to which Spirit Realty or one of its Affiliates (which may include a Taxable REIT Subsidiary) performs services for Spirit MTA which may include, without limitation, investment management and real estate management and servicing.         “ Corrected Lease ”: Any Specially Serviced Lease with respect to which, as of any date of determination, one or more of the following as are applicable shall have occurred with respect to each Specially Serviced Lease Trigger Event that previously occurred with respect to such Specially Serviced Lease:        (i)  with respect to the circumstances described in clause (a) of the definition of the            term “Specially Serviced Lease”, the related Tenant has made three consecutive            full and timely Monthly Lease Payments under the terms of such Lease (as such            terms may be changed or modified in connection with a bankruptcy or similar            proceeding involving the related Tenant or by reason of a modification, waiver or            amendment granted or agreed to by the Special Servicer) or such Lease has been            terminated and the related Mortgaged Property has been re-leased;        (ii) with respect to the circumstances described in clause (b) of the definition of the            term “Specially Serviced Lease”, such circumstances cease to exist in the good            faith and reasonable judgment of the Special Servicer;        (iii) with respect to the circumstances described in clause (c) of the definition of the            term “Specially Serviced Lease”, the Special Servicer determines that the            applicable Tenant likely will be able to make future Monthly Lease Payments;        (iv) with respect to the circumstances described in clause (d) of the definition of the            term “Specially Serviced Lease”, such default is cured; and        (v)  with respect to the circumstances described in clause (e) of the definition of the            term “Specially Serviced Lease”, such proceedings are terminated.                                      6 US-DOCS\ 96557504.7 102826315.7 

 

      “Corrected Loan ”: Any Specially Serviced Loan with respect to which, as of any date of determination, one or more of the following as are applicable shall have occurred with respect to each Specially Serviced Loan Trigger Event that previously occurred with respect to such Specially Serviced Loan:        (i)  with respect to the circumstances described in clause (a) of the definition of the            term “Specially Serviced Loan”, the related Borrower has made three consecutive            full and timely Monthly Loan Payments under the terms of such Mortgage Loan            (as such terms may be changed or modified in connection with a bankruptcy or            similar proceeding involving the related Borrower or by reason of a modification,            waiver or amendment granted or agreed to by the Special Servicer);        (ii) with respect to the circumstances described in clause (b) of the definition of the            term “Specially Serviced Loan”, such circumstances cease to exist in the good            faith and reasonable judgment of the Special Servicer;        (iii) with respect to the circumstances described in clause (c) of the definition of the            term “Specially Serviced Loan”, the Special Servicer determines that the            applicable Borrower likely will be able to make future Monthly Loan Payments;        (iv) with respect to the circumstances described in clause (d) of the definition of the            term “Specially Serviced Loan”, such default is cured; and        (v)  with respect to the circumstances described in clause (e) of the definition of the            term “Specially Serviced Loan”, such proceedings are terminated.        “Cure Party ”: (i) With respect to any Mortgaged Property, Mortgage Loan, Qualified Substitute Mortgage Loan or Qualified Substitute Mortgaged Property acquired by the applicable Issuer from an Originator, such Originator; (ii) with respect to any Mortgage Loan, Mortgaged Property, Qualified Substitute Mortgaged Property or Qualified Substitute Mortgage Loan acquired by the applicable Issuer from a third party unaffiliated with Spirit Realty, such Issuer; and (iii) in the case of either of (i) or (ii), the Support Provider under the Performance Undertaking.        “Custodian ”: As defined in the Indenture.        “Custodian Inventory List ”: As defined in the Custody Agreement.        “Custody Agreement ”: The Second Amended and Restated Custody Agreement, dated as of the Applicable Closing Date, among the Issuers, the Indenture Trustee and the Custodian, as the same may be amended or supplemented from time to time.        “Default Interest ”: With respect to any (i) Lease, any amounts collected thereon (other than late payments, late payment charges or amounts representing the Third Party Option Price (without giving effect to clause (ii) in the definition thereof) paid by the related the Tenant) that represent penalty interest accrued at the rate specified in the related lease agreement and (ii) Mortgage Loan, any amounts collected thereon (other than late payments, late payment charges                                     7 US-DOCS\ 96557504.7 102826315.7 

 

or Prepayment Consideration Payments) that represent penalty interest in excess of interest on the principal balance of such Mortgage Loan accrued at the related Interest Rate.        “Defaulted Asset ”: Any Mortgage Loan or Mortgaged Property included in the Collateral Pool, with respect to which a default occurs under the applicable Mortgage Loan or Lease, respectively, that materially and adversely affects the interests of the applicable Issuer and that continues unremedied for the applicable grace period under the terms of such Mortgage Loan or Lease (or, if no grace period is specified, for 30 days).        “Defaulting Party ”: As defined in Section 6.01(b) .        “Delinquent Asset ”: Any Mortgage Loan or Mortgaged Property included in the Collateral Pool (other than a Defaulted Asset), with respect to which any Monthly Loan Payment or Monthly Lease Payment, as applicable, becomes delinquent for 60 or more consecutive days.        “Determination Date ”: With respect to any Payment Date, the 7 th  day of the month in which such Payment Date occurs or, if such 7 th  day is not a Business Day, the Business Day immediately succeeding such 7 th  day.        “Determination Date Report ”: As defined in Section 4.01(a) .        “Due Date ”: With respect to any Mortgage Loan or Lease, the day of each calendar month on which the Monthly Loan Payment or Monthly Lease Payment, as applicable, with respect thereto is due.        “Early Amortization Event ”: As defined in the Indenture.        “Early Refinancing Prepayment ”: As defined in the Series 2017-1 Supplement.        “Eligible Account ”: As defined in the Indenture.        “Eligible Successor ”: An entity which, at the time it is appointed as Successor Property Manager or Successor Special Servicer, (i) is legally qualified and has the capacity to carry out the duties and obligations hereunder of the Property Manager or Special Servicer, as applicable, and (ii) has demonstrated the ability to administer professionally and competently a portfolio of leases, mortgaged properties and mortgage loans that are similar to the Leases, Mortgaged Properties and Mortgage Loans with high standards of skill and care.        “Emergency Property Expenses ”: As defined in Section 3.03(e) .        “Environmental Condition Mortgaged Property ”: Any Mortgaged Property (i) on which a gasoline station or other gasoline pumping facility is operated, (ii) on which, to the Property Manager’s knowledge, oil or other hazardous materials are stored in underground storage tanks, (iii) in the Manufacturing Business Sector or (iv) any other Mortgaged Property that the Property Manager believes, in its reasonable discretion exercised in accordance with the Servicing Standard (including based on the review of any Environmental Report), has a material risk of declining in value due to environmental conditions existing on or in respect of such Mortgaged Property; provided  that no Mortgaged Property described in clauses (i) through (iv)                                     8 US-DOCS\ 96557504.7 102826315.7 

 

shall be an Environmental Condition Mortgaged Property if the Rating Condition is satisfied with respect to the acquisition of such Mortgaged Property by an Issuer.        “Environmental Indemnity Agreement ”: As defined in the Indenture.        “Environmental Insurer ”: Any Qualified Insurer that issues Environmental Policies relating to any of the Mortgage Loans or Mortgaged Properties.        “Environmental Policy ”: Any insurance policy issued by an Environmental Insurer, together with any endorsements thereto, providing insurance coverage for losses, with respect to certain Mortgage Loans or Mortgaged Properties, caused by the presence of hazardous substances on, or the migration of hazardous substances from, the related Mortgaged Properties.        “Equipment Loan ”: Any commercial equipment loan secured by equipment used in the operation of a commercial real estate property and listed on the Mortgage Loan Schedule.        “Escrow Payment ”: Any payment received by the Property Manager or the Special Servicer for the account of any Obligor or otherwise deposited in the Servicing Account for application toward the payment of real estate taxes, assessments, insurance premiums, ground rents (if applicable) and similar items in respect of the related Mortgaged Property.        “Event of Default ”: As defined in the Indenture.        “Excess Cashflow ”: As defined in the Indenture.        “Exchange Act ”: The Securities Exchange Act of 1934, as amended.        “Exchange Account ”: An account established in the name of the Qualified Intermediary in order to receive all proceeds from the sale or disposition of Relinquished Properties.        “Exchange Agreement ”: An agreement entered into a Qualified Intermediary setting forth the terms of a like-kind exchange program.        “Exchange Cash Collateral ”: With respect to any Mortgaged Property which has been released pursuant to Section 7.01(a), an amount provided by the Issuers that is free and clear of all Liens in an amount equal to the Net Release Price thereof that is deposited into the Exchange Reserve Account.        “Exchange Reserve Account ”: As defined in Section 3.04(c) .        “Extraordinary Expense ”: As defined in the Indenture.        “Fair Market Value ”: With respect to any Mortgaged Property or Mortgage Loan secured by a Mortgaged Property, at any time, a price determined by the Property Manager (or by the Special Servicer with respect to a Specially Serviced Asset) in accordance with the Servicing Standard and Section 7.01(b) .                                      9 US-DOCS\ 96557504.7 102826315.7 

 

      “FDIC ”: Federal Deposit Insurance Corporation or any successor.        “Financing Statement ”: A financing statement either filed or recorded or in a form suitable for filing and recording under the applicable Uniform Commercial Code.        “First Collateral Date ”: With respect to any Mortgaged Property or Mortgage Loan, (i) in the event that such Mortgaged Property or Mortgage Loan was (or is) added to the Collateral Pool on a Series Closing Date on which such Issuer became an “Issuer” hereunder, such Series Closing Date or (ii) otherwise, the Transfer Date with respect thereto.        “Fixed Charge Coverage Ratio ” or “ FCCR ”: The fixed charge coverage ratio determined in accordance with the provisions of Exhibit E  attached hereto.        “FNMA ”: Federal National Mortgage Association or any successor.        “GAAP ”: Generally accepted accounting principles as in effect in the United States, consistently applied, as of the date of such application.        “Global Appraisal Event ”: An event that shall occur when the Property Manager, within a one-year period, both (i) causes new Appraised Values to be determined with respect to all of the Mortgaged Properties and (ii) designates (in its sole discretion) that a “Global Appraisal Event” has occurred in connection therewith.        “Granting Clause ”: The Granting Clause set forth in the Indenture.        “Ground Lease ”: With respect to any Mortgaged Property the fee interest in which is owned by an Issuer or the related Borrower, the lease agreement, if any, pursuant to which such Issuer leases the land relating to such Mortgaged Property to the related tenant and such tenant owns the buildings and other improvements on such Mortgaged Property.        “Guaranty ”: With respect to any Lease or Mortgage Loan, the guaranty, if any, related to such Lease or Mortgage Loan executed by an individual or an Affiliate or parent of the Tenant or Borrower, as applicable, in favor of the lessor or the lender, as applicable.        “Hazardous Materials ”: As defined in the Indenture.        “Indenture ”: The Second Amended and Restated Master Indenture, dated as of the Applicable Series Closing Date, among the Issuers and the Indenture Trustee, relating to the issuance of the Notes, including all amendments, supplements and other modifications thereto and any additional indenture between the Indenture Trustee and any Issuer.        “Indenture Trustee ”: Citibank, N.A., a national banking association, in its capacity as indenture trustee under the Indenture, or its successor in interest or any successor indenture trustee appointed as provided in the Indenture.        “Indenture Trustee Fee ”: As defined in the Indenture.                                      10 US-DOCS\ 96557504.7 102826315.7 

 

      “Independent ”:  When used with respect to any specified Person, any such Person who (i) is not an Issuer, an Issuer Member, the Indenture Trustee, the Property Manager, the Special Servicer or an Affiliate thereof, (ii) does not have any direct financial interest in or any material indirect financial interest in any of the Issuers, the Issuer Members, the Indenture Trustee, the Property Manager, the Special Servicer or any of their respective Affiliates, and (iii) is not connected with the Issuers, the Issuer Members, the Indenture Trustee, the Property Manager, the Special Servicer or any of their respective Affiliates as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided , however , that a Person shall not fail to be Independent of the Issuers, the Issuer Members, the Indenture Trustee, the Property Manager, the Special Servicer or an Affiliate thereof merely because such Person is the beneficial owner of 1% or less of any class of securities issued by any Issuer, any Issuer Member, the Indenture Trustee, the Property Manager, the Special Servicer or an Affiliate thereof, as the case may be.        “Initial Purchaser ”: As defined in the Indenture.        “Interest Accrual Period ”: With respect to each Due Date related to any Mortgage Loan, the applicable period specified in the related Loan Documents.        “Interest Rate ”: With respect to any Mortgage Loan, the annualized rate at which interest is scheduled (in the absence of a default) to accrue on such Mortgage Loan from time to time during any Interest Accrual Period in accordance with the related Mortgage Note and applicable law, as such rate may be modified in accordance with Section 3.19  or in connection with a bankruptcy, insolvency or similar proceeding involving the related Borrower.        “Interested Person ”: The Issuers, the Issuer Members, the Property Manager, the Special Servicer, any holder of Notes or an Affiliate of any such Person.        “Issuer ”: Each of Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC, Spirit Master Funding VI, LLC, Spirit Master Funding VIII, LLC and any Joining Party or, in any such case, its successor in interest, as the context may require. References to a “related” or “applicable” Issuer shall refer to the Issuer that owns the Collateral or has issued the Notes being addressed.        “Issuer Member ”: With respect to any Issuer, the holder of the LLC Interests with respect to such Issuer, and with respect to any Joining Party, as indicated in the applicable Joinder Agreement.        “Joinder Agreement ”: With respect to any Series of Notes (other than any Series of Notes that was issued on the Applicable Series Closing Date), the Joinder Agreement, dated as of the applicable Series Closing Date, among the applicable Joining Party, the Property Manager, the Special Servicer and the Back-Up Manager, substantially in the form of Exhibit G attached hereto.        “Joining Party ”: Any Spirit SPE or Support Provider SPE, as indicated in the applicable Joinder Agreement.                                      11 US-DOCS\ 96557504.7 102826315.7 

 

      “Lease ”: Each lease listed on the Mortgaged Property Schedule and from time to time included in the Collateral Pool. As used herein, the term “Lease” includes the related lease agreement and other documents contained in the related Lease File as the context may require.        “Lease Documents ”: Any related lease agreement, non-disturbance agreement, guaranty or other agreement or instrument, to the extent made for the benefit of the related Originator.        “Lease File ”: As defined in the Custody Agreement.        “Lease Security Deposit ”: As defined in Section 3.03(a) .        “Lease Transfer Mortgaged Property ”: As defined in Section 7.03 .        “Like-Kind Exchange Program ”: A like-kind exchange program whereby Relinquished Property may be exchanged with Replacement Property pursuant to an Exchange Agreement with a Qualified Intermediary.        “Liquidated Lease ”: A Defaulted Asset that is a Lease with respect to which the related Mortgaged Property has been either re-leased or sold, or any Lease related to a Mortgaged Property sold, exchanged or otherwise disposed of by such Issuer, whether or not a Defaulted Asset.        “Liquidation Fee ”: The fee payable to the Special Servicer pursuant to Section  3.11(g) .        “Liquidation Fee Rate ”: A percentage equal to 0.50%.        “Liquidation Proceeds ”: All cash proceeds and all other amounts (other than Property Insurance Proceeds and REO Revenues) received by the applicable Issuer, the Property Manager, or the Special Servicer and retained in connection with the liquidation of any Mortgage Loan, Lease or Mortgaged Property which is (or relates to) a Defaulted Asset; all cash proceeds and all other amounts (other than Property Insurance Proceeds and REO Revenues) from the release or substitution of any Mortgage Loan or Mortgaged Property other than to the extent deposited into the Release Account; all proceeds from the investment of funds on deposit in the Release Account; and all cash proceeds from the release or substitution of any Mortgage Loan or Mortgaged Property transferred from the Release Account to the Collection Account pursuant to Section 3.04(b).        “LLC Agreement ”: With respect to (i) any Issuer that constitutes an Issuer as of the date hereof, such Issuer’s limited liability company agreement and (ii) any other Issuer, as indicated in the applicable Joinder Agreement, in each case as the same may be amended from time to time in accordance with the terms thereto and the Indenture.        “LLC Interests ”: The limited liability company interests issued pursuant to an LLC Agreement evidencing beneficial ownership interests in the related Issuer.        “Loan Agreement ”: The agreement pursuant to which a Mortgage Loan was made.                                      12 US-DOCS\ 96557504.7 102826315.7 

 

      “Loan Documents ”: With respect to each of the Mortgage Loans, the related Loan Agreement, if any, and Mortgage Note, and any related Mortgage, Ground Lease, as applicable, Guaranty or other agreement or instrument, to the extent made for the benefit of the related lender or holder of the Mortgage Note.        “Loan File ”: As defined in the Custody Agreement.        “Loan-to-Value Ratio ”: With respect to any Mortgage Loan and any commercial real estate loan proposed to be included in the Collateral Pool as a Qualified Substitute Mortgage Loan, a ratio, expressed as a percentage, the numerator of which is the unpaid principal balance of such Mortgage Loan (or proposed Qualified Substitute Mortgage Loan) and the denominator of which is the Appraised Value of the Mortgaged Property securing such Mortgage Loan (or the Mortgaged Property securing the proposed Qualified Substitute Mortgage Loan).        “Lockbox Account ”: The account or accounts created and maintained pursuant to Section 3.02(b) .        “Lockbox Account Bank ”: As defined in Section 3.02(b) .        “Lockbox Transfer Account ”: The account or accounts created and maintained pursuant to Section 3.02(c) .        “Lockbox Transfer Account Bank ”: As defined in Section 3.02(c) .        “MAI ”: A designation signifying that the designee is a member of the Appraisal Institute, a real estate appraisers and valuation professionals trade group.        “Modified Collateral Detail and Realized Loss Report”: As defined in Section 4.01(c) .        “Monthly Lease Payment ”: With respect to any Lease (except as otherwise described in the Mortgaged Property Schedule), the fixed or “base” rent monthly lease payment that is actually payable by the related Tenant from time to time under the terms of such Lease, after giving effect to any provision of such Lease providing for periodic increases in such fixed or “base” rent by fixed percentages or dollar amounts or by percentages based on increases in a consumer price index.        “Monthly Loan Payment ”: With respect to any Mortgage Loan, the scheduled monthly payment of interest and, if applicable, principal due on such Mortgage Loan that is or would be, as the case may be, payable by the related Borrower on each Due Date under the terms of the related Mortgage Note as in effect on the First Collateral Date with respect to such Mortgage Loan, without regard to any subsequent change in or modification of such terms in connection with a bankruptcy or similar proceeding involving the related Borrower or a modification, waiver or amendment of such Mortgage Loan granted or agreed to by the Special Servicer pursuant to Section 3.19 , and assuming that each prior Monthly Loan Payment has been made in a timely manner.        “Moody’s ”: Moody’s Investors Service, Inc.                                     13 US-DOCS\ 96557504.7 102826315.7 

 

      “Mortgage ”: With respect to any Mortgaged Property, a mortgage (or deed of trust or deed to secure debt), assignment of leases and rents, security agreement and fixture filing or similar document executed by the applicable Issuer or the related Borrower, as applicable, pursuant to which such Issuer or Borrower grants a lien on its interest in such Mortgaged Property in favor of the Collateral Agent or the initial lender of the related Mortgage Loan, as applicable.        “Mortgage Loan ”: Each fixed-rate or adjustable-rate, monthly pay, first lien, commercial mortgage loan secured by fee title to, or leasehold interest in, commercial real estate properties (including each similarly secured, fixed-rate or adjustable-rate, monthly pay, first lien mortgage loan acquired after the applicable Series Closing Date), as listed on the Mortgage Loan Schedule and from time to time included in the Collateral Pool.        “Mortgage Loan Schedule ”: The list of Mortgage Loans transferred to each Issuer as part of the Collateral Pool and attached hereto as Exhibit A-2  (as such list may be amended upon each Series Closing Date and each Transfer Date, and otherwise be amended from time to time in accordance with the Transaction Documents, including to reflect the conveyance by an Issuer of any Mortgage Loan pursuant to the terms hereof). Such list shall set forth the following information with respect to each Mortgaged Loan:        (i)  the street address (including city, state and zip code) of the related Mortgaged            Property (if any);        (ii) the related Issuer loan number and name of Borrower;        (iii) the initial Appraised Value of any related Mortgaged Property; and        (iv) the Mortgage Loan’s maturity date, if applicable.        “Mortgage Note ”: The original executed note evidencing the indebtedness of a Borrower under a Mortgage Loan, together with any rider, addendum or amendment thereto, or any renewal, substitution or replacement of such note.        “Mortgaged Property ”: Each parcel of real property listed on the Mortgaged Property Schedule, the fee or leasehold interest in which is from time to time included in the Collateral Pool, and each parcel of real property or leasehold interest in a commercial real estate property securing a Mortgage Loan, including (to the extent not property of the related Tenant) the buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements or improvements now or hereinafter erected or located on such parcel and appurtenant easements and other property rights relating thereto.        “Mortgaged Property Schedule ”: The list of Mortgaged Properties and Leases transferred to each Issuer as part of the Collateral Pool and attached hereto as Exhibit A-1  (as such list may be amended upon each Series Closing Date and each Transfer Date, and otherwise be amended from time to time in accordance with the Transaction Documents, including to                                      14 US-DOCS\ 96557504.7 102826315.7 

 

reflect the conveyance by an Issuer of any Mortgaged Property pursuant to the terms hereof). Such list shall set forth the following information with respect to each Mortgaged Property:        (i)  the street address (including city, state and zip code) of the Mortgaged Property;        (ii) the related Issuer lease number and name of Tenant;        (iii) the Appraised Value; and        (iv) the Lease’s final payment date.        “Net Assets ” As defined in Section 6.04(b) .        “Net Default Interest ”: With respect to any (i) Lease, any Default Interest collected thereon, net of any unreimbursed Advance Interest accrued on Property Protection Advances made in respect of such Lease and reimbursable from such Default Interest in accordance with the terms hereof and (ii) Mortgage Loan, any Default Interest collected thereon, net of any unreimbursed Advance Interest accrued on Property Protection Advances made in respect of such Mortgage Loan and reimbursable from such Default Interest in accordance with the terms hereof.        “Net Investment Earnings ”: The amount by which the aggregate of all interest and other income realized during a Collection Period on funds held in the Collection Account, the Exchange Reserve Account and/or the Release Account (as the context may require), if any, exceeds the aggregate of all losses, if any, incurred during such Collection Period in connection with the investment of such funds.        “Net Release Price ”: As defined in Section 3.05(b) .        “Nonrecoverable Advance ”: Any Nonrecoverable P&I Advance and/or Nonrecoverable Property Protection Advance, as the context may require.        “Nonrecoverable P&I Advance ”: Any P&I Advance previously made or proposed to be made in respect of any Payment Date, that, as determined by the Property Manager (or, if applicable, the Back-Up Manager or Indenture Trustee), in its commercially reasonable, good faith business judgment and (other than with respect to any such determination made by the Indenture Trustee) in accordance with the Servicing Standard, will not be ultimately recoverable by it from the proceeds on the Collateral Pool allocated in accordance with the priority set forth in Section 2.11  of the Indenture with respect to the payment of Collateral Pool Expenses.        “Nonrecoverable Property Protection Advance ”: Any Property Protection Advance previously made or proposed to be made in respect of a Mortgaged Property (including any Lease related thereto) or Mortgage Loan that, as determined by the Property Manager (or, if applicable, the Back-Up Manager or Indenture Trustee), in its commercially reasonable good faith business judgment and (other than with respect any such determination made by the Indenture Trustee) in accordance with the Servicing Standard, will not be ultimately recoverable from late payments, Property Insurance Proceeds, Liquidation Proceeds or any other recovery on or in respect of the related Mortgage Loan or Mortgaged Property or related Lease with respect                                     15 US-DOCS\ 96557504.7 102826315.7 

 

to which such Property Protection Advance was (or is proposed to be) made (including any Monthly Lease Payments in respect of any Lease added to the Collateral upon any re-leasing of the related Mortgaged Property).        “Note Registrar ”: As defined in the Indenture.        “Notes ”: As defined in the Indenture.        “Noteholders ”: As defined in the Indenture.        “Obligor ”: A Tenant or a Borrower, as the context requires.        “Officer’s Certificate ”: A certificate signed by a Servicing Officer of the Property Manager or the Special Servicer or a Responsible Officer of the Indenture Trustee or the applicable Issuer Member on behalf of an Issuer, as the case may be, and with respect to any other Person, a certificate signed by the Chairman of the Board, the President, a Vice President or Assistant Vice President, the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant Secretaries of such Person.        “Opinion of Counsel ”: A written opinion of counsel (which shall be rendered by counsel that is Independent of the Issuers, the Issuer Members, the Indenture Trustee, the Property Manager and the Special Servicer) in form and substance reasonably acceptable to and delivered to the addressees thereof.        “Originators ”: Collectively, each of Spirit Realty and its Affiliates which has conveyed one or more Mortgage Loans or Mortgaged Properties to an Issuer pursuant to a Property Transfer Agreement or otherwise.        “OTS ”: The Office of Thrift Supervision or any successor thereto.        “P&I Advance ”: As defined in Section 3.03(g)  hereof.        “P&I Shortfall ”: With respect to any Series of Notes and any Payment Date, in the event that the Series Available Amount allocated (or to be allocated) to such Series of Notes in respect of such Payment Date will be insufficient to pay in full (x) the P&I Shortfall Scheduled Principal Payment  (if  any),  in  respect  of  the  Notes  of  such  Series  due  on  such  Payment  Date   and ,  (y) accrued and unpaid Note Interest in respect of the Notes of such Series due on  such  Payment Date   and   (z)   the   aggregate   VFN   Administrative   Agent   fees   and   VFN   Undrawn Commitment  Fees  due  on  the  Variable  Funding  Notes  of  such  Series  on such Payment Date, in each case in accordance with the terms of the Series Supplement with respect to such Series of Notes, the amount of such insufficiency for such Payment Date. For the avoidance of doubt and notwithstanding the foregoing, in no event shall P&I Shortfall include any Make Whole Amount, Class  B  Deferred  Interest,  Post-ARD  Additional  Interest  or  Deferred  Post-ARD  Additional Interest        “P&I Shortfall Scheduled Principal Balance Payment ”: With respect to any Series of Notes and any Payment Date, the Scheduled Principal Payment (if any) with respect to each                                     16 US-DOCS\ 96557504.7 102826315.7 

 

Class of Notes in such Series other than any such Class of Notes whose Anticipated Repayment Date (x) occurs on such Payment Date or (y) has occurred prior to such Payment Date.        “Pari Passu Co-Lender Agreements ”: Any co-lender agreement relating to any Issuer acquiring Pari Passu Loans secured by Mortgaged Properties (or leasehold interests in real property) that also secure Companion Loans held by parties other than such Issuer.        “Pari Passu Loans ”: Mortgage Loans secured by Mortgaged Properties (or leasehold interests in real property) that also secure on a pari passu  basis any Companion Loans.        “Payment Account ”: As defined in the Indenture.        “Payment Date ”: As defined in the Indenture.        “Payoff Amount ”: An amount equal to the Collateral Value as of the First Collateral Date of any Mortgage Loan or Mortgaged Property, as applicable, plus any due and unpaid Monthly Loan Payment(s) or Monthly Lease Payment(s), as applicable, and any unreimbursed Property Protection Advances (plus Advance Interest thereon), Emergency Property Expenses, Liquidation Fees, Workout Fees, Special Servicing Fees and Extraordinary Expenses, in each case with respect to such Mortgage Loan or Mortgaged Property or the related Lease.        “Percentage Rent ”: With respect to any Lease that does not provide for the payment of fixed rent, the rent thereunder, if any, calculated solely as a percentage of the total sales generated by the related Tenant at the related Mortgaged Property.        “Performance Undertaking ”: As defined in the Indenture.        “Permitted Investments ”: Any one or more of the following obligations or securities:        (i)  direct obligations of, or obligations fully guaranteed as to timely payment of            principal and interest by, the United States of America or any agency or            instrumentality thereof; provided , that such obligations are backed by the full faith            and credit of the United States of America and have a predetermined, fixed            amount of principal due at maturity (that cannot vary or change) and that each            such obligation has a fixed interest rate or has its interest rate tied to a single            interest rate index plus a single fixed spread;        (ii) obligations of the following agencies or instrumentalities of the United States of            America: the Export-Import Bank, the Farm Credit System Financial Assistance            Corporation, the Rural Economic Community Development Administration, the            General Services Administration, the U.S. Maritime Administration, the Small            Business Administration, the Government National Mortgage Association, the            U.S. Department of Housing & Urban Development, the Federal Housing            Administration and the Federal Financing Bank; provided , that such obligations            are backed by the full faith and credit of the United States of America, have a            predetermined, fixed amount of principal due at maturity (that cannot vary or            change) and do not have an “r” highlight attached to any rating and that each such                                     17 US-DOCS\ 96557504.7 102826315.7 

 

           obligation has a fixed interest rate or has its interest rate tied to a single interest            rate index plus a single fixed spread;        (iii) direct obligations of the following agencies or instrumentalities of the United            States of America that are not backed by the full faith and credit of the United            States: the Resolution Funding Corporation, the Federal Home Loan Bank System            (senior debt obligations only), the Federal National Mortgage Association (senior            debt obligations rated “Aaa” by Moody’s and “AAA” by S&P only) or the Federal            Home Loan Mortgage Corporation (senior debt obligations rated “Aaa” by            Moody’s and “AAA” by S&P only); provided , that such obligations have a            predetermined amount of principal due at maturity (that cannot vary or change)            and do not have an “r” highlight attached to any rating and that each such            obligation has a fixed interest rate or has its interest rate tied to a single interest            rate index plus a single fixed spread;        (iv) uncertificated certificates of deposit, time deposits and bankers’ acceptances            having maturities of not more than 360 days, of any bank or trust company            organized under the laws of the United States of America or any state thereof;            provided , that such items are rated in the highest short-term debt rating category            of each Rating Agency or such lower rating as will not result in a qualification,            downgrading or withdrawal of the rating then assigned to the Notes by any Rating            Agency without giving effect to any Insurance Policy (as evidenced in writing by            each Rating Agency), do not have an “r” highlight affixed to its rating and have a            predetermined fixed amount of principal due at maturity (that cannot vary or            change);        (v)  commercial paper (having original maturities of not more than 270 days) of any            corporation incorporated under the laws of the United States of America or any            state thereof (or of any corporation not so incorporated; provided , that the            commercial paper is denominated in United States dollars and amounts payable            thereunder are not subject to any withholding imposed by any non-United States            jurisdiction) that is rated in the highest short-term debt rating category of each            Rating Agency or such lower rating as will not result in a qualification,            downgrading or withdrawal of the rating then assigned to the Notes by any Rating            Agency without giving effect to any Insurance Policy (as evidenced in writing by            each Rating Agency), does not have an “r” highlight affixed to its rating, has a            predetermined fixed amount of principal due at maturity (that cannot vary or            change) and has a fixed interest rate or has its interest rate tied to a single interest            rate index plus a single fixed spread, or any demand notes that constitute vehicles            for commercial paper rated in the highest unsecured commercial or finance            company paper rating category of each Rating Agency;        (vi) investments in money market funds rated “AA-mg” (or the equivalent rating) or            higher by each Rating Agency; and                                      18 US-DOCS\ 96557504.7 102826315.7 

 

      (vii) any other obligation or security the inclusion of which, as an Eligible Investment,            satisfies the Rating Agency Notification Condition.  provided , that (1) no investment described hereunder shall evidence either the right to receive (x) only interest with respect to such investment or (y) a yield to maturity greater than 120% of the yield to maturity at par of the underlying obligations, (2) no investment described hereunder may be purchased at a price greater than par if such investment may be prepaid or called at a price less than its purchase price prior to stated maturity (that cannot vary or change) and (3) such Permitted Investments are either (x) at all times available or (y) mature prior to the Payment Date on which funds used to acquire such investment would otherwise be distributed pursuant to Section 2.11 of the Indenture.        “Permitted Replacement Event ”: As defined in Section 6.04(a) hereof.        “Permitted Termination Event ”: As defined in Section 6.04(b) hereof.        “Person ”: Any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, estate, unincorporated organization or government or any agency, instrumentality or political subdivision of any government, or any definition of such term as may be provided in Sections 13(d) and 14(d) of the Exchange Act.        “Post-Closing Acquisition Reserve Account ”: As defined in the Indenture.        “Post-Closing Property ”: As defined in the Indenture.        “Prepayment Consideration Payment ”: With respect to any Mortgage Loan, any yield maintenance or prepayment premium payment made by a Borrower in connection with a Principal Prepayment on or other early collection of principal of a Mortgage Loan.        “Primary Servicing Office ”: The office of the Property Manager or the Special Servicer, as the context may require, that is primarily responsible for such party’s servicing obligations hereunder.        “Prime Rate ”: The “prime rate” published in the “Money Rates” section of The Wall Street Journal,  as such “prime rate” may change from time to time. If The Wall Street Journal ceases to publish the “prime rate,” then the Indenture Trustee shall select an equivalent publication that publishes such “prime rate”; and if such “prime rate” is no longer generally published or is limited, regulated or administered by a governmental or quasi-governmental body, then the Indenture Trustee shall select a comparable interest rate index. In either case, such selection shall be made by the Indenture Trustee in its sole discretion and the Indenture Trustee shall notify the Property Manager and the Special Servicer in writing of its selection.         “ Principal Prepayment ”: Any payment of principal voluntarily made by the Borrower on a Mortgage Loan that is received in advance of its scheduled Due Date and that is not accompanied by an amount of interest (without regard to any Prepayment Consideration Payment                                      19 US-DOCS\ 96557504.7 102826315.7 

 

that may have been collected) representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment.         “ Property Insurance Policy ”: With respect to any Mortgage Loan and/or Mortgaged Property, any hazard insurance policy, flood insurance policy, title policy, Environmental Policy, residual value insurance policy or other insurance policy that is maintained from time to time in respect of such Mortgage Loan and/or Mortgaged Property (including, without limitation, any blanket insurance policy maintained by or on behalf of the applicable Issuer).        “Property Insurance Proceeds ”: All proceeds received under any Property Insurance Policy that provides coverage with respect to any Mortgaged Property or the related Mortgage Loan, if applicable.         “ Property Management Fee ”: With respect to each Mortgage Loan and each Mortgaged Property owned by the Issuer, the fee payable to the Property Manager pursuant to Section 3.11(a) .        “Property Management Fee Rate ”: With respect to each Mortgage Loan and each Lease, a fixed percentage rate equal to 0.25% per annum.        “Property Manager ”: Spirit Realty, in its capacity as property manager under this Agreement, or any successor property manager appointed as herein provided.        “Property Manager Additional Servicing Compensation ”: As defined in  Section 3.11(b) .        “Property Protection Advances ”: With respect to the Leases, the Mortgage Loans and the Mortgaged Properties:        (i)  All customary, reasonable and necessary out-of-pocket costs and expenses            incurred by the Property Manager or the Back-Up Manager, in connection with            servicing the Leases, the Mortgaged Properties and the Mortgage Loans, in            accordance with the Servicing Standard and this Agreement, for the purpose of            paying (a) real estate taxes, (b) in the case of Leasehold Mortgaged Properties,            payments required to be made under the related ground leases, (c) premiums on            Property Insurance Policies (not already paid pursuant to Section 2.11 of the            Indenture, as confirmed by the applicable Issuers) and (d) other amounts            necessary to preserve or maintain the security interest and lien of the Indenture            Trustee in, and value of, each related Mortgaged Property (including any costs            and expenses necessary to re-lease such Mortgaged Property), Lease or Mortgage            Loan (including costs and expenses related to collection efforts).        (ii) All customary, reasonable and necessary out-of-pocket costs and expenses            incurred by the Property Manager or the Back-Up Manager (or, if applicable, the            Special Servicer) in connection with the servicing of a Mortgage Loan after a            default, delinquency or other unanticipated event, or in connection with the            administration of any REO Property, including, but not limited to, the cost of (a)                                     20 US-DOCS\ 96557504.7 102826315.7 

 

           compliance with the obligations of the Property Manager or the Special Servicer            set forth in Sections 2.04(c) , 3.03(c)  and 3.17(b) , (b) the preservation, insurance,            restoration, protection and management of any Collateral, including the cost of            any “force placed” insurance policy purchased by the Property Manager to the            extent such cost is allocable to a particular item of Collateral that the Property            Manager is required to cause to be insured pursuant to Section 3.07(a) , (c)            obtaining any Liquidation Proceeds (insofar as such Liquidation Proceeds are of            the nature described in the definition thereof) or Property Insurance Proceeds in            respect of any Collateral or REO Property, (d) any enforcement of judicial            proceedings with respect to any Collateral, including foreclosures, and (e) the            operation, management, maintenance and liquidation of any REO Property.        Notwithstanding anything to the contrary, “Property Protection Advances” shall not include allocable overhead of the Property Manager or the Special Servicer, such as costs for office space, office equipment, supplies and related expenses, employee salaries and related expenses and similar internal costs and expenses.        “Property Transfer Agreements ”: As defined in the Indenture.        “Protective Mortgage Loan ”: Means any Mortgage Loan (a) with respect to which Spirit Realty or an affiliate thereof is the Borrower and (b) that was acquired by any Issuer in lieu of such Issuer acquiring the Mortgaged Property or Mortgaged Properties securing such Mortgage Loan in order to reduce or eliminate any actual or potential liability that such Issuer would have had in the event that such Mortgaged Property or Mortgaged Properties were acquired by such Issuer.        “Purchase Option Deficiency ”: An amount equal to the deficiency, if any, between 115% of the Allocated Loan Amount of a Mortgaged Property released in connection with a Third Party Purchase Option and the related Third Party Option Price for such Mortgaged Property.        “Purchase Premium ”: As defined in Section 7.01(c).        “Qualified Deleveraging Event ”: Either (i) a firm commitment underwritten public offering of the equity interests of Spirit MTA or any direct or indirect parent entity of Spirit MTA pursuant to a registration statement under the Securities Act, which results in aggregate cash proceeds to Spirit MTA or any direct or indirect parent entity of Spirit MTA of at least $75 million (net of underwriting discounts and commissions), (ii) an acquisition (whether by merger, consolidation or otherwise) of greater than fifty percent (50%) of the voting equity interests of Spirit MTA, or any direct or indirect parent of Spirit MTA by any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or (iii) Spirit MTA or any direct or indirect parent or subsidiary of Spirit MTA sells or transfers (whether by merger, consolidation or otherwise) all of its interests in the Issuers or the Issuers convey or transfer (whether by merger, consolidation or otherwise) all or substantially all the Collateral Pool in accordance with the applicable restrictions in the Indenture (in each case, other than a sale, transfer or other conveyance to a direct or indirect parent or wholly owned subsidiary of Spirit MTA).                                     21 US-DOCS\ 96557504.7 102826315.7 

 

      “Qualified Eligible Successor ”: As defined in Section 6.04(b).        “Qualified Insurer ”: An insurance company or security or bonding company qualified to write the related Property Insurance Policy in the relevant jurisdiction.        “Qualified Intermediary ”: Any third-party acting as an “qualified intermediary” within the meaning of Section 1031 of the Code and Section 1.1031(k)-1(g)(4) of the Treasury Regulations.         “ Qualified Release Amount ”: An amount equal to the product of (i) the amount of the Early Refinancing Prepayment and (ii) (a) the aggregate Collateral Value of all Mortgaged Properties (not otherwise securing a Mortgage Loan) and Mortgage Loans divided by (b) the aggregate Allocated Loan Amount of the Collateral Pool.        “Qualified Substitute Mortgage Loan ”: (X) Any Qualified Substitute Protective Mortgage Loan or (Y) any other commercial real estate loan acquired by an Issuer, which, in the case of clause (Y), is: (a) in substitution for a Released Mortgage Loan, (b) with the proceeds (or a portion thereof) from the sale of a Released Mortgage Loan or (c) with the proceeds (or a portion thereof) of a Balloon Payment or Principal Prepayment on a Mortgage Loan and which, in each such case, as of the date of the acquisition thereof, (i) is secured by one or more Mortgaged Properties that would constitute a Qualified Substitute Mortgaged Property (other than any requirements set forth in clauses (iii) and (vii) of the definition thereof) in the event that it (or they) were exchanged by such Issuer for the Mortgaged Property (or Mortgaged Properties) securing such Released Mortgage Loan or the Mortgage Loan with respect to which such Balloon Payment or Principal Prepayment was received, as applicable (it being understood that, for the purposes of this clause (i), the Collateral Value of each such Mortgaged Property shall be determined in accordance with clause (i) of the definition of “Collateral Value” as if it did not secure a Mortgage Loan), (ii) has an unpaid principal balance that, when combined with any cash proceeds received (or to be received) in connection with such substitution or such sale, if applicable, and the principal balance of each other commercial real estate loan acquired (or to be acquired) by the applicable Issuer in substitution for such Released Mortgage Loan or with the proceeds of such sale or such Balloon Payment or Principal Prepayment, as applicable, is not less than the unpaid principal balance of such Released Mortgage Loan or the amount of such Balloon Payment or Principal Prepayment, as applicable (other than the amount of such Balloon Payment or Principal Prepayment that will remain in the Release Account after giving effect to such acquisition), (iii) has an Interest Rate not more than one percentage point less than such Released Mortgage Loan or the Mortgage Loan with respect to which such Balloon Payment or Principal Prepayment was made, as applicable, (iv) subject to any exceptions with respect to which the Rating Condition is satisfied or the Requisite Global Majority has consented, the applicable Issuer has obtained from an Originator or itself has made, with respect to such commercial real estate loan, either (x) all of the representations and warranties originally made with respect to such Released Mortgage Loan or Mortgage Loan with respect to which such Balloon Loan or Principal Prepayment was made or (y) all of the representations and warranties required to be made for Mortgage Loans pursuant to Section 2.19 of the Indenture (in each case, with each date therein referring to, unless otherwise expressly stated, the date of such acquisition ), (v) pays interest and, if applicable, principal on a monthly basis, (vi) has been approved in writing by the Support Provider, (vii) has a maturity date that is not more than one                                     22 US-DOCS\ 96557504.7 102826315.7 

 

year earlier than such Released Mortgage Loan or Mortgage Loan with respect to which the Balloon Payment or Principal Prepayment was made, (viii) if such commercial real estate loan would constitute a Balloon Loan and either such Released Mortgage Loan was a Balloon Loan or such commercial real estate loan is being acquired with the proceeds of a Balloon Payment, such commercial real estate loan has a balloon payment that is not more than 10.0% larger than the Balloon Payment relating to such Released Mortgage Loan or such Balloon Payment, as applicable and (ix) that has a Loan-to-Value Ratio no greater than the higher of (a) 80.0% and (b) the Loan-to-Value Ratio of the Released Mortgage Loan (or the Mortgage Loan with respect to which the Balloon Payment or Principal Prepayment was made). If one or more of the foregoing criteria are not met (x) other than with respect to a commercial real estate loan being acquired with the proceeds of a Balloon Payment or Principal Prepayment, such commercial real estate loan will be a Qualified Substitute Mortgage Loan if the Qualified Substitute Mortgage Loan Waiver Criteria are satisfied with respect to such commercial real estate loan or (y) with respect to a commercial real estate loan being acquired with the proceeds of a Balloon Payment or Principal Prepayment, such commercial real estate loan will be a Qualified Substitute Mortgage Loan if the Special Servicer considers such acquisition to be in the interest of the Noteholders and the Rating Agency Notification Condition is satisfied in connection with such acquisition.        “Qualified Substitute Mortgage Loan Waiver Criteria ”: Means criteria that will be satisfied with respect to any commercial real estate loan in the event that: (1) the Special Servicer considers the acquisition by the applicable Issuer of such commercial real estate loan to be in the interest of the Noteholders and (2) either (x) the Rating Condition is satisfied in connection with such acquisition or (y) both (A) the Rating Agency Notification Condition is satisfied in connection with such acquisition and (B) after giving effect to such acquisition, the aggregate Collateral Values (determined as of the date of acquisition by the applicable Issuer) of all commercial real estate loans acquired pursuant to this clause (2)(y) and all commercial real estate properties acquired pursuant to clause (2)(y) of the Qualified Substitute Mortgaged Property Waiver Criteria, in each case during the Closing Date Period in which such acquisition occurs, will not exceed 5.0% of the Aggregate Collateral Value (determined as of the Starting Closing Date with respect to such Closing Date Period).        “Qualified Substitute Mortgaged Property ”: Any commercial real estate property acquired by the applicable Issuer (a) in substitution for a Released Mortgaged Property or a Released Mortgage Loan, (b) with the proceeds (or a portion thereof) from the sale of a Released Mortgaged Property or Released Mortgage Loan or (c) with the proceeds (or a portion thereof) of a Balloon Payment or Principal Prepayment on a Mortgage Loan and which, in any case, as of the date of the acquisition thereof, (i) solely to the extent acquired with amounts on deposit in the Release Account, has a Collateral Value that, when combined with any cash proceeds received (or to be received) in connection with such substitution or such sale, if applicable, and the Collateral Value of each other commercial real estate property acquired (or to be acquired) by the applicable Issuer or Co-Issuer in substitution for such Released Mortgaged Property or Released Mortgage Loan or with the proceeds of such sale or such Balloon Payment or Principal Prepayment, as applicable, is equal to or greater than (x) in the case of a Released Mortgaged Property, the Fair Market Value of such Released Mortgaged Property, (y) in the case of a Released Mortgage Loan, the principal balance of such Released Mortgage Loan or (z)                                     23 US-DOCS\ 96557504.7 102826315.7 

 

in the case of a Balloon Payment or Principal Prepayment, the amount of such Balloon Payment or Principal Prepayment, as applicable (other than the amount of such Balloon Payment or Principal Prepayment that will remain in the Release Account after giving effect to such acquisition), (ii) solely to the extent acquired through an exchange (and not with proceeds on deposit in the Release Account), has a Fair Market Value that, when combined with any cash proceeds received (or to be received) in connection with such substitution or such sale, if applicable, and the Fair Market Value of each other commercial real estate property acquired (or to be acquired) by the applicable Issuer in substitution for such Released Mortgaged Property or Released Mortgage Loan or with the proceeds of such sale or such Balloon Payment or Principal Prepayment, as applicable, is equal to or greater than (x) in the case of a Released Mortgaged Property, the Fair Market Value of such Released Mortgaged Property, (y) in the case of a Released Mortgage Loan, the principal balance of such Released Mortgage Loan or (z) in the case of a Balloon Payment or Principal Prepayment, the amount of such Balloon Payment or Principal Prepayment, as applicable (other than the amount of such Balloon Payment or Principal Prepayment that will remain in the Release Account after giving effect to such acquisition), (iii) solely to the extent acquired through an exchange (and not with proceeds on deposit in the Release Account), has a Collateral Value that, when combined with any cash proceeds received (or to be received) in connection with such substitution or such sale, if applicable, and the Collateral Value of each other commercial real estate property acquired (or to be acquired) by the Issuer in substitution for such Released Mortgaged Property or Released Mortgage Loan or with the proceeds of such sale or such Balloon Payment or Principal Prepayment, as applicable, is equal to or greater than (x) in the case of a Released Mortgaged Property, the Collateral Value of such Released Mortgaged Property, (y) in the case of a Released Mortgage Loan, the principal balance of such Released Mortgage Loan or (z) in the case of a Balloon Payment or Principal Prepayment, the amount of such Balloon Payment or Principal Prepayment, as applicable (other than the amount of such Balloon Payment or Principal Prepayment that will remain in the Release Account after  giving effect to such acquisition), (iv) subject to any exceptions with respect to which the Rating Condition is satisfied or the Requisite Global Majority has consented, such Issuer has obtained from an Originator or itself has made, (A) with respect to any such commercial real estate property acquired in substitution for a Released Mortgaged Property, either (x) all of the representations and warranties originally made with respect to such Released Mortgaged Property or (y) all of the representations and warranties required to be made with respect to commercial real estate loans contemplated by Section 2.19 of the Indenture for Mortgaged Properties or (B) with respect to any such commercial real estate property acquired with the proceeds of any Balloon Payment or Principal Prepayment of a Mortgage Loan, all of the representations and warranties required to be made with respect to commercial real estate loans contemplated by Section 2.19 of the Indenture for Mortgaged Properties (in each case, with each date therein referring to, unless otherwise expressly stated, the date of such acquisition), (v) in the event that such commercial real estate property were included as a Mortgaged Property in the Collateral Pool as of the end of the Collection Period preceding the Collection Period in which such acquisition occurs, it would not have lowered the weighted average of the FCCR for all Mortgaged Properties in the Collateral Pool and all Mortgaged Properties securing Mortgage Loans in the Collateral Pool, based upon the most recent determination of each such FCCR by the Property Manager (weighted based on the Allocated Loan Amount of each such Mortgaged Property); provided, however, with respect to no more than 10% of the Aggregate Collateral Value in any Closing Date Period (determined as of the                                     24 US-DOCS\ 96557504.7 102826315.7 

 

applicable Starting Closing Date), such Qualified Substitute Mortgaged Properties will not be subject to the weighted average FCCR criteria set forth in this clause (v), but instead will be required to have a minimum FCCR of 2.5 (measured as of the date of each respective substitution); provided, further, that with respect to no more than 5% of the Aggregate Collateral Value in any Closing Date Period, such Qualified Substitute Mortgaged Properties will not be subject to the weighted average FCCR or minimum FCCR criteria set forth in this clause (v) so long as the Tenant under the related Lease (or any related Guarantor) has an investment grade rating from S&P, Moody’s or Fitch Ratings, Inc., -(vi) in the event that any lease relating to such commercial real estate property were included as a “Lease” in the Collateral Pool as of the end of the Collection Period preceding the Collection Period in which such acquisition occurs, it would not have lowered the weighted average of the Monthly Lease Payments for all Leases in the Collateral Pool and all leases relating to Mortgaged Properties securing Mortgage Loans in the Collateral Pool (weighted based on the Allocated Loan Amount of each such Mortgaged Property) ; provided, however, that any such leases included as “Leases” in the Collateral Pool may reduce the weighted average of the Monthly Lease Payments for all Leases in the Collateral Pool by no more than 2.5% in the aggregate for all such leases in any Closing Date Period , (vii) in the event that any lease relating to such commercial real estate property were included as a “Lease” in the Collateral Pool as of the end of the Collection Period preceding the Collection Period in which such acquisition occurs, it would not have lowered the weighted average of the remaining lease term for all Leases in the Collateral Pool and all Leases relating to Mortgaged Properties securing Mortgage Loans in the Collateral Pool (weighted based on the Allocated Loan Amount of each such Mortgaged Property) ; provided, however, that any such leases included as “Leases” in the Collateral Pool may reduce the weighted average of the remaining lease term for all Leases in the Collateral Pool by no more than 3 months in the aggregate for all such leases in any Closing Date Period , (viii) if the tenant thereof or any third party has an option to purchase such commercial real estate property, the contractual amount of such option price is no less than what the Allocated Loan Amount of such commercial real estate property would be after giving effect to such acquisition, (ix) has been approved in writing by the Support Provider, (x) is either (x)  leased pursuant to a “triple net” lease or (y) leased pursuant to a “double  net” lease and (xi) has an appraisal that meets the applicable requirements set forth in the definition of “Appraised Value.” If one or more of the foregoing criteria are not met, such commercial real estate property will be a Qualified Substitute Mortgaged Property if the Qualified Substitute Mortgaged Property Waiver Criteria are satisfied with respect to such commercial real estate property.        “Qualified Substitute Mortgaged Property Waiver Criteria ”: Means criteria that will be satisfied with respect to any commercial real estate property in the event that: (1) the Special Servicer considers the acquisition by the applicable Issuer of such commercial real estate property to be in the interest of the Noteholders and (2) either (x) the Rating Condition is satisfied in connection with such acquisition or (y) both (A) the Rating Agency Notification Condition is satisfied in connection with such acquisition and (B) after giving effect to such acquisition, the aggregate Collateral Values (determined as of the date of acquisition by the applicable Issuer) of all commercial real estate properties acquired pursuant to this clause (2)(y) and all commercial real estate loans acquired pursuant to clause (2)(y) of the Qualified Substitute Mortgage Loan Waiver Criteria, in each case during the Closing Date Period in which such                                      25 US-DOCS\ 96557504.7 102826315.7 

 

acquisition occurs, will not exceed 5.0% of the Aggregate Collateral Value (determined as of the Starting Closing Date with respect to such Closing Date Period).        “Qualified Substitute Protective Mortgage Loan ”: Means any Protective Mortgage Loan that (i) is secured by one or more Mortgaged Properties that would constitute a Qualified Substitute Mortgaged Property (other than any requirements set forth in clauses (iii) and (vii) of the definition thereof) in the event that it (or they) were exchanged by an Issuer for the Released Mortgaged Property (it being understood that, for the purposes of this clause (i), the Collateral Value of each such Mortgaged Property shall be determined in accordance with clause (i) of the definition of “Collateral Value” as if it did not secure a Mortgage Loan), (ii) has an unpaid principal balance that, when combined with any cash proceeds received (or to be received) in connection with the substitution or sale of the applicable Released Mortgaged Property, if applicable, and the principal balance of each other commercial real estate loan or commercial real estate property acquired (or to be acquired) by the applicable Issuer in substitution for such Released Mortgaged Property or with the proceeds of such sale or substitution, is not less than the Collateral Value of such Released Mortgaged Property, (iii) with respect to which, subject to any exceptions with respect to which the Rating Condition is satisfied or the Requisite Global Majority has consented, the applicable Issuer has obtained from an Originator or itself has made, all of the representations and warranties required to be made for Mortgage Loans pursuant to Section 2.19 of the Indenture (with each date therein referring to, unless otherwise expressly stated, the date of such acquisition) and (iv) has been approved in writing by the Support Provider.        “Rating Agency ”: As defined in the Indenture.        “Rating Agency Notification Condition ”: As defined in the Indenture.        “Rating Condition ”: As defined in the Indenture.        “Re-Appraised Value : With respect to each Mortgaged Property that is the subject of a Global Appraisal Event, the Appraised Value that is determined with respect to such Mortgaged Property in connection with such Global Appraisal Event. In the event that multiple Global Appraisal Events occur with respect to the same Mortgaged Property, the Appraised Value determined with respect to the most recent Global Appraisal Event shall constitute the Re- Appraised Value of such Mortgaged Property.        “Reimbursement Rate ”: The rate per annum applicable to the accrual of Advance Interest, which rate per annum is equal to the Prime Rate plus 2.0%.        “Release ”: As defined in Section 7.01(a) .        “Release Account ”: As defined in Section 3.04(b) .        “Release Parcel ”: With respect to the Post-Closing Properties identified as Buehler’s Food Market (1055 Sugarbush Drive) and Buehler’s Food Market (3540 Burbank Road), an undeveloped portion of each such property that (i) was not considered in determining the purchase price thereof paid by the Originator with respect thereto and (ii) is subject to an option                                     26 US-DOCS\ 96557504.7 102826315.7 

 

on the part of the related Tenant permitting such Tenant to subdivide and reacquire such undeveloped portion for a nominal amount.        “Release Price ”: As defined in Section 7.01(b) .        “Remaining Parcel ”: As defined in Section 7.01(a) .        “Relinquished Property ”: Any Mortgaged Property qualifying as “relinquished property” within the meaning of Section 1.1031(k)-(1(a) of the Treasury Regulations (or any successor section).        “Relinquished Property Agreement ”: Any agreement relating to the sale or disposition of Relinquished Property.        “Relinquished Property Proceeds ”: means the proceeds of the sale or disposition of Relinquished Property.        “Remittance Date ”: The Business Day preceding each Payment Date.        “Removed Mortgaged Property ”: Each Third Party Option Mortgaged Property and each Lease Transfer Mortgaged Property, released at any time from the lien of the Indenture.        “REO Acquisition ”: The acquisition of any REO Property pursuant to Section 3.09 .        “REO Disposition ”: The sale or other disposition of any REO Property pursuant to Section 3.18 .        “REO Property ”: A Mortgaged Property acquired by or on behalf of the Indenture Trustee through foreclosure, acceptance of a deed-in-lieu of foreclosure or otherwise in accordance with applicable law in connection with the default or imminent default of a Mortgage Loan.        “REO Revenues ”: All income, rents, profits and proceeds derived from the ownership, operation or leasing of any REO Property.         “ Replacement Property ”: Mortgaged Properties that are (i) of a “like-kind” (within the meaning of Section 1.1031(a)-1(b) of the Treasury Regulations (or any successor section)) to any Relinquished Property and otherwise satisfying the definition of and requirements for “replacement property” under the Treasury Regulations and (ii) satisfy the definition of Qualified Substitute Mortgaged Property.        “Replacement Property Agreement ”: Any agreement relating to the acquisition of Replacement Property.        “Request for Release ”: A request signed by a Servicing Officer, as applicable, of the Property Manager substantially in the form of Exhibit B  attached hereto or of the Special Servicer substantially in the form of Exhibit C  attached hereto.                                     27 US-DOCS\ 96557504.7 102826315.7 

 

      “Requisite Global Majority ”: As defined in the Indenture.        “Responsible Officer ”: As defined in the Indenture.        “Restaurant Concept ”: With respect to any properties operated within the Restaurants Business Sector, any chain of properties that share substantially the same characteristics.        “S&P ”: Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.        “Series ”: As defined in the Indenture.        “Series 2014-1 Supplement ”: The Series 2014-1 Supplement to the Indenture, dated as of the date hereof, among the Issuers and the Indenture Trustee, as amended, supplemented or modified from time to time.        “Series 2017-1 Supplement ”: The Series 2017-1 Supplement to the Indenture, dated as of the Series 2017-1 Closing Date, among the Issuers and the Indenture Trustee, as amended, supplemented or modified from time to time.        “Series Account : As defined in the Indenture.        “Servicer Replacement Event ”: The meaning specified in Section 6.01(a) .        “Servicing Account ”: The segregated account or accounts created and maintained pursuant to Section 3.03(a) .        “Servicing Fees ”: With respect to each Mortgage Loan, Mortgaged Property and Lease, the Property Management Fee, the Back-Up Fee, the Special Servicing Fee, if any, and the Additional Servicing Compensation, if any.        “Servicing File ”: Any documents (other than documents required to be part of the related Loan File or Lease File) in the possession of the Property Manager or the Special Servicer and relating to the origination and servicing of any Mortgage Loan or Lease or the administration of any Mortgaged Property (including copies of all applicable Property Insurance Policies with respect thereto).        “Servicing Officer ”: Any officer or employee of the Property Manager or the Special Servicer, as applicable, involved in, or responsible for, the administration, management and servicing of the Mortgage Loans, Mortgaged Properties and Leases, whose name and specimen signature appear on the list of servicing officers furnished, from time to time, by such party to the applicable Issuers and the Indenture Trustee.        “Servicing Standard ”: To provide property management services for the Mortgaged Properties and to service and special service the Mortgage Loans and Leases on behalf of the applicable Issuers in accordance with applicable law, the terms of this Agreement, the terms of the respective Mortgage Loans and Leases and, to the extent consistent with the foregoing, (x) in the same manner in which, and with the same care, skill, prudence and diligence with which, the                                     28 US-DOCS\ 96557504.7 102826315.7 

 

Property Manager or the Special Servicer, as the case may be, (a) services and administers similar mortgage loans, leases and mortgaged properties for other third party portfolios or (b) administers similar mortgage loans, leases and mortgaged properties for its own account or (y) in a manner normally associated with the servicing and administration of similar properties, whichever standard is highest, in all cases taking into account the best interests of the Noteholders and taking into consideration the maximization of revenue, but without regard to: (i) any known relationship that the Property Manager or Special Servicer, or an Affiliate of the Property Manager or Special Servicer, may have with any Issuer, any Originator, the Support Provider, any Tenant, any Borrower, any of their respective Affiliates or any other party to the Transaction Documents; (ii) the ownership of any Note or LLC Interest by the Property Manager or Special Servicer or any Affiliate of the Property Manager or Special Servicer, as applicable; (iii) the Property Manager’s obligation to make Advances, to incur servicing expenses or to withdraw (or, in the event the Property Manager is Spirit Realty, to direct the Indenture Trustee to withdraw) funds from the Collection Account to pay Emergency Property Expenses with respect to the Mortgage Loans, the Leases or the Mortgaged Properties; (iv) the Property Manager’s or Special Servicer’s right to receive compensation for its services or reimbursements of the costs under this Agreement; (v) the ownership, servicing or management for others, by the Property Manager, the Special Servicer or any Originator or other Affiliate of any other leases or property; (vi) the repurchase and indemnification obligations of the Originators or Support Provider; or (vii) the existence of any loans made to a Tenant by the Property Manager, the Special Servicer or Spirit Realty or any Affiliate of the Property Manager, the Special Servicer or Spirit Realty.        “Servicing Transfer Event ”: With respect to any Mortgaged Property, the occurrence of any of the events described in clauses (a) through (e) of the definition of “Specially Serviced Lease.” With respect to any Mortgage Loan, the occurrence of any of the events described in clauses (a) through (e) of the definition of “Specially Serviced Loan.”        “Special Servicer ”: Spirit Realty, in its capacity as special servicer under this Agreement, or any successor special servicer appointed as herein provided.        “Special Servicer Additional Servicing Compensation ”: As defined in Section  3.11(d) .        “Special Servicer Report ”: As defined in Section 4.01(b) .        “Special Servicing Fee ”: With respect to each Specially Serviced Asset, the fee designated as such and payable to the Special Servicer pursuant to the first paragraph of Section 3.11(c) .        “Special Servicing Fee Rate ”: With respect to each Specially Serviced Asset, a fixed percentage rate equal to 0.75% per annum.        “Specially Serviced Asset ”: A Specially Serviced Lease or a Specially Serviced Loan.        “Specially Serviced Lease ”: Any Lease as to which any of the following events occurs or exists:                                      29 US-DOCS\ 96557504.7 102826315.7 

 

      (i)  any Monthly Lease Payment becomes delinquent for 60 or more consecutive days;        (ii) the Property Manager determines in its good faith and reasonable judgment that a            default in making a Monthly Lease Payment is likely to occur within 30 days and            is not likely to be remedied for 60 days;        (iii) the Property Manager receives written notice from the Tenant indicating that such            Tenant cannot make future Monthly Lease Payments or requesting a reduction in            the amount of its Monthly Lease Payments;        (iv) a default (other than as described in clause (a) above) occurs that materially and            adversely affects the interests of the Issuers and that continues unremedied for the            applicable grace period under the terms of the Lease (or, if no grace period is            specified, for 30 days); or        (v)  the related Tenant becomes insolvent, readjusts its debt, is subject to marshaling            of assets and liabilities, or similar proceedings in respect of the related Tenant            occur, or as to which the related Tenant (in the good faith and reasonable            judgment of the Property Manager) takes actions indicating its insolvency or its            inability to pay its obligations or the Property Manager or the Special Servicer            receives notice of commencement of foreclosure or similar proceedings with            respect to the related Mortgaged Property.        “Specially Serviced Lease Trigger Event ”: Each of the circumstances identified in clauses (a) through (e) of the definition of the term “Specially Serviced Lease”.        “Specially Serviced Loan” : Any Mortgage Loan as to which any of the following events has occurred:        (i)  any Monthly Loan Payment becomes delinquent for 60 or more consecutive days;        (ii) the Property Manager determines in its good faith and reasonable judgment that a            default in making a Monthly Loan Payment is likely to occur within 30 days and is            not likely to be remedied for 60 days;        (iii) the Property Manager receives written notice from the Borrower indicating that            such Borrower cannot make future Monthly Loan Payments or requesting a            reduction in the amount of its payment;        (iv) a default (other than as described in clause (a) above) occurs that materially and            adversely affects the interests of the Issuers and that continues unremedied for the            applicable grace period under the terms of the Mortgage Loan (or, if no grace            period is specified, for 30 days); or        (v)  the related Borrower becomes insolvent, readjusts its debt, is subject to            marshaling of assets and liabilities, or similar proceedings in respect of the related            Borrower occur, or as to which the related Borrower (in the good faith and            reasonable judgment of the Property Manager) takes actions indicating its                                     30 US-DOCS\ 96557504.7 102826315.7 

 

           insolvency or its inability to pay its obligations or the Property Manager or the            Special Servicer receives notice of commencement of foreclosure or similar            proceedings with respect to the related Mortgaged Property.        “Specially Serviced Loan Trigger Event ”: Each of the circumstances identified in clauses (a) through (e) of the definition of the term “Specially Serviced Loan”.        “Specified Permitted Subdivision ”: With respect to each Post-Closing Property containing a Release Parcel, the subdivision of such Mortgaged Property to permit the transfer of the Release Parcel to the related Tenant.        “Specified Permitted Subdivision Conditions ”: As defined in Section 7.01(a).        “Spin-Off ”: A transaction whereby Spirit Realty (or its parent) will “spin-off” certain of its real estate assets, including the Issuers and the Collateral Pool.        “Spirit MTA ”: Spirit MTA REIT, a Maryland real estate investment trust, and its successors and assigns.        “Spirit Realty ”: Spirit Realty, L.P., a Delaware limited partnership, and its successors and assigns.        “Spirit SPE ”: Any special purpose, bankruptcy remote subsidiary (direct or indirect) of Spirit Realty.        “Starting Closing Date ”: With respect to any Closing Date Period, the Series Closing Date upon which such Closing Date Period commences .        “Sub-Manager ”: Any Person with which the Property Manager or the Special Servicer has entered into a Sub-Management Agreement.        “Sub-Management Agreement ”: The written contract between the Property Manager or the Special Servicer, on the one hand, and any Sub-Manager, on the other hand, relating to servicing and administration of Mortgage Loans, Leases and Mortgaged Properties, as provided in Section 3.21 , as may be amended, supplemented or otherwise modified.        “Successor Property Manager ”: As defined in Section 6.01(b).        “Successor Replacement Date ”: As defined in Section 6.01(b).        “Successor Special Servicer ”: As defined in Section 6.01(b) .        “Support Provider ”: Spirit Realty or any successor support provider.        “Support Provider SPE ”: Any special purpose, bankruptcy remote subsidiary (direct or indirect) of the Support Provider.                                      31 US-DOCS\ 96557504.7 102826315.7 

 

       “ Sweep Period ”: As defined in the Indenture.        “Taxable REIT Subsidiary ” With respect to Spirit Realty, an Affiliate thereof that is a “taxable REIT subsidiary” under the Code.        “Tenant ”: With respect to each Lease, the tenant under such Lease and any successor or assign thereof.        “Terminated Lease Property ”: A Mortgaged Property, with respect to which (a) the related Lease has expired, has been terminated or has been rejected in a bankruptcy, insolvency or similar proceeding of the Tenant, (b) the related Tenant has notified the Property Manager or the applicable Issuer of its intent to not renew such Lease within 24 months of the termination date of the related Lease or (c) the related Tenant has otherwise failed to comply with the procedures for renewal under the terms of the related Lease (including, but not limited to, any notice provisions relating to renewal of the Lease); provided  solely in the case of an expiration, termination or rejection as described in clause (a), the Property Manager has used commercially reasonable efforts to renew such Lease or obtain a new Lease of such Mortgaged Property.        “Third Party Option Expenses ”: Any reasonable out-of-pocket costs and expenses (but not internal costs and expenses) incurred by the Issuers (or Property Manager or Special Servicer, as applicable, on behalf of the Issuers) in connection with the exercise of a Third Party Purchase Option with respect to the applicable Mortgaged Property; provided , that such costs and expenses shall not exceed $50,000 with respect to any single Mortgaged Property.        “Third Party Option Mortgaged Property ”: As defined in Section 7.02(a) .        “Third Party Option Price ”: A cash price equal to (i) the amount specified in a related Lease, Lease Document or other agreement, as payable by a Tenant or any other Person in connection with the exercise of a Third Party Purchase Option minus (ii) the Third Party Option Expenses in connection with such exercise.        “Third Party Purchase Option ”: An option of a Tenant or any other Person under or in connection with a Lease, Lease Documents or other related agreements to purchase the related Mortgaged Property before or at the expiration of the Lease term.        “Title Company ”: As defined in Section 2.03(a).        “Title Insurance Policies ”: As defined in Section 2.03(a).        “Total Debt Service ”: As defined in the Indenture.        “Transfer Date ”: The date on which a Mortgage Loan or Mortgaged Property is acquired by the applicable Issuer.        “Treasury Regulations ” Any treasury regulations relating to like-kind exchanges and Section 1031 of the Code (or any successor section thereof).                                      32 US-DOCS\ 96557504.7 102826315.7 

 

      “Unscheduled Principal Payment ”: On any Payment Date, the sum of (a) the Unscheduled Proceeds deposited into the Collection Account during the Collection Period relating to such Payment Date plus (b) any Purchase Option Deficiency arising during such Collection Period, together with any Purchase Option Deficiency from any prior Payment Date or related Collection Period with respect to which Available Amounts were not allocated to any Series pursuant to Section 2.11(b) the Indenture.        “Unscheduled Proceeds ”: Collectively, Liquidation Proceeds, Condemnation Proceeds, Property Insurance Proceeds, Principal Prepayments, Release Prices, Balloon Payments, Purchase Premiums and Exchange Cash Collateral; provided , however , that any amounts which are on deposit in the Release Account or the Exchange Reserve Account shall not be deemed Unscheduled Proceeds until such amounts have been transferred to the Collection Account.        “Uniform Commercial Code ”: The Uniform Commercial Code as in effect in any applicable jurisdiction.        “Workout Fee ”: With respect to each Corrected Loan and each Corrected Lease, the fee payable to the Special Servicer pursuant to Section 3.11(f) .        “Workout Fee Rate ”: With respect to each Corrected Loan and each Corrected Lease, a fixed percentage rate equal to 0.50%.        Section 1.02 Other Definitional Provisions .        (a)  All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.        (b)  As used in this Agreement and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document, to the extent not defined, shall have the respective meanings given to them under GAAP. To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document shall control.        (c)  The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section and Exhibit references contained in this Agreement are references to Sections and Exhibits in or to this Agreement unless otherwise specified; a reference to a subsection or other subdivision without further reference to a Section is a reference to such subsection or other subdivision as contained in the Section in which the reference appears; and the words “include” and “including” shall mean without limitation by reason of enumeration.                                      33 US-DOCS\ 96557504.7 102826315.7 

 

      (d)  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as the feminine and neuter genders of such terms.        (e)  Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted assignees.        Section 1.03 Certain Calculations in Respect of the Leases and the Mortgage Loans .        (a)  All amounts collected in respect of any Lease in the form of payments from the related Tenants, Guaranties, Property Insurance Proceeds or otherwise shall be applied to amounts due and owing under the Lease in accordance with the express provisions of such Lease, and all amounts collected in respect of any Mortgage Loan in the form of payments from the related Borrower, Guaranties, Liquidation Proceeds or Property Insurance Proceeds shall be applied to amounts due and owing under the related Mortgage Note and Mortgage (including for principal and accrued and unpaid interest) in accordance with the express provisions of the related Mortgage Note and Mortgage; in the absence of such express provisions, all amounts collected shall be applied for purposes of this Agreement: (i) with respect to amounts collected in respect to any Lease, first , as a recovery of any related and unreimbursed Property Protection Advances, and second , in accordance with the Servicing Standard, but subject to Section 1.03(c) , as a recovery of any other amounts then due and owing under such Lease, including, without limitation, Additional Rent and Default Interest; and (ii) with respect to amounts collected in respect of any Mortgage Loan, first , as a recovery of any related and unreimbursed Property Protection Advances, second , as a recovery of accrued and unpaid interest at the related Interest Rate on such Mortgage Loan to but not including, as appropriate, the date of receipt or the Due Date in the Collection Period of receipt, third , as a recovery of principal of such Mortgage Loan then due and owing, including by reason of acceleration of the Mortgage Loan following a default thereunder (or, if a liquidation event has occurred in respect of such Mortgage Loan, a recovery of principal to the extent of its entire remaining unpaid principal balance), fourth , as a recovery of any Prepayment Consideration Payment then due and owing under such Mortgage Loan, fifth , in accordance with the Servicing Standard, but subject to Section 1.03(c) , as a recovery of any other amounts then due and owing under such Mortgage Loan, including Default Interest, and sixth , as a recovery of any remaining principal of such Mortgage Loan to the extent of its entire remaining unpaid principal balance. Any proceeds derived from an unleased Mortgaged Property (exclusive of related operating costs, including reimbursement of Property Protection Advances made by the Property Manager or the Back-Up Manager in connection with the operation and disposition of such Mortgaged Property) shall be applied by the Property Manager in the same manner as if they were Monthly Lease Payments due on the previously existing Lease for such Mortgaged Property until such Lease becomes a Liquidated Lease pursuant to the terms of such Lease and the related Lease Documents.        (b)  Collections in respect of each REO Property (exclusive of amounts to be applied to the payment of the costs of operating, managing, maintaining and disposing of such REO Property) shall be treated: first , as a recovery of any related and unreimbursed Property                                     34 US-DOCS\ 96557504.7 102826315.7 

 

Protection Advances; second , as a recovery of accrued and unpaid interest on the related Mortgage Loan at the related Interest Rate to but not including the Due Date in the Collection Period of receipt; third , as a recovery of principal of the related Mortgage Loan to the extent of its entire unpaid principal balance; and fourth , in accordance with the Servicing Standard, but subject to Section 1.03(c) , as a recovery of any other amounts deemed to be due and owing in respect of the related Mortgage Loan.        (c)  Insofar as amounts received in respect of any Lease, Mortgage Loan or REO Property which are allocable to fees and charges owing in respect of such Lease, Mortgage Loan or REO Property which constitute Additional Servicing Compensation payable to the Property Manager or Special Servicer are insufficient to cover the full amount of such fees and charges, such amounts shall be allocated between such of those fees and charges as are payable to the Property Manager, on the one hand, and as are payable to the Special Servicer, on the other, pro rata  in accordance with their respective entitlements with respect to such Lease, Mortgage Loan or REO Property.        (d)  The foregoing applications of amounts received in respect of any Lease, Mortgage Loan or REO Property shall be determined by the Property Manager and reflected in the appropriate monthly Determination Date Report and any Modified Collateral Detail and Realized Loss Report.        (e)  Notwithstanding the early termination of any Lease resulting from a default by the related Tenant, such Lease will be treated for purposes of determining Servicing Fees and Indenture Trustee Fees as remaining in effect until such Lease becomes a Liquidated Lease.        Section 1.04 Fee Calculations; Interest Calculations.        (a)  The calculation of the Servicing Fees shall be made in accordance with Section 3.11 . All dollar amounts calculated hereunder shall be rounded to the nearest penny with one-half of one penny being rounded up.        (b)  The amount of interest accrued on each Mortgage Loan during any Interest Accrual Period will be calculated in arrears based on the terms specified in the related Mortgage Documents.                                   ARTICLE II   REPRESENTATIONS AND WARRANTIES; RECORDINGS AND FILINGS; BOOKS AND      RECORDS; DEFECT, BREACH, CURE, REPURCHASE AND SUBSTITUTION;                          FINANCIAL COVENANTS        Section 2.01 Representations and Warranties of the Property Manager and the Back-Up Manager .                                      35 US-DOCS\ 96557504.7 102826315.7 

 

      (a)  The Property Manager represents and warrants to the other parties hereto, and for the benefit of the Issuers, the Indenture Trustee on behalf of the Noteholders, as of each Series Closing Date:             (i)   The Property Manager is a limited partnership duly organized, validly       existing, and in good standing under the laws of the State of Delaware and is in       compliance with the laws of each state (within the United States of America) in which any       Mortgaged Property is located to the extent necessary to its performance under this       Agreement;             (ii)  The execution and delivery of this Agreement by the Property Manager,       and the performance and compliance with the terms of this Agreement by the Property       Manager, do not violate its organizational documents or constitute an event that, with       notice or lapse of time, or both, would constitute a default under, or result in the breach       of, any material agreement or other instrument to which it is a party or by which it is       bound;             (iii) The Property Manager has the power and authority to enter into and       consummate all transactions to be performed by it contemplated by this Agreement, has       duly authorized the execution, delivery and performance by it of this Agreement, and has       duly executed and delivered this Agreement;             (iv)  This Agreement, assuming due authorization, execution and delivery by       each of the other parties hereto, constitutes a valid, legal and binding obligation of the       Property Manager, enforceable against the Property Manager in accordance with the       terms hereof (except as such enforceability may be limited by bankruptcy, insolvency,       fraudulent conveyance, reorganization, moratorium and other similar laws affecting       creditors’ rights generally or by general equitable principles, whether considered in a       proceeding at law or in equity and by an implied covenant of good faith and fair dealing);             (v)   The Property Manager is not in violation of, and its execution and delivery       of this Agreement and its performance and compliance with the terms of this Agreement       will not constitute a violation of, any law, any order or decree of any court or arbiter, or       any order, regulation or demand of any federal, state or local governmental or regulatory       authority, which violation is likely to affect materially and adversely either the ability of       the Property Manager to perform its obligations under this Agreement or the financial       condition of the Property Manager;             (vi)  No litigation is pending or, to the Property Manager’s knowledge,       threatened against the Property Manager that is reasonably likely to be determined       adversely to the Property Manager and, if determined adversely to the Property Manager,       would prohibit the Property Manager from entering into this Agreement or that, in the       Property Manager’s good faith and reasonable judgment, is likely to materially and       adversely affect either the ability of the Property Manager to perform its obligations       under this Agreement or the financial condition of the Property Manager;                                      36 US-DOCS\ 96557504.7 102826315.7 

 

           (vii) No consent, approval, authorization or order under any court or       governmental agency or body is required for the execution, delivery and performance by       the Property Manager of, or the compliance by the Property Manager with, this       Agreement or the consummation of the transactions of the Property Manager       contemplated by this Agreement, except for any consent, approval, authorization or order       that has been obtained or that if not obtained would not have a material and adverse       effect on the ability of the Property Manager to perform its obligations hereunder; and             (viii) Each officer and employee of the Property Manager that has       responsibilities concerning the management, servicing and administration of Mortgaged       Properties, Leases and Mortgage Loans is covered by errors and omissions insurance and       the fidelity bond as and to the extent required by Section 3.07(c) .        (b)  The representations and warranties of the Property Manager set forth in Section 2.01(a)  shall survive the execution and delivery of this Agreement and shall inure to the benefit of the Persons to whom and for whose benefit they were made until all amounts owed to the Noteholders under or in connection with this Agreement, the Indenture and the Notes have been indefeasibly paid in full. Upon discovery by any party hereto of any breach of any of the foregoing representations and warranties, the party discovering such breach shall give prompt written notice to the other parties.        (c)  Any successor Property Manager or Special Servicer shall be deemed to have made, as of the date of its succession, each of the representations and warranties set forth in Section 2.01(a) , subject to such appropriate modifications to the representation and warranty set forth in Section 2.01(a)(i)  to accurately reflect such successor’s jurisdiction of organization and whether it is a corporation, partnership, bank, association or other type of organization.        (d)  The Back-Up Manager represents and warrants to the other parties hereto, and for the benefit of the Issuers and the Indenture Trustee on behalf of the Noteholders, as of each Series Closing Date:             (i)   The Back-Up Manager is a national banking association duly organized,       validly existing, and in good standing under the laws of the United States of America and       is in compliance with the laws of each state (within the United States of America) in       which any Mortgaged Property is located to the extent necessary to its performance       under this Agreement;             (ii)  The execution and delivery of this Agreement by the Back-Up Manager,       and the performance and compliance with the terms of this Agreement by the Back-Up       Manager, do not violate its organizational documents or constitute an event that, with       notice or lapse of time, or both, would constitute a default under, or result in the breach       of, any material agreement or other instrument to which it is a party or by which it is       bound;             (iii) The Back-Up Manager has the corporate power and authority to enter into       and consummate all transactions to be performed by it contemplated by this Agreement,                                      37 US-DOCS\ 96557504.7 102826315.7 

 

      has duly authorized the execution, delivery and performance by it of this Agreement, and       has duly executed and delivered this Agreement;             (iv)  This Agreement, assuming due authorization, execution and delivery by       each of the other parties hereto, constitutes a valid, legal and binding obligation of the       Back-Up Manager, enforceable against the Back-Up Manager in accordance with the       terms hereof (except as such enforceability may be limited by bankruptcy, insolvency,       fraudulent conveyance, reorganization, moratorium and other similar laws affecting       creditors’ rights generally or by general equitable principles, whether considered in a       proceeding at law or in equity and by an implied covenant of good faith and fair dealing);             (v)   The Back-Up Manager is not in violation of, and its execution and delivery       of, this Agreement and its performance and compliance with the terms of this Agreement       will not constitute a violation of, any law, any order or decree of any court or arbiter, or       any order, regulation or demand of any federal, state or local governmental or regulatory       authority, which violation is likely to affect materially and adversely either the ability of       the Back-Up Manager to perform its obligations under this Agreement or the financial       condition of the Back-Up Manager;             (vi)  No litigation is pending or, to the Back-Up Manager’s knowledge,       threatened against the Back-Up Manager that is reasonably likely to be determined       adversely to the Back-Up Manager and, if determined adversely to the Back-Up       Manager, would prohibit the Back-Up Manager from entering into this Agreement or       that, in the Back-Up Manager’s good faith and reasonable judgment, is likely to       materially and adversely affect either the ability of the Back-Up Manager to perform its       obligations under this Agreement or the financial condition of the Back-Up Manager;             (vii) No consent, approval, authorization or order under any court or       governmental agency or body is required for the execution, delivery and performance by       the Back-Up Manager of, or the compliance by the Back-Up Manager with, this       Agreement or the consummation of the transactions contemplated by the Back-Up       Manager by this Agreement, except for any consent, approval, authorization or order that       has been obtained or that if not obtained would not have a material and adverse effect on       the ability of the Back-Up Manager to perform its obligations hereunder; and             (viii) Each officer and employee of the Back-Up Manager that has       responsibilities concerning the management, servicing and administration of the       Mortgaged Properties, Leases and Mortgage Loans is covered by errors and omissions       insurance and the fidelity bond as and to the extent required by Section 3.07(c) .        Section 2.02 Representations and Warranties of the Issuers .        (a)  Each Issuer hereby represents and warrants to each of the other parties hereto and for the benefit of the Indenture Trustee, on behalf of the Noteholders as of each Series Closing Date on or after the date on which such Issuer becomes a party to this Agreement:                                      38 US-DOCS\ 96557504.7 102826315.7 

 

           (i)   Such Issuer is a limited liability company duly organized, validly existing,       and in good standing under the laws of the State of Delaware and is in compliance with       the laws of each state (within the United States of America) in which any applicable       Mortgaged Property is located to the extent necessary for the Issuer to perform its       obligations under this Agreement;             (ii)  The execution and delivery by such Issuer of this Agreement and the       consummation by such Issuer of the transactions provided for in this Agreement have       been duly authorized by all necessary action on the part of the Issuer;             (iii) The execution and delivery of this Agreement by such Issuer, and the       performance and compliance with the terms of this Agreement by such Issuer, do not       violate its organizational documents or constitute an event that, with notice or lapse of       time, or both, would constitute a default under, or result in the breach of, any material       agreement or other instrument to which it is a party or by which it is bound;             (iv)  Such Issuer has the limited liability company power and authority to enter       into and consummate all transactions to be performed by it contemplated by this       Agreement, has duly authorized the execution, delivery and performance by it of this       Agreement and any applicable Joinder Agreement, and has duly executed and delivered       this Agreement and any applicable Joinder Agreement;             (v)   This Agreement, assuming due authorization, execution and delivery by       each of the other parties hereto, constitutes a valid, legal and binding obligation of such       Issuer, enforceable against such Issuer in accordance with the terms hereof (except as       such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,       reorganization, moratorium and other similar laws affecting creditors’ rights generally or       by general equitable principles, whether considered in a proceeding at law or in equity       and by an implied covenant of good faith and fair dealing);             (vi)  Such Issuer is not in violation of, and its execution and delivery of, this       Agreement or any applicable Joinder Agreement and its performance and compliance       with the terms of this Agreement will not constitute a violation of, any law, any order or       decree of any court or arbiter, or any order, regulation or demand of any federal, state or       local governmental or regulatory authority, which violation is likely to affect materially       and adversely either the ability of such Issuer to perform its obligations under this       Agreement or the financial condition of such Issuer;             (vii) No litigation is pending or, to such Issuer’s knowledge, threatened against       such Issuer that is reasonably likely to be determined adversely to such Issuer and, if       determined adversely to such Issuer, would prohibit such Issuer from entering into this       Agreement or that, in such Issuer’s good faith and reasonable judgment, is likely to       materially and adversely affect either the ability of such Issuer to perform its obligations       under this Agreement or the financial condition of such Issuer;             (viii) No consent, approval, authorization or order under any court or       governmental agency or body is required for the execution, delivery and performance by                                     39 US-DOCS\ 96557504.7 102826315.7 

 

      such Issuer of, or the compliance by such Issuer with, this Agreement or the       consummation of the transactions of such Issuer contemplated by this Agreement, except       for any consent, approval, authorization or order that has been obtained or that if not       obtained would not have a material and adverse effect on the ability of such Issuer to       perform its obligations hereunder;             (ix)  Each officer and employee of such Issuer that has responsibilities       concerning the management, servicing and administration of the applicable Mortgaged       Properties, Leases and Mortgage Loans is covered by errors and omissions insurance and       the fidelity bond as and to the extent required by Section 3.07(c) ; and             (x)   To such Issuer’s knowledge, each of the Mortgaged Properties owned by       such Issuer or securing a Mortgage Loan owned by such Issuer is a commercial property.        (b)  The representations and warranties of each Issuer set forth in Section 2.02(a)  shall survive the execution and delivery of this Agreement and shall inure to the benefit of the Persons to whom and for whose benefit they were made for so long as such Issuer remains in existence. Upon discovery by any party hereto of any breach of any of the foregoing representations and warranties, the party discovering such breach shall give prompt written notice to the other parties.        Section 2.03 Recordings and Filings; Books and Records .        (a)  In connection with the Grant made by the Issuers to the Indenture Trustee pursuant to the Granting Clause of the Indenture, each Issuer shall cause the delivery of the applicable Lease Files for the Leases and the applicable Loan Files for the applicable Mortgage Loans to the Custodian in accordance with the Custody Agreement for the benefit of the Indenture Trustee in furtherance of such Grant and such Issuer shall cause: (i) with respect to the Mortgaged Properties owned by such Issuer (A) each Mortgage, Financing Statement and continuation statement referred to in the definition of “Lease File” in the Custody Agreement to be submitted to the appropriate Title Company (as defined below) on or before the First Collateral Date with respect thereto for recording or filing, as the case may be, in the appropriate public office for real property records or for Financing Statements, at the expense of such Issuer and (B) each title insurance binder or commitment referred to in the definition of “Lease File” in the Custody Agreement to be issued as a final title insurance policy by the title companies (the “Title Companies ”) issuing the same (the “ Title Insurance Policies ”); and (ii) with respect to the Mortgage Loans owned by such Issuer, promptly (and in any event within 60 days following the applicable First Collateral Date) cause each assignment of Mortgage in favor of the Collateral Agent referred to in clauses (v) and (vi) of the definition of “Loan File” in the Custody Agreement and each Financing Statement on the applicable UCC form in favor of the Collateral Agent referred to in clause (iii) of such definition to be submitted for recording or filing, as the case may be, in the appropriate public office for real property records or for Financing Statements. Each such assignment and each Mortgage shall reflect that, following recording, it should be returned by the public recording office to the Custodian, on behalf of the Indenture Trustee (or to the Property Manager (or its designee), who shall then deliver such recorded document to the Custodian), and each such Financing Statement shall reflect that the file copy thereof should be returned to the Custodian, for the benefit of the Indenture Trustee (or to the                                     40 US-DOCS\ 96557504.7 102826315.7 

 

Property Manager (or its designee), who shall then deliver such filed document to the Custodian) following filing; provided , that in those instances where the public recording office retains the original Mortgage, assignment of Mortgage and assignment of Assignment of Leases, the Property Manager, on behalf of the Indenture Trustee, shall obtain therefrom a certified copy of the recorded original. Each of the Title Companies issuing the Title Insurance Policies shall be instructed by the applicable Issuer to deliver such policies to the Custodian, for the benefit of the Indenture Trustee. The Property Manager, on behalf of the Indenture Trustee, shall use reasonable efforts to diligently pursue with the Title Companies the return of each of the Mortgages, assignments of Mortgage and Financing Statements from the appropriate recording or filing offices and the delivery of the Title Insurance Policies by the related Title Companies. If any such document or instrument is lost or returned unrecorded or unfiled, as the case may be, because of a defect therein, the applicable Issuer shall promptly prepare and cause to be executed a substitute therefor or cure such defect, as the case may be, and thereafter, such Issuer shall cause the same to be duly recorded or filed, as appropriate. The Property Manager shall file any continuation statements necessary to continue the effectiveness of the Financing Statements.        (b)  Each Issuer shall deliver to and deposit with, or cause to be delivered to and deposited with, the Property Manager all documents and records in the possession of such Issuer or any related Originators that relate to the applicable Mortgaged Properties, Leases and Mortgage Loans and that are not required to be a part of a Lease File or a Loan File in accordance with the definition thereof, and the Property Manager shall hold all such documents and records in trust on behalf of the Indenture Trustee (in hard copy or electronic format). The Property Manager’s possession of such documents and records shall be at the will of the related Issuer and the Indenture Trustee for the sole purpose of facilitating the servicing and administration of the applicable Leases, Mortgage Loans and Mortgaged Properties pursuant to this Agreement and such possession by the Property Manager shall be in a custodial capacity only on behalf of the Indenture Trustee. The ownership of such documents and records shall be vested in each Issuer, as applicable, subject to the lien of the Indenture, and the ownership of all documents and records with respect to the applicable Leases, Mortgage Loans and Mortgaged Properties that are prepared by or which come into possession of the Property Manager or the Special Servicer shall immediately vest in such Issuer, subject to the lien of the Indenture, and shall be delivered to and deposited with the Property Manager, in the case of documents or records in the hands of the Special Servicer, and retained and maintained in trust by the Property Manager in such custodial capacity only on behalf of the Indenture Trustee, except as otherwise provided herein. All such documents and records shall be appropriately maintained in a manner to clearly reflect the ownership of such documents and records by the applicable Issuers, subject to the lien of the Indenture, and that such documents and records are being held on behalf of the Indenture Trustee, and the Property Manager shall release such documents and records from its custody only in accordance with this Agreement.        (c)  With respect to any Mortgaged Property or Mortgage Loan the First Collateral Date of which occurred prior to the Applicable Series Closing Date, no additional documents shall be delivered by any Issuer or Property Manager to, or reviewed by, the Custodian in connection with the Applicable Series Closing Date, it being understood that the related Loan                                      41 US-DOCS\ 96557504.7 102826315.7 

 

Files and related Lease Files were previously delivered by each Issuer and reviewed by the Custodian.        (d)  The Property Manager shall monitor the delivery of the Lease Files and the Loan Files to the Custodian, for the benefit of the Indenture Trustee.        Section 2.04 Repurchase or Transfer for Collateral Defects and Breaches of Representations and Warranties .        (a)  If any party hereto discovers that any document required to be included in any Loan File or Lease File is missing (after the date it is required to be delivered) or otherwise deficient (any such absence or deficiency, an “ Applicable Absence or Deficiency ”) or that there exists a breach of any of the representations and warranties made by any Originator set forth in the applicable Property Transfer Agreement, any Issuer as required under Section 2.19 of the Indenture or Section 3.04 of the Series 2014-1 Supplement or the Support Provider under Section 2 of the applicable Performance Undertaking with respect to any applicable Mortgage Loan or Mortgaged Property or related Lease (such representations and warranties, the “Applicable Representations ”), and if such absence or deficiency or breach materially and adversely affects the value of such Mortgage Loan or such Mortgaged Property and related Lease or the interests of any Issuer or the Noteholders therein, such party shall give prompt written notice thereof to the other parties to this Agreement. If such absence, deficiency or breach materially and adversely affects the value of the applicable Mortgage Loan or Mortgaged Property or the related Lease or the interests of the applicable Issuer or the Noteholders in the related Mortgage Loan or Mortgaged Property or related Lease (a “ Collateral Defect ”), within 60 days following notice thereof (which may be extended for an additional 60 days if such Collateral Defect is capable of being cured but not within such initial 60 day period and the applicable Cure Party is diligently proceeding with the cure), an applicable Cure Party shall (a) deliver the missing document or cure the deficiency or breach, as the case may be, in all material respects or (b) repurchase such Mortgage Loan or Mortgaged Property from the applicable Issuer at an amount equal to the Payoff Amount for such Mortgage Loan or Mortgaged Property (or if the applicable Issuer acquired such Mortgage Loan or Mortgaged Property by contribution from the applicable Cure Party, transfer the applicable Payoff Amount to the applicable Issuer upon which transfer the applicable Issuer may at its option reconvey such Mortgage Loan or Mortgaged Property to such Cure Party), or exchange one or more Qualified Substitute Mortgage Loans or Qualified Substitute Mortgaged Properties for such Mortgage Loan or Mortgaged Property (or if the applicable Issuer assigned such Mortgage Loan or Mortgaged Property by contribution from the applicable Cure Party, substitute a Qualified Substitute Mortgage Loan or Qualified Substitute Mortgaged Property by contribution to the applicable Issuer, upon which contribution the applicable Issuer may at its option reconvey the Mortgage Loan or Mortgaged Property being substituted for by the applicable Cure Party), as the case may be (subject to Section 7.04); provided , that if (i) such Collateral Defect is capable of being cured (including by delivery of a missing document) but not within such 60-day period, (ii) an applicable Cure Party has commenced and is diligently proceeding with the cure (which may include the delivery of a missing document) of such Collateral Defect within such 60-day period, and (iii) prior to the end of such 60-day period, an applicable Cure Party shall have delivered to the applicable Issuer, the Property Manager and the Indenture Trustee a certification executed on                                     42 US-DOCS\ 96557504.7 102826315.7 

 

its behalf by an officer thereof setting forth the reason such Collateral Defect is not capable of being cured within an initial 60-day period and what actions such Cure Party is pursuing in connection with the cure thereof and stating that it anticipates that such Collateral Defect will be cured within an additional period of 60 days, then such Cure Party shall have an additional 60 days commencing on the 61 st  day from receipt of such certification by the Indenture Trustee to (x) complete such cure or (y) effectuate a repurchase of, or exchange for, the applicable Mortgage Loan or Mortgaged Property as described in clause (b) above. If the affected Mortgaged Property or Mortgage Loan is to be repurchased, funds in the amount of the Payoff Amount shall be wired to the Release Account, and the Property Manager shall promptly notify the applicable Issuer, the Back-Up Manager, and the Indenture Trustee when such deposit is made. In addition, failure to deliver the documents specified in clauses (i), (ii), (iv) or (ix) of the definition of “Loan File” with respect to any Mortgage Loan or clauses (i), (iv) or (v) in the definition of “Lease File” with respect to any Mortgaged Property, in each case to the Collateral Agent, shall be deemed to constitute a Collateral Defect with respect to such Mortgaged Property or Mortgage Loan, as applicable.        In the event that an applicable Cure Party elects to substitute one or more Qualified Substitute Mortgaged Properties or Qualified Substitute Mortgage Loans for the affected Mortgaged Property or Mortgage Loan pursuant to this Section 2.04(a) , such Cure Party shall give notice of same to the Back-Up Manager and each Issuer and deliver, or cause to be delivered, to the Custodian all documents as specified in the definition of “Lease File” or “Loan File” in the Custody Agreement with respect to each such Qualified Substitute Mortgaged Property or Qualified Substitute Mortgage Loan no later than the date such Qualified Substitute Mortgaged Property or Qualified Substitute Mortgage Loan is acquired by the applicable Issuer. Notwithstanding anything to the contrary herein, Monthly Lease Payments due with respect to Qualified Substitute Mortgaged Properties and Monthly Loan Payments due with respect to Qualified Substitute Mortgage Loans in the month in which the applicable substitution occurs shall not be part of the Collateral and will be retained by the Property Manager and remitted by the Property Manager to the applicable Cure Party. Notwithstanding anything to the contrary herein, in the event that any Mortgaged Property or Mortgage Loan is to be substituted for (and released) pursuant to this Section 2.04(a) , the applicable Issuer shall be entitled to receive the Monthly Lease Payment due on the Lease for any such Mortgaged Property in the month in which such substitution occurs and the Monthly Loan Payment due on any such Mortgage Loan in the month in which such substitution occurs and thereafter the applicable Person acquiring such Mortgaged Property or Mortgage Loan shall be entitled to retain all amounts received in respect of such Lease or Mortgage Loan. On or prior to the effective date of any substitution or repurchase pursuant to this Section 2.04(a) , the Property Manager shall deliver to the Indenture Trustee and the Issuers an amended Mortgaged Property Schedule and Mortgage Loan Schedule reflecting the addition (if any) to the Collateral of each new Qualified Substitute Mortgaged Property and Lease and each new Qualified Substitute Mortgage Loan and the removal from the Collateral of each Mortgaged Property and Lease and each Mortgage Loan that, in either case, was repurchased or substituted for. For the avoidance of doubt, in the event that any Cure Party takes any action described in this Section 2.4(a) , the failure to take such action shall not constitute a default or breach with respect to any other Cure Party. Notwithstanding anything to the contrary herein, it is understood and agreed that the obligations of the Cure Parties expressly set forth in this Section 2.04(a)  constitute (i) the sole remedies available to the Noteholders and                                     43 US-DOCS\ 96557504.7 102826315.7 

 

to the Indenture Trustee on their behalf in respect of a breach of the Applicable Representations and (ii) the sole remedies available to the Noteholders and to the Indenture Trustee on their behalf in respect of an Applicable Absence or Deficiency.        (b)  Upon receipt of an Officer’s Certificate from the Property Manager to the effect that all requirements for any repurchase or substitution pursuant to Section 2.4(a)  have been satisfied, which Officer’s Certificate shall be furnished by the Property Manager promptly after such requirements have been satisfied, the Indenture Trustee or the Custodian, as applicable, shall release or cause to be released to the Person acquiring such Mortgaged Property or Mortgage Loan, or its designee, the related Lease File or Loan File, as applicable, and each of the applicable Issuer, the Indenture Trustee and the Collateral Agent shall execute and deliver such instruments of release, transfer and assignment, in each case without recourse, as shall be provided to it and are reasonably necessary to vest in such Person the ownership of such Mortgaged Property and the related Lease or Mortgage Loan, free and clear of the lien of the Indenture and the related Mortgage. The Property Manager shall, and is hereby authorized and empowered by each applicable Issuer and the Indenture Trustee to, prepare, execute and deliver in its own name, on behalf of such Issuer, the Indenture Trustee and the Collateral Agent or any of them, the endorsements, assignments and other documents contemplated by this Section 2.04(b) , and such Issuer, the Indenture Trustee and the Collateral Agent shall execute and deliver any limited powers of attorney substantially in the form of Exhibit D  necessary to permit the Property Manager to do so; provided , however , that none of the Issuers, the Issuer Members, the Indenture Trustee or the Collateral Agent shall be held liable for any misuse of any such power of attorney by the Property Manager and the Property Manager hereby agrees to indemnify the Issuers, the Issuer Members, the Indenture Trustee and the Collateral Agent against, and hold the Issuers, the Issuer Members, the Indenture Trustee and the Collateral Agent harmless from, any loss or liability arising from any misuse of such power of attorney. In connection with any such repurchase or substitution by any Cure Party, the Property Manager or the Special Servicer, as appropriate, shall deliver the related Lease File or Loan File, as applicable, to such Cure Party.        (c)  If any Cure Party defaults on its obligations to repurchase or substitute for any Mortgaged Property as contemplated by Section 2.04(a)  or the applicable Performance Undertaking, as the case may be, the Property Manager shall promptly notify the Issuers, the Back-Up Manager and the Indenture Trustee and shall take such actions with respect to the enforcement of such obligations, including the institution and prosecution of appropriate proceedings, as the Property Manager shall determine, in its good faith and reasonable judgment, are in the best interests of the applicable Issuer and the Noteholders. In the event the Property Manager fails to take such actions, the Back-Up Manager shall do so if it has notice of such default by the Property Manager. Any and all expenses incurred by the Property Manager or the Back-Up Manager with respect to the foregoing shall constitute Property Protection Advances in respect of the affected Mortgaged Property and neither the Property Manager nor the Back-Up Manager shall have any obligation to any such expenses if it determines that such amounts would constitute Nonrecoverable Advances.        Section 2.05 Non-Petition .        The Issuers will cause each party to any property transfer agreement, purchase and sale agreement or loan purchase agreement between any such Issuer and seller of Mortgage Loans or                                     44 US-DOCS\ 96557504.7 102826315.7 

 

Mortgaged Properties pursuant thereto (other than such agreement in which the applicable Issuer does not incur any material liability or obligation or in which the applicable Issuer satisfies each of its material liabilities or obligations thereunder as of the date of such agreement) to covenant and agree that such party shall not institute against, or join any other Person in instituting against, any Issuer, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or any other proceeding under any federal or state bankruptcy or similar law.                                  ARTICLE III    ADMINISTRATION AND SERVICING OF MORTGAGED PROPERTIES AND LEASES        Section 3.01 Administration of the Mortgaged Properties , Leases and Mortgage Loans .        (a)  Each of the Property Manager and the Special Servicer shall service and administer the Mortgaged Properties, Leases and Mortgage Loans in the Collateral Pool that it is obligated to service and administer pursuant to this Agreement on behalf of the applicable Issuers, and in the best interests and for the benefit of the holders of the Notes and the LLC Interests (as a collective whole) in accordance with any and all applicable laws and the terms of this Agreement, the Property Insurance Policies and the respective Leases and Mortgage Loans and, to the extent consistent with the foregoing, in accordance with the Servicing Standard. Without limiting the foregoing, and subject to Section 3.20 , (i) the Property Manager shall service and administer each Lease (and each related Mortgaged Property) and each Mortgage Loan as to which no Servicing Transfer Event has occurred and each Corrected Lease and Corrected Loan, and (ii) the Special Servicer shall service and administer each Lease (and each related Mortgaged Property) and each Mortgage Loan as to which a Servicing Transfer Event has occurred and that is not a Corrected Lease or Corrected Loan, as applicable; provided , however , that the Property Manager shall continue to collect information and prepare and deliver all reports to the Indenture Trustee and the Issuers required hereunder with respect to any Specially Serviced Leases (and the related Mortgaged Properties) and Specially Serviced Loans, and further to render such incidental services with respect to any Specially Serviced Assets as are specifically provided for herein. No direction, consent or approval or lack of direction, consent or approval of any Controlling Party or the Requisite Global Majority may (and the Special Servicer or the Property Manager will ignore and act without regard to any such advice or approval or lack of approval that the Special Servicer or the Property Manager has determined, in its reasonable, good faith judgment, would) (A) require or cause the Special Servicer or the Property Manager to violate applicable law, the Servicing Standard or the terms of any Mortgage Loan or any Lease or (B) expand the scope of the Property Manager’s or Special Servicer’s responsibilities under this Agreement. In addition, neither the Property Manager nor the Special Servicer, acting in its individual capacity (and, for the avoidance of doubt, not in the capacity of Special Servicer or Property Manager), shall take any action or omit to take any action as lessor of any Collateral if such action or omission would materially and adversely affect the interests of the holders of the Notes or the LLC Interests or the Issuers. None of the Property Manager, the Special Servicer or the Back-Up Manager shall be liable to the Indenture Trustee, any Noteholder or any other Person for following any direction of a Controlling Party hereunder, and any action taken in accordance with such direction shall be deemed to be in accordance with the Servicing Standard and deemed not to breach such party’s obligations hereunder.                                     45 US-DOCS\ 96557504.7 102826315.7 

 

      (b)  Subject to Section 3.01(a) , the Property Manager and the Special Servicer each shall have full power and authority, acting alone, to do or cause to be done any and all things in connection with such servicing and administration of the Mortgage Loans and Mortgaged Properties and related Leases that it may deem necessary or desirable. Without limiting the generality of the foregoing, each of the Property Manager and the Special Servicer, in its own name, with respect to each of the Mortgaged Properties, Leases and Mortgage Loans it is obligated to service or administer hereunder, is hereby authorized and empowered by the applicable Issuers and the Indenture Trustee to execute and deliver, on behalf of each such Issuer and the Indenture Trustee: (i) any and all financing statements, continuation statements and other documents or instruments necessary to maintain the lien created by any Mortgage or other security document in the related Asset File on the related Collateral; (ii) in accordance with the Servicing Standard and subject to Sections 3.08  and 3.19 , any and all modifications, waivers, amendments or consents to or with respect to any documents contained in the related Asset File; and (iii) any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments. Subject to Section 3.10 , each applicable Issuer and the Indenture Trustee shall, at the written request of a Servicing Officer of the Property Manager or the Special Servicer, furnish, or cause to be so furnished, to the Property Manager or the Special Servicer, as the case may be, any limited powers of attorney (substantially in the form of Exhibit D  attached hereto) and other documents necessary or appropriate to enable it to carry out its servicing and administrative duties hereunder; provided , however , that none of the Issuers, the Issuer Members or the Indenture Trustee shall be held liable for any misuse of any such power of attorney by the Property Manager or the Special Servicer and each of the Property Manager and the Special Servicer hereby agree to indemnify the Issuers, the Issuer Members, the Back-Up Manager and the Indenture Trustee against, and hold the Issuers, the Issuer Members, the Back-Up Manager and the Indenture Trustee harmless from, any cost, loss or liability arising from any misuse by it of such power of attorney. Notwithstanding anything contained herein to the contrary, the Property Manager shall not, without the Indenture Trustee’s written consent: (i) initiate any action, suit or proceeding solely under the Indenture Trustee’s name without indicating the Indenture Trustee’s representative capacity or (ii) take any action with the intent to cause, and which actually does cause, the Indenture Trustee to be registered to do business in any state.        (c)  Promptly after any request therefor, the Property Manager shall provide to the Indenture Trustee: (i) the most recent inspection report prepared or obtained by the Property Manager or the Special Servicer in respect of each Mortgaged Property pursuant to Section 3.12(a) ; (ii) the most recent available operating statement and financial statements of the related Obligor collected by the Property Manager or the Special Servicer pursuant to Section 3.12(b) , together with the accompanying written reports to be prepared by the Property Manager or the Special Servicer, as the case may be, pursuant to Section 3.12(c) ; and (iii) any and all notices and reports with respect to any Mortgaged Property as to which environmental testing is contemplated by Section 10.08 of the Indenture.        (d)  The relationship of each of the Property Manager and the Special Servicer to the Issuers and the Indenture Trustee under this Agreement is intended by the parties to be and shall be that of an independent contractor and not that of a joint venturer, partner or agent.                                      46 US-DOCS\ 96557504.7 102826315.7 

 

      (e)  The Property Manager will cause the form of each Mortgage with respect to Mortgaged Properties added to the Collateral Pool after the Applicable Series Closing Date to be prepared with review and comment by counsel licensed to practice in the state where such Mortgage is filed.        Section 3.02 Collection of Lease Payments and Loan Payments; Lockbox Accounts; Lockbox Transfer Accounts .        (a)  Each of the Property Manager and the Special Servicer shall undertake reasonable efforts to collect all payments called for under the terms and provisions of the Leases and the Mortgage Loans it is obligated to service hereunder and shall, to the extent such procedures shall be consistent with this Agreement (including Section 3.01(a)) , follow such collection procedures as it would follow were it the owner of such Leases and Mortgage Loans. Consistent with the foregoing (and without regard to Section 3.19) , the Special Servicer or the Property Manager, as the case may be, may waive any Net Default Interest or late payment charge it is entitled to in connection with any delinquent payment on a Lease or Mortgage Loan it is obligated to service hereunder.        (b)  The Property Manager shall establish and maintain one or more segregated accounts (each, a “ Lockbox Account ”) with one or more banks (each, a “ Lockbox Account Bank ”). Each Lockbox Account shall be an Eligible Account and may be an account to which payments relating to other assets serviced or managed by the Property Manager are paid; provided , that such account shall be in the nature of a clearing account and the Property Manager shall not have access to such account; provided , further, that the Property Manager shall at all times be able to readily identify any amounts that constitute Collateral. Each of the Property Manager and the Special Servicer shall, as to those Leases and Mortgage Loans it is obligated to service hereunder, instruct the related Obligor to make all Monthly Lease Payments and Monthly Loan Payments to a Lockbox Account. The Property Manager shall cause all amounts deposited into the Lockbox Account with respect to the Collateral to be transferred to the Collection Account or a Lockbox Transfer Account within one Business Day after such funds have been identified, cleared and become available in accordance with the polices of the Lockbox Account Bank; provided , that the Property Manager shall cause all such amounts to be transferred to the Collection Account or the Lockbox Transfer Account no later than seven Business Days after such amounts have been deposited into a Lockbox Account (the requirements set forth in this sentence, the “ Lockbox Transfer Requirements ”).        (c)  The Property Manager may establish and maintain one or more segregated accounts in the name of the Property Manager on behalf of the Indenture Trustee, held for the benefit of the Noteholders (each, a “ Lockbox Transfer Account ”) with one or more banks (each, a “ Lockbox Transfer Account Bank ”). Each Lockbox Transfer Account shall be an Eligible Account. Each Lockbox Transfer Account shall be subject to an Account Control Agreement (in form and substance satisfactory to the Indenture Trustee) among the Property Manager, the Indenture Trustee and the applicable Lockbox Transfer Account Bank. Except as expressly permitted herein, neither the Property Manager nor the Issuers will have any right of withdrawal from the Lockbox Transfer Account, and the Property Manager hereby covenants                                      47 US-DOCS\ 96557504.7 102826315.7 

 

and agrees that it shall not withdraw, or direct any Person to withdraw, any funds from the Lockbox Transfer Account except as expressly permitted hereunder.        Section 3.03 Collection of Real Estate Taxes and Insurance Premiums; Servicing Accounts; Property Protection Advances; P&I Advances; Emergency Property Expenses .        (a)  Each of the Property Manager and the Special Servicer shall, as to those Mortgaged Properties, Leases and Mortgage Loans it is obligated to service and administer hereunder, establish and maintain one or more accounts (the “ Servicing Accounts ”), and shall cause to be deposited from the Lockbox Transfer Account or otherwise into such Servicing Accounts all Escrow Payments, security deposits received from Tenants pursuant to the Leases, subject to the Tenants’ rights to such amounts (“ Lease Security Deposits ”), and amounts required to be paid by the applicable Issuers as lessors under the Leases in respect of sales taxes (“ Sales Tax Deposits ”). Notwithstanding the foregoing, no Servicing Accounts shall be established and maintained with respect to those Mortgaged Properties, Leases or Mortgage Loans pursuant to which the Tenant or Borrower is not required to make Escrow Payments, Lease Security Deposit or Sales Tax Deposits. Each Servicing Account shall be an Eligible Account. Withdrawals of amounts so collected from a Servicing Account (other than Lease Security Deposits) may be made only to: (i) effect payment of real estate or personal property taxes, sales taxes, assessments, insurance premiums, ground rents (if applicable) and comparable items (including taxes or other amounts that could constitute liens prior to or on parity with the lien of the related Mortgage); (ii) refund to Obligors any sums as may be determined to be overages; (iii) pay interest, if required and as described below in clause (b) , to Obligors on balances in the Servicing Account; (iv) clear and terminate the Servicing Account at the termination of this Agreement in accordance with Section 8.01 ; (v) withdraw any amounts deposited in error or (vi) for any other purpose required by the applicable Lease or Mortgage Loan; provided , however , that Lease Security Deposits may not be withdrawn for such purposes and shall be withdrawn only in accordance with the terms of the related Lease, to be repaid to the related Tenant or applied in full or partial satisfaction of the obligations of the related Tenant in accordance with the Servicing Standard (for application in the same manner as payments in respect of such obligations). Any remaining portion of such Lease Security Deposit (after no further allocations could be required pursuant to clauses (i) through (vi) above) shall be withdrawn by the Property Manager from the Servicing Account and deposited into the Collection Account and shall constitute part of the Available Amount on the next Payment Date.        (b)  The Property Manager and the Special Servicer shall each pay or cause to be paid to the Obligors interest, if any, earned on the investment of funds in Servicing Accounts maintained thereby, if required by law or the terms of the related Lease or Mortgage Loan. If the Property Manager or the Special Servicer shall deposit in a Servicing Account any amount not required to be deposited therein, it may at any time withdraw such amount from such Servicing Account, any provision herein to the contrary notwithstanding.        (c)  Each of the Property Manager and the Special Servicer shall, as to those Mortgaged Properties and Mortgage Loans it is obligated to service hereunder, maintain accurate records with respect to any Mortgaged Property and Mortgage Loan reflecting the status of real estate taxes, ground rents, assessments and other similar items that are or may become a lien thereon, and the status of insurance premiums payable in respect thereof that, in                                     48 US-DOCS\ 96557504.7 102826315.7 

 

each case, the related Obligor is contractually or legally obligated to pay under the terms of the applicable Lease or Mortgage Loan or applicable law, and the Property Manager shall effect payment thereof, as a Property Protection Advance or otherwise as payment of an Emergency Property Expense from funds on deposit in the Collection Account, as described below, if not paid by such Obligor prior to the applicable due, penalty or termination date, promptly after the Property Manager or Special Servicer, as the case may be, receives actual notice from any source of such nonpayment by such Obligor. For purposes of effecting any such payment for which it is responsible, the Property Manager or the Special Servicer, as the case may be, shall apply Escrow Payments as allowed under the terms of the related Lease or Mortgage Loan or, if such Lease or Mortgage Loan does not require the related Obligor to escrow for the payment of real estate taxes, assessments and insurance premiums, each of the Property Manager and the Special Servicer shall, as to those Leases and Mortgage Loans it is obligated to service hereunder, enforce the requirement of the related Lease and Mortgage Loan that such Obligor make payments in respect of such items at the time they first become due.        (d)  In accordance with the Servicing Standard, the Property Manager shall make Property Protection Advances with respect to each Mortgaged Property, Lease and Mortgage Loan in the Collateral Pool; provided , that in no event shall the Property Manager be required to make any Property Protection Advance that it determines would constitute a Nonrecoverable Property Protection Advance in accordance with Section 3.03(f) . Notwithstanding anything to the contrary herein, (i) the Property Manager shall not have any obligation to advance funds in respect of delinquent payments of principal or interest in respect of the Mortgage Loans and (ii) the Property Manager shall not have any obligation to advance real estate taxes or premiums on Insurance Policies that the related obligor or the Issuer is not contractually or legally obligated to pay, nor shall it have any obligation to monitor the timely payment of real estate taxes and insurance premiums the payment of which is the responsibility of a person other than the applicable Tenant or Borrower or Issuer; provided  that if the Property Manager has actual knowledge of the nonpayment of such real estate taxes and insurance premiums, it shall be obligated to make such advance in accordance with the provisions set forth herein if it would otherwise make such advance in accordance with the Servicing Standard. Each of the Property Manager, the Indenture Trustee and the Back-Up Manager will be entitled to recover any Property Protection Advance (i) from general collections if such Property Protection Advance is determined to be a Nonrecoverable Property Protection Advance, (ii) from any amounts subsequently received on the related Mortgage Loan or Lease or with respect to the related Mortgaged Property with respect to which such Property Protection Advance was made or (iii) in the case of the Back-Up Manager or Indenture Trustee, to the extent not recovered under clauses (i)  and (ii) immediately above, from the Property Manager or any Successor Property Manager. The Property Manager shall give prompt written notice to the Indenture Trustee and the Back-Up Manager in the event that it has not made, and does not intend to make, any Property Protection Advance it is required to make hereunder. Promptly upon obtaining knowledge that the full amount of any Property Protection Advance required to be made by the Property Manager has not been so made, the Indenture Trustee shall provide notice of such failure to a Servicing Officer of the Property Manager and the Back-Up Manager. If the Indenture Trustee does not receive confirmation that the full amount of such Property Protection Advance has been made within four (4) Business Days following the date of such notice, then the Back-Up Manager, upon written notice from the Indenture Trustee, shall make the portion of                                     49 US-DOCS\ 96557504.7 102826315.7 

 

such Property Protection Advance that was required to be, but was not, made by the Property Manager in accordance with the Servicing Standard, unless the Back-Up Manager determines in accordance with the Servicing Standard that such Property Protection Advance would be a Nonrecoverable Property Protection Advance. Promptly upon obtaining knowledge that the full amount of any Property Protection Advance required to be made by the Back-Up Manager has not been so made, then the Indenture Trustee shall make the portion of such Property Protection Advance that was required to be, but was not, made by the Back-Up Manager, unless the Indenture Trustee determines in its commercially reasonable judgment that such Property Protection Advance would be a Nonrecoverable Property Protection Advance. In making any such determination, the Indenture Trustee may conclusively rely on any determination of nonrecoverability by the Property Manager or the Back-Up Manager, as the case may be. Any such Property Protection Advance made by the Back-Up Manager or the Indenture Trustee shall thereafter be reimbursable to the such Indenture Trustee or Back-Up Manager, together with Advance Interest thereon, in accordance Section 2.11 of the Indenture or from any Successor Property Manager.        (e)  If, prior to making any Property Protection Advance, the Property Manager shall have determined (which shall be evidenced by an Officer’s Certificate delivered to the Indenture Trustee), in accordance with the Servicing Standard, (i) that such Property Protection Advance, if made, would constitute a Nonrecoverable Property Protection Advance, and (ii) that the payment of such cost, expense or other amount for which a Property Protection Advance might be made is nonetheless in the best interest of the Noteholders, the Property Manager shall, in accordance with the Servicing Standard, withdraw (or, in the event the Property Manager is Spirit Realty, direct the Indenture Trustee to withdraw) funds from the Collection Account and use such funds in order to pay such costs, expenses and other amounts (collectively, “Emergency Property Expenses ”) to the extent necessary to preserve the security interest in, and value of, any Mortgaged Property or Mortgage Loan, as applicable. Any such funds withdrawn from the Collection Account to pay Emergency Property Expenses shall not constitute part of the Available Amount on any Payment Date.        (f)  In determining whether it has made a Nonrecoverable Property Protection Advance or whether any proposed Property Protection Advance, if made, would constitute a Nonrecoverable Property Protection Advance, the Property Manager (or, if applicable, the Back- Up Manager or Indenture Trustee) shall be entitled to (a) consider (among other things) the obligations of the Obligor under the terms of the related Lease Documents or Loan Documents as they may have been modified, (b) consider the related Mortgaged Properties or REO Properties in their “as is” or then current conditions and occupancies, as modified by such party’s assumptions (consistent with the Servicing Standard in the case of the Property Manager or the Back-Up Manager) regarding the possibility and effects of future adverse changes with respect to such Mortgaged Properties or REO Properties, (c) estimate and consider (consistent with the Servicing Standard in the case of the Property Manager or the Back-Up Manager) (among other things) future expenses, and (d) estimate and consider (consistent with the Servicing Standard in the case of the Property Manager or the Back-Up Manager) (among other things) the timing of recoveries. If applicable to a Series of Notes, none of the Property Manager, the Back-Up Manager or the Indenture Trustee, as applicable, shall take into account amounts on deposit in the Post-Closing Acquisition Reserve Account in determining whether it has made a                                     50 US-DOCS\ 96557504.7 102826315.7 

 

Nonrecoverable Property Protection Advance or whether any proposed Property Protection Advance, if made, would constitute a Nonrecoverable Property Protection Advance. In addition, any such Person may update or change its recoverability determinations at any time (but not reverse any other Person’s determination that a Property Protection Advance is a Nonrecoverable Property Protection Advance) and, consistent with the Servicing Standard, in the case of the Property Manager, the Back-Up Manager or the Indenture Trustee, may obtain promptly upon request, from the Special Servicer, any reasonably required analysis, appraisals or market value estimates or other information in the Special Servicer’s possession for making a recoverability determination. The determination by the Property Manager, the Back-Up Manager or the Indenture Trustee, as the case may be, that it has made a Nonrecoverable Property Protection Advance or that any proposed Property Protection Advance, if made, would constitute a Nonrecoverable Property Protection Advance, or any updated or changed recoverability determination, shall be evidenced by an Officer’s Certificate delivered by such Back-Up Manager, Property Manager or Indenture Trustee to each other such Person and to the Issuers. Any such determination shall be conclusive and binding on the applicable Issuer, the Property Manager, the Noteholders the Back-Up Manager and the Indenture Trustee. The Officer’s Certificate shall set forth such determination of nonrecoverability and the considerations of the Property Manager, the Back-Up Manager or the Indenture Trustee, as applicable, forming the basis of such determination (which shall be accompanied by, to the extent available, information such as related income and expense statements, rent rolls, occupancy status and property inspections, and shall include an appraisal of the related Lease, Mortgage Loan or Mortgaged Property or REO Property). The Special Servicer shall promptly furnish any party required to make Property Protection Advances hereunder with any information in its possession regarding the Specially Serviced Assets which are Leases, Mortgaged Properties, Mortgage Loans and REO Properties as such party required to make Property Protection Advances may reasonably request for purposes of making recoverability determinations. In the case of a cross collateralized Mortgage Loan, such recoverability determination shall take into account the cross collateralization of the related cross-collateralized Mortgage Loan.        (g)  In the event that a P&I Shortfall exists with respect to any Series for any Payment Date, the Property Manager shall deposit an amount equal to such P&I Shortfall with respect to such Series into a Series Account for such Series no later than 11:00 a.m. New York time on the related Remittance Date, and such amount shall be added to (and applied as) Series Available Amount for such Series for such Payment Date (any such amount, a “ P&I Advance ”).        (h)  Notwithstanding anything to the contrary herein, none of the Property Manager, the Back-Up Manager or the Indenture Trustee shall be required to make any P&I Advance that it determines would constitute a Nonrecoverable P&I Advance. In making a determination that any P&I Advance is (or is not) a Nonrecoverable Advance, the Property Manager, the Back-Up Manager or the Indenture Trustee, as applicable, may consider only the obligations of the Issuers under the terms of the transaction documents as they may have been modified, the Collateral in “as is” or then current condition and the timing and availability of anticipated cash flows as modified by such party’s assumptions regarding the possibility and effect of future adverse changes, together with such other factors, including but not limited to an estimate of future expenses, timing of recovery, the inherent risk of a protracted period to complete liquidation or the potential inability to liquidate Collateral as a result of intervening creditor claims or of a                                     51 US-DOCS\ 96557504.7 102826315.7 

 

bankruptcy proceeding affecting the Issuer and the effect thereof on the existence, validity and priority of any security interest encumbering the Collateral, available cash on deposit in the Collection Account, the future allocations and disbursements of cash on deposit in the Collection Account, and the net proceeds derived from any of the foregoing. If applicable to a Series of Notes, none of the Property Manager, the Back-Up Manager or the Indenture Trustee, as applicable, shall take into account amounts on deposit in the Post-Closing Acquisition Reserve Account in such determination of whether a P&I Advance is (or is not) a Nonrecoverable Advance. Any such determination shall be conclusive and binding on the applicable Issuer, the Property Manager, the Special Servicer, the Noteholders the Back-Up Manager and the Indenture Trustee.        (i)  If the Indenture Trustee does not receive confirmation that the full amount of such P&I Advance has been made by 5:00 p.m. New York time on such Remittance Date for any Series, then the Back-Up Manager, after receipt of written notice from the Indenture Trustee, shall deposit, into a Series Account for such Series, the portion of such P&I Advance that was required to be, but was not, made by the Property Manager in respect of such Series by 10:00 a.m. New York time on the Payment Date, unless the Back-Up Manager determines (in accordance with clause (h) above) that such P&I Advance would be a Nonrecoverable P&I Advance. If the Indenture Trustee does not receive confirmation that the full amount of such P&I Advance for such Series that was required to be made in respect of such Series by such Back-Up Manager has been made by 11:00 a.m. New York time on such Remittance Date, then the Indenture Trustee, shall deposit, into a Series Account for such Series, the portion of such P&I Advance that was required to be, but was not, made by the Property Manager in respect of such Series on or prior to the time the Series Available Amount is distributed to such Series in accordance with the terms of the Indenture, unless the Indenture Trustee determines (in accordance with clause (h) above) that such P&I Advance would be a Nonrecoverable P&I Advance. In making any such determination, the Indenture Trustee may conclusively rely on any determination of nonrecoverability by the Property Manager or the Back-Up Manager, as the case may be.        (j)  Additionally, in the event that a Series of Notes is proposed to be issued after the Applicable Series Closing Date, the Property Manager will give notice to the Back-Up Manager and the Indenture Trustee of such proposed issuance. Within ten business days of receipt of such notice, the Back-Up Manager will be obligated to notify the Property Manager and the Indenture Trustee in writing as to whether the Back-Up Manager is willing to make Advances after such Series of Notes is issued. Notwithstanding anything to the contrary herein, in the event that the Back-Up Manager delivers to the Property Manager and the Indenture Trustee a notice stating that it is unwilling to make such Advances after such issuance (with respect to any such Series of Notes, a “ Decline to Advance Notice ”), the Property Manager in its sole discretion (and without the consent of the Indenture Trustee, any Issuer or any Noteholder) will be permitted to remove the Back-Up Manager (a “ Discretionary Back-Up Manager Removal ”) and appoint a successor Back-Up Manager (so long as the Rating Condition is satisfied in connection with such appointment); provided , that, no such removal will be effective until such a successor Back-Up Manager is appointed. In the event of any such removal, the Issuer, the Indenture Trustee and the Back-Up Manager shall be required to (i) cooperate reasonably to effectuate the transfer of the back-up servicing rights, duties and obligations to such successor and (ii) take any actions                                     52 US-DOCS\ 96557504.7 102826315.7 

 

reasonably requested by the Property Manager in order to effectuate such appointment. In the event that a Series of Notes is issued with respect to which the Back-Up Manager has delivered to the Property Manager and the Indenture Trustee a Decline to Advance Notice but a successor Back-Up Manager has not been appointed, the Back-Up Manager will have no further obligation to make any Advance from and after the date (the “ Non-Advance Date ”) of issuance of such Series of Notes (but, for the avoidance of doubt, will have the right to be reimbursed for any Advances previously made). If the Back-Up Manager has delivered a Decline to Advance Notice to the Property Manager and the Indenture Trustee and a successor Back-Up Manager has not been appointed, the obligations of the Indenture Trustee to make Advances shall automatically cease as of the Non-Advance Date (but, for the avoidance of doubt, the Indenture Trustee will have the right to be reimbursed for any Advances previously made). So long as the Back-Up Manager has not been removed, after any Non-Advance Date, the Back-Up Manager may deliver an Officer’s Certificate to each of the Property Manager and the Indenture Trustee stating that it wishes to reinstate its obligation to make Advances. Upon such delivery, (x) the Back-Up Manager and the Indenture Trustee will again be obligated to make Advances to the extent required in accordance with this Agreement and in the manner described in this Agreement (as if the applicable Decline to Advance Notice had not been delivered) and (y) the Property Manager will no longer be permitted to effectuate a Discretionary Back-Up Manager Removal, in each case until a subsequent Decline to Advance Notice is delivered by the Back-Up Manager (which may only be delivered in connection with an additional proposed issuance of a Series of Notes).        Section 3.04 Collection Account; Release Account; Exchange Reserve Account .        (a)  The Property Manager shall establish and maintain one or more separate accounts in the name of the Indenture Trustee for the benefit of the Noteholders, for the collection of payments on and other amounts received in respect of the Leases, the Mortgaged Properties and the Mortgage Loans (collectively, the “ Collection Account ”), which shall be established in such manner and with the type of depository institution (the “ Collection Account Bank ”) specified in this Agreement that permits the Collection Account to be an Eligible Account. The Collection Account shall be an Eligible Account. If the Property Manager is Spirit Realty, the Property Manager shall establish and maintain the Collection Account at a Collection Account Bank at the Indenture Trustee and the Indenture Trustee shall have the sole right of withdrawal from such account; provided , that the Property Manager shall be permitted to make withdrawals from such Collection Account to the extent expressly permitted under the terms hereof. If the Property Manager is not Spirit Realty or another Affiliate of the Issuers, the Collection Account shall be subject to an Account Control Agreement among the applicable Issuers, the Property Manager, the Indenture Trustee and the Collection Account Bank.        Unless otherwise expressly required hereunder, the Property Manager shall deposit or cause to be deposited in the Collection Account, (i) other than payments and collections deposited into a Lockbox Account, within two (2) Business Days after receipt, the following payments and collections received or made by or on behalf of the Property Manager on or after the later of the applicable Transfer Date (other than payments due before the applicable Transfer Date) and (ii) in the case of collections and payments deposited into a Lockbox Account, in accordance with the Lockbox Transfer Requirements, the Property Manager shall instruct each Lockbox Account Bank to transfer the following payments and collections deposited in the                                     53 US-DOCS\ 96557504.7 102826315.7 

 

Lockbox Account (A) to the Lockbox Transfer Account and, within one Business Day thereafter from the Lockbox Transfer Account into the Collection Account or (B) directly into the Collection Account:             (i)   all payments on account of Monthly Lease Payments, Monthly Loan       Payments and, so long as an Early Amortization Event or Sweep Period has occurred and       is continuing, Excess Cashflow;             (ii)  all payments of other amounts payable by the Obligors on the Leases and       the Mortgage Loans, including without limitation Prepayment Consideration Payments;             (iii) all Property Insurance Proceeds, Condemnation Proceeds (other than       proceeds paid to the related Borrower or Tenant as required by Loan Documents or       Lease Documents, as applicable, proceeds applied to the restoration or remediation of       property or otherwise released in accordance with the Servicing Standard) and all       Liquidation Proceeds;             (iv)  all cash proceeds and other amounts (other than Property Insurance       Proceeds and REO Revenues) from the release or substitution of any Mortgage Loan or       Mortgaged Property to the extent not deposited into the Release Account or any       Exchange Account; and all cash proceeds from the release or substitution of any       Mortgage Loan or Mortgaged Property transferred from the Release Account or the       Exchange Reserve Account to the Collection Account pursuant to Section 3.05(b)  and all       proceeds representing earnings on investments in the Release Account (including interest       on any Permitted Investments) made with such proceeds;             (v)   any amounts required to be deposited into the Collection Account       pursuant to Section 3.07(b)  in connection with losses resulting from a deductible clause in       a blanket hazard insurance policy;             (vi)  any amounts received on account of payments under the Guaranties, the       Property Transfer Agreements, the Performance Undertakings or the Environmental       Indemnity Agreements;             (vii) all REO Revenues; and             (viii) any other amounts required to be so deposited under this Agreement.        Except as expressly permitted hereunder, the Property Manager shall not make any withdrawals from the Collection Account except in accordance with this Section 3.04  and Section 3.05(a)  hereof. The Collection Account shall be maintained as a segregated account, separate and apart from trust funds created for certificates, bonds or notes of other series of notes (other than any Series) serviced by and the other accounts of the Property Manager.        Upon direct receipt by the Special Servicer of any of the amounts described above with respect to any Specially Serviced Asset or the Mortgaged Property or REO Property relating thereto, the Special Servicer shall promptly but in no event later than the second Business Day                                     54 US-DOCS\ 96557504.7 102826315.7 

 

after receipt (or, if later, the date on which such amounts are available to the Special Servicer), remit such amounts to the Property Manager for deposit into the Collection Account in accordance with this Section 3.04(a) , unless the Special Servicer determines, consistent with the Servicing Standard, that a particular item should not be deposited therein because of a restrictive endorsement or other reasonably appropriate reason. The Property Manager shall not deposit (or cause to be deposited) into the Collection Account or the Lockbox Transfer Account any collections allocated to Companion Loans, any Additional Servicing Compensation, amounts received on account of Excess Cashflow (so long as no Early Amortization Event or Sweep Period has occurred and is continuing), Sales Tax Deposits, Escrow Payments, Lease Security Deposits, amounts received as reimbursement for any cost paid by the Issuers as lessors or lenders under the Leases or Mortgage Loans, as applicable, amounts collected by or on behalf of the Issuers and held in escrow or impound as lenders or lessors to pay future obligations or other amounts that the Property Manager is not required to deposit into the Collection Account as expressly set forth herein.        With respect to any such amounts paid by check to the order of the Special Servicer, the Special Servicer shall endorse such check to the order of the Property Manager and shall deliver promptly, but in no event later than one (1) Business Day after receipt, any such check to the Property Manager by overnight courier, unless the Special Servicer determines, consistent with the Servicing Standard, that a particular item cannot be so endorsed and delivered because of a restrictive endorsement or other reasonably appropriate reason. The funds held in the Collection Account may be held as cash or invested in Permitted Investments in accordance with the provisions of Section 3.06(a) . Any interest or other income earned on funds in the Collection Account will be added to the Available Amount.        (b)  The Property Manager shall establish and maintain at a bank designated by the Indenture Trustee a segregated account in the name of the Indenture Trustee for the deposit of cash proceeds from the sale of any Mortgage Loan or Mortgaged Property or receipt of any Balloon Payments or Principal Prepayments (the “ Release Account ”). The Release Account shall be an Eligible Account. The funds held in the Release Account may be held as cash or invested in Permitted Investments in accordance with the provisions of Section 3.06(b) . The Release Account and the amounts on deposit therein will be pledged to the Indenture Trustee under the Indenture. The Property Manager will deposit or cause to be deposited in the Release Account any cash proceeds from the sale of any Mortgage Loan or Mortgaged Property and any Balloon Payments or Principal Prepayments received in connection with any Mortgage Loan within one Business Day after such funds have been identified, cleared and become available.        (c)  The Property Manager shall establish and maintain at a bank designated by the Indenture Trustee a segregated account in the name of the Indenture Trustee for the deposit of cash proceeds from the sale of any Mortgaged Property released pursuant to Section 7.01(a) (the “Exchange Reserve Account ”). The Exchange Reserve Account shall be an Eligible Account. The funds held in the Exchange Reserve Account may be held as cash or invested in Permitted Investments in accordance with the provisions of Section 3.06(b) . The Exchange Reserve Account and the amounts on deposit therein will be pledged to the Indenture Trustee under the Indenture. The Property Manager will deposit or cause to be deposited, on behalf of the Issuers, any Exchange Cash Collateral.                                     55 US-DOCS\ 96557504.7 102826315.7 

 

      Section 3.05 Withdrawals From the Collection Account and the Release Account .        (a)  If the Property Manager is Spirit Realty, Spirit MTA or any of their respective affiliates, then the Indenture Trustee shall make withdrawals upon the written direction of the Property Manager from the Collection Account (i) on each Remittance Date, for delivery by wire transfer of immediately available funds for deposit into the Payment Account, of the Available Amount for the related Payment Date for application by the Indenture Trustee to make payments in accordance with the priorities set forth pursuant to Section 2.11(b) of the Indenture, (ii) on any date, to pay any Emergency Property Expenses (pursuant to Section 3.03(e))  and (iii) on any date, to remove amounts deposited in the Collection Account in error. If the Property Manager is an entity other than Spirit Realty, Spirit MTA or any of their respective affiliates, then the Property Manager shall make withdrawals from the Collection Account (i) on each Remittance Date, for delivery by wire transfer of immediately available funds for deposit into the Payment Account, of the Available Amount for the related Payment Date for application by the Indenture Trustee to make payments in accordance with the priorities set forth pursuant to Section 2.11(b) of the Indenture, (ii) at any time on or prior to each Remittance Date, to pay the Property Management Fee, the Back-Up Fee, any Special Servicing Fees, any Liquidation Fees and any Workout Fees (each, pursuant to Section 3.11) , (iii) on any date, to pay any Emergency Property Expenses (pursuant to Section 3.03(e))  or (iv) on any date, to remove amounts deposited in the Collection Account in error. Except as provided in Section 3.04(a) , no other amounts may be withdrawn from the Collection Account by the Property Manager.        (b)  Amounts deposited in the Release Account with respect to any Mortgage Loan, Lease or Mortgaged Property (including Net Investment Earnings on funds on deposit therein) shall be applied by the Property Manager (or the Indenture Trustee based on the instructions of the Property Manager if the Property Manager is Spirit Realty), to reimburse the Property Manager, the Special Servicer and the Back-Up Manager any amounts owed with respect to unreimbursed Extraordinary Expenses, Property Protection Advances and Advance Interest thereon and Emergency Property Expenses related to such Mortgage Loan, Lease or Mortgaged Property and to pay the expenses related to the release of such Mortgage Loan, Lease or Mortgaged Property. After any such reimbursements have been made, any remaining amounts deposited in the Release Account with respect to any Mortgage Loan, Lease or Mortgaged Property (such amount with respect to any Mortgage Loan, Lease or Mortgaged Property, the “Net Release Price ” thereof) shall be applied by the Property Manager (or the Indenture Trustee based on the instructions of the Property Manager if the Property Manager is Spirit Realty) to either (i) permit an Issuer to acquire (or to acquire on behalf of an Issuer) Qualified Substitute Mortgage Loans or Qualified Substitute Mortgaged Properties within twelve months following the release of the applicable Mortgage Loan or Mortgaged Property (in the event that such amounts were received in connection with such a release) or following the receipt of such amounts (in the event that such amounts were received in connection with a Balloon Payment or Principal Prepayment, as applicable) or (ii) after such period concludes with respect to the applicable amounts (or, if the Property Manager elects, prior to the conclusion of such twelve- month period) be deposited as Unscheduled Proceeds into the Collection Account and included in the Available Amount on the Payment Date relating to the Collection Period in which such deposit occurs. Upon the occurrence and during the continuance of an Early Amortization Event, all amounts in the Release Account (and all amounts that otherwise would have been deposited                                     56 US-DOCS\ 96557504.7 102826315.7 

 

into the Release Account excluding amounts on deposit in the Exchange Account, but including equivalent amounts on deposit in the Exchange Reserve Account) shall be deposited as Unscheduled Proceeds into the Collection Account and will be included in the Available Amount on the Payment Date relating to the Collection Period in which such deposit occurs. If the Like- Kind Exchange Program is established, in connection with the sale or disposition of a Mortgaged Property, the Property Manager may elect to deposit or cause to be deposited the related Net Release Price into an Exchange Account (in lieu of the Release Account) for the purpose of consummating an Exchange pursuant to Section 7.01(d).        Section 3.06 Investment of Funds in the Collection Account and the Release Account .        (a)  The Property Manager may direct any institution maintaining the Collection Account to invest the funds held therein in one or more Permitted Investments bearing interest or sold at a discount, and maturing, unless payable on demand, not later than the Business Day immediately preceding the Remittance Date relating to the Payment Date for which such funds will constitute Available Amounts, which may be in the form of a standing direction.        (b)  The Property Manager may direct any institution maintaining the Release Account or Exchange Reserve Account to invest the funds held therein in one or more specific Permitted Investments bearing interest or sold at a discount, and maturing, unless payable on demand, not later than the Business Day immediately preceding the day such amounts are required to be distributed pursuant to Section 3.05(b) , which may be in the form of a standing direction.        (c)  The Property Manager may direct any institution maintaining the Servicing Accounts with respect to Lease Security Deposits to invest the funds held therein in one or more Permitted Investments bearing interest or sold at a discount, and maturing, unless payable on demand, not later than the Business Day immediately preceding the day such amounts are required to be distributed pursuant to the related Lease and this Agreement, which may be in the form of a standing direction.        (d)  [Reserved]        (e)  All Permitted Investments in the Collection Account, the Release Account, the Expense Reserve Account and the Servicing Accounts shall be held to maturity, unless payable on demand. Any investment of funds in the Collection Account, the Release Account, the Expense Reserve Account and the Servicing Accounts shall be made in the name of the Indenture Trustee (in its capacity as such). The Property Manager shall promptly deliver to the Indenture Trustee, and the Indenture Trustee shall maintain continuous possession of, any Permitted Investment that is either (i) a “certificated security,” as such term is defined in the Uniform Commercial Code, or (ii) other property in which the lack of possession of such property could reasonably be expected to materially adversely affect the Noteholders’ interest in such property. If amounts on deposit in the Collection Account, the Release Account, the Expense Reserve Account or the Servicing Accounts are at any time invested in a Permitted Investment payable on demand, the Property Manager shall:             (i)   consistent with any notice required to be given thereunder, demand that       payment thereon be made on the last day such Permitted Investment may otherwise                                     57 US-DOCS\ 96557504.7 102826315.7 

 

      mature thereunder in an amount equal to the lesser of (1) all amounts then payable       thereunder and (2) the amount required to be withdrawn on such date; and             (ii)  demand payment of all amounts due thereunder promptly upon       determination by the Property Manager that such Permitted Investment would not       constitute a Permitted Investment in respect of funds thereafter on deposit in the       Collection Account, the Release Account, the Expense Reserve Account or the Servicing       Accounts, as applicable.        (f)  Interest and investment income realized on funds deposited in the Collection Account and, if applicable, the Release Account and the Exchange Reserve Account  that constitute part of the Available Amount for any Collection Period, to the extent of the Net Investment Earnings, if any, shall be added to the Available Amount for such Collection Period and distributed in accordance with Section 2.11 of the Indenture on the applicable Payment Date. Notwithstanding the investment of funds held in the Collection Account, for purposes of the calculations hereunder, including the calculation of the Available Amount, the amounts so invested shall be deemed to remain on deposit in the Collection Account. Except as provided in Section 5.03(a) , the Property Manager shall have no liability for any investment of funds in the Collection Account, the Release Account, the Expense Reserve Account , the Exchange Reserve Account  or Servicing Account.        (g)  Except as otherwise expressly provided in this Agreement, if any default occurs in the making of a payment due under any Permitted Investment, or if a default occurs in any other performance required under any Permitted Investment, the Property Manager may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate proceedings.        Section 3.07 Maintenance of Insurance Policies; Errors and Omissions and Fidelity Coverage .        (a)  The Property Manager (other than with respect to Specially Serviced Assets) and the Special Servicer (with respect to Specially Serviced Assets) shall use reasonable efforts in accordance with the Servicing Standard to cause the related Obligor to maintain for each Mortgaged Property all insurance coverage as is required under the terms of the related Lease or Mortgage Loan, as applicable (including for the avoidance of doubt, any Environmental Policy); provided , that if and to the extent that any such Lease or Mortgage Loan permits the lessor thereunder any discretion (by way of consent, approval or otherwise) as to the insurance coverage that the related Obligor is required to maintain, the Property Manager or the Special Servicer, as the case may be, shall exercise such discretion in a manner consistent with the Servicing Standard; and provided , further , that, if and to the extent that a Lease or Mortgage Loan so permits, the related Obligor shall be required to obtain the required insurance coverage from Qualified Insurers that have a claims-paying ability rated at least “A:VIII” by A.M. Best’s Key Rating Guide and at least “A” by S&P, which are licensed to do business in the state wherein the related Obligor or the Mortgaged Property subject to the policy, as applicable, is located. If such Obligor does not maintain the required insurance or, with respect to any Environmental Policy in place as of the applicable First Collateral Date, the Property Manager will itself cause such insurance to be maintained with Qualified Insurers meeting such criteria; provided , that the                                     58 US-DOCS\ 96557504.7 102826315.7 

 

Property Manager shall not be required to maintain such insurance if the Indenture Trustee (as mortgagee of record on behalf of the Noteholders) does not have an insurable interest or the Property Manager has determined (in its reasonable judgment in accordance with the Servicing Standard) that either (i) such insurance is not available at a commercially reasonable rate and the subject hazards are at the time not commonly insured against by prudent owners of properties similar to the Mortgaged Property located in or around the region in which such Mortgaged Property is located or (ii) such insurance is not available at any rate. Subject to Section 3.17(b) , the Special Servicer shall also use reasonable efforts to cause to be maintained for each REO Property no less insurance coverage than was previously required of the Obligor under the related Mortgage or Lease and at a minimum, (i) hazard insurance with a replacement cost rider and (ii) comprehensive general liability insurance, in each case, in an amount customary for the type and geographic location of such REO Property and consistent with the Servicing Standard; provided , that all such insurance shall be obtained from Qualified Insurers that, if they are providing casualty insurance, shall have a claims-paying ability rated at least “A:VIII” by A.M. Best’s Key Rating Guide and “A” by S&P. The cost of any such insurance coverage obtained by either the Property Manager or the Special Servicer shall be a Property Protection Advance to be paid by the Property Manager. All such insurance policies shall contain (if they insure against loss to property) a “standard” mortgagee clause, with loss payable to the Property Manager, as agent of and for the account of the applicable Issuer and the Indenture Trustee, and shall be issued by an insurer authorized under applicable law to issue such insurance. Any amounts collected by the Property Manager or the Special Servicer under any such policies (other than amounts to be applied to the restoration or repair of the related Mortgaged Property or amounts to be released to the related Tenant, in each case in accordance with the Servicing Standard) shall be deposited in the Collection Account, subject to withdrawal pursuant to Section 2.11 of the Indenture.        (b)  The Property Manager or Special Servicer may satisfy its obligations under Section 3.07(a)  by obtaining, maintaining or causing to be maintained a blanket or forced place insurance policy. If applicable, the Property Manager or the Special Servicer shall obtain and maintain, or cause to be obtained and maintained on behalf of each applicable Issuer, a master forced place insurance policy or a blanket policy (or an endorsement to an existing policy) insuring against hazard losses (not otherwise insured by a Tenant or Borrower due to a default by such Tenant or Borrower under the insurance covenants of its Lease or Mortgage Loan or because a Tenant or Borrower permitted to self-insure fails to pay for casualty losses) on the applicable Mortgaged Properties that it is required to service and administer, which policy shall (i) be obtained from a Qualified Insurer having a claims-paying ability rated at least “A:VIII” by A.M. Best’s Key Rating Guide and at least “A” by S&P, and (ii) provide protection equivalent to the individual policies otherwise required under Section 3.07(a) . The Property Manager and the Special Servicer shall bear the cost of any premium payable in respect of any such blanket policy (other than blanket policies specifically obtained for Mortgaged Properties or REO Properties) without right of reimbursement; provided , that if the Property Manager or the Special Servicer, as the case may be, causes any Mortgaged Property or REO Property to be covered by such blanket policy in order to satisfy such obligations, the incremental costs of such insurance applicable to such Mortgaged Property or REO Property shall constitute, and be reimbursable as, a Property Protection Advance (it being understood that such incremental costs incurred by the Special Servicer shall be paid by the Property Manager to the Special Servicer and that such payment shall constitute, and be reimbursable as, a Property Protection Advance). If the Property                                     59 US-DOCS\ 96557504.7 102826315.7 

 

Manager or Special Servicer, as applicable, causes any Mortgaged Property or REO Property to be covered by a force-placed insurance policy, the incremental costs of such insurance applicable to such Mortgaged Property or REO Property (which shall not include any minimum or standby premium payable for such policy whether or not any Mortgaged Property or REO Property is covered thereby) shall be paid as a Property Protection Advance (it being understood that such incremental costs incurred by the Special Servicer shall be paid by the Property Manager to the Special Servicer and that such payment shall constitute, and be reimbursable as, a Property Protection Advance). Any such policy may contain a deductible clause (not in excess of a customary amount) in which case the Property Manager or the Special Servicer, as appropriate, shall, if there shall not have been maintained on the related Mortgaged Property or REO Property a hazard insurance policy complying with the requirements of Section 3.07(a)  and there shall have been one or more losses that would have been covered by such policy, promptly deposit into the Collection Account from its own funds the amount not otherwise payable under the blanket policy in connection with such loss or losses because of such deductible clause. The Property Manager or the Special Servicer, as appropriate, shall prepare and present, on behalf of itself, the Indenture Trustee and the applicable Issuer, claims under any such blanket policy in a timely fashion in accordance with the terms of such policy. Any payments on such policy shall be made to the Property Manager as agent of and for the account of the applicable Issuer, the Noteholders and the Indenture Trustee.        (c)  Each of the Property Manager, the Special Servicer and the Back-Up Manager shall at all times during the term of this Agreement (or, in the case of the Special Servicer, at all times during the term of this Agreement in which Specially Serviced Assets exist as part of the Collateral) keep in force with a Qualified Insurer having a claims paying ability rated at least “A:VIII” by A.M. Best’s Key Rating Guide and at least “A” by S&P, a fidelity bond in such form and amount as does not adversely affect any rating assigned by any Rating Agency to the Notes; provided , that, unless any Rating Agency then rating any Notes at the request of an Issuer states that the form or amount of any such fidelity bond would be the sole cause of or be a material reason for a downgrade, qualification or withdrawal of any rating then assigned by such Rating Agency to such Notes, the form and amount of such fidelity bond shall be deemed to not adversely affect any rating assigned by any Rating Agency to the Notes. Each of the Property Manager and the Special Servicer shall be deemed to have complied with the foregoing provision if an Affiliate thereof has such fidelity bond coverage and, by the terms of such fidelity bond, the coverage afforded thereunder extends to the Property Manager or the Special Servicer, as the case may be. Such fidelity bond shall provide that it may not be canceled without ten (10) days’ prior written notice to the Issuers.        Each of the Property Manager, the Special Servicer and the Back-Up Manager shall at all times during the term of this Agreement (or, in the case of the Special Servicer, at all times during the term of this Agreement in which Specially Serviced Assets exist as part of the Collateral) also keep in force with a Qualified Insurer having a claims-paying ability rated at least “A: VIII” by A.M. Best’s Key Rating Guide and at least “A” by S&P, a policy or policies of insurance covering loss occasioned by the errors and omissions of its officers, employees and agents in connection with its servicing obligations hereunder, which policy or policies shall name the Indenture Trustee as an additional insured and shall be in such form and amount as does not adversely affect any rating assigned by any Rating Agency to the Notes; provided , that, unless                                     60 US-DOCS\ 96557504.7 102826315.7 

 

any Rating Agency then rating any Notes at the request of an Issuer states that the form or amount of any such insurance would be the sole cause of or be a material reason for a downgrade, qualification or withdrawal of any rating then assigned by such Rating Agency to such Notes, the form and amount of such insurance shall be deemed to not adversely affect any rating assigned by any Rating Agency to the Notes. Each of the Property Manager and the Special Servicer shall be deemed to have complied with the foregoing provisions if an Affiliate thereof has such insurance and, by the terms of such policy or policies, the coverage afforded thereunder extends to the Property Manager or the Special Servicer, as the case may be. Any such errors and omissions policy shall provide that it may not be canceled without ten (10) days’ prior written notice to the Issuers.        Each of the Property Manager and the Special Servicer shall at all times during the term of this Agreement (or, in the case of the Special Servicer, at all times during the term of this Agreement in which Specially Serviced Assets exist as part of the Collateral) also, on behalf of the Issuers, keep in force with a Qualified Insurer having a claims-paying ability rated at least “A:VIIF" by A.M. Best’s Key Rating Guide and at least “A” by S&P, a lessor’s general liability insurance policy or policies, which policy or policies shall be in such form and amount as does not adversely affect any rating assigned by any Rating Agency to the Notes; provided , that, unless any Rating Agency then rating any Notes at the request of an Issuer states that the form or amount of any such insurance would be the sole cause of or be a material reason for a downgrade, qualification or withdrawal of any rating then assigned by such Rating Agency to such Notes, the form and amount of such insurance shall be deemed to not adversely affect any rating assigned by any Rating Agency to the Notes. Any such general liability insurance policy shall provide that it may not be canceled without ten (10) days’ prior written notice to the Issuers and the Indenture Trustee. Any payments on such policy shall be made to the Property Manager as agent of and for the account of any applicable Issuer and the Indenture Trustee.        The insurance described in this clause (c)  shall be required to include coverage in respect of losses that may be sustained as a result of an officer’s or employee’s of the Property Manager or the Special Servicer misappropriation of funds and errors and omissions.        If the Property Manager (or its corporate parent), the Special Servicer (or its corporate parent) or the Back-Up Manager (or its corporate parent), as applicable, are rated not lower than “A2” by Moody’s, “A” by S&P and “A” by Fitch Ratings, Inc., the Property Manager, the Special Servicer or the Back-Up Manager, as applicable, may self-insure with respect to any insurance coverage or fidelity bond coverage required hereunder, in which case it shall not be required to maintain an insurance policy with respect to such coverage; provided , that Spirit Realty may not self-insure with respect to any such insurance coverage or fidelity bond.        Section 3.08 Enforcement of Alienation Clauses; Consent to Assignment .        With respect to those Leases and Mortgage Loans it is obligated to service hereunder, each of the Property Manager and the Special Servicer, on behalf of the Issuers and the Indenture Trustee for the benefit of the holders of the Notes, shall enforce the restrictions contained in the related Lease and Mortgage Loans or in any other document in the related Lease File or Loan File on transfers or further encumbrances of the related Mortgaged Property and Mortgage Loan and on transfers of interests in the related Borrower or Tenant, unless it has determined,                                     61 US-DOCS\ 96557504.7 102826315.7 

 

consistent with the Servicing Standard, that waiver of such restrictions would be in accordance with the Servicing Standard. After having made any such determination, the Property Manager or the Special Servicer, as the case may be, shall deliver to the Indenture Trustee (and the Property Manager in the case of the Special Servicer) an Officer’s Certificate setting forth the basis for such determination. In connection with any assignment or sublet by a Tenant of its interest under a Lease, the applicable Issuer shall not take any action to release such Tenant from its obligations under such Lease unless a new Tenant approved by such Issuer assumes the obligations under such Lease and any applicable requirements set forth in the applicable Lease have been satisfied.        Section 3.09 Realization Upon Specially Serviced Assets.        (a)  If the Special Servicer has determined, in its good faith and reasonable judgment, that any material default related to a Specially Serviced Asset will not be cured by the related Obligor, the Special Servicer will be required to evaluate the possible alternatives available in accordance with the Servicing Standard and this Agreement with respect to such Specially Serviced Asset. Such alternatives may include, among other things, modification or restructuring of the related Mortgage Loan or Lease, sale or exchange of the related Mortgage Loan or Mortgaged Property in accordance with Section 3.18  or the enforcement of remedies available under the related Mortgage Loan or Lease in accordance with Section 3.19 , including foreclosure of the Mortgage Loan or eviction of the Tenant, as applicable, and the re-leasing of the related Mortgaged Property. Subject to all other provisions and limitations set forth herein, the Special Servicer shall take such actions with respect to each Specially Serviced Asset as it determines in accordance with the Servicing Standard, acting in the best interests of the applicable Issuer and the Noteholders. If the Property Manager re-leases any Mortgaged Property, the Property Manager shall deliver to the Indenture Trustee and the Issuers an amended Exhibit A-1  reflecting the addition of such Lease to the Collateral Pool.        (b)  Upon the request of the Special Servicer, the Property Manager shall pay or cause to be paid, as Property Protection Advances or Emergency Property Expenses, as applicable, in accordance with Section 3.17(c) , all costs and expenses (other than costs or expenses that would, if incurred, constitute a Nonrecoverable Property Protection Advance) incurred in connection with each Specially Serviced Asset, and shall be entitled to reimbursement therefor as provided herein and in Section 2.11 of the Indenture. If and when the Property Manager or the Special Servicer deems it necessary and prudent for purposes of establishing the Fair Market Value of any Mortgaged Property related to a Specially Serviced Asset, the Special Servicer or the Property Manager; as the case may be, is authorized to have an appraisal done by an Independent MAI-designated appraiser or other expert (the cost of which appraisal shall be paid by the Property Manager and shall constitute a Property Protection Advance).        (c)  Notwithstanding anything to the contrary contained herein, neither the Property Manager nor the Special Servicer shall, on behalf of the applicable Issuer, obtain title to a Mortgaged Property that secures a Mortgage Loan by deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property that secures a Mortgage Loan, if, as a result of any such action, the applicable Issuer or the Indenture Trustee could, in the reasonable judgment of the Property Manager or the Special Servicer, as the case may be, made in accordance with the Servicing Standard and which shall be based on Opinions of Counsel (of which the Indenture Trustee shall be an addressee) and evidenced by an officer’s certificate                                     62 US-DOCS\ 96557504.7 102826315.7 

 

delivered to the Indenture Trustee, be considered to hold title to, to be a “mortgagee-in- possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless:             (i)   the Property Manager or the Special Servicer, as the case may be, has       previously determined in accordance with the Servicing Standard (and as evidenced by an       officer’s certificate delivered to the Indenture Trustee), based on (x) a Phase I       Environmental Assessment or comparable environmental assessment (and any additional       environmental testing, investigation or analysis that the Property Manager or the Special       Servicer, as applicable, deems necessary and prudent) of such Mortgaged Property       conducted by an Independent Person who regularly conducts such environmental testing,       investigation or analysis, or (y) any environmental testing, investigation and/or analysis       conducted in connection with any related Environmental Policy, and performed during the       twelve-month period preceding any such acquisition of title or other action and in each       case after consultation with an environmental expert, that:                   (A)  the Mortgaged Property is in compliance with applicable                       environmental laws and regulations or, if not, that it would                       maximize the recovery to the applicable Issuer on a present value                       basis (the relevant discounting of anticipated collections to be                       performed at the relevant interest rate for the applicable Mortgage                       Loan or the capitalization rate used in respect of the Lease for any                       Mortgaged Property) to acquire title to or possession of the                       Mortgaged Property and to effect such compliance, which                       determination shall take into account any coverage afforded under                       any related Environmental Policy with respect to such Mortgaged                       Property; and                   (B)  there are no circumstances or conditions present at the Mortgaged                       Property relating to the use, management or disposal of Hazardous                       Materials for which investigation, testing, monitoring, containment,                       clean-up or remediation could be required under any currently                       applicable environmental laws and regulations or, if such                       circumstances or conditions are present for which any such action                       could reasonably be expected to be required, that it would                       maximize the recovery to the applicable Issuer on a present value                       basis (the relevant discounting of anticipated collections to be                       performed at the relevant interest rate for the applicable Mortgage                       Loan or the capitalization rate used in respect of the Lease for any                       Mortgaged Property) to acquire title to or possession of the                       Mortgaged Property and to take such actions, which determination                       shall take into account any coverage afforded under any related                       Environmental Policy with respect to such Mortgaged Property; or             (ii)  in the event that the conditions set forth in clauses (i)(A)  or (i)(B)  are not       satisfied, it shall have notified the Indenture Trustee in writing that it has determined that       the applicable Issuer or the Indenture Trustee could not reasonably be considered to be a                                     63 US-DOCS\ 96557504.7 102826315.7 

 

      potentially responsible party (which determination may be based on an Opinion of       Counsel the cost of which shall be a Property Protection Advance).        (d)  Any such determination in clauses (c)(i)  or (c)(ii)  above by the Property Manager or the Special Servicer shall be evidenced by an Officer’s Certificate to such effect delivered to the Indenture Trustee (which the Indenture Trustee shall provide to the Noteholders), the Issuers and, in the case of the Special Servicer, the Property Manager, specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The Property Manager or the Special Servicer, as appropriate, shall undertake reasonable efforts to make the determination referred to in clause (ii)  immediately above, and may conclusively rely on any related  environmental assessments referred to above in making such determination. The cost of any opinions, testing, analysis and investigation and any remedial, corrective or other action contemplated by clause (c)  above, shall be reimbursed, to the extent not paid by an Environmental Insurer or other party with liability for such amounts, to the Property Manager from the Collection Account as a Property Protection Advance, subject to Section 5.03 .        (e)  If the Property Manager or Special Servicer, as applicable, determines (in accordance with Section 3.09(c))  that any of the conditions set forth in Section 3.09(c)(i)  or (ii) above have not been satisfied with respect to any such Mortgaged Property, the Property Manager or Special Servicer, as applicable, shall take such action as is in accordance with the Servicing Standard and, at such time as it deems appropriate, may, on behalf of the applicable Issuer and the Indenture Trustee, release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided , that prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, (x) the Property Manager or the Special Servicer, as applicable, shall have notified the Indenture Trustee in writing of its intention to so release all or a portion of such Mortgaged Property and (y) the Indenture Trustee shall have notified the Controlling Parties in writing of the Property Manager’s intention to so release all or a portion of such Mortgaged Property. The Indenture Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, as shall be provided to it by the Property Manager and are reasonably necessary to release any lien on or security interest in such Mortgaged Property.        (f)  The Property Manager or the Special Servicer, as applicable, shall report to the Indenture Trustee and the Property Manager (if applicable) monthly in writing as to any actions taken by such party with respect to any Mortgaged Property as to which the environmental testing contemplated in Section 3.09(c)  has revealed that any of the conditions set forth in either Section 3.09(c)(i)(A)  or (i)(B)  have not been satisfied, in each case until such matter has been resolved.        (g)  The   Special Servicer shall have the right to determine, in accordance with the Servicing Standard, the advisability of seeking to obtain a deficiency judgment if the state in which the Collateral securing a Specially Serviced Loan is located and the terms of the Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable.        (h)  The Special Servicer shall prepare and file the reports of foreclosures and abandonments of any Mortgaged Property and the information returns relating to cancellation of                                     64 US-DOCS\ 96557504.7 102826315.7 

 

indebtedness income with respect to any Mortgaged Property required by Sections 6050J and 6050P of the Code and promptly deliver to the Indenture Trustee an Officer’s Certificate stating that such reports have been filed. Such reports shall be in form and substance sufficient to meet the reporting requirements imposed by Sections 6050J and 6050P of the Code.        (i)  All sales of Mortgaged Properties pursuant to this Section 3.09 shall be conducted in accordance with the provisions of Section 3.18  and Article VII , as applicable.        Section 3.10 Issuers , Custodian and Indenture Trustee to Cooperate; Release of Lease Files and Loan Files .        (a)  If from time to time, and as appropriate for servicing of any Mortgage Loan, Lease, assumption of a Lease, modification of a Lease or the re-lease or sale of any Mortgaged Property, the Property Manager or the Special Servicer shall otherwise require the use of any Lease File or Loan File, as applicable (or any portion thereof), the Custodian, upon request of the Property Manager and receipt from the Property Manager of a Request for Release substantially in the form of Exhibit B  attached hereto signed by a Servicing Officer thereof, or upon request of the Special Servicer and receipt from the Special Servicer of a Request for Release substantially in the form of Exhibit C  attached hereto, shall release such Lease File or Loan File, as applicable (or portion thereof), to the Property Manager or the Special Servicer, as the case may be. Upon return of such Lease File or Loan File, as applicable (or portion thereof), to the Custodian, or upon the Special Servicer’s delivery to the Indenture Trustee of an Officer’s Certificate stating that (i) such Lease or Mortgage Loan has been liquidated and all amounts received or to be received in connection with such Lease or Mortgage Loan are required to be deposited into the Collection Account pursuant to Section 3.04(a)  have been or will be so deposited or (ii) such Mortgaged Property has been sold, a copy of the Request for Release shall be released by the Indenture Trustee to the Property Manager or the Special Servicer, as applicable.        (b)  Within seven (7) Business Days of the Special Servicer’s request therefor (or, if the Special Servicer notifies the Issuers and the Indenture Trustee of an exigency, within such shorter period as is reasonable under the circumstances), each of the applicable Issuer and the Indenture Trustee shall execute and deliver to the Special Servicer, in the form supplied to the applicable Issuer and the Indenture Trustee by the Special Servicer, any court pleadings, leases, sale documents or other documents reasonably necessary to the re-lease, foreclosure or sale in respect of any Mortgage Loan or Mortgaged Property or to any legal action brought to obtain judgment against any Obligor on the related Lease or Mortgage Loan or to obtain a judgment against an Obligor, or to enforce any other remedies or rights provided by the Lease or Mortgage Loan or otherwise available at law or in equity or to defend any legal action or counterclaim filed against the applicable Issuer, the Property Manager or the Special Servicer; provided , that each of the applicable Issuer and the Indenture Trustee may alternatively execute and deliver to the Special Servicer, in the form supplied to the applicable Issuer and the Indenture Trustee by the Special Servicer, a limited power of attorney substantially in the form of Exhibit D issued in favor of the Special Servicer and empowering the Special Servicer to execute and deliver any or all of such pleadings, leases, sale documents or other documents on behalf of the applicable Issuer or the Indenture Trustee, as the case may be; provided, however , that neither the applicable Issuer nor the Indenture Trustee shall be held liable for any misuse of such power of attorney by the Special Servicer. Together with such pleadings, leases, sale documents or documents (or such                                     65 US-DOCS\ 96557504.7 102826315.7 

 

power of attorney empowering the Special Servicer to execute the same on behalf of the applicable Issuer and the Indenture Trustee), the Special Servicer shall deliver to each of the applicable Issuer and the Indenture Trustee an Officer’s Certificate requesting that such pleadings, leases, sale documents or other documents (or such power of attorney empowering the Special Servicer to execute the same on behalf of the applicable Issuer or the Indenture Trustee, as the case may be) be executed by the applicable Issuer or the Indenture Trustee and certifying as to the reason such pleadings or documents are required.        (c)  Upon the payment in full of any Mortgage Loan, or the receipt by the Property Manager of a notification that payment in full shall be escrowed in a manner customary for such purposes, the Property Manager shall promptly notify the Custodian and the Indenture Trustee by a certification (which certification shall be in the form of a Request for Release substantially in the form of Exhibit B  attached hereto, shall be accompanied by the form of any necessary release or discharge and shall include a statement to the effect that all amounts received or to be received in connection with such payment which are required to be deposited in the Collection Account pursuant to Section 3.04(a)  have been or will be so deposited) of a Servicing Officer (a copy of which certification shall be delivered to the Special Servicer) and shall request delivery to it and release of the related Loan File. Upon receipt of such certification and request, the Custodian shall promptly cause the release of the related Loan File to the Property Manager and the Indenture Trustee shall deliver to the Property Manager such release or discharge, duly executed. Except customary fees and expenses, no expenses incurred in connection with any instrument of satisfaction or deed of reconveyance shall be chargeable to the Collection Account or other amounts that constitute Collateral.        Section 3.11 Servicing Compensation; Interest on Property Protection Advances .        (a)  As compensation for its activities hereunder, the Property Manager shall be entitled to receive the Property Management Fee with respect to each Mortgaged Property and Mortgage Loan included in the Collateral Pool. As to each such Mortgaged Property and Mortgage Loan included in the Collateral Pool, the Property Management Fee shall accrue daily at the related Property Management Fee Rate on the basis of the Collateral Value of each such Mortgaged Property and Mortgage Loan and shall be calculated with respect to each Mortgage Loan on the same basis as interest accrues on such Mortgage Loan and with respect to each Mortgaged Property on a 30/360 Basis. The right to receive the Property Management Fee may not be transferred in whole or in part except in connection with the transfer of all of the Property Manager’s responsibilities and obligations under this Agreement. Earned but unpaid Property Management Fees shall be payable monthly out of general collections on deposit in the Collection Account pursuant to Section 3.05  and Section 2.11 of the Indenture.        (b)  On each Remittance Date, the Property Manager shall be entitled to receive: (i) all returned check fees, assumption, modification and similar fees and late payment charges from Obligors with respect to Mortgaged Properties, Leases and Mortgage Loans that are not Specially Serviced Assets as of such Remittance Date; and (ii) any default interest collected on a Mortgaged Property, Lease or Mortgage Loan, but only to the extent that (x) such default interest is allocable to the period (not to exceed 60 days) when such Mortgaged Property, Lease or Mortgage Loan did not constitute a Specially Serviced Asset and (y) such default interest is not allocable to reimburse the Property Manager, the Back-Up Manager or the Indenture Trustee                                     66 US-DOCS\ 96557504.7 102826315.7 

 

with respect to any Property Protection Advances or interest thereon made in respect of such Mortgage Loan, Lease or Mortgaged Property (collectively, the “ Property Manager Additional Servicing Compensation ”).        (c)  As compensation for its activities hereunder, the Special Servicer shall be entitled to receive the Special Servicing Fee with respect to each Specially Serviced Asset. As to each Specially Serviced Asset, the Special Servicing Fee shall accrue daily from time to time at the Special Servicing Fee Rate on the basis of the Collateral Value of such Specially Serviced Asset and shall be calculated with respect to each Specially Serviced Loan on the same basis as interest accrues on such Specially Serviced Loan and with respect to each Mortgaged Property related to a Specially Serviced Lease on a 30/360 Basis. The Special Servicing Fee with respect to any Specially Serviced Asset shall (subject to Section 3.20  hereof) cease to accrue if (i) the related Mortgaged Property is sold or exchanged for a Qualified Substitute Mortgaged Property or the Specially Serviced Loan is sold or exchanged for a Qualified Substitute Mortgage Loan, as applicable, or (ii) such Specially Serviced Asset becomes a Corrected Lease or a Corrected Loan, as applicable, or (iii) such Specially Serviced Asset becomes a Liquidated Lease or liquidated Mortgage Loan, as applicable. Earned but unpaid Special Servicing Fees shall be payable monthly out of collections on deposit in the Collection Account pursuant to Section 3.05 hereof and Section 2.11 of the Indenture.        The Special Servicer’s right to receive the Special Servicing Fee may not be transferred in whole or in part except in connection with the transfer of all of the Special Servicer’s responsibilities and obligations under this Agreement.        (d)  Subject to the last sentence of this Section 3.11(d) , on each Remittance Date, the Special Servicer shall be entitled to receive: (i) all returned check fees, assumption, modification and similar fees and late payment charges received on or with respect to the Specially Serviced Assets (determined as of the Remittance Date relating to such Payment Date); and (ii) any default interest collected on a Specially Serviced Asset (to the extent that such default interest is not allocable to reimburse the Property Manager, Indenture Trustee or Back-Up Manager with respect to any Property Protection Advances made in respect of the related Mortgage Loan, Lease or Mortgaged Property or interest thereon and such default interest is not allocable to the Property Manager under Section 3.11(b))  as additional servicing compensation (collectively, the “Special Servicer Additional Servicing Compensation ”). Notwithstanding the foregoing, if the Special Servicer is terminated at a time when no Servicer Replacement Event existed with respect to the Special Servicer and such Special Servicer was servicing or administering any Specially Serviced Asset as of the date of such termination, and such servicing or administration had been continuing for at least two (2) months, then the terminated Special Servicer will be entitled to 50% of all modification fees earned by its successor with respect to such Specially Serviced Asset during the 12-month period following the date of such termination.        (e)  As and to the extent permitted by Section 2.11 of the Indenture, the Property Manager, Indenture Trustee and the Back-Up Manager, as applicable, shall each be entitled to receive Advance Interest on the amount of each Advance made thereby for so long as such Advance is outstanding. The Property Manager and the Back-Up Manager shall be reimbursed                                      67 US-DOCS\ 96557504.7 102826315.7 

 

for Property Protection Advances in accordance with Sections 3.03(d) and 3.05(a)  and (b), and Section 2.11 of the Indenture.        Except as otherwise expressly set forth herein, the Property Manager and the Special Servicer shall each be required to pay all ordinary expenses incurred by it in connection with its servicing activities under this Agreement, including fees of any subservicers retained by it. In addition, the Property Manager and the Special Servicer shall not be reimbursed for its own internal costs and expenses and overhead expenses, such as office space expenses, office equipment costs, supply costs or employee salaries or related costs and expenses.        (f)  A Workout Fee shall be payable to the Special Servicer with respect to each Corrected Loan or Corrected Lease. As to each such Corrected Loan or Corrected Lease, the Workout Fee will be payable out of, and shall be calculated by application of the Workout Fee Rate to, each collection of rents, interest (other than Default Interest) and principal (including scheduled payments, prepayments, Balloon Payments and payments at maturity) received on such Corrected Loan or Corrected Lease, as applicable, so long as it remains a Corrected Lease or Corrected Loan; provided , that no Workout Fee shall be payable from, or based upon the receipt of, Liquidation Proceeds collected in connection with (i) the purchase of any Specially Serviced Loan, Mortgaged Property related to any Specially Serviced Lease or REO Property by the Property Manager or the Special Servicer or (ii) the repurchase of any Specially Serviced Loan or Mortgaged Property related to any Specially Serviced Lease by the Originator or Support Provider due to a Collateral Defect within the period provided to the Originator and Support Provider to cure such Collateral Defect. In addition, no Workout Fee shall be payable with respect to any Corrected Loan or Corrected Lease if and to the extent (i) such Mortgage Loan again becomes a Specially Serviced Loan under clause (b)  of the definition of “Specially Serviced Loan” or the Lease again becomes a Specially Serviced Lease under clause (b)  of the definition of “Specially Serviced Lease” and (ii) no default under the Mortgage Loan or Lease, as applicable, actually occurs, or if such default has occurred, it is remedied within the 60 days provided in such clauses. Except as provided in the preceding sentence, for the avoidance of doubt, a new Workout Fee will become payable if and when a Mortgage Loan or Lease that ceased to be a Corrected Lease or Corrected Loan again becomes a Corrected Lease or Corrected Loan. If the Special Servicer is terminated (with or without cause) or resigns with respect to any or all of its servicing duties, it shall retain the right to receive any and all Workout Fees payable with respect to the Mortgage Loans or Leases that became Corrected Loans or Corrected Leases during the period that it had responsibility for servicing Specially Serviced Assets (and the successor Special Servicer shall not be entitled to any portion of such Workout Fees), in each case until the Workout Fee for any such Corrected Loan or Corrected Lease ceases to be payable in accordance with the second preceding sentence. If the Special Servicer is terminated for any reason or resigns as Special Servicer hereunder, and prior to such resignation or termination, any Specially Serviced Asset would have been a Corrected Loan or Corrected Lease but for the related Borrower or Tenant, as applicable, not yet having made three full and consecutive Monthly Payments as provided in the Lease Documents or Loan Documents, then such terminated or resigning Special Servicer shall be entitled to all, and the Successor Special Servicer shall be entitled to none, of the Workout Fee payable in connection with such Specially Serviced Asset after it actually becomes a Corrected Loan or Corrected Lease, as applicable.                                      68 US-DOCS\ 96557504.7 102826315.7 

 

      (g)  A Liquidation Fee shall be payable to the Special Servicer with respect to (i) each Mortgage Loan or Mortgaged Property repurchased by the related Originator or the Support Provider due to a Collateral Defect if purchased after the applicable cure period, and shall equal the product of (x) the repurchase price with respect to any such repurchase and (y) the Liquidation Fee Rate, (ii) any Specially Serviced Asset as to which the Special Servicer obtains a full, partial or discounted payoff from the related Borrower of a Mortgage Loan or for some or all of the Collateral Value from the Mortgaged Property related to a Lease from the Tenant, and shall equal the product of (x) the amount of any such payoff and (y) the Liquidation Fee Rate, or (iii) any Specially Serviced Asset or REO Property as to which the Special Servicer recovers any Liquidation Proceeds, and shall equal the product of (x) the amount of such Liquidation Proceeds and (y) the Liquidation Fee Rate; provided , that no Liquidation Fee shall be payable from, or based upon the receipt of, Liquidation Proceeds collected in connection with the purchase of any Specially Serviced Loan, Mortgaged Property related to any Specially Serviced Lease or REO Property by the Property Manager or the Special Servicer.        (h)  As compensation for its activities hereunder, the Back-Up Manager shall be entitled to receive the Back-Up Fee with respect to each Mortgaged Property and Mortgage Loan included in the Collateral Pool. As to each such Mortgaged Property and Mortgage Loan included in the Collateral Pool, the Back-Up Fee shall accrue each day at the related Back-Up Fee Rate on the basis of the Collateral Value of each such Mortgaged Property and Mortgage Loan. The right to receive the Back-Up Fee may not be transferred in whole or in part except in connection with the transfer of all of the Back-Up Manager’s responsibilities and obligations under this Agreement. Earned but unpaid Back-Up Fees shall be payable monthly pursuant to Section 3.05(a)  and Section 2.11 of the Indenture.        Section 3.12 Property Inspections; Collection of Financial Statements; Delivery of Certain Reports .        (a)  If a Lease or Mortgage Loan becomes a Specially Serviced Asset, the Special Servicer shall perform a physical inspection of the related Mortgaged Property as soon as practicable thereafter and, if such Lease or Mortgage Loan remains a Specially Serviced Asset for more than two years, at least annually thereafter so long as such Lease or Mortgage Loan remains a Specially Serviced Asset. The Special Servicer shall prepare a written report of each such inspection performed by it that sets forth in detail the condition of the related Mortgaged Property and that specifies the existence of (i) any sale, abandonment or transfer of such Mortgaged Property, or (ii) any change in the condition or value of such Mortgaged Property that it, in its good faith and reasonable judgment, considers material. The Special Servicer shall deliver to the Issuers, the Indenture Trustee, the Property Manager and the Rating Agencies a copy of each such written report prepared by it within 15 days of the completion of each such inspection. The Special Servicer (i) shall receive reimbursement for reasonable out-of-pocket expenses related to any such inspection and (ii) shall be entitled to a reasonable inspection fee for any such inspection, in each case from the applicable Issuers pursuant to Section 2.11(b) of the Indenture.        (b)  The Special Servicer, in the case of any Specially Serviced Asset, and the Property Manager, in the case of all other Leases and Mortgage Loans, shall make reasonable efforts to collect promptly from each related Obligor and review annual operating statements of the related                                     69 US-DOCS\ 96557504.7 102826315.7 

 

Mortgaged Properties and financial statements of such Obligor required to be provided under the applicable Mortgage Loan or Lease.        (c)  Not later than December 15 of each year, commencing December 15, 2014, the Property Manager shall deliver to the Issuers, the Indenture Trustee and the Special Servicer (i) from information, if any, that the Property Manager has most recently received pursuant to Section 3.12(b) , a report setting forth the aggregate Fixed Charge Coverage Ratios of all Mortgaged Properties with respect to which it has received sufficient financial information from the applicable Obligor(s) to permit it to calculate such Fixed Charge Coverage Ratio (either at the “unit” level, master lease level or corporate level, as applicable) and, in each case, identifying the period covered by the related financial statements in its possession, and (ii) a schedule, in the form of the Mortgaged Property Schedule or Mortgage Loan Schedule, as applicable, prepared as of the later of (1) the most recent Series Closing Date and (2) the most recent Transfer Date, and further identifying on such schedule each Lease or Mortgage Loan (x) that has become a Liquidated Lease or liquidated Mortgage Loan since the most recent delivery of such schedule pursuant to this Section 3.12(c)(ii)  (or, in the case of the first such delivery, since the Series Closing Date), and specifying the date on which the sale or re-lease of the related Mortgaged Property or Mortgage Loan occurred or (y) that has otherwise terminated in accordance with its terms and, in each case, specifying the date of such sale, re-lease or termination, the amount collected in connection therewith and the amount of any unreimbursed Property Protection Advances, Emergency Property Expenses, Extraordinary Expenses and other amounts due and unpaid under the related Mortgage Loan or Lease incurred in connection therewith.        Section 3.13 Annual Statement as to Compliance .        Each of the Property Manager and the Special Servicer shall deliver to the Issuers, to the Indenture Trustee and, in the case of the Special Servicer, to the Property Manager, as soon as available, and in any event by the 15 th  day after each March 31 of each year (or the next succeeding Business Day if any such day is not a Business Day) beginning in March 2015, an Officer’s Certificate stating, as to each officer signatory thereof, that (i) a review of the activities of the Property Manager or the Special Servicer, as the case may be, during the prior calendar year, and of its performance under this Agreement, has been made under the supervision of the signatories signing such Officer’s Certificate, and (ii) to the best of such signatory’s knowledge, based on such review, the Property Manager or the Special Servicer, as the case may be, complied in all material respects throughout such period with the minimum servicing standards in this Agreement and fulfilled in all material respects throughout such period its obligations under this Agreement or, if there was noncompliance with such standards or a default in the fulfillment of any such obligation in any material respect, such Officer’s Certificate shall include a description of such noncompliance or specify each such default, as the case may be, known to such signatory and the nature and status thereof.        Section 3.14 Reports by Independent Public Accountants.        On or before March 31 of each year, beginning in March 2015, each of the Property Manager and the Special Servicer, at its expense, shall cause an independent, registered public accounting firm (which may also render other services to the Property Manager or the Special Servicer, as the case may be) to furnish to the Issuers and the Indenture Trustee and, in the case                                     70 US-DOCS\ 96557504.7 102826315.7 

 

of the Special Servicer, to the Property Manager a report containing such firm’s opinion that, on the basis of an examination conducted by such firm substantially in accordance with standards established by the American Institute of Certified Public Accountants, the officer’s assertion made pursuant to Section 3.13  by the Property Manager or the Special Servicer, as the case may be, is fairly stated in all material respects, subject to such exceptions and other qualifications that, in the opinion of such firm, such institute’s standards require it to report and that such examination included tests in accordance with the requirements of the Uniform Single Attestation Program for Mortgage Bankers, to the extent the procedures in such program are applicable to the servicing obligations set forth in this Agreement. In rendering such statement, such firm may rely, as to matters relating to direct servicing of leases and mortgage loans by Sub-Managers, upon comparable reports for examinations conducted substantially in accordance with such institute’s standards (rendered within one year of such report) of independent public accountants with respect to the related Sub-Manager.        Section 3.15 Access to Certain Information; Delivery of Certain Information .        (a)  Each of the Property Manager and the Special Servicer shall afford to the other, to the Issuers, the Indenture Trustee, the Back-Up Manager and the Rating Agencies and to the OTS, the FDIC and any other banking or insurance regulatory authority that may exercise authority over any holder of Notes or LLC Interests, reasonable access to any documentation regarding the Leases, Mortgage Loans and Mortgaged Properties and its servicing thereof within its control, except to the extent it is prohibited from doing so by applicable law, rule or regulation or contract or to the extent such information is subject to a privilege under applicable law. Such access shall be afforded without charge but only upon reasonable prior written request and during normal business hours at the offices of the Property Manager or the Special Servicer, as the case may be, designated by it.        (b)  The Property Manager or the Special Servicer shall notify the Rating Agencies, the Back-Up Manager and the Indenture Trustee of any Mortgaged Property whose Tenant has ceased to exercise its business activity on such Mortgaged Property within 30 days of becoming aware of such a circumstance.        Section 3.16 Title to REO Property .        (a)  If title to any REO Property is acquired by the Special Servicer on behalf of the Issuer, the deed or certificate of sale shall be issued to the applicable Issuer. Upon acquisition of such REO Property, the Special Servicer shall, if any amounts remain due and owing under the related Mortgage Note, cause the applicable Issuer to execute and deliver to the Indenture Trustee or the Collateral Agent a new Mortgage (along with appropriate Financing Statements), as applicable, in favor of the Indenture Trustee or the Collateral Agent to secure the lien of the Indenture.        (b)  The Special Servicer shall remit to the Property Manager for deposit in the Collection Account or Release Account, as applicable, upon receipt, all REO Revenues, Property Insurance Proceeds and Liquidation Proceeds received in respect of an REO Property or Specially Serviced Asset.                                     71 US-DOCS\ 96557504.7 102826315.7 

 

      Section 3.17 Management of REO Properties and Mortgaged Properties relating to Defaulted Assets .        (a)  [Reserved].        (b)  At any time that a Mortgaged Property is not subject to a Mortgage Loan or a Lease or is subject to a Mortgage Loan or a Lease that is (or relates to) a Defaulted Asset or with respect to an REO Property or a Terminated Lease Property, the Special Servicer’s decision as to how such Mortgaged Property or REO Property shall be managed and operated shall be based on the good faith and reasonable judgment of the Special Servicer as to the best interest of the applicable Issuer and the Noteholders by maximizing (to the extent commercially feasible) the net after-tax revenues received by the applicable Issuer with respect to such property and, to the extent consistent with the foregoing, in the same manner as would commercial loan and lease servicers and asset managers operating property comparable to the respective Mortgaged Property, REO Property or Terminated Lease Property under the Servicing Standard. The applicable Issuer, the Indenture Trustee and the Special Servicer may consult with counsel at the expense of the applicable Issuer in connection with determinations required under this Section 3.17(b) . Neither the Indenture Trustee nor the Special Servicer shall be liable to the Issuers, the holders of the Notes, the other parties hereto or each other, nor shall the applicable Issuer be liable to the other Issuers, any such holders or to the other parties hereto, for errors in judgment made in good faith in the exercise of their discretion while performing their respective duties, obligations and responsibilities under this Section 3.17(b) . Nothing in this Section 3.17(b)  is intended to prevent the sale or re-lease of a Mortgaged Property, REO Property or Terminated Lease Property pursuant to the terms and subject to the conditions of Section 3.18  and Article VII , as applicable.        (c)  The Special Servicer shall have full power and authority to do any and all things in connection with the servicing and administration of any Defaulted Asset and Mortgaged Property subject to a Defaulted Asset and any REO Property or Terminated Lease Property as are consistent with the Servicing Standard and, consistent therewith, shall request that the Property Manager make, and the Property Manager shall make, Property Protection Advances, or pay (or cause to be paid) Emergency Property Expenses from funds on deposit in the Collection Account, necessary for the proper operation, management, maintenance and disposition of such Mortgaged Property, REO Property or Terminated Lease Property, including:             (i)   all insurance premiums due and payable in respect of such Mortgaged       Property, REO Property or Terminated Lease Property;             (ii)  all real estate and personal property taxes and assessments in respect of       such Mortgaged Property, REO Property or Terminated Lease Property that may result       in the imposition of a lien thereon (including taxes or other amounts that could constitute       liens prior to or on parity with the lien of the related Mortgage);             (iii) [Reserved]; and                                      72 US-DOCS\ 96557504.7 102826315.7 

 

           (iv)  all costs and expenses necessary to maintain, lease, sell, protect, manage,       operate and restore such Mortgaged Property, REO Property or Terminated Lease       Property.  Notwithstanding the foregoing, the Property Manager shall have no obligation to make any such Property Protection Advance if (as evidenced by an Officer’s Certificate delivered to the applicable Issuer and the Indenture Trustee) the Property Manager determines, in accordance with the Servicing Standard, that such payment would be a Nonrecoverable Property Protection Advance. The Special Servicer shall submit requests to make Property Protection Advances to the Property Manager not more than once per month unless the Special Servicer determines on an emergency basis in accordance with the Servicing Standard that earlier payment is required to protect the interests of the Issuers and the Noteholders.        Section 3.18 Sale and Exchange of Mortgage Loans , Leases and Mortgaged Properties .        (a)  The Property Manager, the Special Servicer and the applicable Issuer may sell or purchase, or permit the sale or purchase of, a Mortgage Loan or Mortgaged Property only on the terms and subject to the conditions set forth in this Section 3.18  or as otherwise expressly provided in or contemplated hereunder. Except with respect to repurchases or substitutions by a related Originator or the Support Provider due to a Collateral Defect, an Issuer may only sell or exchange a Mortgaged Property or Mortgage Loan to or with any of its Affiliates subject to the applicable conditions (if any) set forth in the Indenture (including any applicable Series Supplement) and herein.        (b)  The Special Servicer shall act on behalf of the applicable Issuer and the Indenture Trustee in negotiating and taking any other action necessary or appropriate in connection with the sale of any Defaulted Asset, Lease related to a Defaulted Asset, Terminated Lease Property or REO Property and the collection of all amounts payable in connection therewith. The Special Servicer shall take such actions as it determines in accordance with the Servicing Standard will be in the best interests of the applicable Issuer and the Noteholders, including, in the case of a Terminated Lease Property, the Special Servicer shall use reasonable efforts, consistent with the Servicing Standard, to (i) attempt to induce another Tenant to assume the obligations under the existing Lease, with or without modification, (ii) lease the Terminated Lease Property under a new Lease on economically desirable terms or (iii) dispose of the related Mortgaged Property. The decision to enter into a lease assumption or re-lease the Terminated Lease Property shall be made by the Special Servicer in accordance with the Servicing Standard. If the Special Servicer is successful in re-leasing the related Mortgaged Property, a new Appraised Value will be determined in the Special Servicer’s discretion. Any sale of a Mortgage Loan, Mortgaged Property, Lease, Defaulted Asset, Terminated Lease Property or REO Property shall be free and clear of the lien of the Indenture and shall be final and without recourse to the applicable Issuer or the Indenture Trustee. If such sale is consummated in accordance with the terms of this Agreement, none of the Property Manager, the Special Servicer or the Indenture Trustee shall have any liability to the Issuers or any holder of Notes with respect to the purchase price therefor accepted by the Property Manager, the Special Servicer or the Indenture Trustee, as the case may be.                                      73 US-DOCS\ 96557504.7 102826315.7 

 

      Section 3.19 Modifications, Waivers, Amendments and Consents.        (a)  The Property Manager and the Special Servicer each may, consistent with the Servicing Standard, agree to any modification, waiver or amendment of any term of, forgive any Lease or Mortgage Loan payment on, permit the release of the Obligor on or guarantor of, or approve of the assignment of a Tenant’s interest in its Lease with respect to, or the sublease of all or a portion of, any Mortgaged Property, Lease or Mortgage Loan it is required to service and administer hereunder, without the consent of the Issuers, the Indenture Trustee, any holder of Notes or any Controlling Party or Requisite Global Majority; provided ; that (i) in the reasonable judgment of the party agreeing to any such amendment, such amendment will not cause the Current Cashflow Coverage Ratio to be reduced to or below 1.30 or, if the Current Cashflow Coverage Ratio is already equal to or lower than 1.30, will not cause the Current Cashflow Coverage Ratio to be further reduced and (ii) in the reasonable judgment of the party agreeing to any such amendment, such amendment is in the best interest of the Noteholders and will not have an adverse effect on the Collateral Value of the related Mortgaged Property (in the case of any such amendment with respect to a Lease) or Mortgage Loan (in the case of any such amendment with respect to a Mortgage Loan); provided ; that any such amendment (x) in connection with a Delinquent Asset or Defaulted Asset, (y) that is required by the terms of the applicable Lease or Mortgage Loan or (z) with respect to which the Rating Condition is satisfied, shall not be subject to the foregoing restrictions set forth in (i) or (ii) above;        (b)  From time to time, subject to the Servicing Standard and upon satisfaction of the Rating Agency Notification Condition, the Property Manager or Special Servicer, as applicable, shall be entitled (on behalf of the Issuer and the Indenture Trustee) to release an immaterial portion of any Mortgaged Property that it is then administering from the lien of the Indenture and the Mortgage (and simultaneously release the Issuer’s interest in such portion of such Mortgaged Property) or consent to, or make, an immaterial modification with respect to any Mortgaged Property that it is then administering; provided , that, such Property Manager or Special Servicer shall have certified that it reasonably believes that such release or modification (both individually and collectively with any other similar releases or modifications with respect to such Mortgaged Property) will not materially adversely affect (i) the Appraised Value of such Mortgaged Property or (ii) the Noteholders’ or the holders’ of the Related Series Notes interests in such Mortgaged Property;        (c)  The Property Manager and the Special Servicer each may, as a condition to its granting any request by an Obligor for consent, modification, waiver or indulgence or any other matter or thing, the granting of which is within the Property Manager’s or Special Servicer’s, as the case may be, discretion pursuant to the terms of the instruments evidencing or securing the related Lease or Mortgage Loan and is permitted by the terms of such Lease or Mortgage Loan, require that such Obligor pay to it, as Additional Servicing Compensation, a reasonable or customary fee for the additional services performed in connection with such request, together with any related costs and expenses incurred by it; and        (d)  All modifications, waivers, amendments and other actions entered into or taken in respect of a Lease or Mortgage Loan pursuant to this Section 3.19  shall be in writing. Each of the Property Manager and the Special Servicer shall notify the other such party and the Issuers and the Indenture Trustee, in writing, of any modification, waiver, amendment or other action                                     74 US-DOCS\ 96557504.7 102826315.7 

 

entered into or taken in respect of any Lease or Mortgage Loan pursuant to this Section 3.19  and the date thereof, and shall deliver to the Custodian for deposit in the related Lease File or Loan File an original counterpart of the agreements relating to such modification, waiver, amendment or other action, promptly (and in any event within ten (10) Business Days) following the execution thereof.        Section 3.20 Transfer of Servicing Between Property Manager and Special Servicer; Record Keeping .        (a)  Upon determining that a Servicing Transfer Event has occurred with respect to any Lease or Mortgage Loan and if the Property Manager is not also the Special Servicer, the Property Manager shall immediately give notice thereof, and shall deliver the related Servicing File, to the Special Servicer, and shall use its best efforts to provide the Special Servicer with all information, documents (or copies thereof) and records (including records stored electronically on computer tapes, magnetic discs and the like) relating to such Lease or Mortgage Loan reasonably requested by the Special Servicer to enable it to assume its functions hereunder with respect thereto without acting through a Sub-Manager. The Property Manager shall use its best efforts to comply with the preceding sentence within five (5) Business Days of the occurrence of each related Servicing Transfer Event.        Upon determining that a Specially Serviced Asset has become a Corrected Lease or Corrected Loan and if the Property Manager is not also the Special Servicer, the Special Servicer shall immediately give notice thereof, and shall return the related Servicing File, to the Property Manager and, upon giving such notice and returning such Servicing File, to the Property Manager, (i) the Special Servicer’s obligation to service such Corrected Lease or Corrected Loan shall terminate, (ii) the Special Servicer’s right to receive the Special Servicing Fee with respect to such Corrected Lease or Corrected Loan shall terminate, and (iii) the obligations of the Property Manager to service and administer such Lease or Mortgage Loan shall resume, in each case, effective as of the first day of the calendar month following the calendar month in which such notice was delivered and return effected.        (b)  In servicing any Specially Serviced Assets, the Special Servicer shall provide to the Custodian, for the benefit of the Indenture Trustee, originals of documents included within the definition of “Lease File” for inclusion in the related Lease File and “Loan File” for inclusion in the related Loan File (with a copy of each such original to the Property Manager), and copies of any additional related Lease and Mortgage Loan information, including correspondence with the related Obligor.        (c)  Notwithstanding anything in this Agreement to the contrary, in the event that the Property Manager and the Special Servicer are the same Person, all notices, certificates, information and consents required to be given by the Property Manager to the Special Servicer or vice versa shall be deemed to be given without the necessity of any action on such Person’s part.        Section 3.21 Sub-Management Agreements .                                      75 US-DOCS\ 96557504.7 102826315.7 

 

      (a)  The Property Manager and the Special Servicer may enter into Sub-Management Agreements to provide for the performance by third parties of any or all of their respective obligations hereunder; provided , that, in each case, the Sub-Management Agreement: (i) is consistent with this Agreement in all material respects and requires the Sub-Manager to comply with all of the applicable conditions of this Agreement; (ii) provides that if the Property Manager or the Special Servicer, as the case may be, shall for any reason no longer act in such capacity hereunder (including by reason of a Servicer Replacement Event), any Back-Up Manager, Successor Property Manager or Successor Special Servicer, may thereupon assume all of the rights and, except to the extent they arose prior to the date of assumption, obligations of the Property Manager or the Special Servicer, as the case may be, under such agreement or, alternatively, may (or the Indenture Trustee may) terminate such Sub-Management Agreement without cause and without payment of any penalty or termination fee; (iii) provides that the Issuers, the Back-Up Manager, the Indenture Trustee, the other parties hereto and, as and to the extent provided herein, the third party beneficiaries hereof shall be third party beneficiaries under such agreement, but that (except to the extent the Back-Up Manager or Successor Property Manager or Successor Special Servicer assumes the obligations of the Property Manager or the Special Servicer, as the case may be, under the applicable Sub-Management Agreement as contemplated by the immediately preceding clause (ii)  and, in such case, only from the date of such assumption) none of the Issuers, the Indenture Trustee, the Back-Up Manager, any other party hereto, any successor Property Manager or Special Servicer, as the case may be, any holder of Notes or LLC Interests or any other third party beneficiary hereof shall have any duties under such agreement or any liabilities arising therefrom; (iv) permits any purchaser of a Mortgaged Property and any related Lease or Mortgage Loan pursuant to this Agreement to terminate such Sub-Management Agreement with respect to such purchased Mortgaged Property and related Lease or Mortgage Loan at its option and without penalty; (v) does not permit the Sub-Manager to enter into or consent to any modification, waiver or amendment or otherwise take any action on behalf of the Property Manager or Special Servicer, as the case may be, contemplated by Section 3.19  without the written consent of the Property Manager or Special Servicer, as the case may be; and (vi) does not permit the Sub-Manager any rights of indemnification that may be satisfied out of the Collateral (it being understood that any Sub-Manager shall be entitled to recover amounts in respect of Property Protection Advances as described in the following paragraph). In addition, each Sub-Management Agreement entered into by the Property Manager shall provide that such agreement shall terminate with respect to any Lease and the related Mortgaged Property, and any Mortgage Loan serviced thereunder at the time such Lease or Mortgage Loan becomes a Specially Serviced Asset, and each Sub-Management Agreement entered into by the Special Servicer shall relate only to Specially Serviced Assets and shall terminate with respect to any such Lease or Mortgage Loan that ceases to be a Specially Serviced Asset, in each case pursuant to the terms hereof.        The Property Manager and the Special Servicer shall each deliver to the Issuers and the Indenture Trustee copies of all Sub-Management Agreements, and any amendments thereto and modifications thereof, entered into by it, promptly upon its execution and delivery of such documents. References in this Agreement to actions taken or to be taken by the Property Manager or the Special Servicer include actions taken or to be taken by a Sub-Manager on behalf of the Property Manager or the Special Servicer, as the case may be, and in connection therewith, all amounts advanced by any Sub-Manager to satisfy the obligations of the Property                                     76 US-DOCS\ 96557504.7 102826315.7 

 

Manager hereunder to make Advances shall be deemed to have been advanced by the Property Manager out of its own funds and, accordingly, such amounts constituting Advances shall be recoverable by such Sub-Manager in the same manner and out of the same funds as if such Sub- Manager were the Property Manager. For so long as they are outstanding, Advances shall accrue Advance Interest in accordance with the terms hereof, such interest to be allocable between the Property Manager and such Sub-Manager as they may agree. For purposes of this Agreement, the Property Manager and the Special Servicer each shall be deemed to have received any payment, and shall be obligated to handle such payment in accordance with the terms of this Agreement, when a Sub-Manager retained by it receives such payment. The Property Manager and the Special Servicer each shall notify the other, the Issuers and the Indenture Trustee in writing promptly of the appointment by it of any Sub-Manager.        (b)  The Property Manager shall have determined to its commercially reasonable satisfaction that each Sub-Manager shall be authorized to transact business, and shall have obtained all necessary licenses and approvals, in each jurisdiction in which the failure to be so authorized or qualified or to have obtained such licenses would adversely affect its ability to carry out its obligations under the Sub-Management Agreement to which it is a party.        (c)  The Property Manager and the Special Servicer, for the benefit of the Issuers, shall (at no expense to the Issuers or the Indenture Trustee) monitor the performance and enforce the obligations of their respective Sub-Managers under the related Sub-Management Agreements. Such enforcement, including the legal prosecution of claims, termination of Sub- Management Agreements in accordance with their respective terms and the pursuit of other appropriate remedies, shall be in such form and carried out to such an extent and at such time as the Property Manager or the Special Servicer, as applicable, in its good faith and reasonable judgment, would require were it the owner of the Mortgaged Properties and the Mortgage Loans. Subject to the terms of the related Sub-Management Agreement, the Property Manager and the Special Servicer shall each have the right to (in its sole discretion and without the consent of any other person) remove a Sub-Manager retained by it at any time it considers such removal to be in the best interests of the Issuers.        (d)  In the event that the Back-Up Manager has succeeded to the rights and assumed the obligations hereunder, of the Property Manager or the Special Servicer, then the Back-Up Manager shall succeed to the rights and assume the obligations of the Property Manager or the Special Servicer, as applicable, under any Sub-Management Agreement, unless the Indenture Trustee elects to terminate any such Sub-Management Agreement in accordance with its terms. In any event, if a Sub-Management Agreement is to be assumed by the Back-Up Manager, then the predecessor Property Manager or the Special Servicer, as applicable, at its expense, shall, upon request of the Back-Up Manager, deliver to the Back-Up Manager all documents and records relating to such Sub-Management Agreement and the Mortgaged Properties and the Mortgage Loans then being serviced thereunder and an accounting of amounts collected and held on behalf of it thereunder, and otherwise use its best efforts to effect the orderly and efficient transfer of the Sub-Management Agreement to the assuming party.        (e)  Notwithstanding any Sub-Management Agreement, the Property Manager and the Special Servicer shall remain obligated and liable to the Issuers, the Noteholders, the Indenture Trustee and each other for the performance of their respective obligations and duties under this                                     77 US-DOCS\ 96557504.7 102826315.7 

 

Agreement in accordance with the provisions hereof to the same extent and under the same terms and conditions as if each alone were servicing and administering the Mortgage Loans, the Mortgaged Properties and Leases for which it is responsible.        (f)  Except as otherwise expressly provided for herein, the Property Manager or Special Servicer, as applicable, will be solely liable for all fees owed by it to any Sub-Manager, irrespective of whether its compensation pursuant to this Agreement is sufficient to pay such fees.        (g)  Each of the Property Manager and the Special Servicer shall have all the limitations upon liability and all the indemnities for the actions and omissions of any such Sub- Manager retained by it that it has for its own actions hereunder.        (h)  For the avoidance of doubt, this Section 3.21 shall not apply to any delegation of obligations pursuant to Section 6.04(a) following a Permitted Replacement Event or Section 6.04(b) following a Permitted Termination Event.                                  ARTICLE IV                                  REPORTS        Section 4.01 Reports to the Issuers , the Indenture Trustee and the Insurers .        (a)  Not later than 2:00 p.m. (New York City time), three (3) Business Days prior to each Payment Date, the Property Manager shall deliver to each of the Issuers and the Indenture Trustee a report containing the information specified on Exhibit F  hereto, and such other information with respect to the Mortgage Loans, the Leases and Mortgaged Properties as the Indenture Trustee may reasonably request (such report, the “ Determination Date Report ”), reflecting information as of the close of business on the last day of the related Collection Period, in a mutually agreeable electronic format. The Determination Date Report and any written information supplemental thereto shall include such information with respect to the Mortgage Loans, the Leases and Mortgaged Properties as is required by the Indenture Trustee for purposes of making the payments required by Section 2.11(b) of the Indenture and the calculations and reports referred to in Section 6.01 of the Indenture and otherwise therein, in each case as set forth in the written specifications or guidelines issued by any of the Issuers of the Indenture Trustee, as the case may be, from time to time. The Property Manager shall also provide to the Indenture Trustee the wire instructions for the relevant parties to which payments under Section 2.11(b) of the Indenture will be made. The Determination Date Report shall also contain a certification by the Property Manager that the Issuers have not incurred any indebtedness except indebtedness permitted by the Transaction Documents. Such information shall be delivered by the Property Manager to each of the Issuers and the Indenture Trustee in agreed-upon format and such electronic or other form as may be reasonably acceptable to the Issuers and the Indenture Trustee. The Special Servicer shall from time to time (and, in any event, as may be reasonably required by the Property Manager) provide the Property Manager with such information regarding the Specially Serviced Assets as may be necessary for the Property Manager to prepare                                      78 US-DOCS\ 96557504.7 102826315.7 

 

each Determination Date Report and any supplemental information to be provided by the Property Manager to the Issuers or the Indenture Trustee.        (b)  Not later than 2:00 p.m. (New York City time), three (3) Business Days prior to each Payment Date, the Special Servicer shall deliver to the Property Manager and the Indenture Trustee a report containing such information relating to the Specially Serviced Assets and in such form as the Indenture Trustee may reasonably request (such report, the “ Special Servicer Report ”), reflecting information as of the close of business on the last day of the related Collection Period. For the avoidance of doubt, the Special Servicer Report may be included in the Determination Date Report.        (c)  Not later than the 30th day following the end of each calendar quarter, commencing with the quarter ended September 30, 2014, the Special Servicer shall deliver to the Indenture Trustee and the Property Manager a report containing such information and in such form as the Indenture Trustee may reasonably request (such report a “ Modified Collateral Detail and Realized Loss Report ”) with respect to all operating statements and other financial information collected or otherwise obtained by the Special Servicer pursuant to Section 3.12(b) during such calendar quarter.        Section 4.02 Use of Agents .        The Property Manager may at its own expense utilize agents or attorneys-in-fact, including Sub-Managers, in performing any of its obligations under this Article IV , but no such utilization shall relieve the Property Manager from any of such obligations, and the Property Manager shall remain responsible for all acts and omissions of any such agent or attorney-in-fact. The Property Manager shall have all the limitations upon liability and all the indemnities for the actions and omissions of any such agent or attorney-in-fact that it has for its own actions hereunder pursuant to Article V , and (except as set forth in Section 3.21(a))  any such agent or attorney-in-fact shall have the benefit of all the limitations upon liability, if any, and all the indemnities provided to the Property Manager under Section 5.03(a) . Such indemnities shall be expenses, costs and liabilities of the Issuers, and any such agent or attorney-in-fact shall be entitled to be reimbursed (to the same extent the Property Manager would be entitled to be reimbursed) as provided in Section 2.11 of the Indenture.                                   ARTICLE V              THE PROPERTY MANAGER AND THE SPECIAL SERVICER        Section 5.01 Liability of the Property Manager and the Special Servicer .        The Property Manager and the Special Servicer shall be liable in accordance herewith only to the extent of the obligations specifically imposed upon and undertaken by the Property Manager and the Special Servicer, respectively, herein.        Section 5.02 Merger , Consolidation or Conversion of the Property Manager and the Special Servicer .                                      79 US-DOCS\ 96557504.7 102826315.7 

 

      Subject to the following paragraph, the Property Manager and the Special Servicer shall each keep in full effect its existence, rights and franchises as a partnership, corporation, bank or association under the laws of the jurisdiction of its formation, and each will obtain and preserve its qualification to do business as a foreign partnership, corporation, bank or association in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement or any of the Leases and the Mortgage Loans and to perform its respective duties under this Agreement.        Each of the Property Manager and the Special Servicer may be merged or consolidated with or into any Person, or may transfer all or substantially all of its assets to any Person, in which case any Person resulting from any merger or consolidation to which the Property Manager or the Special Servicer is a party, or any Person succeeding to the business of the Property Manager or the Special Servicer, will be the successor Property Manager or the successor Special Servicer, as the case may be, hereunder, and each of the Property Manager and the Special Servicer may transfer any or all of its rights and obligations under this Agreement to any Person; provided , however , that no such successor, surviving Person or transferee shall succeed to the rights of the Property Manager or the Special Servicer unless (a) the Rating Condition is satisfied or (b) such successor is an affiliate of the Property Manager or the Special Servicer and the obligations of such successor hereunder are guaranteed by the Support Provider.        Section 5.03 Limitation on Liability of the Property Manager , the Special Servicer and the Back-Up Manager; Environmental Liabilities .        (a)  None of the Property Manager, the Special Servicer or the Back-Up Manager or any director, partner, member, manager, officer, employee or agent of any such party or Control Person over any of them shall be under any liability to the Issuers, the Indenture Trustee, the Collateral Agent, the Custodian or the holders of the Notes or the LLC Interests or any other Person for any action taken, or not taken, in good faith pursuant to this Agreement, or for errors in judgment; provided , however , that none of the Property Manager, the Special Servicer or the Back-Up Manager shall be protected against any liability that would otherwise be imposed by reason of misfeasance, bad faith or negligence in the performance of obligations or duties hereunder. The Property Manager and the Special Servicer and the Back-Up Manager (each, an “Applicable Party ”) and any director, officer, partner, member, manager, employee or agent of any such person or Control Person of any of them shall be entitled to indemnification by the Issuers, payable, subject to Section 5.04 of the Indenture and pursuant to Section 2.11 of the Indenture, against any loss, liability or expense incurred in connection with the performance of duties or obligations hereunder or under any other Transaction Document or in connection with any legal action that relates to this Agreement or any other Transaction Document; provided , however , that such indemnification shall not extend to any loss, liability or expense incurred by reason of misfeasance, bad faith or negligence in the performance of obligations or duties under this Agreement. Each Applicable Party shall indemnify the Issuers, the Indenture Trustee and the Collateral Agent and any director, officer, employee, agent or Control Person of any of them against any loss, liability or expense resulting from the misfeasance, bad faith or negligence in the performance of such Applicable Party’s duties or obligations under this Agreement. No Applicable Party shall be under any obligation to appear in, prosecute or defend any legal action                                     80 US-DOCS\ 96557504.7 102826315.7 

 

that is not incidental to its respective responsibilities under this Agreement and that in its opinion may involve it in any expense or liability; provided , however , that each Applicable Party shall be permitted, at its sole discretion, to undertake any such action that it may deem necessary or desirable with respect to the enforcement or protection of the rights and duties of the parties hereto or the interests of any Issuer hereunder. In such event, the legal expenses and costs of such action, and any liability resulting therefrom, shall be reimbursed by the Issuers in accordance with Section 2.11(b) of the Indenture.        (b)  The Property Manager shall enforce or pursue in accordance with the Servicing Standard any claim for payment, indemnity or reimbursement available to any of the Issuers or the Indenture Trustee in respect of any environmental liabilities, losses, claims, costs or expenses, including, without limitation, any right to payment under an Environmental Indemnity Agreement or a Performance Undertaking. The Property Manager shall seek payment from the Support Provider for any indemnities due under an Environmental Indemnity Agreement to the extent any such amounts are not paid by the applicable Issuer on a current basis from the Available Amount on any Payment Date in accordance with Section 2.11(b) of the Indenture. Any amounts advanced by Spirit Realty, in its capacity as Property Manager, in respect of environmental matters that are payable by the applicable Issuer under an Environmental Indemnity Agreement and are not reimbursed on a current basis as described above, shall be deemed to be payment by Spirit Realty, in its capacity as Support Provider, and Spirit Realty shall not be entitled to reimbursement of any such amounts as a Property Protection Advance.        Section 5.04 Term of Service; Property Manager and Special Servicer Not to Resign .        Subject to (and without limiting) Section 5.02 , Section 6.04(a)  and Section 6.04(b) , hereof, neither the Property Manager nor the Special Servicer shall resign from the obligations and duties hereby imposed on it, except upon determination that the performance of its duties hereunder is no longer permissible under applicable law or are in material conflict by reason of applicable law with any other activities carried on by it, such other activities causing such a conflict being of a type and nature carried on by the Property Manager or the Special Servicer, as the case may be, at the date of this Agreement. Any such determination permitting the resignation of the Property Manager or the Special Servicer, as applicable, shall be evidenced by an Opinion of Counsel to such effect that shall be delivered to the Issuers and the Indenture Trustee. No such resignation shall become effective until a successor shall have assumed the responsibilities and obligations of the resigning party hereunder. If within one hundred twenty (120) days of the date of such determination, no successor shall have assumed the applicable responsibilities and obligations of the resigning party, such Property Manager or Special Servicer shall be permitted to petition a court of competent jurisdiction to appoint a successor.        Notwithstanding anything to the contrary herein, each of the Property Manager and the Special Servicer may cause all or part of the obligations and duties imposed on it by this Agreement to be assumed by, and may assign part or all of its rights, benefits or privileges hereunder to, another Person; provided , that (i) the assuming party is an Eligible Successor and (ii) unless the assuming party or assignee is an Affiliate of the Property Manager or Special Servicer whose obligations and duties hereunder are guaranteed by the Support Provider, the Rating Condition shall have been satisfied with respect to any such assumption or assignment. Upon any such assignment or assumption, the Property Manager and/or the Special Servicer, as                                     81 US-DOCS\ 96557504.7 102826315.7 

 

applicable, shall be relieved from all liability hereunder for acts or omissions the assuming Person or assignee, as applicable, occurring after the date of such assignment or assumption.        If the Property Manager, Special Servicer or Back-Up Manager shall resign pursuant to this Section 5.04  or be removed pursuant to Section 6.01 , then such resigning Property Manager, Special Servicer or Back-Up Manager, as applicable, must pay all reasonable costs and expenses associated with the transfer of its duties and cooperate reasonably with its successor in order to effect such transfer.        Except as provided herein, neither the Property Manager nor the Special Servicer shall assign or transfer any of its rights, benefits or privileges hereunder to any other Person or delegate to or subcontract with, or authorize or appoint, any other Person to perform any of the duties, covenants or obligations to be performed by it hereunder, or cause any other Person to assume such duties, covenants or obligations. If, pursuant to any provision hereof, all of the duties and obligations of the Property Manager or the Special Servicer are transferred by an assignment and assumption to a successor thereto, the entire amount of compensation payable to the Property Manager or the Special Servicer, as the case may be, that accrues pursuant hereto from and after the date of such transfer shall be payable to such successor.        Section 5.05 Rights of Certain Persons in Respect of the Property Manager and the Special Servicer .        Each of the Property Manager and the Special Servicer shall afford to the other and, also to the Issuers and the Indenture Trustee, upon reasonable notice, during normal business hours, (a) access to all records maintained by it relating to the Mortgage Loans, Mortgaged Properties and Leases included in the Collateral Pool and in respect of its rights and obligations hereunder and (b) access to such of its officers as are responsible for such obligations; provided , that, in no event shall the Property Manager or Special Servicer be required to take any action that violates applicable law, contract or regulation. The Issuers may, but are not obligated to, enforce the obligations of the Property Manager and the Special Servicer hereunder and may, but are not obligated to, perform, or cause a designee to perform, any defaulted obligation of the Property Manager or the Special Servicer hereunder, or, in connection with any such defaulted obligation, exercise the related rights of the Property Manager or the Special Servicer hereunder; provided , however , that neither the Property Manager nor the Special Servicer shall be relieved of any of its obligations hereunder by virtue of such performance by any such Issuer or its designee. The Issuer shall not have any responsibility or liability for any action or failure to act by or with respect to the Property Manager or the Special Servicer.        Section 5.06 [Reserved] .        Section 5.07 Property Manager or Special Servicer as Owner of Notes .        The Property Manager or an Affiliate of the Property Manager, or the Special Servicer or an Affiliate of the Special Servicer, may become the holder of any Notes or any LLC Interests with the same rights (unless otherwise expressly provided in a Transaction Document) as it would have if it were not the Property Manager, the Special Servicer or any such Affiliate. If, at any time during which the Property Manager, the Special Servicer or any of their respective                                     82 US-DOCS\ 96557504.7 102826315.7 

 

Affiliates is the holder of any Note or LLC Interest, the Property Manager or the Special Servicer proposes to take or omit to take action (i) which action or omission is not expressly prohibited by the terms hereof and would not, in the Property Manager or the Special Servicer’s good faith judgment, violate the Servicing Standard, and (ii) which action, if taken, or omission, if made, might nonetheless, in the Property Manager’s or the Special Servicer’s good faith judgment, be considered by other Persons to violate the Servicing Standard, the Property Manager or the Special Servicer may, but need not, seek the approval of the holders of the Notes and the LLC Interests to such action or omission by delivering to the Issuers and the Indenture Trustee a written notice that (a) states that it is delivered pursuant to this Section 5.07 , (b) identifies the portion of Notes and LLC Interests beneficially owned by the Property Manager or the Special Servicer or any Affiliate of the Property Manager or the Special Servicer, and (c) describes in reasonable detail the action that the Property Manager or the Special Servicer, as the case may be, proposes to take or omit. Upon receipt of such notice, the Issuers shall forward such notice to the applicable holders of the LLC Interests. If, at any time, the Requisite Global Majority separately consent in writing to the proposal described in the such notice, and if the Property Manager or the Special Servicer, as the case may be, takes action and/or omits to take action as proposed in such notice, such action and/or omission will be deemed to comply with the Servicing Standard. It is not the intent of the foregoing provision that the Property Manager or the Special Servicer be permitted to invoke the procedure set forth herein with respect to routine servicing matters arising hereunder, but rather in the case of unusual circumstances.                                  ARTICLE VI                       SERVICER REPLACEMENT EVENTS        Section 6.01 Servicer Replacement Events        (a)   “ Servicer Replacement Event ” wherever used herein with respect to the Property Manager or Special Servicer, means any one of the following events:             (i)   any failure by the Property Manager or the Special Servicer to remit or       deposit moneys, as required under the Indenture or this Agreement, to the Collection       Account, the Release Account or the Payment Account, which failure remains       unremedied for two (2) Business Day after the earlier of (x) the date on which notice of       such failure, requiring the same to be remedied, is given to the Property Manager or       Special Servicer, as applicable, by the Indenture Trustee, or to such Property Manager or       Special Servicer, as applicable, and the Indenture Trustee by the Noteholders holding at       least 25% of the Aggregate Series Principal Balance and (y) actual knowledge of such       failure by such Property Manager or Special Servicer, as applicable; or             (ii)  the Property Manager fails to make any P&I Advance as required by this       Agreement;             (iii) the Property Manager fails to make any Property Protection Advance or       fails to pay (or, in the event the Property Manager is Spirit Realty, fails to direct the       Indenture Trustee to pay) any Emergency Property Expenses from funds on deposit in the       Collection Account, in each case as required by the Indenture or this Agreement, which                                     83 US-DOCS\ 96557504.7 102826315.7 

 

      failure remains unremedied for four (4) Business Days after the earlier of (x) the date on       which notice of such failure, requiring the same to be remedied, shall have been given to       such Property Manager by the Indenture Trustee, or to such Property Manager and the       Indenture Trustee by the Noteholders holding at least 25% of the Aggregate Series       Principal Balance and (y) actual knowledge of such failure by such Property Manager; or             (iv)  either the Property Manager or the Special Servicer fails to comply in any       material respect with any other of the covenants or agreements on the part of the       Property Manager or the Special Servicer, as the case may be, contained in this       Agreement, which failure continues unremedied for a period of 30 days after the date on       which written notice of such failure shall have been received by the Property Manager or       the Special Servicer, as applicable; provided , however , that if the failure is capable of       being cured and such Property Manager or Special Servicer is diligently pursuing that       cure, the 30 day period will be extended for another 30 days; or             (v)   any breach on the part of the Property Manager or the Special Servicer of       any representation or warranty contained in this Agreement that materially and adversely       affects the interests of the Issuers or the Noteholders, and that continues unremedied for a       period of 30 days after the date on which notice of such breach is given to the Property       Manager or the Special Servicer, as applicable; provided , however , that if the breach is       capable of being cured and such Property Manager or Special Servicer is diligently       pursuing that cure, the 30 day period will be extended for another 30 days; or             (vi)  (a) the Property Manager or the Special Servicer consents to the       appointment of a receiver, liquidator, trustee or similar official relating to it or relating to       all or substantially all of its assets or admits in writing its inability to pay its debts or takes       other actions indicating its insolvency or inability to pay its obligations; or (b) a decree or       order of a court having jurisdiction in any involuntary case for the appointment of a       receiver, liquidator, trustee or similar official in any bankruptcy, insolvency, readjustment       of debt, marshalling of assets and liabilities or similar proceedings is entered against the       Property Manager or the Special Servicer and the decree or order remains in force for a       period of 60 days; provided , that if any decree or order cannot be discharged, dismissed       or stayed within the 60-day period, such Property Manager or Special Servicer will have       an addition 30 days to effect the discharge, so long as it commenced proceedings to have       the decree or order dismissed within the initial 60-day period and it is continuing to       pursue the discharge; or             (vii) either the Property Manager or Special Servicer assigns any of its       obligations to any third party other than as permitted under this Agreement or any other       Transaction Document and does not remedy such breach within five Business Days of       such assignment; or             (viii) either the Property Manager or the Special Servicer fails to observe any       material reporting requirements under this Agreement, which failure remains unremedied       30 days after the date on which written notice of such failure, requiring the same to be                                      84 US-DOCS\ 96557504.7 102826315.7 

 

      remedied, shall have been given to the Property Manager or the Special Servicer, as       applicable, by any other party to this Agreement or the Indenture Trustee; or             (ix)  any Issuer or the Indenture Trustee has received notice in writing from any       Rating Agency then rating any Notes at the request of an Issuer citing servicing concerns       and stating that the continuation of the Property Manager or the Special Servicer in such       capacity would, in and of itself, result in a downgrade, qualification or withdrawal of any       of the ratings then assigned by such Rating Agency or other nationally recognized       statistical ratings organization to such Notes; or             (x)   the declaration of an Indenture Event of Default; or             (xi)  an Early Amortization Event occurs and is continuing that is reasonably       determined by the Back-Up Manager (unless the Back-Up Manager is then serving as       Property Manager or Special Servicer) or the Requisite Global Majority to be primarily       attributable to acts or omissions of the Property Manager or the Special Servicer rather       than general market factors (provided that the occurrence of an Early Amortization Event       determined to be attributable to the acts or omissions of a Property Manager or Special       Servicer that has been replaced shall not cause a Servicer Replacement Event with       respect to any Successor Property Manager or Successor Special Servicer (including the       Back-Up Manager)); or             (xii) the Property Manager or the Special Servicer has engaged in fraud, gross       negligence or willful misconduct in connection with its performance under this Agreement       and such event could reasonably be expected to have a material adverse effect on the use,       value or operation of the Collateral Pool (taken as a whole), and remains unremedied for       30 days after the Property Manager or the Special Servicer receives written notice       thereof.  When a single entity acts as Property Manager and Special Servicer, a Servicer Replacement Event in one such capacity shall constitute a Servicer Replacement Event in each such capacity. In the event that the same entity is serving as both Property Manager and Special Servicer and such entity is terminated hereunder in one such capacity (in accordance with Section 6.01(b)) , it shall automatically be terminated in both such capacities. Each of the Property Manager and the Special Servicer will notify the Indenture Trustee in writing of the occurrence of a Servicer Replacement Event or an event that, with the giving of notice or the expiration of any cure period, or both, would constitute a Servicer Replacement Event promptly upon obtaining actual knowledge thereof.        (b)  (i)   If any Servicer Replacement Event (other than any Servicer Replacement Event under Sections 6.01(a)(vi) ) occurs with respect to the Property Manager or the Special Servicer (in either case, for purposes of this Section 6.01(b) , the “ Defaulting Party ”) of which a responsible officer of the Indenture Trustee shall have actual knowledge shall occur, then the Indenture Trustee shall provide written notice thereof to the Noteholders requesting that the Noteholders (excluding Spirit Realty and its affiliates) direct the removal of the Property Manager and/or Special Servicer or waive such Servicer Replacement Event. In the event that, while such Servicer Replacement Event is continuing, the Requisite Global Majority directs the                                     85 US-DOCS\ 96557504.7 102826315.7 

 

removal of such Property Manager and/or Special Servicer, as applicable, the Indenture Trustee will terminate such Property Manager or Special Servicer by notice in writing to the Defaulting Party (with a copy of such notice to each other party hereto). For the avoidance of doubt, no such direction may occur in the event that a Servicer Replacement Event is not continuing. Upon the occurrence of any Servicer Replacement Event under Sections 6.01(a)(vi)  with respect to any Defaulting Party, such Defaulting Party shall be immediately terminated without any further action on the part of any other person. Following any such termination of a Defaulting Party as described in this Section 6.01(b) , the Back-Up Manager shall replace the Defaulting Party as Property Manager and/or Special Servicer, as applicable, subject to and in accordance with Section 6.02(b)  and shall have all the rights, duties and obligations of the Property Manager and/or Special Servicer, as applicable, hereunder until a Successor Property Manager or Successor Special Servicer, as applicable, shall have been appointed. Promptly after any such termination, the Indenture Trustee (acting at the written direction of the Requisite Global Majority) shall appoint a successor property manager (any property manager appointed in such manner, the “ Successor Property Manager ”) and/or a successor special servicer (any special servicer appointed in such manner, the “ Successor Special Servicer ”) in accordance with Section 6.01(b)(iii) , each of which shall serve as and have all the rights, duties and obligations of the Property Manager and/or of the Special Servicer, as applicable, hereunder; provided , that any Successor Property Manager or Successor Special Servicer must be an Eligible Successor at the time of such appointment. Upon its appointment, the Successor Property Manager or Successor Special Servicer shall be the successor in all respects to the Property Manager or Special Servicer, as applicable, and shall be subject to all the responsibilities, duties and liabilities relating thereto placed upon the Property Manager or Special Servicer by the terms and provisions hereof; provided , that, no such Successor Special Servicer or Successor Property Manager shall have any liability with respect to any duties or obligations of the terminated Property Manager or Special Servicer, as applicable, accruing prior to the date of such appointment. Notwithstanding the foregoing, if a Servicer Replacement Event under Section 6.01(b)(ii)  or (iii)  occurs as a result of a failure by the Property Manager to make any Advance and the Back-Up Manager makes such Advance, for so long as the Property Manager has not reimbursed the amount of such Advance to the Back-Up Manager, the Back-Up Manager will have the right to immediately terminate the Property Manager (and the Special Servicer, if the Property Manager and the Special Servicer are the same entity) and become the Successor Property Manager (and the Successor Special Servicer, if the Property Manager being replaced and the Special Servicer are the same entity). In any such event, the Back-Up Manager shall be deemed to have been appointed the Successor Property Manager and, if applicable, the Successor Special Servicer hereunder (regardless of whether any of the other conditions of this Section 6.01(b)  are satisfied).             (ii)  Unless otherwise expressly set forth herein, any such appointment of a       Successor Property Manager or Successor Special Servicer, other than the Back-Up       Manager, will be subject to (i) the satisfaction of the Rating Condition and (ii) the written       agreement of the Successor Property Manager or Successor Special Servicer to be bound       by the terms and conditions of this Agreement, together with an Opinion of Counsel       regarding the enforceability of such agreement. Subject to the foregoing conditions set       forth in Section 6.01(b) , any person, including any holder of Notes or LLC Interests or                                      86 US-DOCS\ 96557504.7 102826315.7 

 

      any Affiliate thereof, may be appointed as Successor Property Manager or Successor       Special Servicer.             (iii) In the event that a Successor Property Manager or Successor Special       Servicer (other than the Back-Up Manager), as applicable, has failed to assume all of the       duties and obligations of the Defaulting Party as provided in this Agreement within 30       days of written notice of termination to such Defaulting Party (the “ Successor       Replacement Date ”), the Back-Up Manager shall automatically (and without further       action and regardless of whether any of the other conditions of this Section 6.01(b)  are       satisfied) be (and shall have been deemed to have been appointed) the Successor Property       Manager or the Successor Special Servicer, as applicable, under this Agreement;       provided , however , that the Indenture Trustee shall (at the direction of the Requisite       Global Majority) replace the Back-Up Manager acting as Successor Property Manager or       Successor Special Servicer without cause upon 30 days written notice and appoint a new       Successor Property Manager or Successor Special Servicer specified in such Requisite       Global Majority’s direction; provided , that (i) such appointment shall be subject to the       terms and conditions of the appointment of a Successor Property Manager or Successor       Special Servicer, as applicable, set forth in this Section 6.01(b)(i)  and (if) the Back-Up       Manager shall continue serving as Property Manager or Special Servicer, as applicable,       until such appointment is effected.             (iv)  In the event that a Successor Property Manager or Successor Special       Servicer, as applicable, other than the Back-Up Servicer has not been appointed within       thirty (30) days of the applicable Successor Replacement Date, the Back-Up Manager       may (but shall not be obligated to) direct the Indenture Trustee to appoint (for the       avoidance of doubt, subject to the terms and conditions of the appointment of a       Successor Property Manager or Successor Special Servicer, as applicable, set forth in       Sections 6.01(b)(i)  and (ii))  a Successor Property Manager or Successor Special Servicer       designated by the Back-Up Manager (which successor will be subject to the criteria       described above, including satisfaction of the Rating Condition); provided , that the Back-       Up Manager will continue serving as Property Manager or Special Servicer, as applicable,       until a Successor Property Manager or Successor Special Servicer, as applicable, has       been so appointed. If the Back-Up Manager does not direct the Indenture Trustee to       appoint a Successor Property Manager or Successor Special Servicer within 30 days of       the applicable Successor Replacement Date, then such Back-Up Manager will continue to       serve as Property Manager or Special Servicer, as applicable, and will no longer be       permitted to so direct the Indenture Trustee.             (v)   Each of the Property Manager and the Special Servicer agrees that, if it is       terminated pursuant to this Section 6.01(b) , it shall (i) promptly (and in any event not       later than ten (10) Business Days prior to the effective date of such termination) provide       the Back-Up Manager or any Successor Property Manager or Successor Special Servicer,       as applicable, with all documents and records in accordance with Section 6.02(b) , (ii)       cooperate with such successor in effecting the termination of the duties, obligations,       responsibilities and rights of the Property Manager or Special Servicer hereunder and       transferring such duties, obligations and responsibilities to such successor, (including                                     87 US-DOCS\ 96557504.7 102826315.7 

 

      carrying out the actions set forth in Section 6.02) and (iii) in the event that it receives any       amounts that constitute Collateral, transfer such amounts to the Property Manager (it       being understood that if the Property Manager has been terminated, such amounts shall be       transferred to the Successor Property Manager that succeeds such Property Manager)       within two (2) Business Days after receipt thereof; provided , however , that the Property       Manager and the Special Servicer each shall, if terminated pursuant to this Section       6.01(b) , continue to be obligated for or entitled to pay or receive all amounts accrued or       owing by or to it under this Agreement on or prior to the date of such termination,       whether in respect of Property Protection Advances or otherwise, and it and its directors,       officers, employees and agents shall continue to be entitled to the benefits of Section       5.03(a) notwithstanding any such termination. Any Successor Property Manager or a       Successor Special Servicer shall use reasonable efforts to diligently complete the physical       transfer of servicing from the terminated Property Manager or Special Servicer, as       applicable, with the cooperation of such Property Manager or Special Servicer.        Section 6.02 Successor Property Manager .        (a)  In the event that a Successor Property Manager (including the Back-Up Manager) is appointed, the terminated Property Manager shall arrange for the delivery to the Successor Property Manager of all of the Servicing Files (other than with respect to any Specially Serviced Asset), which Servicing Files shall contain sufficient data to permit the Successor Property Manager to assume the duties of the Property Manager hereunder without delay on account of the absence of relevant servicing information. In the event that a Successor Special Servicer (including the Back-Up Manager) is appointed, the terminated Special Servicer shall arrange for the delivery to the Successor Special Servicer of all of the Servicing Files for any Specially Serviced Asset, which Servicing Files shall contain sufficient data to permit the Successor Special Servicer to assume the duties of the Special Servicer hereunder without delay on account of the absence of relevant servicing information.  If the Back-Up Manager has made any Advances that the Property Manager was required to make but did not make which have not been reimbursed, any Successor Property Manager (other than the Back-Up Manager) will be required to reimburse the Back-Up Manager for such Advances as a condition to its appointment as successor (and any amount so reimbursed will be deemed to constitute Advances made by the Successor Property Manager).        (b)  The Issuers, if they determine in their reasonable discretion that enforcement rights and/or remedies are available to the holders of the Notes against the terminated Property Manager or Special Servicer and it is prudent under the circumstances to enforce such rights, agree to enforce their rights under this Agreement against the terminated Property Manager or Special Servicer, including any rights they have to enforce each Defaulting Party’s obligation to fully cooperate in the orderly transfer and transition of servicing and otherwise comply with the terms of this Agreement. In the event that the Successor Special Servicer or Successor Property Manager discovers or becomes aware of any errors in any records or data of the terminated Special Servicer or Property Manager which impairs its ability to perform its duties hereunder, such Successor Property Manager or Successor Special Servicer shall notify the Issuers and the Indenture Trustee in writing of such errors and shall, at such terminated Special Servicer’s or                                      88 US-DOCS\ 96557504.7 102826315.7 

 

Property Manager’s expense and upon the Issuers’ direction, undertake to correct or reconstruct such records or data.        (c)  From and after the date of this Agreement until the Back-Up Manager becomes the Successor Property Manager, the Property Manager shall (i) provide or cause to be provided to the Back-Up Manager on the 20 th  day of each month, in electronic form, a complete data tape of the Mortgage Loan Schedule, the Mortgaged Property Schedule and such other information as any Issuer may reasonably deem necessary, including all information necessary to determine the Release Price with respect to any Mortgage Loan or Mortgaged Property and the original purchase price paid by any Issuer in respect of any Mortgage Loan or Mortgaged Property and (ii) make available to the Back-Up Manager a copy of each Determination Date Report, Modified Collateral Detail and Realized Loss Report and any Special Servicer Report. The Back- Up Manager will perform an initial comprehensive data integrity review and a monthly review of this information to determine whether it provides adequate information to enable the Back-Up Manager to perform its obligations hereunder as the Back-Up Manager. To the extent that the Back-Up Manager determines within ten (10) calendar days of its receipt of such information that such information is adequate for the Back-Up Manager to perform its obligations as the Back-Up Manager, the Back-Up Manager will provide the Issuers and the Indenture Trustee with written notice to that effect. To the extent that the Back-Up Manager determines within ten (10) calendar days of its receipt of such information that such information is inadequate for the Back-Up Manager to perform its obligations as the Back-Up Manager, the Back-Up Manager will provide prompt written notice to the Issuers and the Property Manager identifying any deficiencies in such information that do not enable the Back-Up Manager to perform its obligations as the Back-Up Manager. The Property Manager shall use its best efforts to provide any such deficient information to the Back-Up Manager within ten (10) calendar days of receipt of such notice from the Back-Up Manager.        (d)  Within ten (10) Business Days of the date of receipt from the Property Manager, the Back-Up Manager shall, in order to understand the purpose of each data field (and the interrelationships among such data fields), review the form of Determination Date Report, Modified Collateral Detail and Realized Loss Report and the Special Servicer Report, each in the form agreed to by the Property Manager and the Back-Up Manager. Provided the data in the Determination Date Report, the Special Servicer Report and the Modified Collateral Detail and Realized Loss Report are in a format readable by the Back-Up Manager, the Back-Up Manager shall create a set of conversion routines and database mapping programs, as necessary, that will enable the Back-Up Manager to (i) receive such data from the Property Manager on a monthly basis and to ensure that the data is readable, and (ii) independently generate such Determination Date Reports and Special Servicer Reports, as applicable, in the event that it is appointed Successor Property Manager or Successor Special Servicer.        (e)  On a monthly basis, the Back-Up Manager shall (x) verify receipt of the Determination Date Report and the Special Servicer Report required to be delivered by the Property Manager, together with any other records and data supplied to the Issuers, Indenture Trustee or otherwise hereunder, by Property Manager with respect to the Mortgage Loans and Leases, and (y) verify that such records and data are in a readable format.                                      89 US-DOCS\ 96557504.7 102826315.7 

 

      (f)  The Back-Up Manager may resign from its obligations under this Agreement (i) with the consent of the Requisite Global Majority, (ii) upon a determination that the performance of its hereunder duties and obligations are no longer permitted under applicable law or (iii) if the Back-Up Manager identifies a successor back-up manager whose appointment as successor Back-Up Manager satisfies the Rating Condition, and in each case a written assumption agreement is executed whereby such successor assumes all rights, duties and obligations of the Back-Up Manager. No such resignation shall become effective a successor shall have assumed the responsibilities and obligations of the Back-Up Manager party hereunder.        Section 6.03 Additional Remedies of the Issuers and the Indenture Trustee upon a Servicer Replacement Event .        During the continuance of any Servicer Replacement Event, so long as such Servicer Replacement Event shall not have been remedied, in addition to the rights specified in Section 6.01 , the Issuers shall have the right, and the Indenture Trustee shall have the right, in its own name and as trustee of an express trust, to take all actions now or hereafter existing at law, in equity or by statute to enforce its rights and remedies and to protect the interests, and enforce the rights and remedies, of the Noteholders (including the institution and prosecution of all judicial, administrative and other proceedings and the filings of proofs of claim and debt in connection therewith). Except as otherwise expressly provided in this Agreement, no remedy provided for by this Agreement shall be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall be deemed to be a waiver of any Servicer Replacement Event.        Section 6.04 Replacement of the Servicer.        (a)  Following the occurrence of the Spin-Off, Sprit Realty may elect by written notice to the Issuers and the Indenture Trustee to be replaced as Property Manager and Special Servicer by a direct or indirect wholly owned subsidiary that is a Taxable REIT Subsidiary (any such replacement, a “ Permitted Replacement Event ”); provided  that (i) Spirit Realty has entered into a performance guarantee (a copy of which shall be provided to the Issuers and the Indenture Trustee) whereby Spirit Realty fully, unconditionally and irrevocably guarantees the all obligations, including financial obligations, of such subsidiary pursuant to this Agreement in such subsidiary’s capacity as successor Property Manager and Special Servicer and (ii) immediately after giving effect to such replacement, such subsidiary delegates all of its obligations under this Agreement to Spirit Realty and Spirit Realty accepts such delegation (which may involve an employee sharing agreement between Spirit Realty and the Taxable REIT Subsidiary) (as confirmed by an Officer’s Certificate of Spirit Realty and the applicable Taxable REIT Subsidiary). Any such appointment of a successor Property Manager or successor Special Servicer will be subject to the written agreement of the successor Property Manager or successor Special Servicer to be bound by the terms and conditions of this Agreement, together with an Opinion of Counsel delivered to the Issuers and the Indenture Trustee regarding the enforceability of such agreement.        (b)  If a Qualified Deleveraging Event occurs or if the Corporate Asset Management Agreement is terminated for any reason, Spirit Realty (or any Taxable REIT Subsidiary that has                                     90 US-DOCS\ 96557504.7 102826315.7 

 

been appointed Property Manager and/or Special Servicer) may resign or be replaced as Property Manager and Special Servicer (a “ Permitted Termination Event ”), in each case, upon 30 days prior written notice from Spirit Realty to the Issuers, or from the Issuers to Spirit Realty, as applicable, so long as (i) a Qualified Eligible Successor has been appointed Property Manager and Special Servicer, (ii) the Rating Condition has been satisfied and (iii) the successor Property Manager and/or successor Special Servicer has agreed in writing to be bound by the terms and conditions of this Agreement and the Indenture Trustee has received an Opinion of Counsel regarding the enforceability of such agreement. A “Qualified Eligible Successor ” means any Eligible Successor that, immediately prior to giving effect to its appointment as Property Manager and/or Special Servicer, (i) owns and/or manages at least ten million (10,000,000) square feet of commercial property and (ii) has Net Assets of not less than $50,000,000 and covenants with the Indenture Trustee (on behalf of the Noteholders) to maintain Net Assets in at least such amount at all times. “ Net Assets ” for purposes of such definition means with respect to any entity the difference between (i) the fair value of such entity’s assets, but excluding accumulated depreciation, and (ii) such entity’s liabilities determined in accordance with GAAP. Each of the Property Manager and the Special Servicer agrees that in the event that it receives any amounts that constitute Collateral after giving effect to its resignation, it will transfer such amounts to the successor Property Manager within two business days after receipt thereof.                                  ARTICLE VII    TRANSFERS AND EXCHANGES OF MORTGAGED PROPERTIES AND MORTGAGE   LOANS BY THE APPLICABLE ISSUERS; RELEASE OF MORTGAGED PROPERTIES             AND MORTGAGE LOANS BY THE APPLICABLE ISSUERS.        Section 7.01 Released Mortgage Loans and Released Mortgaged Properties .        (a)  The applicable Issuers may obtain the release (the “ Release ”) of Mortgage Loans or Mortgaged Properties (any such Mortgage Loan or Mortgaged Property, a “ Released Mortgage Loan ” or “ Released Mortgaged Property ” as applicable) from the lien of the Indenture in connection with (i) the exercise of a Third Party Purchase Option, (ii) the purchase or substitution of a Delinquent Asset or Defaulted Asset by the Special Servicer or the Property Manager or any assignee thereof, (iii) the repurchase or substitution of a Mortgage Loan or Mortgaged Property by an applicable Cure Party due to a Collateral Defect, (iv) the sale of a Mortgage Loan or Mortgaged Property to the Support Provider or to a Support Provider SPE , Spirit Realty or to a third party unaffiliated with Spirit Realty or the Support Provider , (v) the exchange of a Mortgage Loan or Mortgaged Property with the Support Provider, a third party unaffiliated with the Support Provider, a Support Provider SPE, Spirit Realty,  Spirit SPE or a third-party unaffiliated with Spirit Realty or the Support Provider or (vi) an Early Refinancing Prepayment. In connection with the Release of (x) any Released Mortgaged Property, the related Lease and the related Lease File shall be simultaneously released from the lien of the Indenture or (y) any Released Mortgage Loan, the related Loan File shall be simultaneously released from the lien of the Indenture. The applicable Issuers shall obtain any Release that it is required to obtain in accordance with the terms hereof.        Except in connection with the release of a Mortgage Loan or a Mortgaged Property in exchange  for  one  or  more  Qualified  Substitute  Mortgage  Loans  or  one  or  more  Qualified                                     91 US-DOCS\ 96557504.7 102826315.7 

 

Substitute  Mortgaged  Properties  or  a  release  in  connection  with  an  Early  Refinancing Prepayment, the applicable Issuer will be required to obtain the applicable Release Price in order to obtain the Release of a Mortgage Loan or Mortgaged Property. The “ Release Price ” for any Mortgage Loan or Mortgaged Property will be an amount equal to (i) the Third Party Option Price if the release occurs in connection with any Third Party Purchase Option, (ii) with respect to any Delinquent Asset or Defaulted Asset purchased by the Special Servicer or the Property Manager or any assignee thereof the greater of (A) the Fair Market Value thereof and (B) the Allocated Loan Amount thereof, (iii) the Payoff Amount with respect to any Mortgage Loan or Mortgaged  Property  repurchased  by  the  related  Originator  or  the  Support  Provider  due  to  a Collateral Defect (or an equivalent amount recorded as a contribution in such calculations), (iv) with respect to any Terminated Lease Property, the Fair Market Value thereof, (v) the greater of (A) the Fair Market Value and (B) the sum of 115% of the Allocated Loan Amount thereof plus unreimbursed  Property  Protection  Advances  (plus  Advance  Interest  thereon),  Emergency Property  Expenses,  Extraordinary  Expenses,  Special Servicing  Fees,  Liquidation  Fees  and Workout Fees for any Mortgage Loan or Mortgaged Property sold to the Support Provider, a Support  Provider  SPE,  Spirit  Realty,  a  Spirit  SPE  or  to  a  third  party  unaffiliated  with  Spirit Realty  or  the  Support  Provider  or  (vi)  the  Fair  Market  Value  of  any  Mortgage  Loan  or Mortgaged  Property,  in  each  case,  in  each  case  if  (X)  the  Property  Manager  or  the  Special Servicer deems the release and sale of such Mortgage Loan or Mortgaged Property pursuant to this  clause  (vi)  to  be  in  the  best  interest  of  the Noteholders  and  (Y)  the  Rating  Agency Notification  Condition  is  satisfied  with  respect  to  such  release  and  sale;  provided,  that  after giving  effect  to  such  sale,  the  aggregate  Collateral  Value  of  all  Mortgaged  Properties   and Mortgage Loans (determined as of the release date with respect to each such Released Mortgage Loan) owned by the Issuer that have been sold to affiliates of any Issuer or Spirit Realty pursuant to this clause (vi) would not exceed, 35.0% of the Aggregate Collateral Value (determined as of the applicable Starting Closing Date) during the Series Closing Period in which such sale occurs; provided, further, that the Issuers shall only be permitted to sell such Mortgaged Properties and Mortgage Loans pursuant to this clause (vi) to its affiliates (or affiliates of Spirit Realty) in the event that the Property Manager or the Special Servicer determines that such sale is reasonably necessary in order to manage the Cashflow Coverage Ratios or compliance with the Maximum Asset  Concentrations.  In  addition,  the  Issuers  shall  not  acquire  any  Mortgaged  Property  or Mortgage  Loan  pursuant  to  this  Section   7.01   in  the  event  that,  after  giving  effect  to  such acquisition,  any  Property Concentration would exceed the Maximum Asset Concentrations set forth  in  the  Indenture  or  any  Series  Supplement  and  in  effect  at  the  time  of  such  acquisition. Notwithstanding anything in the Transaction Documents to the contrary, no Release Price will be payable  with  respect  to  any  Release  Parcel  transferred  to  a  Tenant  pursuant  to  an  obligation under the related Lease in connection with a Specified Permitted Subdivision and, in such case, the Indenture Trustee will release such property from the Collateral Pool, subject only to receipt of an Officer’s Certificate from the Property Manager certifying that: (i) the Specified Permitted Subdivision will not result in a reduction of the Collateral Value of the original property that was subdivided in connection with such Specified Permitted Subdivision, (ii) the Specified Permitted Subdivision  is  in  compliance  in  all  material  respects  with  all  requirements  of  law,  (iii)  the Specified Permitted Subdivision will not impair or otherwise adversely affect the liens, security interests  and  other  rights  of  the  Issuers  in  the  portion  of  the  property  not  being  released  (the “Remaining   Parcel ”),  (iv)  the  Remaining  Parcel  will  comply  with  all requirements  of  law (including,  without  limitation,  all  zoning  (including  any  parking  requirements)  and  building                                     92 US-DOCS\ 96557504.7 102826315.7 

 

codes)  as  well  as  the  applicable  requirements  of  the  Lease,  (v)  the  Remaining  Parcel  will constitute  a  separate  and  legal  lot  for  subdivision,  assessment  and  zoning  purposes,  (vi)  the Remaining Parcel will either constitute a separate and legal lot for tax purposes or an application for  a  separate  tax  lot  identification will have been submitted and an escrow account will have been established with sufficient funds on deposit to pay taxes on both the Release Parcel and the Remaining  Parcel,  (vii)  the  release  of  the  Release Parcel  will  not  materially  adversely  affect ingress or egress to or from the Remaining Parcel or access to utilities for the Remaining Parcel, (viii) the Release Parcel does not include any improvements that are subject to the related Lease, (ix) the documents with respect to the Specified Permitted Subdivision will not impose any new obligations  upon,  or  otherwise  further  burden,  the Remaining  Parcel  in  any  way  other  than customary  reciprocal  easements;  and  (x)  the  Property  Manager  or  the  Tenant has obtained or caused to be obtained all necessary approvals, consents or permits with respect to such Specified Permitted Subdivision (whether from applicable governmental or municipal authorities, parties to instruments  of record affecting the property or otherwise).  The certifications described in the preceding  sentence  are  collectively  referred  to  herein  as  the  “Specified   Permitted   Subdivision Conditions .”   Any  costs  or  expenses  incurred  in  connection  with  any  Specified  Permitted Subdivision will be paid by the Property Manager from its own funds.        In determining the Fair Market Value with respect to any Mortgaged Property or Mortgage Loan, the Property Manager or the Special Servicer, as applicable, shall establish a price determined to be the most probable price which such Mortgage Loan or Mortgaged Property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. In making any such determination, the Property Manager or Special Servicer, as applicable, (X) may obtain an MAI appraisal of the related Mortgaged Property; provided  that in the case of a sale of a Mortgaged Property or Mortgage Loan to an affiliate of any Issuer or Spirit Realty pursuant to clause (vi) of the definition of “Release Price”, the Property Manager or Special Servicer shall obtain such an appraisal unless (x) an appraisal with respect to the related Mortgaged Property or property securing such Mortgage Loan has been delivered within twelve months prior to the sale of such Mortgaged Property or Mortgage Loan and (y) neither the Property Manager nor the Special Servicer reasonably believes that the value of such Mortgaged Property or property securing such Mortgage Loan has materially increased in value since the date of such appraisal and (Y) shall assume the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (i) buyer and seller are typically motivated; (ii) both parties are well informed or well advised, and acting in what they consider their best interests; (iii) a reasonable time is allowed for exposure in the open market; (iv) payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and (v) the price represents the normal consideration for such Mortgage Loan or Mortgaged Property unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. In making any such determination, the Property Manager or Special Servicer shall take into account, among other factors, the period and amount of the delinquency on such Mortgage Loan or Lease, the occupancy level and physical condition of the related Mortgaged Property, the state of the local economy in the area where the Mortgaged Property is located, and the time and expense associated with a purchaser’s foreclosing on the related Mortgaged Property. In addition, the Property Manager or the Special Servicer, as applicable, shall refer to all other relevant information obtained by it or otherwise                                     93 US-DOCS\ 96557504.7 102826315.7 

 

contained in the related servicing file, taking into account any change in circumstances regarding the related Mortgaged Property known to the Property Manager or the Special Servicer, as applicable, that would materially affect the value of the related Mortgaged Property reflected in the most recent related appraisal. Furthermore, the Property Manager or the Special Servicer, as applicable, may consider available objective third party information obtained from generally available sources, as well as information obtained from vendors providing real estate services to the Property Manager or the Special Servicer, as applicable, concerning the market for distressed real estate loans and the real estate market for the subject property type in the area where the related Mortgaged Property is located. The Property Manager or the Special Servicer, as applicable, may also conclusively rely on any opinions or reports of qualified independent experts in real estate or commercial mortgage loan matters. All reasonable costs and expenses incurred by the Property Manager or the Special Servicer, as applicable, pursuant to making a determination of Fair Market Value shall constitute, and be reimbursable as, Property Protection Advances.        (c)  Any (i) Release Price (plus sales proceeds in excess thereof (any such excess amount, a “ Purchase Premium ”)) received by the applicable Issuer in connection with the release of a Mortgage Loan or Mortgaged Property (other than during a Disposition Period) and (ii) any Balloon Payment or Principal Prepayment received in connection with a Mortgage Loan, in each case shall be deposited into the Release Account (or, during the continuance of an Early Amortization Event, the Collection Account or an Exchange Account pursuant to Section 7.01(d) below).        (d)  For the avoidance of doubt, an Issuer may obtain the release of a Mortgage Loan or a Mortgaged Property in exchange for one or more Qualified Substitute Mortgage Loans or one or more Qualified Substitute Mortgaged Properties, as applicable, subject to the terms hereof.        (e)  (i) After giving effect to any sale or exchange of a Mortgage Loan or Mortgaged Property, the aggregate Collateral Value of all Released Mortgaged Properties and Released Mortgage Loans (determined as of the release date with respect to each such Released Mortgage Loan) sold or exchanged by any Issuer during the Closing Date Period in which such sale or exchange occurs shall not exceed 35.0% of the Aggregate Collateral Value (determined as of the applicable Starting Closing Date) unless the Rating Condition is satisfied; provided  that releases and exchanges or substitutions in connection with Collateral Defects, sales pursuant to the exercise of Third Party Purchase Options, sales during the Disposition Period, transfers or exchanges of Terminated Lease Properties, Risk-Based Substitutions and releases in connection with an Early Refinancing Prepayment shall not be subject to the foregoing limitation or taken into consideration in determining such aggregate Collateral Values of such Released Mortgaged Properties and Released Mortgage Loans.             (ii)  If any of the following criteria are satisfied, the release of a Mortgaged       Property in exchange for one or more Qualified Substitute Mortgaged Properties or,       solely in the case of clause (d) below, the release of a Mortgage Loan in exchange for one       or more Qualified Substitute Mortgage Loans or Qualified Substitute Mortgaged       Properties will constitute a “ Risk-Based Substitution ”: (a) the remaining term to       maturity of the related Lease is less than three years from the date of the proposed                                     94 US-DOCS\ 96557504.7 102826315.7 

 

      substitution and the Property Manager, in accordance with the Servicing Standard,       determines that there is a reasonable risk of non-renewal of such Lease ; based on written       communications from the Tenant under such Lease, the Property Manager, in accordance       with the Servicing Standard, determines that there is a reasonable risk of nonrenewal of       such Lease; (c) the Issuer has received from the Tenant under the related Lease written       notice of the non-renewal of such Lease; or (d) the Property Manager, in accordance with       the Servicing Standard, determines that there is a reasonable risk of monetary default by       the Tenant under such Lease or the Borrower under such Mortgage Loan, as applicable,       or such a default has occurred or such Lease or Mortgage Loan is or relates to a       Defaulted Asset.             (iii) If the Class Principal Balance of any Class of Notes is greater than zero on       the Payment Date that is three years prior to the earliest Legal Final Payment Date of any       outstanding Class of Notes, then a disposition period (the “ Disposition Period ”) will       commence on such Payment Date and will continue until the earlier of (i) the date on       which the Class Principal Balance of the Class of Notes having the earliest Legal Final       Payment Date is reduced to zero and (ii) such Legal Final Payment Date. During the       Disposition Period, the Property Manager will be required to utilize efforts consistent       with the Servicing Standard to either (i) sell (on behalf of the Issuers) each Mortgage       Loan and Mortgaged Property for a price equal to the greater of (x) the applicable       Release Price and (y) the applicable Allocated Loan Amount (and in each case in       accordance with the other provisions set forth in this Agreement) or (ii) sell (on behalf of       the Issuers) Mortgage Loans and Mortgaged Properties for no less than an amount       sufficient to generate proceeds which would, when combined with all other amounts       available for such purposes on deposit in the Collection Account and applied as described       in Section 2.11 of the Indenture, cause the Class Principal Balance of each Class of Notes       to be reduced to zero and all outstanding expenses of the Issuers to be paid. In the event       of any such disposition, the sales proceeds therefor will be deposited as Unscheduled       Proceeds into the Collection Account and applied as part of the Available Amount on the       Payment Date relating to the Collection Period in which such deposit occurs.        (f)  If the Rating Condition is satisfied, the Property Manager and the Issuers may enter into an Exchange Agreement with a Qualified Intermediary to establish a Like-Kind Exchange Program.  If a Like-Kind Exchange Program is established, the Property Manager and the Issuers (or the Property Manager on behalf of the Issuers) shall be permitted to:             (i)   Assign their respective rights to each Relinquished Property Agreement       and Replacement Property Agreement to the Qualified Intermediary in accordance with       Section 1.1031(k)-1(g)(4)(iv) of the Treasury Regulations (or any successor section       thereto); and             (ii)  Deposit all Relinquished any Net Release Price constituting a portion       ofRelinquished  Property Proceeds with respect to any Mortgage Loan or Mortgaged       Property  in the Exchange Account (in lieu of depositing such amount in the Release       Account), which such amounts may be disbursed from such Exchange Account to the       applicable seller of any Replacement Property;                                     95 US-DOCS\ 96557504.7 102826315.7 

 

Provided , that, no such assignment pursuant to clause (d)(i) above or deposit in the Exchange Account pursuant to clause (ii) above shall be permitted unless, (A) the Issuers have established the Exchange Reserve Account and (B) the Exchange Cash Collateral relating to the applicable Relinquished Property has been deposited in the Exchange Reserve Account.        If an Early Amortization Event has occurred and is continuing, all Exchange Cash Collateral on deposit in the Exchange Reserve Account shall be transferred to the Collection Account as Unscheduled Proceeds and applied as Unscheduled Principal Payments on the Payment Date following the commencement of such Early Amortization Event.  Upon such transfer of Exchange Cash Collateral, the Indenture Trustee will release any interest in any right to receive any related amounts of Relinquished Property Proceeds on deposit in the Exchange Account. Upon the purchase of any Qualified Substitute Mortgaged Property using any Relinquished Property Proceeds, if directed by the Property Manager, the Indenture Trustee will release Exchange Cash Collateral in an amount equal to the amount of such Relinquished Property Proceeds that were used for such purchase directly to the Issuers without depositing such amount in the Collection Account. In addition, if any Relinquished Property Proceeds on deposit in the Exchange Account are transferred to the Release Account as a result of a failed exchanged or otherwise, if directed by the Property Manager, the Indenture Trustee to release Exchange Cash Collateral in an amount equal to the amount of such Relinquished Property Proceeds transferred to the Release Account directly to the Issuers without depositing such amount in the Collection Account.        Exchange Cash Collateral will be invested in Permitted Investments as directed by the Issuers, or if no such direction is received, will be held uninvested. Any such Permitted Investment must (i) have a maturity date prior to the Payment Date following the date of such direction and (ii) have a short-term rating of not less than “A- 2” by S&P. Any interest or other income earned on funds in the Exchange Reserve Account (including interest on any Permitted Investments) will be treated as Unscheduled Proceeds part of the Available Amount  for the applicable Payment Date.        Section 7.02 Third Party Purchase Options; Release of Mortgaged Properties to Affiliates under Defaulted or Delinquent Assets; Early Refinancing Prepayment; Other Sales or Exchanges .        (a)  In the event any third party authorized to do so exercises a Third Party Purchase Option in accordance with the terms of the applicable Lease, the Third Party Option Price (without giving effect to clause (ii) in the definition thereof) paid by such third party shall be deposited into the Release Account (or, during the continuance of an Early Amortization Amount, the Collection Account), at the direction of the Property Manager, and upon receipt of an Officer’s Certificate from the Property Manager to the effect that such deposit has been or will be made (which the Property Manager shall deliver to the Indenture Trustee and the Issuers promptly after such deposit is made or immediately prior to the time at which such deposit will be made), the Indenture Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, as shall be provided to it by the Property Manager and are reasonably necessary to release the related Mortgage or any other lien on or security interest in such Mortgaged Property (each, a “ Third Party Option Mortgaged Property ”), whereupon such Mortgaged Property may be sold, transferred or otherwise disposed of by such Issuer, free                                     96 US-DOCS\ 96557504.7 102826315.7 

 

and clear of the lien of the Indenture and any Mortgage. Each of the applicable Issuers and the Property Manager hereby covenant and agree that they shall not solicit any Person to exercise any Third Party Purchase Option.        (b)  A Mortgaged Property leased under or constituting any Delinquent Asset or any Defaulted Asset, or a Mortgage Property securing or constituting any Delinquent Asset or any Defaulted Asset, may at the option of the Property Manager or Special Servicer be (a) purchased by the Special Servicer or the Property Manager or any assignee thereof for cash in an amount equal to the applicable Release Price, or (b) substituted for one or more Qualified Substitute Mortgaged Properties or Qualified Substitute Mortgage Loans owned by the Special Servicer, the Property Manager or any assignee thereof; provided , that (1) no Early Amortization Event has occurred and is continuing or would occur as a result of such purchase or substitution or (2) the Rating Condition is satisfied with respect to such purchase or substitution. The Indenture Trustee shall execute and deliver such instruments of release, transfer or assignment, in each case without recourse, as shall be provided to it by the applicable Issuer and are reasonably necessary to release any lien or security interest in the Released Mortgage Loan or Released Mortgage Property relating to such purchase or substitution, whereupon such Mortgaged Property may be sold, transferred or otherwise disposed of by such Issuer, free and clear of the lien of the Indenture and any Mortgage.        (c)  The applicable Issuer may (i) sell any of its Mortgage Loans or Mortgaged Properties and related Leases for cash equal to any amount not less than the applicable Release Price and/or (ii) exchange such Mortgage Loan or Mortgaged Property for one or more Qualified Substitute Mortgage Loans or Qualified Substitute Mortgaged Properties, as applicable, in each case in a transaction with (1) a third party unaffiliated with Spirit Realty, (2) a Spirit SPE or (3) a Support Provider SPE; provided , however , that no Early Amortization Event has occurred and is continuing or would occur as a result of such sale or exchange (unless the Rating Condition is satisfied with respect to such sale or exchange). The Indenture Trustee shall execute and deliver such instruments of release, transfer or assignment, in each case without recourse, as shall be provided to it by the applicable Issuer and are reasonably necessary to release any lien or security interest in the Released Mortgage Loan or Released Mortgage Property relating to such sale or exchange, whereupon such Mortgaged Property may be sold, transferred or otherwise disposed of by such Issuer, free and clear of the lien of the Indenture and any Mortgage.        (d)  In the event that the applicable Tenant or any other Person pays any cash price in connection with the exercise of a Third Party Purchase Option, the Issuers (or the Property Manager or Special Servicer, as applicable, on behalf of the Issuers) may use a portion of such cash price (not to exceed the Third Party Option Expenses with respect to such exercise) to pay the applicable costs and expenses incurred by the Issuers (or such Property Manager or Special Servicer on behalf of such Issuers) in connection with such exercise (and such portion shall not constitute part of the Available Amount for any Payment Date).        Section 7.03 Transfer of Lease to New Mortgaged Property.        In the event a Tenant under a Lease requests that such Lease be modified to apply to a property (owned by such Tenant or an Affiliate thereof) in lieu of the related Mortgaged                                     97 US-DOCS\ 96557504.7 102826315.7 

 

Property, the substitute property shall be acquired by the applicable Issuer (with the consent of the Issuer and the Property Manager or Special Servicer, as applicable) from such Tenant or Affiliate thereof in exchange for the original Mortgaged Property (each such original Mortgaged Property, a “Lease Transfer Mortgaged Property”) and such substitute property will be mortgaged to the Indenture Trustee; provided, however, that none of the applicable Issuer, the Property Manager or the Special Servicer shall consent to the substitution of a Lease Transfer Mortgaged Property unless (i) the substituted property is a Qualified Substitute Mortgaged Property and satisfies any criteria set forth in such Lease and (ii) the Property Manager and Back-Up Manager have been reimbursed for all Property Protection Advances and Emergency Property Expenses related to the Lease Transfer Mortgaged Property. Upon the Indenture Trustee’s receipt of an Officer’s Certificate from the Property Manager to the effect that such modification and substitution has been or will be completed in accordance with the terms hereof (which shall include a certification that the applicable Issuer has executed and delivered (or immediately will execute and deliver) a Mortgage with respect to the applicable Lease Transfer Mortgaged Property to the Indenture Trustee), the Indenture Trustee shall execute and deliver such instruments of release, transfer or assignment, in each case without recourse, as shall be provided to it by such Issuer and are reasonably necessary to release any lien or security interest in the Lease Transfer Mortgaged Property, whereupon such Lease Transfer Mortgaged Property may be sold, transferred or otherwise disposed of by such Issuer, free and clear of the lien of the Indenture and any Mortgage. Any proceeds of such sale, transfer or other disposition shall not constitute part of the Collateral and shall not be deposited in the Collection Account or the Release Account.        In connection with an Early Refinancing Prepayment, if directed by an Issuer (or the Property Manager on behalf of an Issuer) the Indenture Trustee will release Mortgaged Properties and Mortgage Loans with an aggregate Allocated Loan Amount not to exceed the Qualified Release Amount; provided, however, that the Rating Condition is satisfied in connection with such release and such release does not cause (i) an Event of Default or Early Amortization Event to occur or (ii) a Maximum Asset Concentration to be exceeded after giving effect to such release (or if, prior to such release, an existing Maximum Asset Concentration is already exceeded, the release of such Mortgaged Properties or Mortgage Loans will reduce the Maximum Asset Concentration or such Maximum Asset Concentration will remain unchanged after giving effect to such release).        Section 7.04 Criteria Applicable to all Mortgage Properties and Mortgage Loans included in the Collateral Pool .        (a)  No Issuer shall acquire, either in connection with a New Issuance or as a Qualified Substitute Mortgage Loan or Qualified Substitute Mortgaged Property, any real property or mortgage loan that will not meet the definition of “Mortgaged Property” or “Mortgage Loan”, as applicable, set forth herein or that is operated in a business sector other than a “Business Sector” as defined in the most recent Series Supplement which includes a definition of “Business Sector.”        (b)  For each Mortgaged Property included in the Collateral Pool, on or prior to the later of (i) the First Collateral Date with respect to such Mortgaged Property and (ii) the Applicable Series Closing Date, the Property Manager shall assign such Mortgaged Property to a particular Business Sector (and such Mortgaged Property shall be categorized as solely being in                                     98 US-DOCS\ 96557504.7 102826315.7 

 

such Business Sector). From and after such assignment with respect to such Mortgaged Property, the Property Manager shall not assign such Mortgaged Property to a different Business Sector.        (c)  For each Mortgaged Property securing a Mortgage Loan included in the Collateral Pool, on or prior to the later of (i) the First Collateral Date with respect to such Mortgage Loan and (ii) the Applicable Series Closing Date, the Property Manager shall assign such Mortgaged Property to a particular Business Sector (and such Mortgaged Property shall be categorized as solely being in such Business Sector). From and after such assignment with respect to such Mortgaged Property, the Property Manager shall not assign such Mortgaged Property to a different Business Sector.        (d)  If the definition of “Business Sector” in the Indenture is amended pursuant to an amendment, the Property Manager may reasonably re-designate any Mortgaged Property included in the Collateral Pool in order to give effect to such amendment.        (e)  The Loan Documents for any adjustable rate Mortgage Loan added to the Collateral Pool after the Series 2017-1 Closing Date that accrues interest based on LIBOR will contain provisions that provide for interest to accrue in an alternate manner in the event LIBOR becomes unavailable.        (f)  The Loan Documents for any Mortgage Loan added to the Collateral Pool after the Series 2017-1 Closing Date will contain provisions that require Monthly Loan Payments of interest and scheduled principal to be payable by the related Borrower on the first day of each calendar month.        Section 7.05 Restrictions on Environmental Condition Mortgaged Properties .        An Environmental Condition Mortgaged Property shall not be considered a Qualified Substitute Mortgaged Property; provided  that a Protective Mortgage Loan may be secured by an Environmental Condition Mortgaged Property (and, for the avoidance of doubt, any Environmental Condition Mortgaged Property may be considered a Qualified Substitute Mortgaged Property for purposes of determining whether a Protective Mortgage Loan constitutes a Qualified Substitute Protective Mortgage Loan).        Section 7.06 Terminated Lease Property.        An Issuer may remove a Terminated Lease Property from the Collateral Pool in exchange for the addition of one or more Qualified Substitute Mortgaged Properties to the Collateral Pool pursuant to the provisions of Section 7.01.                                  ARTICLE VIII                                TERMINATION        Section 8.01 Termination Upon Repurchase or Liquidation of All Mortgaged Properties or Discharge of Indenture .                                     99 US-DOCS\ 96557504.7 102826315.7 

 

      The respective obligations and responsibilities under this Agreement of the Property Manager, the Special Servicer, the Back-Up Manager and the Issuers shall terminate upon the earlier of (i) liquidation or final payment under the last remaining Mortgage Loan or Lease with respect to a Mortgaged Property included in the Collateral Pool and (ii) satisfaction of the indebtedness evidenced by the Notes.                                  ARTICLE IX                         MISCELLANEOUS PROVISIONS        Section 9.01 Amendment.        Subject to the provisions of Article VIII of the Indenture governing amendments, supplements and other modifications to this Agreement, this Agreement may be amended, supplemented or modified by the parties hereto from time to time but only by the mutual written agreement signed by the parties hereto with 20 days’ prior written notice to the Rating Agencies. The Property Manager shall furnish to each party hereto and to the Issuers a fully executed counterpart of each amendment to this Agreement.        The parties hereto agree that no modifications or amendments will be made to the Indenture, any Series Supplement or other Transaction Documents without the consent of the Property Manager, the Special Servicer or the Back-Up Manager, as applicable, if such person would be materially adversely affected by such modification or amendment, regardless of whether such person is a party to such agreement.        Section 9.02 Counterparts.        This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and all such counterparts shall constitute but one and the same instrument. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. Delivery of an executed counterpart of a signature page of this Agreement in Portable Document Format (PDF) or by facsimile transmission shall be as effective as delivery of a manually executed original counterpart of this Agreement.        Section 9.03 GOVERNING LAW .        THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL  LAWS  OF  THE  STATE  OF  NEW  YORK  APPLICABLE  TO AGREEMENTS  MADE  AND  TO  BE  PERFORMED  IN  SUCH  STATE  (WITHOUT REGARD  TO  CONFLICT  OF  LAWS  PRINCIPLES),  AND  THE  OBLIGATIONS, RIGHTS  AND  REMEDIES  OF  THE  PARTIES  HEREUNDER  SHALL           BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.        Section 9.04 Notices .                                     100 US-DOCS\ 96557504.7 102826315.7 

 

      All notices, requests and other communications hereunder shall be in writing and, unless otherwise provided herein, shall be deemed to have been duly given if delivered by courier or mailed by first class mail, postage prepaid, or if transmitted by facsimile or e-mail and confirmed in a writing delivered or mailed as aforesaid, to:        (a)  the Property Manager or Special Servicer, Spirit Realty, L.P., 16767 N. Perimeter Drive, Suite 210, Scottsdale, Arizona 85260; fax: 480-606-0826; e-mail: rberry@spiritrealty.com;        (b)  in the case of the Back-Up Manager, Midland Loan Services, a division of PNC Bank, National Association, 10851 Mastin Street, Suite 700, Overland Park, Kansas, 66210, Attention: President, facsimile number: 913-253-9009, e-mail: noticeadmin@midlandls.com and noticeadmin@pnc.com, with a copy to,  Andrascik & Tita LLC, 1425 Locust Street, Suite 268, Philadelphia, PA 19102, Attention: Stephanie Tita, e-mail: stephanie@kanlegal.com;        (c)  in the case of the Issuers: to Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC or the name of any other Issuer, as applicable, at 16767 N. Perimeter Drive, Suite 210, Scottsdale, Arizona 85260, facsimile number: 480- 606-0820; Attention: Ryan Berry, General Counsel; e-mail: rberry@spiritrealty.com;        (d)  in the case of the Indenture Trustee, Citibank, N.A., 388 Greenwich Street, 14 th Floor, New York, New York 10013, Attention: Structured Finance Agency and Trust- Spirit Master Funding, LLC, facsimile number: 212-816-5527;        (e)  in the case of any Originator, at its address for notices specified in the related Property Transfer Agreement; provided , however , that any notice required to be given hereunder to any Originator which has ceased to exist as a legal entity for any reason may be given directly to the Support Provider;        (f)  in the case of the Support Provider, at its address for notices specified in the Performance Undertakings;        (g)  in the case of any Rating Agency, as provided in each outstanding Series Supplement;  or, as to each such Person, to such other address and facsimile number as shall be designated by such Person in a written notice to parties hereto. Any notice required or permitted to be delivered to a holder of LLC Interests or Notes shall be deemed to have been duly given if mailed by first class mail, postage prepaid, at the address of such holder as shown in the register maintained for such purposes under the applicable LLC Agreement and the Indenture, respectively. Any notice so mailed within the time prescribed in this Agreement shall conclusively be presumed to have been duly given, whether or not such holder receives such notice.        Section 9.05 Severability of Provisions .        If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or                                    101 US-DOCS\ 96557504.7 102826315.7 

 

terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.        Section 9.06 Effect of Headings and Table of Contents .        The article and section headings and the table of contents herein are for convenience of reference only and shall not limit or otherwise affect the construction hereof.        Section 9.07 Notices to Rating Agencies .        (a)  The Indenture Trustee shall promptly provide notice to the Rating Agencies with respect to each of the following of which a Responsible Officer of the Indenture Trustee has actual knowledge:             (i)   Any requests for the satisfaction of the Rating Condition;             (ii)  The occurrence of any Servicer Replacement Event that hasnot been       cured; and             (iii) the resignation or termination of the Property Manager or the Special       Servicer and the appointment of a successor.        (b)  The Property Manager shall promptly provide notice to the Rating Agencies with respect to each of the following of which it has actual knowledge:             (i)   the resignation or removal of the Indenture Trustee and the appointment of       a successor;             (ii)  any change in the location of the Collection Account or the Release       Account;             (iii) any change in the identity of an Obligor; and             (iv)  any requests for the satisfaction of the Rating Condition;             (v)   any addition or removal of a Mortgage Loan or Mortgaged Property from       the Collateral.        (c)  Each of the Property Manager and the Special Servicer, as the case may be, shall furnish each Rating Agency such information with respect to the Mortgage Loans, Leases and Mortgaged Properties as such Rating Agency shall reasonably request and that the Property Manager or the Special Servicer, as the case may be, can reasonably provide.        (d)  Prior to providing any information to, or communicating with, any Rating Agency in accordance with its obligations hereunder or under the Indenture, the Property Manager, Special Servicer or Indenture Trustee, as applicable, shall cause such information or                                     102 US-DOCS\ 96557504.7 102826315.7 

 

communication to be uploaded to the 17g-5 Website subject to and in accordance with the terms of the Indenture relating thereto (including with respect to such uploading).        (e)  Any Officer’s Certificate, Opinion of Counsel, report, notice, request or other material communication prepared by the Property Manager, the Special Servicer, the Issuer Members on behalf of each Issuer or the Indenture Trustee, or caused to be so prepared, for dissemination to any of the parties to this Agreement or any holder of Notes or LLC Interests shall also be concurrently forwarded by such Person to Spirit Realty and the Issuers to the extent not otherwise required to be so forwarded.        Section 9.08 Successors and Assigns: Beneficiaries .        The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. The Indenture Trustee shall be an express third party beneficiary hereof. No other person, including any Obligor, shall be entitled to any benefit or equitable right, remedy or claim under this Agreement. Except as otherwise expressly permitted herein, the Back-Up Manager may not assign any of its rights, duties or obligations under this Agreement, in whole or in part, without the prior written consent of each other party hereto.        Section 9.09 Complete Agreement .        This Agreement embodies the complete agreement among the parties with respect to the subject matter hereof and may not be varied or (other than pursuant to Section 8.01) terminated except by a written agreement conforming to the provisions of Section 9.01 . All prior negotiations or representations of the parties are merged into this Agreement and shall have no force or effect unless expressly stated herein.        Section 9.10 [Reserved].        Section 9.11 Consent to Jurisdiction .        Any action or proceeding against any of the parties hereto relating in any way to this Agreement may be brought and enforced in the courts of the State of New York sitting in the borough of Manhattan or of the United States District Court for the Southern District of New York and each of the parties hereto irrevocably submits to the jurisdiction of each such court in respect of any such action or proceeding. Each of the parties hereto hereby waives, to the fullest extent permitted by law, any right to remove any such action or proceeding by reason of improper venue or inconvenient forum.        Section 9.12 No Proceedings .        The Property Manager, the Special Servicer, each Issuer (with respect to any other Issuer) and the Back-Up Manager hereby covenant and agree that, prior to the date which is two years and thirty-one days after the payment in full of the latest maturing Note, it will not institute against, or join with, encourage or cooperate with any other Person in instituting, against an Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or                                    103 US-DOCS\ 96557504.7 102826315.7 

 

other proceedings, under any federal or state bankruptcy or similar law; provided , however , that nothing in this Section 9.12  shall constitute a waiver of any right to indemnification, reimbursement or other payment from the Issuer pursuant to the Indenture. In the event that any such Person takes action in violation of this Section 9.12 , the applicable Issuer, shall file or cause to be filed an answer with the bankruptcy court or otherwise properly contesting the filing of such a petition by any such Person against such Issuer or the commencement of such action and raising the defense that such Person has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it may assert. The provisions of this Section 9.12  shall survive the termination of this Agreement, and the resignation or removal of any party hereto. Nothing contained herein shall preclude participation by any Person in the assertion or defense of its claims in any such proceeding involving an Issuer.        The obligations of each Issuer under Agreement are solely the obligations of such Issuer. No recourse shall be had for the payment of any amount owing in respect of any fee hereunder or any other obligation or claim arising out of or based upon this Agreement against any member, employee, officer or director of such Issuer. Fees, expenses, costs or other obligations payable by an Issuer hereunder shall be payable by such Issuer solely to the extent that funds are then available or thereafter become available for such purpose pursuant to Section 2.11 of the Indenture. In the event that sufficient funds are not available for their payment pursuant to Section 2.11 of the Indenture, the excess unpaid amount of such fees, expenses, costs or other obligations shall in no event constitute a claim (as defined in Section 101 of the Bankruptcy Code) against, or corporate obligation of, such Issuer.                                     104 US-DOCS\ 96557504.7 102826315.7 

 

      IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly executed by their respective officers or representatives all as of the day and year first above written.                                   SPIRIT MASTER FUNDING, LLC  , as Issuer                                   By:  Spirit SPE Manager, LLC, a Delaware limited                                      liability company                                  Its:  Manager                                    By:                                        Name: Peter M. Mavoides                                      Its: President and Chief Operating Officer                                   SPIRIT MASTER FUNDING II, LLC , as Issuer                                   By:  Spirit SPE Manager, LLC, a Delaware limited                                      liability company                                  Its:  Manager                                    By:                                        Name: Peter M. Mavoides                                      Its: President and Chief Operating Officer                                   SPIRIT MASTER FUNDING III, LLC , as Issuer                                   By:  Spirit SPE Manager, LLC, a Delaware limited                                      liability company                                  Its:  Manager                                    By:                                        Name: Peter M. Mavoides                                      Its: President and Chief Operating Officer                                 Signature Page to                      Property Management and Servicing Agreement US-DOCS\ 96557504.7 102826315.7 

 

                                 SPIRIT REALTY, L.P. ,                                   By:  Spirit General OP Holdings, LLC, a Delaware                                      limited liability company                                  Its:  Manager                                    By:                                        Name: Peter M. Mavoides                                      Its: President and Chief Operating Officer                                   MIDLAND LOAN SERVICES, A DIVISION                                  OF PNC BANK, NATIONAL ASSOCIATION   ,                                  as Back-Up Manager                                    By:                                        Name: Lawrence D. Ashley                                      Title: Senior Vice President                                 Signature Page to                      Property Management and Servicing Agreement  US-DOCS\ 96557504.7 102826315.7 

 

                       Summary report:    Litéra® Change-Pro TDC 10.1.0.400 Document comparison done on                      11/1/2018 1:02:06 PM Style name: L&W without Moves Intelligent Table Comparison: Active Original DMS: iw://US-DOCS/US-DOCS/102826315/1 Modified DMS: iw://US-DOCS/US-DOCS/102826315/7 Changes: Add                                            32 Delete                                         18 Move From                                      0 Move To                                        0 Table Insert                                   0 Table Delete                                   0 Table moves to                                 0 Table moves from                               0 Embedded Graphics (Visio, ChemDraw, Images etc.) 0 Embedded Excel                                 0 Format changes                                 0 Total Changes:                                 50

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