Document:

ex10-1.htm

Exhibit 10.1

 

Execution Version

 

 

 

$875,000,000 

 

 

 

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

 

 

 

Dated as of July 7, 2016

 

among

 

CERTAIN SUBSIDIARIES OF RUSH ENTERPRISES, INC., as Borrowers,

 

rush enterprises, inc., as THE BORROWER REPRESENTATIVE,

 

The Lenders, 

 

and

 

BMO HARRIS BANK N.A., 
as Administrative Agent, Collateral Agent, 
Sole Lead Arranger and Bookrunner

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

 

 

 

 

TABLE OF CONTENTS

 

 

	
ARTICLE 1
	
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
	
1

	
Section 1.1
	
Defined Terms
	
1

	
Section 1.2
	
UCC Terms
	
18

	
Section 1.3
	
Accounting Terms and Principles
	
18

	
Section 1.4
	
Interpretation
	
19

	
ARTICLE 2
	
REVOLVING CREDIT FACILITY
	
20

	
Section 2.1
	
The Revolving Credit Facility.
	
20

	
Section 2.2
	
Borrowing Procedures
	
22

	
Section 2.3
	
Refinancing Swing Loans
	
25

	
Section 2.4
	
Reallocation of Loans
	
26

	
Section 2.5
	
Reduction and Termination of the Commitments
	
26

	
Section 2.6
	
Repayment of Loans
	
27

	
Section 2.7
	
Optional Prepayments
	
28

	
Section 2.8
	
Mandatory Repayments
	
28

	
Section 2.9
	
Interest; Fees
	
29

	
Section 2.10
	
Delayed Payment Privilege
	
30

	
Section 2.11
	
Settlement Dates
	
33

	
Section 2.12
	
Application of Payments
	
33

	
Section 2.13
	
Payments and Computations
	
34

	
Section 2.14
	
Evidence of Debt
	
36

	
Section 2.15
	
Suspension of LIBOR Rate Option
	
37

	
Section 2.16
	
Breakage Costs
	
38

	
Section 2.17
	
Taxes
	
38

	
Section 2.18
	
Substitution of Lenders
	
40

	
ARTICLE 3
	
SECURITY INTEREST
	
42

	
ARTICLE 4
	
REPRESENTATIONS AND WARRANTIES
	
42

	
Section 4.1
	
Corporate Existence; Compliance with Law; Line of Business
	
42

	
Section 4.2
	
Loan
	
43

	
Section 4.3
	
Ownership of Group Members
	
43

	
Section 4.4
	
Financial Statements
	
43

	
Section 4.5
	
Material Adverse Effect
	
44

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

 

 

 

	
Section 4.6
	
Solvency
	
44

	
Section 4.7
	
Litigation
	
44

	
Section 4.8
	
Taxes
	
44

	
Section 4.9
	
Margin Regulations
	
44

	
Section 4.10
	
No Burdensome Obligations; No Defaults
	
44

	
Section 4.11
	
Investment Company Act; Public Utility Holding Company Act
	
45

	
Section 4.12
	
Full Disclosure
	
45

	
Section 4.13
	
Patriot Act
	
45

	
Section 4.14
	
Collateral
	
45

	
Section 4.15
	
EEA Financial Institutions
	
45

	
ARTICLE 5
	
FINANCIAL COVENANTS
	
45

	
ARTICLE 6
	
REPORTING COVENANTS
	
46

	
Section 6.1
	
Financial Statements
	
46

	
Section 6.2
	
Other Events
	
47

	
Section 6.3
	
Copies of Notices and Reports
	
48

	
Section 6.4
	
Other Information
	
48

	
ARTICLE 7
	
AFFIRMATIVE COVENANTS
	
48

	
Section 7.1
	
Maintenance of Corporate Existence
	
48

	
Section 7.2
	
Compliance with Laws, Etc
	
48

	
Section 7.3
	
Payment of Obligations
	
48

	
Section 7.4
	
Maintenance of Property
	
49

	
Section 7.5
	
Maintenance of Insurance
	
49

	
Section 7.6
	
Keeping of Books
	
49

	
Section 7.7
	
Access to Books and Property
	
50

	
Section 7.8
	
Use of Proceeds
	
50

	
Section 7.9
	
Future Borrowers
	
50

	
ARTICLE 8
	
NEGATIVE COVENANTS
	
51

	
Section 8.1
	
Liens
	
51

	
Section 8.2
	
Fundamental Changes
	
51

	
Section 8.3
	
Change in Nature of Business
	
51

	
Section 8.4
	
Transactions with Affiliates
	
51

	
Section 8.5
	
Modification of Certain Documents; Change in Jurisdiction of Organization
	
52

	
Section 8.6
	
Accounting Changes; Fiscal Year
	
52

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

ii

 

 

	
Section 8.7
	
Margin Regulations
	
52

	
ARTICLE 9
	
EVENTS OF DEFAULT
	
52

	
Section 9.1
	
Definition
	
52

	
Section 9.2
	
Remedies
	
54

	
ARTICLE 10
	
THE ADMINISTRATIVE AGENT
	
54

	
Section 10.1
	
Appointment and Duties
	
54

	
Section 10.2
	
Binding Effect
	
56

	
Section 10.3
	
Use of Discretion
	
56

	
Section 10.4
	
Delegation of Rights and Duties
	
56

	
Section 10.5
	
Reliance and Liability
	
56

	
Section 10.6
	
Administrative Agent Individually
	
58

	
Section 10.7
	
Lender Credit Decision
	
58

	
Section 10.8
	
Expenses; Indemnities
	
58

	
Section 10.9
	
Resignation of Administrative Agent
	
59

	
Section 10.10
	
Release of Collateral or Guarantors
	
60

	
ARTICLE 11
	
MISCELLANEOUS
	
60

	
Section 11.1
	
Amendments, Waivers, Etc
	
60

	
Section 11.2
	
Assignments and Participations; Binding Effect
	
62

	
Section 11.3
	
Costs and Expenses
	
63

	
Section 11.4
	
Indemnities
	
64

	
Section 11.5
	
Survival
	
65

	
Section 11.6
	
Limitation of Liability for Certain Damages
	
65

	
Section 11.7
	
Lender-Creditor Relationship
	
65

	
Section 11.8
	
Right of Setoff
	
65

	
Section 11.9
	
Sharing of Payments, Etc
	
66

	
Section 11.10
	
Marshaling; Payments Set Aside
	
66

	
Section 11.11
	
Notices
	
66

	
Section 11.12
	
Electronic Transmissions
	
67

	
Section 11.13
	
GOVERNING LAW
	
68

	
Section 11.14
	
JURISDICTION
	
68

	
Section 11.15
	
WAIVER OF JURY TRIAL
	
69

	
Section 11.16
	
Severability
	
69

	
Section 11.17
	
Execution in Counterparts
	
69

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

iii

 

 

	
Section 11.18
	
Entire Agreement
	
69

	
Section 11.19
	
Use of Name
	
70

	
Section 11.20
	
Non-Public Information; Confidentiality
	
70

	
Section 11.21
	
Actions in Concert
	
71

	
Section 11.22
	
Patriot Act Notice
	
71

	
Section 11.23
	
Amendment and Restatement; No Novation
	
71

	
Section 11.24
	
Reaffirmation of Guaranty
	
72

	
Section 11.25
	
Reallocation
	
72

	
Section 11.26
	
Acknowledgement and Consent to Bail-In of EEA Financial Institutions
	
72

	
ARTICLE 12
	
CROSS-GUARANTY
	
73

	
Section 12.1
	
Cross-Guaranty
	
73

	
Section 12.2
	
Waivers by Borrowers
	
74

	
Section 12.3
	
Benefit of Guaranty
	
74

	
Section 12.4
	
Subordination of Subrogation, Etc
	
74

	
Section 12.5
	
Election of Remedies
	
74

	
Section 12.6
	
Limitation
	
75

	
Section 12.7
	
Contribution with Respect to Guaranty Obligations
	
75

	
Section 12.8
	
Liability Cumulative
	
76

 

 

 

 

 

Exhibits

 

	Exhibit A	
-
	
Form of Assignment

	Exhibit B-1	-	Form of Request for Equipment Loan Borrowing
	Exhibit B-2	-	Form of Request for Working Capital Loan Borrowing
	Exhibit C	-	Form of Compliance Certificate 

 

Schedules

 

	Schedule I  	-	Commitments
	Schedule II	-	Lender Addresses for Notice
	Schedule 1.1	-	Immaterial Subsidiaries
	Schedule 4.2	-	Consents and Approvals
	Schedule 4.3	-	Group Members

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

iv

 

 

This Third Amended and Restated Credit Agreement, dated as of July 7, 2016 (this “Agreement”), is entered into among Rush Truck Centers of Alabama, Inc., Rush Truck Centers of Arizona, Inc., Rush Truck Centers of California, Inc., Rush Medium Duty Truck Centers of Colorado, Inc., Rush Truck Centers of Colorado, Inc., Rush Truck Centers of Florida, Inc., Rush Truck Centers of Georgia, Inc., Rush Truck Centers of New Mexico, Inc., Rush Truck Centers of Oklahoma, Inc., Rush Truck Centers of Tennessee, Inc., Rush Truck Centers of North Carolina, Inc., Rush Truck Centers of Idaho, Inc., Rush Truck Centers of Utah, Inc., Rush Truck Centers of Ohio, Inc., Rush Truck Centers of Kansas, Inc., Rush Truck Centers of Missouri, Inc., Rush Truck Centers of Virginia Inc., Rush Truck Centers of Indiana Inc., Rush Truck Centers of Illinois Inc., Rush Truck Centers of Nevada, Inc. and Rush Truck Centers of Kentucky, Inc., each a Delaware corporation and Rush Truck Centers of Texas, L.P., a Texas limited partnership (collectively, the “Borrowers” and individually a “Borrower”), Rush Enterprises, Inc., a Texas corporation (“Holdings” or the “Borrower Representative”), the Lenders (as defined below) from time to time parties hereto and BMO Harris Bank N.A., as administrative agent and collateral agent for the Lenders (in such capacity, and together with its successors and permitted assigns, the “Administrative Agent”).

 

The parties hereto agree that the Second Amended and Restated Credit Agreement, dated as of September 15, 2015, by and among certain of the Borrowers, Holdings, certain of the Lenders and the Administrative Agent (as amended prior to the date hereof, the “Original Credit Agreement”) is amended and restated in its entirety as follows:

 

ARTICLE 1
Definitions, Interpretation and Accounting Terms

 

Section 1.1     Defined Terms. As used in this Agreement, the following terms have the following meanings:

 

“Account” has the meaning specified in Article 3.

 

“Acknowledgement of Purchaser” has the meaning specified in Section 2.10(g).

 

“Administrative Agent” has the meaning specified in preamble of this Agreement.

 

“Affected Lender” has the meaning specified in Section 2.18.

 

“Affiliate” means, with respect to any Person, each officer, director, general partner or joint-venturer of such Person and any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person; provided, however, that no Secured Party shall be an Affiliate of any Borrower. For purpose of this definition, “control” means the possession of either (a) the power to vote, or the beneficial ownership of, 10% or more of the Voting Stock of such Person or (b) the power to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

 

“Agreement” means this Third Amended and Restated Credit Agreement.

 

“Allocable Amount” has the meaning specified in Section 12.7.

 

“Approved Fund” means, with respect to any Lender, any Person (other than a natural Person) that is an Affiliate of such Lender. 

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

 

 

 

“Assignment” means an assignment agreement entered into by a Lender, as assignor, and any Person, as assignee, pursuant to the terms and provisions of Section 11.2 (with the consent of any party whose consent is required by Section 11.2), accepted by the Administrative Agent, in substantially the form of Exhibit A, or any other form approved by the Administrative Agent.

 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

“Bank of Montreal” means Bank of Montreal, a Canadian chartered bank, together with its successors and assigns.

 

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as amended and in effect from time to time and the regulations issued from time to time thereunder.

 

“Base Rate” has the meaning specified in Section 2.15(c).

 

“Base Rate Loan” has the meaning specified in Section 2.15(c).

 

“BHB” means BMO Harris Bank N.A. together with its successors and assigns.

 

“Borrower” has the meaning specified in preamble of this Agreement.

 

“Borrower Representative” has the meaning specified in preamble of this Agreement.

 

“Borrowing” means a borrowing consisting of Loans made on the same day by the Lenders according to their respective Commitments.

 

“Business Day” means any day of the year that is not a Saturday, Sunday or a day on which banks are required or authorized to close in New York City and, when determined in connection with notices and determinations in respect of any LIBOR Rate or LIBOR Rate Loan or any funding, conversion, continuation or payment of any LIBOR Rate Loan, that is also a day on which dealings in Dollar deposits are carried on in the London interbank market.

 

“Capital Expenditures” means, for any Person for any period, the aggregate of all expenditures, whether or not made through the incurrence of Indebtedness, by such Person and its Subsidiaries during such period for the acquisition, leasing (pursuant to a Capital Lease), construction, replacement, repair, substitution or improvement of fixed or capital assets or additions to equipment, in each case required to be capitalized under GAAP on a Consolidated balance sheet of such Person, excluding interest capitalized during construction.

 

“Capital Lease” means, with respect to any Person, any lease of, or other arrangement conveying the right to use, any property (whether real, personal or mixed) by such Person as lessee that has been or should be accounted for as a capital lease on a balance sheet of such Person prepared in accordance with GAAP.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

2

 

 

“Capitalized Lease Obligations” means, at any time, with respect to any Capital Lease, any lease entered into as part of any Sale and Leaseback Transaction of any Person or any synthetic lease, the amount of all obligations of such Person that is (or that would be, if such synthetic lease or other lease were accounted for as a Capital Lease) capitalized on a balance sheet of such Person prepared in accordance with GAAP.

 

“Cash Equivalents” means (a) any readily-marketable securities (i) issued by, or directly, unconditionally and fully guaranteed or insured by the United States federal government or (ii) issued by any agency of the United States federal government the obligations of which are fully backed by the full faith and credit of the United States federal government, (b) any readily-marketable direct obligations issued by any other agency of the United States federal government, any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case having a rating of at least “A-1” from S&P or at least “P-1” from Moody’s, (c) any commercial paper rated at least “A-1” by S&P or “P-1” by Moody’s and issued by any Person organized under the laws of any state of the United States, (d) any Dollar-denominated time deposit, insured certificate of deposit, overnight bank deposit or bankers’ acceptance issued or accepted by (i) any Lender or (ii) any commercial bank that is (A) organized under the laws of the United States, any state thereof or the District of Columbia, (B) “adequately capitalized” (as defined in the regulations of its primary federal banking regulators) and (C) has Tier 1 capital (as defined in such regulations) in excess of $250,000,000, (e) shares of any United States money market fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clause (a), (b), (c) or (d) above with maturities as set forth in the proviso below, (ii) has net assets in excess of $500,000,000 and (iii) has obtained from either S&P or Moody’s the highest rating obtainable for money market funds in the United States and (f) CDARS, if the amount so invested is unconditionally guaranteed by the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America); provided, however, that the maturities of all obligations specified in any of clauses (a), (b), (c) and (d) above shall not exceed 365 days.

 

“Change of Control” means the occurrence of any of the following: (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the Restatement Date), other than Permitted Investors, of Stock representing 35% or more of the aggregate ordinary voting power represented by the issued and outstanding Stock of Borrower Representative, (b) the occupation of a majority of the seats on the board of directors of Borrower Representative by Persons who were not directors on the Restatement Date and were neither (i) nominated by the board of directors of Borrower Representative nor (ii) appointed by directors so nominated, or (c) Borrower Representative ceases, directly or indirectly, to own and control, beneficially and of record, one hundred percent (100%) of the issued and outstanding Voting Stock and Stock Equivalents of each Borrower on a fully diluted basis (as the same may be adjusted for any combination, recapitalization or reclassification into a greater or smaller number of shares, interests or other unit of equity security). For purposes of this definition, Permitted Investors shall mean W. Marvin Rush, W.M. “Rusty” Rush, Robin Rush, Barbara Rush, Michael McRoberts, James Thor, Martin A. Naegelin, Scott Anderson, Derrek Weaver, Steven Keller, Corey Lowe and Rich Ryan and any other Person whose Stock is controlled by any one or more of the foregoing. 

 

“Closing Date” means December 31, 2010.

 

“Code” means the U.S. Internal Revenue Code of 1986.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

3

 

 

“Collateral” has the meaning specified in Article 3.

 

“Collateral Amount Financed” has the meaning specified in Section 2.10(a).

 

“Commitment” means a Commitment A or a Commitment B, as the case may be, and “Commitments” means, collectively all Commitments A and Commitments B. 

 

“Commitment A” means, with respect to each Lender, the commitment of such Lender to make Revolving A Loans, which commitment is in the amount set forth opposite such Lender’s name on Schedule I under the caption “Commitment A” as amended to reflect Assignments and as such amount may be reduced pursuant to this Agreement. The aggregate amount of the Commitments A on the Restatement Date equals $775,000,000.

 

“Commitment B” means, with respect to each Lender, the commitment of such Lender to make Revolving B Loans, which commitment is in the amount set forth opposite such Lender’s name on Schedule I under the caption “Commitment B” as amended to reflect Assignments and as such amount may be reduced or increased pursuant to this Agreement. The aggregate amount of the Commitments B on the Restatement Date equals $100,000,000.

 

“Commitment Termination Date” shall mean the earliest of (a) the Scheduled Termination Date, (b) the date of termination of the Commitments pursuant to Section 2.5 or 9.2 and (c) the date on which the Obligations become due and payable pursuant to Section 9.2.

 

“Company Vehicles” means all trucks, trailers, tractors, vans, cars, pick-up trucks and other vehicles, wherever located, in each case, owned and utilized by the Borrowers in the normal course of business and not constituting Inventory. 

 

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

 

“Consolidated” means, with respect to any Person, the accounts of such Person and its Subsidiaries consolidated in accordance with GAAP.

 

“Consolidated Adjusted EBITDAR” means, for any period, (a) the Consolidated Net Income of Holdings and its Subsidiaries for such period plus (b) the sum of, in each case to the extent deducted in the calculation of such Consolidated Net Income but without duplication, (i) any provision for United States federal, state or local income taxes or other taxes measured by net income, (ii) Consolidated Interest Expense, (iii) any loss from extraordinary items, (iv) any depreciation and amortization expense, (v) any aggregate net loss on the Sale of property (other than accounts (as defined under the applicable UCC) and inventory) outside the ordinary course of business, (vi) any other non-cash expenditure, charge or loss for such period (other than any non-cash expenditure, charge or loss relating to write-offs, write-downs or reserves with respect to accounts and inventory), including the amount of any compensation deduction as the result of any grant of Stock or Stock Equivalents to employees, officers, directors or consultants, (vii) alternative fuel vehicle tax credits earned by Holdings and its Subsidiaries in respect of such period, and (viii) all rent expense for real property (land and buildings) of Holdings and its Subsidiaries actually paid or payable in cash by Holdings and its Subsidiaries in respect of such period, and minus (c) the sum of, in each case to the extent included in the calculation of such Consolidated Net Income and without duplication, (i) any credit for United States federal, state or local income taxes or other taxes measured by net income, (ii) any gain from extraordinary items, (iii) any aggregate net gain from the Sale of property (other than accounts (as defined in the applicable UCC) and inventory) out of the ordinary course of business by such Person, (iv) any other non-cash gain, including any reversal of a charge referred to in clause (b)(vi) above by reason of a decrease in the value of any Stock or Stock Equivalent, and (v) any other cash payment in respect of expenditures, charges and losses that have been added to Consolidated Adjusted EBITDAR of such Person pursuant to clause (b)(vi) above in any prior period.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

4

 

 

“Consolidated Fixed Charge Coverage Ratio” means, for any period, the ratio of (a) Consolidated Adjusted EBITDAR for such period, minus Capital Expenditures of such Person for such period (excluding Capital Expenditures financed with Indebtedness or Stock) to (b) the Consolidated Fixed Charges of such Person for such period.

 

“Consolidated Fixed Charges” means, for any period, the sum, determined on a Consolidated basis, of (a) the Consolidated Interest Expense of Holdings and its Subsidiaries actually paid or payable in cash by Holdings and its Subsidiaries in respect of such period, (b) the aggregate amount of principal payments (whether scheduled or unscheduled) on Indebtedness of Holdings and its Subsidiaries actually paid or payable in cash by Holdings and its Subsidiaries in respect of such period, but excluding any balloon or “lump sum” principal payments that are re-financed or rolled over with other Indebtedness, (c) all rent expense for real property (land and buildings) of Holdings and its Subsidiaries actually paid or payable in cash by Holdings and its Subsidiaries in respect of such period, (d) the total liability for United States federal, state and local income taxes and other taxes measured by net income actually paid or payable in cash by Holdings and its Subsidiaries in respect of such period and (e) all cash Restricted Payments paid or payable by Holdings and its Subsidiaries on Stock in respect of such period to Persons other than Holdings and its Subsidiaries.

 

“Consolidated Interest Expense” means, for any Person for any period, Consolidated total interest expense of such Person and its Subsidiaries for such period determined in accordance with GAAP.

 

“Consolidated Leverage Ratio” means, as of any date, the ratio of (a) Consolidated total liabilities of Holdings and its Subsidiaries determined in accordance with GAAP as of such date to (b) Consolidated Net Worth as of such date.

 

“Consolidated Net Income” means, with respect to any Person, for any period, the Consolidated net income (or loss) of such Person and its Subsidiaries for such period; provided, however, that the following shall be excluded: (a) the net income of any other Person in which such Person or one of its Subsidiaries has a joint interest with a third-party (which interest does not cause the net income of such other Person to be Consolidated into the net income of such Person), except to the extent of the amount of dividends or distributions paid to such Person or Subsidiary, (b) the net income of any Subsidiary of such Person that is, on the last day of such period, subject to any restriction or limitation on the payment of dividends or the making of other distributions, to the extent of such restriction or limitation and (c) the net income of any other Person arising prior to such other Person becoming a Subsidiary of such Person or merging or consolidating into such Person or its Subsidiaries.

 

“Consolidated Net Worth” means, as of any date, total shareholders' equity of Holdings as of such date. 

 

“Consolidated Tangible Net Worth” means, as of any date, (i) Consolidated Net Worth, less (ii) the value of all assets of Holdings and its Subsidiaries which would be classified as intangible assets under generally accepted accounting principles, including, without limitation, goodwill, licenses, patents, trademarks, trade names, copyrights, and franchises.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

5

 

 

“Constituent Documents” means, with respect to any Person, collectively and, in each case, together with any modification of any term thereof, (a) the articles of incorporation, certificate of incorporation, constitution or certificate of formation of such Person, (b) the bylaws, operating agreement or joint venture agreement of such Person, (c) any other constitutive, organizational or governing document of such Person, whether or not equivalent, and (d) any other document setting forth the manner of election or duties of the directors, officers or managing members of such Person or the designation, amount or relative rights, limitations and preferences of any Stock of such Person.

 

“Contractual Obligation” means, with respect to any Person, any provision of any Security issued by such Person or of any document or undertaking (other than a Loan Document) to which such Person is a party or by which it or any of its property is bound or to which any of its property is subject.

 

“Credit Exposure”, of any Lender at any time, means the outstanding principal amount of all Loans owing to such Lender, plus any participations in Swing Loans purchased by such Lender hereunder.

 

“Default” means any Event of Default and any event that, with the passing of time or the giving of notice or both would become an Event of Default.

 

“Delayed Payment Privilege” has the meaning specified in Section 2.10(a).

 

“Delayed Payment Privilege Collateral” has the meaning specified in Section 2.10(a).

 

“Delayed Payment Privilege Request” has the meaning specified in Section 2.10(c).

 

“Delivery Schedule” has the meaning specified in Section 2.10(e).

 

“Disclosure Documents” means, collectively, (a) all confidential information memoranda and related materials prepared in connection with the syndication of the credit facilities and (b) all other documents filed by any Group Member with the United States Securities and Exchange Commission.

 

“Dollars” and the sign “$” each mean the lawful money of the United States of America.

 

“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia. 

 

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. 

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

6

 

 

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

“E-Fax” means any system used to receive or transmit faxes electronically.

 

“Electronic Transmission” means each document, instruction, authorization, file, information and any other communication transmitted, posted or otherwise made or communicated by e-mail or E-Fax, or otherwise to or from an E-System or other equivalent service.

 

“Entity” has the meaning specified in Section 11.20.

 

“E-System” means any electronic system, including COMS® and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent, any of its Related Persons or any other Person, providing for access to data protected by passcodes or other security system.

 

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor thereto), as in effect from time to time. 

 

“Event of Default” has the meaning specified in Section 9.1.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and published guidance with respect thereto, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any applicable intergovernmental agreements with respect thereto.

 

“Federal Funds Rate” means, for any period, the greater of (x) a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as determined by the Administrative Agent in its sole discretion and (y) zero.

 

“Federal Reserve Board” means the Board of Governors of the United States Federal Reserve System and any successor thereto.

 

“Financial Statement” means each financial statement delivered pursuant to Section 4.4 or 6.1.

 

“Fiscal Quarter” means each 3 fiscal month period ending on March 31, June 30, September 30 or December 31.

 

“Fiscal Year” means the twelve-month period ending on December 31.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

7

 

 

“Ford Motor Credit Financing” shall mean any financing of Inventory manufactured by Ford Motor Company obtained by any Borrower from Ford Motor Credit Company LLC or its Affiliates.

 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary. 

 

“Formula Revolver Agent” means the administrative agent and collateral agent under any Formula Revolver Loan Agreement.

 

“Formula Revolver Debt” means the loans and other Indebtedness outstanding under the Formula Revolver Loan Agreement from time to time. 

 

“Formula Revolver Loan Agreement” means any loan or credit agreement (other than any Loan Document) entered into by the Borrowers following the date hereof pursuant to which the Formula Revolver Agent and the other lenders party thereto make loans and/or other extensions of credit to the Borrowers based on a borrowing base.

 

“Formula Revolver Loan Documents” means the Formula Revolver Loan Agreement and each note, security agreement, mortgage or other document executed in connection with the Formula Revolver Loan Agreement.

 

“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time, set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, in the statements and pronouncements of the Financial Accounting Standards Board and in such other statements by such other entity as may be in general use by significant segments of the accounting profession that are applicable to the circumstances as of the date of determination. Subject to Section 1.3, all references to “GAAP” shall be to GAAP applied consistently with the principles used in the preparation of the Financial Statements described in Section 4.4(a).

 

“Governmental Authority” means any nation, sovereign or government, any state or other political subdivision thereof, any agency, authority or instrumentality thereof and any entity or authority exercising executive, legislative, taxing, judicial, regulatory or administrative functions of or pertaining to government, including any central bank, stock exchange, regulatory body, arbitrator, public sector entity, supra-national entity (including the European Union and the European Central Bank) and any self-regulatory organization (including the National Association of Insurance Commissioners).

 

“Group Members” means, collectively, Holdings and its Subsidiaries.

 

“Group Members’ Accountants” means Ernst & Young LLP or other nationally-recognized independent registered certified public accountants acceptable to the Administrative Agent.

 

“Guarantor” means each Person that guarantees the Obligations.

 

“Guarantor Payment” has the meaning specified in Section 12.7.

 

“Guaranteed Obligations” has the meaning specified in Section 12.1.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

8

 

 

“Guaranty Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of such Person for any Indebtedness, lease, dividend or other obligation (the “primary obligation”) of another Person (the “primary obligor”), if the purpose or intent of such Person in incurring such liability, or the economic effect thereof, is to guarantee such primary obligation or provide support, assurance or comfort to the holder of such primary obligation or to protect or indemnify such holder against loss with respect to such primary obligation, including (a) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of any primary obligation, (b) the incurrence of reimbursement obligations with respect to any letter of credit or bank guarantee in support of any primary obligation, (c) the existence of any Lien, or any right, contingent or otherwise, to receive a Lien, on the property of such Person securing any part of any primary obligation and (d) any liability of such Person for a primary obligation through any Contractual Obligation (contingent or otherwise) or other arrangement (i) to purchase, repurchase or otherwise acquire such primary obligation or any security therefor or to provide funds for the payment or discharge of such primary obligation (whether in the form of a loan, advance, stock purchase, capital contribution or otherwise), (ii) to maintain the solvency, working capital, equity capital or any balance sheet item, level of income or cash flow, liquidity or financial condition of any primary obligor, (iii) to make take-or-pay or similar payments, if required, regardless of non-performance by any other party to any Contractual Obligation, (iv) to purchase, sell or lease (as lessor or lessee) any property, or to purchase or sell services, primarily for the purpose of enabling the primary obligor to satisfy such primary obligation or to protect the holder of such primary obligation against loss or (v) to supply funds to or in any other manner invest in, such primary obligor (including to pay for property or services irrespective of whether such property is received or such services are rendered); provided, however, that “Guaranty Obligations” shall not include (x) endorsements for collection or deposit in the ordinary course of business, (y) product warranties given in the ordinary course of business and (z) guarantees by a Borrower of liabilities and other obligations of any other Borrower. The outstanding amount of any Guaranty Obligation shall equal the outstanding amount of the primary obligation so guaranteed or otherwise supported or, if lower, the stated maximum amount for which such Person may be liable under such Guaranty Obligation.

 

“Holdings” has the meaning specified in preamble of this Agreement.

 

“Immaterial Subsidiaries” means Subsidiaries of Holdings that do not own or operate and are not otherwise engaged in truck dealerships. As of the Restatement Date, the Immaterial Subsidiaries are set forth on Schedule 1.1.

 

“Indebtedness” of any Person means, without duplication, any of the following, whether or not matured: (a) all indebtedness for borrowed money, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all reimbursement and all obligations with respect to (i) letters of credit, bank guarantees or bankers’ acceptances or (ii) surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation) other than those entered into in the ordinary course of business, (d) all obligations to pay the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (e) all obligations created or arising under any conditional sale or other title retention agreement, regardless of whether the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property, (f) all Capitalized Lease Obligations, (g) all obligations, whether or not contingent, to purchase, redeem, retire, defease or otherwise acquire for value any of its own Stock or Stock Equivalents (or any Stock or Stock Equivalent of a direct or indirect parent entity thereof) prior to the date that is 180 days after the Scheduled Termination Date, valued at, in the case of redeemable preferred Stock, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such Stock plus accrued and unpaid dividends, (h) all payments that would be required to be made in respect of any swap agreement in the event of a termination (including an early termination) on the date of determination and (i) all Guaranty Obligations for obligations of any other Person constituting Indebtedness of such other Person; provided, however, that the items in each of clauses (a) through (i) above shall constitute “Indebtedness” of such Person solely to the extent, directly or indirectly, (x) such Person is liable for any part of any such item or (y) any such item is secured by a Lien on such Person’s property.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

9

 

 

“Indemnified Matter” has the meaning specified in Section 11.4.

 

“Indemnitee” has the meaning specified in Section 11.4.

 

“Intercreditor Agreement” means an intercreditor agreement between the Administrative Agent and the Formula Revolver Agent to be entered into on or following the Restatement Date and containing terms satisfactory to the Administrative Agent and the Required Lenders in their sole discretion. 

 

“Inventory” means all present and future vehicle inventory (as defined in the UCC), including trailers and glider kits, of the Borrowers. 

 

“IRS” means the Internal Revenue Service of the United States and any successor thereto.

 

“Lender” means, collectively, any financial institution or other Person that (a) is listed on the signature pages hereof as a “Lender”, (b) from time to time becomes a party hereto by execution of an Assignment, together with its successors, or (c) is a Working Capital Lender or Swingline Lender hereunder.

 

“Liabilities” means all claims, actions, suits, judgments, damages, losses, liability, obligations, responsibilities, fines, penalties, sanctions, costs, fees, taxes, commissions, charges, disbursements and expenses, in each case of any kind or nature (including interest accrued thereon or as a result thereof and fees, charges and disbursements of financial, legal and other advisors and consultants), whether joint or several, whether or not indirect, contingent, consequential, actual, punitive, treble or otherwise.

 

“LIBOR Rate” means, for each calendar month, the greater of (a) zero and (b) (i) the rate of interest quoted in The Wall Street Journal, Money Rates Section as the “Libor, 3 month” rate on the last business day of the immediately preceding calendar month, or (ii) if the interest rate specified in clause (i) is not published or available, the offered rate per annum for deposits of Dollars for a period of three months that appears on Reuters Screen LIBOR 01 Page as of 11:00 a.m. (London, England time) two Business Days prior to the first day in such calendar month, or (iii) if the interest rate specified in clauses (i) and (ii) is not published or available, the rate of interest per annum, as determined by the Administrative Agent at which deposits of Dollars in immediately available funds are offered at 11:00 a.m. (London, England time) two Business Days prior to the first day in such interest period by major financial institutions reasonably satisfactory to the Administrative Agent in the London interbank market for such interest period for the applicable principal amount on such date of determination. 

 

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

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

10

 

 

“Loan” means any loan made or deemed made by any Lender or Swingline Lender hereunder, including, without limitation, Revolving Loans, Swing Loans and Working Capital Loans.

 

“Loan Documents” means, collectively, (i) this Agreement and, when executed, each document executed by a Loan Party and delivered to the Administrative Agent or any Lender in connection with or pursuant to this Agreement or the Obligations, together with any modification of any term, or any waiver with respect to, any of the foregoing, and (ii) the Intercreditor Agreement. 

 

“Loan Party” means each Borrower and each Guarantor.

 

“Material Adverse Effect” means an effect that results in or causes, or could reasonably be expected to result in or cause, a material adverse change in any of (a) the condition (financial or otherwise), business, performance, operations or property of the Group Members, taken as a whole, (b) the ability of any Loan Party to perform its obligations under any Loan Document and (c) the validity or enforceability of any Loan Document or the rights and remedies of the Administrative Agent, the Lenders and the other Secured Parties under any Loan Document.

 

“Maximum Lawful Rate” has the meaning specified in Section 2.9.

 

“Minimum Consolidated Net Worth” means, (i) with respect to any Fiscal Quarter ending on or prior to March 31, 2016, $537,244,000 and (ii) with respect to any Fiscal Quarter ending after March 31, 2016, the sum of (A) the Minimum Consolidated Net Worth for the immediately preceding Fiscal Quarter plus (B) the greater of (1) 50% of Consolidated Net Income for Holdings and its Subsidiaries with respect to the current Fiscal Quarter and (2) zero. For example, if the Consolidated Net Income for Holdings and its Subsidiaries for the Fiscal Quarter ending June 30, 2016 is $1,000,000, the Minimum Consolidated Net Worth for the Fiscal Quarter ending June 30, 2016 will be $537,744,000 (i.e., the Minimum Consolidated Net Worth for the Fiscal Quarter ending March 31, 2016 ($537,244,000) plus 50% of $1,000,000).

 

“Minimum Consolidated Tangible Net Worth” means, (i) with respect to any Fiscal Quarter ending on or prior to March 31, 2016, $355,038,500 and (ii) with respect to any Fiscal Quarter ending after March 31, 2016, the sum of (A) the Minimum Consolidated Tangible Net Worth for the immediately preceding Fiscal Quarter plus (B) the greater of (1) 50% of Consolidated Net Income for Holdings and its Subsidiaries with respect to the current Fiscal Quarter and (2) zero. For example, if the Consolidated Net Income for Holdings and its Subsidiaries for the Fiscal Quarter ending June 30, 2016 is $1,000,000, the Minimum Consolidated Tangible Net Worth for the Fiscal Quarter ending June 30, 2016 will be $355,538,500 (i.e., the Minimum Consolidated Tangible Net Worth for the Fiscal Quarter ending March 31, 2016 ($355,038,500) plus 50% of $1,000,000).

 

“Moody’s” means Moody’s Investors Service, Inc.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

11

 

 

 

“Net Equipment Loans” means, at any time, (i) (A) the aggregate principal amount of Revolving Loans made by the Lenders pursuant to Section 2.1(a) plus (B) the aggregate principal amount of Swing Loans made by the Swingline Lender pursuant to Section 2.1(b), minus (ii) all repayments of principal of the Revolving Loans and Swing Loans made by the Borrowers pursuant to this Agreement, including without limitation all voluntary prepayments of Revolving Loans and Swing Loans pursuant to Section 2.7.

 

“New Equipment Curtailment Payment” has the meaning specified in Section 2.6(b).

 

“New Equipment Loan” means a Loan to purchase new Inventory not previously used or sold at retail.

 

“New Equipment Loan Sublimit” means $875,000,000 minus the amount of any outstanding Used Equipment Loans.

 

“Non-Funding Lender” means any Lender that has (a) failed to fund any payments required to be made by it under the Loan Documents within two Business Days after any such payment is due (excluding expense and similar reimbursements that are subject to good faith disputes), (b) given written notice (and the Administrative Agent has not received a revocation in writing), to the Borrower Representative, the Administrative Agent or any Lender or has otherwise publicly announced (and the Administrative Agent has not received notice of a public retraction) that such Lender believes it will fail to fund payments or purchases of participations required to be funded by it under the Loan Documents or one or more other syndicated credit facilities (unless such writing or public announcement relates to such Lender’s obligation to fund a loan hereunder or under such other credit facilities and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically stated in such writing or public announcement) cannot be satisfied), (c) failed to fund, and not cured, loans, participations, advances, or reimbursement obligations under one or more other syndicated credit facilities, unless subject to a good faith dispute, or (d) any Lender that has (i) become subject to a voluntary or involuntary case under the Bankruptcy Code or any similar bankruptcy laws, (ii) a custodian, conservator, receiver or similar official appointed for it or any substantial part of such Person’s assets, (iii) made a general assignment for the benefit of creditors, been liquidated, or otherwise been adjudicated as, or determined by any Governmental Authority having regulatory authority over such Person or its assets to be, insolvent or bankrupt, or (iv) become the subject of a Bail-In Action and for clause (d), the Administrative Agent has determined that such Lender is reasonably likely to fail to fund any payments required to be made by it under the Loan Documents. 

 

“Obligations” means, with respect to any Loan Party, all amounts, obligations, liabilities, covenants and duties of every type and description owing by such Loan Party to the Administrative Agent, any Lender, any other Indemnitee, or any participant arising out of, under, or in connection with, any Loan Document, whether direct or indirect (regardless of whether acquired by assignment), absolute or contingent, due or to become due, whether liquidated or not, now existing or hereafter arising and however acquired, and whether or not evidenced by any instrument or for the payment of money, including, without duplication, (a) if such Loan Party is a Borrower all Loans, (b) all interest, whether or not accruing after the filing of any petition in bankruptcy or after the commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding, and (c) all other fees, expenses (including fees, charges and disbursement of counsel), interest, commissions, charges, costs, disbursements, indemnities and reimbursement of amounts paid and other sums chargeable to such Loan Party under any Loan Document. For the avoidance of doubt, the “Obligations” do not include any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act. 

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

12

 

 

“Original Credit Agreement” has the meaning specified in the recitals to this Agreement.

 

“Other A Lenders” has the meaning specified in Section 2.4.

 

“Other B Lenders” has the meaning specified in Section 2.4.

 

“Other Lenders” has the meaning specified in Section 2.4.

 

“Other Taxes” has the meaning specified in Section 2.17(c).

 

“Parts Inventory” means inventory (as defined in the UCC) of the Borrowers consisting of parts and accessories. 

 

“Peg Balance” means $25,000,000, or such other amount as determined by the Swingline Lender in its sole discretion; provided, that the Peg Balance shall not exceed $25,000,000 without the consent of the Required Lenders. 

 

“Permit” means, with respect to any Person, any permit, approval, authorization, license, registration, certificate, concession, grant, franchise, variance or permission from, and any other Contractual Obligations with, any Governmental Authority, in each case whether or not having the force of law and applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Permitted Transferee” means any Affiliate of BHB or Bank of Montreal; provided, that such Person shall constitute a Permitted Transferee only if such Person, or its direct or indirect parent, is a bank with assets greater than or equal to $500,000,000,000 and a public corporate credit rating of at least “A” from S&P or a public corporate family rating of at least “A-2” from Moody’s. 

 

“Person” means any individual, partnership, corporation (including a business trust and a public benefit corporation), joint stock company, estate, association, firm, enterprise, trust, limited liability company, unincorporated association, joint venture and any other entity or Governmental Authority.

 

“Prepayment Processing Fee” has the meaning specified in Section 2.5(c).

 

“Pro Forma Basis” means, with respect to any determination for any period and any Pro Forma Transaction, that such determination shall be made by giving pro forma effect to each such Pro Forma Transaction, as if each such Pro Forma Transaction had been consummated on the first day of such period, based on historical results accounted for in accordance with GAAP and, to the extent applicable, reasonable assumptions that are specified in detail in the relevant Compliance Certificate, Financial Statement or other document provided to the Administrative Agent or any Lender in connection herewith in accordance with Regulation S-X of the Securities Act of 1933.

 

“Pro Forma Transaction” means any transaction consummated as part of any acquisition of all or substantially all of the assets or stock of any Person by the Borrower Representative or any Subsidiary of the Borrower Representative, together with each other transaction relating thereto and consummated in connection therewith, including any incurrence or repayment of Indebtedness.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

13

 

 

“Pro Rata Share” means, with respect to any Lender at any time, (a) with respect to the Commitment A of such Lender, the percentage obtained by dividing (i) such Commitment A of such Lender at such time or, if the Commitments A have terminated, the Revolving A Loans and participations in Swing Loans (to the extent such Swing Loans may be refinanced with Revolving A Loans pursuant to Section 2.3) held by such Lender at such time by (ii) the Commitments A of all Lenders at such time or, if the Commitments A have terminated, all Revolving A Loans and such participations in Swing Loans outstanding at such time, (b) with respect to the Commitment B of such Lender, the percentage obtained by dividing (i) such Commitment B of such Lender at such time or, if the Commitments B have terminated, the Revolving B Loans and participations in Swing Loans (to the extent such Swing Loans may be refinanced with Revolving B Loans pursuant to Section 2.3) held by such Lender at such time by (ii) the Commitments B of all Lenders at such time or, if the Commitments B have terminated, all Revolving B and such participations in Swing Loans outstanding at such time, and (c) with respect to all Commitments of such Lender, the percentage obtained by dividing (i) the Commitments of such Lender at such time or, if the Commitments have terminated, the Revolving Loans and participations in Swing Loans held by such Lender at such time by (ii) the Commitments of all Lenders at such time or, if the Commitments have terminated, all Revolving Loans and participations in Swing Loans outstanding at such time; provided, however, that, if there are no Commitments and no Loans outstanding, such Lender’s Pro Rata Share shall be determined based on the Pro Rata Share most recently in effect, after giving effect to any subsequent assignment and any subsequent non-pro rata payments of any Lender pursuant to Section 2.18.

 

“Purchasing Lender” has the meaning specified in Section 11.25.

 

“Register” has the meaning specified in Section 2.14(b).

 

“Related Person” means, with respect to any Person, each Affiliate of such Person and each director, officer, employee, agent, trustee, representative, attorney, accountant and each insurance, environmental, legal, financial and other advisor and other consultants and agents of or to such Person or any of its Affiliates, together with, if such Person is the Administrative Agent, each other Person or individual designated, nominated or otherwise mandated by or helping the Administrative Agent pursuant to and in accordance with Section 10.4 or any comparable provision of any Loan Document.

 

“Required Lenders” means, at any time, Lenders having at such time in excess of 75% of the sum of the aggregate Commitments (or, if such Commitments are terminated, the sum of the outstanding Loans) then in effect, ignoring, in such calculation, the amounts held by any Non-Funding Lender; provided, that, for purposes of determining Required Lenders hereunder, the principal amount of Swing Loans outstanding shall be deemed to be allocated among the Revolving Lenders based on their respective Pro Rata Shares of the applicable Commitments that would refinance such Swing Loans if refinanced at such time in accordance with Section 2.3; provided, further, that, so long as there are three or more Lenders party hereto (excluding any Non-Funding Lenders), considering any Lender and its Affiliates as a single Lender, Required Lenders shall include at least three Lenders; provided, further, that, if there are only two Lenders party hereto (excluding any Non-Funding Lenders), considering any Lender and its Affiliates as a single Lender, Required Lenders shall include both Lenders.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

14

 

 

“Required Revolving A Lenders” means, at any time, Lenders having at such time at least a majority of the sum of the aggregate Commitments A (or, if such Commitments are terminated, the sum of the outstanding Revolving A Loans) then in effect, ignoring, in such calculation, the amounts held by any Non-Funding Lender; provided, that, for purposes of determining Required Revolving A Lenders hereunder, the principal amount of Swing Loans (if any that may be refinanced with Revolving A Loans pursuant to Section 2.3) outstanding shall be deemed to be allocated among the Revolving A Lenders based on their respective Pro Rata Shares of Commitments A.

 

“Required Revolving B Lenders” means, at any time, Lenders having at such time at least a majority of the sum of the aggregate Commitments B (or, if such Commitments are terminated, the sum of the outstanding Revolving B Loans) then in effect, ignoring, in such calculation, the amounts held by any Non-Funding Lender; provided, that, for purposes of determining Required Revolving B Lenders hereunder, the principal amount of Swing Loans (if any that may be refinanced with Revolving B Loans pursuant to Section 2.3) outstanding shall be deemed to be allocated among the Revolving B Lenders based on their respective Pro Rata Shares of Commitments B.

 

“Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of, any Governmental Authority, in each case whether or not having the force of law and that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Responsible Officer” means, with respect to any Person, any of the president, chief executive officer, treasurer, assistant treasurer, controller, managing member or general partner of such Person but, in any event, with respect to financial matters, any such officer that is responsible for preparing the Financial Statements delivered hereunder and, with respect to the documents delivered pursuant to Section 6.1(e) and documents delivered on the Restatement Date, the secretary or assistant secretary of such Person or any other officer responsible for maintaining the corporate and similar records of such Person.

 

“Restatement Date” means July 7, 2016.

 

“Restricted Payment” means any dividend, return of capital, or distribution in cash or Stock or Stock Equivalent of Holdings or any of its Subsidiaries, in each case now or hereafter outstanding, including with respect to a claim for rescission of a Sale of such Stock or Stock Equivalent.

 

“Revolving A Exposure” of any Lender at any time, means the outstanding principal amount of all Revolving A Loans owing to such Lender, plus any participations in Swing Loans purchased by such Lender hereunder to the extent such Swing Loans may be refinanced with Revolving A Loans pursuant to Section 2.3. With respect to any determination of “Revolving A Exposure” required by Sections 2.1 or 2.3, “Revolving A Exposure” shall be calculated without giving effect to any prepayment of the Revolving A Loans pursuant to Section 2.7.

 

“Revolving A Lender” means a Lender with a Commitment A.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

15

 

 

“Revolving A Loans” has the meaning specified in Section 2.1(a). 

 

“Revolving B Exposure” of any Lender at any time, means the outstanding principal amount of all Revolving B Loans owing to such Lender, plus any participations in Swing Loans purchased by such Lender hereunder to the extent such Swing Loans may be refinanced with Revolving B Loans pursuant to Section 2.3. With respect to any determination of “Revolving B Exposure” required by Sections 2.1 or 2.3, “Revolving B Exposure” shall be calculated without giving effect to any prepayment of the Revolving B Loans pursuant to Section 2.7.

 

“Revolving B Lender” means a Lender with a Commitment B.

 

“Revolving B Loans” has the meaning specified in Section 2.1(a). 

 

“Revolving Loans” means, collectively, the Revolving A Loans and the Revolving B Loans. 

 

“S&P” means Standard & Poor’s Rating Services.

 

“Sale and Leaseback Transaction” means, with respect to any Person (the “obligor”), any Contractual Obligation or other arrangement with any other Person (the “counterparty”) consisting of a lease by such obligor of any property that, directly or indirectly, has been or is to be Sold by the obligor to such counterparty or to any other Person to whom funds have been advanced by such counterparty based on a Lien on, or an assignment of, such property or any obligations of such obligor under such lease.

 

“Scheduled Termination Date” means June 30, 2019.

 

“Secured Parties” means the Lenders, the Administrative Agent and any other holder of any Obligation of any Loan Party.

 

“Security” means all Stock, Stock Equivalents, voting trust certificates, bonds, debentures, instruments and other evidence of Indebtedness, whether or not secured, convertible or subordinated, all certificates of interest, share or participation in, all certificates for the acquisition of, and all warrants, options and other rights to acquire, any Security.

 

“Sell” means, with respect to any property, to sell, convey, transfer, assign, license, lease or otherwise dispose of, any interest therein or to permit any Person to acquire any such interest, including, in each case, through a Sale and Leaseback Transaction or through a sale, factoring at maturity, collection of or other disposal, with or without recourse, of any notes or accounts receivable. Conjugated forms thereof and the noun “Sale” have correlative meanings.

 

“Selling Lender” has the meaning specified in Section 11.25.

 

“Settlement Date” means the 10th and 22nd day of each calendar month, or if such day is not a Business Day, the immediately following Business Day. 

 

“Solvent” means, with respect to any Person as of any date of determination, that, as of such date, (a) the value of the assets of such Person (both at fair value and present fair saleable value) is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

16

 

 

“Stock” means all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting.

 

“Stock Equivalents” means all securities convertible into or exchangeable for Stock or any other Stock Equivalent and all warrants, options or other rights to purchase, subscribe for or otherwise acquire any Stock or any other Stock Equivalent, whether or not presently convertible, exchangeable or exercisable.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company, association or other entity, the management of which is, directly or indirectly, controlled by, or of which an aggregate of more than 50% of the outstanding Voting Stock is, at the time, owned or controlled directly or indirectly by, such Person or one or more Subsidiaries of such Person.

 

“Substitute Lender” has the meaning specified in Section 2.18(a).

 

“Swingline Lender” means BHB and its successors and assigns.

 

“Swing Loans” has the meaning specified in Section 2.1(b). 

 

“Tax Affiliate” means, (a) Holdings, the Borrowers and their Subsidiaries and (b) any Affiliate of Holdings with which the Holdings files or is eligible to file consolidated, combined or unitary tax returns.

 

“Tax Return” has the meaning specified in Section 4.8.

 

“Taxes” has the meaning specified in Section 2.17(a).

 

“Total Equipment Loans” means, at any time, (i) (A) the aggregate principal amount of Revolving Loans made by the Lenders pursuant to Section 2.1(a) plus (B) the aggregate principal amount of Swing Loans made by the Swingline Lender pursuant to Section 2.1(b), minus (ii) all repayments of principal of the Revolving Loans and Swing Loans made by the Borrowers pursuant to this Agreement, including any payments deemed to have been made to Total Equipment Loans pursuant to Section 2.13(e), but excluding any voluntary prepayments of principal pursuant to Section 2.7.

 

“Total Loans” means, at any time, (i) the Net Equipment Loans, plus (ii) the aggregate outstanding Working Capital Loans at such time. 

 

“UCC” means the Uniform Commercial Code of any applicable jurisdiction and, if the applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform Commercial Code as in effect in the State of New York.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

17

 

 

“United States” means the United States of America.

 

“Used Equipment Curtailment Payment” has the meaning specified in Section 2.6(c).

 

“Used Equipment Loan” means a Loan to purchase Inventory previously used or sold at retail.

 

“Used Equipment Loan Sublimit” means $150,000,000. 

 

“Voting Stock” means Stock of any Person having ordinary power to vote in the election of members of the board of directors, managers, trustees or other controlling Persons, of such Person (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the occurrence of any contingency).

 

“Working Capital Lender” means BHB and its successors and assigns.

 

“Working Capital Loan” has the meaning specified in Section 2.1(c). 

 

“Working Capital Subfacility Amount” means, at any time, the lesser of (x) the amount by which the Total Equipment Loans exceeds the Net Equipment Loans and (y) $227,000,000.

 

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

 

Section 1.2     UCC Terms. The following terms have the meanings given to them in the applicable UCC: “account”, “chattel paper”, “commodity account”, “commodity contract”, “commodity intermediary”, “deposit account”, “documents”, “entitlement holder”, “entitlement order”, “equipment”, “financial asset”, “general intangible”, “goods”, “instruments”, “inventory”, “securities account”, “securities intermediary” and “security entitlement”.

 

Section 1.3     Accounting Terms and Principles. (a) GAAP. All accounting determinations required to be made pursuant hereto shall, unless expressly otherwise provided herein, be made in accordance with GAAP. No change in the accounting principles used in the preparation of any Financial Statement hereafter adopted by Holdings shall be given effect if such change would affect a calculation that measures compliance with any provision of Article 5 or Article 8 unless the Borrowers, the Administrative Agent and the Required Lenders agree to modify such provisions to reflect such changes in GAAP and, unless such provisions are modified, all Financial Statements, Compliance Certificates and similar documents provided hereunder shall be provided together with a reconciliation between the calculations and amounts set forth therein before and after giving effect to such change in GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to in Article 5 and Article 8 shall be made, without giving effect to any election under Accounting Standards Codification 825-10 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of any Loan Party or any Subsidiary of any Loan Party at “fair value.” Notwithstanding the foregoing, any lease that would be characterized as an operating lease in accordance with GAAP on December 31, 2015 (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capital Lease) for purposes of this Agreement regardless of any change in GAAP following such date (or the implementation or effectiveness of any change in GAAP following such date) that would otherwise require such lease to be recharacterized (on a prospective or retroactive basis or otherwise) as a Capital Lease.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

18

 

 

(b)     Pro Forma. All components of financial calculations made to determine compliance with Article 5 shall be adjusted on a Pro Forma Basis to include or exclude, as the case may be, without duplication, such components of such calculations attributable to any Pro Forma Transaction consummated after the first day of the applicable period of determination and prior to the end of such period, as determined in good faith by the Borrowers based on assumptions expressed therein and that were reasonable based on the information available to the Borrowers at the time of preparation of the Compliance Certificate setting forth such calculations.

 

Section 1.4     Interpretation. (a) Certain Terms. Except as set forth in any Loan Document, all accounting terms not specifically defined herein shall be construed in accordance with GAAP (except for the term “property”, which shall be interpreted as broadly as possible, including, in any case, cash, Securities, other assets, rights under Contractual Obligations and Permits and any right or interest in any property). The terms “herein”, “hereof” and similar terms refer to this Agreement as a whole. In the computation of periods of time from a specified date to a later specified date in any Loan Document, the terms “from” means “from and including” and the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.” In any other case, the term “including” when used in any Loan Document means “including without limitation.” The term “documents” means all writings, however evidenced and whether in physical or electronic form, including all documents, instruments, agreements, notices, demands, certificates, forms, financial statements, opinions and reports. The term “incur” means incur, create, make, issue, assume or otherwise become directly or indirectly liable in respect of or responsible for, in each case whether directly or indirectly, and the terms “incurrence” and “incurred” and similar derivatives shall have correlative meanings.

 

(b)     Certain References. Unless otherwise expressly indicated, references (i) in this Agreement to an Exhibit, Schedule, Article, Section or clause refer to the appropriate Exhibit or Schedule to, or Article, Section or clause in, this Agreement and (ii) in any Loan Document, to (A) any agreement shall include, without limitation, all exhibits, schedules, appendixes and annexes to such agreement and, unless the prior consent of any Secured Party required therefor is not obtained, any modification to any term of such agreement, (B) any statute shall be to such statute as modified from time to time and to any successor legislation thereto, in each case as in effect at the time any such reference is operative and (C) any time of day shall be a reference to New York time. Titles of articles, sections, clauses, exhibits, schedules and annexes contained in any Loan Document are without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. Unless otherwise expressly indicated, the meaning of any term defined (including by reference) in any Loan Document shall be equally applicable to both the singular and plural forms of such term.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

19

 

 

ARTICLE 2
REVOLVING CREDIT FACILITY

 

Section 2.1     The Revolving Credit Facility. 

 

(a)     (i) On the terms and subject to the conditions contained in this Agreement, each Revolving A Lender severally, but not jointly, agrees to make loans in Dollars (each a “Revolving A Loan”) to the Borrowers from time to time on any Business Day during the period from the date hereof until the Commitment Termination Date for the purpose of acquiring Inventory from the manufacturers and distributors of such Inventory or to refinance Swing Loans as contemplated in this Agreement; provided, however, that at no time shall any Revolving A Lender be obligated to make any Revolving A Loan if after giving effect thereto, (A) the Revolving A Exposure of such Lender would exceed such Lender’s Commitment A, (B) either the Total Loans or the Total Equipment Loans would exceed the aggregate Commitments, (C) the aggregate New Equipment Loans would exceed the New Equipment Loan Sublimit, (D) the aggregate Used Equipment Loans would exceed the Used Equipment Loan Sublimit or (E) a Default shall exist; provided, further, that, except as provided in Section 2.3, at no time shall any Revolving A Lender be required to make any Revolving A Loan unless the Administrative Agent, in its sole discretion, has approved any request for Borrowing submitted by the Borrower Representative. 

 

(ii)     On the terms and subject to the conditions contained in this Agreement, each Revolving B Lender severally, but not jointly, agrees to make loans in Dollars (each a “Revolving B Loan”) to the Borrowers from time to time on any Business Day during the period from the date hereof until the Commitment Termination Date for the purpose of acquiring Inventory from the manufacturers and distributors of such Inventory or to refinance Swing Loans as contemplated in this Agreement; provided, however, that at no time shall any Revolving B Lender be obligated to make any Revolving B Loan if after giving effect thereto, (A) the Revolving A Exposure of all Revolving A Lenders other than the Working Capital Lenders would be less than the Commitments A of such Revolving A Lenders, (B) the Revolving B Exposure of such Lender would exceed such Lender’s Commitment B, (C) either the Total Loans or the Total Equipment Loans would exceed the aggregate Commitments, (D) the aggregate New Equipment Loans would exceed the New Equipment Loan Sublimit, (E) the aggregate Used Equipment Loans would exceed the Used Equipment Loan Sublimit, or (F) a Default shall exist; provided, further, that, except as provided in Section 2.3, at no time shall any Revolving B Lender be required to make any Revolving B Loan unless the Administrative Agent, in its sole discretion, has approved any request for Borrowing submitted by the Borrower Representative. 

 

(iii)     Subject to the foregoing, the obligation of each Lender to make its Revolving Loans shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever, including (A) the existence of any setoff, claim, abatement, recoupment, defense or other right that such Lender, any Affiliate thereof or any other Person may have against the Administrative Agent, any Borrower or any other Person, and (B) any adverse change in the condition (financial or otherwise) of any Loan Party. Subject to the terms and conditions of this Agreement and within the limits set forth in this clause (a), amounts of Loans repaid may be reborrowed under this Section 2.1.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

20

 

 

(b)     At the election of the Swingline Lender, the Swingline Lender may, in its sole discretion, make loans in Dollars (each a “Swing Loan”) available to the Borrowers from time to time on any Business Day during the period from the date hereof until the Commitment Termination Date for the purpose of acquiring Inventory from the manufacturers and distributors of such Inventory; provided, however, that the Swingline Lender may not make any Swing Loan to the extent that after giving effect to such Swing Loan, (i) (A) the aggregate Revolving A Exposure of all Revolving A Lenders would exceed the aggregate Commitments A or (B) the aggregate Revolving B Exposure of all Revolving B Lenders would exceed the aggregate Commitments B, (ii) either the Total Loans or the Total Equipment Loans would exceed the aggregate Commitments, (iii) the aggregate New Equipment Loans would exceed the New Equipment Loan Sublimit, (iv) the aggregate Used Equipment Loans would exceed the Used Equipment Loan Sublimit, or (v) a Default shall exist; provided, further, that at no time shall the Swingline Lender make any Swing Loan unless the Administrative Agent, in its sole discretion, has approved any request for Borrowing submitted by the Borrower Representative. Subject to the terms and conditions of this Agreement and within the limits set forth in this clause (b), amounts of Swing Loans repaid may be reborrowed under this clause (b). Notwithstanding the foregoing, the Swingline Lender shall not make any Swing Loan if at least two (2) Business Days prior to such date, the Swingline Lender shall have received written notice from any Revolving Lender or the Administrative Agent that Swing Loans should be suspended based on the occurrence and continuance of a Default or Event of Default and stating that such notice is a “notice of default”; provided, however that the Swingline Lender may make Swing Loans from the earlier of (i) the date that Revolving Lenders having at such time in excess of 80% of the sum of the aggregate Commitments (or, if such Commitments are terminated, the sum of the outstanding Revolving Loans) then in effect, ignoring, in such calculation, the amounts held by any Non-Funding Lender, authorize the Swingline Lender to continue to make Swing Loans; provided, that, for purposes of determining outstanding Loans for the calculations in this sentence, the principal amount of Swing Loans outstanding shall be deemed to be allocated among the Revolving Lenders based on their respective Pro Rata Shares of the applicable Commitment that would refinance such Swing Loans if such Swing Loans were refinanced at such time; provided, further, that, so long as there is more than one Revolving Lender party hereto, the authorization of at least two Revolving Lenders, considering any Revolving Lender and its affiliates as a single Revolving Lender, shall be required to authorize the Swingline Lender to continue funding Swing Loans, and (ii) the date that such Default or Event of Default is waived in accordance with the terms hereof.

 

(c)     So long as no Default or Event of Default has occurred and is continuing, the Working Capital Lenders will make loans in Dollars (each a “Working Capital Loan”) available to the Borrowers from time to time on any Business Day during the period from the date hereof until the Commitment Termination Date for working capital and other general corporate purposes; provided, however, that the Working Capital Lenders may not make any Working Capital Loan to the extent that, after giving effect to such Working Capital Loan, (x) the aggregate outstanding Working Capital Loans would exceed the Working Capital Subfacility Amount or (y) the Total Loans would exceed the aggregate Commitments. Subject to the terms and conditions of this Agreement and within the limits set forth in this clause (c), amounts of Working Capital Loans repaid may be reborrowed under this clause (c). Working Capital Loans shall be deemed to be outstanding under the Commitments A, to the extent that the aggregate outstanding Revolving A Loans and Swing Loans of Lenders that are also Working Capital Lenders are less than the aggregate Commitments A of such Lenders and otherwise shall be deemed to be outstanding under the Commitments B.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

21

 

 

Section 2.2     Borrowing Procedures. (a) Request for Equipment Loans. Except as the Administrative Agent may permit through its E-Systems, each request for a Borrowing of New Equipment Loans or Used Equipment Loans shall be made in writing by the Borrower Representative to the Administrative Agent not later than 10:00 a.m. on the first Business Day prior to the proposed Borrowing (except with respect to a Borrowing of Swing Loans for which notice shall be made no later than 10:00 a.m. on the same Business Day) in substantially the form of Exhibit B-1 (a “Request for Equipment Borrowing”), duly completed, with such Request for Equipment Borrowing. Each Request for Equipment Borrowing with respect to a New Equipment Loan shall attach copies of the invoices to be paid with the proceeds of such Loan unless such invoices have previously been electronically submitted to the Administrative Agent. Each Request for Equipment Borrowing with respect to a Used Equipment Loan shall describe the used equipment to be purchased and the purchase price therefor, and shall attach copies of the certificates of title of the Inventory to be purchased with the proceeds of such Loan. The Administrative Agent is authorized to pay on behalf of any Borrower any invoices, or any electronic remittance advice, presented to the Administrative Agent from time to time that evidences the sale by a manufacturer or distributor of one or more items of Inventory. The Administrative Agent shall promptly determine in its sole discretion whether or not any Loans will be made in response to such Request for Equipment Borrowing, and will provide the Borrower Representative prompt notice of such determination. If the Administrative Agent approves such Request for Equipment Borrowing, it shall determine in its sole discretion whether such Request for Equipment Borrowing will be funded with Revolving A Loans (in which case it shall promptly notify the Revolving A Lenders of the details thereof), with Swing Loans (in which case it shall promptly notify the Swingline Lender of the details thereof) or with Revolving B Loans (in which case it shall promptly notify the Revolving B Lenders of the details thereof). Each submission of a Request for Equipment Borrowing by the Borrower Representative or any Borrower shall constitute a representation and warranty by the Borrower Representative that (i) the representations and warranties set forth in Article 4 of this Agreement and elsewhere in the Loan Documents are true and correct in all material respects, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct as of such date; and (ii) no Default is continuing.

 

(b)     Notice to Swingline Lender. Upon receipt of notice from the Administrative Agent to fund a Request for Equipment Borrowing with Swing Loans subject to paragraph (a) above, and subject to the terms of this Agreement, the Swingline Lender will make a Swing Loan available to the Borrowers by making the proceeds thereof available to the applicable Borrower, to Administrative Agent (for further application to the applicable Borrower) or to directly pay any electronic remittance advice or invoices that are the subject of such Request for Equipment Borrowing. 

 

(c)     Notice to Each Revolving Lender. 

 

(i)     Upon receipt of notice from the Administrative Agent to fund a Request for Equipment Borrowing with Revolving A Loans subject to paragraph (a) above, and subject to the terms of this Agreement, each Revolving A Lender shall, before 10:00 a.m. on the date of the proposed Borrowing, make available to the Administrative Agent at its address referred to in Section 11.11, such Revolving A Lender’s Pro Rata Share (based upon its Commitment A) of such proposed Borrowing (adjusted in accordance with Section 2.1(a)), and in turn, the Administrative Agent shall promptly make such funds available to the applicable Borrower or to directly pay any electronic remittance advice or invoices that are the subject of such Request for Equipment Borrowing. 

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

22

 

 

(ii)     Upon receipt of notice from the Administrative Agent to fund a Request for Equipment Borrowing with Revolving B Loans subject to paragraph (a) above, and subject to the terms of this Agreement, each Revolving B Lender shall, before 10:00 a.m. on the date of the proposed Borrowing, make available to the Administrative Agent at its address referred to in Section 11.11, such Revolving B Lender’s Pro Rata Share (based upon its Commitment B) of such proposed Borrowing (adjusted in accordance with Section 2.1(a)), and in turn, the Administrative Agent shall promptly make such funds available to the applicable Borrower or to directly pay any electronic remittance advice or invoices that are the subject of such Request for Equipment Borrowing. 

 

(d)     Request for Working Capital Loans. Each request for a Borrowing of Working Capital Loans shall be made in writing by the Borrower Representative to the Administrative Agent not later than 11:00 a.m. on (x) the third Business Day prior to the date of the proposed Borrowing if the proposed Borrowing is equal to or greater than $20,000,000 and (y) on the first Business Day prior to the date of the proposed Borrowing if the proposed Borrowing is less than $20,000,000, in substantially the form of Exhibit B-2 (a “Request for Working Capital Borrowing”), duly completed. The Administrative Agent shall promptly determine in its sole discretion whether or not any Loans will be made in response to such Request for Working Capital Borrowing, and the Administrative Agent will provide the Borrower Representative and the Working Capital Lenders with prompt notice of such determination. 

 

(e)     Notice to Each Working Capital Lender. Upon receipt of notice from the Administrative Agent to fund a Request for Working Capital Borrowing with Working Capital Loans subject to clause (d) above, and subject to the terms of this Agreement, each Working Capital Lender shall, before 10:00 a.m. on the date of the proposed Borrowing, make available to the Administrative Agent at its address referred to in Section 11.11, such Working Capital Lender’s ratable share of such proposed Borrowing based upon its Commitments, and in turn, the Administrative Agent shall promptly make such funds available to the applicable Borrower.

 

(f)     Non-Funding Lenders. 

 

(i)     Non-Funding Lenders Responsibility. Unless the Administrative Agent shall have received notice from any Lender prior to the date such Lender is required to make any payment hereunder with respect to any Loan or any participation in any Swing Loan that such Lender will not make such payment (or any portion thereof) available to the Administrative Agent, the Administrative Agent may assume that such Lender has made such payment available to the Administrative Agent on the date such payment is required to be made in accordance with this Article 2 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount; provided, that nothing herein or in any other Loan Document shall be deemed to require the Administrative Agent to advance funds on behalf of any Lender. The Borrowers agree to repay to the Administrative Agent on demand such amount (until repaid by such Lender) with interest thereon for each day from the date such amount is made available to the Borrowers until the date such amount is repaid to the Administrative Agent, at the interest rate applicable to the Obligation that would have been created when the Administrative Agent made available such amount to the Borrowers had such Lender made a corresponding payment available; provided, however, that such payment shall not relieve such Lender of any obligation it may have to the Borrowers or the Swingline Lender. The failure of a Non-Funding Lender to make any Revolving Loan, to fund any purchase of any participation to be made or funded by it or to make any other payment required to be made by it under the Loan Documents, in each case on the date specified therefore, shall not relieve any other Lender of its obligations to make such loan, fund the purchase of such participation or make any other such payment under any Loan Document on such date, but neither the Administrative Agent nor, other than as expressly set forth herein, any Lender shall be responsible for the failure of any Non-Funding Lender to make a Loan, fund the purchase of a participation or make any other payment required under any Loan Document.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

23

 

 

(ii)     Reallocation. If any Revolving Lender is a Non-Funding Lender, all or a portion of such Non-Funding Lender’s reimbursement obligations with respect to Swing Loans shall, at the Administrative Agent’s election at any time or upon Swingline Lender’s written request delivered to the Administrative Agent (whether before or after the occurrence of any Default or Event of Default), be reallocated to and assumed by the Revolving Lenders that are not Non-Funding Lenders in accordance with their Pro Rata Share of the Commitments (calculated as if the Non-Funding Lender’s Pro Rata Share was reduced to zero and each other Revolving Lender’s Pro Rata Share had been increased proportionately); provided, that no Revolving Lender shall be reallocated any such amounts or be required to fund any amounts that would cause (x) such Revolving Lender’s Revolving A Exposure to exceed its Commitment A or (y) such Revolving Lender’s Revolving B Exposure to exceed its Commitment B, and any such amounts in excess of such Revolving Lender’s availability under its Commitments shall be reallocated as Working Capital Loans ratably to the Working Capital Lenders to the extent of availability under the Commitments of such Working Capital Lenders. 

 

(iii)     Voting Rights. Notwithstanding anything herein to the contrary, including Section 11.1, a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Loan Document or constitute a “Lender” or a “Revolving Lender” (or be, or have its Loans or Commitments, included in the determination of “Required Lenders” or “Lenders directly affected” pursuant to Section 11.1) for any voting or consent rights under or with respect to any Loan Document; provided, that (A) the Commitments of a Non-Funding Lender may not be increased, extended or reinstated, (B) the principal of a Non-Funding Lender’s Loans may not be reduced or forgiven and (C) the interest rate applicable to Obligations owing to a Non-Funding Lender may not be reduced, in each case without the consent of such Non-Funding Lender. For the purposes of determining Required Lenders, the Loans and Commitments held by Non-Funding Lenders shall be excluded from the total Loans and Commitments outstanding.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

24

 

 

Section 2.3     Refinancing Swing Loans. 

 

(a)     The Swingline Lender may at any time, and shall at least one Business Day prior to each Settlement Date, forward a demand to the Administrative Agent (which the Administrative Agent shall, upon receipt, forward to each Revolving Lender) that each Revolving Lender pay to the Administrative Agent, for the account of the Swingline Lender, such Revolving Lender’s Pro Rata Share of the outstanding Swing Loans to be refinanced pursuant to this Section 2.3(a) (as such Revolving Lender’s Pro Rata Share of the outstanding amount of the Swing Loans may be increased pursuant to Section 2.2(f)(ii)); provided, that on each Settlement Date the amount of Swing Loans to be refinanced shall be equal to the excess of the aggregate outstanding principal amount of the Swing Loans over the Peg Balance. Each Revolving Lender shall pay such Pro Rata Share of the amount of outstanding Swing Loans to be refinanced to the Administrative Agent for the account of the Swingline Lender. Upon receipt by the Administrative Agent of such payment (other than during the continuation of any Event of Default under Section 9.1(e)), such Revolving Lender shall be deemed to have made a Revolving Loan to the applicable Borrowers, which, upon receipt of such payment by the Swingline Lender from the Administrative Agent, the applicable Borrowers shall be deemed to have used to refinance such portion of the Swing Loans. In addition, regardless of whether any such demand is made, upon the occurrence of any Event of Default under Section 9.1(e), each Revolving Lender shall be deemed to have acquired, without recourse or warranty, an undivided interest and participation in each Swing Loan in an amount equal to such Revolving Lender’s Pro Rata Share of such Swing Loan. If any payment made by any Revolving Lender as a result of any such demand is not deemed a Revolving Loan, such payment shall be deemed a funding by such Revolving Lender of such participation. Such participation shall not be otherwise required to be funded. Upon receipt by the Swingline Lender of any payment from any Revolving Lender pursuant to this clause (a) with respect to any portion of any Swing Loan, the Swingline Lender shall promptly pay over to such Revolving Lender all payments of principal (to the extent received after such payment by such Revolving Lender) and interest (to the extent accrued with respect to periods after such payment) received by the Swingline Lender with respect to such portion. The Swingline Lender shall be entitled to offset amounts owed by the Revolving Lenders pursuant to this Section 2.3(a) against payments to be made to the Revolving Lenders on such Settlement Date. Notwithstanding anything set forth above, to the extent that there is insufficient availability under the applicable Commitment of any Revolving Lender to fund its entire Pro Rata Share of any requested new Revolving Loan or any requested purchase in any Swing Loan, such Revolving Lender’s Pro Rata Share of such requested new Revolving Loan and its interest in any Swing Loan that cannot be funded shall be reduced to the extent such Revolving Loan or purchase of an interest in Swing Loans will result in such Revolving Lender’s Revolving A Exposure being equal to (and not in excess of) its Commitment A or such Revolving Lender’s Revolving B Exposure being equal to (and not in excess of) its Commitment B, as applicable, and the remaining portion of such Revolving Loan or purchase of an interest in such Swing Loans shall be funded ratably by the Working Capital Lenders. 

 

(b)     Swing Loans refinanced pursuant to Section 2.3(a) shall be funded first from Revolving A Loans unless and until the aggregate Total Equipment Loans funded under the Commitments A equals the aggregate Commitments A and thereafter from Revolving B Loans.

 

(c)     Obligation to Fund Absolute. Each Lender’s obligations pursuant to clause (a) above shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever, including (A) the existence of any setoff, claim, abatement, recoupment, defense or other right that such Lender, any Affiliate thereof or any other Person may have against the Swingline Lender or any other Person, and (B) any adverse change in the condition (financial or otherwise) of any Loan Party.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

25

 

 

Section 2.4     Reallocation of Loans. Upon the acceleration of the Loans, the foreclosure on any Liens securing the Obligations, the exercise of any other contractual remedies granted under the Loan Documents by the Administrative Agent or any Lenders or the occurrence of an Event of Default pursuant to Section 9.1(e), (x) to the extent that the outstanding Revolving A Exposure of each Revolving A Lender is not equal to its Pro Rata Share of the Commitments A, the Working Capital Lenders shall be deemed to have purchased ratably from all other Revolving A Lenders (the “Other A Lenders”), without recourse or warranty, a portion of the Revolving A Loans and participations in Swing Loans held by the Other A Lenders (or to the extent not permitted by law, an undivided interest and participation in the Revolving A Loans and participations in Swing Loans held by the Other A Lenders) to the extent necessary such that the Revolving A Loans are held ratably by all Revolving A Lenders and the participations in Swing Loans are held ratably by all Revolving A Lenders in accordance with portion of the outstanding Swing Loans that each Revolving A Lender could be required to refinance under Section 2.3 absent such Event of Default and (y) to the extent that the outstanding Revolving B Exposure of each Revolving B Lender is not equal to its Pro Rata Share of the Commitments B, the Working Capital Lenders shall be deemed to have purchased ratably from all other Revolving B Lenders (the “Other B Lenders”), without recourse or warranty, a portion of the Revolving B Loans held by the Other B Lenders (or to the extent not permitted by law, an undivided interest and participation in the Revolving B Loans held by the Other B Lenders) to the extent necessary such that the Revolving B Loans are held ratably by all Revolving B Lenders. Upon receipt by any Other Lender of any payment with respect to any portion of the Revolving Loans or participations in Swing Loans sold or participated out to the Working Capital Lenders pursuant to this Section 2.4, such Other Lender shall promptly pay over to such Working Capital Lender all payments of principal, interest and fees received by such Other Lender with respect to such portion.

 

Section 2.5     Reduction and Termination of the Commitments. 

 

(a)     Optional. The Borrowers may, upon notice to the Administrative Agent, terminate the Commitments in their entirety (but not in part); provided, that the Borrowers repay the outstanding principal balance of all Loans, together with all accrued fees and interest thereon and the Prepayment Processing Fee payable pursuant to Section 2.5(c). 

 

(b)     Mandatory. All outstanding Commitments shall terminate on the earlier of (i) the Scheduled Termination Date and (ii) the date 360 days after the Administrative Agent elects to terminate the Commitments by delivering written notice thereof to the Borrower Representative and the Lenders. For the avoidance of doubt, the 360 day period contemplated by this Section 2.5(b) shall not apply to the termination of Commitments pursuant to Section 9.2.

 

(c)     Prepayment Processing Fee. If (i) any Borrower allows another finance source to finance any Inventory, (ii) the Borrowers terminate the Commitments pursuant to Section 2.5(a) or (iii) the Administrative Agent terminates this Agreement pursuant to Section 9.2 when any Event of Default has occurred and is continuing, the Borrowers shall pay to the Administrative Agent, for the ratable benefit of the Lenders, an amount (the “Prepayment Processing Fee”) equal to (a) 2.00% of the aggregate Commitments if such financing or termination above occurs on or before January 1, 2018, (b) 1.00% of the aggregate Commitments if such financing or termination occurs after January 1, 2018, and on or prior to July 1, 2018, and (c) $500,000 if such financing or termination occurs after July 1, 2018 and prior to the Scheduled Termination Date. Notwithstanding the foregoing, the Borrowers shall not be required to pay any Prepayment Processing Fee (i) as a result of any Borrower financing Inventory for a limited period of time (not to exceed 180 days) with interest-free floor plan financing arranged or offered by the manufacturer of such Inventory, (ii) as a result of any Ford Motor Credit Financing, (iii) to the extent that the Borrower Representative has requested in writing that the Lenders increase the Commitments, the Lenders declined to do so and the aggregate Commitments are substantially fully funded, or (iv) to the extent the Borrower Representative terminates the Commitments within 90 days after any Person other than BHB or a Permitted Transferee becomes the Administrative Agent hereunder.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

26

 

 

Section 2.6     Repayment of Loans. (a) The Borrowers jointly and severally promise to repay the entire outstanding principal amount of all Loans on the earlier of (i) the Scheduled Termination Date and (ii) the date that is 360 days following the delivery by the Administrative Agent of a notice terminating the Commitments pursuant to Section 2.5(b). 

 

(b)     New Equipment Curtailment Payments. Until each New Equipment Loan has been repaid in full, the Borrowers jointly and severally promise to make curtailment principal payments with respect to such New Equipment Loan in amounts equal to the original principal amount of each New Equipment Loan multiplied by the percentages set forth below (each such payment, a “New Equipment Curtailment Payment”): 

 

	
DATE
	
AMOUNT

	 	 
	
Date that is 12 months after 

the date of such New 

Equipment Loan
	
10%

	 	 
	
Date that is 18 months after 

the date of such New 

Equipment Loan
	
5%

	 	 
	
Date that is 24 months after 

the date of such New 

Equipment Loan and each 

monthly anniversary of the 

date of such New 

Equipment Loan thereafter
	
5%

 

Each New Equipment Curtailment Payment shall be accrued on the applicable date set forth in the table above and shall be due and payable on the fifteenth day after the date of the invoice setting forth such New Equipment Curtailment Payment. Each such New Equipment Curtailment Payment shall be deemed to reduce the principal amount of the related New Equipment Loan, and shall be applied to the Obligations in accordance with Section 2.12. 

 

(c)     Used Equipment Curtailment Payments. Until each Used Equipment Loan has been repaid in full, the Borrowers jointly and severally promise to make curtailment principal payments with respect to such Used Equipment Loan in amounts equal to the original principal amount of such Used Equipment Loan multiplied by the percentages set forth below (each such payment, a “Used Equipment Curtailment Payment”):

 

	
DATE
	
AMOUNT

	 	 
	
Date that is 12 months after 

the date of such Used 

Equipment Loan
	
10%

	 	 
	
Date that is 15 months after 

the date of such Used 

Equipment Loan
	
10%

	 	 
	
Date that is 18 months after 

the date of such Used 

Equipment Loan
	
10%

	 	 
	
Date that is 19 months after

the date of such Used 

Equipment Loan and each 

monthly anniversary of the 

date of such Used 

Equipment Loan thereafter
	
5%

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

27

 

 

Each Used Equipment Curtailment Payment shall be accrued on the applicable date set forth in the table above and shall be due and payable on the fifteenth day after the date of the invoice setting forth such Used Equipment Curtailment Payment. Each such Used Equipment Curtailment Payment shall be deemed to reduce the principal amount of the related Used Equipment Loan, and shall be applied to the Obligations in accordance with Section 2.12. 

 

Section 2.7     Optional Prepayments. The Borrowers may prepay the Revolving Loans and Swing Loans in whole or in part at any time (together with any breakage costs that may be owing pursuant to Section 2.16(a) after giving effect to such prepayment); provided, however, that (x) in no event shall the aggregate amount of partial prepayments exceed the aggregate Total Equipment Loans made by Lenders that are also Working Capital Lenders and (y) no Revolving A Loans may be prepaid in whole or in part if any Revolving B Loans made by the Working Capital Lenders are outstanding at such time. The Borrowers may prepay the Working Capital Loans in whole or in part at any time (together with any breakage costs that may be owing pursuant to Section 2.16(a) after giving effect to such prepayment). All such partial prepayments shall be applied to the Obligations in accordance with Section 2.12, but shall not be deemed to reduce any New Equipment Loans or Used Equipment Loans. Notwithstanding the foregoing, no prepayment of the Loans with any proceeds of the Formula Revolver Debt shall be permitted.

 

Section 2.8     Mandatory Repayments. 

 

(a)     Excess Outstandings. On any date on which the aggregate Revolving A Exposure exceeds the aggregate Commitments A, the Borrowers shall pay to the Administrative Agent an amount equal to such excess, allocated first to any Working Capital Loans outstanding under the Commitments A until paid in full, then to any outstanding Swing Loans (to the extent that such Swing Loans would be refinanced with Revolving A Loans pursuant to Section 2.3(a) if refinanced on such date) until paid in full, and then to any outstanding Revolving A Loans. On any date on which the aggregate Revolving B Exposure exceeds the aggregate Commitments B, the Borrowers shall pay to the Administrative Agent an amount equal to such excess, allocated first to any Working Capital Loans outstanding under the Commitments B until paid in full, second to any outstanding Swing Loans (to the extent that such Swing Loans would be refinanced with Revolving B Loans pursuant to Section 2.3(a) if refinanced on such date) and then to any outstanding Revolving B Loans. On any date on which the aggregate outstanding principal amount of the Working Capital Loans exceeds the Working Capital Subfacility Amount, the Borrowers shall pay to the Administrative Agent an amount equal to such excess, allocated first to any Working Capital Loans outstanding under the Commitments B until paid in full and then to any Working Capital Loans outstanding under the Commitments A until paid in full.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

28

 

 

(b)     Sale, Loss or Destruction of Inventory. Subject to the terms of Section 2.10, if any Inventory is Sold, the Borrowers shall pay or cause to be paid to the Administrative Agent an amount equal to the principal amount of the New Equipment Loan or Used Equipment Loan borrowed to purchase such Inventory (less any curtailment payments paid with respect to such New Equipment Loan or Used Equipment Loan pursuant to Section 2.6), together with all accrued and unpaid interest thereon, on the earlier of the date a Borrower receives payment for such item of Inventory or the date possession of such item of Inventory is delivered to the purchaser thereof, notwithstanding that the relevant purchase order or invoice may list an earlier date of sale. If any Inventory is lost or destroyed, the Borrowers shall pay or cause to be paid to the Administrative Agent an amount equal to the principal amount of the Loan or Loans borrowed to purchase such Inventory, together with all accrued and unpaid interest thereon, no later than thirty (30) Business Days after any Borrower obtains knowledge or notice of such loss or destruction. 

 

(c)     Loss of Franchises. Upon the termination of any franchise at a particular location, the Administrative Agent may demand payment within thirty (30) days of all New Equipment Loans and Used Equipment Loans that relate to such franchise at that location. Upon the termination by a Governmental Authority of any license to operate as a motor vehicle dealer at a particular location, the Administrative Agent may demand payment within thirty (30) days of all New Equipment Loans and Used Equipment Loans related to Inventory at such location. Should the franchises representing more than twenty-five percent (25.0%) of the Total Equipment Loans to Borrowers by dollar volume be terminated or the licenses to operate a motor vehicle dealer at locations representing more than twenty-five percent (25.0%) of the Total Equipment Loans to Borrowers by dollar volume be terminated, the Administrative Agent may demand payment of all Loans then outstanding, in which event such Loans, together with all accrued but unpaid interest, shall be paid by the Borrowers no later than thirty (30) days after such demand.

 

Section 2.9     Interest; Fees. Interest Rate. Except as otherwise provided in clause (c) below, all Loans and the outstanding amount of all other Obligations shall bear interest, in the case of Loans, on the unpaid principal amount thereof from the date such Loans are made and, in the case of such other Obligations, from the date such other Obligations are due and payable until, in all cases, paid in full at a rate per annum equal to the sum of the LIBOR Rate plus 1.51% per annum.

 

(b)     Working Capital Fee. The Borrowers agree to pay to the Administrative Agent, for the ratable benefit of the Working Capital Lenders, a fee on the actual daily amount by which the Total Equipment Loans exceeds the sum of (i) the Net Equipment Loans plus (ii) all outstanding Working Capital Loans, measured from the date hereof through the Scheduled Termination Date at a rate per annum equal to 0.16%, payable in arrears (x) on the last day of each calendar month and (y) on the Scheduled Termination Date.

 

(c)     Payments. Interest accrued shall be payable in arrears jointly and severally by the Borrowers to the Administrative Agent (i) if accrued on the principal amount of any Loan, (A) at maturity (whether by acceleration or otherwise), and (B) within fifteen days after the date of any monthly invoice delivered by the Administrative Agent to the Borrower Representative setting forth the amount of interest due and payable, and (ii) if accrued on any other Obligation, on demand from any Lender after the time such Obligation is due and payable (whether by acceleration or otherwise). On the last day of each calendar month, the Administrative Agent shall pay to each Lender interest on the principal amount of the Loans and other Obligations owed to such Lender for the period of time for which such interest was paid by the Borrowers at a rate per annum equal to the sum of the LIBOR Rate plus 1.35%; provided, however, that in no event shall the amount due to any Lender exceed such Lender’s pro rata share (based upon the aggregate Credit Exposure of such Lender) of the interest received by the Administrative Agent from the Borrowers during such calendar month. The remaining interest shall be paid by the Administrative Agent to BHB for its own account on such Settlement Date, subject to the terms of any Assignment to which BHB is a party as an assignee Lender or assignor Lender.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

29

 

 

(d)     Delinquency Charges. To the extent any charge or amount is due hereunder, and are not paid within 10 days of its due date, the Borrowers shall pay to the Administrative Agent for the benefit of the Lenders a delinquency charge calculated thereon at the rate of 11⁄2% per month for the period of delinquency or, at the Administrative Agent’s option, 5% of such past due amounts, provided that such delinquency charge is not prohibited by law, otherwise at the highest rate the Borrowers can legally obligate themselves to pay and/or the Administrative Agent or Lenders can legally collect (provided such delinquency charges may not exceed those set out herein).

 

(e)     Savings Clause. Anything herein to the contrary notwithstanding, the obligations of the Borrowers hereunder shall be subject to the limitation that payments of interest shall not be required, for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by the respective Lender would be contrary to the provisions of any law applicable to such Lender limiting the highest rate of interest which may be lawfully contracted for, charged or received by such Lender, and in such event the Borrowers shall pay such Lender interest at the highest rate permitted by applicable law (“Maximum Lawful Rate”); provided, however, that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, the Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by the Administrative Agent, on behalf of Lenders, is equal to the total interest that would have been received had the interest payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Closing Date as otherwise provided in this Agreement. 

 

Section 2.10     Delayed Payment Privilege.

 

(a)     The Borrowers have requested the privilege of delaying payment of a Loan in the limited instances where Collateral is sold by a Borrower to a purchaser for whom both the Borrower Representative and the Administrative Agent have agreed to a delayed payment period (the “Delayed Payment Privilege”) and the portion of the purchase price for such Collateral (the “Collateral Amount Financed”) subject to such Delayed Payment Privilege. In no event shall the Collateral Amount Financed exceed $85,000,000 without the consent of the Required Lenders. Notwithstanding anything contained herein to the contrary, the Loan Parties acknowledge and agree that the Administrative Agent’s security interest in any and all vehicles sold to a customer subject to the Delayed Payment Privilege (the “Delayed Payment Privilege Collateral”), and in which event the full payment thereof by cash or on the basis of a properly perfected retail installment contract or other security agreement in favor of the Administrative Agent is not made contemporaneous with the delivery of such Collateral by the Borrowers, shall remain in full force and effect in such Delayed Payment Privilege Collateral and shall not be relinquished, extinguished, released or terminated as a consequence of such sale or delivery unless and until the payment is thereafter made directly to the Administrative Agent or jointly to the Borrowers and the Administrative Agent. Moreover, except as provided in this Section 2.10, Borrowers are expressly prohibited and shall not have any express, implied or apparent authority to sell, lease, transfer or otherwise dispose of any Delayed Payment Privilege Collateral. The terms of this Section 2.10 shall not be altered, modified, supplemented, qualified, waived or amended by reason of any agreement (unless in writing executed by the Borrowers and the Administrative Agent), or by the course of performance, course of dealing, or usage of trade by the Borrowers and the Administrative Agent or any of them. 

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

30

 

 

(b)     Reserved.

 

(c)     The Borrower Representative shall promptly, and in any event no less frequently than weekly, notify the Administrative Agent of each and every transaction in which the Borrower Representative has sold Collateral subject to a delayed payment period and, together with such notice shall provide information in reasonable detail on such Collateral, including the period of time for which the Delayed Payment Privilege is being requested. Such notification shall be made to the Administrative Agent in writing and on a form of the type and kind provided by the Administrative Agent from time to time (a “Delayed Payment Privilege Request”), duly completed. Upon receipt of a Delayed Payment Privilege Request from the Borrower Representative, the Administrative Agent shall notify the Borrower Representative within one Business Day if it does not consent to the grant of a Delayed Payment Privilege or needs additional information in order to evaluate the grant of a Delayed Payment Privilege. If Borrower Representative does not receive a response from the Administrative Agent to any Delayed Payment Privilege Request with respect to Collateral sold on delayed payment terms in the ordinary course of business within one Business Day of such request, then Administrative Agent shall be deemed to have consented to such request. 

 

(d)     The Administrative Agent’s consent to any request for disposition of Delayed Payment Privilege Collateral shall be in the Administrative Agent’s sole and exclusive discretion and further subject and contingent upon the following additional terms and conditions: 

 

(i)     The Administrative Agent may, in its sole and exclusive discretion limit the number of items of Collateral, amount outstanding and terms and conditions for which the Delayed Payment Privilege requested by the Borrower Representative is approved. 

 

(ii)     The Administrative Agent may, in its sole and exclusive discretion withdraw, cancel, or suspend the Delayed Payment Privilege at any time and for any reason upon a ten-day advance written notice and immediately if any Event of Default exists; provided, however, that such withdrawal, cancellation or suspension shall not affect the rights, interests and duties under this Agreement with respect to any Delayed Payment Privilege granted prior thereto. 

 

(e)     Reserved. 

 

(f)     Borrowers shall immediately pay Administrative Agent the Collateral Amount Financed upon the earliest of (i) demand by Administrative Agent; or (ii) receipt of the amount due from the disposition of each of the Delayed Payment Privilege Collateral; or (iii) the "Purchaser Payment Date" set forth on the applicable Delayed Payment Privilege Request; or (iv) with respect to any particular vehicle as to which the Borrowers have exercised the Deferred Payment Privilege, one hundred twenty (120) days after such vehicle was sold (unless the Required Lenders consent to an extension of such 120-day period).

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

31

 

 

(g)     Upon Administrative Agent’s request, Borrowers shall obtain from the person acquiring the Delayed Payment Privilege Collateral a duly authorized and executed acknowledgement from the Purchaser confirming that the terms of sale including the continuation of Administrative Agent's security interest in the Delayed Payment Privilege Collateral. The acknowledgement shall be in writing and on a form of the type and kind provided by Administrative Agent from time to time, which shall be delivered to Administrative Agent prior to any sale, transfer or delivery of any Delayed Payment Privilege Collateral to such person (the "Acknowledgement of Purchaser"). 

 

(h)     The grant and exercise of the Delayed Payment Privilege shall in no way extinguish, release or terminate Administrative Agent's security interest in the Delayed Payment Privilege Collateral unless and until the conditions described in the clauses (a) and (f) above and the aforesaid Acknowledgement of Purchaser are first fulfilled, which shall then and thereafter continue in the proceeds thereof. 

 

(i)     Administrative Agent shall have no duty or obligation to examine, review or consider the creditworthiness of any proposed or actual customer of Borrowers for which Borrowers seeks Administrative Agent's consent to the Delayed Payment Privilege and any such examination, review or consideration by Administrative Agent shall be for its sole and exclusive use and purposes. 

 

(j)     Borrowers' obligation to pay Administrative Agent for the Collateral Amount Financed shall be absolute, unconditional and primary, notwithstanding (a) Administrative Agent consenting to the Delayed Payment Privilege; or (b) default in the payment or acquisition terms by the customer of the Borrowers for Delayed Payment Privilege Collateral, or that of any of customer's surety, guarantor, co-obligor or lender; or (c) rejection or revocation of acceptance of any Delayed Payment Privilege Collateral by such customer; or (d) the acceptance by Administrative Agent of any assignment or proceeds from any Delayed Payment Privilege Collateral; provided, however, that nothing in this Section 2.10 is intended to permit payment to Administrative Agent of any more than the greater of (i) the Collateral Amounts Financed or (ii) the value of Administrative Agent's security interest in the Delayed Payment Privilege Collateral. For the avoidance of doubt, notwithstanding the fact that any Collateral is subject to the Delayed Payment Privilege, any Loans made to finance the purchase price of such Collateral subject to the Delayed Payment Privilege shall remain outstanding until paid in full in accordance with the terms hereof and such Loans shall be included, as applicable, in the calculation of the aggregate amount of Loans, New Equipment Loans and Used Equipment Loans outstanding and in the calculation of the Total Equipment Loans, Net Equipment Loans and Total Loans.

 

(k)     Upon demand by Administrative Agent, Borrowers shall provide Administrative Agent with an assignment of all right, title, and interest of the Borrowers in and to the accounts, contract rights, sale proceeds or any other interest Borrowers may then or thereafter have in the Delayed Payment Privilege Collateral. Said assignment shall be for the purpose of additional security only and shall be on a form of the type and kind provided by Administrative Agent from time to time. 

 

(l)     Administrative Agent may take such actions as it reasonably deems appropriate to assure and enforce compliance with this Agreement, including requesting, for audit purposes, verification from Borrowers' customers the fact of delivery, possession, and amount, date and circumstances of payment of any Delayed Payment Privilege Collateral, and the notification to appropriate persons of any security interest, assignment or other claim in the Delayed Payment Privilege Collateral of Administrative Agent.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

32

 

 

Section 2.11     Settlement Dates. On each Settlement Date, the Administrative Agent shall pay to all Lenders, in accordance with Section 2.12, their share of all principal repayments received by the Administrative Agent from the Borrowers since the prior Settlement Date (or with respect to the first Settlement Date following the Restatement Date, since the Restatement Date). On each Settlement Date, each Revolving Lender shall pay to the Administrative Agent, for the benefit of the Swingline Lender, its Pro Rata Share of the Revolving Loan to be made on such Settlement Date to refinance Swing Loans in accordance with Section 2.3. The Administrative Agent shall be entitled to offset such fundings and fund or receive payment on a net basis. 

 

Section 2.12     Application of Payments. 

 

(a)     Application of Payments During an Event of Default. Each of the Borrowers hereby irrevocably waives, and agrees to cause each Loan Party and each other Group Member to waive, the right to direct the application during the continuance of an Event of Default of any and all payments in respect of any Obligation and any proceeds of Collateral and agrees that the Administrative Agent may apply all payments in respect of any Obligation and all proceeds of Collateral to the Obligations in accordance with this Section 2.12 or as otherwise directed by the Administrative Agent and all Lenders. Without limiting the foregoing, if an Event of Default has occurred and is continuing, the Administrative Agent may, and, upon the direction of the Required Lenders, the Required Revolving A Lenders or the Required Revolving B Lenders, or upon the acceleration of any Obligation pursuant to Section 9.2, the Administrative Agent shall, apply all payments in respect of any Obligation and all proceeds of Collateral (i) first, to pay Obligations in respect of any cost or expense reimbursements, fees or indemnities then due to the Administrative Agent, (ii) second, to pay Obligations in respect of any cost or expense reimbursements, fees or indemnities then due to the Lenders, (iii) third, to pay interest then due and payable in respect of the Loans, (iv) fourth, to repay the outstanding principal amounts of the Loans and (v) fifth, to the ratable payment of all other Obligations. If sufficient amounts are not available to repay all outstanding Obligations described in any priority level set forth in this Section 2.12(a), the available amounts shall be applied, unless otherwise expressly specified herein, to such Obligations in the applicable priority level ratably based on the proportion of the Secured Parties’ interest in such Obligations. Any priority level set forth in this Section 2.12 that includes interest shall include all such interest, whether or not accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding.

 

(b)     Application of Payments under Sections 2.6(b), 2.6(c), 2.8(b) and 2.8(c). All repayments of the Obligations made by the Borrowers pursuant to Section 2.6(b), Section 2.6(c), Section 2.8(b) or Section 2.8(c) shall be allocated (i) first, to pay the outstanding principal amount of the Swing Loans, (ii) second, to pay the outstanding principal amount of the Revolving B Loans in proportion to each Revolving B Lender’s Pro Rata Share (based on its Commitments B), subject to Section 2.13(e), and (iii) third, to pay the outstanding principal amount of the Revolving A Loans in proportion to each Revolving A Lender’s Pro Rata Share (based on its Commitments A), subject to Section 2.13(e). If sufficient amounts are not available to repay all outstanding Obligations described in any priority level set forth in this Section 2.12(b), the available amounts shall be applied, unless otherwise expressly specified herein, to such Obligations in the applicable priority level ratably based on the proportion of the Secured Parties’ interest in such Obligations. Any priority level set forth in this Section 2.12 that includes interest shall include all such interest, whether or not accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding. 

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

33

 

 

(c)     Application of Voluntary Partial Prepayments under Section 2.7. All voluntary partial prepayments of the Obligations made by the Borrowers pursuant to Section 2.7 shall be allocated (i) first, to pay the outstanding principal amount of the Working Capital Loans, (ii) second, to pay the outstanding principal amount of the Swing Loans (which shall be deemed to reduce the interests of the Working Capital Lenders therein but not the interests of any other Lenders), (iii) third, to pay the outstanding principal amount of Revolving B Loans made by the Working Capital Lenders (but not any other Lenders), and (iv) fourth, to pay the outstanding principal amount of Revolving A Loans made by the Working Capital Lenders (but not any other Lenders). If sufficient amounts are not available to repay all outstanding Obligations described in any priority level set forth in this Section 2.12(c), the available amounts shall be applied, unless otherwise expressly specified herein, to such Obligations ratably based on the proportion of the Secured Parties’ interest in such Obligations. Any priority level set forth in this Section 2.12(c) that includes interest shall include all such interest, whether or not accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding.

 

(d)     Application of Payments Generally. Subject to Section 2.12(a), Section 2.12(b) and Section 2.12(c), all payments that would otherwise be allocated to the Lenders pursuant to this Section 2.12 shall be allocated (i) first, to pay Obligations in respect of any cost or expense reimbursements, fees or indemnities then due to the Administrative Agent, (ii) second, to pay accrued and unpaid interest and fees due and payable to the Lenders, (iii) third, to pay the outstanding principal amount of Swing Loans, (iv) fourth, to pay the outstanding principal amount of Revolving B Loans allocated ratably based on each Revolving B Lender’s Pro Rata Share, (v) fifth, to pay the outstanding principal amount of Revolving A Loans allocated ratably based on each Revolving A Lender’s Pro Rata Share, (vi) sixth, to pay the outstanding principal amount of Working Capital Loans allocated as the Administrative Agent shall determine and (vii) seventh, to pay any other Obligations then due and payable. If sufficient amounts are not available to repay all outstanding Obligations described in any priority level set forth in this Section 2.12, the available amounts shall be applied, unless otherwise expressly specified herein, to such Obligations ratably based on the proportion of the Secured Parties’ interest in such Obligations. Any priority level set forth in this Section 2.12 that includes interest shall include all such interest, whether or not accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding. 

 

Section 2.13     Payments and Computations. (a) Procedure. The Borrowers shall make each payment under any Loan Document not later than 11:00 a.m. on the day when due to the Administrative Agent by wire transfer or ACH transfer (which shall be the exclusive means of payment hereunder) to such account or by such other means to such other address as the Administrative Agent shall have notified the Borrower Representative in writing within a reasonable time prior to such payment in immediately available Dollars and without setoff or counterclaim.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

34

 

 

(b)     Computations of Interests and Fees. All computations of interest and of fees shall be made by the Administrative Agent on the basis of a year of 360 days consisting of 12 30-day months (including the first day but excluding the last day) occurring in the period for which such interest and fees are payable. Each determination of an interest rate or the amount of a fee hereunder shall be made by the Administrative Agent (including determinations of a LIBOR Rate in accordance with the definitions of “LIBOR Rate”) and shall be conclusive, binding and final for all purposes, absent manifest error.

 

(c)     Payment Dates. Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, the due date for such payment shall be extended to the next succeeding Business Day without any increase in such payment as a result of additional interest or fees; provided, however, that such interest and fees shall continue accruing as a result of such extension of time.

 

(d)     Advancing Payments. Unless the Administrative Agent shall have received notice from the Borrower Representative to the Lenders prior to the date on which any payment is due hereunder that the Borrowers will not make such payment in full, the Administrative Agent may assume that the Borrowers have made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrowers shall not have made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent on demand such amount distributed to such Lender together with interest thereon (at the Federal Funds Rate for the first Business Day and thereafter, at the rate applicable to the Loans) for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent. The Lenders shall make any payment under any Loan Document in immediately available Dollars and without setoff or counterclaim. 

 

(e)     Non-Pro Rata Payments. Notwithstanding anything contained in this Agreement to the contrary, to the extent that (x) the outstanding Revolving A Loans are not held ratably among the Revolving A Lenders and the payments to be allocated to any Revolving A Lender under this Agreement exceed its outstanding Revolving A Loans or (y) the outstanding Revolving B Loans are not held ratably among the Revolving B Lenders and the payments to be allocated to any Revolving B Lender under this Agreement exceed its outstanding Revolving B Loans, such excess payments shall be applied first to any outstanding Working Capital Loans of such Lender (whether outstanding under Commitments A or Commitments B), and then refunded to the Borrowers in the form of a Working Capital Loan; provided, however, that for purposes of calculating Total Equipment Loans, the entire payment amount (including any portion that is retained by or returned to the Borrowers) shall be deemed to have been paid and shall reduce Total Equipment Loans. 

 

(f)     Non-Pro Rata Funding of Loans. To the extent that the outstanding Revolving A Loans are not held ratably among the Revolving A Lenders and there is insufficient availability under the Commitment A of any Revolving A Lender to fund its Pro Rata Share of any requested new Borrowing of Revolving A Loans, such Revolving A Lender shall fund a portion of such Borrowing equal to the unfunded amount of its Commitment A, and the remaining portion of such Borrowing shall be funded ratably by the remaining Revolving A Lenders. To the extent that the outstanding Revolving B Loans are not held ratably among the Revolving B Lenders and there is insufficient availability under the Commitment B of any Revolving B Lender to fund its Pro Rata Share of any requested new Borrowing of Revolving B Loans, such Revolving B Lender shall fund a portion of such Borrowing equal to the unfunded amount of its Commitment B, and the remaining portion of such Borrowing shall be funded ratably by the remaining Revolving B Lenders. 

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

35

 

 

(g)     Allocation of Payments to New Equipment Loans and Used Equipment Loans. The Administrative Agent may maintain books and records associating each New Equipment Loan and each Used Equipment Loan with specific items of Inventory. The principal amount of each New Equipment Loan shall be deemed reduced by each New Equipment Loan Curtailment Payment associated with such New Equipment Loan and each repayment thereof required under Section 2.8(b), regardless of how such payments are allocated pursuant to Section 2.12. The principal amount of each Used Equipment Loan shall be deemed reduced by each Used Equipment Loan Curtailment Payment associated with such Used Equipment Loan and each repayment thereof required under Section 2.8(b), regardless of how such payments are allocated pursuant to Section 2.12. None of the New Equipment Loans or Used Equipment Loans will be deemed to be reduced as a result of any prepayments made pursuant to Section 2.7.

 

Section 2.14     Evidence of Debt. (a) Records of Lenders. Each Lender shall maintain in accordance with its usual practice accounts evidencing Indebtedness of the Borrowers to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. In addition, each Lender having sold a participation in any of its Obligations to the Administrative Agent, acting as agent of the Borrowers solely for this purpose and solely for tax purposes, shall establish and maintain at its address referred to in Section 11.11 (or at such other address as such Lender shall notify the Borrower Representative) a record of ownership (the “Participant Register”), in which such Lender shall register by book entry (A) the name and address of each such participant (and each change thereto, whether by assignment or otherwise) and (B) the rights, interest or obligation of each such participant in any Obligation, in any Commitment and in any right to receive any payment hereunder.

 

(b)     Records of Administrative Agent. The Administrative Agent, acting as agent of the Borrowers solely for tax purposes and solely with respect to the actions described in this Section 2.14, shall establish and maintain at its address referred to in Section 11.11 (or at such other address as the Administrative Agent may notify the Borrower Representative) (A) a record of ownership (the “Register”) in which the Administrative Agent agrees to register by book entry the interests (including any rights to receive payment hereunder) of the Administrative Agent and each Lender, their Commitments, their Loans, each of their obligations under this Agreement to participate in each Loan, and any assignment of any such interest, obligation or right and (B) accounts in the Register in accordance with its usual practice in which it shall record (1) the names and addresses of the Lenders (and each change thereto pursuant to Section 2.18 (Substitution of Lenders) and Section 11.2 (Assignments and Participations; Binding Effect)), (2) the Commitments of each Lender, (3) the amount of each Loan and each funding of any participation described in clause (a) above, (4) the amount of any principal or interest due and payable or paid and (5) any other payment received by the Administrative Agent from the Borrowers and its application to the Obligations.

 

(c)     Registered Obligations. Notwithstanding anything to the contrary contained in this Agreement, the Loans are registered obligations, the right, title and interest of the Lenders and their assignees in and to such Loans shall be transferable only upon notation of such transfer in the Register and no assignment thereof shall be effective until recorded therein. This Section 2.14 and Section 11.2 shall be construed so that the Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations (and any successor provisions).

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

36

 

 

(d)     Prima Facie Evidence. The entries made in the Register and in the accounts maintained pursuant to clauses (a) and (b) above shall, to the extent permitted by applicable Requirements of Law, be prima facie evidence of the existence and amounts of the obligations recorded therein; provided, however, that no error in such account and no failure of any Lender or the Administrative Agent to maintain any such account shall affect the obligations of any Loan Party to repay the Loans in accordance with their terms. In addition, the Loan Parties, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender for all purposes of this Agreement. Information contained in the Register and the Participant Register with respect to any Lender or any participant shall be available for access by the Borrowers, the Administrative Agent and such Lender at any reasonable time during normal business hours and from time to time upon reasonable prior notice of at least three Business Days. No Lender shall, in such capacity, have access to or be otherwise permitted to review any information in the Register other than information with respect to such Lender unless otherwise agreed by the Administrative Agent. 

 

(e)     Notes. Upon any Lender’s reasonable request, the Borrowers shall promptly execute and deliver notes to such Lender evidencing the Loans of such Lender. Each note, if issued, shall only be issued as means to evidence the right, title or interest of a Lender or a registered assignee in and to the related Loan, as set forth in the Register, and in no event shall any note be considered a bearer instrument or obligation.

 

Section 2.15     Suspension of LIBOR Rate Option. Notwithstanding any provision to the contrary in this Article 2, the following shall apply:

 

(a)     Interest Rate Unascertainable, Inadequate or Unfair. In the event that the Administrative Agent determines that adequate and fair means do not exist for ascertaining the applicable interest rates by reference to which the LIBOR Rate is determined, the Administrative Agent shall promptly so notify the Borrower Representative and the Lenders, whereupon the obligation of each Lender to make or to continue LIBOR Rate Loans shall be suspended as provided in clause (c) below until the Administrative Agent shall notify the Borrower Representative that the Required Lenders have determined that the circumstances causing such suspension no longer exist.

 

(b)     Illegality. If any Lender determines that the introduction of, or any change in or in the interpretation of, any Requirement of Law after the date of this Agreement shall make it unlawful, or any Governmental Authority shall assert that it is unlawful, for any Lender or its applicable lending office to make LIBOR Rate Loans or to continue to fund or maintain LIBOR Rate Loans, then, on notice thereof and demand therefor by such Lender to the Borrower Representative through the Administrative Agent, the obligation of such Lender to make or to continue LIBOR Rate Loans shall be suspended as provided in clause (c) below until such Lender shall, through the Administrative Agent, notify the Borrower Representative that it has determined that it may lawfully make LIBOR Rate Loans.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

37

 

 

(c)     Effect of Suspension. If the obligation of any Lender to make LIBOR Rate Loans is suspended, (A) such Lender shall make a Base Rate Loan at any time such Lender would otherwise be obligated to make a LIBOR Rate Loan, (B) the Borrower Representative may revoke any pending request for a LIBOR Rate Loan and (C) each LIBOR Rate Loan of such Lender shall automatically and immediately (or, in the case of any suspension pursuant to clause (a) above, on the last day of the current calendar month) be converted into a Base Rate Loan. For purposes of this Section 2.15(c) and Section 2.16, a “Base Rate Loan” means any Loan that bears interest based on the Base Rate, and “Base Rate” means, for any day, the sum of a rate per annum equal to the higher of (a) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent) and (b) the sum of 1.85% per annum and the Federal Funds Rate. Any change in the Base Rate due to a change in any of the foregoing shall be effective on the effective date of such change in the “Prime Rate”, “bank prime loan” rate or the Federal Funds Rate.

 

Section 2.16     Breakage Costs. The Borrowers shall compensate each Lender, upon demand from such Lender to the Borrower Representative (with copy to the Administrative Agent), for all Liabilities (including, in each case, those incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to prepare to fund, to fund or to maintain the LIBOR Rate Loans of such Lender to the Borrowers) that such Lender may incur (A) to the extent, for any reason other than solely by reason of such Lender being a Non-Funding Lender, a proposed Borrowing does not occur on a date specified therefor in a Request for Equipment Loan Borrowing or a Request for Working Capital Borrowing or in a similar request made by telephone by the Borrower Representative, (B) to the extent any LIBOR Rate Loan is paid (whether through a scheduled payment, optional prepayment or mandatory repayment) or converted to a Base Rate Loan (but excluding because of Section 2.15) on a date that is not the last day of the applicable calendar month or (C) as a consequence of any failure by the Borrowers to repay LIBOR Rate Loans when required by the terms hereof. For purposes of this Section 2.16, each Lender shall be deemed to have funded each LIBOR Rate Loan made by it using a matching deposit or other borrowing in the London interbank market. Each demand for compensation under this Section 2.16 shall be accompanied by a certificate of the Lender claiming such compensation, setting forth the amounts to be paid hereunder, which certificate shall be conclusive, binding and final for all purposes, absent manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods.

 

Section 2.17     Taxes. (a) Payments Free and Clear of Taxes. Except as otherwise provided in this Section 2.17, each payment by any Loan Party under any Loan Document shall be made free and clear of all present or future taxes, levies, imposts, deductions, charges or withholdings and all liabilities with respect thereto (and without deduction for any of them) (collectively, but excluding the taxes set forth in clauses (i), (ii) and (iii) below, the “Taxes”) other than for (i) taxes measured by net income (including branch profits taxes) and overall receipts, total capital or franchise taxes imposed in lieu of net income taxes, in each case imposed on any Secured Party as a result of a present or former connection between such Secured Party and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than such connection arising solely from any Secured Party having executed, delivered or performed its obligations or received a payment under, or enforced, any Loan Document), (ii) taxes that are directly attributable to the failure (other than as a result of a change in any Requirement of Law in effect as of the date such Secured Party becomes a party to this Agreement) by any Secured Party to deliver the forms, certificates or other documentation required to be delivered pursuant to clause (e) below or (iii) taxes imposed by FATCA on any payment under a Loan Document to a Secured Party.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

38

 

 

(b)     Gross-Up. Except as provided in this Section 2.17(b), if any Taxes shall be required by law to be deducted from or in respect of any amount payable under any Loan Document to any Secured Party (i) such amount shall be increased as necessary to ensure that, after all required deductions for Taxes are made (including deductions applicable to any increases to any amount under this Section 2.17), such Secured Party receives the amount it would have received had no such deductions been made, (ii) the relevant Loan Party shall make such deductions, (iii) the relevant Loan Party shall timely pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable Requirements of Law and (iv) within 30 days after such payment is made, the relevant Loan Party shall deliver to the Administrative Agent an original or certified copy of a receipt evidencing such payment; provided, however, that no such increase shall be made with respect to, and no Loan Party shall be required to indemnify any such Secured Party pursuant to clause (d) below for, withholding taxes to the extent that the obligation to withhold amounts existed on the date that such Secured Party became a “Secured Party” under this Agreement in the capacity under which such Secured Party makes a claim under this clause (b), except in each case to the extent such Secured Party is a direct or indirect assignee (other than pursuant to Section 2.18 (Substitution of Lenders)) of any other Secured Party that was entitled, at the time the assignment of such other Secured Party became effective, to receive additional amounts under this clause (b).

 

(c)     Other Taxes. In addition, the Borrowers agree to pay, and authorize the Administrative Agent to pay in their names, any stamp, documentary, excise or property tax, charges or similar levies imposed by any applicable Requirement of Law or Governmental Authority and all Liabilities with respect thereto (including by reason of any delay in payment thereof), in each case arising from the execution, delivery or registration of, or otherwise with respect to, any Loan Document or any transaction contemplated therein (collectively, “Other Taxes”). Within 30 days after the date of any payment of Taxes or Other Taxes by any Loan Party, the Borrowers shall furnish to the Administrative Agent, at its address referred to in Section 11.11, the original or a certified copy of a receipt evidencing payment thereof.

 

(d)      Indemnification. Except as provided in Section 2.17(b), the Borrowers shall reimburse and indemnify, within 30 days after receipt of demand therefor (with copy to the Administrative Agent), each Secured Party for all Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.17) paid by such Secured Party and any Liabilities arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Each Secured Party agrees to use commercially reasonable efforts to make any claim for payment to which it is entitled under this Section 2.17(d) within a reasonable period of time after becoming aware of its entitlement thereto. A certificate of the Secured Party (or of the Administrative Agent on behalf of such Secured Party) claiming any compensation under this clause (d), setting forth the amounts to be paid thereunder and delivered to the Borrowers with copy to the Administrative Agent, shall be conclusive, binding and final for all purposes, absent manifest error. In determining such amount, the Administrative Agent and such Secured Party may use any reasonable averaging and attribution methods.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

39

 

 

(e)     Tax Forms. 

 

(i)     Each Lender shall (A) on the Restatement Date and on or prior to becoming a Secured Party, (B) on or prior to the date on which any such form or certification expires or becomes obsolete, (C) after the occurrence of any event requiring a change in the most recent form or certification previously delivered by it pursuant to this clause (e) and (D) from time to time if requested by the Borrower Representative or the Administrative Agent (or, in the case of a participant, the relevant Lender), provide the Administrative Agent and the Borrower Representative (or, in the case of a participant, the relevant Lender) with two completed originals of Form W-9 (certifying that such Lender is entitled to an exemption from U.S. backup withholding tax) or any successor form.

 

(ii)     Each Lender having sold a participation in any of its Obligations to the Administrative Agent shall collect from such participant the documents described in this clause (e) and provide them to the Administrative Agent.

 

(f)     If any Secured Party determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which any Loan Party has paid additional amounts pursuant to this Section 2.17, such Secured Party shall pay to the Borrowers an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by any Loan Party under this Section 2.17 with respect to such Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Secured Party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that, the Borrowers, upon the request of such Secured Party, shall repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Secured Party in the event the Secured Party is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require any Secured Party to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrowers or any other person.

 

Section 2.18     Substitution of Lenders. (a) Substitution Right. In the event that any Lender (an “Affected Lender”), (i) notifies the Borrower Representative pursuant to Section 2.15(b) (Illegality) that it becomes illegal for such Lender to continue to fund or make any LIBOR Rate Loan, (ii) makes a claim for payment pursuant to Section 2.17(b) (Taxes - Gross Up) or (iii) does not consent to any amendment, waiver or consent to any Loan Document for which the consent of the Required Lenders is obtained but that requires the consent of such Lender, the Borrowers may either pay in full such Affected Lender with respect to amounts due with the consent of the Administrative Agent or substitute for such Affected Lender any Lender or any Affiliate or Approved Fund of any Lender or any other Person acceptable (which acceptance shall not be unreasonably withheld or delayed) to the Administrative Agent (in each case, a “Substitute Lender”). Notwithstanding anything herein to the contrary, with respect to a Lender that is a Non-Funding Lender, the Administrative Agent may, but shall not be obligated to, obtain a Substitute Lender and execute an Assignment on behalf of such Non-Funding Lender at any time with three Business Days’ prior notice to such Non-Funding Lender (unless notice is not practicable under the circumstances) and cause such Lender’s Loans and Commitments to be sold and assigned, in whole or in part, at par.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

40

 

 

(b)     Procedure. To substitute such Affected Lender or pay in full the Obligations owed to such Affected Lender as described in the first sentence of clause (a) above, the Borrower Representative shall deliver a notice to the Administrative Agent and such Affected Lender. The effectiveness of such payment or substitution shall be subject to the delivery to the Administrative Agent by the Borrowers (or, as may be applicable in the case of a substitution, by the Substitute Lender) of (i) payment for the account of such Affected Lender, of, to the extent accrued through, and outstanding on, the effective date for such payment or substitution, all Obligations owing to such Affected Lender, (ii) in the case of a payment in full of the Obligations owing to such Affected Lender, payment of any amount that, after giving effect to the termination of the Commitment of such Affected Lender, is required to be paid pursuant to Section 2.8(a) (Excess Outstandings) and (iii) in the case of a substitution, (A) payment of the assignment fee set forth in Section 11.2(c) and (B) an assumption agreement in form and substance satisfactory to the Administrative Agent whereby the Substitute Lender shall, among other things, agree to be bound by the terms of the Loan Documents and assume the Commitment of the Affected Lender.

 

(c)     Effectiveness. Upon satisfaction of the conditions set forth in clause (b) above or in the case of a substitution of a Non-Funding Lender as described in the last sentence of clause (a) above, the Administrative Agent shall record such substitution or payment in the Register, whereupon (i) in the case of any payment in full, such Affected Lender’s Commitments shall be terminated and (ii) in the case of any substitution, (A) the Affected Lender shall sell and be relieved of, and the Substitute Lender shall purchase and assume, all rights and claims of such Affected Lender under the Loan Documents, except that the Affected Lender shall retain such rights expressly providing that they survive the repayment of the Obligations and the termination of the Commitments, (B) the Substitute Lender shall become a “Lender” hereunder having a Commitment in the amount of such Affected Lender’s Commitment and (C) the Affected Lender shall execute and deliver to the Administrative Agent an Assignment to evidence such substitution; provided, however, that the failure of any Affected Lender to execute any such Assignment shall not render such sale and purchase (or the corresponding assignment) invalid. Each Lender agrees that if the Borrower Representative or the Administrative Agent exercises its option hereunder to cause an assignment by such Lender as an Affected Lender, such Lender shall, promptly after receipt of written notice of such election, execute and deliver all documentation necessary to effectuate such assignment in accordance with Section 11.2. In the event that a Lender does not comply with the requirements of the immediately preceding sentence within one Business Day after receipt of such notice, each Lender hereby authorizes and directs the Administrative Agent to execute and deliver, on behalf of such Lender as assignor, any assignment agreement or other documentation as may be required to give effect to an assignment in accordance with Section 11.2 on behalf of an Affected Lender and any such documentation so executed by the Administrative Agent shall be effective for purposes of documenting an assignment pursuant to Section 11.2.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

41

 

 

ARTICLE 3
Security INTEREST

 

To secure payment of all Obligations, Holdings and each Borrower grants to the Administrative Agent, for the benefit of the holders of the Obligations, a security interest in (i) all present and future Inventory of Holdings or such Borrower, together with all attachments, accessories, exchanges and additions to (including replacement parts installed in or repairs to) any such Inventory, and all chattel paper, documents, certificates of title, certificates of origin, general intangibles, instruments, accounts and contract rights now existing or hereafter arising with respect thereto, (ii) all Parts Inventory, (iii) all Company Vehicles, and (iv) all cash and non-cash proceeds of any of the foregoing (collectively, the “Collateral”). Each Borrower agrees that at any time and from time to time, upon the request of Administrative Agent, Borrowers will promptly (i) deliver to Administrative Agent all Collateral other than Inventory, Parts Inventory and Company Vehicles, (ii) mark all chattel paper, documents and instruments and Borrowers’ books of account, ledger cards and other records relative to the Collateral with a notation reasonably satisfactory to Administrative Agent disclosing that they are subject to Administrative Agent’s security interest, (iii) execute and deliver to Administrative Agent such instruments, statements and agreements as Administrative Agent may reasonably request to evidence further each Loan and the security interests granted hereunder; provided, however, a Borrower’s failure to comply with such request shall not affect or limit Administrative Agent’s security interest or other rights in and to the Collateral, and (iv) permit Administrative Agent or its representatives to examine the Collateral and Borrowers’ books and records and, during the continuation of an Event of Default, Borrowers agree to pay to Administrative Agent its actual costs relating to such examinations immediately upon receipt of Administrative Agent’s invoice therefor. Borrowers agree that Administrative Agent may directly collect any amount owed to Borrowers with respect to the Collateral (hereafter referred to as an "Account") and credit Borrowers with all sums received by Administrative Agent. With the consent of the Borrower Representative, not to be unreasonably withheld or delayed, or at any time that an Event of Default has occurred and is continuing, Administrative Agent may contact any customer of any Borrower to confirm and verify the terms of sale, payments made on an Account, and any modifications claimed to be made by the Borrowers with such customer of Borrower. If an Event of Default has occurred and is continuing, Borrowers agree that Administrative Agent may at any time notify any customer of any Borrower of the assignment of said Account and revoke the authority of the Borrowers to collect the same and should the Administrative Agent at any time receive any checks, drafts, money orders or other instruments or orders for money payable to a Borrower to apply to an Account, Administrative Agent is irrevocably appointed attorney-in-fact for each such Borrower to endorse each such instrument with the name of the applicable Borrower and collect the same. Without limiting the foregoing, (i) concurrently with the entry of any Borrower into a security agreement, mortgage or other document pursuant to which such Borrower purports to grant a Lien in any personal property to secure the obligations under any Formula Revolver Loan Documents, the Borrower shall enter into a corresponding agreement granting a Lien in such personal property to secure the Obligations, and (ii) as security for the full and timely payment and performance of all Obligations, Borrower Representative shall, and shall cause each other Borrower to do or cause to be done all things necessary in the reasonable opinion of the Administrative Agent to grant to the Administrative Agent for the benefit of the Secured Parties a duly perfected first priority security interest in all Collateral subject to no prior Lien or other encumbrance or restriction on transfer, except as expressly permitted under Section 8.1.

 

ARTICLE 4
Representations and Warranties

 

To induce the Lenders and the Administrative Agent to enter into the Loan Documents, each Loan Party represents and warrants that: 

 

Section 4.1     Corporate Existence; Compliance with Law; Line of Business. Each Group Member (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) is duly qualified to do business as a foreign entity and in good standing under the laws of each jurisdiction where such qualification is necessary, except where the failure to be so qualified or in good standing would not, in the aggregate, have a Material Adverse Effect, (c) has all requisite corporate or limited partnership power, as applicable, and authority and the legal right to own, pledge, mortgage and operate its property, to lease or sublease any property it operates under lease or sublease and to conduct its business as now or currently proposed to be conducted, (d) is in compliance in all material respects with its Constituent Documents, (e) is in compliance with all applicable Requirements of Law, except where the failure to be in compliance would not have a Material Adverse Effect and (f) has all necessary Permits from or by, has made all necessary filings with, and has given all necessary notices to, each Governmental Authority having jurisdiction, to the extent required for such ownership, lease, sublease, operation, occupation or conduct of business, except where the failure to obtain such Permits, make such filings or give such notices would not, in the aggregate, have a Material Adverse Effect. The Borrowers are engaged in the business of selling Inventory at retail.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

42

 

 

Section 4.2     Loan. (a) Power and Authority. The execution, delivery and performance by each Loan Party of the Loan Documents (i) are within such Loan Party’s corporate or similar powers and, at the time of execution thereof, have been duly authorized by all necessary corporate and similar action (including, if applicable, consent of holders of its Securities), (ii) do not (A) contravene such Loan Party’s Constituent Documents, (B) violate any applicable Requirement of Law, (C) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material Contractual Obligation of any Loan Party or any of its Subsidiaries (including other Loan Documents) other than those that would not, in the aggregate, have a Material Adverse Effect or (D) result in the imposition of any Lien (other than a Lien securing the Obligations) upon any property of any Loan Party or any of its Subsidiaries and (iii) do not require any Permit of, or filing with, any Governmental Authority or any consent of, or notice to, any Person, other than (A) with respect to the Loan Documents, the filings and, in the case of Company Vehicles, compliance with applicable certificate-of-title Laws, required to perfect the Liens created by the Loan Documents, and (B) those listed on Schedule 4.2 and that have been, or will be prior to the Restatement Date, obtained or made, copies of which have been, or will be prior to the Restatement Date, delivered to the Administrative Agent, and each of which on the Restatement Date will be in full force and effect.

 

(b)     Due Execution and Delivery. From and after its delivery to the Administrative Agent, each Loan Document has been duly executed and delivered to the other parties thereto by each Loan Party party thereto, is the legal, valid and binding obligation of such Loan Party and is enforceable against such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.

 

Section 4.3     Ownership of Group Members. Set forth on Schedule 4.3 is a complete and accurate list showing, as of the Restatement Date, for each Group Member and each Subsidiary of any Group Member and each joint venture of any of them, its legal name, its jurisdiction of organization and the percentage of its Voting Stock owned by Holdings and each other Subsidiary, and for each joint venture, the nature of the application.

 

Section 4.4     Financial Statements. Each of (i) the audited Consolidated balance sheet of Holdings as at December 31, 2015 and the related Consolidated statements of income, retained earnings and cash flows of Holdings for the Fiscal Year then ended, certified by Group Members’ Accountants, and (ii) subject to the absence of footnote disclosure and normal recurring year-end audit adjustments, the unaudited Consolidated balance sheets of Holdings as at March 31, 2016 and the related Consolidated statements of income, retained earnings and cash flows of Holdings for the three months then ended, copies of each of which have been furnished to the Administrative Agent, fairly present in all material respects the Consolidated financial position, results of operations and cash flow of Holdings as at the dates indicated and for the periods indicated in accordance with GAAP.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

43

 

 

Section 4.5     Material Adverse Effect. Since December 31, 2015, there have been no events, circumstances, developments or other changes in facts that would, in the aggregate, have a Material Adverse Effect.

 

Section 4.6     Solvency. Giving effect to the contribution rights of the Loan Parties contained in Section 12.7 and the limitation in Section 12.6(b), both before and after giving effect to (a) the Loans made on or prior to the date this representation and warranty is made, (b) the disbursement of the proceeds of such Loans, and (c) the payment and accrual of all transaction costs in connection with the foregoing, both the Loan Parties taken as a whole and each Borrower are Solvent.

 

Section 4.7     Litigation. There are no pending (or, to the knowledge of any Group Member, threatened) actions, suits, proceedings, claims, demands, orders or disputes, or to the knowledge of any Group Member, any pending or threatened investigation or audit, against any Borrower or any of its Subsidiaries with, by or before any Governmental Authority other than those that cannot reasonably be expected to adversely affect the Obligations, the Loan Documents and the other transactions contemplated therein and would not, in the aggregate, have a Material Adverse Effect.

 

Section 4.8     Taxes. All federal, state, local and foreign income and franchise and other material tax returns, reports and statements (collectively, the “Tax Returns”) required to be filed by any Tax Affiliate have been filed with the appropriate Governmental Authorities in all jurisdictions in which such Tax Returns are required to be filed, all such Tax Returns are true and correct in all material respects, and all taxes, charges and other impositions reflected therein or otherwise due and payable have been paid prior to the date on which any Liability may be added thereto for non-payment thereof except for those contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Tax Affiliate in accordance with GAAP. 

 

Section 4.9     Margin Regulations. No Borrower is engaged in the business of extending credit for the purpose of, and no proceeds of any Loan or other extensions of credit hereunder will be used for the purpose of, buying or carrying margin stock (within the meaning of Regulation U of the Federal Reserve Board) or extending credit to others for the purpose of purchasing or carrying any such margin stock, in each case in contravention of Regulation T, U or X of the Federal Reserve Board.

 

Section 4.10    No Burdensome Obligations; No Defaults. No Group Member is a party to any Contractual Obligation, no Group Member has Constituent Documents containing obligations, and, to the knowledge of any Group Member, there are no applicable Requirements of Law, in each case the compliance with which would have, in the aggregate, a Material Adverse Effect. No Group Member (and, to the knowledge of each Group Member, no other party thereto) is in default under or with respect to any Contractual Obligation of any Group Member, other than those that would not, in the aggregate, have a Material Adverse Effect.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

44

 

 

Section 4.11     Investment Company Act; Public Utility Holding Company Act. No Group Member is (a) an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940 or (b) a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company”, as each such term is defined and used in the Public Utility Holding Company Act of 2005.

 

Section 4.12     Full Disclosure. All of the information prepared or furnished by or on behalf of the Group Members in connection with any Loan Document (including the information contained in any Financial Statement or Disclosure Document) or any other transaction contemplated therein, when read together, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances when made, not misleading; provided, however, that projections contained therein are not to be viewed as factual and that actual results during the periods covered thereby may differ from the results set forth in such projections by a material amount. All projections that are part of such information are based upon good faith estimates and stated assumptions believed to be reasonable and fair as of the date made in light of conditions and facts then known and, as of such date, reflect good faith, reasonable and fair estimates of the information projected for the periods set forth therein. All facts (other than facts of a general economic or political nature) known to any Group Member and material to an understanding of the financial condition, business, property or prospects of the Group Member taken as one enterprise have been disclosed to the Lenders.

 

Section 4.13     Patriot Act. No Group Member (and, to the knowledge of each Group Member, no joint venture or subsidiary thereof) is in violation in any material respects of any United States Requirements of Law relating to terrorism, sanctions or money laundering (the “Anti-Terrorism Laws”), including the United States Executive Order No. 13224 on Terrorist Financing (the “Anti-Terrorism Order”) and the Patriot Act.

 

Section 4.14     Collateral. The Collateral is free from all Liens other than those Liens specifically permitted under Section 8.1. Except as herein specifically permitted, no financing statement covering the Collateral is now on file in favor of anyone other than the Administrative Agent. The Collateral is not used by any Group Member for personal, family or household purposes.

 

Section 4.15     EEA Financial Institutions. No Borrower or Guarantor is an EEA Financial Institution. 

 

 

 

ARTICLE 5
Financial Covenants

 

Each of Holdings and each Borrower agrees that as long as any Obligation (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted) or any Commitment remains outstanding:

 

Section 5.1     Maximum Consolidated Leverage Ratio. Holdings shall not have, on the last day of each Fiscal Quarter, a Consolidated Leverage Ratio greater than 3.50 to 1.00.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

45

 

 

Section 5.2     Minimum Consolidated Fixed Charge Coverage Ratio. Holdings shall not have, on the last day of each Fiscal Quarter, a Consolidated Fixed Charge Coverage Ratio for the four Fiscal Quarter period ending on such day less than 1.20:1.00.

 

Section 5.3     Minimum Consolidated Tangible Net Worth. Holdings shall have, on the last day of each Fiscal Quarter, a Consolidated Tangible Net Worth at least equal to the Minimum Consolidated Tangible Net Worth with respect to such Fiscal Quarter. 

 

Section 5.4     Minimum Consolidated Net Worth. Holdings shall have, on the last day of each Fiscal Quarter, a Consolidated Net Worth at least equal to the Minimum Consolidated Net Worth with respect to such Fiscal Quarter. 

 

ARTICLE 6
Reporting Covenants

 

Each of Holdings and each Borrower agrees that, as long as any Obligation (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted) or any Commitment remains outstanding: 

 

Section 6.1     Financial Statements. The Borrower Representative shall deliver to the Administrative Agent each of the following that are not publicly available on the United States Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (or “EDGAR”):

 

(a)     Reserved. 

 

(b)     Quarterly Reports. As soon as available, and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, the Consolidated unaudited balance sheet of Holdings as of the close of such Fiscal Quarter and related Consolidated statements of income and cash flow for such Fiscal Quarter and that portion of the Fiscal Year ending as of the close of such Fiscal Quarter, setting forth in comparative form the figures for the corresponding period in the prior Fiscal Year, in each case certified by a Responsible Officer of the Borrower Representative as fairly presenting in all material respects the Consolidated financial position, results of operations and cash flow of Holdings as at the dates indicated and for the periods indicated in accordance with GAAP (subject to the absence of footnote disclosure and normal year-end audit adjustments).

 

(c)     Annual Reports. As soon as available, and in any event within 90 days after the end of each Fiscal Year, the Consolidated balance sheet of Holdings as of the end of such year and related Consolidated statements of income, stockholders’ equity and cash flow for such Fiscal Year, each prepared in accordance with GAAP, together with a certification by the Group Members’ Accountants that such Consolidated Financial Statements fairly present in all material respects the Consolidated financial position, results of operations and cash flow of Holdings as at the dates indicated and for the periods indicated therein in accordance with GAAP without qualification as to the scope of the audit or as to going concern and without any other similar qualification.

 

(d)     Compliance Certificate. Together with each delivery of any Financial Statement pursuant to clause (b) or (c) above, a Compliance Certificate duly executed by a Responsible Officer of the Borrower Representative that, among other things, states that no Default is continuing as of the date of delivery of such Compliance Certificate or, if a Default is continuing, states the nature thereof and the action that the Borrowers propose to take with respect thereto.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

46

 

 

(e)     Collateral Updates. As part of the Compliance Certificate delivered pursuant to clause (d) above, a certification by a Responsible Officer of the Borrower Representative that (i) the corporate chart attached thereto (or the last corporate chart delivered pursuant to this clause (e)) is correct and complete as of the date of such Compliance Certificate, (ii) the Loan Parties have delivered all documents (including updated schedules as to locations of Collateral and acquisition of intellectual property or real property) they are required to deliver pursuant to any Loan Document on or prior to the date of delivery of such Compliance Certificate and (iii) complete and correct copies of all documents modifying any term of any Constituent Document of any Group Member (other than Immaterial Subsidiaries) or any Subsidiary or joint venture thereof on or prior to the date of delivery of such Compliance Certificate have been delivered to the Administrative Agent or are attached to such certificate. The Borrower Representative will notify the Administrative Agent in writing of any change in name of any Borrower or change in chief executive office or place of business of any Borrower, in each case at least 30 days prior to such change. 

 

(f)     Reserved. 

 

(g)     Reserved. 

 

(h)     Audit Reports, Management Letters, Etc. Together with each delivery of any Financial Statement for any Fiscal Year pursuant to clause (c) above, copies of each management letter, audit report or similar letter or report received by any Group Member from any independent registered certified public accountant (including the Group Members’ Accountants) in connection with such Financial Statements or any audit thereof, each certified to be complete and correct copies by a Responsible Officer of the Borrower Representative as part of the Compliance Certificate delivered in connection with such Financial Statements.

 

(i)     Insurance. Upon request of the Administrative Agent, a reasonably detailed summary of all material insurance coverage related to the Collateral maintained as of the date thereof by any Group Member, together with such other related documents and information as the Administrative Agent may reasonably require.

 

Section 6.2     Other Events. The Borrowers shall give the Administrative Agent notice of each of the following (which may be made by telephone if promptly confirmed in writing) promptly after any Responsible Officer of any Group Member knows or has reason to know of it: (a)(i) any Default and (ii) any event that would have a Material Adverse Effect, specifying, in each case, the nature and anticipated effect thereof and any action proposed to be taken in connection therewith, or (b) the commencement of, or any material developments in, any action, investigation, suit, proceeding, audit, claim, demand, order or dispute with, by or before any Governmental Authority affecting any Group Member or any property of any Group Member that (i) seeks injunctive or similar relief, (ii) in the reasonable judgment of the Borrowers, exposes any Group Member to liability in an aggregate amount in excess of $2,500,000 or (iii) if adversely determined would have a Material Adverse Effect.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

47

 

 

Section 6.3     Copies of Notices and Reports. The Borrowers shall promptly deliver to the Administrative Agent copies of each of the following: (a) all reports that Holdings transmits to its security holders generally, (b) all documents that any Group Member files with the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., any securities exchange or any Governmental Authority exercising similar functions, (c) all press releases not made available directly to the general public, and (d) any material document transmitted or received pursuant to, or in connection with, any Contractual Obligation governing Indebtedness of any Group Member, which in the case of clauses (a) and (b) are not publicly available on EDGAR.

 

Section 6.4     Other Information. The Borrowers shall provide the Administrative Agent with (and with respect to any material information or documents and any information or documents requested by any Lender, the Administrative Agent shall make available to the Lenders) such other documents and information with respect to the business, property, condition (financial or otherwise), legal, financial or corporate or similar affairs or operations of any Group Member as the Administrative Agent or any Lender through the Administrative Agent may from time to time reasonably request.

 

ARTICLE 7
Affirmative Covenants

 

Each of Holdings and each Borrower agrees that as long as any Obligation (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted) or any Commitment remains outstanding: 

 

Section 7.1     Maintenance of Corporate Existence. Each Group Member (other than Immaterial Subsidiaries) shall (a) preserve and maintain its legal existence, except in the consummation of transactions expressly permitted by Section 8.2, and (b) preserve and maintain its rights (charter and statutory), privileges, franchises and Permits necessary or desirable in the conduct of its business, except, in the case of this clause (b), where the failure to do so would not, in the aggregate, have a Material Adverse Effect.

 

Section 7.2     Compliance with Laws, Etc. Each Group Member shall comply with all applicable Requirements of Law, Contractual Obligations and Permits, except for such failures to comply that would not, in the aggregate, have a Material Adverse Effect.

 

Section 7.3     Payment of Obligations. Each Group Member shall pay or discharge before they become delinquent (a) all material claims, taxes, assessments, charges and levies imposed by any Governmental Authority and (b) all other lawful claims that if unpaid would, by the operation of applicable Requirements of Law, become a Lien upon any Collateral, except, in each case, for those whose amount or validity is being contested in good faith by proper proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Group Member in accordance with GAAP.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

48

 

 

Section 7.4     Maintenance of Property. Each Group Member (other than Immaterial Subsidiaries) shall maintain and preserve (a) in good working order and condition all of its property necessary in the conduct of its business and (b) all rights, permits, licenses, approvals and privileges (including all Permits) necessary or used, whether because of its ownership, lease, sublease or other operation or occupation of property or other conduct of its business, and shall make all necessary or appropriate filings with, and give all required notices to, Government Authorities, except for such failures to maintain and preserve the items set forth in clauses (a) and (b) above that would not, in the aggregate, have a Material Adverse Effect. No Inventory shall be used for any purpose other than demonstration at or in reasonable proximity to a Borrower’s place of business or at industry trade shows and any such demonstration shall be in conformity in all material respects with any applicable Requirements of Law. All Inventory shall be kept at a Borrower’s place of business other than (i) Inventory used in a demonstration or at an industry trade show in accordance with the immediately preceding sentence, (ii) Inventory undergoing body work, upfitting or repairs and (iii) Inventory on consignment in a transaction permitted under this Section 7.4. Without limitation to Section 8.1, no Inventory shall be on consignment without the consent of the Administrative Agent or otherwise subject to a Lien (other than mechanics’, materialmen’s, repairmen’s or other similar Liens arising by operation of law in the ordinary course of business which are not delinquent for more than ninety (90) days or remain payable without penalty or which are being contested in good faith by proper proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Group Member in accordance with GAAP, in each case so long as no proceeding to enforce such Lien or marshall such Collateral has been commenced) in favor of any Person performing such body work or repairs or any Person at whose location such Inventory is located while undergoing such body work or repairs. The Borrowers shall use and maintain the Collateral in compliance with any insurance policies and all applicable Requirements of Laws. 

 

Section 7.5     Maintenance of Insurance. (a) Loan Parties shall at all times bear all risk of loss, damage to or destruction of the Collateral. Each Group Member shall maintain or cause to be maintained in full force and effect all policies of insurance of any kind with respect to the property and businesses of the Group Members (including policies of life, fire, theft, product liability, public liability, flood insurance, property damage, other casualty, employee fidelity, workers’ compensation, business interruption and employee health and welfare insurance) with financially sound and reputable insurance companies or associations (in each case that are not Affiliates of any Borrower) of a nature and providing such coverage as is sufficient in light of the size and character of the business of the Group Members. Without limiting the foregoing, Loan Parties agree to procure forthwith and maintain insurance on the Inventory, all in form and amount and with insurers reasonably satisfactory to Administrative Agent. 

 

(b) Each Group Member (other than Immaterial Subsidiaries) shall cause all such insurance relating to any property or business of any Loan Party to name the Administrative Agent on behalf of the Secured Parties as additional insured or loss payee, as appropriate, to provide that Administrative Agent’s interest therein will not be invalidated by the acts, omissions or neglect of anyone other than Administrative Agent, and to provide that no cancellation, material addition in amount or material change in coverage shall be effective until after 45 days’ notice thereof to the Administrative Agent. Loan Parties assign to Administrative Agent all proceeds of such insurance, including returned and unearned premiums, not to exceed the sum of all amounts payable pursuant hereto. Loan Parties direct all insurers to make payment of such proceeds jointly payable to Administrative Agent and the appropriate Loan Party unless the Loan Parties are legally required to pay such proceeds directly to a third party.

 

Section 7.6     Keeping of Books. Holdings shall keep proper books of record and account for itself and its Subsidiaries, in which full, true and correct entries shall be made in accordance with GAAP and all other applicable Requirements of Law of all financial transactions and the assets and business of each Group Member.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

49

 

 

Section 7.7     Access to Books and Property. Each Group Member shall permit the Administrative Agent, and during the continuance of an Event of Default the Lenders, and any Related Person of any of them, as often as reasonably requested, at any reasonable time during normal business hours and with reasonable advance notice (except that, during the continuance of an Event of Default, no such notice shall be required) to (a) visit and inspect the property of each Group Member (other than Immaterial Subsidiaries) and examine and make copies of and abstracts from, the corporate (and similar), financial, operating and other books and records of each Group Member (other than Immaterial Subsidiaries), (b) discuss the affairs, finances and accounts of each Group Member with any officer or director of any Group Member (other than Immaterial Subsidiaries)and (c) communicate directly with any registered certified public accountants (including the Group Members’ Accountants) of any Group Member (other than Immaterial Subsidiaries). Each Group Member shall authorize their respective registered certified public accountants (including the Group Members’ Accountants) to communicate directly with the Administrative Agent, and during the continuance of an Event of Default the Lenders, and their Related Persons and to disclose to the Administrative Agent, and during the continuance of an Event of Default the Lenders, and their Related Persons all financial statements and other documents and information as they might have and the Administrative Agent or, during the continuance of an Event of Default, any Lender reasonably requests with respect to any Group Member (other than Immaterial Subsidiaries). Without limiting the foregoing, (i) each Group Member shall permit the Administrative Agent and its Related Persons to conduct up to three audits of its Inventory in any calendar year, with such audits rotating on a monthly basis through the different Borrowers and shall permit the Lenders to be present at such audits; and (ii) Holdings and each Group Member (other than Immaterial Subsidiaries) shall permit the Administrative Agent and its Related Persons to conduct comprehensive financial audits of the Group Members (other than any Immaterial Subsidiaries) and shall permit the Lenders to be present at such audits; provided, however, that, unless an Event of Default has occurred and is continuing, the Administrative Agent shall not be permitted to conduct more than one such financial audit in any twelve month period. 

 

Section 7.8     Use of Proceeds. The proceeds of the New Equipment Loans shall be used by the Borrowers (and, to the extent distributed to them by the Borrowers, each other Group Member) solely to finance the purchase of new Inventory not previously used or sold at retail. The proceeds of the Used Equipment Loans shall be used by the Borrowers (and, to the extent distributed to them by the Borrowers, each other Group Member) solely to finance the purchase of used Inventory and Inventory previously sold at retail. The proceeds of the Working Capital Loans shall be used by the Borrowers (and, to the extent distributed to them by the Borrowers, each other Group Member) for working capital and other general corporate purposes.

 

Section 7.9     Future Borrowers. In the event that, subsequent to the Restatement Date, any Person becomes a Domestic Subsidiary of the Borrower Representative, other than Immaterial Subsidiaries, then such Person shall become a Borrower under this Agreement upon (i) the Administrative Agent’s receipt of a joinder to this Agreement, in form and substance reasonably satisfactory to Administrative Agent and duly executed by such Person, and the Administrative Agent’s receipt of all relevant documentation with respect thereto as such Person would have been required to provide and take if such Person had been a Borrower on the Restatement Date and (ii) completion of all actions with respect to this Agreement as such Person would have been required to provide and take if such Person had been a Borrower on the Restatement Date. Notwithstanding the foregoing, no Foreign Subsidiary of the Borrower Representative may become a Borrower hereunder without the prior written consent of all Lenders. 

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

50

 

 

ARTICLE 8
Negative Covenants

 

Each of Holdings and each Borrower agrees that as long as any Obligation (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted) or any Commitment remains outstanding: 

 

Section 8.1     Liens. No Group Member shall incur, maintain or otherwise suffer to exist any Lien upon or with respect to any of the Collateral, whether now owned or hereafter acquired, or assign any right to receive income or profits in connection with the Collateral, except (i) Liens securing the Obligations, (ii) mechanics’, materialmen’s, repairmen’s or other similar Liens arising by operation of law in the ordinary course of business which are not delinquent for more than ninety (90) days or remain payable without penalty or which are being contested in good faith by proper proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Group Member in accordance with GAAP, in each case so long as no proceeding to enforce such Lien or marshall such Collateral has been commenced, (iii) Liens on Parts Inventory, (iv) Liens on Collateral subject to a consignment permitted under Section 7.4 (provided, that such Liens are junior to the Liens securing the Obligations), and (v) Liens securing the Formula Revolver Debt to the extent permitted under the Intercreditor Agreement; provided, that any Lien securing the Formula Revolver Debt in any present and future Inventory of Holdings or any Borrower, together with all attachments, accessories, exchanges and additions to (including replacement parts installed in or repairs to) any such Inventory, and all chattel paper, documents, certificates of title, certificates of origin, general intangibles, instruments, accounts and contract rights now existing or hereafter arising with respect thereto shall be junior and subordinate to the Lien granted to the Administrative Agent, for the benefit of the Secured Parties, pursuant to this Agreement.

 

Section 8.2     Fundamental Changes. Unless consented to by the Administrative Agent, such consent not to be unreasonably withheld, no Group Member shall merge, consolidate or amalgamate with any Person or Sell, lease as lessor, transfer or otherwise dispose of all or substantially all of its property, other than (i) the merger, consolidation or amalgamation of any Borrower with another Borrower or any Subsidiary of the Borrowers into any Borrower and (ii) the merger, consolidation or amalgamation of any Borrower with any Person that is not a Borrower so long as (A) such Borrower is the surviving entity or, if the surviving entity is not the Borrower, such surviving entity executes a joinder to this agreement, in form and substance satisfactory to Administrative Agent, and (B) no Default or Event of Default results therefrom. Unless consented to by the Administrative Agent, such consent not to be unreasonably withheld, the Borrower Representative shall not, and shall not permit the Group Members to, sell all or substantially all of the Consolidated assets of the Borrower Representative and its Subsidiaries.

 

Section 8.3     Change in Nature of Business. No Group Member (other than Immaterial Subsidiaries) shall carry on any business, operations or activities (whether directly, through a joint venture, in connection with an acquisition or otherwise) substantially different from those carried on by the Borrowers and their Subsidiaries at the date hereof and business, operations and activities reasonably related thereto.

 

Section 8.4     Transactions with Affiliates. No Group Member shall, except as otherwise expressly permitted herein, enter into any other transaction directly or indirectly with, or for the benefit of, any Affiliate of the Borrowers that is not a Loan Party (including Guaranty Obligations with respect to any obligation of any such Affiliate), except for transactions in the ordinary course of business on a basis no less favorable in the aggregate to such Group Member as would be obtained in a comparable arm’s length transaction with a Person not an Affiliate of the Borrowers.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

51

 

 

Section 8.5     Modification of Certain Documents; Change in Jurisdiction of Organization. No Group Member (other than Immaterial Subsidiaries) shall waive or otherwise modify any term of any Constituent Document of any Group Member (other than Immaterial Subsidiaries) except for those modifications and waivers that do not materially affect the rights and privileges of any Group Member or any Secured Party under the Loan Documents or in the Collateral. No Group Member (other than Immaterial Subsidiaries) will change its jurisdiction of organization if it is a corporation, limited liability company, limited partnership or other registered organization without giving the Administrative Agent at least thirty (30) days’ prior written notice. 

 

Section 8.6     Accounting Changes; Fiscal Year. No Group Member shall change its (a) accounting treatment or reporting practices, except as required by GAAP or any Requirement of Law, or (b) its Fiscal Year or its method for determining Fiscal Quarters.

 

Section 8.7     Margin Regulations. No Group Member shall use all or any portion of the proceeds of any credit extended hereunder to purchase or carry margin stock (within the meaning of Regulation U of the Federal Reserve Board) in contravention of Regulation U of the Federal Reserve Board.

 

ARTICLE 9
Events Of Default

 

Section 9.1     Definition. Each of the following shall be an “Event of Default”:

 

(a)     the Borrowers shall fail to pay any principal of any Loan when the same becomes due and payable or any interest on any Loan, any fee under any Loan Document or any other Obligation and such non-payment continues for a period of ten days after the due date therefor; or 

 

(b)     any representation, warranty or certification made or deemed made by or on behalf of any Loan Party in any Loan Document or by or on behalf of any Loan Party (or any Responsible Officer thereof) in connection with any Loan Document (including in any document delivered in connection with any Loan Document) shall prove to have been incorrect in any material respect (or in any respect if such representation or warranty is qualified by “material” or “Material Adverse Effect”) when made or deemed made; or

 

(c)     any Loan Party shall fail to comply with (i) any provision of Article 5 (Financial Covenants), Section 6.1 (Financial Statements), Section 6.2(a)(i) (Notice of Default), Section 7.1 (Maintenance of Corporate Existence) or Article 8 (Negative Covenants) or (ii) any other provision of any Loan Document if, in the case of this clause (ii), such failure shall remain unremedied for 30 days after the earlier of (A) the date on which a Responsible Officer of any Borrower becomes aware of such failure and (B) the date on which notice thereof shall have been given to the Borrower Representative by the Administrative Agent or the Required Lenders; or

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

52

 

 

(d)     (i) any Group Member (other than Immaterial Subsidiaries) shall fail to make any payment when due (whether due because of scheduled maturity, required repayment and prepayment provisions, acceleration, demand or otherwise) on any Indebtedness of any Group Member (other than Immaterial Subsidiaries) other than the Obligations and, in each case, such failure relates to Indebtedness having a principal amount of $10,000,000 or more, (ii) any other event shall occur or condition shall exist under any Contractual Obligation relating to any such Indebtedness, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness, (iii) any such Indebtedness shall become or be declared to be due and payable, or be required to be prepaid, redeemed, defeased or repurchased (other than by a regularly scheduled required repayment or prepayment), prior to the stated maturity thereof, or (iv) any “Event of Default” (however defined) shall occur under the Formula Revolver Loan Agreement; or

 

(e)     (i) any Group Member (other than Immaterial Subsidiaries) shall generally not pay its debts as such debts become due, shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors, (ii) any proceeding shall be instituted by or against any Group Member (other than Immaterial Subsidiaries) seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, composition of it or its debts or any similar order, in each case under any Requirement of Law relating to bankruptcy, insolvency or reorganization or relief of debtors or seeking the entry of an order for relief or the appointment of a custodian, receiver, trustee, conservator, liquidating agent, liquidator, other similar official or other official with similar powers, in each case for it or for any substantial part of its property and, in the case of any such proceedings instituted against (but not by or with the consent of) any Group Member (other than Immaterial Subsidiaries), either such proceedings shall remain undismissed or unstayed for a period of 60 days or more or any action sought in such proceedings shall occur or (iii) any Group Member (other than Immaterial Subsidiaries) shall take any corporate or similar action or any other action to authorize any action described in clause (i) or (ii) above; or

 

(f)     one or more judgments, orders or decrees (or other similar process) shall be rendered against any Group Member (other than Immaterial Subsidiaries) (i)(A) in the case of money judgments, orders and decrees, involving an aggregate amount (excluding amounts adequately covered by insurance payable to any Group Member (other than Immaterial Subsidiaries), to the extent the relevant insurer has not denied coverage therefor) in excess of $10,000,000 or (B) otherwise, that would have, in the aggregate, a Material Adverse Effect and (ii)(A) enforcement proceedings shall have been commenced by any creditor upon any such judgment, order or decree or (B) such judgment, order or decree shall not have been vacated or discharged for a period of 30 consecutive days and there shall not be in effect (by reason of a pending appeal or otherwise) any stay of enforcement thereof; or

 

(g)     except pursuant to a valid, binding and enforceable termination or release permitted under the Loan Documents and executed by the Administrative Agent or as otherwise expressly permitted under any Loan Document, (i) any provision of any Loan Document shall, at any time after the delivery of such Loan Document, fail to be valid and binding on, or enforceable against, any Loan Party party thereto or (ii) any Loan Document purporting to grant a Lien to secure any Obligation shall, at any time after the delivery of such Loan Document, fail to create a valid and enforceable Lien on any Collateral purported to be covered thereby or such Lien (except in the case of Company Vehicles prior to compliance with applicable certificate of title laws) shall fail or cease to be a perfected Lien with the priority required in the relevant Loan Document, or any Group Member shall state in writing that any of the events described in clause (i) or (ii) above shall have occurred; or

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

53

 

 

(h)     any Borrower shall permit another financing source to commence financing Inventory (other than construction equipment and other than Ford Motor Credit Financing); or

 

(i)     any Collateral having a value in excess of one percent of the Collateral is attached and such attachment is not contested and or resolved within ninety (90) days thereof and if part of the Collateral, paid off after such ninety (90) day period; or

 

(j)     there shall occur any Material Adverse Effect; or

 

(k)     any Person in control of any Group Member is accused or alleged or charged (whether or not subsequently arraigned, indicted or convicted) by any Governmental Authority to have used any Inventory in connection with the commission of any crime (other than a misdemeanor moving violation); or

 

(l)     there shall occur any Change of Control.

 

Section 9.2     Remedies. During the continuance of any Event of Default, the Administrative Agent may, and, at the request of the Required Lenders, shall, in each case by notice to the Borrowers and in addition to any other right or remedy provided under any Loan Document or by any applicable Requirement of Law, do each of the following: (a) declare all or any portion of the Commitments terminated, whereupon the Commitments shall immediately be reduced by such portion or, in the case of a termination in whole, shall terminate together with any obligation any Lender may have hereunder to make any Loan, (b) declare immediately due and payable all or part of any Obligation (including any accrued but unpaid interest thereon), whereupon the same shall become immediately due and payable, without presentment, demand, protest or further notice or other requirements of any kind, all of which are hereby expressly waived by Holdings and each Borrower (and, to the extent provided in any other Loan Document, other Loan Parties), (c) cancel any insurance purchased by the Administrative Agent and credit any refund to the Obligations, and (d) exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and any other applicable laws, including, without limitation, the right to require the Loan Parties to assemble the Collateral and deliver it to the Administrative Agent at a place to be designated by the Administrative Agent which is reasonably convenient to both parties; provided, however, that, effective immediately upon the occurrence of the Events of Default specified in Section 9.1(e)(ii), (x) the Commitments of each Lender to make Loans shall automatically be terminated and (y) each Obligation (including in each case all accrued but unpaid interest thereon) shall automatically become and be due and payable, without presentment, demand, protest or further notice or other requirement of any kind, all of which are hereby expressly waived by Holdings and each Borrower (and, to the extent provided in any other Loan Document, any other Loan Party).

 

ARTICLE 10
The Administrative Agent

 

Section 10.1     Appointment and Duties. (a) Appointment of Administrative Agent. Each Lender hereby appoints BHB (together with any successor Administrative Agent pursuant to Section 10.9) as the Administrative Agent hereunder and authorizes the Administrative Agent to (i) execute and deliver the Loan Documents, (ii) accept delivery of the Loan Documents on its behalf from any Group Member, (iii) take such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly delegated to the Administrative Agent under such Loan Documents and (iv) exercise such powers as are reasonably incidental thereto.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

54

 

 

(b)     Duties as Collateral and Disbursing Agent. Without limiting the generality of clause (a) above, the Administrative Agent shall have the sole and exclusive right and authority (to the exclusion of the Lenders), and is hereby authorized, to (i) act as the disbursing and collecting agent for the Lenders with respect to all payments and collections arising in connection with the Loan Documents (including in any proceeding described in Section 9.1(e)(ii) or any other bankruptcy, insolvency or similar proceeding), and each Person making any payment in connection with any Loan Document to any Secured Party is hereby authorized to make such payment to the Administrative Agent, (ii) file and prove claims and file other documents necessary or desirable to allow the claims of the Secured Parties with respect to any Obligation in any proceeding described in Section 9.1(e)(ii) or any other bankruptcy, insolvency or similar proceeding (but not to vote, consent or otherwise act on behalf of such Secured Party), (iii) act as collateral agent for each Secured Party for purposes of the perfection of all Liens created by such agreements and all other purposes stated therein, (iv) manage, supervise and otherwise deal with the Collateral, (v) take such other action as is necessary or desirable to maintain the perfection and priority of the Liens created or purported to be created by the Loan Documents, (vi) except as may be otherwise specified in any Loan Document, exercise all remedies given to the Administrative Agent and the other Secured Parties with respect to the Collateral, whether under the Loan Documents, applicable Requirements of Law or otherwise and (vii) execute any amendment, consent or waiver under the Loan Documents on behalf of any Lender that has consented in writing to such amendment, consent or waiver; provided, however, that the Administrative Agent hereby appoints, authorizes and directs each Lender to act as collateral sub-agent for the Administrative Agent and the Lenders for purposes of the perfection of all Liens with respect to the Collateral, including any deposit account maintained by a Loan Party with, and cash and Cash Equivalents held by, such Lender, and may further authorize and direct the Lenders to take further actions as collateral sub-agents for purposes of enforcing such Liens or otherwise to transfer the Collateral subject thereto to the Administrative Agent, and each Lender hereby agrees to take such further actions to the extent, and only to the extent, so authorized and directed.

 

(c)     Limited Duties. Under the Loan Documents, the Administrative Agent (i) is acting solely on behalf of the Lenders (except to the limited extent provided in Section 2.14(b) with respect to the Register and in Section 10.6), with duties that are entirely administrative in nature, notwithstanding the use of the defined term “Administrative Agent”, the terms “agent”, “administrative agent” and “collateral agent” and similar terms in any Loan Document to refer to the Administrative Agent, which terms are used for title purposes only, (ii) is not assuming any obligation under any Loan Document other than as expressly set forth therein or any role as agent, fiduciary or trustee of or for any Lender or any other Secured Party and (iii) shall have no implied functions, responsibilities, duties, obligations or other liabilities under any Loan Document, and each Lender hereby waives and agrees not to assert any claim against the Administrative Agent based on the roles, duties and legal relationships expressly disclaimed in clauses (i) through (iii) above.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

55

 

 

Section 10.2     Binding Effect. Each Lender agrees that (i) any action taken by the Administrative Agent or the Required Lenders (or, if expressly required hereby, a greater proportion of the Lenders) in accordance with the provisions of the Loan Documents, (ii) any action taken by the Administrative Agent in reliance upon the instructions of Required Lenders (or, where so required, such greater proportion) and (iii) the exercise by the Administrative Agent or the Required Lenders (or, where so required, such greater proportion) of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Secured Parties.

 

Section 10.3     Use of Discretion. No Action without Instructions. The Administrative Agent shall not be required to exercise any discretion or take, or to omit to take, any action, including with respect to enforcement or collection, except any action it is required to take or omit to take (i) under any Loan Document or (ii) pursuant to instructions from the Required Lenders (or, where expressly required by the terms of this Agreement, a greater proportion of the Lenders).

 

(b)     Right Not to Follow Certain Instructions. Notwithstanding clause (a) above, the Administrative Agent shall not be required to take, or to omit to take, any action (i) unless, upon demand, the Administrative Agent receives an indemnification satisfactory to it from the Lenders (or, to the extent applicable and acceptable to the Administrative Agent, any other Secured Party) against all Liabilities that, by reason of such action or omission, may be imposed on, incurred by or asserted against the Administrative Agent or any Related Person thereof or (ii) that is, in the opinion of the Administrative Agent or its counsel, contrary to any Loan Document or applicable Requirement of Law.

 

Section 10.4     Delegation of Rights and Duties. The Administrative Agent may, upon any term or condition it specifies, delegate or exercise any of its rights, powers and remedies under, and delegate or perform any of its duties or any other action with respect to, any Loan Document by or through any trustee, co-agent, employee, attorney-in-fact and any other Person (including any Secured Party). Any such Person shall benefit from this Article 10 to the extent provided by the Administrative Agent.

 

Section 10.5     Reliance and Liability. (a) The Administrative Agent may, without incurring any liability hereunder, (i) rely on the Register to the extent set forth in Section 2.14, (ii) consult with any of its Related Persons and, whether or not selected by it, any other advisors, accountants and other experts (including advisors to, and accountants and experts engaged by, any Loan Party) and (iii) rely and act upon any document and information (including those transmitted by Electronic Transmission) and any telephone message or conversation, in each case believed by it to be genuine and transmitted, signed or otherwise authenticated by the appropriate parties.

 

(b)     None of the Administrative Agent and its Related Persons shall be liable for any action taken or omitted to be taken by any of them under or in connection with any Loan Document, and each Lender, Holdings and the Borrowers hereby waive and shall not assert (and each of Holdings and the Borrowers shall cause each other Loan Party to waive and agree not to assert) any right, claim or cause of action based thereon, except to the extent of liabilities resulting primarily from the gross negligence or willful misconduct of the Administrative Agent or, as the case may be, such Related Person (each as determined in a final, non-appealable judgment by a court of competent jurisdiction) in connection with the duties expressly set forth herein. Without limiting the foregoing, the Administrative Agent:

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

56

 

 

(i)     shall not be responsible or otherwise incur liability for any action or omission taken in reliance upon the instructions of the Required Lenders or for the actions or omissions of any of its Related Persons selected with reasonable care (other than employees, officers and directors of the Administrative Agent, when acting on behalf of the Administrative Agent);

 

(ii)     shall not be responsible to any Secured Party for the due execution, legality, validity, enforceability, effectiveness, genuineness, sufficiency or value of, or the attachment, perfection or priority of any Lien created or purported to be created under or in connection with, any Loan Document;

 

(iii)     makes no warranty or representation, and shall not be responsible, to any Secured Party for any statement, document, information, representation or warranty made or furnished by or on behalf of any Related Person or any Loan Party in connection with any Loan Document or any transaction contemplated therein or any other document or information with respect to any Loan Party, whether or not transmitted or (except for documents expressly required under any Loan Document to be transmitted to the Lenders) omitted to be transmitted by the Administrative Agent, including as to completeness, accuracy, scope or adequacy thereof, or for the scope, nature or results of any due diligence performed by the Administrative Agent in connection with the Loan Documents; 

 

(iv)     shall not be responsible or liable for any election to make or not make any Revolving Loan or any other Loan, regardless of the credit profile of any Borrower or the Borrowers generally at the time of such Loan, any information known or that should have been known by the Administrative Agent at the time of such Loan, the Borrowers’ failure to comply with the terms of this Agreement or any other matter; and

 

(v)     shall not have any duty to ascertain or to inquire as to the performance or observance of any provision of any Loan Document, whether any condition set forth in any Loan Document is satisfied or waived, as to the financial condition of any Loan Party or as to the existence or continuation or possible occurrence or continuation of any Default or Event of Default and shall not be deemed to have notice or knowledge of such occurrence or continuation unless it has received a notice from the Borrower Representative or any Lender describing such Default or Event of Default clearly labeled “notice of default” (in which case the Administrative Agent shall promptly give notice of such receipt to all Lenders);

 

and, for each of the items set forth in clauses (i) through (v) above, each Lender, Holdings and the Borrowers hereby waives and agrees not to assert (and each of Holdings and the Borrowers shall cause each other Loan Party to waive and agree not to assert) any right, claim or cause of action it might have against the Administrative Agent based thereon. Each Lender acknowledges and agrees that Revolving Loans will be made at the election of the Administrative Agent, acting in its sole discretion, but the Administrative Agent shall not be liable to any Lender due to or in connection with such election to make or not make any Revolving Loan and each Lender completely absolves the Administrative Agent of any responsibility or liability due to or in connection with such election to make or not make any Revolving Loan.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

57

 

 

Section 10.6     Administrative Agent Individually. The Administrative Agent and its Affiliates may make loans and other extensions of credit to, acquire Stock and Stock Equivalents of, engage in any kind of business with, any Loan Party or Affiliate thereof as though it were not acting as Administrative Agent and may receive separate fees and other payments therefor. To the extent the Administrative Agent or any of its Affiliates makes any Loan or otherwise becomes a Lender hereunder, it shall have and may exercise the same rights and powers hereunder and shall be subject to the same obligations and liabilities as any other Lender and the terms “Lender” and “Required Lender” and any similar terms shall, except where otherwise expressly provided in any Loan Document, include, without limitation, the Administrative Agent or such Affiliate, as the case may be, in its individual capacity as Lender, or as one of the Required Lenders.

 

Section 10.7     Lender Credit Decision. Each Lender acknowledges that it shall, independently and without reliance upon the Administrative Agent, any Lender or any of its Related Persons or upon any document (including the Disclosure Documents) solely or in part because such document was transmitted by the Administrative Agent or any of its Related Persons, conduct its own independent investigation of the financial condition and affairs of each Loan Party and make and continue to make its own credit decisions in connection with entering into, and taking or not taking any action under, any Loan Document or with respect to any transaction contemplated in any Loan Document, in each case based on such documents and information as it shall deem appropriate. Except for documents expressly required by any Loan Document to be transmitted by the Administrative Agent to the Lenders, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Loan Party or any Affiliate of any Loan Party that may come in to the possession of the Administrative Agent or any of its Related Persons.

 

Section 10.8     Expenses; Indemnities. (a) Each Lender agrees to reimburse the Administrative Agent and each of its Related Persons (to the extent not reimbursed by any Loan Party) promptly upon demand for such Lender’s Pro Rata Share of any costs and expenses (including fees, charges and disbursements of financial, legal and other advisors and Other Taxes paid in the name of, or on behalf of, any Loan Party) that may be incurred by the Administrative Agent or any of its Related Persons in connection with the preparation, syndication, execution, delivery, administration, modification, consent, waiver or enforcement (whether through negotiations, through any work-out, bankruptcy, restructuring or other legal or other proceeding or otherwise) of, or legal advice in respect of its rights or responsibilities under, any Loan Document.

 

(b)     Each Lender further agrees to indemnify the Administrative Agent and each of its Related Persons (to the extent not reimbursed by any Loan Party), from and against such Lender’s aggregate Pro Rata Share of the Liabilities (including taxes, interests and penalties imposed for not properly withholding or backup withholding on payments made to on or for the account of any Lender) that may be imposed on, incurred by or asserted against the Administrative Agent or any of its Related Persons in any matter relating to or arising out of, in connection with or as a result of any Loan Document or any other act, event or transaction related, contemplated in or attendant to any such document, or, in each case, any action taken or omitted to be taken by the Administrative Agent or any of its Related Persons under or with respect to any of the foregoing; provided, however, that no Lender shall be liable to the Administrative Agent or any of its Related Persons to the extent such liability has resulted primarily from the gross negligence or willful misconduct of the Administrative Agent or, as the case may be, such Related Person, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

58

 

 

(c)     To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If any payment has been made to any Lender by the Administrative Agent without the applicable withholding Tax being withheld from such payment and the Administrative Agent has paid over the applicable withholding Tax to the Internal Revenue Service or any other Governmental Authority, or the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.

 

Section 10.9     Resignation of Administrative Agent. (a) The Administrative Agent may resign at any time by delivering notice of such resignation to the Lenders and the Borrower Representative, effective on the earlier to occur of (i) the expiration of thirty (30) days after such notice is delivered, (ii) the appointment by retiring Administrative Agent of a successor Administrative Agent from among the Lenders (as provided for below) and (iii) the appointment by the Required Lenders of a successor Administrative Agent (as provided for below). If the Administrative Agent delivers any such notice, the Required Lenders shall have the right to appoint a successor Administrative Agent. If, within 30 days after the retiring Administrative Agent having given notice of resignation, no successor Administrative Agent has been appointed by the Required Lenders that has accepted such appointment, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent. Each appointment under this clause (a) shall be subject to the prior consent of the Borrower Representative, which consent may not be unreasonably withheld, delayed or conditioned, but which shall not be required during the continuance of an Event of Default.

 

(b)     Effective immediately upon its resignation, (i) the retiring Administrative Agent shall be discharged from its duties and obligations under the Loan Documents, (ii) the Lenders shall assume and perform all of the duties of the Administrative Agent until a successor Administrative Agent shall have accepted a valid appointment hereunder, (iii) the retiring Administrative Agent and its Related Persons shall no longer have the benefit of any provision of any Loan Document other than with respect to any actions taken or omitted to be taken while such retiring Administrative Agent was, or because such Administrative Agent had been, validly acting as Administrative Agent under the Loan Documents and (iv) subject to its rights under Section 10.3, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its rights as Administrative Agent under the Loan Documents. Effective immediately upon its acceptance of a valid appointment as Administrative Agent, a successor Administrative Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent under the Loan Documents.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

59

 

 

(c)     Notwithstanding anything to the contrary set forth in this Section 10.9 or any other provision of this Agreement or any other Loan Document, each of the Administrative Agent, Swingline Lender and Working Capital Lender, may resign and any Permitted Transferee may be appointed the successor Administrative Agent and as a successor Working Capital Lender and Swingline Lender, without the consent of any Borrower, any Lender or any other Person and, upon such resignation and appointment, the applicable Permitted Transferee shall succeed to all benefits, rights and privileges of the Administrative Agent, Swingline Lender and Working Capital Lender, as applicable, and shall assume all duties and obligations of the Administrative Agent, Swingline Lender and Working Capital Lender, in each case, to the same extent as any other successor Administrative Agent, Swingline Lender or Working Capital Lender. Except as otherwise expressly provided in this clause (c), each of the provisions of this Section 10.9 shall apply to the Administrative Agent, Swingline Lender and Working Capital Lender and any Permitted Transferee, in its capacity as successor Administrative Agent, Swingline Lender and Working Capital Lender.

 

Section 10.10     Release of Collateral or Guarantors. Each Lender hereby consents to the automatic release and hereby directs the Administrative Agent to release (or, in the case of clause (b)(ii) below, release or subordinate) the following:

 

(a)     any Subsidiary of any Borrower from its guaranty of any Obligation of any Loan Party if all of the Securities of such Subsidiary owned by any Group Member are Sold in a Sale permitted under the Loan Documents (including pursuant to a waiver or consent), to the extent that, after giving effect to such Sale, such Subsidiary would not be a Borrower hereunder or required to guaranty any Obligations; and

 

(b)     any Lien held by the Administrative Agent for the benefit of the Secured Parties against (i) any Collateral that is Sold by a Loan Party in a Sale permitted by the Loan Documents (including pursuant to a valid waiver or consent) and (ii) all of the Collateral and all Loan Parties, upon (A) termination of the Commitments, (B) payment and satisfaction in full of all Loans and all other Obligations that the Administrative Agent has been notified in writing are then due and payable by the holder of such Obligation, (C) deposit of cash collateral with respect to all contingent Obligations (excluding contingent Obligations as to which no claim has been asserted), in amounts and on terms and conditions and with parties reasonably satisfactory to the Administrative Agent and each Indemnitee that is owed such Obligations and (D) to the extent requested by the Administrative Agent, receipt by the Secured Parties of liability releases from the Loan Parties each in form and substance acceptable to the Administrative Agent.

 

Each Lender hereby directs the Administrative Agent, and the Administrative Agent hereby agrees, upon receipt of reasonable advance notice from the Borrower Representative, to execute and deliver or file such documents and to perform other actions reasonably necessary to release the guaranties and Liens when and as directed in this Section 10.10.

 

ARTICLE 11
Miscellaneous

 

Section 11.1     Amendments, Waivers, Etc. (a) No amendment or waiver of any provision of any Loan Document and no consent to any departure by any Loan Party therefrom shall be effective unless the same shall be in writing and signed by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and the Borrowers (or by the Borrower Representative with the consent of the Borrowers); provided, however, that no amendment, consent or waiver shall, unless in writing and signed by each Lender directly affected thereby (or by the Administrative Agent with the consent of such Lender), in addition to any other Person the signature of which is otherwise required pursuant to any Loan Document, do any of the following:

 

(i)     increase any Commitment of such Lender or subject such Lender to any additional obligation;

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

60

 

 

(ii)     reduce (A) the principal amount of, the interest rate on, or any obligation of the Borrowers to repay (whether or not on a fixed date), any outstanding Loan owing to such Lender, (B) any accrued interest payable to such Lender or (C) any other amount payable to such Lender; provided, however, that this clause (ii) does not apply to (x) any change to any provision increasing any interest rate or fee during the continuance of an Event of Default or to any payment of any such increase or (y) any modification to any financial covenant set forth in Article 5 or in any definition set forth therein or principally used therein;

 

(iii)     except as expressly set forth in this Agreement, waive or postpone any scheduled maturity date or other scheduled date fixed for the payment, in whole or in part, of principal of or interest on any Loan, fee or other amount owing to such Lender or for the reduction of any Commitment of such Lender; 

 

(iv)     except as provided in Section 10.10, release, or subordinate the Administrative Agent’s Lien in, all or substantially all of the Collateral or release any Guarantor from its guaranty of any Obligation of the Borrowers;

 

(v)     reduce or increase the proportion of Lenders required for the Lenders (or any subset thereof) to take any action hereunder or change the definition of the terms “Required Lenders”, “Required Revolving A Lenders”, “Required Revolving B Lenders”, or “Pro Rata Share”; 

 

(vi)     amend Section 2.4 (Reallocation of Loans), Section 2.7 (Optional Prepayments), Section 2.8 (Mandatory Repayments), Section 2.12 (Application of Payments), Section 10.10 (Release of Collateral or Guarantors), Section 11.9 (Sharing of Payments, Etc.) or this Section 11.1; or

 

(vii)     amend Section 7.9 to permit a Foreign Subsidiary of the Borrower Representative to become a Borrower hereunder without the prior written consent of all Lenders; 

 

and provided, further, that (y) no amendment, waiver or consent shall affect the rights or duties under any Loan Document of, or any payment to, the Administrative Agent (or otherwise modify any provision of Article 10 or the application thereof), unless in writing and signed by the Administrative Agent in addition to any signature otherwise required and (z) the consent of the Borrowers shall not be required to change any order of priority set forth in Section 2.12. 

 

(b)     Each waiver or consent under any Loan Document shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Loan Party shall entitle any Loan Party to any notice or demand in the same, similar or other circumstances. No failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

61

 

 

(c)     Notwithstanding anything to the contrary herein, this Agreement may be amended (or amended and restated) without the consent of any Lender (but with the consent of the Borrowers and the Administrative Agent) if, upon giving effect to such amendment and restatement, such Lender shall no longer be a party to this Agreement (as so amended and restated), the Commitments of such Lender shall have terminated, such Lender shall have no other commitment or other obligation hereunder and such Lender shall have been paid in full all principal, interest and other amounts owing to it or accrued for its account under this Agreement. 

 

Section 11.2     Assignments and Participations; Binding Effect. (a) Binding Effect. This Agreement shall become effective when it shall have been executed by Holdings, the Borrowers and the Administrative Agent and when the Administrative Agent shall have been notified by each Lender that such Lender has executed it. Thereafter, it shall be binding upon and inure to the benefit of, but only to the benefit of, Holdings, the Borrowers (in each case except for Article 10), the Administrative Agent, each Lender and each other Indemnitee and, in each case, their respective successors and permitted assigns. Except as expressly provided in any Loan Document (including in Section 10.9 hereof), none of Holdings, the Borrowers or the Administrative Agent shall have the right to assign any rights or obligations hereunder or any interest herein.

 

(b)     Right to Assign. Each Lender may sell, transfer, negotiate or assign all or a portion of its rights and obligations hereunder (including all or a portion of its Commitments and its rights and obligations with respect to Loans) to (i) any existing Lender (other than a Non-Funding Lender), (ii) any Affiliate or Approved Fund of any existing Lender (other than a Non-Funding Lender), (iii) any Permitted Transferee or (iv) any other Person (other than the Borrower Representative or its Affiliates) acceptable (which acceptance shall not be unreasonably withheld or delayed) to the Administrative Agent and, so long as no Event of Default is continuing, the Borrower Representative; provided, however, that (x) the aggregate outstanding principal amount (determined as of the effective date of the applicable Assignment) of the Loans, and Commitments subject to any such Sale shall be in a minimum amount of $1,000,000, unless such Sale is made to an existing Lender or an Affiliate or Approved Fund of any existing Lender, is of the assignor’s (together with its Affiliates and Approved Funds) entire interest or is made with the prior consent of the Administrative Agent and (y) such Sales by Lenders who are Non-Funding Lenders due to clause (a) of the definition of Non-Funding Lender shall be subject to the Administrative Agent’s prior written consent in all instances, unless in connection with such sale, such Non-Funding Lender cures, or causes the cure of, its Non-Funding Lender status. The Administrative Agent’s refusal to accept a Sale to a Loan Party, an Affiliate of a Loan Party, or to a Person that would be (or could reasonably be expected to become) a Non-Funding Lender, or the imposition of conditions or limitations (including limitations on voting) upon Sales to such Persons, shall not be deemed to be unreasonable.

 

(c)     Procedure. The parties to each Sale made in reliance on clause (b) above shall execute and deliver to the Administrative Agent an Assignment via an electronic settlement system designated by the Administrative Agent (or if previously agreed with the Administrative Agent, via a manual execution and delivery of the assignment) evidencing such Sale, any tax forms required to be delivered pursuant to Section 2.17(e) and payment of an assignment fee in the amount of $3,500, provided that (1) if a Sale by a Lender is made to an Affiliate or an Approved Fund of such assigning Lender, then no assignment fee shall be due in connection with such Sale, (2) if a Sale by a Lender is made to an assignee that is not an Affiliate or Approved Fund of such assignor Lender, and concurrently to one or more Affiliates or Approved Funds of such assignee, then only one assignment fee of $3,500 shall be due in connection with such Sale and (3) if a Sale by BHB or a Permitted Transferee is made to a Permitted Transferee, then no assignment fee shall be due in connection with such Sale. Upon receipt of all the foregoing, and conditioned upon such receipt and, if such assignment is made in accordance with Section 11.2(b)(iv), upon the Administrative Agent consenting to such Assignment, from and after the effective date specified in such Assignment, the Administrative Agent shall record or cause to be recorded in the Register the information contained in such Assignment.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

62

 

 

(d)     Effectiveness. Subject to the recording of an Assignment by the Administrative Agent in the Register pursuant to Section 2.14(b), (i) the assignee thereunder shall become a party hereto and, to the extent that rights and obligations under the Loan Documents have been assigned to such assignee pursuant to such Assignment, shall have the rights and obligations of a Lender and (ii) the assignor thereunder shall, to the extent that rights and obligations under this Agreement have been assigned by it pursuant to such Assignment, relinquish its rights (except for those surviving the termination of the Commitments and the payment in full of the Obligations) and be released from its obligations under the Loan Documents, other than those relating to events or circumstances occurring prior to such assignment (and, in the case of an Assignment covering all or the remaining portion of an assigning Lender’s rights and obligations under the Loan Documents, such Lender shall cease to be a party hereto except that each Lender agrees to remain bound by Article 10, Section 11.8 (Right of Setoff) and Section 11.9 (Sharing of Payments).

 

(e)     Grant of Security Interests. In addition to the other rights provided in this Section 11.2, each Lender may grant a security interest in, or otherwise assign as collateral, any of its rights under this Agreement, whether now owned or hereafter acquired (including rights to payments of principal or interest on the Loans), to (A) any federal reserve bank (pursuant to Regulation A of the Federal Reserve Board), without notice to the Administrative Agent or (B) any holder of, or trustee for the benefit of the holders of, such Lender’s Securities by notice to the Administrative Agent; provided, however, that no such holder or trustee, whether because of such grant or assignment or any foreclosure thereon (unless such foreclosure is made through an assignment in accordance with clause (b) above), shall be entitled to any rights of such Lender hereunder and no such Lender shall be relieved of any of its obligations hereunder.

 

Section 11.3     Costs and Expenses. Any action taken by any Loan Party under or with respect to any Loan Document, even if required under any Loan Document or at the request of any Secured Party, shall be at the expense of such Loan Party, and no Secured Party shall be required under any Loan Document to reimburse any Loan Party or Group Member therefor except as expressly provided therein. In addition, the Borrowers and Holdings agree to pay or reimburse upon demand (a) the Administrative Agent for all reasonable out-of-pocket costs and expenses incurred by it or any of its Related Persons in connection with the investigation, development, preparation, negotiation, syndication, execution, interpretation or administration of, any modification of any term of or termination of, any Loan Document, any commitment or proposal letter therefor, any other document prepared in connection therewith or the consummation and administration of any transaction contemplated therein (including periodic audits in connection therewith and environmental audits and assessments), in each case including the reasonable fees, charges and disbursements of legal counsel to the Administrative Agent or such Related Persons, fees, costs and expenses incurred in connection with COMS® or any other E-System and allocated to the credit facilities contemplated by this Agreement by the Administrative Agent in its sole discretion and fees, charges and disbursements of the auditors, appraisers, printers and other of their Related Persons retained by or on behalf of any of them or any of their Related Persons, (b) the Administrative Agent for all reasonable costs and expenses incurred by it or any of its Related Persons in connection with internal audit reviews, field examinations and Collateral examinations (which shall be reimbursed, in addition to the out-of-pocket costs and expenses of such examiners, at the per diem rate per individual charged by the Administrative Agent for its examiners), (c) each of the Administrative Agent and its Related Persons for all costs and expenses incurred in connection with (i) any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out”, (ii) the enforcement or preservation of any right or remedy under any Loan Document, any Obligation, with respect to the Collateral or any other related right or remedy or (iii) the commencement, defense, conduct of, intervention in, or the taking of any other action with respect to, any proceeding (including any bankruptcy or insolvency proceeding) related to any Group Member, Loan Document, Obligation (or the response to and preparation for any subpoena or request for document production relating thereto) and (d) fees and disbursements of one law firm on behalf of all Lenders (other than the Administrative Agent) incurred in connection with any matters referred to in clause (c) above.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

63

 

 

Section 11.4     Indemnities. Each Borrower agrees to indemnify, hold harmless and defend the Administrative Agent, each Lender and each of their respective Related Persons (each such Person being an “Indemnitee”) from and against all Liabilities (including brokerage commissions, fees and other compensation) that may be imposed on, incurred by or asserted against any such Indemnitee in any matter relating to or arising out of, in connection with or as a result of (i) any Loan Document, any Disclosure Document, any Obligation (or the repayment thereof), the use or intended use of the proceeds of any Loan, or any securities filing of, or with respect to, any Group Member, (ii) any commitment letter, proposal letter or term sheet with any Person or any Contractual Obligation, arrangement or understanding with any broker, finder or consultant, in each case entered into by or on behalf of any Group Member or any Affiliate of any of them in connection with any of the foregoing and any Contractual Obligation entered into in connection with any E-Systems or other Electronic Transmissions, (iii) any actual or prospective investigation, litigation or other proceeding, whether or not brought by any such Indemnitee or any of its Related Persons, any holders of Securities or creditors (and including attorneys’ fees in any case), whether or not any such Indemnitee, Related Person, holder or creditor is a party thereto, and whether or not based on any securities or commercial law or regulation or any other Requirement of Law or theory thereof, including common law, equity, contract, tort or otherwise, or (iv) any other act, event or transaction related, contemplated in or attendant to any of the foregoing (collectively, the “Indemnified Matters”); provided, however, that no Borrower shall have any liability under this Section 11.4 to any Indemnitee with respect to any Indemnified Matter, and no Indemnitee shall have any liability with respect to any Indemnified Matter other than (to the extent otherwise liable), to the extent such liability has resulted primarily from the gross negligence or willful misconduct of such Indemnitee, as determined by a court of competent jurisdiction in a final non-appealable judgment or order. Furthermore, each of Holdings and each Borrower waives and agrees not to assert against any Indemnitee, and shall cause each other Loan Party to waive and not assert against any Indemnitee, any right of contribution with respect to any Liabilities that may be imposed on, incurred by or asserted against any Related Person.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

64

 

 

Section 11.5     Survival. Any indemnification or other protection provided to any Indemnitee pursuant to any Loan Document (including pursuant to Section 2.17 (Taxes), Section 2.16 (Breakage Costs), Article 10 (The Administrative Agent), Section 11.3 (Costs and Expenses), Section 11.4 (Indemnities) or this Section 11.5) and all representations and warranties made in any Loan Document shall (A) survive the termination of the Commitments and the payment in full of other Obligations and (B) inure to the benefit of any Person that at any time held a right thereunder (as an Indemnitee or otherwise) and, thereafter, its successors and permitted assigns.

 

Section 11.6     Limitation of Liability for Certain Damages. In no event shall any Indemnitee be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings). Each of Holdings and each Borrower hereby waives, releases and agrees (and shall cause each other Loan Party to waive, release and agree) not to sue upon any such claim for any special, indirect, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

Section 11.7     Lender-Creditor Relationship. The relationship between the Lenders and the Administrative Agent, on the one hand, and the Loan Parties, on the other hand, is solely that of lender and creditor. No Secured Party has any fiduciary relationship or duty to any Loan Party arising out of or in connection with, and there is no agency, tenancy or joint venture relationship between the Secured Parties and the Loan Parties by virtue of, any Loan Document or any transaction contemplated therein.

 

Section 11.8     Right of Setoff. Each of the Administrative Agent, each Lender and each Affiliate (including each branch office thereof) of any of them is hereby authorized, without notice or demand (each of which is hereby waived by Holdings and the Borrowers), at any time and from time to time during the continuance of any Event of Default and to the fullest extent permitted by applicable Requirements of Law, to set off and apply any and all deposits (whether general or special, time or demand, provisional or final) at any time held and other Indebtedness, claims or other obligations at any time owing by the Administrative Agent, such Lender or any of their respective Affiliates to or for the credit or the account of Holdings or any Borrower against any Obligation of any Loan Party now or hereafter existing, whether or not any demand was made under any Loan Document with respect to such Obligation and even though such Obligation may be unmatured. Each of the Administrative Agent and each Lender agrees promptly to notify the Borrower Representative and the Administrative Agent after any such setoff and application made by such Lender or its Affiliates; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights under this Section 11.8 are in addition to any other rights and remedies (including other rights of setoff) that the Administrative Agent, the Lenders and their Affiliates and other Secured Parties may have.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

65

 

 

Section 11.9     Sharing of Payments, Etc. If any Lender, directly or through an Affiliate or branch office thereof, obtains any payment of any Obligation of any Loan Party (whether voluntary, involuntary or through the exercise of any right of setoff or the receipt of any Collateral or “proceeds” (as defined under the applicable UCC) of Collateral) other than pursuant to Sections 2.16 (Breakage Costs), 2.17 (Taxes), 2.18 (Substitution of Lenders) and 11.2 (Assignments and Participations; Binding Effect) and such payment exceeds the amount such Lender would have been entitled to receive if all payments had gone to, and been distributed by, the Administrative Agent in accordance with the provisions of the Loan Documents, such Lender shall purchase for cash from other Secured Parties such participations in their Obligations as necessary for such Lender to share such excess payment with such Secured Parties to ensure such payment is applied as though it had been received by the Administrative Agent and applied in accordance with this Agreement (or, if such application would then be at the discretion of the Borrowers, applied to repay the Obligations in accordance herewith); provided, however, that (a) if such payment is rescinded or otherwise recovered from such Lender in whole or in part, such purchase shall be rescinded and the purchase price therefor shall be returned to such Lender without interest and (b) such Lender shall, to the fullest extent permitted by applicable Requirements of Law, be able to exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation. If a Non-Funding Lender receives any such payment as described in the previous sentence, such Lender shall turn over such payments to Agent.

 

Section 11.10     Marshaling; Payments Set Aside. No Secured Party shall be under any obligation to marshal any property in favor of any Loan Party or any other party or against or in payment of any Obligation. To the extent that any Secured Party receives a payment from any Borrower, from the proceeds of the Collateral, from the exercise of its rights of setoff, any enforcement action or otherwise, and such payment is subsequently, in whole or in part, invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not occurred.

 

Section 11.11     Notices. (a) Addresses. All notices, demands, requests, directions and other communications required or expressly authorized to be made by this Agreement shall, whether or not specified to be in writing but unless otherwise expressly specified to be given by any other means, be given in writing and (i) addressed to (A) if to Holdings or the Borrowers, to Rush Enterprises, Inc., 555 IH 35 South, Suite 500, New Braunfels, Texas 78130, Attention: Steven Keller, Chief Financial Officer, Tel: (830) 626-5256, Fax: (830) 626-5307, with copy to Rush Enterprises, Inc., 555 IH 35 South, Suite 500, New Braunfels, Texas 78130, Attention: Derrek Weaver, General Counsel, Tel: (830) 626-5929, Fax: (830) 626-5307, (B) if to the Administrative Agent, to BMO Harris Bank N.A., 300 E. John W. Carpenter Freeway, Suite 510, Irving, TX 75062, Attention: Charlie Price/Senior Risk Officer, Tel: (469) 586-2264, Fax: (469) 519-2424, with a copy to BMO Harris Bank N.A., 300 E. John W. Carpenter Freeway, Suite 510, Irving, TX 75062, Attention: William E. Wilson, Associate General Counsel/Vice President, and (C) otherwise to the party to be notified at its address specified opposite its name on Schedule II or on the signature page of any applicable Assignment, or (ii) addressed to such other address as shall be notified in writing (A) in the case of the Borrowers and the Administrative Agent, to the other parties hereto and (B) in the case of all other parties, to the Borrower Representative and the Administrative Agent; provided that (x) any Request for Equipment Borrowing with respect to any franchised or name brand Inventory shall be given by facsimile or email and addressed to Theresa White, BMO Harris Bank N.A., Telephone: 469-586-2190, Fax: 469-519-4112, email: theresa.white@bmotf.com, (y) any manufacturer of Inventory may provide notice of a sale of such Inventory to a Borrower and a related New Equipment Loan by use of the COMS® system and (z) any Request for Working Capital Borrowing or Request for Equipment Borrowing not made pursuant to clause (x) or clause (y) shall be given by email or fax to the Administrative Agent as provided in clause (i)(B) above.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

66

 

 

(b)     Effectiveness. All communications described in clause (a) above and all other notices, demands, requests and other communications made in connection with this Agreement shall be effective and be deemed to have been received (i) if delivered by hand, upon personal delivery, (ii) if delivered by overnight courier service, one Business Day after delivery to such courier service, (iii) if delivered by mail, when deposited in the mails, (iv) if delivered by facsimile (other than to post to an E-System pursuant to clause (a)(v) below), upon sender’s receipt of confirmation of proper transmission, and (v) if delivered by posting to any E-System, on the later of the date of such posting in an appropriate location and the date access to such posting is given to the recipient thereof in accordance with the standard procedures applicable to such E-System; provided, however, that no communications to the Administrative Agent pursuant to Article 2 or Article 10 shall be effective until received by the Administrative Agent.

 

Section 11.12      Electronic Transmissions. (a) Authorization. Subject to the provisions of Section 11.11(a), each of the Administrative Agent, the Borrowers, the Lenders and each of their Related Persons is authorized (but not required) to transmit, post or otherwise make or communicate, in its sole discretion, Electronic Transmissions in connection with any Loan Document and the transactions contemplated therein. Each of Holdings, each Borrower and each Secured Party hereby acknowledges and agrees, and each of Holdings and each Borrower shall cause each other Group Member to acknowledge and agree, that the use of Electronic Transmissions is not necessarily secure and that there are risks associated with such use, including risks of interception, disclosure and abuse and each indicates it assumes and accepts such risks by hereby authorizing the transmission of Electronic Transmissions.

 

(b)     Signatures. Subject to the provisions of Section 11.11(a), (i)(A) no posting to any E-System shall be denied legal effect merely because it is made electronically, (B) each PDF or other digital signature on any such posting shall be deemed sufficient to satisfy any requirement for a “signature” and (C) each such posting shall be deemed sufficient to satisfy any requirement for a “writing”, in each case including pursuant to any Loan Document, any applicable provision of any UCC, the federal Uniform Electronic Transactions Act, the Electronic Signatures in Global and National Commerce Act and any substantive or procedural Requirement of Law governing such subject matter, (ii) each such posting that is not readily capable of bearing either a signature or a reproduction of a signature may be signed, and shall be deemed signed, by attaching to, or logically associating with such posting, a PDF or other digital signature, upon which each Secured Party and Loan Party may rely and assume the authenticity thereof, (iii) each such posting containing a signature, a reproduction of a signature or a PDF or other digital signature shall, for all intents and purposes, have the same effect and weight as a signed paper original and (iv) each party hereto or beneficiary hereto agrees not to contest the validity or enforceability of any posting on any E-System or PDF or other digital signature on any such posting under the provisions of any applicable Requirement of Law requiring certain documents to be in writing or signed; provided, however, that nothing herein shall limit such party’s or beneficiary’s right to contest whether any posting to any E-System or PDF or other digital signature has been altered after transmission.

 

(c)      Separate Agreements. All uses of an E-System (including, without limitation, the COMS® system) shall be governed by and subject to, in addition to Section 11.11 and this Section 11.12, separate terms and conditions posted or referenced in such E-System and related Contractual Obligations executed by Secured Parties and Group Members in connection with the use of such E-System.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

67

 

 

(d)     Limitation of Liability. All E-Systems and Electronic Transmissions shall be provided “as is” and “as available”. None of Administrative Agent or any of its Related Persons warrants the accuracy, adequacy or completeness of any E-Systems or Electronic Transmission, and each disclaims all liability for errors or omissions therein. No warranty of any kind is made by the Administrative Agent or any of its Related Persons in connection with any E-Systems or Electronic Transmission, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects. Each of Holdings, each Borrower and each Secured Party agrees (and each of Holdings and the Borrowers shall cause each other Loan Party to agree) that the Administrative Agent has no responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Electronic Transmission or otherwise required for any E-System.

 

Section 11.13     Governing Law. This Agreement, each other Loan Document that does not expressly set forth its applicable law, and the rights and obligations of the parties hereto and thereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

 

Section 11.14   Jurisdiction. (a) Submission to Jurisdiction. Any legal action or proceeding with respect to any Loan Document shall be brought exclusively in the courts of the State of New York located in the City of New York, Borough of Manhattan, or of the United States of America for the Southern District of New York and, by execution and delivery of this Agreement, each of Holdings and EACH Borrower hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts; provided, that nothing in this Agreement shall limit the right of ADMINISTRATIVE Agent to commence any proceeding in the federal or state courts of any other jurisdiction to the extent ADMINISTRATIVE Agent determines that such action is necessary or appropriate to exercise its rights or remedies under the Loan Documents. The parties hereto (and, to the extent set forth in any other Loan Document, each other Loan Party) hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that any of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.

 

(b)     Service of Process. Each of Holdings and EACH Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) hereby irrevocably waives personal service of any and all legal process, summons, notices and other documents and other service of process of any kind and consents to such service in any suit, action or proceeding brought in the United States of America with respect to or otherwise arising out of or in connection with any Loan Document by any means permitted by applicable Requirements of Law, including by the mailing thereof (by registered or certified mail, postage prepaid) to the address of THE BorrowerS specified in Section 11.11 (and shall be effective when such mailing shall be effective, as provided therein). Each of Holdings and EACH Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

68

 

 

(c)     Non-Exclusive Jurisdiction. Nothing contained in this Section 11.14 shall affect the right of the Administrative Agent or any Lender to serve process in any other manner permitted by applicable Requirements of Law or commence legal proceedings or otherwise proceed against any Loan Party in any other jurisdiction.

 

Section 11.15     Waiver of Jury Trial. Each party hereto hereby irrevocably waives trial by jury in any suit, action or proceeding with respect to, or directly or indirectly arising out of, under or in connection with, any Loan Document or the transactions contemplated therein or related thereto (whether founded in contract, tort or any other theory). Each party hereto (A) certifies that no other party and no Related Person of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (B) acknowledges that it and the other parties hereto have been induced to enter into the Loan Documents, as applicable, by the mutual waivers and certifications in this Section 11.15.

 

Section 11.16     Severability. Any provision of any Loan Document being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other provision of any Loan Document or any part of such provision in any other jurisdiction.

 

Section 11.17     Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Agreement by facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually executed counterpart hereof.

 

Section 11.18     Entire Agreement. The Loan Documents embody the entire agreement of the parties and supersede all prior agreements and understandings relating to the subject matter thereof and any prior letter of interest, commitment letter, fee letter, confidentiality and similar agreements involving any Loan Party and any of the Administrative Agent or any Lender or any of their respective Affiliates relating to a financing of substantially similar form, purpose or effect. In the event of any conflict between the terms of this Agreement and any other Loan Document, the terms of this Agreement shall govern (unless such terms of such other Loan Documents are necessary to comply with applicable Requirements of Law, in which case such terms shall govern to the extent necessary to comply therewith).

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

69

 

 

Section 11.19     Use of Name. Each of Holdings and each Borrower agrees, and shall cause each other Loan Party to agree, that it shall not, and none of its Affiliates shall, issue any press release or other public disclosure (other than any document filed with any Governmental Authority (i) relating to a public offering of the Securities of any Loan Party or (ii) pursuant to the Securities Exchange Act of 1934, as amended) using the name, logo or otherwise referring to BHB or of any of its Affiliates, the Loan Documents or any transaction contemplated therein to which the Secured Parties are party without at least 2 Business Days’ prior notice to BHB and without the prior consent of BHB except to the extent required to do so under applicable Requirements of Law and then, only after consulting with BHB prior thereto (any such consultation not to be required more than once with respect to duplicate references).

 

Section 11.20     Non-Public Information; Confidentiality. (a) Each Lender acknowledges and agrees that it may receive material non-public information hereunder concerning the Loan Parties and their Affiliates and Securities and agrees to use such information in compliance with all relevant policies, procedures and Contractual Obligations and applicable Requirements of Laws (including United States federal and state security laws and regulations).

 

(b)     Each Lender and the Administrative Agent agrees to use all reasonable efforts to maintain, in accordance with its customary practices, the confidentiality of information obtained by it pursuant to any Loan Document and designated in writing by any Loan Party as confidential, except that such information may be disclosed (i) with the Borrower Representative’s consent, (ii) to Related Persons of such Lender or the Administrative Agent, as the case may be, that are advised of the confidential nature of such information and are instructed to keep such information confidential in accordance with the terms hereof, (iii) to the extent such information presently is or hereafter becomes (A) publicly available other than as a result of a breach of this Section 11.20 or (B) available to such Lender or the Administrative Agent or any of their Related Persons, as the case may be, from a source (other than any Loan Party) not known to them to be subject to disclosure restrictions, (iv) to the extent disclosure is required by applicable Requirements of Law or other legal process or requested or demanded by any Governmental Authority, (v) to the extent necessary or customary for inclusion in league table measurements or in any tombstone or other advertising materials (and the Loan Parties consent to the publication of such tombstone or other advertising materials by the Administrative Agent, any Lender or any of their Related Persons), (vi) to the National Association of Insurance Commissioners or any similar organization, any examiner or any nationally recognized rating agency or otherwise to the extent consisting of general portfolio information that does not identify Loan Parties, (vii) to current or prospective assignees, grantees of any option described in Section 11.2 or participants, direct or contractual counterparties to any swap agreement permitted hereunder and to their respective Related Persons, in each case to the extent such assignees, participants, counterparties or Related Persons agree to be bound by provisions substantially similar to the provisions of this Section 11.20 (and such Person may disclose information to their respective Related Persons in accordance with clause (ii) above), (viii) to any other party hereto and (ix) in connection with the exercise or enforcement of any right or remedy under any Loan Document, in connection with any litigation or other proceeding to which such Lender or the Administrative Agent or any of their Related Persons is a party or bound, to the extent necessary to respond to public statements or disclosures by Loan Parties or their Related Persons referring to a Lender or the Administrative Agent or any of their Related Persons. In the event of any conflict between the terms of this Section 11.20 and those of any other Contractual Obligation entered into with any Loan Party (whether or not a Loan Document), the terms of this Section 11.20 shall govern. Any Person required to maintain the confidentiality of information as provided in this Section 11.20 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord its own confidential information.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

70

 

 

(c)     Notwithstanding the foregoing, Administrative Agent may receive from and disclose to any individual, corporation, business trust, association, company, partnership, joint venture, or other entity (herein collectively, the "Entity"), including, without limitation, Administrative Agent's parent or any affiliate or any subsidiary of Administrative Agent and any credit reporting agency or other entity whether or not related to Administrative Agent for any purpose, information about any Loan Party’s accounts, credit application and credit experience with Administrative Agent and each Loan Party authorizes any Entity to release to Administrative Agent any information related to such Loan Party’s accounts, credit experience and account information regarding such Loan Party. This shall be continuing authorization for all present and future disclosures of the Loan Parties’ account information, credit application and credit experience on the Loan Parties made by Administrative Agent, or any Entity requested to release such information to Administrative Agent.

 

Section 11.21     Actions in Concert. Notwithstanding anything herein or in the other Loan Documents to the contrary, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights against any Loan Party arising out of this Agreement or any other Loan Document (including exercising any rights of setoff) without first obtaining the prior written consent of the Administrative Agent or the Required Lenders, it being the intent of the Lenders that any such action to protect or enforce rights under this Agreement and the other Loan Documents shall be taken in concert and at the direction or with the consent of the Administrative Agent or the Required Lenders.

 

Section 11.22     Patriot Act Notice. Each Lender subject to the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq.) hereby notifies the Borrowers that, pursuant to Section 326 thereof, it is required to obtain, verify and record information that identifies each Borrower, including the name and address of each Borrower and other information allowing such Lender to identify each such Borrower in accordance with such act.

 

Section 11.23     Amendment and Restatement; No Novation. On the Restatement Date, the Original Credit Agreement is amended and restated in its entirety by this Agreement and (i) all references to the Original Credit Agreement in any Loan Document other than this Agreement (including in any amendment, waiver or consent) shall be deemed to refer to the Original Credit Agreement as amended and restated hereby, (ii) all references to any section (or subsection) of the Original Credit Agreement in any Loan Document (but not herein) shall be amended to be, mutatis mutandis, references to the corresponding provisions of this Agreement, and (iii) except as the context otherwise provides, all references to this Agreement herein (including for purposes of indemnification and reimbursement of fees) shall be deemed to be reference to the Original Credit Agreement as amended and restated hereby. This Agreement is not intended to constitute, and does not constitute, a novation of the obligations and liabilities under the Original Credit Agreement (including the Obligations) or to evidence payment of all or any portion of such obligations and liabilities. Except as expressly provided in any Loan Document, this Agreement (i) shall not cure any breach of the Original Credit Agreement or any “Default” or “Event of Default” thereunder existing prior to the Restatement Date and (ii) is limited as written and is not a consent to any other modification of any term or condition of any Loan Document, each of which shall remain in full force and effect. This Agreement shall not in any way release or impair the rights, duties, Obligations (as defined in the Original Credit Agreement) or Liens (as defined in the Original Credit Agreement) created pursuant to the Original Credit Agreement or any other Loan Document (as defined therein) or affect the relative priorities thereof, in each case to the extent in force and effect thereunder as of the Restatement Date and except as modified hereby or by documents, instruments and agreements executed and delivered in connection herewith and all of such rights, duties, Obligations and Liens are assumed, ratified and affirmed by each of the Loan Parties. All Liens created under the Original Credit Agreement remain in full force and effect. This Agreement shall constitute a Loan Document. As amended hereby, all terms of the Original Credit Agreement and the other Loan Documents shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of the Loan Parties party thereto. 

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

71

 

 

Section 11.24     Reaffirmation of Guaranty. Holdings consents to the execution and delivery by all Borrowers of this Agreement and the consummation of the transactions described herein, and ratifies and confirms the terms of its guarantee of all Obligations with respect to the indebtedness now or hereafter outstanding under the Original Credit Agreement as amended hereby. Holdings acknowledges that, notwithstanding anything to the contrary contained herein or in any other document evidencing any indebtedness of any Borrower to the Lenders or any other obligation of any Borrower, or any actions now or hereafter taken by the Lenders with respect to any obligation of any Borrower, the guarantee by Holdings of all Obligations (i) is and shall continue to be a primary obligation of Holdings, (ii) is and shall continue to be an absolute, unconditional, continuing and irrevocable guaranty of payment, and (iii) is and shall continue to be in full force and effect in accordance with its terms. Nothing contained herein to the contrary shall release, discharge, modify, change or affect the original liability of Holdings with respect to the Obligations as amended hereby. 

 

Section 11.25     Reallocation. As of the date hereof and upon giving effect to the terms of this Agreement, (x) all outstanding “Revolving A Loans” and “Revolving B Loans” (each as defined in the Original Credit Agreement) shall be deemed to be “Revolving A Loans” and shall be reallocated among the Revolving A Lenders based on their respective Pro Rata Shares of the Commitments A and (y) all outstanding “Revolving C Loans” (as defined in the Original Credit Agreement), if any, shall be deemed to be “Revolving B Loans” and shall be reallocated among the Revolving B Lenders based on their respective Pro Rata Shares of the Commitments B. Each Revolving A Lender that has its outstanding Revolving A Loans increased due to such reallocation (each, a “Purchasing Lender”) shall be deemed to have purchased such Revolving A Loans from each Lender under the Original Credit Agreement that has its outstanding loans reduced due to such reallocation (each, a “Selling Lender”) and each Selling Lender shall be deemed to have sold such loans to the Purchasing Lenders. On the Restatement Date, each Purchasing Lender shall pay to the Administrative Agent, for the account of each Selling Lender, an amount equal to the increase in its outstanding loans due to the reallocation contemplated by this Section 11.25.

 

Section 11.26     Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

72

 

 

(a)     the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

 

(b)     the effects of any Bail-in Action on any such liability, including, if applicable:

 

(i)     a reduction in full or in part or cancellation of any such liability;

 

(ii)     a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

 

(iii)     the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

 

ARTICLE 12
CROSS-GUARANTY

 

Section 12.1     Cross-Guaranty. Each Borrower hereby agrees that such Borrower is jointly and severally liable for, and hereby absolutely and unconditionally guarantees to the Administrative Agent and the Lenders and their respective successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to the Administrative Agent and the Lenders by each other Borrower (“Guaranteed Obligations”). Each Borrower agrees that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its obligations under this Article 12 shall not be discharged until payment and performance, in full, of the Obligations has occurred, and that its obligations under this Article 12 shall be absolute and unconditional, irrespective of, and unaffected by: 

 

(a)     the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Borrower is or may become a party;

 

(b)     the absence of any action, against any Person other than such Borrower, to enforce this Agreement (including this Article 12) or any other Loan Document or the waiver or consent by the Administrative Agent and the Lenders with respect to any of the provisions thereof;

 

(c)     the existence, value or condition of, or failure to perfect its Lien against, any security for the Obligations or any action, or the absence of any action, by the Administrative Agent and the Lenders in respect thereof (including the release of any such security); 

 

(d)     the insolvency of any Loan Party; or

 

(e)     any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

73

 

 

Each Borrower shall be regarded, and shall be in the same position, as principal debtor with respect to the Guaranteed Obligations.

 

Section 12.2     Waivers by Borrowers. Each Borrower expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel the Administrative Agent or the Lenders to marshal assets or to proceed in respect of the Obligations guaranteed hereunder against any other Loan Party, any other party or against any security for the payment and performance of the Guaranteed Obligations before proceeding against, or as a condition to proceeding against, such Borrower. It is agreed among each Borrower, the Administrative Agent and the Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for the provisions of this Article 12 and such waivers, the Administrative Agent and the Lenders would decline to enter into this Agreement.

 

Section 12.3     Benefit of Guaranty. Each Borrower agrees that the provisions of this Article 12 are for the benefit of the Administrative Agent and the Lenders and their respective successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower and the Administrative Agent or the Lenders, the obligations of such other Borrower under the Loan Documents. 

 

Section 12.4     Subordination of Subrogation, Etc. Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, and except as set forth in Section 12.7, each Borrower hereby expressly and irrevocably subordinates to payment of the Obligations any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor until the Obligations are paid in full in cash and the applicable preference period has passed. Each Borrower acknowledges and agrees that this subordination is intended to benefit the Administrative Agent and the Lenders and shall not limit or otherwise affect such Borrower's liability hereunder or the enforceability of this Article 12, and that the Administrative Agent, the Lenders and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this Section 12.4.

 

Section 12.5     Election of Remedies. If the Administrative Agent or any Lender may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving the Administrative Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower or by any other Person, either by judicial foreclosure or by non judicial sale or enforcement, the Administrative Agent or any Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Article 12. If, in the exercise of any of its rights and remedies, the Administrative Agent or any Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Borrower or any other Person, whether because of any applicable laws pertaining to "election of remedies" or the like, each Borrower hereby consents to such action by the Administrative Agent or such Lender and waives any claim based upon such action, even if such action by the Administrative Agent or such Lender shall result in a full or partial loss of any rights of subrogation that such Borrower might otherwise have had but for such action by the Administrative Agent or such Lender. Any election of remedies that results in the denial or impairment of the right of the Administrative Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower's obligation to pay the full amount of the Obligations. In the event the Administrative Agent or any Lender shall bid at any foreclosure or trustee's sale or at any private sale permitted by law or the Loan Documents, the Administrative Agent or such Lender may bid all or less than the amount of the Obligations and the amount of such bid need not be paid by the Administrative Agent or such Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether the Administrative Agent, Lender or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Article 12, notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which the Administrative Agent or any Lender might otherwise be entitled but for such bidding at any such sale.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

74

 

 

Section 12.6     Limitation. Notwithstanding any provision herein contained to the contrary, each Borrower's liability under this Article 12 (which liability is in any event in addition to amounts for which such Borrower is primarily liable under Article 2) shall be limited to an amount not to exceed as of any date of determination the greater of:

 

(a)     the net amount of all Loans advanced to any other Borrower under this Agreement and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower; and

 

(b)     the amount that could be claimed by the Administrative Agent and the Lenders from such Borrower under this Article 12 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, such Borrower's right of contribution and indemnification from each other Borrower under Section 12.7.

 

Section 12.7     Contribution with Respect to Guaranty Obligations.

 

(a)     To the extent that any Borrower shall make a payment under this Article 12 of all or any of the Obligations (other than Loans made to that Borrower for which it is primarily liable) (a "Guarantor Payment") that, taking into account all other Guarantor Payments then previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Borrower's "Allocable Amount" (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following payment in full in cash of the Obligations, termination of the Commitments and the passage of the applicable preference period, such Borrower shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

 

(b)     As of any date of determination, the "Allocable Amount" of any Borrower shall be equal to the maximum amount of the claim that could then be recovered from such Borrower under this Article 12 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

75

 

 

(c)     This Section 12.7 is intended only to define the relative rights of the Borrowers and nothing set forth in this Section 12.7 is intended to or shall impair the obligations of the Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including Section 12.1. Nothing contained in this Section 12.7 shall limit the liability of any Borrower to pay the Loans made directly or indirectly to such Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall be primarily liable.

 

(d)     The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Borrowers to which such contribution and indemnification is owing.

 

(e)     The rights of the indemnifying Borrowers against other Loan Parties under this Section 12.7 shall be exercisable upon the full and final payment of the Obligations, the termination of the Commitments and the passage of the applicable preference period.

 

Section 12.8     Liability Cumulative. The liability of the Borrowers under this Article 12 is in addition to and shall be cumulative with all liabilities of each Borrower to the Administrative Agent and the Lenders under this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any Obligations or obligation of the other Borrower, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

 

[Signature Pages Follow]

 

 

THIRD Amended and restated credit Agreement

RUSH ENTERPRISES, INC. 

 

76

 

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

 

	
 
	
BORROWERS:

 

RUSH TRUCK CENTERS OF ALABAMA, INC.

RUSH TRUCK CENTERS OF ARIZONA, INC.

RUSH TRUCK CENTERS OF CALIFORNIA, INC.

RUSH MEDIUM DUTY TRUCK CENTERS OF COLORADO, INC.

RUSH TRUCK CENTERS OF COLORADO, INC.

RUSH TRUCK CENTERS OF FLORIDA, INC.

RUSH TRUCK CENTERS OF GEORGIA, INC.

RUSH TRUCK CENTERS OF NEW MEXICO, INC.

RUSH TRUCK CENTERS OF OKLAHOMA, INC.

RUSH TRUCK CENTERS OF TENNESSEE, INC.

RUSH TRUCK CENTERS OF NORTH CAROLINA, INC.

RUSH TRUCK CENTERS OF IDAHO, INC. 

RUSH TRUCK CENTERS OF UTAH, INC. 

RUSH TRUCK CENTERS OF OHIO, INC.

RUSH TRUCK CENTERS OF KANSAS, INC.

RUSH TRUCK CENTERS OF MISSOURI, INC.

Rush Truck Centers of Virginia Inc.

Rush Truck Centers of Indiana Inc.

Rush Truck Centers of Illinois Inc. 

Rush Truck Centers of Nevada, Inc.
Rush Truck Centers of Kentucky, Inc.

	 	 
	 	
By: /s/ W.M. “Rusty” Rush

Name: W.M. “Rusty” Rush

Title: Chief Executive Officer and President

of each of the foregoing entities 

	 	 
	 	
Rush Truck Centers of Texas, L.P.

 

By: Rushtex, Inc., a Delaware corporation

 

 

By: /s/ W.M. “Rusty” Rush

Name: W.M. “Rusty” Rush

Title: Chief Executive Officer and President 

 

HOLDINGS:

 

RUSH ENTERPRISES, INC.

 

 

By: /s/ W.M. “Rusty” Rush

Name: W.M. “Rusty” Rush

Title: Chief Executive Officer, President and Chairman

 

 

[SIGNATURE PAGE TO RUSH ENTERPRISES, INC. THIRD AMENDED AND RESTATED CREDIT AGREEMENT]

 

 

 

 

	 	
BMO HARRIS BANK N.A., as Administrative Agent and Lender

 

 

 

By: /s/ Charles W. Price
Name: Charles W. Price
Title: Underwriting Manager

 

 

[SIGNATURE PAGE TO RUSH ENTERPRISES, INC. THIRD AMENDED AND RESTATED CREDIT AGREEMENT]

 

 

 

 

	
 
	
OTHER LENDERS:

 

 

Bank of the West, 

as a Lender

 

 

 

By: /s/ Ryan Mauser
Name: Ryan Mauser
Title: Vice President

 

PNC Bank, National Association, 

AS A LENDER

 

 

 

By: /s/ Robert L. Bidinger
Name: Robert L. Bidinger
Title: Senior Vice President

 

MassMutual Asset Finance LLC, 

as a Lender

 

 

By: /s/ Alison Oldmixon
Name: Alison Oldmixon
Title: Vice President

 

Comerica Bank, 

as a Lender

 

 

By: /s/ W. Cody Bracken
Name: W. Cody Bracken
Title: Vice President

 

wells fargo bank, n.a., 

as a Lender

 

 

By: /s/ Jeffrey Brouillard
Name: Jeffrey Brouillard
Title: Senior Vice President

 

 

[SIGNATURE PAGE TO RUSH ENTERPRISES, INC. THIRD amended and restated CREDIT AGREEMENT]

 

 

 

 

 

	
 
	
BOKF, N.A., d/b/a Bank of Texas, 

as a Lender

 

 

By: /s/ Dan Walker
Name: Dan Walker
Title: SVP

 

NYCB Specialty Finance Company, LLC,

as a Lender

 

 

By: /s/ Mark C. Mazmanian
Name: Mark C. Mazmanian
Title: Senior Vice President

 

BANK OF AMERICA, N.A. 

as a Lender

 

 

By: /s/ Joe Sagneri
Name: Joe Sagneri
Title: S.V.P.

 

 

[SIGNATURE PAGE TO RUSH ENTERPRISES, INC. THIRD amended and restated CREDIT AGREEMENT]

 

 

 

 

 

	
 
	
ACKNOWLEDGED AND AGREED:

 

RUSH TRUCK CENTERS OF OREGON, INC.

 

 

By: /s/ W.M. “Rusty” Rush

Name: W.M. “Rusty” Rush

Title: Chief Executive Officer and President

 

 

[SIGNATURE PAGE TO RUSH ENTERPRISES, INC. THIRD amended and restated CREDIT AGREEMENT]

 

 

 

 

Schedule I

Commitments

 

 

 

	
Lender
	
Commitment A
	
Commitment B

	
Bank of the West
	
$43,000,000
	
$0

	
Comerica Bank
	
$100,000,000
	
$0

	
Bank of America, N.A.
	
$100,000,000
	
$0

	
MassMutual Asset Finance LLC
	
$115,000,000
	
$0

	
PNC Bank, National Association
	
$50,000,000
	
$0

	
NYCB Specialty Finance Company, LLC
	
$40,000,000
	
$0

	
BOKF, N.A., d/b/a Bank of Texas
	
$30,000,000
	
$0

	
Wells Fargo Bank, N.A.
	
$70,000,000
	
$0

	
BMO Harris Bank, N.A.
	
$227,000,000
	
$100,000,000

	
Total
	
$775,000,000
	
$100,000,000

 

 

 

 

Schedule II

Lender Addresses for Notice

 

 

Bank of the West:

Bank of the West, a California Banking Corporation

James Chesser 

MSN: NC-B07-2F-P

2527 Camino Ramon

San Ramon, CA 94583

(925) 843- 8156

(866) 649- 1872

james.chesser@bankofthewest.com

 

Bank of the West, a California Banking Corporation

Ryan Mauser

MSN: NC-B07-2F-P

2527 Camino Ramon

San Ramon, CA 94583

(925) 843-8134

(866) 649- 1872

Ryan.mauser@bankofthewest.com

 

 

Comerica Bank: 

Comerica Bank

Marian Welsh

2900 N. Loop West

Suite 700

Houston, TX 77092

(713) 507-1318

(713) 507-2879

mwelsh@comerica.com

 

Comerica Bank

W. Cody Brackeen

2900 N. Loop West

Suite 700

Houston, TX 77092

(713) 507-1319

(713) 507-2879

wcbrackeen@comerica.com

 

 

 

 

MassMutual Asset Finance LLC:

MassMutual Asset Finance LLC

Don Buttler

Two Hampshire Street

Suite 101

Foxboro, MA 02035

508-698-5515

508-698-5519

dbuttler@massmutual.com

 

PNC Bank, National Association:

PNC Bank

Robert Bidinger

155 East Broad Street

Columbus, OH 43215

614-463-7308

614-463-7350

robert.bidinger@pnc.com

 

 

Bank of Texas

BOKF, N.A., d/b/a Bank of Texas

Attention: Erin Young

5956 Sherry Lane, Suite 600

Dallas, Texas 75225

214.346.3913

214.346.3910

e.young@bokf.com 

 

Wells Fargo Bank, N.A.

WELLS FARGO BANK, N.A.

Attention: JEFFREY BROUILLARD

16414 SAN PEDRO, SUITE 700

SAN ANTONIO, TX 78232

210-856-5332

210-856-5003

jeffrey.brouillard@wellsfargo.com

 

 

 

 

NYCB Specialty Finance Company, LLC:

NYCB Specialty Finance Company, LLC 

16 Chestnut Street

Foxboro, MA 02035

Tel: (508) 698-4343

Fax: (508) 543-1551 (email is preferred)

e-mail: mark.mazmanian@mynycb.com

Attention: Mark C. Mazmanian

 

NYCB Specialty Finance Company, LLC 

16 Chestnut Street

Foxboro, MA 02035

Tel: (508) 698-4351

Fax: (508) 543-1551 (email is preferred)

e-mail: jennifer.gobeil@mynycb.com

Attention: Jennifer Gobeil

 

Bank of America, N.A.:

Bank of America, N.A.

1355 Windward Concourse

Alpharetta, Ga 30005

770-774-4640

joe.sagneri@baml.com

Attention: Joe Sagneri

 

 

 

 

Schedule 1.1

Immaterial Subsidiaries

 

 

 

 

	
Rig Tough, Inc.
	
 
	
 
	
Importer of truck parts sold at dealerships

	
Rush Truck Center of Albuquerque, Inc.
	
 
	
 
	
No revenue

	
Rush Equipment Centers of Texas, Inc.
	
 
	
 
	
Inactive

	
Rushtex, Inc.
	
 
	
 
	
General Partner of Rush Truck Centers of Texas, L.P.

	
Rushco, Inc.
	
 
	
 
	
Limited Partner of Rush Truck Centers of Texas, L.P.

	
Rush Real Estate Holdings, Inc.
	
 
	
 
	
Owns corporate headquarters

	
International General Agency
	
 
	
 
	
Insurance Agency that sells insurance to truck owners

	
Los Cuernos, Inc.
	
 
	
 
	
Ranch used for customer entertainment

	
AiRush, Inc.
	
 
	
 
	
This entity owns the corporate aircraft

	
Rush Retail Centers, Inc.
	
 
	
 
	
Inactive

	
Associated Acceptance, Inc.
	
 
	
 
	
Owned by International General Agency above

	
Associated Acceptance of Florida, Inc.
	
 
	
 
	
Owned by International General Agency above

	
Associated Acceptance of Oklahoma, Inc.
	
 
	
 
	
Owned by International General Agency above

	
Advance Premium Finance, Inc.
	
 
	
 
	
Owned by International General Agency above

	
Associated Acceptance of Georgia, Inc.
	  	  	
Owned by International General Agency above

	
Blackshear Real Estate Holdings, Inc.
	  	  	
Leases a dealership in Blackshear, GA

	
Idealease of Chicago LLC
	  	  	
Owns an Idealease franchise in Chicago, IL

	
Natural Gas Fuel Systems, Inc.
	  	  	
Manufactures and sells CNG fuel tanks

	
Rush Accessories Corp.
	  	  	
Sells chrome truck accessories under the brand “Chrome Country”

	
Rush Administrative Services, Inc.
	  	  	
Provides various G&A services to Rush Enterprises, Inc. and its subsidiaries

	
Central California Truck and Trailer Sales, LLC1
	  	  	
Used truck dealer

	
Rush Logistics, Inc.
	  	  	
Provides transportation brokerage services for Rush vehicles

	
Rush Truck Leasing, Inc.
	  	  	
Leases and rents trucks; provides maintenance on leased vehicles

	
Truck & Trailer Finance, Inc.
	  	  	
Provides financing for certain customers 

	
RTC Illinois Acquisition Corp.
	  	  	
No revenue

	
Rush Truck Centers of Oregon Inc.
	
 
	
 
	
Inactive

	
Commercial Fleet Technologies, Inc.
	  	  	
Operates an online parts marketplace

	
RTC Nevada LLC
	  	  	
No revenue

 

 

1 Joint Venture 50% owned by Rush Administrative Services, Inc. 

 

 

 

 

Schedule 4.2

Consents and Approvals

 

 

None. 

 

 

 

 

Schedule 4.3

Group Members 

 

Rush Enterprises, Inc.

 

	
Jurisdiction of Organization:
	
Texas

 

WHOLLY OWNED Subsidiaries Of Rush Enterprises, Inc.:

 

AiRush, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Blackshear Real Estate Holdings, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Commercial Fleet Technologies, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

International General Agency, Inc.

 

	
Jurisdiction of Organization:
	
Texas

 

Wholly Owned Subsidiaries of International General Agency, Inc.:

 

 

	
Advance Premium Finance, Inc.
	 
	
Jurisdiction of Organization:
	
California

	

	 
	
Associated Acceptance, Inc.
	 
	
Jurisdiction of Organization:
	Texas

  
Associated Acceptance of Florida, Inc. 

	
Jurisdiction of Organization:
	
Delaware

 

Associated Acceptance of Georgia, Inc. 

	
Jurisdiction of Organization:
	
Delaware

 

Associated Acceptance of Oklahoma, Inc. 

	
Jurisdiction of Organization:
	
Delaware

 

Los Cuernos, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

Natural Gas Fuel Systems, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

 

 

Rig Tough, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

Rushco, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

 

RTC Nevada LLC

 

	
Jurisdiction of Organization:
	
Delaware

 

Rushtex, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

Rush Accessories Corporation

 

	
Jurisdiction of Organization:
	
Delaware

Rush Administrative Services, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

Central California Truck and Trailer Sales, LLC

 

	
Jurisdiction of Organization:
	
California

Rush Equipment Centers of Texas, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

Rush Logistics, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

Rush Retail Centers, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Real Estate Holdings, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Leasing, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

 

 

 

Wholly Owned Subsidiary of Rush Truck Leasing, Inc.:

 

 

Idealease of Chicago LLC 

	
Jurisdiction of Organization:
	
          Illinois

 

 

Rush Truck Centers of Alabama, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

Rush Truck Centers of Arizona, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Centers of California, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Centers of Colorado, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

 

Wholly Owned Subsidiary of Rush Truck Centers of Colorado, Inc.:

 

Rush Medium Duty Truck Centers of Colorado, Inc. 

	
Jurisdiction of Organization:
	
          Delaware

 

Rush Truck Centers of Florida, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

Rush Truck Centers of Georgia, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Centers of Idaho, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Centers of Illinois, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Wholly Owned Subsidiary of Rush Truck Centers of Illinois, Inc.:

 

RTC Illinois Acquisition Corp. 

	
Jurisdiction of Organization:
	
          Delaware

  

 

 

 

 

Rush Truck Centers of Indiana, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

	  	  

Rush Truck Centers of Kansas, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

 

Rush Truck Centers of Kentucky, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Centers of Missouri, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

 

Rush Truck Centers of Nevada, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Centers of New Mexico, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

 

Wholly Owned Subsidiary of Rush Truck Centers of New Mexico, Inc.:

 

Rush Truck Center of Albuquerque, Inc. 

	
Jurisdiction of Organization:
	
          New Mexico

 

Rush Truck Centers of North Carolina, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Centers of Ohio, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

 

Rush Truck Centers of Oklahoma, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Centers of Oregon, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

 

 

 

Rush Truck Centers of Texas, L.P.

 

	
Jurisdiction of Organization:
	
Texas

	
General Partner:
	
Rushtex, Inc., a Delaware corporation (0.1% owner)

	
Limited Partner:
	
Rushco, Inc., a Delaware corporation (99.9% owner)

Rush Truck Centers of Tennessee, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

Rush Truck Centers of Utah, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Rush Truck Centers of Virginia, Inc.

 

	
Jurisdiction of Organization:
	
Delaware

 

Truck & Trailer Finance, Inc.

 

	
Jurisdiction of Organization:
	
DelawareExhibit 10.1

 

MULTIFAMILY LOAN AND SECURITY AGREEMENT

(NON-RECOURSE)

 

BY AND BETWEEN

 

BR CARROLL LANSBROOK, LLC, a Delaware
limited liability company

 

AND

 

WALKER & DUNLOP, LLC, a Delaware
limited liability company

 

DATED AS OF

 

July 8, 2016

 

  

 

     

     

    

 

TABLE OF CONTENTS

 

	ARTICLE 1 - DEFINITIONS; SUMMARY OF MORTGAGE LOAN TERMS	1
	 	 	 
	Section 1.01     Defined Terms	1
	Section 1.02     Schedules, Exhibits, and Attachments Incorporated	1
	 	 	 
	ARTICLE 2 - GENERAL MORTGAGE LOAN TERMS	2
	 	 	 
	Section 2.01     Mortgage Loan Origination and Security	2
	(a)	Making of Mortgage Loan	2
	(b)	Security for Mortgage Loan	2
	(c)	Protective Advances	2
	Section 2.02     Payments on Mortgage Loan	2
	(a)	Debt Service Payments	2
	(b)	Capitalization of Accrued But Unpaid Interest	3
	(c)	Late Charges	3
	(d)	Default Rate	4
	(e)	Address for Payments	5
	(f)	Application of Payments	5
	Section 2.03     Lockout/Prepayment	5
	(a)	Prepayment; Prepayment Lockout; Prepayment Premium	5
	(b)	Voluntary Prepayment in Full	5
	(c)	Acceleration of Mortgage Loan	6
	(d)	Application of Collateral	6
	(e)	Casualty and Condemnation	7
	(f)	No Effect on Payment Obligations	7
	(g)	Loss Resulting from Prepayment	7
	 	 	 
	ARTICLE 3 - PERSONAL LIABILITY	7
	 	 	 
	Section 3.01     Non-Recourse Mortgage Loan; Exceptions	7
	Section 3.02     Personal Liability of Borrower (Exceptions to Non-Recourse Provision)	8
	(a)	Personal Liability Based on Lender’s Loss	8
	(b)	Full Personal Liability for Mortgage Loan	9
	Section 3.03     Personal Liability for Indemnity Obligations	9
	Section 3.04     Lender’s Right to Forego Rights Against Mortgaged Property	9
	 	 	 
	ARTICLE 4 - BORROWER STATUS	10
	 	 	 
	Section 4.01     Representations and Warranties	10
	(a)	Due Organization and Qualification	10
	(b)	Location	10
	(c)	Power and Authority	10
	(d)	Due Authorization	10
	(e)	Valid and Binding Obligations	11
	(f)	Effect of Mortgage Loan on Borrower’s Financial Condition	11
	(g)	Economic Sanctions, Anti-Money Laundering, and Anti-Corruption	11
	(h)	Borrower Single Asset Status	12
	(i)	No Bankruptcies or Judgments	13
	(j)	No Actions or Litigation	13
	(k)	Payment of Taxes, Assessments, and Other Charges	13

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page i
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	(l)	Not a Foreign Person	14
	(m)	ERISA	14
	(n)	Default Under Other Obligations	14
	(o)	Prohibited Person	14
	(p)	No Contravention	15
	(q)	Lockbox Arrangement	15
	Section 4.02     Covenants	15
	(a)	Maintenance of Existence; Organizational Documents	15
	(b)	Economic Sanctions, Anti-Money Laundering, and Anti-Corruption	15
	(c)	Payment of Taxes, Assessments, and Other Charges	16
	(d)	Borrower Single Asset Status	16
	(e)	ERISA	17
	(f)	Notice of Litigation or Insolvency	18
	(g)	Payment of Costs, Fees, and Expenses	18
	(h)	Restrictions on Distributions	18
	(i)	Lockbox Arrangement	18
	 	 	 
	ARTICLE 5 - THE MORTGAGE LOAN	19
	 	 	 
	Section 5.01     Representations and Warranties	19
	(a)	Receipt and Review of Loan Documents	19
	(b)	No Default	19
	(c)	No Defenses	19
	(d)	Loan Document Taxes	19
	Section 5.02     Covenants	19
	(a)	Ratification of Covenants; Estoppels; Certifications	19
	(b)	Further Assurances	20
	(c)	Sale of Mortgage Loan	20
	(d)	Limitations on Further Acts of Borrower	21
	(e)	Financing Statements; Record Searches	21
	(f)	Loan Document Taxes	22
	 	 	 
	ARTICLE 6 - PROPERTY USE, PRESERVATION, AND MAINTENANCE	22
	 	 	 
	Section 6.01     Representations and Warranties	22
	(a)	Compliance with Law; Permits and Licenses	22
	(b)	Property Characteristics	22
	(c)	Property Ownership	23
	(d)	Condition of the Mortgaged Property	23
	(e)	Personal Property	23
	Section 6.02     Covenants	23
	(a)	Use of Property	23
	(b)	Property Maintenance	24
	(c)	Property Preservation	25
	(d)	Property Inspections	26
	(e)	Compliance with Laws	26
	Section 6.03     Mortgage Loan Administration Matters Regarding the Property	27
	(a)	Property Management	27
	(b)	Subordination of Fees to Affiliated Property Managers	27
	(c)	Property Condition Assessment	27

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page ii
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	ARTICLE 7 - LEASES AND RENTS	27
	 	 	 
	Section 7.01     Representations and Warranties	27
	(a)	Prior Assignment of Rents	27
	(b)	Prepaid Rents	28
	Section 7.02     Covenants	28
	(a)	Leases	28
	(b)	Commercial Leases	28
	(c)	Payment of Rents	29
	(d)	Assignment of Rents	30
	(e)	Further Assignments of Leases and Rents	30
	(f)	Options to Purchase by Tenants	30
	Section 7.03     Mortgage Loan Administration Regarding Leases and Rents	30
	(a)	Material Commercial Lease Requirements	30
	(b)	Residential Lease Form	30
	 	 	 
	ARTICLE 8 - BOOKS AND RECORDS; FINANCIAL REPORTING	31
	 	 	 
	Section 8.01     Representations and Warranties	31
	(a)	Financial Information	31
	(b)	No Change in Facts or Circumstances	31
	Section 8.02     Covenants	31
	(a)	Obligation to Maintain Accurate Books and Records	31
	(b)	Items to Furnish to Lender	31
	(c)	Audited Financials	34
	(d)	Delivery of Books and Records	34
	Section 8.03     Mortgage Loan Administration Matters Regarding Books and Records and Financial Reporting	34
	(a)	Lender’s Right to Obtain Audited Books and Records	34
	(b)	Credit Reports; Credit Score	35
	 	 	 
	ARTICLE 9 - INSURANCE	35
	 	 	 
	Section 9.01     Representations and Warranties	35
	(a)	Compliance with Insurance Requirements	35
	(b)	Property Condition	35
	Section 9.02     Covenants	35
	(a)	Insurance Requirements	35
	(b)	Delivery of Policies, Renewals, Notices, and Proceeds	36
	Section 9.03     Mortgage Loan Administration Matters Regarding Insurance	36
	(a)	Lender’s Ongoing Insurance Requirements	36
	(b)	Application of Proceeds on Event of Loss	37
	(c)	Payment Obligations Unaffected	39
	(d)	Foreclosure Sale	39
	(e)	Appointment of Lender as Attorney-In-Fact	39
	 	 	 
	ARTICLE 10 - CONDEMNATION	39
	 	 	 
	Section 10.01   Representations and Warranties	39
	(a)	Prior Condemnation Action	39
	(b)	Pending Condemnation Actions	40
	Section 10.02   Covenants	40
	(a)	Notice of Condemnation	40

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page iii
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

 

	(b)	Condemnation Proceeds	40
	Section 10.03   Mortgage Loan Administration Matters Regarding Condemnation	40
	(a)	Application of Condemnation Awards	40
	(b)	Payment Obligations Unaffected	40
	(c)	Appointment of Lender as Attorney-In-Fact	40
	(d)	Preservation of Mortgaged Property	41
	 	 	 
	ARTICLE 11 - LIENS, TRANSFERS, AND ASSUMPTIONS	41
	 	 	 
	Section 11.01   Representations and Warranties	41
	(a)	No Labor or Materialmen’s Claims	41
	(b)	No Other Interests	41
	Section 11.02   Covenants	41
	(a)	Liens; Encumbrances	41
	(b)	Transfers	42
	(c)	No Other Indebtedness	45
	(d)	No Mezzanine Financing or Preferred Equity	45
	Section 11.03   Mortgage Loan Administration Matters Regarding Liens, Transfers, and Assumptions	45
	(a)	Assumption of Mortgage Loan	45
	(b)	Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates	46
	(c)	Estate Planning	47
	(d)	Termination or Revocation of Trust	47
	(e)	Death of Key Principal or Guarantor; Transfer Due to Death	48
	(f)	Bankruptcy of Guarantor	49
	(g)	Further Conditions to Transfers and Assumption	50
	 	 	 
	ARTICLE 12 - IMPOSITIONS	53
	 	 	 
	Section 12.01   Representations and Warranties	53
	(a)	Payment of Taxes, Assessments, and Other Charges	53
	Section 12.02   Covenants	53
	(a)	Imposition Deposits, Taxes, and Other Charges	53
	Section 12.03   Mortgage Loan Administration Matters Regarding Impositions	54
	(a)	Maintenance of Records by Lender	54
	(b)	Imposition Accounts	54
	(c)	Payment of Impositions; Sufficiency of Imposition Deposits	54
	(d)	Imposition Deposits Upon Event of Default	55
	(e)	Contesting Impositions	55
	(f)	Release to Borrower	55
	 	 	 
	ARTICLE 13 - REPLACEMENT RESERVE AND REPAIRS	55
	 	 	 
	Section 13.01   Covenants	55
	(a)	Initial Deposits to Replacement Reserve Account and Repairs Escrow Account	55
	(b)	Monthly Replacement Reserve Deposits	56
	(c)	Payment for Replacements and Repairs	56
	(d)	Assignment of Contracts for Replacements and Repairs	56
	(e)	Indemnification	56
	(f)	Amendments to Loan Documents	56
	(g)	Administrative Fees and Expenses	57

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page iv
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	Section 13.02   Mortgage Loan Administration Matters Regarding Reserves	57
	(a)	Accounts, Deposits, and Disbursements	57
	(b)	Approvals of Contracts; Assignment of Claims	63
	(c)	Delays and Workmanship	63
	(d)	Appointment of Lender as Attorney-In-Fact	64
	(e)	No Lender Obligation	64
	(f)	No Lender Warranty	64
	 	 	 
	ARTICLE 14 - DEFAULTS/REMEDIES	64
	 	 	 
	Section 14.01   Events of Default	64
	(a)	Automatic Events of Default	64
	(b)	Events of Default Subject to a Specified Cure Period	65
	(c)	Events of Default Subject to Extended Cure Period	66
	Section 14.02   Remedies	66
	(a)	Acceleration; Foreclosure	66
	(b)	Loss of Right to Disbursements from Collateral Accounts	66
	(c)	Remedies Cumulative	67
	Section 14.03   Additional Lender Rights; Forbearance	67
	(a)	No Effect Upon Obligations	67
	(b)	No Waiver of Rights or Remedies	68
	(c)	Appointment of Lender as Attorney-In-Fact	68
	(d)	Borrower Waivers	70
	Section 14.04   Waiver of Marshaling	70
	 	 	 
	ARTICLE 15 - MISCELLANEOUS	70
	 	 	 
	Section 15.01   Governing Law; Consent to Jurisdiction and Venue	70
	(a)	Governing Law	70
	(b)	Venue	71
	Section 15.02   Notice	71
	(a)	Process of Serving Notice	71
	(b)	Change of Address	71
	(c)	Default Method of Notice	71
	(d)	Receipt of Notices.	72
	Section 15.03   Successors and Assigns Bound; Sale of Mortgage Loan	72
	(a)	Binding Agreement	72
	(b)	Sale of Mortgage Loan; Change of Servicer	72
	Section 15.04   Counterparts	72
	Section 15.05   Joint and Several (or Solidary) Liability	72
	Section 15.06   Relationship of Parties; No Third Party Beneficiary	72
	(a)	Solely Creditor and Debtor	72
	(b)	No Third Party Beneficiaries	72

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page v
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	Section 15.07   Severability; Entire Agreement; Amendments	73
	Section 15.08   Construction	73
	Section 15.09   Mortgage Loan Servicing	74
	Section 15.10   Disclosure of Information	74
	Section 15.11   Waiver; Conflict	74
	Section 15.12   No Reliance	74
	Section 15.13   Subrogation	75
	Section 15.14   Counting of Days	75
	Section 15.15   Revival and Reinstatement of Indebtedness	75
	Section 15.16   Time is of the Essence	75
	Section 15.17   Final Agreement	75
	Section 15.18   WAIVER OF TRIAL BY JURY	76

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page vi
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

SCHEDULES & EXHIBITS

 

Schedules

	Schedule 1	Definitions Schedule (required)	Form 6101.SARM
	Schedule 2	Summary of Loan Terms (required)	Form 6102.SARM
	Schedule 3	Interest Rate Type Provisions (required)	Form 6103.SARM
	Schedule 4	Prepayment Premium Schedule (required)	Form 6104.11
	Schedule 5	Required Replacement Schedule (required)	Form 6001.NR
	Schedule 6	Required Repair Schedule (required)	Form 6001.NR
	Schedule 7	Exceptions to Representations and Warranties Schedule (required)	Form 6001.NR

 

Exhibits

	Exhibit 1	Modifications to Loan Agreement (Condominium Provisions)	Form 6202
	Exhibit 2	Modifications to Loan Agreement (Waiver of Imposition Deposits)	Form 6228

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page vii
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

Lansbrook Village

 

MULTIFAMILY LOAN AND SECURITY AGREEMENT

(Non-Recourse)

 

This MULTIFAMILY LOAN
AND SECURITY AGREEMENT (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan
Agreement”) is made as of the Effective Date (as hereinafter defined) by and between BR CARROLL LANSBROOK, LLC,
a Delaware limited liability company (“Borrower”), and WALKER & DUNLOP, LLC, a Delaware limited liability
company (“Lender”).

 

RECITALS:

 

WHEREAS, Borrower desires
to obtain the Mortgage Loan (as hereinafter defined) from Lender to be secured by the Mortgaged Property (as hereinafter defined);
and

 

WHEREAS, Lender is
willing to make the Mortgage Loan on the terms and conditions contained in this Loan Agreement and in the other Loan Documents
(as hereinafter defined);

 

NOW, THEREFORE, in
consideration of the making of the Mortgage Loan by Lender and other good and valuable consideration, the receipt and adequacy
of which are hereby conclusively acknowledged, the parties hereby covenant, agree, represent, and warrant as follows:

 

AGREEMENTS:

 

ARTICLE 1 - DEFINITIONS;
SUMMARY OF MORTGAGE

LOAN TERMS

 

	Section 1.01	Defined Terms.

 

Capitalized terms not
otherwise defined in the body of this Loan Agreement shall have the meanings set forth in the Definitions Schedule attached as
Schedule 1 to this Loan Agreement.

 

	Section 1.02	Schedules, Exhibits, and Attachments Incorporated.

 

The schedules, exhibits,
and any other addenda or attachments are incorporated fully into this Loan Agreement by this reference and each constitutes a substantive
part of this Loan Agreement.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 1
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

ARTICLE 2 - GENERAL
MORTGAGE LOAN TERMS

 

Section 2.01        Mortgage
Loan Origination and Security.

 

(a)          Making
of Mortgage Loan.

 

Subject to the terms
and conditions of this Loan Agreement and the other Loan Documents, Lender hereby makes the Mortgage Loan to Borrower, and Borrower
hereby accepts the Mortgage Loan from Lender. Borrower covenants and agrees that it shall:

 

(1)         pay
the Indebtedness, including the Prepayment Premium, if any (whether in connection with any voluntary prepayment or in connection
with an acceleration by Lender of the Indebtedness), in accordance with the terms of this Loan Agreement and the other Loan Documents;
and

 

(2)         perform,
observe, and comply with this Loan Agreement and all other provisions of the other Loan Documents.

 

(b)          Security
for Mortgage Loan.

 

The Mortgage Loan is
made pursuant to this Loan Agreement, is evidenced by the Note, and is secured by the Security Instrument, this Loan Agreement,
and the other Loan Documents that are expressly stated to be security for the Mortgage Loan.

 

(c)          Protective
Advances.

 

As provided in the
Security Instrument, Lender may take such actions or disburse such funds as Lender reasonably deems necessary to perform the obligations
of Borrower under this Loan Agreement and the other Loan Documents and to protect Lender’s interest in the Mortgaged Property.

 

Section 2.02        Payments
on Mortgage Loan.

 

(a)          Debt
Service Payments.

 

(1)         Short
Month Interest.

 

If the date
the Mortgage Loan proceeds are disbursed is any day other than the first day of the month, interest for the period beginning on
the disbursement date and ending on and including the last day of the month in which the disbursement occurs shall be payable by
Borrower on the date the Mortgage Loan proceeds are disbursed. In the event that the disbursement date is not the same as the Effective
Date, then:

 

(A)         the
disbursement date and the Effective Date must be in the same month, and

 

(B)         the
Effective Date shall not be the first day of the month.

 

(2)         Interest
Accrual and Computation.

 

Except as
provided in Section 2.02(a)(1), interest shall be paid in arrears. Interest shall accrue as provided in the Schedule of Interest
Rate Type Provisions and shall be computed in accordance with the Interest Accrual Method. If the Interest Accrual Method is “Actual/360,”
Borrower acknowledges and agrees that the amount allocated to interest for each month will vary depending on the actual number
of calendar days during such month.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 2
	Article 2	01-16	© 2016 Fannie Mae

     

    

 

(3)         Monthly
Debt Service Payments.

 

Consecutive
monthly debt service installments (comprised of either interest only or principal and interest, depending on the Amortization Type),
each in the amount of the applicable Monthly Debt Service Payment, shall be due and payable on the First Payment Date, and on each
Payment Date thereafter until the Maturity Date, at which time all Indebtedness shall be due. Any regularly scheduled Monthly Debt
Service Payment that is received by Lender before the applicable Payment Date shall be deemed to have been received on such Payment
Date solely for the purpose of calculating interest due. All payments made by Borrower under this Loan Agreement shall be made
without set-off, counterclaim, or other defense.

 

(4)         Payment
at Maturity.

 

The unpaid
principal balance of the Mortgage Loan, any Accrued Interest thereon and all other Indebtedness shall be due and payable on the
Maturity Date.

 

(5)         Interest
Rate Type.

 

See the Schedule
of Interest Rate Type Provisions for additional provisions, if any, specific to the Interest Rate Type.

 

(b)          Capitalization
of Accrued But Unpaid Interest.

 

Any accrued and unpaid
interest on the Mortgage Loan remaining past due for thirty (30) days or more may, at Lender’s election, be added to
and become part of the unpaid principal balance of the Mortgage Loan.

 

(c)          Late
Charges.

 

(1)         If
any Monthly Debt Service Payment due hereunder is not received by Lender within ten (10) days (or fifteen (15) days for
any Mortgaged Property located in Mississippi or North Carolina to comply with applicable law) after the applicable Payment Date,
or any amount payable under this Loan Agreement (other than the payment due on the Maturity Date for repayment of the Mortgage
Loan in full) or any other Loan Document is not received by Lender within ten (10) days (or fifteen (15) days for any
Mortgaged Property located in Mississippi or North Carolina to comply with applicable law) after the date such amount is due, inclusive
of the date on which such amount is due, Borrower shall pay to Lender, immediately without demand by Lender, the Late Charge.

 

The Late Charge
is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 2.02(d).

 

(2)         Borrower
acknowledges and agrees that:

 

(A)         its
failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Mortgage Loan;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 3
	Article 2	01-16	© 2016 Fannie Mae

     

    

 

(B)         it
is extremely difficult and impractical to determine those additional expenses;

 

(C)         Lender
is entitled to be compensated for such additional expenses; and

 

(D)         the
Late Charge represents a fair and reasonable estimate, taking into account all circumstances existing on the date hereof, of the
additional expenses Lender will incur by reason of any such late payment.

 

(d)          Default
Rate.

 

(1)         Default
interest shall be paid as follows:

 

(A)         If
any amount due in respect of the Mortgage Loan (other than amounts due on the Maturity Date) remains past due for thirty (30)
days or more, interest on such unpaid amount(s) shall accrue from the date payment is due at the Default Rate and shall be payable
upon demand by Lender.

 

(B)         If
any Indebtedness due is not paid in full on the Maturity Date, then interest shall accrue at the Default Rate on all such unpaid
amounts from the Maturity Date until fully paid and shall be payable upon demand by Lender.

 

Absent a demand
by Lender, any such amounts shall be payable by Borrower in the same manner as provided for the payment of Monthly Debt Service
Payments. To the extent permitted by applicable law, interest shall also accrue at the Default Rate on any judgment obtained by
Lender against Borrower in connection with the Mortgage Loan. To the extent Borrower or any other Person is vested with a right
of redemption, interest shall continue to accrue at the Default Rate during any redemption period until such time as the Mortgaged
Property has been redeemed.

 

(2)         Borrower
acknowledges and agrees that:

 

(A)         its
failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Mortgage Loan; and

 

(B)         in
connection with any failure to timely pay all amounts due in respect of the Mortgage Loan on the Maturity Date, or during the time
that any amount due in respect of the Mortgage Loan is delinquent for more than thirty (30) days:

 

(i)          Lender’s
risk of nonpayment of the Mortgage Loan will be materially increased;

 

(ii)         Lender’s
ability to meet its other obligations and to take advantage of other investment opportunities will be adversely impacted;

 

(iii)        Lender
will incur additional costs and expenses arising from its loss of the use of the amounts due;

 

(iv)        it
is extremely difficult and impractical to determine such additional costs and expenses;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 4
	Article 2	01-16	© 2016 Fannie Mae

     

    

 

(v)         Lender
is entitled to be compensated for such additional risks, costs, and expenses; and

 

(vi)        the
increase from the Interest Rate to the Default Rate represents a fair and reasonable estimate of the additional risks, costs, and
expenses Lender will incur by reason of Borrower’s delinquent payment and the additional compensation Lender is entitled
to receive for the increased risks of nonpayment associated with a delinquency on the Mortgage Loan (taking into account all circumstances
existing on the Effective Date).

 

(e)          Address
for Payments.

 

All payments due pursuant
to the Loan Documents shall be payable at Lender’s Payment Address, or such other place and in such manner as may be designated
from time to time by written notice to Borrower by Lender.

 

(f)          Application
of Payments.

 

If at any time Lender
receives, from Borrower or otherwise, any payment in respect of the Indebtedness that is less than all amounts due and payable
at such time, then Lender may apply such payment to amounts then due and payable in any manner and in any order determined by Lender
or hold in suspense and not apply such payment at Lender’s election. Neither Lender’s acceptance of a payment that
is less than all amounts then due and payable, nor Lender’s application of, or suspension of the application of, such payment,
shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. Notwithstanding
the application of any such payment to the Indebtedness, Borrower’s obligations under this Loan Agreement and the other Loan
Documents shall remain unchanged.

 

Section 2.03        Lockout/Prepayment.

 

(a)          Prepayment;
Prepayment Lockout; Prepayment Premium.

 

(1)         Borrower
shall not make a voluntary full or partial prepayment on the Mortgage Loan during any Prepayment Lockout Period nor shall Borrower
make a voluntary partial prepayment at any time. Except as expressly provided in this Loan Agreement (including as provided in
the Prepayment Premium Schedule), a Prepayment Premium calculated in accordance with the Prepayment Premium Schedule shall be payable
in connection with any prepayment of the Mortgage Loan.

 

(2)         If
a Prepayment Lockout Period applies to the Mortgage Loan, and during such Prepayment Lockout Period Lender accelerates the unpaid
principal balance of the Mortgage Loan or otherwise applies collateral held by Lender to the repayment of any portion of the unpaid
principal balance of the Mortgage Loan, the Prepayment Premium shall be due and payable and equal to the amount obtained by multiplying
the percentage indicated (if at all) in the Prepayment Premium Schedule by the amount of principal being prepaid at the time of
such acceleration or application.

 

(b)          Voluntary
Prepayment in Full.

 

At any time after the
expiration of any Prepayment Lockout Period, Borrower may voluntarily prepay the Mortgage Loan in full on a Permitted Prepayment
Date so long as:

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 5
	Article 2	01-16	© 2016 Fannie Mae

     

    

 

(1)         Borrower
delivers to Lender a Prepayment Notice specifying the Intended Prepayment Date not more than sixty (60) days, but not less
than thirty (30) days (if given via U.S. Postal Service) or twenty (20) days (if given via facsimile, e-mail, or overnight
courier) prior to such Intended Prepayment Date; and

 

(2)         Borrower
pays to Lender an amount equal to the sum of:

 

(A)         the
entire unpaid principal balance of the Mortgage Loan; plus

 

(B)         all
Accrued Interest (calculated through the last day of the month in which the prepayment occurs); plus

 

(C)         the
Prepayment Premium; plus

 

(D)         all
other Indebtedness.

 

In connection with any such voluntary prepayment,
Borrower acknowledges and agrees that interest shall always be calculated and paid through the last day of the month in which the
prepayment occurs (even if the Permitted Prepayment Date for such month is not the last day of such month, or if Lender approves
prepayment on an Intended Prepayment Date that is not a Permitted Prepayment Date). Borrower further acknowledges that Lender is
not required to accept a voluntary prepayment of the Mortgage Loan on any day other than a Permitted Prepayment Date. However,
if Lender does approve an Intended Prepayment Date that is not a Permitted Prepayment Date and accepts a prepayment on such Intended
Prepayment Date, such prepayment shall be deemed to be received on the immediately following Permitted Prepayment Date. If Borrower
fails to prepay the Mortgage Loan on the Intended Prepayment Date for any reason (including on any Intended Prepayment Date that
is approved by Lender) and such failure either continues for five (5) Business Days, or into the following month, Lender shall
have the right to recalculate the payoff amount. If Borrower prepays the Mortgage Loan either
in the following month or more than five (5) Business Days after the Intended Prepayment Date that was approved by
Lender, Lender shall also have the right to recalculate the payoff amount based upon the amount of such payment and the date such
payment was received by Lender. Borrower shall immediately pay to Lender any additional amounts required by any such recalculation.

 

(c)          Acceleration
of Mortgage Loan.

 

Upon acceleration of
the Mortgage Loan, Borrower shall pay to Lender:

 

(1)         the
entire unpaid principal balance of the Mortgage Loan;

 

(2)         all
Accrued Interest (calculated through the last day of the month in which the acceleration occurs);

 

(3)         the
Prepayment Premium; and

 

(4)         all
other Indebtedness.

 

(d)          Application
of Collateral.

 

Any application by
Lender of any collateral or other security to the repayment of all or any portion of the unpaid principal balance of the Mortgage
Loan prior to the Maturity Date in accordance with the Loan Documents shall be deemed to be a prepayment by Borrower. Any such
prepayment shall require the payment to Lender by Borrower of the Prepayment Premium calculated on the amount being prepaid in
accordance with this Loan Agreement.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 6
	Article 2	01-16	© 2016 Fannie Mae

     

    

 

(e)          Casualty
and Condemnation.

 

Notwithstanding any
provision of this Loan Agreement to the contrary, no Prepayment Premium shall be payable with respect to any prepayment occurring
as a result of the application of any insurance proceeds or amounts received in connection with a Condemnation Action in accordance
with this Loan Agreement.

 

(f)          No
Effect on Payment Obligations.

 

Unless otherwise expressly
provided in this Loan Agreement, any prepayment required by any Loan Document of less than the entire unpaid principal balance
of the Mortgage Loan shall not extend or postpone the due date of any subsequent Monthly Debt Service Payments, Monthly Replacement
Reserve Deposit, or other payment, or change the amount of any such payments or deposits.

 

(g)          Loss
Resulting from Prepayment.

 

In any circumstance
in which a Prepayment Premium is due under this Loan Agreement, Borrower acknowledges that:

 

(1)         any
prepayment of the unpaid principal balance of the Mortgage Loan, whether voluntary or involuntary, or following the occurrence
of an Event of Default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional risk,
expense, and frustration or impairment of Lender’s ability to meet its commitments to third parties;

 

(2)         it
is extremely difficult and impractical to ascertain the extent of such losses, risks, and damages;

 

(3)         the
formula for calculating the Prepayment Premium represents a reasonable estimate of the losses, risks, and damages Lender will incur
as a result of a prepayment; and

 

(4)         the
provisions regarding the Prepayment Premium contained in this Loan Agreement are a material part of the consideration for the Mortgage
Loan, and that the terms of the Mortgage Loan are in other respects more favorable to Borrower as a result of Borrower’s
voluntary agreement to such prepayment provisions.

 

ARTICLE 3 - PERSONAL
LIABILITY

 

Section 3.01        Non-Recourse
Mortgage Loan; Exceptions.

 

Except as otherwise
provided in this Article 3 or in any other Loan Document, none of Borrower, or any director, officer, manager, member, partner,
shareholder, trustee, trust beneficiary, or employee of Borrower, shall have personal liability under this Loan Agreement or any
other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the
Loan Documents, and Lender’s only recourse for the satisfaction of such Indebtedness and the performance of such obligations
shall be Lender’s exercise of its rights and remedies with respect to the Mortgaged Property and any other collateral held
by Lender as security for the Indebtedness. This limitation on Borrower’s liability shall not limit or impair Lender’s
enforcement of its rights against Guarantor under any Loan Document.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 7
	Article 2	01-16	© 2016 Fannie Mae

     

    

 

Section 3.02        Personal
Liability of Borrower (Exceptions to Non-Recourse Provision).

 

(a)          Personal
Liability Based on Lender’s Loss.

 

Borrower shall be personally
liable to Lender for the repayment of the portion of the Indebtedness equal to any loss or damage suffered by Lender as a result
of, subject to any notice and cure period, if any:

 

(1)         failure
to pay as directed by Lender upon demand after an Event of Default (to the extent actually received by Borrower):

 

(A)         all
Rents to which Lender is entitled under the Loan Documents; and

 

(B)         the
amount of all security deposits then held or thereafter collected by Borrower from tenants and not properly applied pursuant to
the applicable Leases;

 

(2)         failure
to maintain all insurance policies required by the Loan Documents, except to the extent Lender has the obligation to pay the premiums
pursuant to Section 12.03(c);

 

(3)         failure
to apply all insurance proceeds received by Borrower or any amounts received by Borrower in connection with a Condemnation Action,
as required by the Loan Documents;

 

(4)         failure
to comply with any provision of this Loan Agreement or any other Loan Document relating to the delivery of books and records, statements,
schedules, and reports;

 

(5)         except
to the extent directed otherwise by Lender pursuant to Section 3.02(a)(1), failure to apply Rents to the ordinary and necessary
expenses of owning and operating the Mortgaged Property and Debt Service Amounts, as and when each is due and payable, except that
Borrower will not be personally liable with respect to Rents that are distributed by Borrower in any calendar year if Borrower
has paid all ordinary and necessary expenses of owning and operating the Mortgaged Property and Debt Service Amounts for such calendar
year;

 

(6)         waste
or abandonment of the Mortgaged Property; or

 

(7)         grossly
negligent or reckless unintentional material misrepresentation or omission by Borrower, Guarantor, Key Principal, or any officer,
director, partner, manager, member, shareholder, or trustee of Borrower, or any officer, director, or manager of, or any Person
having a Restricted Ownership Interest in, Guarantor, or Key Principal in connection with on-going financial or other reporting
required by the Loan Documents, or any request for action or consent by Lender.

 

Notwithstanding the foregoing, Borrower
shall not have personal liability under clauses (1), (3), or (5) above to the extent that Borrower lacks the legal right to direct
the disbursement of the applicable funds due to an involuntary Bankruptcy Event that occurs without the consent, encouragement,
or active participation of (A) Borrower, Guarantor, or Key Principal, (B) any Person Controlling Borrower, Guarantor, or Key Principal
or (C) any Person Controlled by or under common Control with Borrower, Guarantor, or Key Principal.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 8
	Article 3	01-16	© 2016 Fannie Mae

     

    

 

(b)          Full
Personal Liability for Mortgage Loan.

 

Borrower shall be personally
liable to Lender for the repayment of all of the Indebtedness, and the Mortgage Loan shall be fully recourse to Borrower, upon
the occurrence of any of the following:

 

(1)         failure
by Borrower to comply with the single-asset entity requirements of Section 4.02(d) of this Loan Agreement;

 

(2)         a
Transfer (other than a conveyance of the Mortgaged Property at a Foreclosure Event pursuant to the Security Instrument and this
Loan Agreement) that is not permitted under this Loan Agreement or any other Loan Document;

 

(3)         the
occurrence of any Bankruptcy Event (other than an acknowledgement in writing as described in clause (b) of the definition of “Bankruptcy
Event”); provided, however, in the event of an involuntary Bankruptcy Event, Borrower shall only be personally
liable if such involuntary Bankruptcy Event occurs with the consent, encouragement, or active participation of (A) Borrower, Guarantor,
or Key Principal, (B) any Person Controlling Borrower, Guarantor, or Key Principal, or (C) any Person Controlled by or under common
Control with Borrower, Guarantor, or Key Principal;

 

(4)         fraud,
written material misrepresentation, or material omission by Borrower, Guarantor, Key Principal, or any officer, director, partner,
manager, member, shareholder, or trustee of Borrower, Guarantor, or Key Principal in connection with any application for
or creation of the Indebtedness; or

 

(5)         fraud,
written intentional material misrepresentation, or intentional material omission by Borrower, Guarantor, Key Principal, or any
officer, director, partner, manager, member, shareholder, or trustee of Borrower, or any officer, director, or manager of, or any
Person having a Restricted Ownership Interest in, Guarantor, or Key Principal in connection with on-going financial or other reporting
required by the Loan Documents, or any request for action or consent by Lender.

 

Section 3.03         Personal
Liability for Indemnity Obligations.

 

Borrower shall be personally
and fully liable to Lender for Borrower’s indemnity obligations under Section 13.01(e) of this Loan Agreement, the Environmental
Indemnity Agreement, and any other express indemnity obligations provided by Borrower under any Loan Document. Borrower’s
liability for such indemnity obligations shall not be limited by the amount of the Indebtedness, the repayment of the Indebtedness,
or otherwise, provided that Borrower’s liability for such indemnities shall not include any loss caused by the gross negligence
or willful misconduct of Lender as determined by a court of competent jurisdiction pursuant to a final non-appealable court order.

 

Section 3.04         Lender’s
Right to Forego Rights Against Mortgaged Property.

 

To the extent that
Borrower has personal liability under this Loan Agreement or any other Loan Document, Lender may exercise its rights against Borrower
personally to the fullest extent permitted by applicable law without regard to whether Lender has exercised any rights against
the Mortgaged Property, the UCC Collateral, or any other security, or pursued any rights against Guarantor, or pursued any other
rights available to Lender under this Loan Agreement, any other Loan Document, or applicable law. For purposes of this Section
3.04 only, the term “Mortgaged Property” shall not include any funds that have been applied by Borrower as required
or permitted by this Loan Agreement prior to the occurrence of an Event of Default, or that Borrower was unable to apply as required
or permitted by this Loan Agreement because of a Bankruptcy Event. To the fullest extent permitted by applicable law, in any action
to enforce Borrower’s personal liability under this Article 3, Borrower waives any right to set off the value of the Mortgaged
Property against such personal liability.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 9
	Article 3	01-16	© 2016 Fannie Mae

     

    

 

ARTICLE 4 - BORROWER
STATUS

 

Section 4.01        Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 4.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Due
Organization and Qualification.

 

Borrower is validly
existing and qualified to transact business and is in good standing in the state in which it is formed or organized, the Property
Jurisdiction, and in each other jurisdiction that qualification or good standing is required according to applicable law to conduct
its business with respect to the Mortgaged Property and where the failure to be so qualified or in good standing would adversely
affect Borrower’s operation of the Mortgaged Property or the validity, enforceability or the ability of Borrower to perform
its obligations under this Loan Agreement or any other Loan Document.

 

(b)          Location.

 

Borrower’s General
Business Address is Borrower’s principal place of business and principal office.

 

(c)          Power
and Authority.

 

Borrower has the requisite
power and authority:

 

(1)         to
own the Mortgaged Property and to carry on its business as now conducted and as contemplated to be conducted in connection with
the performance of its obligations under this Loan Agreement and under the other Loan Documents to which it is a party; and

 

(2)         to
execute and deliver this Loan Agreement and the other Loan Documents to which it is a party, and to carry out the transactions
contemplated by this Loan Agreement and the other Loan Documents to which it is a party.

 

(d)          Due
Authorization.

 

The execution, delivery,
and performance of this Loan Agreement and the other Loan Documents to which it is a party have been duly authorized by all necessary
action and proceedings by or on behalf of Borrower, and no further approvals or filings of any kind, including any approval of
or filing with any Governmental Authority, are required by or on behalf of Borrower as a condition to the valid execution, delivery,
and performance by Borrower of this Loan Agreement or any of the other Loan Documents to which it is a party, except filings required
to perfect and maintain the liens to be granted under the Loan Documents and routine filings to maintain good standing and its
existence.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 10
	Article 4	01-16	© 2016 Fannie Mae

     

    

 

(e)          Valid
and Binding Obligations.

 

This Loan Agreement
and the other Loan Documents to which it is a party have been duly executed and delivered by Borrower and constitute the legal,
valid, and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as such
enforceability may be limited by applicable Insolvency Laws or by the exercise of discretion by any court.

 

(f)          Effect
of Mortgage Loan on Borrower’s Financial Condition.

 

The Mortgage Loan will
not render Borrower Insolvent. Borrower has sufficient working capital, including proceeds from the Mortgage Loan, cash flow from
the Mortgaged Property, or other sources, not only to adequately maintain the Mortgaged Property, but also to pay all of Borrower’s
outstanding debts as they come due, including all Debt Service Amounts, exclusive of Borrower’s ability to refinance or pay
in full the Mortgage Loan on the Maturity Date. In connection with the execution and delivery of this Loan Agreement and the other
Loan Documents (and the delivery to, or for the benefit of, Lender of any collateral contemplated thereunder), and the incurrence
by Borrower of the obligations under this Loan Agreement and the other Loan Documents, Borrower did not receive less than reasonably
equivalent value in exchange for the incurrence of the obligations of Borrower under this Loan Agreement and the other Loan Documents.

 

(g)          Economic
Sanctions, Anti-Money Laundering, and Anti-Corruption.

 

(1)         None
of Borrower, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, or Key
Principal, nor any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest
in Borrower, Guarantor, or Key Principal, is in violation of any applicable civil or criminal laws or regulations, including those
requiring internal controls, intended to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or corruption,
of the United States and the jurisdiction where the Mortgaged Property is located or where the Person resides, is domiciled, or
has its principal place of business.

 

(2)         None
of Borrower, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, or Key
Principal, nor any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest
in Borrower, Guarantor, or Key Principal, is a Person:

 

(A)         against
whom proceedings are pending for any alleged violation of any laws described in Section 4.01(g)(1);

 

(B)         that
has been convicted of any violation of, has been subject to civil penalties or Economic Sanctions pursuant to, or had any of its
property seized or forfeited under, any laws described in Section 4.01(g)(1); or

 

(C)         with
whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories,
or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories,
is a Sanctioned Person or is otherwise prohibited from transacting business of the type contemplated by this Loan Agreement and
the other Loan Documents under any other applicable law.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 11
	Article 4	01-16	© 2016 Fannie Mae

     

    

 

(3)         Borrower,
Guarantor, and Key Principal are in compliance with all applicable Economic Sanctions laws and regulations.

 

(h)          Borrower
Single Asset Status.

 

Borrower:

 

(1)         does
not own or lease any real property, personal property, or assets other than the Mortgaged Property;

 

(2)         does
not own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance of the
Mortgaged Property;

 

(3)         has
no material financial obligation under or secured by any indenture, mortgage, deed of trust, deed to secure debt, loan agreement,
or other agreement or instrument to which Borrower is a party, or by which Borrower is otherwise bound, or to which the Mortgaged
Property is subject or by which it is otherwise encumbered, other than:

 

(A)         unsecured
trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive of amounts for rehabilitation,
restoration, repairs, or replacements of the Mortgaged Property) that (i) are not evidenced by a promissory note, (ii) are payable
within sixty (60) days of the date incurred, and (iii) as of the Effective Date, do not exceed, in the aggregate, four percent (4%)
of the original principal balance of the Mortgage Loan;

 

(B)         if
the Security Instrument grants a lien on a leasehold estate, Borrower’s obligations as lessee under the ground lease creating
such leasehold estate; and

 

(C)         obligations
under the Loan Documents and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;

 

(4)         has
maintained its financial statements, accounting records, and other partnership, real estate investment trust, limited liability
company, or corporate documents, as the case may be, separate from those of any other Person (unless Borrower’s assets have
been included in a consolidated financial statement prepared in accordance with generally accepted accounting principles);

 

(5)         has
not commingled its assets or funds with those of any other Person, unless such assets or funds can easily be segregated and identified
in the ordinary course of business from those of any other Person;

 

(6)         has
been adequately capitalized in light of its contemplated business operations;

 

(7)         has
not assumed, guaranteed, or pledged its assets to secure the liabilities or obligations of any other Person (except in connection
with the Mortgage Loan or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection
with any Consolidation, Extension and Modification Agreement or similar instrument), or held out its credit as being available
to satisfy the obligations of any other Person;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 12
	Article 4	01-16	© 2016 Fannie Mae

     

    

 

(8)         has
not made loans or advances to any other Person; and

 

(9)         has
not entered into, and is not a party to, any transaction with any Borrower Affiliate, except in the ordinary course of business
and on terms which are no more favorable to any such Borrower Affiliate than would be obtained in a comparable arm’s length
transaction with an unrelated third party.

 

(i)          No
Bankruptcies or Judgments.

 

None of Borrower, Guarantor,
or Key Principal, nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, or Key Principal, nor any Person
Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor,
or Key Principal, is currently:

 

(1)         the
subject of or a party to any completed or pending bankruptcy, reorganization, including any receivership or other insolvency proceeding
(other than as a creditor);

 

(2)         preparing
or intending to be the subject of a Bankruptcy Event; or

 

(3)         the
subject of any judgment unsatisfied of record or docketed in any court; or

 

(4)         Insolvent.

 

(j)          No
Actions or Litigation.

 

(1)         There
are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending against or,
to Borrower’s knowledge, threatened against or affecting Borrower or the Mortgaged Property not otherwise covered by insurance
(except claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, which shall always
be disclosed); and

 

(2)         there
are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending or, to Borrower’s
knowledge, threatened against or affecting Guarantor or Key Principal, which claims, actions, suits, or proceedings, if adversely
determined (individually or in the aggregate) reasonably would be expected to materially adversely affect the financial condition
or business of Borrower, Guarantor, or Key Principal or the condition, operation, or ownership of the Mortgaged Property (except
claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, which shall always be
deemed material).

 

(k)          Payment
of Taxes, Assessments, and Other Charges.

 

Borrower confirms that:

 

(1)         it
has filed all federal, state, county, and municipal tax returns and reports required to have been filed by Borrower;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 13
	Article 4	01-16	© 2016 Fannie Mae

     

    

 

(2)         it
has paid, before any fine, penalty, interest, lien, or costs may be added thereto, all taxes, governmental charges, and assessments
due and payable with respect to such returns and reports;

 

(3)         there
is no controversy or objection pending, or to the knowledge of Borrower, threatened in respect of any tax returns of Borrower;
and

 

(4)         it
has made adequate reserves on its books and records for all taxes that have accrued but which are not yet due and payable.

 

(l)          Not
a Foreign Person.

 

Borrower is not a “foreign
person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code.

 

(m)          ERISA.

 

Borrower represents
and warrants that:

 

(1)         Borrower
is not an Employee Benefit Plan;

 

(2)         no
asset of Borrower constitutes “plan assets” (within the meaning of Section 3(42) of ERISA and Department of Labor
Regulation Section 2510.3-101) of an Employee Benefit Plan;

 

(3)         no
asset of Borrower is subject to any laws of any Governmental Authority governing the assets of an Employee Benefit Plan; and

 

(4)         neither
Borrower nor any ERISA Affiliate is subject to any obligation or liability with respect to any ERISA Plan.

 

(n)          Default
Under Other Obligations.

 

(1)         The
execution, delivery, and performance of the obligations imposed on Borrower under this Loan Agreement and the Loan Documents to
which it is a party will not cause Borrower to be in default under the provisions of any agreement, judgment, or order to which
Borrower is a party or by which Borrower is bound.

 

(2)         None
of Borrower, Guarantor, or Key Principal is in default under any obligation to Lender.

 

(o)          Prohibited
Person.

 

None of Borrower, Guarantor,
or Key Principal is a Prohibited Person, nor to Borrower’s knowledge, is any Person:

 

(1)         Controlling
Borrower, Guarantor, or Key Principal a Prohibited Person; or

 

(2)         Controlled
by and having a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal a Prohibited Person.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 14
	Article 4	01-16	© 2016 Fannie Mae

     

    

 

(p)          No
Contravention.

 

Neither the execution
and delivery of this Loan Agreement and the other Loan Documents to which Borrower is a party, nor the fulfillment of or compliance
with the terms and conditions of this Loan Agreement and the other Loan Documents to which Borrower is a party, nor the performance
of the obligations of Borrower under this Loan Agreement and the other Loan Documents does or will conflict with or result in any
breach or violation of, or constitute a default under, any of the terms, conditions, or provisions of Borrower’s organizational
documents, or any indenture, existing agreement, or other instrument to which Borrower is a party or to which Borrower, the Mortgaged
Property, or other assets of Borrower are subject.

 

(q)          Lockbox
Arrangement.

 

Borrower is not party
to any type of lockbox agreement or similar cash management arrangement that has not been approved by Lender in writing, and no
direct or indirect owner of Borrower is party to any type of lockbox agreement or similar cash management arrangement with respect
to Rents or other income from the Mortgaged Property that has not been approved by Lender in writing.

 

Section 4.02        Covenants.

 

(a)          Maintenance
of Existence; Organizational Documents.

 

Borrower shall maintain
its existence, its entity status, franchises, rights, and privileges under the laws of the state of its formation or organization
(as applicable). Borrower shall continue to be duly qualified and in good standing to transact business in each jurisdiction in
which qualification or standing is required according to applicable law to conduct its business with respect to the Mortgaged Property
and where the failure to do so would adversely affect Borrower’s operation of the Mortgaged Property or the validity, enforceability,
or the ability of Borrower to perform its obligations under this Loan Agreement or any other Loan Document. Neither Borrower nor
any partner, member, manager, officer, or director of Borrower shall:

 

(1)         make
or allow any material change to the organizational documents or organizational structure of Borrower, including changes relating
to the Control of Borrower, or

 

(2)         file
any action, complaint, petition, or other claim to:

 

(A)         divide,
partition, or otherwise compel the sale of the Mortgaged Property, or

 

(B)         otherwise
change the Control of Borrower.

 

(b)          Economic
Sanctions, Anti-Money Laundering, and Anti-Corruption.

 

(1)         Borrower,
Guarantor, Key Principal, and any Person Controlling Borrower, Guarantor, or Key Principal, or any Person Controlled by Borrower,
Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal shall
remain in compliance with any applicable civil or criminal laws or regulations (including those requiring internal controls) intended
to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or corruption, of the United States and the jurisdiction
where the Mortgaged Property is located or where the Person resides, is domiciled, or has its principal place of business.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 15
	Article 4	01-16	© 2016 Fannie Mae

     

    

 

(2)         At
no time shall Borrower, Guarantor, or Key Principal, or any Person Controlling Borrower, Guarantor, or Key Principal, or any Person
Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor,
or Key Principal, be a Person:

 

(A)         against
whom proceedings are pending for any alleged violation of any laws described in Section 4.02(b)(1);

 

(B)         that
has been convicted of any violation of, has been subject to civil penalties or Economic Sanctions pursuant to, or had any of its
property seized or forfeited under, any laws described in Section 4.02(b)(1); or

 

(C)         with
whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories,
or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories,
is a Sanctioned Person or is otherwise prohibited from transacting business of the type contemplated by this Loan Agreement and
the other Loan Documents under any other applicable law.

 

(3)         Borrower,
Guarantor, and Key Principal shall at all times remain in compliance with any applicable Economic Sanctions laws and regulations.

 

(c)          Payment
of Taxes, Assessments, and Other Charges.

 

Borrower shall file
all federal, state, county, and municipal tax returns and reports required to be filed by Borrower and shall pay, before any fine,
penalty, interest, or cost may be added thereto, all taxes payable with respect to such returns and reports.

 

(d)          Borrower
Single Asset Status.

 

Until the Indebtedness
is fully paid, Borrower:

 

(1)         shall
not acquire or lease any real property, personal property, or assets other than the Mortgaged Property except as permitted by Article
16 of this Loan Agreement;

 

(2)         shall
not acquire, own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance
of the Mortgaged Property;

 

(3)         shall
not commingle its assets or funds with those of any other Person, unless such assets or funds can easily be segregated and identified
in the ordinary course of business from those of any other Person;

 

(4)         shall
maintain its financial statements, accounting records, and other partnership, real estate investment trust, limited liability company,
or corporate documents, as the case may be, separate from those of any other Person (unless Borrower’s assets are included
in a consolidated financial statement prepared in accordance with generally accepted accounting principles);

 

(5)         shall
have no material financial obligation under any indenture, mortgage, deed of trust, deed to secure debt, loan agreement, or other
agreement or instrument to which Borrower is a party or by which Borrower is otherwise bound, or to which the Mortgaged Property
is subject or by which it is otherwise encumbered, other than:

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 16
	Article 4	01-16	© 2016 Fannie Mae

     

    

 

(A)         unsecured
trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive of amounts (i) to be paid
out of the Replacement Reserve Account or Repairs Escrow Account, or (ii) for rehabilitation, restoration, repairs, or replacements
of the Mortgaged Property or otherwise approved by Lender) so long as such trade payables (1) are not evidenced by a promissory
note, (2) are payable within sixty (60) days of the date incurred, and (3) as of any date, do not exceed, in the aggregate, two
percent (2%) of the original principal balance of the Mortgage Loan; provided, however, that otherwise compliant outstanding trade
payables may exceed two percent (2%) up to an aggregate amount of four percent (4%) of the original principal balance of the Mortgage
Loan for a period (beginning on or after the Effective Date) not to exceed ninety (90) consecutive days;

 

(B)         if
the Security Instrument grants a lien on a leasehold estate, Borrower’s obligations as lessee under the ground lease creating
such leasehold estate; and

 

(C)         obligations
under the Loan Documents and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;

 

(6)         shall
not assume, guaranty, or pledge its assets to secure the liabilities or obligations of any other Person (except in connection with
the Mortgage Loan or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection
with any Consolidation, Extension and Modification Agreement or similar instrument) or hold out its credit as being available to
satisfy the obligations of any other Person;

 

(7)         shall
not make loans or advances to any other Person; or

 

(8)         shall
not enter into, or become a party to, any transaction with any Borrower Affiliate, except in the ordinary course of business and
on terms which are no more favorable to any such Borrower Affiliate than would be obtained in a comparable arm’s-length transaction
with an unrelated third party.

 

(e)          ERISA.

 

Borrower covenants
that:

 

(1)         no
asset of Borrower shall constitute “plan assets” (within the meaning of Section 3(42) of ERISA and Department
of Labor Regulation Section 2510.3-101) of an Employee Benefit Plan;

 

(2)         no
asset of Borrower shall be subject to the laws of any Governmental Authority governing the assets of an Employee Benefit Plan;
and

 

(3)         neither
Borrower nor any ERISA Affiliate shall incur any obligation or liability with respect to any ERISA Plan.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 17
	Article 4	01-16	© 2016 Fannie Mae

     

    

 

(f)          Notice
of Litigation or Insolvency.

 

Borrower shall give
immediate written notice to Lender of any claims, actions, suits, or proceedings at law or in equity (including any insolvency,
bankruptcy, or receivership proceeding) by or before any Governmental Authority pending or, to Borrower’s knowledge, threatened
against or affecting Borrower, Guarantor, Key Principal, or the Mortgaged Property, which claims, actions, suits, or proceedings,
if adversely determined reasonably would be expected to materially adversely affect the financial condition or business of Borrower,
Guarantor, or Key Principal, or the condition, operation, or ownership of the Mortgaged Property (including any claims, actions,
suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, which shall always be deemed material).

 

(g)          Payment
of Costs, Fees, and Expenses.

 

In addition to the
payments specified in this Loan Agreement, Borrower shall pay, on demand, all of Lender’s out-of-pocket fees, costs, charges,
or expenses (including the reasonable fees and expenses of attorneys, accountants, and other experts) incurred by Lender in connection
with:

 

(1)         any
amendment to, or consent, or waiver required under, this Loan Agreement or any of the Loan Documents (whether or not any such amendments,
consents, or waivers are entered into);

 

(2)         defending
or participating in any litigation arising from actions by third parties and brought against or involving Lender with respect to:

 

(A)         the
Mortgaged Property;

 

(B)         any
event, act, condition, or circumstance in connection with the Mortgaged Property; or

 

(C)         the
relationship between or among Lender, Borrower, Key Principal, and Guarantor in connection with this Loan Agreement or any of the
transactions contemplated by this Loan Agreement;

 

(3)         the
administration or enforcement of, or preservation of rights or remedies under, this Loan Agreement or any other Loan Documents
including or in connection with any litigation or appeals, any Foreclosure Event or other disposition of any collateral granted
pursuant to the Loan Documents; and

 

(4)         any
Bankruptcy Event or Guarantor Bankruptcy Event.

 

(h)          Restrictions
on Distributions.

 

No distributions or
dividends of any nature with respect to Rents or other income from the Mortgaged Property shall be made to any Person having a
direct ownership interest in Borrower if an Event of Default has occurred and is continuing.

 

(i)          Lockbox
Arrangement.

 

Borrower shall not
enter into any type of lockbox agreement or similar cash management arrangement that has not been approved by Lender in writing,
and no direct or indirect owner of Borrower shall enter into any type of lockbox agreement or similar cash management arrangement
with respect to Rents or other income from the Mortgaged Property that has not been approved by Lender in writing. Lender’s
approval of any such cash management arrangement may be conditioned upon requiring Borrower to enter into a lockbox agreement or
similar cash management arrangement with Lender in form and substance acceptable to Lender with regard to Rents and other income
from the Mortgaged Property.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 18
	Article 4	01-16	© 2016 Fannie Mae

     

    

 

ARTICLE 5 - THE MORTGAGE
LOAN

 

Section 5.01        Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 5.01are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Receipt
and Review of Loan Documents.

 

Borrower has received
and reviewed this Loan Agreement and all of the other Loan Documents.

 

(b)          No
Default.

 

No default exists under
any of the Loan Documents.

 

(c)          No
Defenses.

 

The Loan Documents
are not currently subject to any right of rescission, set-off, counterclaim, or defense by either Borrower or Guarantor, including
the defense of usury, and neither Borrower nor Guarantor has asserted any right of rescission, set-off, counterclaim, or defense
with respect thereto.

 

(d)          Loan
Document Taxes.

 

All mortgage, mortgage
recording, stamp, intangible, or any other similar taxes required to be paid by any Person under applicable law currently in effect
in connection with the execution, delivery, recordation, filing, registration, perfection, or enforcement of any of the Loan Documents,
including the Security Instrument, have been paid or will be paid in the ordinary course of the closing of the Mortgage Loan.

 

Section 5.02        Covenants.

 

(a)          Ratification
of Covenants; Estoppels; Certifications.

 

Borrower shall:

 

(1)         promptly
notify Lender in writing upon any violation of any covenant set forth in any Loan Document of which Borrower has notice or knowledge;
provided, however, any such written notice by Borrower to Lender shall not relieve Borrower of, or result in a waiver
of, any obligation under this Loan Agreement or any other Loan Document; and

 

(2)         within
ten (10) days after a request from Lender, provide a written statement, signed and acknowledged by Borrower, certifying to
Lender or any person designated by Lender, as of the date of such statement:

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 19
	Article 5	01-16	© 2016 Fannie Mae

     

    

 

(A)         that
the Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that the Loan Documents are
in full force and effect as modified and setting forth such modifications);

 

(B)         the
unpaid principal balance of the Mortgage Loan;

 

(C)         the
date to which interest on the Mortgage Loan has been paid;

 

(D)         that
Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained
in this Loan Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable
detail);

 

(E)         whether
or not there are then-existing any setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender
under the Loan Documents; and

 

(F)         any
additional facts reasonably requested in writing by Lender.

 

(b)          Further
Assurances.

 

(1)         Other
Documents As Lender May Require.

 

Within ten (10)
days after request by Lender, Borrower shall, subject to Section 5.02(d) below, execute, acknowledge, and deliver, at its cost
and expense, all further acts, deeds, conveyances, assignments, financing statements, transfers, documents, agreements, assurances,
and such other instruments as Lender may reasonably require from time to time in order to better assure, grant, and convey to Lender
the rights intended to be granted, now or in the future, to Lender under this Loan Agreement and the other Loan Documents.

 

(2)         Corrective
Actions.

 

Within ten (10)
days after request by Lender, Borrower shall provide, or cause to be provided, to Lender, at Borrower’s cost and expense,
such further documentation or information reasonably deemed necessary or appropriate by Lender in the exercise of its rights under
the related commitment letter between Borrower and Lender or to correct patent mistakes in the Loan Documents, the Title Policy,
or the funding of the Mortgage Loan.

 

(c)          Sale
of Mortgage Loan.

 

Borrower shall, subject
to Section 5.02(d) below:

 

(1)         comply
with the reasonable requirements of Lender or any Investor of the Mortgage Loan or provide, or cause to be provided, to Lender
or any Investor of the Mortgage Loan within ten (10) days of the request, at Borrower’s cost and expense, such further
documentation or information as Lender or Investor may reasonably require, in order to enable:

 

(A)         Lender
to sell the Mortgage Loan to such Investor;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 20
	Article 5	01-16	© 2016 Fannie Mae

     

    

 

(B)         Lender
to obtain a refund of any commitment fee from any such Investor; or

 

(C)         any
such Investor to further sell or securitize the Mortgage Loan;

 

(2)         ratify
and affirm in writing the representations and warranties set forth in any Loan Document as of such date specified by Lender modified
as necessary to reflect changes that have occurred subsequent to the Effective Date;

 

(3)         confirm
that Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained
in this Loan Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable
detail); and

 

(4)         execute
and deliver to Lender and/or any Investor such other documentation, including any amendments, corrections, deletions, or additions
to this Loan Agreement or other Loan Document(s) as is reasonably required by Lender or such Investor.

 

(d)          Limitations
on Further Acts of Borrower.

 

Nothing in Section
5.02(b) and Section 5.02(c) shall require Borrower to do any further act that has the effect of:

 

(1)         changing
the economic terms of the Mortgage Loan set forth in the related commitment letter between Borrower and Lender;

 

(2)         imposing
on Borrower or Guarantor greater personal liability under the Loan Documents than that set forth in the related commitment letter
between Borrower and Lender; or

 

(3)         materially
changing the rights and obligations of Borrower or Guarantor under the commitment letter.

 

(e)          Financing
Statements; Record Searches.

 

(1)         Borrower
shall pay all costs and expenses associated with:

 

(A)         any
filing or recording of any financing statements, including all continuation statements, termination statements, and amendments
or any other filings related to security interests in or liens on collateral; and

 

(B)         any
record searches for financing statements that Lender may require.

 

(2)         Borrower
hereby authorizes Lender to file any financing statements, continuation statements, termination statements, and amendments (including
an “all assets” or “all personal property” collateral description or words of similar import) in form and
substance as Lender may require in order to protect and preserve Lender’s lien priority and security interest in the Mortgaged
Property (and to the extent Lender has filed any such financing statements, continuation statements, or amendments prior to the
Effective Date, such filings by Lender are hereby authorized and ratified by Borrower).

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 21
	Article 5	01-16	© 2016 Fannie Mae

     

    

 

(f)          Loan
Document Taxes.

 

Borrower shall pay,
on demand, any transfer taxes, documentary taxes, assessments, or charges made by any Governmental Authority in connection with
the execution, delivery, recordation, filing, registration, perfection, or enforcement of any of the Loan Documents or the Mortgage
Loan.

 

ARTICLE 6 - PROPERTY
USE, PRESERVATION, AND MAINTENANCE

 

Section 6.01        Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 6.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Compliance
with Law; Permits and Licenses.

 

(1)         To
Borrower’s knowledge, all improvements to the Land and the use of the Mortgaged Property comply with all applicable laws,
ordinances, statutes, rules, and regulations, including all applicable statutes, rules, and regulations pertaining to requirements
for equal opportunity, anti-discrimination, fair housing, and rent control, and Borrower has no knowledge of any action or proceeding
(or threatened action or proceeding) regarding noncompliance or nonconformity with any of the foregoing.

 

(2)         To
Borrower’s knowledge, there is no evidence of any illegal activities on the Mortgaged Property.

 

(3)         To
Borrower’s knowledge, no permits or approvals from any Governmental Authority, other than those previously obtained and furnished
to Lender, are necessary for the commencement and completion of the Repairs or Replacements, as applicable, other than those permits
or approvals which will be timely obtained in the ordinary course of business.

 

(4)         All
required permits, licenses, and certificates to comply with all zoning and land use statutes, laws, ordinances, rules, and regulations,
and all applicable health, fire, safety, and building codes, and for the lawful use and operation of the Mortgaged Property, including
certificates of occupancy, apartment licenses, or the equivalent, have been obtained and are in full force and effect.

 

(5)         No
portion of the Mortgaged Property has been purchased with the proceeds of any illegal activity.

 

(b)          Property
Characteristics.

 

(1)         The
Mortgaged Property contains at least:

 

(A)         the
Property Square Footage;

 

(B)         the
Total Parking Spaces; and

 

(C)         the
Total Residential Units.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 22
	Article 5	01-16	© 2016 Fannie Mae

     

    

 

(2)         No
part of the Land is included or assessed under or as part of another tax lot or parcel, and no part of any other property is included
or assessed under or as part of the tax lot or parcels for the Land.

 

(c)          Property
Ownership.

 

Borrower is sole owner
or ground lessee of the Mortgaged Property.

 

(d)          Condition
of the Mortgaged Property.

 

(1)         Borrower
has not made any claims, and to Borrower’s knowledge, no claims have been made, against any contractor, engineer, architect,
or other party with respect to the construction or condition of the Mortgaged Property or the existence of any structural or other
material defect therein; and

 

(2)         neither
the Land nor the Improvements has sustained any damage other than damage which has been fully repaired, or is fully insured and
is being repaired in the ordinary course of business.

 

(e)          Personal
Property.

 

Borrower owns (or,
to the extent disclosed on the Exceptions to Representations and Warranties Schedule, leases) all of the Personal Property that
is material to and is used in connection with the management, ownership, and operation of the Mortgaged Property.

 

Section 6.02        Covenants

 

(a)          Use
of Property.

 

From and after the
Effective Date, Borrower shall not, unless required by applicable law or Governmental Authority:

 

(1)         change
the use of all or any part of the Mortgaged Property;

 

(2)         convert
any individual dwelling units or common areas to commercial use, or convert any common area or commercial use to individual dwelling
units without Lender’s prior written consent;

 

(3)         initiate
or acquiesce in a change in the zoning classification of the Land;

 

(4)         establish
any condominium or cooperative regime with respect to the Mortgaged Property;

 

(5)         subdivide
the Land; or

 

(6)         suffer,
permit, or initiate the joint assessment of any Mortgaged Property with any other real property constituting a tax lot separate
from such Mortgaged Property which could cause the part of the Land to be included or assessed under or as part of another tax
lot or parcel, or any part of any other property to be included or assessed under or as part of the tax lot or parcels for the
Land.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 23
	Article 6	01-16	© 2016 Fannie Mae

     

    

 

(b)          Property
Maintenance.

 

Borrower shall:

 

(1)         pay
the expenses of operating, managing, maintaining, and repairing the Mortgaged Property (including insurance premiums, utilities,
Repairs, and Replacements) before the last date upon which each such payment may be made without any penalty or interest charge
being added;

 

(2)         keep
the Mortgaged Property in good repair and marketable condition (ordinary wear and tear excepted) (including the replacement of
Personalty and Fixtures with items of equal or better function and quality) and subject to Section 9.03(b)(3) and Section 10.03(d)
restore or repair promptly, in a good and workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of its
original condition or condition immediately prior to the damage (if improved after the Effective Date), whether or not any insurance
proceeds or amounts received in connection with a Condemnation Action are available to cover any costs of such restoration or repair;

 

(3)         commence
all Required Repairs, Additional Lender Repairs, and Additional Lender Replacements as follows:

 

(A)         with
respect to any Required Repairs, promptly following the Effective Date (subject to Force Majeure, if applicable), in accordance
with the timelines set forth on the Required Repair Schedule, or if no timelines are provided, as soon as practical following the
Effective Date;

 

(B)         with
respect to Additional Lender Repairs, in the event that Lender determines that Additional Lender Repairs are necessary from time
to time or pursuant to Section 6.03(c), promptly following Lender’s written notice of such Additional Lender Repairs (subject
to Force Majeure, if applicable), commence any such Additional Lender Repairs in accordance with Lender’s timelines, or if
no timelines are provided, as soon as practical;

 

(C)         with
respect to Additional Lender Replacements, in the event that Lender determines that Additional Lender Replacements are necessary
from time to time or pursuant to Section 6.03(c), promptly following Lender’s written notice of such Additional Lender Replacements
(subject to Force Majeure, if applicable), commence any such Additional Lender Replacements in accordance with Lender’s timelines,
or if no timelines are provided, as soon as practical;

 

(4)         make,
construct, install, diligently perform, and complete all Replacements and Repairs:

 

(A)         in
a good and workmanlike manner as soon as practicable following the commencement thereof, free and clear of any Liens, including
mechanics’ or materialmen’s liens and encumbrances (except Permitted Encumbrances and mechanics’ or materialmen’s
liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery
of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials);

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 24
	Article 6	01-16	© 2016 Fannie Mae

     

    

 

(B)         in
accordance with all applicable laws, ordinances, rules, and regulations of any Governmental Authority, including applicable building
codes, special use permits, and environmental regulations;

 

(C)         in
accordance with all applicable insurance and bonding requirements; and

 

(D)         within
all timeframes required by Lender, and Borrower acknowledges that it shall be an Event of Default if Borrower abandons or ceases
work on any Repair at any time prior to the completion of the Repairs for a period of longer than twenty (20) days (except
when Force Majeure exists and Borrower is diligently pursuing the reinstitution of such work, provided, however, any such abandonment
or cessation shall not in any event allow the Repair to be completed after the Completion Period, subject to Force Majeure); and

 

(5)         subject
to the terms of Section 6.03(a) provide for professional management of the Mortgaged Property by a residential rental property
manager satisfactory to Lender under a contract approved by Lender in writing;

 

(6)         give
written notice to Lender of, and, unless otherwise directed in writing by Lender, appear in and defend any action or proceeding
purporting to affect the Mortgaged Property, Lender’s security for the Mortgage Loan, or Lender’s rights under this
Loan Agreement; and

 

(7)         upon
Lender’s written request, submit to Lender any contracts or work orders described in Section 13.02(b).

 

(c)          Property
Preservation.

 

Borrower shall:

 

(1)         not
commit waste or abandon or (ordinary wear and tear excepted) permit impairment or deterioration of the Mortgaged Property;

 

(2)         except
as otherwise permitted herein in connection with Repairs and Replacements, not remove, demolish, or alter the Mortgaged Property
or any part of the Mortgaged Property (or permit any tenant or any other person to do the same) except in connection with the replacement
of tangible Personalty or Fixtures (provided such Personalty and Fixtures are replaced with items of equal or better function and
quality);

 

(3)         not
engage in or knowingly permit, and shall take appropriate measures to prevent and abate or cease and desist, any illegal activities
at the Mortgaged Property that could endanger tenants or visitors, result in damage to the Mortgaged Property, result in forfeiture
of the Land or otherwise materially impair the lien created by the Security Instrument or Lender’s interest in the Mortgaged
Property;

 

(4)         not
permit any condition to exist on the Mortgaged Property that would invalidate any part of any insurance coverage required by this
Loan Agreement; or

 

(5)         not
subject the Mortgaged Property to any voluntary, elective, or non-compulsory tax lien or assessment (or opt in to any voluntary,
elective, or non-compulsory special tax district or similar regime).

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 25
	Article 6	01-16	© 2016 Fannie Mae

     

    

 

(d)          Property
Inspections.

 

Borrower shall:

 

(1)         permit
Lender, its agents, representatives, and designees to enter upon and inspect the Mortgaged Property (including in connection with
any Replacement or Repair, or to conduct any Environmental Inspection pursuant to the Environmental Indemnity Agreement), and shall
cooperate and provide access to all areas of the Mortgaged Property (subject to the rights of tenants under the Leases):

 

(A)         during
normal business hours;

 

(B)         at
such other reasonable time upon reasonable notice of not less than one (1) Business Day;

 

(C)         at
any time when exigent circumstances exist; or

 

(D)         at
any time after an Event of Default has occurred and is continuing; and

 

(2)         pay
for reasonable costs or expenses incurred by Lender or its agents in connection with any such inspections.

 

(e)          Compliance
with Laws.

 

Borrower shall:

 

(1)         comply
with all laws, ordinances, statutes, rules, and regulations of any Governmental Authority and all recorded lawful covenants and
agreements relating to or affecting the Mortgaged Property, including all laws, ordinances, statutes, rules and regulations, and
covenants pertaining to construction of improvements on the Land, fair housing, and requirements for equal opportunity, anti-discrimination,
and Leases;

 

(2)         procure
and maintain all required permits, licenses, charters, registrations, and certificates necessary to comply with all zoning and
land use statutes, laws, ordinances, rules and regulations, and all applicable health, fire, safety, and building codes and for
the lawful use and operation of the Mortgaged Property, including certificates of occupancy, apartment licenses, or the equivalent;

 

(3)         comply
with all applicable laws that pertain to the maintenance and disposition of tenant security deposits;

 

(4)         at
all times maintain records sufficient to demonstrate compliance with the provisions of this Section 6.02(e); and

 

(5)         promptly
after receipt or notification thereof, provide Lender copies of any building code or zoning violation from any Governmental Authority
with respect to the Mortgaged Property.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 26
	Article 6	01-16	© 2016 Fannie Mae

     

    

 

Section 6.03        Mortgage
Loan Administration Matters Regarding the Property.

 

(a)          Property
Management.

 

From and after the
Effective Date, each property manager and each property management agreement must be approved by Lender. If, in connection with
the making of the Mortgage Loan, or at any later date, Lender waives in writing the requirement that Borrower enter into a written
contract for management of the Mortgaged Property, and Borrower later elects to enter into a written contract or change the management
of the Mortgaged Property, such new property manager or the property management agreement must be approved by Lender. As a condition
to any approval by Lender, Lender may require that Borrower and such new property manager enter into a collateral assignment of
the property management agreement on a form approved by Lender.

 

(b)          Subordination
of Fees to Affiliated Property Managers.

 

Any property manager
that is a Borrower Affiliate to whom fees are payable for the management of the Mortgaged Property must enter into an assignment
of management agreement or other agreement with Lender, in a form approved by Lender, providing for subordination of those fees
and such other provisions as Lender may require.

 

(c)          Property
Condition Assessment.

 

If, in connection with
any inspection of the Mortgaged Property, Lender determines that the condition of the Mortgaged Property has deteriorated (ordinary
wear and tear excepted) since the Effective Date, Lender may obtain, at Borrower’s expense, a property condition assessment
of the Mortgaged Property. Lender’s right to obtain a property condition assessment pursuant to this Section 6.03(c) shall
be in addition to any other rights available to Lender under this Loan Agreement in connection with any such deterioration. Any
such inspection or property condition assessment may result in Lender requiring Additional Lender Repairs or Additional Lender
Replacements as further described in Section 13.02(a)(9)(B).

 

ARTICLE 7 - LEASES
AND RENTS

 

Section 7.01        Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 7.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Prior
Assignment of Rents.

 

Borrower has not executed
any:

 

(1)         prior
assignment of Rents (other than an assignment of Rents securing prior indebtedness that has been paid off and discharged or will
be paid off and discharged with the proceeds of the Mortgage Loan); or

 

(2)         instrument
which would prevent Lender from exercising its rights under this Loan Agreement or the Security Instrument.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 27
	Article 6	01-16	© 2016 Fannie Mae

     

    

 

(b)          Prepaid
Rents.

 

Borrower has not accepted,
and does not expect to receive prepayment of, any Rents for more than two (2) months prior to the due dates of such Rents.

 

Section 7.02         Covenants.

 

(a)          Leases.

 

Borrower shall:

 

(1)         comply
with and observe Borrower’s obligations under all Leases, including Borrower’s obligations pertaining to the maintenance
and disposition of tenant security deposits;

 

(2)         surrender
possession of the Mortgaged Property, including all Leases and all security deposits and prepaid Rents, immediately upon appointment
of a receiver or Lender’s entry upon and taking of possession and control of the Mortgaged Property, as applicable;

 

(3)         require
that all Residential Leases have initial lease terms of not less than six (6) months and not more than twenty-four (24)
months (notwithstanding the foregoing, Residential Leases with initial terms of less than six (6) months, but not less than one
(1) month, shall be permitted for up to ten percent (10%) of the units at the Mortgaged Property without Lender’s consent;
however, if customary in the applicable market for properties comparable to the Mortgaged Property, more than ten percent (10%)
of the Residential Leases with terms of less than six (6) months (but in no case less than one (1) month) may be permitted
with Lender’s prior written consent); and

 

(4)         promptly
provide Lender a copy of any non-Residential Lease at the time such Lease is executed (subject to Lender’s consent rights
for Material Commercial Leases in Section 7.02(b)) and, upon Lender’s written request, promptly provide Lender a copy of
any Residential Lease then in effect.

 

(b)          Commercial
Leases.

 

(1)         With
respect to Material Commercial Leases, Borrower shall not:

 

(A)         enter
into any Material Commercial Lease except with the prior written consent of Lender; or

 

(B)         modify
the terms of, extend, or terminate any Material Commercial Lease (including any Material Commercial Lease in existence on the Effective
Date) without the prior written consent of Lender.

 

(2)         With
respect to any non-Material Commercial Lease, Borrower shall not:

 

(A)         enter
into any non-Material Commercial Lease that materially alters the use and type of operation of the premises subject to the Lease
in effect as of the Effective Date or reduces the number or size of residential units at the Mortgaged Property; or

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 28
	Article 7	01-16	© 2016 Fannie Mae

     

    

 

(B)         modify
the terms of any non-Material Commercial Lease (including any non-Material Commercial Lease in existence on the Effective Date)
in any way that materially alters the use and type of operation of the premises subject to such non-Material Commercial Lease in
effect as of the Effective Date, reduces the number or size of residential units at the Mortgaged Property, or results in such
non-Material Commercial Lease being deemed a Material Commercial Lease.

 

(3)         With
respect to any Material Commercial Lease or non-Material Commercial Lease, Borrower shall cause the applicable tenant to provide
within ten (10) days after a request by Borrower, a certificate of estoppel, or
if not provided by tenant within such ten (10) day period, Borrower shall provide
such certificate of estoppel, certifying:

 

(A)         that
such Material Commercial Lease or non-Material Commercial Lease is unmodified and in full force and effect (or if there have been
modifications, that such Material Commercial Lease or non-Material Commercial Lease is in full force and effect as modified and
stating the modifications);

 

(B)         the
term of the Lease including any extensions thereto;

 

(C)         the
dates to which the Rent and any other charges hereunder have been paid by tenant;

 

(D)         the
amount of any security deposit delivered to Borrower as landlord;

 

(E)         whether
or not Borrower is in default (or whether any event or condition exists which, with the passage of time, would constitute an event
of default) under such Lease;

 

(F)         the
address to which notices to tenant should be sent; and

 

(G)         any
other information as may be reasonably required by Lender.

 

(c)          Payment
of Rents.

 

Borrower shall:

 

(1)         pay
to Lender upon demand all Rents after an Event of Default has occurred and is continuing;

 

(2)         cooperate
with Lender’s efforts in connection with the assignment of Rents set forth in the Security Instrument; and

 

(3)         not
accept Rent under any Lease (whether a Residential Lease or a non-Residential Lease) for more than two (2) months in advance.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 29
	Article 7	01-16	© 2016 Fannie Mae

     

    

 

(d)          Assignment
of Rents.

 

Borrower shall not:

 

(1)         perform
any acts nor execute any instrument that would prevent Lender from exercising its rights under the assignment of Rents granted
in the Security Instrument or in any other Loan Document; nor

 

(2)         interfere
with Lender’s collection of such Rents.

 

(e)          Further
Assignments of Leases and Rents.

 

Borrower shall execute
and deliver any further assignments of Leases and Rents as Lender may reasonably require.

 

(f)          Options
to Purchase by Tenants.

 

No Lease (whether a
Residential Lease or a non-Residential Lease) shall contain an option to purchase, right of first refusal to purchase or right
of first offer to purchase, except as required by applicable law.

 

Section 7.03        Mortgage
Loan Administration Regarding Leases and Rents.

 

(a)          Material
Commercial Lease Requirements.

 

Each Material Commercial
Lease, including any renewal or extension of any Material Commercial Lease in existence as of the Effective Date, shall provide,
directly or pursuant to a subordination, non-disturbance and attornment agreement approved by Lender, that:

 

(1)         the
tenant shall, upon written notice from Lender after the occurrence of an Event of Default, pay all Rents payable under such Lease
to Lender;

 

(2)         such
Lease and all rights of the tenant thereunder are expressly subordinate to the lien of the Security Instrument;

 

(3)         the
tenant shall attorn to Lender and any purchaser at a Foreclosure Event (such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a Foreclosure Event or by Lender in any manner);

 

(4)         the
tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a Foreclosure Event may from time to
time request; and

 

(5)         such
Lease shall not terminate as a result of a Foreclosure Event unless Lender or any other purchaser at such Foreclosure Event affirmatively
elects to terminate such Lease pursuant to the terms of the subordination, non-disturbance and attornment agreement.

 

(b)          Residential
Lease Form.

 

All Residential Leases
entered into from and after the Effective Date shall be on forms approved by Lender.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 30
	Article 7	01-16	© 2016 Fannie Mae

     

    

 

ARTICLE 8 - BOOKS
AND RECORDS; FINANCIAL REPORTING

 

Section 8.01        Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 8.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Financial
Information.

 

All financial statements
and data, including statements of cash flow and income and operating expenses, that have been delivered to Lender in respect of
the Mortgaged Property:

 

(1)         are
true, complete, and correct in all material respects; and

 

(2)         accurately
represent the financial condition of the Mortgaged Property as of such date.

 

(b)          No
Change in Facts or Circumstances.

 

All information in
the Loan Application and in all financial statements, rent rolls, reports, certificates, and other documents submitted in connection
with the Loan Application are complete and accurate in all material respects. There has been no material adverse change in any
fact or circumstance that would make any such information incomplete or inaccurate.

 

Section 8.02         Covenants.

 

(a)          Obligation
to Maintain Accurate Books and Records.

 

Borrower shall keep
and maintain at all times at the Mortgaged Property or the property management agent’s offices or Borrower’s General
Business Address and, upon Lender’s written request, shall make available at the Land:

 

(1)         complete
and accurate books of account and records (including copies of supporting bills and invoices) adequate to reflect correctly the
operation of the Mortgaged Property; and

 

(2)         copies
of all written contracts, Leases, and other instruments that affect Borrower or the Mortgaged Property.

 

(b)          Items
to Furnish to Lender.

 

Borrower shall furnish
to Lender the following, certified as true, complete, and accurate in all material respects, by an individual having authority
to bind Borrower (or Guarantor, as applicable), in such form and with such detail as Lender reasonably requires:

 

(1)         within
forty-five (45) days after the end of each first, second, and third calendar quarter, a statement of income and expenses for
Borrower on a year-to-date basis as of the end of each calendar quarter;

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 31
	Article 8	01-16	© 2016 Fannie Mae

     

    

 

(2)         within
one hundred twenty (120) days after the end of each calendar year:

 

(A)         for
any Borrower and any Guarantor that is an entity, a statement of income and expenses and a statement of cash flows for such calendar
year;

 

(B)         for
any Borrower and any Guarantor that is an individual, or a trust established for estate-planning purposes, a personal financial
statement for such calendar year;

 

(C)         when
requested in writing by Lender, balance sheet(s) showing all assets and liabilities of Borrower and Guarantor and a statement of
all contingent liabilities as of the end of such calendar year;

 

(D)         if
an energy consumption metric for the Mortgaged Property is required to be reported to any Governmental Authority, the Fannie Mae
Energy Performance Metrics report, as generated by ENERGY STAR® Portfolio Manager, for the Mortgaged Property for
such calendar year, which report must include the ENERGY STAR score, the Source Energy Use Intensity (EUI), the month and year
ending period for such ENERGY STAR score and such Source Energy Use Intensity, and the ENERGY STAR Portfolio Manager Property Identification
Number; provided that, if the Governmental Authority does not require the use of ENERGY STAR Portfolio Manager for the reporting
of the energy consumption metric and Borrower does not use ENERGY STAR Portfolio Manager, then Borrower shall furnish to Lender
the Source Energy Use Intensity for the Mortgaged Property for such calendar year;

 

(E)         a
written certification ratifying and affirming that:

 

(i)          Borrower
has taken no action in violation of Section 4.02(d) regarding its single asset status;

 

(ii)         Borrower
has received no notice of any building code violation, or if Borrower has received such notice, evidence of remediation;

 

(iii)        Borrower
has made no application for rezoning nor received any notice that the Mortgaged Property has been or is being rezoned; and

 

(iv)        Borrower
has taken no action and has no knowledge of any action that would violate the provisions of Section 11.02(b)(1)(F) regarding liens
encumbering the Mortgaged Property;

 

(F)         an
accounting of all security deposits held pursuant to all Leases, including the name of the institution (if any) and the names and
identification numbers of the accounts (if any) in which such security deposits are held and the name of the person to contact
at such financial institution, along with any authority or release necessary for Lender to access information regarding such accounts;
and

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 32
	Article 8	01-16	© 2016 Fannie Mae

     

    

 

(G)         written
confirmation of:

 

(i)          any
changes occurring since the Effective Date (or that no such changes have occurred since the Effective Date) in (1) the direct owners
of Borrower, (2) the indirect owners (and any non-member managers) of Borrower that Control Borrower (excluding any Publicly-Held
Corporations or Publicly-Held Trusts), or (3) the indirect owners of Borrower that hold twenty-five percent (25%) or more
of the ownership interests in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts), and their respective
interests;

 

(ii)         the
names of all officers and directors of (1) any Borrower which is a corporation, (2) any corporation which is a general partner
of any Borrower which is a partnership, or (3) any corporation which is the managing member or non-member manager of any Borrower
which is a limited liability company; and

 

(iii)        the
names of all managers who are not members of (1) any Borrower which is a limited liability company, (2) any limited liability company
which is a general partner of any Borrower which is a partnership, or (3) any limited liability company which is the managing member
or non-member manager of any Borrower which is a limited liability company; and

 

(H)         if
not already provided pursuant to Section 8.02(b)(2)(A) above, a statement of income and expenses for Borrower’s operation
of the Mortgaged Property on a year-to-date basis as of the end of each calendar year;

 

(3)         within
forty-five (45) days after the end of each first, second, and third calendar quarter and within one hundred twenty (120)
days after the end of each calendar year, and at any other time upon Lender’s written request, a rent schedule for the Mortgaged
Property showing the name of each tenant and for each tenant, the space occupied, the lease expiration date, the rent payable for
the current month, the date through which rent has been paid, and any related information requested by Lender; and

 

(4)         upon
Lender’s written request (but, absent an Event of Default, no more frequently than once in any six (6) month period):

 

(A)         any
item described in Section 8.02(b)(1) or Section 8.02(b)(2) for Borrower, certified as true, complete, and accurate by an individual
having authority to bind Borrower;

 

(B)         a
property management or leasing report for the Mortgaged Property, showing the number of rental applications received from tenants
or prospective tenants and deposits received from tenants or prospective tenants, and any other information requested by Lender;

 

(C)         a
statement of income and expenses for Borrower’s operation of the Mortgaged Property on a year-to-date basis as of the end
of each month for such period as requested by Lender, which statement shall be delivered within thirty (30) days after the
end of such month requested by Lender;

 

(D)         a
statement of real estate owned directly or indirectly by Borrower and Guarantor for such period as requested by Lender, which statement(s)
shall be delivered within thirty (30) days after the end of such month requested by Lender; and

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 33
	Article 8	01-16	© 2016 Fannie Mae

     

    

 

(E)         a
statement that identifies:

 

(i)          the
direct owners of Borrower and their respective interests;

 

(ii)         the
indirect owners (and any non-member managers) of Borrower that Control Borrower (excluding any Publicly-Held Corporations or Publicly-Held
Trusts) and their respective interests; and

 

(iii)        the
indirect owners of Borrower that hold twenty-five percent (25%) or more of the ownership interests in Borrower (excluding
any Publicly-Held Corporations or Publicly-Held Trusts) and their respective interests.

 

(c)          Audited
Financials.

 

In the event Borrower
or Guarantor receives or obtains any audited financial statements and such financial statements are required to be delivered to
Lender under Section 8.02(b), Borrower shall deliver or cause to be delivered to Lender the audited versions of such financial
statements.

 

(d)          Delivery
of Books and Records.

 

If an Event of Default
has occurred and is continuing, Borrower shall deliver to Lender, upon written demand, all books and records relating to the Mortgaged
Property or its operation.

 

Section 8.03         Mortgage
Loan Administration Matters Regarding Books and Records and Financial Reporting.

 

(a)          Lender’s
Right to Obtain Audited Books and Records.

 

Lender may require
that Borrower’s or Guarantor’s books and records be audited, at Borrower’s expense, by an independent certified
public accountant selected by Lender in order to produce or audit any statements, schedules, and reports of Borrower, Guarantor,
or the Mortgaged Property required by Section 8.02, if:

 

(1)         Borrower
or Guarantor fails to provide in a timely manner the statements, schedules, and reports required by Section 8.02 and, thereafter,
Borrower or Guarantor fails to provide such statements, schedules, and reports within the cure period provided in Section 14.01(c);

 

(2)         the
statements, schedules, and reports submitted to Lender pursuant to Section 8.02 are not full, complete, and accurate in all material
respects as determined by Lender and, thereafter, Borrower or Guarantor fails to provide such statements, schedules, and reports
within the cure period provided in Section 14.01(c); or

 

(3)         an
Event of Default has occurred and is continuing.

 

Notwithstanding the
foregoing, the ability of Lender to require the delivery of audited financial statements shall be limited to not more than once
per Borrower’s fiscal year so long as no Event of Default has occurred during such fiscal year (or any event which, with
the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing).
Borrower shall cooperate with Lender in order to satisfy the provisions of this Section 8.03(a). All related costs and expenses
of Lender shall become immediately due and payable by Borrower within ten (10) Business Days after demand therefor.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 34
	Article 8	01-16	© 2016 Fannie Mae

     

    

 

(b)          Credit
Reports; Credit Score.

 

No more often than
once in any twelve (12) month period, Lender is authorized to obtain a credit report (if applicable) on Borrower or Guarantor,
the cost of which report shall be paid by Borrower. Lender is authorized to obtain a Credit Score (if applicable) for Borrower
or Guarantor at any time at Lender’s expense.

 

ARTICLE 9 - INSURANCE

 

Section 9.01        Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 9.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Compliance
with Insurance Requirements.

 

Borrower is in compliance
with Lender’s insurance requirements (or has obtained a written waiver from Lender for any non-compliant coverage) and has
timely paid all premiums on all required insurance policies.

 

(b)          Property
Condition.

 

(1)         The
Mortgaged Property has not been damaged by fire, water, wind, or other cause of loss; or

 

(2)         if
previously damaged, any previous damage to the Mortgaged Property has been repaired and the Mortgaged Property has been fully restored.

 

Section 9.02        Covenants.

 

(a)          Insurance
Requirements.

 

(1)         As
required by Lender and applicable law, and as may be modified from time to time, Borrower shall:

 

(A)         keep
the Improvements insured at all times against any hazards, which insurance shall include coverage against loss by fire and all
other perils insured by the “special causes of loss” coverage form, general boiler and machinery coverage, business
income coverage, and flood (if any of the Improvements are located in an area identified by the Federal Emergency Management Agency
(or any successor) as an area having special flood hazards and to the extent flood insurance is available in that area), and may
include sinkhole insurance, mine subsidence insurance, earthquake insurance, terrorism insurance, windstorm insurance and, if the
Mortgaged Property does not conform to applicable building, zoning, or land use laws, ordinance, and law coverage;

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 35
	Article 8	01-16	© 2016 Fannie Mae

     

    

 

(B)         maintain
at all times commercial general liability insurance, workmen’s compensation insurance, and such other liability, errors and
omissions, and fidelity insurance coverage; and

 

(C)         maintain
builder’s risk and public liability insurance, and other insurance in connection with completing the Repairs or Replacements,
as applicable.

 

(b)          Delivery
of Policies, Renewals, Notices, and Proceeds.

 

Borrower shall:

 

(1)         cause
all insurance policies (including any policies not otherwise required by Lender) which can be endorsed with standard non-contributing,
non-reporting mortgagee clauses making loss payable to Lender (or Lender’s assigns) to be so endorsed;

 

(2)         promptly
deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies and all receipts for
paid premiums;

 

(3)         deliver
evidence, in form and content acceptable to Lender, that each required insurance policy under this Article 9 has been renewed not
less than fifteen (15) days prior to the applicable expiration date, and (if such evidence is other than an original or duplicate
original of a renewal policy) deliver the original or duplicate original of each renewal policy (or such other evidence of insurance
as may be required by or acceptable to Lender) in form and content acceptable to Lender within ninety (90) days after the
applicable expiration date of the original insurance policy;

 

(4)         provide
immediate written notice to the insurance company and to Lender of any event of loss;

 

(5)         execute
such further evidence of assignment of any insurance proceeds as Lender may require; and

 

(6)         provide
immediate written notice to Lender of Borrower’s receipt of any insurance proceeds under any insurance policy required by
Section 9.02(a)(1) above and, if requested by Lender, deliver to Lender all of such proceeds received by Borrower to be applied
by Lender in accordance with this Article 9.

 

Section 9.03        Mortgage
Loan Administration Matters Regarding Insurance

 

(a)          Lender’s
Ongoing Insurance Requirements.

 

Borrower acknowledges
that Lender’s insurance requirements may change from time to time. All insurance policies and renewals of insurance policies
required by this Loan Agreement shall be:

 

(1)         in
the form and with the terms required by Lender;

 

(2)         in
such amounts, with such maximum deductibles and for such periods required by Lender; and

 

(3)         issued
by insurance companies satisfactory to Lender.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 36
	Article 9	01-16	© 2016 Fannie Mae

     

    

 

Borrower
acknowledges that any failure OF BORROWER to comply with THE REQUIREMENTS SET FORTH IN SECTION 9.02(a)
or SECTION 9.02(b)(3) above shall permit lender to purchase the applicable
insurance at Borrower’s cost. Such insurance may, but need not, protect Borrower’s
interests. The coverage that Lender purchases may not pay any claim that Borrower makes or any claim that is made against Borrower
in connection with the Mortgaged Property. If Lender purchases insurance for the Mortgaged Property as permitted hereunder, Borrower
will be responsible for the costs of that insurance, including interest at the Default Rate and any other charges Lender may impose
in connection with the placement of the insurance until the effective date of the cancellation or the expiration of the insurance.
The costs of the insurance shall be added to Borrower’s total outstanding balance or obligation and shall constitute additional
Indebtedness. The costs of the insurance may be more than the cost of insurance Borrower may be able to obtain on its own. Borrower
may later cancel any insurance purchased by Lender, but only after providing evidence that Borrower has obtained insurance as required
by this Loan Agreement and the other Loan Documents.

 

(b)          Application
of Proceeds on Event of Loss.

 

(1)         Upon
an event of loss, Lender may, at Lender’s option:

 

(A)         hold
such proceeds to be applied to reimburse Borrower for the cost of Restoration (in accordance with Lender’s then-current policies
relating to the restoration of casualty damage on similar multifamily residential properties); or

 

(B)         apply
such proceeds to the payment of the Indebtedness, whether or not then due; provided, however, Lender shall not apply
insurance proceeds to the payment of the Indebtedness and shall permit Restoration pursuant to Section 9.03(b)(1)(A) if all of
the following conditions are met:

 

(i)          no
Event of Default has occurred and is continuing (or any event which, with the giving of written notice or the passage of
time, or both, would constitute an Event of Default has occurred and is continuing);

 

(ii)         Lender
determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the
Restoration;

 

(iii)        Lender
determines that the net operating income generated by the Mortgaged Property after completion of the Restoration will be sufficient
to support a debt service coverage ratio not less than the debt service coverage ratio immediately prior to the event of loss,
but in no event less than 1.0x (the debt service coverage ratio shall be calculated on a thirty (30) year amortizing basis
(if applicable, on a proforma basis approved by Lender) in all events and shall include all operating costs and other
expenses, Imposition Deposits, deposits to Collateral Accounts, and Mortgage Loan repayment obligations);

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 37
	Article 9	01-16	© 2016 Fannie Mae

     

    

 

(iv)        Lender
determines that the Restoration will be completed before the earlier of (1) one year before the stated Maturity Date, or (2)
one year after the date of the loss or casualty; and

 

(v)         Borrower
provides Lender, upon written request, evidence of the availability during and after the Restoration of the insurance required
to be maintained by Borrower pursuant to this Loan Agreement.

 

After the completion
of Restoration in accordance with the above requirements, as determined by Lender, the balance, if any, of such proceeds shall
be returned to Borrower.

 

(2)         Notwithstanding
the foregoing, if any loss is estimated to be in an amount equal to or less than $50,000, Lender shall not exercise its rights
and remedies as power-of-attorney herein and shall allow Borrower to make proof of loss, to adjust and compromise any claims under
policies of property damage insurance, to appear in and prosecute any action arising from such policies of property damage insurance,
and to collect and receive the proceeds of property damage insurance; provided that each of the following conditions
shall be satisfied:

 

(A)         Borrower
shall immediately notify Lender of the casualty giving rise to the claim;

 

(B)         no
Event of Default has occurred and is continuing (or any event which, with the giving of written notice or the passage of
time, or both, would constitute an Event of Default has occurred and is continuing);

 

(C)         the
Restoration will be completed before the earlier of (i) one year before the stated Maturity Date, or (ii) one year after the date
of the loss or casualty;

 

(D)         Lender
determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the
Restoration;

 

(E)         all
proceeds of property damage insurance shall be issued in the form of joint checks to Borrower and Lender;

 

(F)         all
proceeds of property damage insurance shall be applied to the Restoration;

 

(G)         Borrower
shall deliver to Lender evidence satisfactory to Lender of completion of the Restoration and obtainment of all lien releases;

 

(H)         Borrower
shall have complied to Lender’s satisfaction with the foregoing requirements on any prior claims subject to this provision,
if any; and

 

(I)         Lender
shall have the right to inspect the Mortgaged Property (subject to the rights of tenants under the Leases).

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 38
	Article 9	01-16	© 2016 Fannie Mae

     

    

 

(3)         If
Lender elects to apply insurance proceeds to the Indebtedness in accordance with the terms of this Loan Agreement, Borrower shall
not be obligated to restore or repair the Mortgaged Property. Rather, Borrower shall restrict access to the damaged portion of
the Mortgaged Property and, at its expense and regardless of whether such costs are covered by insurance, clean up any debris resulting
from the casualty event, and, if required or otherwise permitted by Lender, demolish or raze any remaining part of the damaged
Mortgaged Property to the extent necessary to keep and maintain the Mortgaged Property in a safe, habitable, and marketable condition.
Nothing in this Section 9.03(b) shall affect any of Lender’s remedial rights against Borrower in connection with a breach
by Borrower of any of its obligations under this Loan Agreement or under any Loan Document, including any failure to timely pay
Monthly Debt Service Payments or maintain the insurance coverage(s) required by this Loan Agreement.

 

(c)          Payment
Obligations Unaffected.

 

The application of
any insurance proceeds to the Indebtedness shall not extend or postpone the Maturity Date, or the due date or the full payment
of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred to in this Loan Agreement
or in any other Loan Document. Notwithstanding the foregoing, if Lender applies insurance proceeds to the Indebtedness in connection
with a casualty of less than the entire Mortgaged Property, and after such application of proceeds the debt service coverage ratio
(as determined by Lender) is less than 1.25x based on the then-applicable Monthly Debt Service Payment and the anticipated on-going
net operating income of the Mortgaged Property after such casualty event, then Lender may, at its discretion, permit an adjustment
to the Monthly Debt Service Payments that become due and owing thereafter, based on Lender’s then-current underwriting requirements.
In no event shall the preceding sentence obligate Lender to make any adjustment to the Monthly Debt Service Payments.

 

(d)          Foreclosure
Sale.

 

If the Mortgaged Property
is transferred pursuant to a Foreclosure Event or Lender otherwise acquires title to the Mortgaged Property, Borrower acknowledges
that Lender shall automatically succeed to all rights of Borrower in and to any insurance policies and unearned insurance premiums
applicable to the Mortgaged Property and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such
Foreclosure Event or such acquisition.

 

(e)          Appointment
of Lender as Attorney-In-Fact.

 

Borrower hereby authorizes
and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).

 

ARTICLE 10 - CONDEMNATION

 

Section 10.01        Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 10.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Prior
Condemnation Action.

 

No part of the Mortgaged
Property has been taken in connection with a Condemnation Action.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 39
	Article 9	01-16	© 2016 Fannie Mae

     

    

 

(b)          Pending
Condemnation Actions.

 

No Condemnation Action
is pending nor, to Borrower’s knowledge, is threatened for the partial or total condemnation or taking of the Mortgaged Property.

 

Section 10.02         Covenants.

 

(a)          Notice
of Condemnation.

 

Borrower shall:

 

(1)         promptly
notify Lender of any Condemnation Action of which Borrower has knowledge;

 

(2)         appear
in and prosecute or defend, at its own cost and expense, any action or proceeding relating to any Condemnation Action, including
any defense of Lender’s interest in the Mortgaged Property tendered to Borrower by Lender, unless otherwise directed by Lender
in writing; and

 

(3)         execute
such further evidence of assignment of any condemnation award in connection with a Condemnation Action as Lender may require.

 

(b)          Condemnation
Proceeds.

 

Borrower shall pay
to Lender all awards or proceeds of a Condemnation Action promptly upon receipt.

 

Section 10.03        Mortgage
Loan Administration Matters Regarding Condemnation.

 

(a)          Application
of Condemnation Awards.

 

Lender may apply any
awards or proceeds of a Condemnation Action, after the deduction of Lender’s expenses incurred in the collection of such
amounts, to:

 

(1)         the
restoration or repair of the Mortgaged Property, if applicable;

 

(2)         the
payment of the Indebtedness, with the balance, if any, paid to Borrower; or

 

(3)         Borrower.

 

(b)          Payment
Obligations Unaffected.

 

The application of
any awards or proceeds of a Condemnation Action to the Indebtedness shall not extend or postpone the Maturity Date, or the due
date or the full payment of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred
to in this Loan Agreement or in any other Loan Document.

 

(c)          Appointment
of Lender as Attorney-In-Fact.

 

Borrower hereby authorizes
and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 40
	Article 10	01-16	© 2016 Fannie Mae

     

    

 

(d)          Preservation
of Mortgaged Property.

 

If a Condemnation Action
results in or from damage to the Mortgaged Property and Lender elects to apply the proceeds or awards from such Condemnation Action
to the Indebtedness in accordance with the terms of this Loan Agreement, Borrower shall not be obligated to restore or repair the
Mortgaged Property. Rather, Borrower shall restrict access to any portion of the Mortgaged Property which has been damaged or destroyed
in connection with such Condemnation Action and, at Borrower’s expense and regardless of whether such costs are covered by
insurance, clean up any debris resulting in or from the Condemnation Action, and, if required by any Governmental Authority or
otherwise permitted by Lender, demolish or raze any remaining part of the damaged Mortgaged Property to the extent necessary to
keep and maintain the Mortgaged Property in a safe, habitable, and marketable condition. Nothing in this Section 10.03(d) shall
affect any of Lender’s remedial rights against Borrower in connection with a breach by Borrower of any of its obligations
under this Loan Agreement or under any Loan Document, including any failure to timely pay Monthly Debt Service Payments or maintain
the insurance coverage(s) required by this Loan Agreement.

 

ARTICLE 11 - LIENS,
TRANSFERS, AND ASSUMPTIONS

 

Section 11.01        Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 11.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          No
Labor or Materialmen’s Claims.

 

All parties furnishing
labor and materials on behalf of Borrower have been paid in full. There are no mechanics’ or materialmen’s liens (whether
filed or unfiled) outstanding for work, labor, or materials (and no claims or work outstanding that under applicable law could
give rise to any such mechanics’ or materialmen’s liens) affecting the Mortgaged Property, whether prior to, equal
with, or subordinate to the lien of the Security Instrument.

 

(b)          No
Other Interests.

 

No Person:

 

(1)         other
than Borrower has any possessory ownership or interest in the Mortgaged Property or right to occupy the same except under and pursuant
to the provisions of existing Leases, the material terms of all such Leases having been previously disclosed in writing to Lender;
nor

 

(2)         has
an option, right of first refusal, or right of first offer (except as required by applicable law) to purchase the Mortgaged Property,
or any interest in the Mortgaged Property.

 

Section 11.02        Covenants.

 

(a)          Liens;
Encumbrances.

 

Borrower shall not
permit the grant, creation, or existence of any Lien, whether voluntary, involuntary, or by operation of law, on all or any portion
of the Mortgaged Property (including any voluntary, elective, or non-compulsory tax lien or assessment pursuant to a voluntary,
elective, or non-compulsory special tax district or similar regime) other than:

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 41
	Article 10	01-16	© 2016 Fannie Mae

     

    

 

(1)         Permitted
Encumbrances;

 

(2)         the
creation of:

 

(A)         any
tax lien, municipal lien, utility lien, mechanics’ lien, materialmen’s lien, or judgment lien against the Mortgaged
Property if bonded off, released of record, or otherwise remedied to Lender’s satisfaction within sixty (60) days after
the earlier of the date Borrower has actual notice or constructive notice of the existence of such lien; or

 

(B)         any
mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority upon the
commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent
in the payment for any such work or materials; and

 

(3)         the
lien created by the Loan Documents.

 

(b)          Transfers.

 

(1)         Mortgaged
Property.

 

Borrower
shall not Transfer, or cause or permit a Transfer of, all or any part of the Mortgaged Property (including any interest in the
Mortgaged Property) other than:

 

(A)         a
Transfer to which Lender has consented in writing;

 

(B)         Leases
permitted pursuant to the Loan Documents;

 

(C)         [reserved];

 

(D)         a
Transfer of obsolete or worn out Personalty or Fixtures that are contemporaneously replaced by items of equal or better function
and quality which are free of Liens (other than those created by the Loan Documents);

 

(E)         the
grant of an easement, servitude, or restrictive covenant to which Lender has consented, and Borrower has paid to Lender, upon demand,
all costs and expenses incurred by Lender in connection with reviewing Borrower’s request. Notwithstanding the foregoing,
Borrower shall be permitted to grant an easement over the Mortgaged Property to a publicly operated or private franchise utility
where (a) such easement is between Borrower and the utility, (b) the granting of such easement does not affect Borrower’s
access to the Mortgaged Property or the use of any easements or amenities which benefit the Mortgaged Property, (c) the granting
of such easement does not result in the loss of the use of any units, (d) the granting of such easement does not result in an effect
on the Mortgaged Property’s value or marketability, or on the health or safety of the tenants under any Residential Leases,
that is adverse in any meaningful way, and (e) the consideration paid to Borrower (which consideration may be retained by Borrower
as provided in the following sentence), after deducting Borrower’s costs and expenses incurred in connection with the granting
of such easement, is less than $250 per individual dwelling unit. Prior to the granting of an easement described in the immediately
preceding sentence, Borrower shall (x) provide Lender with copies of the utility easement, for Lender’s review and approval,
which approval shall not be unreasonably withheld, conditioned or delayed, and, (y) deliver evidence reasonably satisfactory to
Lender that the conditions in subsections (a) through (e) have been met. So long as no Event of Default exists, any compensation
received from the easement holder shall be paid: first, to cover the expenses of recording the easement; second, to reimburse or
pay Lender’s out of pocket expenses incurred by Lender in connection with its review of the easement in accordance with this
Section 11.02(b)(1)(E); third, if applicable, to pay the cost to repair or restore any portion of the Mortgaged Property damaged
as a result of the exercise of the rights granted by easement holder, to the extent not paid directly by such easement holder,
and fourth, to Borrower for its own account; provided, that in the event any compensation to be retained by the Borrower in accordance
with this provision exceeds $250 per dwelling unit (after deducting Borrower’s costs and expenses incurred in connection
with the granting of such easement), such amounts shall be deposited in the Replacement Reserve Account;

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 42
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(F)         a
lien permitted pursuant to Section 11.02(a) of this Loan Agreement; or

 

(G)         the
conveyance of the Mortgaged Property following a Foreclosure Event.

 

(2)         Interests
in Borrower, Key Principal, or Guarantor.

 

Other than
a Transfer to which Lender has consented in writing, Borrower shall not Transfer, or cause or permit to be Transferred:

 

(A)         any
direct or indirect ownership interest in Borrower, Key Principal, or Guarantor (if applicable) if such Transfer would cause a change
in Control;

 

(B)         a
direct or indirect Restricted Ownership Interest in Borrower, Key Principal, or Guarantor (if applicable);

 

(C)         fifty
percent (50%) or more of Key Principal’s or Guarantor’s direct or indirect ownership interests in Borrower that
existed on the Effective Date (individually or on an aggregate basis);

 

(D)         the
economic benefits or rights to cash flows attributable to any ownership interests in Borrower, Key Principal, or Guarantor (if
applicable) separate from the Transfer of the underlying ownership interests if the Transfer of the underlying ownership interest
is prohibited by this Loan Agreement; or

 

(E)         a
Transfer to a new key principal or new guarantor (if such new key principal or guarantor is an entity), which entity has an organizational
existence termination date that ends before the Maturity Date.

 

Notwithstanding
the foregoing or anything in Section 11.02(d) to the contrary, if a Publicly-Held Corporation or a Publicly-Held Trust Controls
Borrower, Key Principal, or Guarantor (or is the Key Principal or Guarantor), or owns a direct or indirect Restricted Ownership
Interest in Borrower, Key Principal, or Guarantor, a Transfer of any ownership interests in such Publicly-Held Corporation or Publicly-Held
Trust (including, but not limited to, the issuance of preferred stock by such Publicly-Held Corporation or Publicly Held Trust
that entitles the holder to a dividend and a liquidation preference that takes priority over the common stock of such Publicly-Held
Corporation or Publicly Held Trust (and the commensurate issuance of preferred limited partnership interests in any operating partnership
of such Publicly-Held Corporation or Publicly Held Trust), so long as Control of such Publicly-Held Corporation or Publicly-Held
Trust remains the same after such issuance and at the time of such issuance no Person owns ten percent (10%) or more of such issuance)
shall not be prohibited under this Loan Agreement as long as (i) such Transfer does not result in a conversion of such Publicly-Held
Corporation or Publicly-Held Trust to a privately held entity, and (ii) Borrower provides written notice to Lender not later than
thirty (30) days thereafter of any such Transfer that results in any Person owning ten percent (10%) or more of the ownership
interests in such Publicly-Held Corporation or Publicly-Held Trust.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 43
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(3)         Name
Change or Entity Conversion.

 

Lender shall
consent to Borrower changing its name, changing its jurisdiction of organization, or converting from one type of legal entity into
another type of legal entity for any lawful purpose, provided that:

 

(A)         Lender
receives written notice at least thirty (30) days prior to such change or conversion, which notice shall include organizational
charts that reflect the structure of Borrower both prior to and subsequent to such name change or entity conversion;

 

(B)         such
Transfer is not otherwise prohibited under the provisions of Section 11.02(b)(2);

 

(C)         Borrower
executes an amendment to this Loan Agreement and any other Loan Documents required by Lender documenting the name change or entity
conversion;

 

(D)         Borrower
agrees and acknowledges, at Borrower’s expense, that (i) Borrower will execute and record in the land records any instrument
required by the Property Jurisdiction to be recorded to evidence such name change or entity conversion (or provide Lender with
written confirmation from the title company (via electronic mail or letter) that no such instrument is required), (ii) Borrower
will execute any additional documents required by Lender, including the amendment to this Loan Agreement, and allow such documents
to be recorded or filed in the land records of the Property Jurisdiction, (iii) Lender will obtain a “date down” endorsement
to the Lender’s Title Policy (or obtain a new Title Policy if a “date down” endorsement is not available in the
Property Jurisdiction), evidencing title to the Mortgaged Property being in the name of the successor entity and the Lien of the
Security Instrument against the Mortgaged Property, and (iv) Lender will file any required UCC-3 financing statement and make any
other filing deemed necessary to maintain the priority of its Liens on the Mortgaged Property; and

 

(E)         no
later than ten (10) days subsequent to such name change or entity conversion, Borrower shall provide Lender (i) the documentation
filed with the appropriate office in Borrower’s state of formation evidencing such name change or entity conversion, (ii)
copies of the organizational documents of Borrower, including any amendments, filed with the appropriate office in Borrower’s
state of formation reflecting the post-conversion Borrower name, form of organization, and structure, and (iii) if available, new
certificates of good standing or valid formation for Borrower.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 44
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(4)         No
Delaware Statutory Trust or Series LLC Conversion.

 

Notwithstanding
any provisions herein to the contrary, no Borrower, Guarantor, or Key Principal shall convert to a Delaware Statutory Trust or
a series limited liability company.

 

(c)          No
Other Indebtedness.

 

Other than the Mortgage
Loan, Borrower shall not incur or be obligated at any time with respect to any loan or other indebtedness (except trade payables
as otherwise permitted in this Loan Agreement), including any indebtedness secured by a Lien on, or the cash flows from, the Mortgaged
Property.

 

(d)          No
Mezzanine Financing or Preferred Equity.

 

Neither Borrower nor
any direct or indirect owner of Borrower shall: (1) incur any Mezzanine Debt other than Permitted Mezzanine Debt; (2) issue any
Preferred Equity other than Permitted Preferred Equity; or (3) incur any similar indebtedness or issue any similar equity.

 

Section 11.03        Mortgage
Loan Administration Matters Regarding Liens, Transfers, and Assumptions

 

(a)          Assumption
of Mortgage Loan.

 

Lender shall consent
to a Transfer of the Mortgaged Property to and an assumption of the Mortgage Loan by a new borrower if each of the following conditions
is satisfied prior to the Transfer:

 

(1)         Borrower
has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(a);

 

(2)         no
Event of Default has occurred and is continuing, and no event which, with the giving of written notice or the passage of time,
or both, would constitute an Event of Default has occurred and is continuing;

 

(3)         Lender
determines that:

 

(A)         the
proposed new borrower, new key principal, and any other new guarantor fully satisfy all of Lender’s then-applicable borrower,
key principal, or guarantor eligibility, credit, management, and other loan underwriting standards, which shall include an analysis
of (i) the previous relationships between Lender and the proposed new borrower, new key principal, new guarantor, and any Person
in Control of them, and the organization of the new borrower, new key principal, and new guarantor (if applicable), and (ii) the
operating and financial performance of the Mortgaged Property, including physical condition and occupancy;

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 45
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(B)         none
of the proposed new borrower, new key principal, and any new guarantor, or any owners of the proposed new borrower, new key principal,
and any new guarantor, are a Prohibited Person; and

 

(C)         none
of the proposed new borrower, new key principal, and any new guarantor (if any of such are entities) shall have an organizational
existence termination date that ends before the Maturity Date;

 

(4)         [reserved];

 

(5)         the
proposed new borrower has:

 

(A)         executed
an assumption agreement acceptable to Lender that, among other things, requires the proposed new borrower to assume and perform
all obligations of Borrower (or any other transferor), and that may require that the new borrower comply with any provisions of
any Loan Document that previously may have been waived by Lender for Borrower, subject to the terms of Section 11.03(g);

 

(B)         if
required by Lender, delivered to the Title Company for filing and/or recording in all applicable jurisdictions, all applicable
Loan Documents including the assumption agreement to correctly evidence the assumption and the confirmation, continuation, perfection,
and priority of the Liens created hereunder and under the other Loan Documents; and

 

(C)         delivered
to Lender a “date-down” endorsement to the Title Policy acceptable to Lender (or a new title insurance policy if a
“date-down” endorsement is not available);

 

(6)         one
or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:

 

(A)         an
assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under
any Guaranty given in connection with the Mortgage Loan; or

 

(B)         a
substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender;

 

(7)         Lender
has reviewed and approved the Transfer documents; and

 

(8)         Lender
has received the fees described in Section 11.03(g).

 

(b)          Transfers
to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates.

 

(1)         Except
as otherwise covered in Section 11.03(b)(2) below, Transfers of direct or indirect ownership interests in Borrower to Key Principal
or Guarantor, or to a transferee through which Key Principal or Guarantor (as applicable) Controls Borrower with the same rights
and abilities as Key Principal or Guarantor (as applicable) Controls Borrower immediately prior to the date of such Transfer, shall
be consented to by Lender if:

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 46
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(A)         such
Transfer satisfies the applicable requirements of Section 11.03(a), other than Section 11.03(a)(5); and

 

(B)         after
giving effect to any such Transfer, each Key Principal or Guarantor (as applicable) continues to own not less than fifty percent (50%)
of such Key Principal’s or Guarantor’s (as applicable) direct or indirect ownership interests in Borrower that existed
on the Effective Date.

 

(2)         Transfers
of direct or indirect interests in Borrower held by a Key Principal or Guarantor to other Key Principals or Guarantors, as applicable,
shall be consented to by Lender if such Transfer satisfies the following conditions:

 

(A)         the
Transfer does not cause a change in the Control of Borrower; and

 

(B)         the
transferor Key Principal or Guarantor maintains the same right and ability to Control Borrower as existed prior to the Transfer.

 

If the conditions set forth in this Section
11.03(b) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

(c)          Estate
Planning.

 

Notwithstanding the
provisions of Section 11.02(b)(2), so long as (1) the Transfer does not cause a change in the Control of Borrower, and (2) Key
Principal and Guarantor, as applicable, maintain the same right and ability to Control Borrower as existed prior to the Transfer,
Lender shall consent to Transfers of direct or indirect ownership interests in Borrower and Transfers of direct or indirect ownership
interests in an entity Key Principal or entity Guarantor to:

 

(A)         Immediate
Family Members of such transferor, each of whom must have obtained the legal age of majority;

 

(B)         United
States domiciled trusts established for the benefit of the transferor or Immediate Family Members of the transferor; or

 

(C)         partnerships
or limited liability companies of which the partners or members, respectively, are comprised entirely of (i) such transferor and
Immediate Family Members (each of whom must have obtained the legal age of majority) of such transferor, (ii) Immediate Family
Members (each of whom must have obtained the legal age of majority) of such transferor, or (iii) United States domiciled trusts
established for the benefit of the transferor or Immediate Family Members of the transferor.

 

If the conditions set forth in this Section
11.03(c) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

(d)          Termination
or Revocation of Trust.

 

If any of Borrower,
Guarantor, or Key Principal is a trust, or if Control of Borrower, Guarantor, or Key Principal is Transferred or if a Restricted
Ownership Interest in Borrower, Guarantor, or Key Principal would be Transferred due to the termination or revocation of a trust,
the termination or revocation of such trust is an unpermitted Transfer; provided that the termination or revocation of the trust
due to the death of an individual trustor shall not be considered an unpermitted Transfer so long as:

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 47
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(1)         Lender
is notified within thirty (30) days of the death; and

 

(2)         such
Borrower, Guarantor, Key Principal, or other Person, as applicable, is replaced with an individual or entity acceptable to Lender,
in accordance with the provisions of Section 11.03(a) within ninety (90) days of the date of the death causing the termination
or revocation.

 

If the conditions set forth in this Section
11.03(d) are satisfied, the Transfer Fee shall be waived; provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

(e)          Death
of Key Principal or Guarantor; Transfer Due to Death.

 

(1)         If
a Key Principal or Guarantor that is a natural person dies, or if Control of Borrower, Guarantor, or Key Principal is Transferred,
or if a Restricted Ownership Interest in Borrower, Guarantor, or Key Principal would be Transferred as a result of the death of
a Person (except in the case of trusts which is addressed in Section 11.03(d)), Borrower must notify Lender in writing within ninety (90)
days in the event of such death. Unless waived in writing by Lender, the deceased shall be replaced by an individual or entity
within one hundred eighty (180) days, subject to Borrower’s satisfaction of the following conditions:

 

(A)         Borrower
has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(e);

 

(B)         Lender
determines that, if applicable:

 

(i)          any
proposed new key principal and any other new guarantor (or Person Controlling such new key principal or new guarantor) fully satisfies
all of Lender’s then-applicable key principal or guarantor eligibility, credit, management, and other loan underwriting standards
(including any standards with respect to previous relationships between Lender and the proposed new key principal and new guarantor
(or Person Controlling such new key principal or new guarantor) and the organization of the new key principal and new guarantor);

 

(ii)         none
of any proposed new key principal or any new guarantor, or any owners of the proposed new key principal or any new guarantor, is
a Prohibited Person; and

 

(iii)        none
of any proposed new key principal or any new guarantor (if any of such are entities) shall have an organizational existence termination
date that ends before the Maturity Date; and

 

(C)         if
applicable, one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 48
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(i)          an
assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under
any Guaranty given in connection with the Mortgage Loan; or

 

(ii)         a
substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender.

 

(2)         In
the event a replacement Key Principal, Guarantor, or other Person is required by Lender due to the death described in this Section
11.03(e), and such replacement has not occurred within such period, the period for replacement may be extended by Lender to a date
not more than one year from the date of such death; however, Lender may require as a condition to any such extension that:

 

(A)         the
then-current property manager be replaced with a property manager reasonably acceptable to Lender (or if a property manager has
not been previously engaged, a property manager reasonably acceptable to Lender be engaged); or

 

(B)         a
lockbox agreement or similar cash management arrangement (with the property manager) reasonably acceptable to Lender during such
extended replacement period be instituted.

 

If the conditions set forth in this Section
11.03(e) are satisfied, the Transfer Fee shall be waived, provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

(f)          Bankruptcy
of Guarantor.

 

(1)         Upon
the occurrence of any Guarantor Bankruptcy Event, unless waived in writing by Lender, the applicable Guarantor shall be replaced
by an individual or entity within ninety (90) days of such Guarantor Bankruptcy Event, subject to Borrower’s satisfaction
of the following conditions:

 

(A)         Borrower
has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(f);

 

(B)         Lender
determines that:

 

(i)          the
proposed new guarantor fully satisfies all of Lender’s then-applicable guarantor eligibility, credit, management, and other
loan underwriting standards (including any standards with respect to previous relationships between Lender and the proposed new
guarantor and the organization of the new guarantor (if applicable));

 

(ii)         no
new guarantor is a Prohibited Person; and

 

(iii)        no
new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Maturity
Date; and

 

(C)         one
or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 49
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(i)          an
assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under
any Guaranty given in connection with the Mortgage Loan; or

 

(ii)         a
substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender.

 

(2)         In
the event a replacement Guarantor is required by Lender due to the Guarantor Bankruptcy Event described in this Section 11.03(f),
and such replacement has not occurred within such period, the period for replacement may be extended by Lender in its discretion;
however, Lender may require as a condition to any such extension that:

 

(A)         the
then-current property manager be replaced with a property manager reasonably acceptable to Lender (or if a property manager has
not been previously engaged, a property manager reasonably acceptable to Lender be engaged); or

 

(B)         a
lockbox agreement or similar cash management arrangement (with the property manager) reasonably acceptable to Lender during such
extended replacement period be instituted.

 

If the conditions set forth in this Section
11.03(f) are satisfied, the Transfer Fee shall be waived, provided Borrower shall pay the Review Fee and out-of-pocket costs set
forth in Section 11.03(g).

 

(g)          Further
Conditions to Transfers and Assumption.

 

(1)         In
connection with any Transfer of the Mortgaged Property, or an ownership interest in Borrower, Key Principal, or Guarantor for which
Lender’s approval is required under this Loan Agreement (including Section 11.03(a)), Lender may, as a condition to any such
approval, require:

 

(A)         additional
collateral, guaranties, or other credit support to mitigate any risks concerning the proposed transferee or the performance or
condition of the Mortgaged Property;

 

(B)         amendment
of the Loan Documents to delete or modify any specially negotiated terms or provisions previously granted for the exclusive benefit
of original Borrower, Key Principal, or Guarantor and to restore the original provisions of the standard Fannie Mae form multifamily
loan documents, to the extent such provisions were previously modified; or

 

(C)         a
modification to the amounts required to be deposited into the Reserve/Escrow Account pursuant to the terms of Section 13.02(a)(3)(B).

 

(2)         In
connection with any request by Borrower for consent to a Transfer, Borrower shall pay to Lender upon demand:

 

(A)         the
Transfer Fee (to the extent charged by Lender);

 

(B)         the
Review Fee (regardless of whether Lender approves or denies such request); and

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 50
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(C)         all
of Lender’s out-of-pocket costs (including reasonable attorneys’ fees) incurred in reviewing the Transfer request,
regardless of whether Lender approves or denies such request.

 

(h)          Additional
Conditionally Permitted Transfers.

 

Notwithstanding anything
in Section 11.02(b) of the Loan Agreement to the contrary and in addition to, and without limiting, any Transfer that would otherwise
be permitted under Section 11.02(b) of the Loan Agreement, the occurrence of the following shall not constitute an Event of Default
under the Loan Agreement and shall be permitted without payment of the Transfer Fee:

 

(1)         a
Transfer (a "BR to Carroll Transfer") of the membership interests in BR Carroll Lansbrook JV, LLC, a Delaware
limited liability company ("Venture"), the sole member of Borrower by BR Lansbrook JV Member, LLC ("BR
Member") to Carroll Lansbrook JV Member, LLC, a Georgia limited liability company ("Carroll Member").
The following provisions shall apply in connection with any BR to Carroll Transfer:

 

(A)         following
the BR to Carroll Transfer, Control of Borrower continues to be held, directly or indirectly, by Carroll Multifamily Real Estate
Fund III, LP (the “Carroll Guarantor”) and, ultimately, by M. Patrick Carroll, and Borrower shall provide Lender
with written certification of the same within fifteen (15) days prior to such Transfer;

 

(B)         no
Event of Default has occurred, and no event which, with the giving of notice or the passage of time, or both, would constitute
an Event of Default has occurred and is continuing and Borrower shall provide Lender with written certification of the same within
fifteen (15) days prior to such Transfer; provided, however, if the BR to Carroll Transfer would cure the Event of Default, the
Transfer must occur within 60 days after all conditions in this Section have been met to Lender's satisfaction;

 

(C)         Lender
has reviewed and approved the Transfer documents and received organizational charts reflecting the structure of Borrower prior
to and after the Transfer and copies of the then-current organizational documents of Borrower, including any amendments;

 

(D)         Borrower
provides Lender with at least 15 days prior written notice of the proposed Transfer and pays the Review Fee in conjunction with
the delivery of such prior written notice;

 

(E)         Borrower
pays or reimburses Lender, upon demand, for all of Lender's out-of-pocket costs (including reasonable attorneys' fees) incurred
in reviewing the Transfer request, to the extent such costs exceed the Review Fee; and

 

(F)         
the Carroll Guarantor and M. Patrick Carroll, the Key Principal, shall reaffirm their respective statuses as a Guarantor and Key
Principal, and Lender will release Bluerock Residential Growth REIT, Inc. (“BR Guarantor”) from all of its obligations
under the Guaranty, provided, however, that

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 51
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(i)          BR
Guarantor is not released from any liability pursuant to the Guaranty relating to the Environmental Indemnity Agreement for any
liability that relates to the period prior to the date of the Transfer, regardless of when such environmental hazard is discovered,
and

 

(ii) Lender
determines that the Carroll Guarantor satisfies all of Lender's then-applicable guarantor eligibility, credit management and other
loan underwriting standards.

 

(2)         a
Transfer (a "Carroll to BR Transfer") of membership interests in Venture by the Carroll Member to the BR Member.
The following provisions shall apply in connection with any Carroll to BR Transfer:

 

(A)         following
the Carroll to BR Transfer, Control of Borrower continues to be held, directly or indirectly, by BR Guarantor and Borrower shall
provide Lender with written certification of the same within fifteen (15) days prior to such Transfer;

 

(B)         no
Event of Default has occurred, and no event which, with the giving of notice or the passage of time, or both, would constitute
an Event of Default has occurred and is continuing and Borrower shall provide Lender with written certification of the same within
fifteen (15) days prior to such Transfer; provided, however, if the Carroll to BR Transfer would cure the Event of Default, the
Transfer must occur within 60 days after all conditions in this Section have been met to Lender's satisfaction;

 

(C)         Lender
has reviewed and approved the Transfer documents and received organizational charts reflecting the structure of Borrower prior
to and after the Transfer and copies of the then-current organizational documents of Borrower, including any amendments;

 

(D)         Borrower
provides Lender with at least 15 days prior written notice of the proposed Transfer and pays the Review Fee in conjunction with
the delivery of such prior written notice;

 

(E)         Borrower
pays or reimburses Lender, upon demand, for all of Lender's out-of-pocket costs (including reasonable attorneys' fees) incurred
in reviewing the Transfer request, to the extent such costs exceed the Review Fee; and

 

(F)         
the BR Guarantor shall reaffirm its status as a Guarantor and Lender will release Carroll Guarantor from all of its obligations
under the Guaranty, provided, however, that

 

(i)          Carroll
Guarantor is not released from any liability pursuant to the Guaranty relating to the Environmental Indemnity Agreement for any
liability that relates to the period prior to the date of the Transfer, regardless of when such environmental hazard is discovered,
and

 

(ii)         Lender
determines that the BR Guarantor satisfies all of Lender's then-applicable guarantor eligibility, credit management and other loan
underwriting standards.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 52
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

For the avoidance of doubt, if any Transfers
permitted under this Section 11.03(h) conflict with any provisions of Section 11.02 of this Loan Agreement, the provisions of this
Section 11.03(h) shall be deemed to control.

 

ARTICLE 12 - IMPOSITIONS

 

Section 12.01        Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section 12.01 are made as of the Effective Date and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

(a)          Payment
of Taxes, Assessments, and Other Charges.

 

Borrower has:

 

(1)         paid
(or with the approval of Lender, established an escrow fund sufficient to pay when due and payable) all amounts and charges relating
to the Mortgaged Property that have become due and payable before any fine, penalty interest, lien, or costs may be added thereto,
including Impositions, leasehold payments, and ground rents;

 

(2)         paid
all Taxes for the Mortgaged Property that have become due before any fine, penalty interest, lien, or costs may be added thereto
pursuant to any notice of assessment received by Borrower and any and all taxes that have become due against Borrower before any
fine, penalty interest, lien, or costs may be added thereto;

 

(3)         no
knowledge of any basis for any additional assessments;

 

(4)         no
knowledge of any presently pending special assessments against all or any part of the Mortgaged Property, or any presently pending
special assessments against Borrower; and

 

(5)         not
received any written notice of any contemplated special assessment against the Mortgaged Property, or any contemplated special
assessment against Borrower.

 

Section 12.02        Covenants.

 

(a)          Imposition
Deposits, Taxes, and Other Charges.

 

Borrower shall:

 

(1)         deposit
the Imposition Deposits with Lender on each Payment Date (or on another day designated in writing by Lender) in amount sufficient,
in Lender’s discretion, to enable Lender to pay each Imposition before the last date upon which such payment may be made
without any penalty or interest charge being added, plus an amount equal to no more than one-sixth (1/6) (or the amount permitted
by applicable law) of the Impositions for the trailing twelve (12) months (calculated based on the aggregate annual Imposition
costs divided by twelve (12) and multiplied by two (2));

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 53
	Article 11	01-16	© 2016 Fannie Mae

     

    

 

(2)         deposit
with Lender, within ten (10) days after written notice from Lender (subject to applicable law), such additional amounts estimated
by Lender to be reasonably necessary to cure any deficiency in the amount of the Imposition Deposits held for payment of a specific
Imposition;

 

(3)         except
as set forth in Section 12.03(c) below, pay all Impositions, leasehold payments, ground rents, and Taxes when due and before any
fine, penalty, interest, lien, or costs may be added thereto;

 

(4)         promptly
deliver to Lender a copy of all notices of, and invoices for, Impositions, and, if Borrower pays any Imposition directly, Borrower
shall promptly furnish to Lender receipts evidencing such payments; and

 

(5)         promptly
deliver to Lender a copy of all notices of any special assessments and contemplated special assessments against the Mortgaged Property
or Borrower.

 

Section 12.03        Mortgage
Loan Administration Matters Regarding Impositions.

 

(a)          Maintenance
of Records by Lender.

 

Lender shall maintain
records of the monthly and aggregate Imposition Deposits held by Lender for the purpose of paying Taxes, insurance premiums, and
each other obligation of Borrower for which Imposition Deposits are required.

 

(b)          Imposition
Accounts.

 

All Imposition Deposits
shall be held in an institution (which may be Lender, if Lender is such an institution) whose deposits or accounts are insured
or guaranteed by a federal agency and which accounts meet the standards for custodial accounts as required by Lender from time
to time. Lender shall not be obligated to open additional accounts, or deposit Imposition Deposits in additional institutions,
when the amount of the Imposition Deposits exceeds the maximum amount of the federal deposit insurance or guaranty. No interest,
earnings, or profits on the Imposition Deposits shall be paid to Borrower unless applicable law so requires. Imposition Deposits
shall not be trust funds, nor shall they operate to reduce the Indebtedness, unless applied by Lender for that purpose in accordance
with this Loan Agreement. For the purposes of 9-104(a)(3) of the UCC, Lender is the owner of the Imposition Deposits and shall
be deemed a “customer” with sole control of the account holding the Imposition Deposits.

 

(c)          Payment
of Impositions; Sufficiency of Imposition Deposits.

 

Lender may pay an Imposition
according to any bill, statement, or estimate from the appropriate public office or insurance company without inquiring into the
accuracy of the bill, statement, or estimate or into the validity of the Imposition. Imposition Deposits shall be required to be
used by Lender to pay Taxes, insurance premiums and any other individual Imposition only if:

 

(1)         no
Event of Default exists;

 

(2)         Borrower
has timely delivered to Lender all applicable bills or premium notices that it has received; and

 

(3)         sufficient
Imposition Deposits are held by Lender for each Imposition at the time such Imposition becomes due and payable.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 54
	Article 12	01-16	© 2016 Fannie Mae

     

    

 

Lender shall have no
liability to Borrower or any other Person for failing to pay any Imposition if any of the conditions are not satisfied. If at any
time the amount of the Imposition Deposits held for payment of a specific Imposition exceeds the amount reasonably deemed necessary
by Lender to be held in connection with such Imposition, the excess may be credited against future installments of Imposition Deposits
for such Imposition.

 

(d)          Imposition
Deposits Upon Event of Default.

 

If an Event of Default
has occurred and is continuing, Lender may apply any Imposition Deposits, in such amount and in such order as Lender determines,
to pay any Impositions or as a credit against the Indebtedness.

 

(e)          Contesting
Impositions.

 

Other than insurance
premiums, Borrower may contest, at its expense, by appropriate legal proceedings, the amount or validity of any Imposition if:

 

(1)         Borrower
notifies Lender of the commencement or expected commencement of such proceedings;

 

(2)         Lender
determines that the Mortgaged Property is not in danger of being sold or forfeited;

 

(3)         Borrower
deposits with Lender (or the applicable Governmental Authority if required by applicable law) reserves sufficient to pay the contested
Imposition, if required by Lender (or the applicable Governmental Authority);

 

(4)         Borrower
furnishes whatever additional security is required in the proceedings or is reasonably requested in writing by Lender; and

 

(5)         Borrower
commences, and at all times thereafter diligently prosecutes, such contest in good faith until a final determination is made by
the applicable Governmental Authority.

 

(f)          Release
to Borrower.

 

Upon payment in full
of all sums secured by the Security Instrument and this Loan Agreement and release by Lender of the lien of the Security Instrument,
Lender shall disburse to Borrower the balance of any Imposition Deposits then on deposit with Lender.

 

ARTICLE 13 - REPLACEMENT
RESERVE AND REPAIRS

 

Section 13.01        Covenants.

 

(a)          Initial
Deposits to Replacement Reserve Account and Repairs Escrow Account.

 

On the Effective Date,
Borrower shall pay to Lender:

 

(1)         the
Initial Replacement Reserve Deposit for deposit into the Replacement Reserve Account; and

 

(2)         the
Repairs Escrow Deposit for deposit into the Repairs Escrow Account.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 55
	Article 12	01-16	© 2016 Fannie Mae

     

    

 

(b)          Monthly
Replacement Reserve Deposits.

 

Borrower shall deposit
the applicable Monthly Replacement Reserve Deposit into the Replacement Reserve Account on each Payment Date.

 

(c)          Payment
for Replacements and Repairs.

 

Borrower shall:

 

(1)         pay
all invoices for the Replacements and Repairs, regardless of whether funds on deposit in the Replacement Reserve Account or the
Repairs Escrow Account, as applicable, are sufficient, prior to any request for disbursement from the Replacement Reserve Account
or the Repairs Escrow Account, as applicable (unless Lender has agreed to issue joint checks in connection with a particular Replacement
or Repair);

 

(2)         pay
all applicable fees and charges of any Governmental Authority on account of the Replacements and Repairs, as applicable; and

 

(3)         provide
evidence satisfactory to Lender of completion of the Replacements and any Required Repairs (within the Completion Period or within
such other period or by such other date set forth in the Required Repair Schedule and any Borrower Requested Repairs and Additional
Lender Repairs (by the date specified by Lender for any such Borrower Requested Repairs or Additional Lender Repairs)).

 

(d)          Assignment
of Contracts for Replacements and Repairs.

 

Borrower shall collaterally
assign to Lender as additional security any contract or subcontract for Replacements or Repairs, upon Lender’s written request,
on a form of assignment approved by Lender.

 

(e)          Indemnification.

 

If Lender elects to
exercise its rights under Section 14.03 due to Borrower’s failure to timely commence or complete any Replacements or Repairs,
Borrower shall indemnify and hold Lender harmless for, from and against any and all actions, suits, claims, demands, liabilities,
losses, damages, obligations, and costs or expenses, including litigation costs and reasonable attorneys’ fees, arising from
or in any way connected with the performance by Lender of the Replacements or Repairs or investment of the Reserve/Escrow Account
Funds; provided that Borrower shall have no indemnity obligation for the actual cost of completing such Replacements or Repairs,
or if such actions, suits, claims, demands, liabilities, losses, damages, obligations, and costs or expenses, including litigation
costs and reasonable attorneys’ fees, arise as a result of the willful misconduct or gross negligence of Lender, Lender’s
agents, employees, or representatives as determined by a court of competent jurisdiction pursuant to a final non-appealable court
order.

 

(f)          Amendments
to Loan Documents.

 

Subject to Section
5.02, Borrower shall execute and deliver to Lender, upon written request, an amendment to this Loan Agreement, the Security Instrument,
and any other Loan Document deemed necessary or desirable to perfect Lender’s lien upon any portion of the Mortgaged Property
for which Reserve/Escrow Account Funds were expended.

 

    	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 56
	Article 13	01-16	© 2016 Fannie Mae

     

    

 

(g)          Administrative Fees and Expenses.

 

Borrower shall pay to Lender:

 

(1)         by
the date specified in the applicable invoice, the Repairs Escrow Account Administrative Fee and the Replacement Reserve Account
Administration Fee for Lender’s services in administering the Repairs Escrow Account and Replacement Reserve Account and
investing the funds on deposit in the Repairs Escrow Account and the Replacement Reserve Account, respectively;

 

(2)         upon
demand, a reasonable inspection fee, not exceeding the Maximum Inspection Fee, for each inspection of the Mortgaged Property by
Lender in connection with a Repair or Replacement, plus all other reasonable costs and out-of-pocket expenses relating to such
inspections; and

 

(3)         upon
demand, all reasonable fees charged by any engineer, architect, inspector or other person inspecting the Mortgaged Property on
behalf of Lender for each inspection of the Mortgaged Property in connection with a Repair or Replacement, plus all other reasonable
costs and out-of-pocket expenses relating to such inspections.

 

Section 13.02         Mortgage
Loan Administration Matters Regarding Reserves.

 

(a)          Accounts,
Deposits, and Disbursements.

 

(1)         Custodial
Accounts.

 

(A)         The
Replacement Reserve Account shall be an interest-bearing account that meets the standards for custodial accounts as required by
Lender from time to time. Lender shall not be responsible for any losses resulting from the investment of the Replacement Reserve
Deposits or for obtaining any specific level or percentage of earnings on such investment. All interest, if any, earned on the
Replacement Reserve Deposits shall be added to and become part of the Replacement Reserve Account; provided, however,
if applicable law requires, and so long as no Event of Default has occurred and is continuing under any of the Loan Documents,
Lender shall pay to Borrower the interest earned on the Replacement Reserve Account not less frequently than the Replacement Reserve
Account Interest Disbursement Frequency. In no event shall Lender be obligated to disburse funds from the Reserve/Escrow Account
if an Event of Default has occurred and is continuing.

 

(B)         Lender
shall not be obligated to deposit the Repairs Escrow Deposits into an interest-bearing account.

 

(2)         Disbursements
by Lender Only.

 

Only Lender or
a designated representative of Lender may make disbursements from the Replacement Reserve Account and the Repairs Escrow Account.
Except as provided in Section 13.02(a)(8), disbursements shall only be made upon Borrower request and after satisfaction of all
conditions for disbursement.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 57
	Article 13	01-16	© 2016 Fannie Mae

     

    

 

(3)         Adjustment
to Deposits.

 

(A)         Mortgage
Loan Terms Exceeding Ten (10) Years.

 

If the Loan Term
exceeds ten (10) years (or five (5) years in the case of any Mortgaged Property that is an “affordable housing property”
as indicated on the Summary of Loan Terms), a property condition assessment shall be ordered by Lender for the Mortgaged Property
at the expense of Borrower (which expense may be paid out of the Replacement Reserve Account if excess funds are available). The
property condition assessment shall be performed no earlier than the sixth (6th) month and no later than the ninth (9th) month
of the tenth (10th) Loan Year and every tenth (10th) Loan Year thereafter if the Loan Term exceeds twenty (20) years (or the fifth
(5th) Loan Year in the case of any Mortgaged Property that is an “affordable housing property” as indicated on the
Summary of Loan Terms and every fifth (5th) Loan Year thereafter if the Loan Term exceeds ten (10) years). After review of the
property condition assessment, the amount of the Monthly Replacement Reserve Deposit may be adjusted by Lender for the remaining
Loan Term by written notice to Borrower so that the Monthly Replacement Reserve Deposits are sufficient to fund the Replacements
as and when required and/or the amount to be held in the Repairs Escrow Account may be adjusted by Lender so that the Repairs Escrow
Deposit is sufficient to fund the Repairs as and when required

 

(B)         Transfers.

 

In connection with
any Transfer of the Mortgaged Property, or any Transfer of an ownership interest in Borrower, Guarantor, or Key Principal that
requires Lender’s consent, Lender may review the amounts on deposit, if any, in the Replacement Reserve Account or the Repairs
Escrow Account, the amount of the Monthly Replacement Reserve Deposit and the likely repairs and replacements required by the Mortgaged
Property, and the related contingencies which may arise during the remaining Loan Term. Based upon that review, Lender may require
an additional deposit to the Replacement Reserve Account or the Repairs Escrow Account, or an increase in the amount of the Monthly
Replacement Reserve Deposit as a condition to Lender’s consent to such Transfer.

 

(4)         Insufficient
Funds.

 

Lender may, upon
thirty (30) days’ prior written notice to Borrower, require an additional deposit(s) to the Replacement Reserve Account
or Repairs Escrow Account, or an increase in the amount of the Monthly Replacement Reserve Deposit, if Lender determines that the
amounts on deposit in either the Replacement Reserve Account or the Repairs Escrow Account are not sufficient to cover the costs
for Required Repairs or Required Replacements or, pursuant to the terms of Section 13.02(a)(9), not sufficient to cover the costs
for Borrower Requested Repairs, Additional Lender Repairs, Borrower Requested Replacements, or Additional Lender Replacements.
Borrower’s agreement to complete the Replacements or Repairs as required by this Loan Agreement shall not be affected by
the insufficiency of any balance in the Replacement Reserve Account or the Repairs Escrow Account, as applicable.

 

(5)         Disbursements
for Replacements and Repairs.

 

(A)         Disbursement
requests may only be made after completion of the applicable Replacements and only to reimburse Borrower for the actual approved
costs of the Replacements. Lender shall not disburse from the Replacement Reserve Account the costs of routine maintenance to the
Mortgaged Property or for costs which are to be reimbursed from the Repairs Escrow Account or any similar account. Disbursement
from the Replacement Reserve Account shall not be made more frequently than the Maximum Replacement Reserve Disbursement Interval.
Other than in connection with a final request for disbursement, disbursements from the Replacement Reserve Account shall not be
less than the Minimum Replacement Reserve Disbursement Amount.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 58
	Article 13	01-16	© 2016 Fannie Mae

     

    

 

(B)         Disbursement
requests may only be made after completion of the applicable Repairs and only to reimburse Borrower for the actual cost of the
Repairs, up to the Maximum Repair Cost. Lender shall not disburse any amounts which would cause the funds remaining in the Repairs
Escrow Account after any disbursement (other than with respect to the final disbursement) to be less than the Maximum Repair Cost
of the then-current estimated cost of completing all remaining Repairs. Lender shall not disburse from the Repairs Escrow Account
the costs of routine maintenance to the Mortgaged Property or for costs which are to be reimbursed from the Replacement Reserve
Account or any similar account. Disbursement from the Repairs Escrow Account shall not be made more frequently than the Maximum
Repair Disbursement Interval. Other than in connection with a final request for disbursement, disbursements from the Repairs Escrow
Account shall not be less than the Minimum Repairs Disbursement Amount.

 

(6)         Disbursement
Requests.

 

Each request
by Borrower for disbursement from the Replacement Reserve Account or the Repairs Escrow Account must be in writing, must specify
the Replacement or Repair for which reimbursement is requested (provided that for any Borrower Requested Replacements, Borrower
Requested Repairs, Additional Lender Replacements, and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow
Account Funds for such replacements or repairs pursuant to the terms of Section 13.02(a)(9)), and must:

 

(A)         if
applicable, specify the quantity and price of the items or materials purchased, grouped by type or category;

 

(B)         if
applicable, specify the cost of all contracted labor or other services involved in the Replacement or Repair for which such request
for disbursement is made;

 

(C)         if
applicable, include copies of invoices for all items or materials purchased and all contracted labor or services provided;

 

(D)         include
evidence of payment of such Replacement or Repair satisfactory to Lender (unless Lender has agreed to issue joint checks in connection
with a particular Repair or Replacement as provided in this Loan Agreement); and

 

(E)         contain
a certification by Borrower that the Repair or Replacement has been completed lien free and in a good and workmanlike manner, in
accordance with any plans and specifications previously approved by Lender (if applicable) and in compliance with all applicable
laws, ordinances, rules, and regulations of any Governmental Authority having jurisdiction over the Mortgaged Property, and otherwise
in accordance with the provisions of this Loan Agreement.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 59
	Article 13	01-16	© 2016 Fannie Mae

     

    

 

(7)         Conditions
to Disbursement.

 

Lender may require
any or all of the following at the expense of Borrower as a condition to disbursement of funds from the Replacement Reserve Account
or the Repairs Escrow Account (provided that for any Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender
Replacements, and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow Account Funds for such replacements
or repairs pursuant to the terms of Section 13.02(a)(9)):

 

(A)        an
inspection by Lender of the Mortgaged Property and the applicable Replacement or Repair;

 

(B)         an
inspection or certificate of completion by an appropriate independent qualified professional (such as an architect, engineer or
property inspector, depending on the nature of the Repair or Replacement) selected by Lender;

 

(C)         either:

 

(i)          a
search of title to the Mortgaged Property effective to the date of disbursement; or

 

(ii)         a
“date-down” endorsement to Lender’s Title Policy (or a new Lender’s Title Policy if a “date-down”
is not available) extending the effective date of such policy to the date of disbursement, and showing no Liens other than (1)
Permitted Encumbrances, (2) liens which Borrower is diligently contesting in good faith that have been bonded off to the satisfaction
of Lender, or (3) mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority
upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent
in the payment for any such work or materials; and

 

(D)         an
acknowledgement of payment, waiver of claims, and release of lien for work performed and materials supplied from each contractor,
subcontractor or materialman in accordance with the requirements of applicable law and covering all work performed and materials
supplied (including equipment and fixtures) for the Mortgaged Property by that contractor, subcontractor, or materialman through
the date covered by the disbursement request (or, in the event that payment to such contractor, subcontractor, or materialman is
to be made by a joint check, the release of lien shall be effective through the date covered by the previous disbursement).

 

(8)         Joint
Checks for Periodic Disbursements.

 

Lender may, upon
Borrower’s written request, issue joint checks, payable to Borrower and the applicable supplier, materialman, mechanic, contractor,
subcontractor, or other similar party, if:

 

(A)         the
cost of the Replacement or Repair exceeds the Replacement Threshold or the Repair Threshold, as applicable, and the contractor
performing such Replacement or Repair requires periodic payments pursuant to the terms of the applicable written contract;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 60
	Article 13	01-16	© 2016 Fannie Mae

     

    

 

(B)         the
contract for such Repair or Replacement requires payment upon completion of the applicable portion of the work;

 

(C)         Borrower
makes the disbursement request after completion of the applicable portion of the work required to be completed under such contract;

 

(D)         the
materials for which the request for disbursement has been made are on site at the Mortgaged Property and are properly secured or
installed;

 

(E)         Lender
determines that the remaining funds in the Replacement Reserve Account designated for such Replacement, or in the Repairs Escrow
Account designated for such Repair, as applicable, are sufficient to pay such costs and the then-current estimated cost of completing
all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested
Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously
approved by Lender;

 

(F)         each
supplier, materialman, mechanic, contractor, subcontractor, or other similar party receiving payments shall have provided, if requested
in writing by Lender, a waiver of liens with respect to amounts which have been previously paid to them; and

 

(G)         all
other conditions for disbursement have been satisfied.

 

(9)         Replacements
and Repairs Other than Required Replacements or Required Repairs.

 

(A)         Borrower
Requested Replacements and Borrower Requested Repairs.

 

Borrower may submit
a disbursement request from the Replacement Reserve Account or the Repairs Escrow Account to reimburse Borrower for any Borrower
Requested Replacement or Borrower Requested Repair. The disbursement request must be in writing and include an explanation for
such request. Lender shall make disbursements for Borrower Requested Replacements or Borrower Requested Repairs if:

 

(i)          they
are of the type intended to be covered by the Replacement Reserve Account or the Repairs Escrow Account, as applicable;

 

(ii)         the
costs are commercially reasonable;

 

(iii)        the
amount of funds in the Replacement Reserve Account or Repairs Escrow Account, as applicable, is sufficient to pay such costs and
the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost),
as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements or Additional
Lender Repairs that have been previously approved by Lender; and

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 61
	Article 13	01-16	© 2016 Fannie Mae

     

    

 

(iv)         all
conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.

 

Nothing in this Loan
Agreement shall limit Lender’s right to require an additional deposit to the Replacement Reserve Account or an increase to
the Monthly Replacement Reserve Deposit in connection with any such Borrower Requested Replacements, or an additional deposit to
the Repairs Escrow Account for any such Borrower Requested Repairs.

 

(B)         Additional
Lender Replacements and Additional Lender Repairs.

 

Lender may require,
as set forth in Section 6.02(b), Section 6.03(c), or otherwise from time to time, upon written notice to Borrower, that Borrower
make Additional Lender Replacements or Additional Lender Repairs. Lender shall make disbursements from the Replacement Reserve
Account for Additional Lender Replacements or from the Repairs Escrow Account for Additional Lender Repairs, as applicable, if:

 

(i)          the
costs are commercially reasonable;

 

(ii)         the
amount of funds in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, is sufficient to pay such costs
and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair
Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements,
or Additional Lender Repairs that have been previously approved by Lender; and

 

(iii)        all
conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.

 

Nothing in this Loan
Agreement shall limit Lender’s right to require an additional deposit to the Replacement Reserve Account or an increase to
the Monthly Replacement Reserve Deposit for any such Additional Lender Replacements or an additional deposit to the Repairs Escrow
Account for any such Additional Lender Repair.

 

(10)        Excess
Costs.

 

In the event
any Replacement or Repair exceeds the approved cost set forth on the Required Replacement Schedule for Replacements, or the Maximum
Repair Cost for Repairs, Borrower may submit a disbursement request to reimburse Borrower for such excess cost. The disbursement
request must be in writing and include an explanation for such request. Lender shall make disbursements from the Replacement Reserve
Account or the Repairs Escrow Account, as applicable, if:

 

(A)         the
excess cost is commercially reasonable;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 62
	Article 13	01-16	© 2016 Fannie Mae

     

    

 

(B)         the
amount of funds in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, is sufficient to pay such costs
and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair
Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements,
or Additional Lender Repairs that have been previously approved by Lender; and

 

(C)         all
conditions for disbursement from the Replacement Reserve Account or the Repairs Escrow Account have been satisfied.

 

(11)        Final
Disbursements.

 

Upon completion
of all Repairs in accordance with this Loan Agreement and so long as no Event of Default has occurred and is continuing, Lender
shall disburse to Borrower any amounts then remaining in the Repairs Escrow Account. Upon payment in full of the Indebtedness and
release by Lender of the lien of the Security Instrument, Lender shall disburse to Borrower any and all amounts then remaining
in the Replacement Reserve Account and the Repairs Escrow Account (if not previously released).

 

(b)          Approvals
of Contracts; Assignment of Claims.

 

Lender retains the right
to approve all contracts or work orders with materialmen, mechanics, suppliers, subcontractors, contractors, or other parties providing
labor or materials in connection with the Replacements or Repairs. Notwithstanding Borrower’s assignment (in the Security
Instrument) of its rights and claims against all Persons supplying labor or materials in connection with the Replacement or Repairs,
Lender will not pursue any such right or claim unless an Event of Default has occurred and is continuing or as otherwise provided
in Section 14.03(c).

 

(c)          Delays
and Workmanship.

 

If any work for any Replacement
or Repair has not timely commenced, has not been timely performed in a workmanlike manner, or has not been timely completed in
a workmanlike manner, Lender may, without notice to Borrower:

 

(1)          withhold
disbursements from the Replacement Reserve Account or Repairs Escrow Account for such unsatisfactory Replacement or Repair, as
applicable;

 

(2)          proceed
under existing contracts or contract with third parties to make or complete such Replacement or Repair;

 

(3)          apply
the funds in the Replacement Reserve Account or Repairs Escrow Account toward the labor and materials necessary to make or complete
such Replacement or Repair, as applicable; or

 

(4)          exercise
any and all other remedies available to Lender under this Loan Agreement or any other Loan Document, including any remedies otherwise
available upon an Event of Default pursuant to the terms of Section 14.02.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 63
	Article 13	01-16	© 2016 Fannie Mae

     

    

 

To facilitate Lender’s
completion or making of such Replacements or Repairs, Lender shall have the right to enter onto the Mortgaged Property and perform
any and all work and labor necessary to make or complete the Replacements or Repairs and employ watchmen to protect the Mortgaged
Property from damage. All funds so expended by Lender shall be deemed to have been advanced to Borrower, shall be part of the Indebtedness
and shall be secured by the Security Instrument and this Loan Agreement.

 

(d)          Appointment
of Lender as Attorney-In-Fact.

 

Borrower hereby authorizes
and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).

 

(e)          No
Lender Obligation.

 

Nothing in this Loan Agreement
shall:

 

(1)          make
Lender responsible for making or completing the Replacements or Repairs;

 

(2)          require
Lender to expend funds, whether from the Replacement Reserve Account, the Repairs Escrow Account, or otherwise, to make or complete
any Replacement or Repair;

 

(3)          obligate
Lender to proceed with the Replacements or Repairs; or

 

(4)          obligate
Lender to demand from Borrower additional sums to make or complete any Replacement or Repair.

 

(f)           No
Lender Warranty.

 

Lender’s approval
of any plans for any Replacement or Repair, release of funds from the Replacement Reserve Account or Repairs Escrow Account, inspection
of the Mortgaged Property by Lender or its agents, representatives, or designees, or other acknowledgment of completion of any
Replacement or Repair in a manner satisfactory to Lender shall not be deemed an acknowledgment or warranty to any Person that the
Replacement or Repair has been completed in accordance with applicable building, zoning, or other codes, ordinances, statutes,
laws, regulations, or requirements of any Governmental Authority, such responsibility being at all times exclusively that of Borrower.

 

ARTICLE
14 - DEFAULTS/REMEDIES

 

Section 14.01         Events
of Default.

 

The occurrence of any one
or more of the following in this Section 14.01 shall constitute an Event of Default under this Loan Agreement.

 

(a)          Automatic
Events of Default.

 

Any of the following shall
constitute an automatic Event of Default:

 

(1)          any
failure by Borrower to pay or deposit when due any amount required by the Note, this Loan Agreement or any other Loan Document;

 

(2)          any
failure by Borrower to maintain the insurance coverage required by any Loan Document;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 64
	Article 13	01-16	© 2016 Fannie Mae

     

    

 

(3)          any
failure by Borrower to comply with the provisions of Section 4.02(d) relating to its single asset status;

 

(4)          if
any warranty, representation, certification, or statement of Borrower, Guarantor, or Key Principal in this Loan Agreement or any
of the other Loan Documents is false, inaccurate, or misleading in any material respect when made;

 

(5)          fraud,
gross negligence, willful misconduct, or material misrepresentation or material omission by or on behalf of Borrower, Guarantor,
or Key Principal or any of their officers, directors, trustees, partners, members, or managers in connection with:

 

(A)         the
application for, or creation of, the Indebtedness;

 

(B)         any
financial statement, rent roll, or other report or information provided to Lender during the term of the Mortgage Loan; or

 

(C)         any
request for Lender’s consent to any proposed action, including a request for disbursement of Reserve/Escrow Account Funds
or Collateral Account Funds;

 

(6)          the
occurrence of any Transfer not permitted by the Loan Documents;

 

(7)          the
occurrence of a Bankruptcy Event;

 

(8)          the
commencement of a forfeiture action or other similar proceeding, whether civil or criminal, which, in Lender’s reasonable
judgment, could result in a forfeiture of the Mortgaged Property or otherwise materially impair the lien created by this Loan Agreement
or the Security Instrument or Lender’s interest in the Mortgaged Property;

 

(9)          if
Borrower, Guarantor, or Key Principal is a trust, or if Control of Borrower, Guarantor, or Key Principal is Transferred or if a
Restricted Ownership Interest in Borrower, Guarantor, or Key Principal would be Transferred due to the termination or revocation
of a trust, the termination or revocation of such trust, except as set forth in Section 11.03(d);

 

(10)        any
failure by Borrower to complete any Repair related to fire, life, or safety issues in accordance with the terms of this Loan Agreement
within the Completion Period (or such other date set forth on the Required Repair Schedule or otherwise required by Lender in writing
for such Repair); or

 

(11)        any
exercise by the holder of any other debt instrument secured by a mortgage, deed of trust, or deed to secure debt on the Mortgaged
Property of a right to declare all amounts due under that debt instrument immediately due and payable.

 

(b)          Events
of Default Subject to a Specified Cure Period.

 

Any of the following shall
constitute an Event of Default subject to the cure period set forth in the Loan Documents:

 

(1)          if
Key Principal or Guarantor is a natural person, the death of such individual, unless all requirements of Section 11.03(e) are met;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 65
	Article 14	01-16	© 2016 Fannie Mae

     

    

 

(2)          the
occurrence of a Guarantor Bankruptcy Event, unless requirements of Section 11.03(f) are met;

 

(3)          any
failure by Borrower, Key Principal, or Guarantor to comply with the provisions of Section 5.02(b) and Section 5.02(c); or

 

(4)          any
failure by Borrower to perform any obligation under this Loan Agreement or any Loan Document that is subject to a specified written
notice and cure period, which failure continues beyond such specified written notice and cure period as set forth herein or in
the applicable Loan Document.

 

(c)          Events
of Default Subject to Extended Cure Period.

 

The following shall constitute
an Event of Default if the existence of such condition or event, or such failure to perform or default in performance continues
for a period of thirty (30) days after written notice by Lender to Borrower of the existence of such condition or event, or
of such failure to perform or default in performance, provided, however, such period may be extended for up to an additional thirty (30)
days if Borrower, in the discretion of Lender, is diligently pursuing a cure of such; provided, further, however, no such written
notice, grace period, or extension shall apply if, in Lender’s discretion, immediate exercise by Lender of a right or remedy
under this Loan Agreement or any Loan Document is required to avoid harm to Lender or impairment of the Mortgage Loan (including
the Loan Documents), the Mortgaged Property or any other security given for the Mortgage Loan:

 

(1)          any
failure by Borrower to perform any of its obligations under this Loan Agreement or any Loan Document (other than those specified
in Section 14.01(a) or Section 14.01(b) above) as and when required.

 

Section 14.02         Remedies.

 

(a)          Acceleration;
Foreclosure.

 

If an Event of Default
has occurred and is continuing, the entire unpaid principal balance of the Mortgage Loan, any Accrued Interest, interest accruing
at the Default Rate, the Prepayment Premium (if applicable), and all other Indebtedness, at the option of Lender, shall immediately
become due and payable, without any prior written notice to Borrower, unless applicable law requires otherwise (and in such case,
after any required written notice has been given). Lender may exercise this option to accelerate regardless of any prior forbearance.
In addition, Lender shall have all rights and remedies afforded to Lender hereunder and under the other Loan Documents, including,
foreclosure on and/or the power of sale of the Mortgaged Property, as provided in the Security Instrument, and any rights and remedies
available to Lender at law or in equity (subject to Borrower’s statutory rights of reinstatement, if any). Any proceeds of
a Foreclosure Event may be held and applied by Lender as additional collateral for the Indebtedness pursuant to this Loan Agreement.
Notwithstanding the foregoing, the occurrence of any Bankruptcy Event shall automatically accelerate the Mortgage Loan and all
obligations and Indebtedness shall be immediately due and payable without written notice or further action by Lender.

 

(b)          Loss
of Right to Disbursements from Collateral Accounts.

 

If an Event of Default
has occurred and is continuing, Borrower shall immediately lose all of its rights to receive disbursements from the Reserve/Escrow
Accounts and any Collateral Accounts. During the continuance of any such Event of Default, Lender may use the Reserve/Escrow Account
Funds and any Collateral Account Funds (or any portion thereof) for any purpose, including:

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 66
	Article 14	01-16	© 2016 Fannie Mae

     

    

 

(1)          repayment
of the Indebtedness, including principal prepayments and the Prepayment Premium applicable to such full or partial prepayment,
as applicable (however, such application of funds shall not cure or be deemed to cure any Event of Default);

 

(2)          reimbursement
of Lender for all losses and expenses (including reasonable legal fees) suffered or incurred by Lender as a result of such Event
of Default;

 

(3)          completion
of the Replacement or Repair or for any other replacement or repair to the Mortgaged Property; and

 

(4)          payment
of any amount expended in exercising (and the exercise of) all rights and remedies available to Lender at law or in equity or under
this Loan Agreement or under any of the other Loan Documents.

 

Nothing in this Loan Agreement
shall obligate Lender to apply all or any portion of the Reserve/Escrow Account Funds or Collateral Account Funds on account of
any Event of Default by Borrower or to repayment of the Indebtedness or in any specific order of priority.

 

(c)          Remedies
Cumulative.

 

Each right and remedy provided
in this Loan Agreement is distinct from all other rights or remedies under this Loan Agreement or any other Loan Document or afforded
by applicable law, and each shall be cumulative and may be exercised concurrently, independently, or successively, in any order.
Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of additional default by
Borrower in order to exercise any of its remedies with respect to an Event of Default.

 

Section 14.03         Additional
Lender Rights; Forbearance.

 

(a)          No
Effect Upon Obligations.

 

Lender may, but shall not
be obligated to, agree with Borrower, from time to time, and without giving notice to, or obtaining the consent of, or having any
effect upon the obligations of, Guarantor, Key Principal, or other third party obligor, to take any of the following actions:

 

(1)          the
time for payment of the principal of or interest on the Indebtedness may be extended, or the Indebtedness may be renewed in whole
or in part;

 

(2)          the
rate of interest on or period of amortization of the Mortgage Loan or the amount of the Monthly Debt Service Payments payable under
the Loan Documents may be modified;

 

(3)          the
time for Borrower’s performance of or compliance with any covenant or agreement contained in any Loan Document, whether presently
existing or hereinafter entered into, may be extended or such performance or compliance may be waived;

 

(4)          any
or all payments due under this Loan Agreement or any other Loan Document may be reduced;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 67
	Article 14	01-16	© 2016 Fannie Mae

     

    

 

(5)          any
Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount of
the Mortgage Loan;

 

(6)          any
amounts under this Loan Agreement or any other Loan Document may be released;

 

(7)          any
security for the Indebtedness may be modified, exchanged, released, surrendered, or otherwise dealt with, or additional security
may be pledged or mortgaged for the Indebtedness;

 

(8)          the
payment of the Indebtedness or any security for the Indebtedness, or both, may be subordinated to the right to payment or the security,
or both, of any other present or future creditor of Borrower; or

 

(9)          any
other terms of the Loan Documents may be modified.

 

(b)          No
Waiver of Rights or Remedies.

 

Any waiver of an Event
of Default or forbearance by Lender in exercising any right or remedy under this Loan Agreement or any other Loan Document or otherwise
afforded by applicable law, shall not be a waiver of any other Event of Default or preclude the exercise or failure to exercise
of any other right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due date of
such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require
prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any failure to make
prompt payment. Enforcement by Lender of any security for the Indebtedness shall not constitute an election by Lender of remedies
so as to preclude the exercise or failure to exercise of any other right available to Lender. Lender’s receipt of any insurance
proceeds or amounts in connection with a Condemnation Action shall not operate to cure or waive any Event of Default.

 

(c)          Appointment
of Lender as Attorney-In-Fact.

 

Borrower hereby irrevocably
makes, constitutes, and appoints Lender (and any officer of Lender or any Person designated by Lender for that purpose) as Borrower’s
true and lawful proxy and attorney-in-fact (and agent-in-fact) in Borrower’s name, place, and stead, with full power of substitution,
to:

 

(1)          use
any of the funds in the Replacement Reserve Account or Repairs Escrow Account for the purpose of making or completing the Replacements
or Repairs;

 

(2)          make
such additions, changes, and corrections to the Replacements or Repairs as shall be necessary or desirable to complete the Replacements
or Repairs;

 

(3)          employ
such contractors, subcontractors, agents, architects, and inspectors as shall be required for such purposes;

 

(4)          pay,
settle, or compromise all bills and claims for materials and work performed in connection with the Replacements or Repairs, or
as may be necessary or desirable for the completion of the Replacements or Repairs, or for clearance of title;

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 68
	Article 14	01-16	© 2016 Fannie Mae

     

    

 

(5)          adjust
and compromise any claims under any and all policies of insurance required pursuant to this Loan Agreement and any other Loan Document,
subject only to Borrower’s rights under this Loan Agreement;

 

(6)          appear
in and prosecute any action arising from any insurance policies;

 

(7)          collect
and receive the proceeds of insurance, and to deduct from such proceeds Lender’s expenses incurred in the collection of such
proceeds;

 

(8)          commence,
appear in, and prosecute, in Lender’s or Borrower’s name, any Condemnation Action;

 

(9)          settle
or compromise any claim in connection with any Condemnation Action;

 

(10)        execute
all applications and certificates in the name of Borrower which may be required by any of the contract documents;

 

(11)        prosecute
and defend all actions or proceedings in connection with the Mortgaged Property or the rehabilitation and repair of the Mortgaged
Property;

 

(12)        take
such actions as are permitted in this Loan Agreement and any other Loan Documents;

 

(13)        execute
such financing statements and other documents and to do such other acts as Lender may require to perfect and preserve Lender’s
security interest in, and to enforce such interests in, the collateral; and

 

(14)        carry
out any remedy provided for in this Loan Agreement and any other Loan Documents, including endorsing Borrower’s name to checks,
drafts, instruments and other items of payment and proceeds of the collateral, executing change of address forms with the postmaster
of the United States Post Office serving the address of Borrower, changing the address of Borrower to that of Lender, opening all
envelopes addressed to Borrower, and applying any payments contained therein to the Indebtedness.

 

Borrower hereby
acknowledges that the constitution and appointment of such proxy and attorney-in-fact are coupled with an interest and are irrevocable
and shall not be affected by the disability or incompetence of Borrower. Borrower specifically acknowledges and agrees that this
power of attorney granted to Lender may be assigned by Lender to Lender’s successors or assigns as holder of the Note (and
the other Loan Documents). The foregoing powers conferred on Lender under this Section 14.03(c) shall not impose any duty upon
Lender to exercise any such powers and shall not require Lender to incur any expense or take any action. Borrower hereby ratifies
and confirms all that such attorney-in-fact may do or cause to be done by virtue of any provision of this Loan Agreement and any
other Loan Documents.

 

Notwithstanding
the foregoing provisions, Lender shall not exercise its rights as set forth in this Section 14.03(c) unless: (A) an Event of Default
has occurred and is continuing, or (B) Lender determines, in its discretion, that exigent circumstances exist or that such exercise
is necessary or prudent in order to protect and preserve the Mortgaged Property, or Lender’s lien priority and security interest
in the Mortgaged Property.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 69
	Article 14	01-16	© 2016 Fannie Mae

     

    

 

(d)          Borrower
Waivers.

 

If more than one Person
signs this Loan Agreement as Borrower, each Borrower, with respect to any other Borrower, hereby agrees that Lender, in its discretion,
may:

 

(1)          bring
suit against Borrower, or any one or more of Borrower, jointly and severally, or against any one or more of them;

 

(2)          compromise
or settle with any one or more of the persons constituting Borrower, for such consideration as Lender may deem proper;

 

(3)          release
one or more of the persons constituting Borrower, from liability; or

 

(4)          otherwise
deal with Borrower, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect
from any Borrower the full amount of the Indebtedness.

 

Section 14.04         Waiver
of Marshaling.

 

Notwithstanding the existence
of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender shall have the right to
determine the order in which any or all of the Mortgaged Property shall be subjected to the remedies provided in this Loan Agreement,
any other Loan Document or applicable law. Lender shall have the right to determine the order in which all or any part of the Indebtedness
is satisfied from the proceeds realized upon the exercise of such remedies. Borrower and any party who now or in the future acquires
a security interest in the Mortgaged Property and who has actual or constructive notice of this Loan Agreement waives any and all
right to require the marshaling of assets or to require that any of the Mortgaged Property be sold in the inverse order of alienation
or that any of the Mortgaged Property be sold in parcels or as an entirety in connection with the exercise of any of the remedies
permitted by applicable law or provided in this Loan Agreement or any other Loan Documents.

 

Lender shall account for
any moneys received by Lender in respect of any foreclosure on or disposition of collateral hereunder and under the other Loan
Documents provided that Lender shall not have any duty as to any collateral, and Lender shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers. NONE OF LENDER OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER (A) FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE,
EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED PURSUANT
TO A FINAL, NON-APPEALABLE COURT ORDER BY A COURT OF COMPETENT JURISDICTION, NOR (B) FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.

 

ARTICLE
15 - MISCELLANEOUS

 

Section 15.01         Governing
Law; Consent to Jurisdiction and Venue.

 

(a)          Governing
Law.

 

This Loan Agreement and
any other Loan Document which does not itself expressly identify the law that is to apply to it, shall be governed by the laws
of the Property Jurisdiction without regard to the application of choice of law principles.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 70
	Article 14	01-16	© 2016 Fannie Mae

     

    

 

(b)          Venue.

 

Any controversy arising
under or in relation to this Loan Agreement or any other Loan Document shall be litigated exclusively in the Property Jurisdiction
without regard to conflicts of laws principles. The state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Loan Agreement
or any other Loan Document. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation
and waives any other venue to which it might be entitled by virtue of domicile, habitual residence, or otherwise.

 

Section 15.02         Notice.

 

(a)          Process
of Serving Notice.

 

Except as otherwise set
forth herein or in any other Loan Document, all notices under this Loan Agreement and any other Loan Document shall be:

 

(1)          in
writing and shall be:

 

(A)         delivered,
in person;

 

(B)         mailed,
postage prepaid, either by registered or certified delivery, return receipt requested;

 

(C)         sent
by overnight courier; or

 

(D)         sent
by electronic mail with originals to follow by overnight courier;

 

(2)          addressed
to the intended recipient at Borrower’s Notice Address and Lender’s Notice Address, as applicable; and

 

(3)          deemed
given on the earlier to occur of:

 

(A)         the
date when the notice is received by the addressee; or

 

(B)         if
the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established
by the records of the United States Postal Service or such express courier service.

 

(b)          Change
of Address.

 

Any party to this Loan
Agreement may change the address to which notices intended for it are to be directed by means of notice given to the other parties
identified on the Summary of Loan Terms in accordance with this Section 15.02.

 

(c)          Default
Method of Notice.

 

Any required notice under
this Loan Agreement or any other Loan Document which does not specify how notices are to be given shall be given in accordance
with this Section 15.02.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 71
	Article 15	01-16	© 2016 Fannie Mae

     

    

 

(d)          Receipt
of Notices.

 

Neither Borrower nor Lender
shall refuse or reject delivery of any notice given in accordance with this Loan Agreement. Each party is required to acknowledge,
in writing, the receipt of any notice upon request by the other party.

 

Section 15.03         Successors
and Assigns Bound; Sale of Mortgage Loan.

 

(a)          Binding
Agreement.

 

This Loan Agreement shall
bind, and the rights granted by this Loan Agreement shall inure to, the successors and assigns of Lender and the permitted successors
and assigns of Borrower. However, a Transfer not permitted by this Loan Agreement shall be an Event of Default and shall be void
ab initio.

 

(b)          Sale
of Mortgage Loan; Change of Servicer.

 

Nothing in this Loan Agreement
shall limit Lender’s (including its successors and assigns) right to sell or transfer the Mortgage Loan or any interest in
the Mortgage Loan. The Mortgage Loan or a partial interest in the Mortgage Loan (together with this Loan Agreement and the other
Loan Documents) may be sold one or more times without prior written notice to Borrower. A sale may result in a change of the Loan
Servicer.

 

Section 15.04         Counterparts.

 

This Loan Agreement may
be executed in any number of counterparts with the same effect as if the parties hereto had signed the same document and all such
counterparts shall be construed together and shall constitute one instrument.

 

Section 15.05         Joint
and Several (or Solidary) Liability.

 

If more than one Person
signs this Loan Agreement as Borrower, the obligations of such Persons shall be joint and several (solidary instead for purposes
of Louisiana law).

 

Section 15.06         Relationship
of Parties; No Third Party Beneficiary.

 

(a)          Solely
Creditor and Debtor.

 

The relationship between
Lender and Borrower shall be solely that of creditor and debtor, respectively, and nothing contained in this Loan Agreement shall
create any other relationship between Lender and Borrower. Nothing contained in this Loan Agreement shall constitute Lender as
a joint venturer, partner, or agent of Borrower, or render Lender liable for any debts, obligations, acts, omissions, representations,
or contracts of Borrower.

 

(b)          No
Third Party Beneficiaries.

 

No creditor of any party
to this Loan Agreement and no other Person shall be a third party beneficiary of this Loan Agreement or any other Loan Document
or any account created or contemplated under this Loan Agreement or any other Loan Document. Nothing contained in this Loan Agreement
shall be deemed or construed to create an obligation on the part of Lender to any third party nor shall any third party have a
right to enforce against Lender any right that Borrower may have under this Loan Agreement. Without limiting the foregoing:

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 72
	Article 15	01-16	© 2016 Fannie Mae

     

    

 

(1)          any
Servicing Arrangement between Lender and any Loan Servicer shall constitute a contractual obligation of such Loan Servicer that
is independent of the obligation of Borrower for the payment of the Indebtedness;

 

(2)          Borrower
shall not be a third party beneficiary of any Servicing Arrangement; and

 

(3)          no
payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness.

 

Section 15.07         Severability;
Entire Agreement; Amendments.

 

The invalidity or unenforceability
of any provision of this Loan Agreement or any other Loan Document shall not affect the validity or enforceability of any other
provision of this Loan Agreement or of any other Loan Document, all of which shall remain in full force and effect, including the
Guaranty. This Loan Agreement contains the complete and entire agreement among the parties as to the matters covered, rights granted,
and the obligations assumed in this Loan Agreement. This Loan Agreement may not be amended or modified except by written agreement
signed by the parties hereto.

 

Section 15.08         Construction.

 

(a)          The
captions and headings of the sections of this Loan Agreement and the Loan Documents are for convenience only and shall be disregarded
in construing this Loan Agreement and the Loan Documents.

 

(b)          Any
reference in this Loan Agreement to an “Exhibit” or “Schedule” or a “Section” or an “Article”
shall, unless otherwise explicitly provided, be construed as referring, respectively, to an Exhibit or Schedule attached to this
Loan Agreement or to a Section or Article of this Loan Agreement.

 

(c)          Any
reference in this Loan Agreement to a statute or regulation shall be construed as referring to that statute or regulation as amended
from time to time.

 

(d)          Use
of the singular in this Loan Agreement includes the plural and use of the plural includes the singular.

 

(e)          As
used in this Loan Agreement, the term “including” means “including, but not limited to” or “including,
without limitation,” and is for example only and not a limitation.

 

(f)           Whenever
Borrower’s knowledge is implicated in this Loan Agreement or the phrase “to Borrower’s knowledge” or a
similar phrase is used in this Loan Agreement, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the
best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.

 

(g)          Unless
otherwise provided in this Loan Agreement, if Lender’s approval, designation, determination, selection, estimate, action,
or decision is required, permitted, or contemplated hereunder, such approval, designation, determination, selection, estimate,
action, or decision shall be made in Lender’s sole and absolute discretion.

 

(h)          All
references in this Loan Agreement to a separate instrument or agreement shall include such instrument or agreement as the same
may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 73
	Article 15	01-16	© 2016 Fannie Mae

     

    

 

(i)           “Lender
may” shall mean at Lender’s discretion, but shall not be an obligation.

 

(j)           If
the Mortgage Loan proceeds are disbursed on a date that is later than the Effective Date, as described in Section 2.02(a)(1), the
representations and warranties in the Loan Documents with respect to the ownership and operation of the Mortgaged Property shall
be deemed to be made as of the disbursement date.

 

Section 15.09         Mortgage
Loan Servicing.

 

All actions regarding the
servicing of the Mortgage Loan, including the collection of payments, the giving and receipt of notice, inspections of the Mortgaged
Property, inspections of books and records, and the granting of consents and approvals, may be taken by the Loan Servicer unless
Borrower receives notice to the contrary. If Borrower receives conflicting notices regarding the identity of the Loan Servicer
or any other subject, any such written notice from Lender shall govern. The Loan Servicer may change from time to time (whether
related or unrelated to a sale of the Mortgage Loan). If there is a change of the Loan Servicer, Borrower will be given written
notice of the change.

 

Section 15.10         Disclosure
of Information.

 

Lender may furnish information
regarding Borrower, Key Principal, or Guarantor, or the Mortgaged Property to third parties with an existing or prospective interest
in the servicing, enforcement, evaluation, performance, purchase, or securitization of the Mortgage Loan, including trustees, master
servicers, special servicers, rating agencies, and organizations maintaining databases on the underwriting and performance of multifamily
mortgage loans. Borrower irrevocably waives any and all rights it may have under applicable law to prohibit such disclosure, including
any right of privacy.

 

Section 15.11         Waiver;
Conflict.

 

No specific waiver of any
of the terms of this Loan Agreement shall be considered as a general waiver. If any provision of this Loan Agreement is in conflict
with any provision of any other Loan Document, the provision contained in this Loan Agreement shall control.

 

Section 15.12         No
Reliance.

 

Borrower acknowledges,
represents, and warrants that:

 

(a)          it
understands the nature and structure of the transactions contemplated by this Loan Agreement and the other Loan Documents;

 

(b)          it
is familiar with the provisions of all of the documents and instruments relating to such transactions;

 

(c)          it
understands the risks inherent in such transactions, including the risk of loss of all or any part of the Mortgaged Property;

 

(d)          it
has had the opportunity to consult counsel; and

 

(e)          it
has not relied on Lender for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated
by this Loan Agreement or any other Loan Document or otherwise relied on Lender in any manner in connection with interpreting,
entering into, or otherwise in connection with this Loan Agreement, any other Loan Document, or any of the matters contemplated
hereby or thereby.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 74
	Article 15	01-16	© 2016 Fannie Mae

     

    

 

Section 15.13         Subrogation.

 

If, and to the extent that,
the proceeds of the Mortgage Loan are used to pay, satisfy, or discharge any obligation of Borrower for the payment of money that
is secured by a pre-existing mortgage, deed of trust, or other lien encumbering the Mortgaged Property, such Mortgage Loan proceeds
shall be deemed to have been advanced by Lender at Borrower’s request, and Lender shall automatically, and without further
action on its part, be subrogated to the rights, including lien priority, of the owner or holder of the obligation secured by such
prior lien, whether or not such prior lien is released.

 

Section 15.14         Counting
of Days.

 

Except where otherwise
specifically provided, any reference in this Loan Agreement to a period of “days” means calendar days, not Business
Days. If the date on which Borrower is required to perform an obligation under this Loan Agreement is not a Business Day, Borrower
shall be required to perform such obligation by the Business Day immediately preceding such date; provided, however,
in respect of any Payment Date, or if the Maturity Date is other than a Business Day, Borrower shall be obligated to make such
payment by the Business Day immediately following such date.

 

Section 15.15         Revival
and Reinstatement of Indebtedness.

 

If the payment of all or
any part of the Indebtedness by Borrower, Guarantor, or any other Person, or the transfer to Lender of any collateral or other
property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’
rights, including provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender is required to repay or restore,
in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of its counsel, then the amount of such Voidable
Transfer or the amount of such Voidable Transfer that Lender is required or elects to repay or restore, including all reasonable
costs, expenses, and attorneys’ fees incurred by Lender in connection therewith, and the Indebtedness shall be automatically
revived, reinstated, and restored by such amount and shall exist as though such Voidable Transfer had never been made.

 

Section 15.16         Time
is of the Essence.

 

Borrower agrees that, with
respect to each and every obligation and covenant contained in this Loan Agreement and the other Loan Documents, time is of the
essence.

 

Section 15.17         Final
Agreement.

 

THIS LOAN AGREEMENT ALONG
WITH ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES. All prior or contemporaneous agreements, understandings, representations, and statements, oral or written,
are merged into this Loan Agreement and the other Loan Documents. This Loan Agreement, the other Loan Documents, and any of their
provisions may not be waived, modified, amended, discharged, or terminated except by an agreement in writing signed by the party
against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then only to the
extent set forth in that agreement.

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 75
	Article 15	01-16	© 2016 Fannie Mae

     

    

 

Section 15.18         WAIVER
OF TRIAL BY JURY.

 

TO THE MAXIMUM EXTENT PERMITTED
BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
ARISING OUT OF THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER,
THAT IS TRIABLE OF RIGHT BY A JURY, AND (b)
WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT
LEGAL COUNSEL.

 

IN WITNESS WHEREOF,
Borrower and Lender have signed and delivered this Loan Agreement under seal (where applicable) or have caused this Loan Agreement
to be signed and delivered under seal (where applicable) by their duly authorized representatives. Where applicable law so provides,
Borrower and Lender intend that this Loan Agreement shall be deemed to be signed and delivered as a sealed instrument.

 

[Remainder of Page Intentionally Blank]

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 76
	Article 15	01-16	© 2016 Fannie Mae

     

    

 

	 	BORROWER:
	 	 
	 	BR CARROLL LANSBROOK, LLC, a Delaware limited liability company
	 	 	 
	 	By:	/s/ Jordan Ruddy
	 	 	Jordan Ruddy
	 	 	Authorized Signatory

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page S-1
	Signature Page	01-16	© 2016 Fannie Mae

     

    

 

	 	LENDER:
	 	 
	 	WALKER & DUNLOP, LLC, a Delaware limited liability company
	 	 	 
	 	By:	/s/ Holly Shonosky
	 	 	Holly Shonosky
	 	 	Senior Closing Officer

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page S-2
	Signature Page	01-16	© 2016 Fannie Mae

     

    

 

SCHEDULE 1

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Definitions Schedule

(Interest Rate Type – Structured ARM
(1 and 3 Month LIBOR))

 

Capitalized terms used
in the Loan Agreement have the meanings given to such terms in this Definitions Schedule.

 

“Accrued Interest” means
unpaid interest, if any, on the Mortgage Loan that has not been added to the unpaid principal balance of the Mortgage Loan pursuant
to Section 2.02(b) (Capitalization of Accrued But Unpaid Interest) of the Loan Agreement.

 

“Additional Lender Repairs”
means repairs of the type listed on the Required Repair Schedule but not otherwise identified thereon that are determined advisable
by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable condition
or to prevent deterioration of the Mortgaged Property.

 

“Additional Lender Replacements”
means replacements of the type listed on the Required Replacement Schedule but not otherwise identified thereon that are determined
advisable by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable
condition or to prevent deterioration of the Mortgaged Property.

 

“Adjustable Rate” has the
meaning set forth in the Summary of Loan Terms.

 

“Amortization Period” has
the meaning set forth in the Summary of Loan Terms.

 

“Amortization Type” has
the meaning set forth in the Summary of Loan Terms.

 

“Bank Secrecy Act” means
the Bank Secrecy Act of 1970, as amended (e.g., 31 U.S.C. Sections 5311-5330).

 

“Bankruptcy Event” means
any one or more of the following:

 

(a)          the
commencement, filing or continuation of a voluntary case or proceeding under one or more of the Insolvency Laws by Borrower;

 

(b)          the
acknowledgment in writing by Borrower (other than to Lender in connection with a workout) that it is unable to pay its debts
generally as they mature;

 

(c)          the
making of a general assignment for the benefit of creditors by Borrower;

 

(d)          the
commencement, filing or continuation of an involuntary case or proceeding under one or more Insolvency Laws against Borrower; or

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 1
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

(e)          the
appointment of a receiver(other than a receiver appointed at the direction or request of Lender under the terms of the Loan Documents),
liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over Borrower or any substantial part
of the assets of Borrower; provided, however, that any proceeding or case under (d) or (e) above shall not be a Bankruptcy Event
until the ninetieth (90th) day after filing (if not earlier dismissed) so long as such proceeding or case occurred without
the consent, encouragement or active participation of (1) Borrower, Guarantor, or Key Principal, (2) any Person Controlling
Borrower, Guarantor, or Key Principal, or (3) any Person Controlled by or under common Control with Borrower, Guarantor, or Key
Principal (in which event such case or proceeding shall be a Bankruptcy Event immediately).

 

“Borrower” means, individually
(and jointly and severally (solidarily instead for purposes of Louisiana law) if more than one), the entity (or entities) identified
as “Borrower” in the first paragraph of the Loan Agreement.

 

“Borrower Affiliate” means,
as to Borrower, Guarantor or Key Principal:

 

(a)          any
Person that owns any direct ownership interest in Borrower, Guarantor or Key Principal; except that if Guarantor or Key Principal
is a Publicly-Held Corporation or a Publicly-Held Trust, then only the shareholders or beneficial owners of such Publicly-Held
Corporation or a Publicly-Held Trust with the power to vote twenty percent (20%) or more of the ownership interests in Guarantor
or Key Principal;

 

(b)          any
Person that indirectly owns, with the power to vote, twenty percent (20%) or more of the ownership interests in Borrower,
Guarantor or Key Principal;

 

(c)          any
Person Controlled by, under common Control with, or which Controls, Borrower, Guarantor or Key Principal;

 

(d)          any
entity in which Borrower, Guarantor or Key Principal directly or indirectly owns, with the power to vote, twenty percent (20%)
or more of the ownership interests in such entity; or

 

(e)          any
other individual that is related (to the third degree of consanguinity) by blood or marriage to Borrower, Guarantor or Key Principal.

 

“Borrower Requested Repairs”
means repairs not listed on the Required Repair Schedule requested by Borrower to be reimbursed from the Repairs Escrow Account
and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable condition or
to prevent deterioration of the Mortgaged Property.

 

“Borrower Requested Replacements”
means replacements not listed on the Required Replacement Schedule requested by Borrower to be reimbursed from the Replacement
Reserve Account and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable
condition or to prevent deterioration of the Mortgaged Property.

 

“Borrower’s General Business
Address” has the meaning set forth in the Summary of Loan Terms.

 

“Borrower’s Notice Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Business Day” means any
day other than (a) a Saturday, (b) a Sunday, (c) a day on which Lender is not open for business, or (d) a day on which the Federal
Reserve Bank of New York is not open for business.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 2
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Collateral Account Funds”
means, collectively, the funds on deposit in any or all of the Collateral Accounts, including the Reserve/Escrow Account Funds.

 

“Collateral Accounts” means
any account designated as such by Lender pursuant to a Collateral Agreement or as established pursuant to this Loan Agreement,
including the Reserve/Escrow Account.

 

“Collateral Agreement” means
any separate agreement between Borrower and Lender for the establishment of any other fund, reserve or account.

 

“Completion Period” has
the meaning set forth in the Summary of Loan Terms.

 

“Condemnation Action” has
the meaning set forth in the Security Instrument.

 

“Control” (including with
correlative meanings, such as “Controlling,” “Controlled by” and “under common Control with”)
means, as applied to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management
and operations of such entity (including, by way of illustration and not limitation, the power to (1) elect the majority of the
directors of such entity; (2) make management decisions on behalf of or independently select the manager of a limited liability
company or the managing partner of a partnership; (3) independently remove and then select a majority of those individuals exercising
managerial authority over any entity; (4) limit or otherwise modify the extent of control over the management and operations of
an entity by any Person exercising managerial authority over such entity), whether through the ownership of voting securities or
other ownership interests, by contract or otherwise.

 

“Conversion” means the conversion
of the Mortgage Loan from an adjustable rate to a fixed rate and, if applicable, the extension of the Maturity Date of the Mortgage
Loan to the New Maturity Date.

 

“Conversion Amendment” means
Lender’s then-current form of Amendment to Multifamily Loan and Security Agreement to be executed by Borrower and Lender
to amend or restate all or any part of this Loan Agreement (including any Schedules, Exhibits or other attachments) in connection
with, and reflecting the terms of, a Conversion of the Mortgage Loan.

 

“Conversion Closing Date”
means, after Borrower exercises the Conversion Option, the date designated by Lender for the closing of the Conversion which
date (a) is a Business Day, (b) is within the Conversion Period, and (c) is not more than ten (10) days after
the Conversion Exercise Date.

 

“Conversion Effective Date”
means, if the Conversion Exercise Date occurs on a Payment Date, the first (1st) day of the calendar month following
the Conversion Exercise Date, or, if the Conversion Exercise Date occurs on any other day other than a Payment Date, the first (1st)
day of the second (2nd) calendar month following the Conversion Exercise Date, but in no event shall the Conversion Effective
Date be after the last day of the Conversion Period.

 

“Conversion Exercise Date”
means the date that Borrower accepts the rate quote provided by Lender in connection with Borrower’s Rate Lock Request.

 

“Conversion Option” means
Borrower’s one-time option to effect the Conversion pursuant to the terms of the Loan Agreement.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 3
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Conversion Period” means
the period commencing on the first (1st) day of the second (2nd) Loan Year and ending on the first (1st) day of
the third (3rd) month prior to the Maturity Date of the Mortgage Loan.

 

“Conversion Review Fee”
has the meaning set forth in the Summary of Loan Terms.

 

“Credit Score” means a numerical
value or a categorization derived from a statistical tool or modeling system used to measure credit risk and predict the likelihood
of certain credit behaviors, including default.

 

“Current Index” has the
meaning set forth in the Summary of Loan Terms.

 

“Debt Service Amounts” means
the Monthly Debt Service Payments and all other amounts payable under the Loan Agreement, the Note, the Security Instrument or
any other Loan Document.

 

“Debt Service Coverage Ratio”
means the ratio of (a) the Net Operating Income of the Mortgaged Property, to (b) the underwritten debt service for the Mortgage
Loan at the proposed Fixed Rate for the trailing twelve (12) month period from the date of the most recently received quarterly
financial statements prepared by Borrower for the Mortgaged Property, provided that (1) the interest rate used in determining
such ratio shall be the greater of (A) the Fixed Rate, or (B) the Underwriting Interest Rate (if any), and (2) an
Amortization Period of three hundred sixty (360) months shall be used in determining such ratio.

 

“Default Rate” means an
interest rate equal to the lesser of:

 

(a)          the
sum of the Interest Rate plus four (4) percentage points; or

 

(b)          the
maximum interest rate which may be collected from Borrower under applicable law.

 

“Definitions Schedule” means
this Schedule 1 (Definitions Schedule) to the Loan Agreement.

 

“Economic Sanctions”
means any economic or financial sanction administered or enforced by the United States Government (including, without limitation,
those administered by OFAC at http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx),
the U.S. Department of Commerce, or the U.S. Department of State.

 

“Effective Date” has the
meaning set forth in the Summary of Loan Terms.

 

“Employee Benefit Plan”
means a plan described in Section 3(3) of ERISA, regardless of whether the plan is subject to ERISA.

 

“Enforcement Costs” has
the meaning set forth in the Security Instrument.

 

“Environmental Indemnity Agreement”
means that certain Environmental Indemnity Agreement dated as of the Effective Date made by Borrower to and for the benefit of
Lender, as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time.

 

“Environmental Inspections”
has the meaning set forth in the Environmental Indemnity Agreement.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 4
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Environmental Laws” has
the meaning set forth in the Environmental Indemnity Agreement.

 

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

 

“ERISA Affiliate” shall
mean, with respect to Borrower, any entity that, together with Borrower, would be treated as a single employer under Section 414(b)
or (c) of the Internal Revenue Code, or Section 4001(a)(14) of ERISA, or the regulations thereunder.

 

“ERISA Plan” means any employee
pension benefit plan within the meaning of Section 3(2) of ERISA (or related trust) that is subject to the requirements of Title
IV of ERISA, Sections 430 or 431 of the Internal Revenue Code, or Sections 302, 303, or 304 of ERISA, which is maintained or contributed
to by Borrower or its ERISA Affiliates.

 

“Event of Default” means
the occurrence of any event listed in Section 14.01 (Events of Default) of the Loan Agreement.

 

“Exceptions to Representations and
Warranties Schedule” means that certain Schedule 7 (Exceptions to Representations and Warranties Schedule)
to the Loan Agreement.

 

“First Payment Date” has
the meaning set forth in the Summary of Loan Terms.

 

“First Principal and Interest Payment
Date” has the meaning set forth in the Summary of Loan Terms, if applicable.

 

“Fixed Monthly Principal Component”
has the meaning set forth in the Summary of Loan Terms.

 

“Fixed Rate” means an interest
rate per annum equal to the sum of the Investor Yield, the Servicing Fee and the Guaranty Fee.

 

“Fixed Rate Amortization Factor”
has the meaning set forth in the Summary of Loan Terms.

 

“Fixed Rate Option” means,
in connection with a Conversion, Borrower’s selection of one (1) of the following fixed rate options for the Mortgage
Loan, which shall be effective from and after the Conversion Effective Date:

 

(a)          seven (7)
year term with a five (5) year yield maintenance period;

 

(b)          seven (7)
year term with a six and one-half (6.5) year yield maintenance period;

 

(c)          ten (10)
year term with a seven (7) year yield maintenance period; or

 

(d)          ten (10)
year term with a nine and one-half (9.5) year yield maintenance period.

 

“Fixtures” has the meaning
set forth in the Security Instrument.

 

“Force Majeure” shall mean
acts of God, acts of war, civil disturbance, governmental action (including the revocation or refusal to grant licenses or permits,
where such revocation or refusal is not due to the fault of Borrower), strikes, lockouts, fire, unavoidable casualties or any other
causes beyond the reasonable control of Borrower (other than lack of financing), and of which Borrower shall have notified Lender
in writing within ten (10) days after its occurrence.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 5
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Foreclosure Event” means:

 

(a)          foreclosure
under the Security Instrument;

 

(b)          any
other exercise by Lender of rights and remedies (whether under the Security Instrument or under applicable law, including Insolvency
Laws) as holder of the Mortgage Loan and/or the Security Instrument, as a result of which Lender (or its designee or nominee) or
a third party purchaser becomes owner of the Mortgaged Property;

 

(c)          delivery
by Borrower to Lender (or its designee or nominee) of a deed or other conveyance of Borrower’s interest in the Mortgaged
Property in lieu of any of the foregoing; or

 

(d)          in
Louisiana, any dation en paiement.

 

“Good Faith Deposit” means
a fee in an amount equal to two percent (2%) of the unpaid principal balance of the Mortgage Loan immediately prior to the
Initial Fixed Rate Payment Date.

 

“Goods” has the meaning
set forth in the Security Instrument.

 

“Governmental Authority”
means any court, board, commission, department or body of any municipal, county, state or federal governmental unit, or any subdivision
of any of them, that has or acquires jurisdiction over Borrower or the Mortgaged Property or the use, operation or improvement
of the Mortgaged Property.

 

“Guarantor” means, individually
and collectively, any guarantor of the Indebtedness or any other obligation of Borrower under any Loan Document.

 

“Guarantor Bankruptcy Event”
means any one or more of the following:

 

(a)          the
commencement, filing or continuation of a voluntary case or proceeding under one or more of the Insolvency Laws by Guarantor;

 

(b)          the
acknowledgment in writing by Guarantor (other than to Lender in connection with a workout) that it is unable to pay its
debts generally as they mature;

 

(c)          the
making of a general assignment for the benefit of creditors by Guarantor;

 

(d)          the
commencement, filing or continuation of an involuntary case or proceeding under one or more Insolvency Laws against Guarantor;
or

 

(e)          the
appointment of a receiver, liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over Guarantor
or any substantial part of the assets of Guarantor, as applicable;

 

provided, however, that any proceeding or case
under (d) or (e) above shall not be a Guarantor Bankruptcy Event until the ninetieth (90th) day after filing (if not earlier
dismissed) so long as such proceeding or case occurred without the consent, encouragement or active participation of (1) Borrower,
Guarantor or Key Principal, (2) any Person Controlling Borrower, Guarantor or Key Principal, or (3) any Person Controlled by or
under common Control with Borrower, Guarantor or Key Principal (in which event such case or proceeding shall be a Guarantor Bankruptcy
Event immediately).

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 6
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Guarantor’s General Business
Address” has the meaning set forth in the Summary of Loan Terms.

 

“Guarantor’s Notice Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Guaranty” means, individually
and collectively, any Payment Guaranty, Non-Recourse Guaranty or other guaranty executed by Guarantor in connection with the Mortgage
Loan.

 

“Guaranty Fee” has the meaning
set forth in the Summary of Loan Terms.

 

“Immediate Family Members”
means a child, stepchild, grandchild, spouse, sibling, or parent, each of whom is not a Prohibited Person.

 

“Imposition Deposits” has
the meaning set forth in the Security Instrument.

 

“Impositions” has the meaning
set forth in the Security Instrument.

 

“Improvements” has the meaning
set forth in the Security Instrument.

 

“Indebtedness” has the meaning
set forth in the Security Instrument.

 

“Index” has the meaning
set forth in the Summary of Loan Terms.

 

“Initial Adjustable Rate”
has the meaning set forth in the Summary of Loan Terms.

 

“Initial Fixed Rate Payment Date”
means the first (1st) day of the calendar month following the Conversion Effective Date.

 

“Initial Monthly Debt Service Payment”
has the meaning set forth in the Summary of Loan Terms.

 

“Initial Replacement Reserve Deposit”
has the meaning set forth in the Summary of Loan Terms.

 

“Insolvency Laws” means
the United States Bankruptcy Code, 11 U.S.C. Section 101, et seq., together with any other federal or state law affecting
debtor and creditor rights or relating to the bankruptcy, insolvency, reorganization, arrangement, moratorium, readjustment of
debt, dissolution, liquidation or similar laws, proceedings, or equitable principles affecting the enforcement of creditors’
rights, as amended from time to time.

 

“Insolvent” means:

 

(a)          that
the sum total of all of a specified Person’s liabilities (whether secured or unsecured, contingent or fixed, or liquidated
or unliquidated) is in excess of the value of such Person’s non-exempt assets, i.e., all of the assets of such Person that
are available to satisfy claims of creditors; or

 

(b)          such
Person’s inability to pay its debts as they become due.

 

“Intended Prepayment Date”
means the date upon which Borrower intends to make a prepayment on the Mortgage Loan, as set forth in the Prepayment Notice.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 7
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Interest Accrual Method”
has the meaning set forth in the Summary of Loan Terms.

 

“Interest Only Term” has
the meaning set forth in the Summary of Loan Terms.

 

“Interest Rate” means the
Initial Adjustable Rate or the Adjustable Rate, as applicable.

 

“Interest Rate Type” has
the meaning set forth in the Summary of Loan Terms.

 

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

 

“Investor” means any Person
to whom Lender intends to (a) sell, transfer, deliver or assign the Mortgage Loan in the secondary mortgage market, or (b) sell
an MBS backed by the Mortgage Loan.

 

“Investor Yield” means,
in connection with a Conversion, the percentage equal to (a) the required net yield offered for purchase by Fannie Mae or
(b) the MBS pass-through rate offered for purchase by regular buyers of mortgage backed securities, as applicable, for a new
Fannie Mae mortgage loan with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking
into account the Fixed Rate Option selected by Borrower).

 

“Key Principal” means, collectively:

 

(a)          the
natural person(s) or entity that Controls Borrower that Lender determines is critical to the successful operation and management
of Borrower and the Mortgaged Property, as identified as such in the Summary of Loan Terms; or

 

(b)          any
natural person or entity who becomes a Key Principal after the date of the Loan Agreement and is identified as such in an assumption
agreement, or another amendment or supplement to the Loan Agreement.

 

“Key Principal’s General Business
Address” has the meaning set forth in the Summary of Loan Terms.

 

“Key Principal’s Notice Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Land” means the land described
in Exhibit A to the Security Instrument.

 

“Last Interest Only Payment Date”
has the meaning set forth in the Summary of Loan Terms, if applicable.

 

“Late Charge” means an amount
equal to the delinquent amount then due under the Loan Documents multiplied by five percent (5%).

 

“Leases” has the meaning
set forth in the Security Instrument.

 

“Lender” means the entity
identified as “Lender” in the first paragraph of the Loan Agreement and its transferees, successors and assigns, or
any subsequent holder of the Note.

 

“Lender’s General Business Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Lender’s Notice Address”
has the meaning set forth in the Summary of Loan Terms.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 8
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Lender’s Payment Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Lien” has the meaning set
forth in the Security Instrument.

 

“Loan Agreement” means the
Multifamily Loan and Security Agreement dated as of the Effective Date executed by and between Borrower and Lender to which this
Definitions Schedule is attached, as the same may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

 

“Loan Amount” has the meaning
set forth in the Summary of Loan Terms.

 

“Loan Application” means
the application for the Mortgage Loan submitted by Borrower to Lender.

 

“Loan Documents” means the
Note, the Loan Agreement, the Security Instrument, the Environmental Indemnity Agreement, the Guaranty, all guaranties, all indemnity
agreements, all Collateral Agreements, all O&M Plans, and any other documents now or in the future executed by Borrower, Guarantor,
Key Principal, any other guarantor or any other Person in connection with the Mortgage Loan, as such documents may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

“Loan Servicer” means the
entity that from time to time is designated by Lender to collect payments and deposits and receive notices under the Note, the
Loan Agreement, the Security Instrument and any other Loan Document, and otherwise to service the Mortgage Loan for the benefit
of Lender. Unless Borrower receives notice to the contrary, the Loan Servicer shall be the Lender originally named on the Summary
of Loan Terms.

 

“Loan Term” has the meaning
set forth in the Summary of Loan Terms.

 

“Loan Year” has the meaning
set forth in the Summary of Loan Terms.

 

“Margin” has the meaning
set forth in the Summary of Loan Terms.

 

“Material Commercial Lease”
means any Lease that is not a Residential Lease, and which is:

 

(a)          a
Lease comprising five percent (5%) or more of total gross income of the Mortgaged Property on an annualized basis;

 

(b)          a
master Lease (which term “master Lease” shall include any master Lease to a single corporate tenant);

 

(c)          a
cell tower Lease;

 

(d)          a
solar (power) Lease;

 

(e)          a
solar power purchase agreement; or

 

(f)          a
Lease of oil, gas, or mineral rights.

 

“Maturity Date” has the
meaning set forth in the Summary of Loan Terms.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 9
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Maximum Fixed Rate” means
the maximum Fixed Rate to which the Mortgage Loan may be converted, as determined by Lender, so that the Debt Service Coverage
Ratio of the Mortgage Loan is not less than the Minimum Conversion Debt Service Coverage Ratio.

 

“Maximum Inspection Fee”
has the meaning set forth in the Summary of Loan Terms.

 

“Maximum Repair Cost” shall
be the amount(s) set forth in the Required Repair Schedule, if any.

 

“Maximum Repair Disbursement Interval”
has the meaning set forth in the Summary of Loan Terms.

 

“Maximum Replacement Reserve Disbursement
Interval” has the meaning set forth in the Summary of Loan Terms.

 

“MBS” means an investment
security that represents an undivided beneficial interest in a pool of mortgage loans or participation interests in mortgage loans
held in trust pursuant to the terms of a governing trust document.

 

“Mezzanine Debt” means a
loan to a direct or indirect owner of Borrower secured by a pledge of such owner’s interest in an entity owning a direct
or indirect interest in Borrower.

 

“Minimum Conversion Debt Service Coverage
Ratio” has the meaning set forth in the Summary of Loan Terms.

 

“Minimum Repairs Disbursement Amount”
has the meaning set forth in the Summary of Loan Terms.

 

“Minimum Replacement Reserve Disbursement
Amount” has the meaning set forth in the Summary of Loan Terms.

 

“Monthly Debt Service Payment”
has the meaning set forth in the Summary of Loan Terms.

 

“Monthly Replacement Reserve Deposit”
has the meaning set forth in the Summary of Loan Terms.

 

“Mortgage Loan” means the
mortgage loan made by Lender to Borrower in the principal amount of the Note made pursuant to the Loan Agreement, evidenced by
the Note and secured by the Loan Documents that are expressly stated to be security for the Mortgage Loan.

 

“Mortgaged Property” has
the meaning set forth in the Security Instrument.

 

“Multifamily Project” has
the meaning set forth in the Summary of Loan Terms.

 

“Multifamily Project Address”
has the meaning set forth in the Summary of Loan Terms.

 

“Net Operating Income” means
the amount determined by Lender to be the net operating income of the Mortgaged Property.

 

“New Maturity Date” means
the Maturity Date of the Mortgage Loan following the Conversion, as set forth on the Summary of Loan Terms attached as Schedule
2 to the Conversion Amendment, which date may be the same as, or later than, the Maturity Date prior to the exercise of the
Conversion.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 10
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“NOI Determination Notice”
means the notice given by Lender to Borrower pursuant to the Conversion Option in which Lender establishes the Net Operating Income
and the Maximum Fixed Rate to which the Mortgage Loan may be converted.

 

“NOI Determination Request”
means the notice given by Borrower to Lender to exercise the Conversion Option in which Borrower requests that Lender determines
the Net Operating Income and the Maximum Fixed Rate to which the Mortgage Loan may be converted.

 

“Non-Recourse Guaranty”
means, if applicable, that certain Guaranty of Non-Recourse Obligations of even date herewith executed by Guarantor to and for
the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Note” means that certain
Multifamily Note of even date herewith in the original principal amount of the stated Loan Amount made by Borrower in favor of
Lender, and all schedules, riders, allonges and addenda attached thereto, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.

 

“O&M Plan” has the meaning
set forth in the Environmental Indemnity Agreement.

 

“OFAC” means the United
States Treasury Department, Office of Foreign Assets Control, and any successor thereto.

 

“Payment Change Date” has
the meaning set forth in the Summary of Loan Terms.

 

“Payment Date” means the
First Payment Date and the first (1st) day of each month thereafter until the Mortgage Loan is fully paid.

 

“Payment Guaranty” means,
if applicable, that certain Guaranty (Payment) of even date herewith executed by Guarantor to and for the benefit of Lender, as
the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

 

“Permitted Encumbrance”
has the meaning set forth in the Security Instrument.

 

“Permitted Mezzanine Debt”
means Mezzanine Debt incurred by a direct or indirect owner or owners of Borrower where the exercise of any of the rights and remedies
by the holder or holders of the Mezzanine Debt would not in any circumstance cause (a) a change in Control in Borrower, Key Principal,
or Guarantor, or (b) a Transfer of a direct or indirect Restricted Ownership Interest in Borrower, Key Principal, or Guarantor.

 

“Permitted Preferred Equity”
means Preferred Equity that does not (a) require mandatory dividends, distributions, payments or returns (including at maturity
or in connection with a redemption), or (b) provide the Preferred Equity owner with rights or remedies on account of a failure
to receive any preferred dividends, distributions, payments or returns (or, if such rights are provided, the exercise of such rights
do not violate the Loan Documents or are otherwise exercised with the prior written consent of Lender in accordance with Article
11 (Liens, Transfers and Assumptions) of the Loan Agreement and the payment of all applicable fees and expenses as set forth in
Section 11.03(g) (Further Conditions to Transfers and Assumption)).

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 11
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Permitted Prepayment Date”
means the last Business Day of a calendar month.

 

“Person” means an individual,
an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental
or private).

 

“Personal Property” means
the Goods, accounts, choses of action, chattel paper, documents, general intangibles (including Software), payment intangibles,
instruments, investment property, letter of credit rights, supporting obligations, computer information, source codes, object codes,
records and data, all telephone numbers or listings, claims (including claims for indemnity or breach of warranty), deposit accounts
and other property or assets of any kind or nature related to the Land or the Improvements, including operating agreements, surveys,
plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements,
and all other intangible property and rights relating to the operation of, or used in connection with, the Land or the Improvements,
including all governmental permits relating to any activities on the Land.

 

“Personalty” has the meaning
set forth in the Security Instrument.

 

“Preferred Equity” means
a direct or indirect equity ownership interest in, economic interests in, or rights with respect to, Borrower that provide an equity
owner preferred dividend, distribution, payment, or return treatment relative to other equity owners.

 

“Prepayment Lockout Period”
has the meaning set forth in the Summary of Loan Terms.

 

“Prepayment Notice” means
the written notice that Borrower is required to provide to Lender in accordance with Section 2.03 (Lockout/Prepayment) of the Loan
Agreement in order to make a prepayment on the Mortgage Loan, which shall include, at a minimum, the Intended Prepayment Date.

 

“Prepayment Premium” means
the amount payable by Borrower in connection with a prepayment of the Mortgage Loan, as provided in Section 2.03 (Lockout/Prepayment)
of the Loan Agreement and calculated in accordance with the Prepayment Premium Schedule.

 

“Prepayment Premium Schedule”
means that certain Schedule 4 (Prepayment Premium Schedule) to the Loan Agreement.

 

“Prepayment Premium Term”
has the meaning set forth in the Summary of Loan Terms.

 

“Prohibited Person” means:

 

(a)          any
Person with whom Lender or Fannie Mae is prohibited from doing business pursuant to any law, rule, regulation, judicial proceeding
or administrative directive; or

 

(b)          any
Person identified on the United States Department of Housing and Urban Development’s “Limited Denial of Participation,
HUD Funding Disqualifications and Voluntary Abstentions List,” or on the General Services Administration’s “System
for Award Management (SAM)” exclusion list, each of which may be amended from time to time, and any successor or replacement
thereof; or

 

(c)          any
Person that is determined by Fannie Mae to pose an unacceptable credit risk due to the aggregate amount of debt of such Person
owned or held by Fannie Mae; or

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 12
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

(d)          any
Person that has caused any unsatisfactory experience of a material nature with Fannie Mae or Lender, such as a default, fraud,
intentional misrepresentation, litigation, arbitration or other similar act.

 

“Property Jurisdiction”
has the meaning set forth in the Security Instrument.

 

“Property Square Footage”
has the meaning set forth in the Summary of Loan Terms.

 

“Publicly-Held Corporation”
means a corporation, the outstanding voting stock of which is registered under Sections 12(b) or 12(g) of the Securities Exchange
Act of 1934, as amended.

 

“Publicly-Held Trust” means
a real estate investment trust, the outstanding voting shares or beneficial interests of which are registered under Sections 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended.

 

“Rate Change Date” has the
meaning set forth in the Summary of Loan Terms.

 

“Rate Lock Request” means
a request from Borrower to Lender for a rate quote for the Fixed Rate (based on the Fixed Rate Option selected by Borrower) which
shall apply after the Conversion Effective Date.

 

“Rents” has the meaning
set forth in the Security Instrument.

 

“Repair Threshold” has the
meaning set forth in the Summary of Loan Terms.

 

“Repairs” means, individually
and collectively, the Required Repairs, Borrower Requested Repairs, and Additional Lender Repairs.

 

“Repairs Escrow Account”
means the account established by Lender into which the Repairs Escrow Deposit is deposited to fund the Repairs.

 

“Repairs Escrow Account Administrative
Fee” has the meaning set forth in the Summary of Loan Terms.

 

“Repairs Escrow Deposit”
has the meaning set forth in the Summary of Loan Terms.

 

“Replacement Reserve Account”
means the account established by Lender into which the Replacement Reserve Deposits are deposited to fund the Replacements.

 

“Replacement Reserve Account Administration
Fee” has the meaning set forth in the Summary of Loan Terms.

 

“Replacement Reserve Account Interest
Disbursement Frequency” has the meaning set forth in the Summary of Loan Terms.

 

“Replacement Reserve Deposits”
means the Initial Replacement Reserve Deposit, Monthly Replacement Reserve Deposits and any other deposits to the Replacement Reserve
Account required by the Loan Agreement.

 

“Replacement Threshold”
has the meaning set forth in the Summary of Loan Terms.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 13
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Replacements” means, individually
and collectively, the Required Replacements, Borrower Requested Replacements and Additional Lender Replacements.

 

“Required Repair Schedule”
means that certain Schedule 6 (Required Repair Schedule) to the Loan Agreement.

 

“Required Repairs” means
those items listed on the Required Repair Schedule.

 

“Required Replacement Schedule”
means that certain Schedule 5 (Required Replacement Schedule) to the Loan Agreement.

 

“Required Replacements”
means those items listed on the Required Replacement Schedule.

 

“Reserve/Escrow Account Funds”
means, collectively, the funds on deposit in the Reserve/Escrow Accounts.

 

“Reserve/Escrow Accounts”
means, together, the Replacement Reserve Account and the Repairs Escrow Account.

 

“Residential Lease” means
a Lease of an individual dwelling unit and shall not include any master Lease (which term “master Lease” includes any
master Lease to a single corporate tenant).

 

“Restoration” means restoring
and repairing the Mortgaged Property to the equivalent of its physical condition immediately prior to the casualty or to a condition
approved by Lender following a casualty.

 

“Restricted Ownership Interest”
means, with respect to any entity, the following:

 

(a)          if
such entity is a general partnership or a joint venture, fifty percent (50%) or more of all general partnership or joint venture
interests in such entity;

 

(b)          if
such entity is a limited partnership:

 

(1)         the
interest of any general partner; or

 

(2)         fifty
percent (50%) or more of all limited partnership interests in such entity;

 

(c)          if
such entity is a limited liability company or a limited liability partnership:

 

(1)         the
interest of any managing member or the contractual rights of any non-member manager; or

 

(2)         fifty
percent (50%) or more of all membership or other ownership interests in such entity;

 

(d)          if
such entity is a corporation (other than a Publicly-Held Corporation) with only one class of voting stock, fifty percent (50%)
or more of voting stock in such corporation;

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 14
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

(e)          if
such entity is a corporation (other than a Publicly-Held Corporation) with more than one class of voting stock, the amount of shares
of voting stock sufficient to have the power to elect the majority of directors of such corporation; or

 

(f)          if
such entity is a trust (other than a land trust or a Publicly-Held Trust), the power to Control such trust vested in the trustee
of such trust or the ability to remove, appoint or substitute the trustee of such trust (unless the trustee of such trust after
such removal, appointment or substitution is a trustee identified in the trust agreement approved by Lender).

 

“Review Fee” means the non-refundable
fee of $3,000 payable to Lender.

 

“Sanctioned Country” means
a country subject to a comprehensive country-wide sanctions program administered and enforced by OFAC, which list is updated from
time to time.

 

“Sanctioned Person” means
(a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC, available
at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or as otherwise published from time to time;
(b) (1) an agency of the government of a Sanctioned Country, (2) an organization controlled by a Sanctioned Country, or (3) a Person
resident in a Sanctioned Country, to the extent any Person described in clauses (1), (2) or (3) is the subject of a sanctions program
administered by OFAC; and, (c) a Person whose property and interests in property are blocked pursuant to an Executive Order or
regulations administered by OFAC consistent with the guidance issued by OFAC.

 

“Schedule of Interest Rate Type Provisions”
means that certain Schedule 3 (Schedule of Interest Rate Type Provisions) to the Loan Agreement.

 

“Security Instrument” means
that certain multifamily mortgage, deed to secure debt or deed of trust executed and delivered by Borrower as security for the
Mortgage Loan and encumbering the Mortgaged Property, including all riders or schedules attached thereto, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

“Servicing Arrangement”
means any arrangement between Lender and the Loan Servicer for loss sharing or interim advancement of funds.

 

“Servicing Fee” has
the meaning set forth in the Summary of Loan Terms.

 

“Summary of Loan Terms”
means that certain Schedule 2 (Summary of Loan Terms) to the Loan Agreement.

 

“Survey” means the plat
of survey of the Mortgaged Property approved by Lender.

 

“Taxes” has the meaning
set forth in the Security Instrument.

 

“Title Policy” means
the mortgagee’s loan policy of title insurance issued in connection with the Mortgage Loan and insuring the lien of the Security
Instrument as set forth therein, as approved by Lender.

 

“Total Parking Spaces” has
the meaning set forth in the Summary of Loan Terms.

 

“Total Residential Units”
has the meaning set forth in the Summary of Loan Terms.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 15
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

“Transfer” means:

 

(a)          a
sale, assignment, transfer or other disposition (whether voluntary, involuntary, or by operation of law), other than Residential
Leases, Material Commercial Leases or non-Material Commercial Leases permitted by this Loan Agreement;

 

(b)          a
granting, pledging, creating or attachment of a lien, encumbrance or security interest (whether voluntary, involuntary, or by operation
of law);

 

(c)          an
issuance or other creation of a direct or indirect ownership interest;

 

(d)          a
withdrawal, retirement, removal or involuntary resignation of any owner or manager of a legal entity; or

 

(e)          a
merger, consolidation, dissolution or liquidation of a legal entity.

 

“Transfer Fee” means a fee
equal to one percent (1%) of the unpaid principal balance of the Mortgage Loan payable to Lender.

 

“UCC” has the meaning set
forth in the Security Instrument.

 

“UCC Collateral” has the
meaning set forth in the Security Instrument.

 

“Underwriting Interest Rate”
means, in connection with the Conversion, the then-current minimum underwriting interest rate (if applicable) used by Lender for
underwriting new loans with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking
into account the Fixed Rate Option selected by Borrower).

 

“Voidable Transfer” means
any fraudulent conveyance, preference or other voidable or recoverable payment of money or transfer of property.

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 16
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	 	/s/ JR
	 	Borrower Initials

 

    
	Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type - SARM)	Form 6101.SARM	Page 17
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

SCHEDULE 2

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Summary of Loan Terms

(Interest Rate Type - Structured ARM (1 and
3 Month LIBOR))

 

	I.           GENERAL PARTY AND MULTIFAMILY PROJECT INFORMATION
	 
	Borrower	BR CARROLL LANSBROOK, LLC, a Delaware limited liability company
	 	 
	Lender	WALKER & DUNLOP, LLC, a Delaware limited liability company
	 	 
	Key Principal	M. Patrick Carroll
	 	 
	Guarantor	Bluerock Residential Growth REIT, Inc.

Carroll Multifamily Real Estate Fund III, LP
	 	 
	Multifamily Project	Lansbrook Village
	 	 
	ADDRESSES
	 
	Borrower’s General Business Address	c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue, 9th Floor

New York, New York 10019 
	 	 
	Borrower’s Notice Address	c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attn:  Michael Konig, Esq. and Jordan Ruddy 

Email:  mkonig@bluerockre.com

             jruddy@bluerockre.com
	 	 
	Multifamily Project Address	3751 Pine Ridge Boulevard

Palm Harbor, Florida 34685
	 	 
	Multifamily Project County	Pinellas County
	 	 
	Key Principal’s General Business Address	c/o Carroll Organization, LLC

3340 Peachtree Road NE, Suite 2250

Atlanta, Georgia  30326
	 	 
	Key Principal’s Notice Address	c/o Carroll Organization, LLC

3340 Peachtree Road NE, Suite 2250

Atlanta, Georgia  30326

Email:  josh.champion@carrollorg.com

 

    
	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6102.SARM	Page 1
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	Guarantor’s General Business Address	Bluerock Residential Growth REIT, Inc.

c/o Bluerock Residential Holdings, L.P.

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attention: Michael Konig, Esq. and Jordan Ruddy 

Carroll Multifamily Real Estate Fund III, LP

c/o Carroll Organization, LLC

3340 Peachtree Road NE, Suite 2250

Atlanta, Georgia  30326
	 	 
	Guarantor’s Notice Address	
        Bluerock Residential Growth REIT, Inc.

        c/o Bluerock Residential Holdings, L.P.

        712 Fifth Avenue, 9th Floor

        New York, New York 10019

        Attention: Michael Konig, Esq. and Jordan Ruddy

        Email: mkonig@bluerockre.com

                  jruddy@bluerockre.com

        

        Carroll Multifamily Real Estate Fund III, LP

        c/o Carroll Organization, LLC

        3340 Peachtree Road NE, Suite 2250

        Atlanta, Georgia 30326

        Email: josh.champion@carrollorg.com

	 	 
	Lender’s General Business Address	7501 Wisconsin Avenue, Suite 1200E

Bethesda, Maryland 20814
	 	 
	Lender’s Notice Address	7501 Wisconsin Avenue, Suite 1200E

Bethesda, Maryland 20814

servicing@walkerdunlop.com
	 	 
	Lender’s Payment Address	7501 Wisconsin Avenue, Suite 1200E

Bethesda, Maryland 20814-6531

 

	II.          MULTIFAMILY PROJECT INFORMATION
	 
	Property Square Footage	3,737,321
	 	 
	Total Parking Spaces	1565 (for the Condominium as a whole)
	 	 
	Total Residential Units	614
	 	 
	Affordable Housing Property	
         ̈         Yes

        x         No

 

    
	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6102.SARM	Page 2
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	III.         MORTGAGE LOAN INFORMATION
	 
	Adjustable Rate	Until the first Rate Change Date, the Initial Adjustable Rate, and from and after each Rate Change Date following the first Rate Change Date until the next Rate Change Date, a per annum interest rate that is the sum of (i) the Current Index, and (ii) the Margin, which sum is then rounded to the nearest three (3) decimal places; provided, however, that the Adjustable Rate shall never be less than the Margin.
	 	 
	Amortization Period	360 months.
	 	 
	Amortization Type	
         ̈         Amortizing

         ̈         Full
        Term Interest Only

        x         Partial
        Interest Only

	 	 
	Current Index	The published Index that is effective on the Business Day immediately preceding the applicable Rate Change Date.
	 	 
	Effective Date	As of July 8, 2016
	 	 
	First Payment Date	September 1, 2016
	 	 
	First Principal and Interest Payment Date	September 1, 2020
	 	 
	Fixed Monthly Principal Component	$92,670.84
	 	 
	Fixed Rate Amortization Factor	3.82% per annum.
	 	 
	Index	The ICE Benchmark Administration Limited (or any successor administrator) fixing of the London Inter-Bank Offered Rate for one (1)-month U.S. Dollar-denominated deposits as reported by Reuters through electronic transmission.  If the Index is no longer available, or is no longer posted through electronic transmission, Lender will choose a new index that is based upon comparable information.
	 	 
	Initial Adjustable Rate	2.907% per annum.

 

    
	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6102.SARM	Page 3
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	Initial Monthly Debt Service Payment	$143,160.87
	 	 
	Interest Accrual Method	Actual/360 (computed on the basis of a three hundred sixty (360) day year and the actual number of calendar days during the applicable month, calculated by multiplying the unpaid principal balance of the Mortgage Loan by the Interest Rate, dividing the product by three hundred sixty (360), and multiplying the quotient obtained by the actual number of days elapsed in the applicable month).
	 	 
	Interest Only Term	48 months.
	 	 
	Interest Rate Type	Structured ARM
	 	 
	Last Interest Only Payment Date	August 1, 2020
	 	 
	Loan Amount	$57,190,000.00
	 	 
	Loan Term	120 months
	 	 
	Loan Year	The period beginning on the Effective Date and ending on the last day of July, 2017, and each successive twelve (12) month period thereafter.
	 	 
	Margin	2.440%
	 	 
	Maturity Date	August 1, 2026, or any later date to which the Maturity Date may be extended (if at all) in connection with an election by Borrower to convert the Interest Rate on the Mortgage Loan to a fixed rate pursuant to the terms of the Loan Agreement, or any earlier date on which the unpaid principal balance of the Mortgage Loan becomes due and payable by acceleration or otherwise.

 

    
	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6102.SARM	Page 4
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	Monthly Debt Service Payment	
        (i)           for
        the First Payment Date, the Initial Monthly Debt Service Payment;

         

        (ii)          for
        each Payment Date thereafter through and including the Last Interest Only Payment Date, the amount obtained by multiplying the
        unpaid principal balance of the Mortgage Loan by the Adjustable Rate, dividing the product by three hundred sixty (360), and
        multiplying the quotient by the actual number of days elapsed in the applicable month;

         

        (iii)        for
        the First Principal and Interest Payment Date and each Payment Date thereafter until the Mortgage Loan is fully paid, an amount
        equal to the sum of:

         

        (1)         the
        Fixed Monthly Principal Component; plus

         

        (2)         an
        interest payment equal to the amount obtained by multiplying the unpaid principal balance of the Mortgage Loan by the Adjustable
        Rate, dividing the product by three hundred sixty (360), and multiplying the quotient by the actual number of days elapsed
        in the applicable month.

	 	 
	Payment Change Date	The first (1st) day of the month following each Rate Change Date until the Mortgage Loan is fully paid.
	 	 
	Prepayment Lockout Period	The first (1st) Loan Year of the term of the Mortgage Loan.
	 	 
	Rate Change Date	The First Payment Date and the first (1st) day of each month thereafter until the Mortgage Loan is fully paid.

 

	IV.          YIELD MAINTENANCE/PREPAYMENT PREMIUM INFORMATION
	 
	Prepayment Premium Term	The period beginning on the Effective Date and ending on the last calendar day of the fourth (4th) month prior to the month in which the Maturity Date occurs.

 

	V.          RESERVE INFORMATION
	 
	Completion Period	Within twelve (12) months after the Effective Date or as otherwise shown on the Required Repair Schedule.
	 	 
	Initial Replacement Reserve Deposit	$0.00

 

    
	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6102.SARM	Page 5
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	Maximum Inspection Fee	$750.00
	 	 
	Maximum Repair Disbursement Interval	One time per calendar month
	 	 
	Maximum Replacement Reserve Disbursement Interval	One time per calendar quarter
	 	 
	Minimum Repairs Disbursement Amount	$5,000.00
	 	 
	Minimum Replacement Reserve Disbursement Amount	$5,000.00
	 	 
	Monthly Replacement Reserve Deposit	$12,791.67
	 	 
	Repair Threshold	$10,000.00
	 	 
	Repairs Escrow Account Administrative Fee	$250.00, payable one time
	 	 
	Repairs Escrow Deposit	$4,000.00 (WAIVED)
	 	 
	Replacement Reserve Account Administration Fee	$250.00, payable annually
	 	 
	Replacement Reserve Account Interest Disbursement Frequency	Annually
	 	 
	Replacement Threshold	$5,000.00

 

	VI.          CONVERSION OPTION – SARM LOAN
	 
	Conversion Review Fee	A non-refundable fee in the amount of $5,000.00.
	 	 
	Guaranty Fee	The guaranty fee offered by Fannie Mae for a new Fannie Mae mortgage loan with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking into account the Fixed Rate Option selected by Borrower) at the time of the Conversion Effective Date.

 

    
	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6102.SARM	Page 6
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	Minimum Conversion Debt Service Coverage Ratio	1.25
	 	 
	Servicing Fee	The servicing fee offered by Fannie Mae for a new Fannie Mae mortgage loan with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking into account the Fixed Rate Option selected by Borrower) at the time of the Conversion Effective Date.

 

    
	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6102.SARM	Page 7
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	 	/s/ JR
	 	Borrower Initials

 

    
	Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6102.SARM	Page 8
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

SCHEDULE 3

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Schedule of Interest Rate Type Provisions

(Structured ARM (1 and 3 Month LIBOR)) and
Fixed Rate Conversion Option

 

1.           Defined
Terms.

 

Capitalized terms not otherwise
defined in this Schedule have the meanings given to such terms in the Definitions Schedule to the Loan Agreement.

 

2.           Interest
Accrual.

 

Except as otherwise provided
in the Loan Agreement, interest shall accrue at the Adjustable Rate until the Mortgage Loan is fully paid.

 

3.           Adjustable
Rate; Adjustments.

 

The Initial Adjustable
Rate shall be effective until the first Rate Change Date. Thereafter, the Adjustable Rate shall change on each Rate Change Date
based on fluctuations in the Current Index.

 

4.           Fixed
Monthly Principal Component.

 

Each amortizing Monthly
Debt Service Payment shall include a principal payment equal to the Fixed Monthly Principal Component, which shall be determined
using the Fixed Rate Amortization Factor.

 

5.           Notification
of Interest Rate Change and Monthly Debt Service Payment.

 

Before each Payment Change
Date, Lender shall notify Borrower of any change in the Adjustable Rate and the amount of the next Monthly Debt Service Payment.

 

6.           Correction
to Monthly Debt Service Payments.

 

If Lender determines at
any time that it has miscalculated the amount of a Monthly Debt Service Payment (whether because of a miscalculation of the Adjustable
Rate or otherwise), then Lender shall give notice to Borrower of the corrected amount of the Monthly Debt Service Payment (and
the corrected Adjustable Rate, if applicable) and a. if the corrected amount of the Monthly Debt Service Payment represents an
increase, then Borrower shall, within thirty (30) calendar days thereafter, pay to Lender any sums that Borrower would have
otherwise been obligated to pay to Lender had the amount of the Monthly Debt Service Payment not been miscalculated, or b. if the
corrected amount of the Monthly Debt Service Payment represents a decrease and Borrower is not otherwise in default under any of
the Loan Documents, then Borrower shall thereafter be paid the sums that Borrower would not have otherwise been obligated to pay
to Lender had the amount of the Monthly Debt Service Payment not been miscalculated.

 

    
	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 1
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

7.           Conversion
to Fixed Rate.

 

(a)          Conversion
Option.

 

(1)          Subject
to the following terms and conditions, Borrower may exercise the Conversion Option pursuant to which the interest rate payable
on the Mortgage Loan may be converted, one (1) time only, on any Payment Date during the Conversion Period from the Adjustable
Rate to the Fixed Rate, after which the interest rate on the Mortgage Loan shall remain at the Fixed Rate until the New Maturity
Date.

 

(2)          For
Mortgage Loans that are full-term interest-only, the Amortization Period from and after the Conversion Effective Date shall be
three hundred sixty (360) months. For all other Mortgage Loans, including Mortgage Loans that are partial interest-only or amortizing,
the Amortization Period from and after the Conversion Effective Date shall be:

 

(A)         three
hundred sixty (360) months, if (i) Borrower selects a Fixed Rate Option having a term greater than or equal to the original term
of the Mortgage Loan from the Effective Date through the Maturity Date, and (ii) the most recent inspection of the Mortgaged Property
by Lender resulted in a rating of either “1” or “2”; or

 

(B)         in
all other cases, the number of months equal to (A) three hundred sixty (360) months, minus (B) the number of Monthly Debt Service
Payments that have elapsed since the Effective Date.

 

(3)          The
Monthly Debt Service Payment following a Conversion shall be in an amount required to pay the unpaid principal balance of the Mortgage
Loan immediately prior to the Initial Fixed Rate Payment Date in equal monthly installments, including accrued interest at the
Fixed Rate, over the Amortization Period utilizing the 30/360 Interest Accrual Method even if Actual/360 is the Interest Accrual
Method.

 

(4)          The
Conversion Option shall lapse (A) at 5:00 p.m. (Eastern Time) on the ninetieth (90th) day prior to the expiration
of the Conversion Period if Borrower has not previously delivered to Lender an NOI Determination Request in accordance with the
terms of this Schedule or (B) on the Conversion Effective Date, if the Conversion Option is timely exercised but the Fixed
Rate does not become effective on such Conversion Effective Date.

 

(5)          It
is anticipated that the Conversion will be effected by the issuance by Lender of a fixed-rate MBS or by the cash purchase of the
Mortgage Loan by Lender into its portfolio (subject to the provisions of Section 7(b)(2) of this Schedule). Borrower acknowledges,
however, that the Conversion is contingent on the capital markets generally, and that from time to time, disruptions in the capital
markets may make Conversion infeasible. In the event Lender is not able to obtain any quotes for the Mortgage Loan at the Fixed
Rate (and does not make a cash bid for the Mortgage Loan), or if the quotes exceed the Maximum Fixed Rate, the interest rate on
the Mortgage Loan shall remain at the Adjustable Rate.

 

    
	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 2
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

(b)          Procedures
for Conversion.

 

(1)          NOI
Determination Request.

 

(A)        Subject
to the terms of the Loan Agreement, if Borrower desires to exercise the Conversion Option, Borrower shall submit an NOI Determination
Request to Lender, which shall include Borrower’s selection of a Fixed Rate Option.

 

(B)         The
NOI Determination Request shall be accompanied by the Conversion Review Fee in the form of a check payable to Lender or by wire
transfer to an account designated by Lender.

 

(C)         In
no event shall the NOI Determination Request be made prior to the commencement of the Conversion Period or less than ninety (90)
days prior to the expiration of the Conversion Period. Borrower may not submit an NOI Determination Request if an Event of Default
has occurred and is continuing at the time of the request or if an Event of Default has occurred at any time within the twelve (12)
month period immediately preceding the date of Borrower’s request. In addition, Borrower may not submit an NOI Determination
Request more than twice in any Loan Year. Borrower shall submit to Lender, within five (5) days after receipt of a request
therefor, all information relating to the operation of the Mortgaged Property required by Lender to determine the Net Operating
Income and Borrower’s compliance with Section 7 of this Schedule. If Borrower fails to provide such information within such
period, Borrower’s NOI Determination Request shall be deemed canceled (however, such canceled NOI Determination Request shall
count as a request for the Loan Year in which the request was made).

 

(2)          Conversion
Eligibility Determination.

 

(A)        Within
fifteen (15) days after receipt of an NOI Determination Request (or, if Lender requests additional information from Borrower
pursuant to Section 7(b)(2)(B) of this Schedule, within fifteen (15) days after Lender’s receipt of such additional
information), Lender shall determine the Net Operating Income of the Mortgaged Property and the Maximum Fixed Rate to which the
Mortgage Loan may be converted and shall provide Borrower with the NOI Determination Notice.

 

(B)         Lender
shall determine the Net Operating Income for the trailing twelve (12) month period on the basis of the most recently received quarterly
financial statements (as such statements may be adjusted by Lender as necessary to accurately reflect items of income, operating
expenses, ground lease payments, if applicable, and replacement reserves to reflect suitable underwriting) prepared by Borrower
for the Mortgaged Property. In connection with any request by Lender for additional information, Borrower shall have five (5)
days after Borrower’s receipt of such request to provide Lender with such additional information.

 

(C)         Borrower
may not exercise the Conversion Option unless Lender determines that, based upon the Net Operating Income set forth in the NOI
Determination Notice and the Fixed Rate quoted in connection with a Rate Lock Request, the Debt Service Coverage Ratio for the
Mortgaged Property is equal to or greater than the Minimum Conversion Debt Service Coverage Ratio.

 

    
	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 3
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

(3)          Exercise
of Conversion Option; Rate Lock Request.

 

(A)         If,
after receipt of the NOI Determination Notice, Borrower desires to exercise the Conversion Option, Borrower shall, within fifteen (15)
days of Borrower’s receipt of the NOI Determination Notice:

 

(i)          provide
Lender with a title report for the Mortgaged Property prepared by, or by an agent for, the issuer of the Title Policy, showing
marketable fee simple or leasehold title to the Mortgaged Property (as applicable) to be vested in Borrower, free and clear of
all Liens and other matters affecting title other than the Permitted Encumbrances;

 

(ii)         pay
to Lender the Good Faith Deposit; and

 

(iii)        make
a Rate Lock Request.

 

(B)         If
the Conversion closes, Lender shall refund the Good Faith Deposit to Borrower within thirty (30) days after the Conversion
Closing Date. If Borrower pays the Good Faith Deposit but does not timely exercise the Conversion Option and the Fixed Rate is
not rate locked, Lender shall refund the Good Faith Deposit to Borrower within forty-five (45) days after receipt of a written
request from Borrower (and the interest rate shall remain at the Adjustable Rate). If Borrower timely exercises the Conversion
Option, but the Conversion is not consummated for any reason other than a default by Lender in performing its obligations under
the Loan Agreement, Borrower shall forfeit the Good Faith Deposit and (i) if the MBS Investor is not Fannie Mae, shall be fully
liable for, and agrees to pay on demand, any and all loss, costs and/or damages incurred by Lender in connection with Borrower’s
failure to consummate the Conversion as provided herein, including any loss, costs and/or damages incurred by Lender in excess
of the Good Faith Deposit, and (ii) if the MBS Investor is Fannie Mae or if the converted Mortgage Loan is held by Fannie Mae and
does not back an MBS, the Good Faith Deposit shall serve as liquidated damages resulting from failure to consummate the Conversion.
Borrower expressly acknowledges that by electing to convert the interest rate on the Mortgage Loan to the Fixed Rate, and agreeing
to the Fixed Rate as provided herein, Borrower is causing Lender to take a position in the financial markets in reliance thereon,
and the failure of Borrower to convert the interest rate on the Mortgage Loan to the Fixed Rate as provided herein may cause Lender
to incur economic damages.

 

(C)         If
Borrower desires to exercise the Conversion Option and has complied with all other requirements of Section 7(d) of this Schedule,
within fifteen (15) days of Borrower’s receipt of the NOI Determination Notice, Borrower shall contact Lender to initiate
a Rate Lock Request. If the Fixed Rate quoted to Borrower is greater than the Maximum Fixed Rate, Borrower shall not be
permitted to accept the quoted Fixed Rate (or exercise its Conversion Option). On or before 5:00 p.m. (Eastern Time) of the
day Borrower accepts the quoted Fixed Rate, Borrower and Lender shall confirm to each other (by letter addressed from Lender to
Borrower, acknowledged and accepted in writing by Borrower and transmitted, in each case, by facsimile or other electronic transmission
acceptable to Lender), (i) the Fixed Rate, (ii) the New Maturity Date (if applicable), (iii) the Conversion Effective
Date, (iv) the new Monthly Debt Service Payment and (v) the Initial Fixed Rate Payment Date.

 

    
	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 4
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

(c)          Amendment
to Multifamily Loan and Security Agreement.

 

The Conversion
shall be evidenced by the Conversion Amendment.

 

(d)          Conditions
Precedent to Closing of Conversion.

 

Borrower’s
right to consummate the Conversion and Lender’s obligation to execute and deliver the Conversion Amendment, shall be subject
to satisfaction of the conditions precedent below.

 

(a)          All
representations and warranties of Borrower set forth in the Loan Documents shall be true and correct in all material respects on
and as of the Conversion Closing Date as though made on and as of the Conversion Closing Date.

 

(b)          Borrower
shall have performed or complied with all of its obligations under the Loan Agreement to be performed or complied with on or before
the Conversion Closing Date.

 

(c)          On
the Conversion Closing Date, no Event of Default shall have occurred and be continuing (or any event which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing).

 

(d)          On
the Conversion Closing Date, Lender shall have received all of the following, each of which, where applicable, shall be executed
by individuals authorized to do so, shall be dated as of the Closing Date, and shall be in form and substance acceptable to Lender:

 

(A)         the
Conversion Amendment;

 

(B)         an
endorsement to the Title Policy or a new Title Policy as of the Conversion Closing Date showing that the Security Instrument constitutes
a valid mortgage lien on the Mortgaged Property, with the same lien priority insured by the Title Policy, subject only to the Permitted
Encumbrances;

 

(C)         either
(i) the Survey, redated to a date within fifteen (15) days prior to the Conversion Closing Date showing that there are
no Liens or other matters that have arisen since the date of the Survey other than matters approved in writing by Lender, or (ii) affirmative
coverage in the title insurance endorsement referred to in Section 7(d)(4)(B) that there are no exceptions based upon the
results of a visual inspection of the Mortgaged Property, or the absence of any exception based upon any facts or conditions which
have arisen since the date of the Survey and which would be disclosed by a current survey of the Mortgaged Property;

 

(D)         if
necessary, as determined by Lender, an amendment to the Security Instrument to be recorded in the land records and insured as a
supplement to the Security Instrument to reflect the New Maturity Date;

 

    
	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 5
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

(E)         an
opinion of counsel satisfactory to Lender as to such matters as Lender may reasonably request; and

 

(F)         such
other documents as Lender may reasonably request related to the Loan Agreement, the Conversion Amendment or the transactions contemplated
hereby or thereby.

 

(e)          The
Mortgaged Property shall not have been damaged, destroyed or subject to any condemnation or other taking, in whole or any material
part, and Lender shall have received a certificate of Borrower, dated as of the Conversion Closing Date, to such effect.

 

8.           Property
Condition Assessment.

 

Notwithstanding the provisions
of Section 13.02(a)(3)(A), if the Conversion Option is exercised for any Mortgaged Property other than an “affordable housing
property” (as indicated on the Summary of Loan Terms), and extends the Loan Term, then a new property condition assessment
shall be required in the earlier of (a) the Loan Year that would have been the final Loan Year of the Mortgage Loan had the Conversion
Option not been exercised, or (b) the tenth (10th) Loan Year.

 

    
	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 6
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

	 	/s/ JR
	 	Borrower Initials

 

    
	Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate and Conversion Provisions (SARM)	Form 6103.SARM	Page 7
	Fannie Mae	01-16	© 2016 Fannie Mae

     

    

 

SCHEDULE 4

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Prepayment Premium Schedule

(1% Prepayment Premium – ARM, SARM)

 

1.           Defined
Terms.

 

All capitalized terms used
but not defined in this Prepayment Premium Schedule shall have the meanings assigned to them in the Loan Agreement.

 

2.           Prepayment
Premium.

 

(a)          Any
Prepayment Premium payable under Section 2.03 (Lockout/Prepayment) of the Loan Agreement shall be equal to the following percentage
of the amount of principal being prepaid at the time of such prepayment, acceleration or application:

 

	Prepayment Lockout Period	 	 	5.00	%
	Second Loan Year, and each Loan Year thereafter	 	 	1.00	%

 

(b)          Notwithstanding
the provisions of Section 2.03 (Lockout/Prepayment) of the Loan Agreement or anything to the contrary in this Prepayment Premium
Schedule, no Prepayment Premium shall be payable with respect to any prepayment made on or after the last calendar day of the fourth (4th)
month prior to the month in which the Maturity Date occurs.

 

    
	Schedule 4 to Multifamily Loan and Security Agreement (Prepayment Premium Schedule – 1% Prepayment Premium – ARM, SARM)	Form 6104.11	Page 1
	Fannie Mae	01-11	© 2011 Fannie Mae

     

    

 

	 	/s/ JR
	 	Borrower Initials

 

    
	Schedule 4 to Multifamily Loan and Security Agreement (Prepayment Premium Schedule – 1% Prepayment Premium – ARM, SARM)	Form 6104.11	Page 2
	Fannie Mae	01-11	© 2011 Fannie Mae

     

    

 

SCHEDULE 5 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Required Replacement Schedule

 

[SEE ATTACHED]

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 1
	Schedule 5	01-16	© 2016 Fannie Mae

     

    

 

	 	/s/ JR
	 	Borrower Initials

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 2
	Schedule 5	01-16	© 2016 Fannie Mae

     

    

 

SCHEDULE 6 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Required Repair Schedule

 

	IMMEDIATE REPAIRS	 	Completion 
 Timeframe (post 
 closing)	 	Amount	 	 	Inflation 
 Factor	 	 	Escrow 
 Amount	 
	Critical Repairs
	Carbon Monoxide Detectors	 	12 Months	 	$	4,000	 	 	 	100	%	 	$	4,000	 
	-	 	 	 	$	0	 	 	 	100	%	 	$	0	 
	-	 	 	 	$	0	 	 	 	100	%	 	$	0	 
	-	 	 	 	$	0	 	 	 	100	%	 	$	0	 
	Subtotal	 	 	 	$	4,000	 	 	 	100	%	 	$	4,000	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Completion Repair Escrow	 	 	 	$	4,000	 	 	 	100	%	 	$	4,000	 
	 	 	 	 	Immediate Repairs Waived?	 	 	Yes	 

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 1
	Schedule 6	01-16	© 2016 Fannie Mae

     

    

 

	 	/s/ JR
	 	Borrower Initials

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 2
	Schedule 6	01-16	© 2016 Fannie Mae

     

    

 

SCHEDULE 7 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Exceptions to Representations and Warranties
Schedule

 

NONE

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 1
	Schedule 7	01-16	© 2016Fannie Mae

     

    

 

	 	/s/ JR
	 	Borrower Initials

 

    
	Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 2
	Schedule 7	01-16	© 2016Fannie Mae

     

    

 

EXHIBIT 1

 

MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY
AGREEMENT

(Condominium Provisions)

 

The foregoing Loan Agreement is hereby modified
as follows:

 

1.            Capitalized
terms used and not specifically defined herein have the meanings given to such terms in the Loan Agreement.

 

2.            The
Definitions Schedule is hereby amended by adding the following new definitions in the appropriate alphabetical order:

 

“Condominium”
has the meaning set forth in the Security Instrument.

 

“Condominium Act”
has the meaning set forth in the Security Instrument.

 

“Condominium Documents”
has the meaning set forth in the Security Instrument.

 

3.            Section
14.01(a) (Events of Default – Automatic Events of Default) of the Loan Agreement is hereby amended by adding the following
provision to the end thereof:

 

(12)        Borrower
(A) terminates or revokes or attempts to terminate or revoke the appointment of Lender as Borrower’s proxy or attorney-in-fact
either permanently or as to any election in the Condominium Act or Condominium Documents or (B) modifies or attempts to modify
the terms of the Condominium Documents without the prior written consent of Lender.

 

4.            Intentionally
Omitted.

 

5.            The
following provision is hereby added to the Loan Agreement as Article 16 (Condominium Provisions):

 

ARTICLE 16
- CONDOMINIUM PROVISIONS

 

Section 16.01         Representations
and Warranties.

 

The representations
and warranties made by Borrower to Lender in this Section are made as of the Effective Date.

 

(a)          The
Mortgaged Property consists of 614 condominium units and constitutes all but 160 of the condominium units in the Condominium and
therefore constitutes 79.3 percent of the condominium units and the corresponding interest in the common elements comprising the
Condominium as established under the Condominium Act.

 

(b)          None
of the condominium units owned by Borrower and no portion of the common elements comprising the Condominium owned by Borrower have
been sold, conveyed or encumbered by Borrower (other than a prior financing being refinanced by this Loan) or are subject to any
agreement to convey or encumber.

 

    
	Modifications to Multifamily Loan and Security Agreement (Condominium Provisions)	Form 6202	Page 1
	Fannie Mae	08-13	© 2013 Fannie Mae

     

    

 

Section 16.02         Covenants.

 

(a)          Use
of Property.

 

Borrower agrees
that it shall own, operate and maintain the Mortgaged Property in accordance with the terms of this Loan Agreement and operate
the Mortgaged Property solely as a rental apartment project.

 

(b)          Liens;
Encumbrances.

 

Borrower shall
not in any way pledge, sell, convey or encumber or enter into a contract or agreement to pledge, sell, convey or encumber any condominium
unit owned by Borrower or any of the common elements of the Condominium owned by Borrower unless expressly agreed to in writing
by Lender.

 

(c)          Condominium
Assessments.

 

Notwithstanding
Borrower’s payment of annual assessments or special assessments levied under the terms of the Condominium Documents to provide
any repairs to or maintenance of any of the common elements of the Condominium, Borrower shall deposit any Initial Replacement
Reserve Deposit, Repairs Deposit and Monthly Replacement Reserve Deposit required pursuant to the terms of this Loan Agreement.

 

(d)          Insurance.

 

Borrower shall
maintain or cause the Condominium association to maintain insurance in accordance with Lender’s guidelines on all of the
Mortgaged Property, including any common elements.

 

(e)          Indemnification.

 

Borrower agrees
to indemnify and hold Lender harmless from and against any and all losses, costs, liabilities, or damages (including reasonable
attorney’s fees and disbursements) arising out of (1) the failure of Borrower to comply with any state or local law, ordinance,
statute, rule, or regulation by any Governmental Authority covering the Condominium; (2) any claim of any unit owner or tenant
of any unit owner as a result of any violation, breach, misrepresentation, fraud, act, or omission of any obligation of Borrower
as set forth in the Condominium Documents; or (3) the performance by Lender of any of the right and powers of Borrower under the
Condominium Documents after an Event of Default, provided that Borrower shall have no indemnity obligation if such losses, costs,
liabilities, or damages arise as a result of the willful misconduct and gross negligence of Lender, Lender’s agents, employees
or representatives as determined by a court of competent jurisdiction pursuant to a final non-appealable court order.

 

(f)           Acquisition
of Additional Units.

 

Borrower shall
use commercially reasonable efforts to acquire title to the 160 condominium units currently not owned by the Borrower (each an
“Additional Unit” and collectively, the “Additional Units”), but no Event of Default shall
result from Borrower’s failure to do so. Lender agrees to the acquisition of the Additional Units by Borrower and the pledging
of the same as additional collateral for the Indebtedness without any prepayment of, or change in the interest rate on, the Indebtedness
or other adverse change in the economic terms of the Loan, provided that the pledging by Borrower of the Additional Units as additional
collateral for the Loan will be subject to and conditioned upon satisfaction of each of the following conditions:

 

    
	Modifications to Multifamily Loan and Security Agreement (Condominium Provisions)	Form 6202	Page 2
	Fannie Mae	08-13	© 2013 Fannie Mae

     

    

 

(i)           Borrower
will submit to Lender, not less than 30 days prior to the date of the proposed acquisition of the Additional Units, all documents,
in a form appropriate in the Property Jurisdiction, required to add the Additional Units to the lien of the Security Instrument.
If required by Lender, Borrower will also execute any required documentation to update the legal description for the Mortgaged
Property in the Security Instrument and any of the other applicable Loan Documents by adding the Additional Units thereto.

 

(ii)          Lender
will have received a commitment for an endorsement to the title insurance policy (i) amending the insured legal description to
include the Additional Units, (ii) insuring the Security Instrument (including the amendment to the Security Instrument recorded
to add the Additional Units to the legal description), (iii) reflecting that no title matters other than those identified in the
title insurance policy previously issued to Lender affect the Land (except those approved by Lender in its discretion that affect
the Additional Units), (iv) extending the effective date of the title policy to the recording date of the deed granting Borrower
an interest in the Additional Units, and (v) further evidencing the continued first lien priority of the Security Instrument on
the Land, including the Additional Units. The original of the endorsement must be delivered to Lender within 15 days after the
recording of the deed granting Borrower an interest in the Additional Units.

 

(iii)         Guarantor
must deliver to Lender a written agreement that the Guaranty continues in full force and effect notwithstanding the acquisition
of the Additional Units.

 

(iv)         Lender
may require an amendment to the Loan Documents to require Additional Lender Replacements or Additional Lender Repairs be made solely
with respect to the Additional Units, an additional deposit be made to the Replacement Reserve Account (provided such additional
deposit is commensurate with the Initial Replacement Reserve Deposit determined on a per-unit basis) or the Repairs Escrow Account
(provided such additional deposit is commensurate with the initial Repair Escrow Deposit determined on a per-unit basis), or an
increase be made in the amount of the Monthly Replacement Reserve Deposit (provided such additional deposit is commensurate with
the Monthly Replacement Reserve Deposit determined on a per-unit basis).

 

(v)          Borrower
will pay all third party costs, taxes and expenses associated with the addition to the lien of the Security Instrument and its
acquisition of the Additional Units. Borrower will also pay (A) the Review Fee, and (B) all of Lender’s out-of-pocket costs
(including reasonable attorneys’ fees) incurred in reviewing the acquisition of the Additional Units, to the extent such
costs exceed the Review Fee; provided, however, that the Review Fee shall be waived where the Additional Units are being pledged
as collateral for the Loan simultaneously with Lender’s issuance of a supplemental loan to Borrower.

 

    
	Modifications to Multifamily Loan and Security Agreement (Condominium Provisions)	Form 6202	Page 3
	Fannie Mae	08-13	© 2013 Fannie Mae

     

    

 

(vi)         The
Additional Units acquired by Borrower will immediately become a part of the Mortgaged Property at the time of acquisition by Borrower
and will be subject to all terms and conditions contained in the Loan Documents.

 

(vii)        A
collapse of the Condominium association, as established by the Condominium Documents, shall not occur until all of the Additional
Units are owned by Borrower. Prior to such time as Borrower has acquired 100% of the Additional Units, Borrower shall be entitled
to submit to Lender a formal plan of termination for the Condominium (and the Condominium association), and Lender shall review
and provide any written comments to Borrower thereon within 90 days of receipt of the termination documentation and the Review
Fee.

 

    
	Modifications to Multifamily Loan and Security Agreement (Condominium Provisions)	Form 6202	Page 4
	Fannie Mae	08-13	© 2013 Fannie Mae

     

    

 

	 	/s/ JR
	 	Borrower Initials

 

    
	Modifications to Multifamily Loan and Security Agreement (Condominium Provisions)	Form 6202	Page 5
	Fannie Mae	08-13	© 2013 Fannie Mae

     

    

 

EXHIBIT 2

 

MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY
AGREEMENT

(Waiver of Imposition Deposits)

 

The foregoing Loan Agreement is hereby modified
as follows:

 

1.            Capitalized
terms used and not specifically defined herein have the meanings given to such terms in the Loan Agreement.

 

2.            The
Definitions Schedule is hereby amended by adding the following new definitions in the appropriate alphabetical order:

 

“Insurance Impositions”
means the premiums for maintaining all Required Insurance Coverage.

 

“Required Insurance Coverage”
means the insurance coverage required pursuant to Article 9 (Insurance) of the Loan Agreement and under any other Loan Document.

 

3.            Section 12.02
(Imposition Deposits, Taxes, and Other Charges – Covenants) of the Loan Agreement is hereby amended by adding the following
provisions to the end thereof:

 

(b)          Conditional
Waiver of Collection of Imposition Deposits.

 

(1)          Notwithstanding
anything contained in this Section 12.02 (Imposition Deposits, Taxes, and Other Charges – Covenants) to the contrary,
Lender hereby agrees to waive the collection of Imposition Deposits for Insurance Impositions, provided, that:

 

(A)       Borrower
shall pay such Insurance Impositions directly to the carrier or agent ten (10) days prior to expiration or as necessary to
prevent the Required Insurance Coverage from lapsing due to non-payment of premiums;

 

(B)        Borrower
shall provide Lender with proof of payment acceptable to Lender of all Insurance Impositions within five (5) days after the
date such Insurance Impositions are paid; and

 

(C)        Borrower
shall cause its insurance agent to provide Lender with such certifications regarding the Required Insurance Coverage as Lender
may request from time to time evidencing that the Insurance Impositions have been paid in a timely manner and that all of the Required
Insurance Coverage is in full force and effect.

 

(2)          Lender
reserves the right to require Borrower to deposit the Imposition Deposits with Lender on each Payment Date for Insurance Impositions
in accordance with this Section 12.02 (Imposition Deposits, Taxes, and Other Charges – Covenants) upon:

 

    
	Modifications to Multifamily Loan and Security Agreement (Waiver of Imposition Deposits)	Form 6228	Page 1
	Fannie Mae	04-12	© 2012 Fannie Mae

     

    

 

(A)       Borrower’s
failure to pay Insurance Impositions or to provide Lender with proof of payment of Insurance Impositions as required in this Section 12.02(b)
(Conditional Waiver of Collection of Imposition Deposits);

 

(B)        Borrower’s
failure to maintain insurance coverage in accordance with the requirements of Article 9 (Insurance);

 

(C)        the
occurrence of any Transfer which is not permitted by the Loan Documents, or any Transfer which requires Lender’s consent;
or

 

(D)        the
occurrence of a default under any of the other terms, conditions and covenants set forth in this Loan Agreement or any of the other
Loan Documents.

 

(3)          Except
as specifically provided in this Section 12.02(b) (Conditional Waiver of Collection of Imposition Deposits), the provisions
of Article 9 (Insurance) shall remain in full force and effect

 

    
	Modifications to Multifamily Loan and Security Agreement (Waiver of Imposition Deposits)	Form 6228	Page 2
	Fannie Mae	04-12	© 2012 Fannie Mae

     

    

 

	 	/s/ JR
	 	Borrower Initials

 

    
	Modifications to Multifamily Loan and Security Agreement (Waiver of Imposition Deposits)	Form 6228	Page 3
	Fannie Mae	04-12	© 2012 Fannie Mae

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00260-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00260-of-00352.parquet"}]]