Document:

Exhibit 10.2

 

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

 

This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “First Amendment”) is made and entered into as of the 21st day of July, 2016, by and among FRANKLIN STREET PROPERTIES CORP. (the “Borrower”), each Lender that is a signatory hereto, and BANK OF MONTREAL (“Bank of Montreal”), in its capacity as Lender, as Administrative Agent (“Administrative Agent”) for itself and the other lenders party to the Credit Agreement (hereinafter defined) from time to time.  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.

 

WHEREAS, the Borrowers, the Administrative Agent and certain Lenders are parties to that certain Amended and Restated Credit Agreement dated as of October 29, 2014 (the “Original A&R Credit Agreement”) pursuant to which the Lenders party to the Original A&R Credit Agreement have extended credit to the Borrowers on the terms set forth therein;

 

WHEREAS, the Borrowers have requested, and the Administrative Agent and the Lenders have agreed, to modify certain of the financial covenants in the Original A&R Credit Agreement.  The Original A&R Credit Agreement as amended by this First Amendment is referred to herein as the “Credit Agreement.”

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

SECTION 1.                                             DEFINITION OF “CHANGE OF CONTROL.”

 

Section 1.01 of the Original A&R Credit Agreement is hereby amended by deleting the definition of “Change of Control” appearing therein and replacing it with the following definition:

 

““Change of Control” means: (a) an event or series of related events by which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 30% or more of the equity securities of Borrower entitled to vote for members of the board of directors or equivalent

 

 

governing body of Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or

 

(b)           an event or series of events by which during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (in each case, such approval either by a specific vote or by approval of the Borrower’s proxy statement in which such member was named as a nominee for election as a director).”

 

SECTION 2.                                             DEFINITION OF “DEFAULTING LENDER.”

 

Section 1.01 of the Original A&R Credit Agreement is hereby amended by deleting the definition of “Defaulting Lender” appearing therein and replacing it with the following definition:

 

““Defaulting Lender” means, subject to Section 2.18(b), any Lender that, as determined by the Administrative Agent, (a) has failed to perform any of its funding obligations hereunder, including in respect of its Loans, within three Business Days of the date required to be funded by it hereunder unless such Lender notifies the Administrative Agent or the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding set forth in Section 4.02 (each of which conditions precedent, together with any applicable default, shall be specifically identified in writing) has not been satisfied, (b) has notified the Borrower or the Administrative Agent in writing that it does not intend to comply with its funding obligations (unless such writing states that such position is based on such Lender’s determination that a condition precedent to funding in Section 4.02 (which condition precedent, together with any applicable default, shall be specifically identified in such writing) cannot be satisfied), (c) has failed, within three Business Days after request by the Administrative Agent, to confirm in a

 

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manner satisfactory to the Administrative Agent that it will comply with its funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such capacity, (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment, or (iv) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.18(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower and each other Lender promptly following such determination.”

 

SECTION 3.                                             DEFINITION OF “EBITDA.”

 

Section 1.01 of the Original A&R Credit Agreement is hereby amended by deleting the definition of “EBITDA” appearing therein and replacing it with the following definition:

 

““EBITDA” means for the Consolidated Parties, for the most recently ended fiscal quarter of Borrower, without duplication, the sum of (a) net income of the Consolidated Parties, in each case, excluding any non recurring or extraordinary gains and losses and Hedge Ineffectiveness for such period (but including syndication fees), plus (b) an amount which, in the determination of net income for such period pursuant to clause (a) above, has been deducted for or in connection with (i) Interest Expense (plus, amortization of deferred financing costs, to the extent included in the

 

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determination of Interest Expense per GAAP), (ii) income taxes, and (iii) depreciation and amortization, all determined in accordance with GAAP for the prior quarter annualized plus (c) the Consolidated Parties’ Equity Percentage of the above attributable to Unconsolidated Affiliates.”

 

SECTION 4.                                             DEFINITION OF “EURODOLLAR BASE RATE.”

 

Section 1.01 of the Original A&R Credit Agreement is hereby amended by deleting the definition of “Eurodollar Base Rate” within the definition of Eurodollar Rate appearing therein and replacing it with the following definition:

 

““Eurodollar Base Rate” means:

 

(a)           for such Interest Period, the rate per annum equal to the London Interbank Offered Rate (“LIBOR”) or a comparable or successor rate, which rate is approved by the Administrative Agent, as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two London Banking Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period;

 

(b)           for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two London Banking Days prior to such date for U.S. Dollar deposits with a term of one month commencing that day; and

 

(c)           if the Eurodollar Base Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement;

 

provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.”

 

SECTION 5.                                             DEFINITION OF “INDEBTEDNESS.”

 

Section 1.01 of the Original A&R Credit Agreement is hereby amended by deleting the definition of “Indebtedness” appearing therein and replacing it with the following definition:

 

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““Indebtedness” means, without duplication, all obligations of the following types:

 

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

 

(b)           all direct or contingent obligations under letters of credit (including standby and commercial), bankers’ acceptances and similar instruments (including bank guaranties, surety bonds, comfort letters, keep-well agreements and capital maintenance agreements) to the extent such instruments or agreements support financial, rather than performance, obligations;

 

(c)           any net obligation under any Swap Contract, the amount of which on any date shall be deemed to be the Swap Termination Value thereof as of such date;

 

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

 

(e)           any capital lease or Synthetic Lease Obligation, the amount of which as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date;

 

(f)            all obligations to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, provided, the foregoing shall be excluded from Indebtedness if the obligation is neither scheduled nor permitted to become due and payable on or prior to the date on which the Obligations are scheduled to be due and payable in full; and

 

(g)           without duplication, all Guarantees in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness shall include the Indebtedness of any partnership or Joint Venture (other than a Joint Venture that is itself a corporation, limited partnership or limited liability company) in which a Person is a general partner or a joint venturer, unless such Indebtedness is Nonrecourse Indebtedness.  Indebtedness shall not include the Indebtedness of Sponsored REITs or the value of Hedge Ineffectiveness.”

 

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SECTION 6.                                             DEFINITION OF “NET OPERATING INCOME” OR “NOI.”

 

Section 1.01 of the Original A&R Credit Agreement is hereby amended by deleting the definition of “Net Operating Agreement” or “NOI” appearing therein and replacing it with the following definition:

 

““Net Operating Income” or “NOI” means, for any Property owned by any Consolidated Party and for the most recently ended fiscal quarter of Borrower for which financial information has been, or simultaneously with such determination will be, delivered to the Administrative Agent, the sum of the following (without duplication and determined on a consistent basis with prior periods): (a) rents and other revenues received or earned in the ordinary course from such Property (including, without limitation, (i) revenues from the straight-lining of rents; and (ii) proceeds of rent loss or business interruption insurance but excluding pre-paid rents and revenues and security deposits except to the extent applied in satisfaction of tenants’ obligations for rent) minus (b) all expenses paid, excluding interest and Hedge Ineffectiveness, and inclusive of an appropriate accrual for expenses related to the ownership, operation or maintenance of such Property during the respective period, including but not limited to property taxes, assessments and the like, insurance, utilities, payroll costs, maintenance, repair and landscaping expenses, marketing expenses, and general and administrative expenses (including an appropriate allocation for legal, accounting, advertising, marketing and other expenses incurred in connection with such Property, as applicable, but specifically excluding general overhead expenses of the Borrower or any Subsidiary and any property management fees) minus (c) the Capital Reserves for such Property as of the end of such period minus (d) without duplication an imputed management fee in the amount of 3% of the gross revenues for such Property for such period.”

 

SECTION 7.                                             DEFINITION OF “TANGIBLE NET WORTH.”

 

Section 1.01 of the Original A&R Credit Agreement is hereby amended by deleting the definition of “Tangible Net Worth” appearing therein and replacing it with the following definition:

 

““Tangible Net Worth” means, for the Consolidated Parties, as of the most recently ended fiscal quarter of Borrower, the excess of Total Assets over Total Liabilities, and less the sum of:

 

(a)           the total book value of all assets of the Consolidated Parties properly classified as Intangible Assets; plus

 

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(b)           all amounts representing any write-up in the book value of any assets of the Consolidated Parties resulting from a revaluation thereof subsequent to the balance sheet date; plus

 

(c)           to the extent otherwise includable in the computation of Tangible Net Worth, any subscriptions receivable.

 

Total Assets and Total Liabilities shall also exclude an asset or liability created by the Swap Termination Value and Hedge Ineffectiveness.”

 

SECTION 8.                                             SECTION 1.01.

 

Section 1.01 of the Original A&R Credit Agreement is hereby supplemented by adding the following definitions in alphabetical order:

 

“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.”

 

“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.”

 

“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.”

 

“Embedded Derivative” is in the definition of Eurodollar Rate that states “if the Eurodollar Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement”.  The Embedded Derivative resulted in Hedge Ineffectiveness, which is calculated quarterly.”

 

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

 

“Hedge Ineffectiveness” means any amount recorded as hedge ineffectiveness in accordance with ASC 815 under GAAP related to the Loan and any Swap Contract.

 

“Significant Acquisition” means an acquisition (in one transaction or a series of related transactions) of (i) one or more entities (excluding Sponsored REITS) for a purchase price in excess of 10% of Total Asset Value as of the last day for which financial statements were delivered under Section 6.01(a) or 6.01(b), or (ii) one or more properties for an amount in excess of 10% of Total Asset Value as of the last day for which financial statements were delivered under Section 6.01(a) or 6.01(b).”

 

“UK Bribery Act 2010” means an Act of the Parliament of the United Kingdom that covers the criminal law relating to bribery.”

 

“United States Foreign Corrupt Practices Act of 1977” means the act codified at 15 U.S.C. Section 78dd-1 et seq.”

 

“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 9.                                             SECTION 3.01.

 

Section 3.01(e) of the Original A&R Credit Agreement is hereby amended by adding the following to the end of the final paragraph of Section 3.01(e):

 

“For purposes of determining withholding Taxes imposed under FATCA, from and after the effective date of that certain First Amendment to this Agreement, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).”

 

SECTION 10.                                      SECTION 5.

 

Section 5 of the Original A&R Credit Agreement is hereby amended by adding the following sections in numerical order at the end of Section 5.21:

 

“Section 5.22.  Anti-Corruption Laws.  To the best of the Borrower’s knowledge after due diligence, the Borrower and its

 

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Subsidiaries have conducted their businesses in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other applicable jurisdictions and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.”

 

“Section 5.23.  EEA Financial Institutions.  None of the Borrower nor any Subsidiary Guarantor is an EEA Financial Institution.”

 

SECTION 11.                                      SECTION 6.

 

Section 6 of the Original A&R Credit Agreement is hereby amended by adding the following section in numerical order at the end of Section 6.16:

 

“Section 6.17.  Anti-Corruption Laws.  Conduct its businesses in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other applicable jurisdictions and maintain policies and procedures designed to promote and achieve compliance with such laws.”

 

SECTION 12.                                      SECTION 7.

 

Section 7 of the Original A&R Credit Agreement is hereby amended by adding the following section in numerical order at the end of Section 7.16:

 

“Section 7.17.  Anti-Corruption Laws.  Directly or indirectly use the proceeds of any Credit Extension for any purpose which would breach the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other applicable jurisdictions.”

 

SECTION 13.                                      SECTION 7.11.

 

Section 7.11 of the Original A&R Credit Agreement is hereby amended by deleting Section 7.11 appearing therein and replacing it with the following Section 7.11:

 

“Section 7.11  Financial Covenants.  Fail, at any time, to comply with any of the following financial covenants on a consolidated basis provided that such covenants shall be calculated as of the last day of a calendar quarter:

 

(a)        Minimum Tangible Net Worth.  Borrower shall maintain a Tangible Net Worth equal to or in excess of $682,422,341 plus seventy-five percent (75%)

 

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of the aggregate net proceeds received by Borrower in connection with any offering of stock or other equity in the Borrower after the date of this First Amendment.

 

(b)        Maximum Leverage Ratio.  Borrower shall not permit the ratio of Total Indebtedness to Total Asset Value to exceed 0.60:1.0, to be increased at the election of the Borrower a maximum of one time per fiscal year to 0.65 to 1.0 commencing on the date on which a Significant Acquisition occurs and continuing for the succeeding two full fiscal quarters thereafter.

 

(c)        Maximum Secured Leverage Ratio.  Borrower shall not permit the ratio of Total Secured Indebtedness (excluding the Credit Extensions) to Total Asset Value to exceed 0.30:1.0.

 

(d)        Minimum Fixed Charge Coverage Ratio.  Borrower shall not permit the ratio of Adjusted EBITDA to Fixed Charges to be less than 1.50:1.0.

 

(e)        Maximum Unencumbered Leverage Ratio.  Borrower shall not permit the ratio of Unsecured Indebtedness to Unencumbered Asset Value to exceed 0.60:1.0, to be increased at the election of the Borrower a maximum of one time per fiscal year to 0.65 to 1.0 commencing on the date on which a Significant Acquisition occurs and continuing for the succeeding two full fiscal quarters thereafter.

 

(f)        Minimum Unsecured Interest Coverage.  Borrower shall not permit the ratio of Unencumbered NOI to the Interest Expense from the Eligible Unencumbered Property Pool to be less than 1.75:1.0.  For the purpose of calculating NOI for this covenant 7.11(f), items (a)-(d) of the definition of Net Operating Income shall be adjusted to (i) exclude the amount attributable to the Properties disposed of during such fiscal quarter and (ii) adjust the amount attributable to Properties owned less than a full fiscal quarter so that such amount is grossed up as if the Property had been owned for the entire fiscal quarter.

 

(g)        Dividends and Distributions.  To the extent an Event of Default exists or would result therefrom, Borrower shall not make Restricted Payments and no Subsidiary shall make any Restricted Payments to any Person other than Borrower or a Subsidiary of Borrower.

 

(h)        Investments.  Borrower shall not permit the aggregate value of the following items of all Consolidated Parties to exceed ten percent (10%) of Total Asset Value: (A) the total cost budget of Projects Under Development; plus (B) the cost value of all undeveloped holdings (raw land or land which is not otherwise an operating property other than any properties determined to be Projects Under Development) determined in accordance with GAAP; plus (C) the value of all Joint Venture Projects plus, without duplication, the cost-basis value of the Consolidated Parties’ investment in Joint Ventures (in each case taking into

 

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account the Consolidated Parties’ Equity Percentage thereof); plus (D) the value of Securities Holdings held by the Consolidated Parties; plus (E) the value of all Mortgages (excluding loans to Sponsored REITS) held by the Consolidated Parties; plus (F) the value of all foreign investments held by the Consolidated Parties.

 

SECTION 14.                                      SECTION 9.06(A).

 

Section 9.06(a) of the Original A&R Credit Agreement is hereby amended by deleting the last sentence of such section and replacing it with the following:

 

“After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them (i) while the retiring or removed Administrative Agent was acting as Administrative Agent and (ii) after such resignation or removal for as long as any of them continues to act in any capacity hereunder or under the other Loan Documents, including (a) acting as collateral agent or otherwise holding any collateral security on behalf of any of the Lenders and (b) in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.”

 

SECTION 15.                                      SECTION 10.

 

Section 10 of the Original A&R Credit Agreement is hereby amended by adding the following section in numerical order at the end of Section 10.21:

 

“Section 10.22  Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Solely to the extent any Lender that is an EEA Financial Institution is a party to this Agreement and 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 Lender that is an 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:

 

(a)                                 the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities

 

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arising hereunder which may be payable to it by any Lender that is an EEA Financial Institution;

 

(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.

 

(c)                                  Borrower may release and/or forgive all or any portion of any liability of an EEA Financial Institution.

 

SECTION 16.                                      EXHIBIT E.

 

Exhibit E of the Original A&R Credit Agreement is hereby deleted and the Exhibit E attached hereto is substituted therefor.

 

SECTION 17.                                      NO WAIVER.

 

Nothing contained herein shall be deemed to (i) constitute a waiver of any Default or Event of Default that may heretofore or hereafter occur or have occurred and be continuing or, except as expressly provided herein, to otherwise modify any provision of the Original A&R Credit Agreement, or (ii) give rise to any defenses or counterclaims to Administrative Agent’s or any of the Lenders’ right to compel payment of the Obligations when due or to otherwise enforce their respective rights and remedies under the Credit Agreement and the other Loan Documents.

 

SECTION 18.                                      CONDITIONS TO EFFECTIVENESS.

 

This First Amendment shall become effective as of the date (the “Effective Date”) when each of the following conditions is met:

 

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(a)                        receipt by the Administrative Agent of this First Amendment duly and properly authorized, executed and delivered by the Borrower and the Lenders;

 

(b)                        receipt by the Administrative Agent of a certificate dated as of the date hereof signed by a Responsible Officer of Borrower certifying that, before and after giving effect to the First Amendment, (I) the representations and warranties contained in Article V of the Credit Agreement are true and correct in all material respects except (i) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and (ii) that (1) the representations and warranties contained in subsections (a), (b) and (c) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01; and (2) the representations and warranties contained in Section 5.13(a) shall be deemed to refer to the most recent update to Schedule 5.13(a) furnished pursuant to Section 6.02(a)(ii), and shall be true and correct in all material respects as of the effective date of such update, and (3) the  representations and warranties contained in the first and second sentences of Section 5.21 shall be deemed to refer to the most recent update to Schedule 5.21 furnished pursuant to Section 6.02(a)(i), and shall be true and correct in all material respects as of the effective date of such update, and (II) no Default of Event of Default Exists; and

 

(c)                         payment of any costs and expenses due to the Administrative Agent or the Lenders, including all of the Administrative Agent’s reasonable legal fees and expenses incurred in connection with the preparation and negotiation of this First Amendment.

 

SECTION 19.                                      REPRESENTATIONS AND WARRANTIES.

 

The Borrower represents and warrants to the Administrative Agent and the Lenders as follows:

 

(a)                        The execution, delivery and performance by Borrower of this First Amendment, has been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of Borrower’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which Borrower is a party or affecting Borrower or the properties of Borrower or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which Borrower or its property is subject; or (c) violate any Law.

 

(b)                        This First Amendment has been duly executed and delivered by Borrower. This First Amendment constitutes a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefore may be brought.

 

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(c)                         No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution and delivery of, and the performance of the Borrower’s obligations under the Original A&R Credit Agreement as amended by this First Amendment, except where such approval, consent, exemption, authorization, action, notice or filing has been obtained or made, and except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

(d)                        There shall not have occurred since December 31, 2015 any event or condition that has had or would be reasonably expected, either individually or in the aggregate, to have a Material Adverse Effect, as determined by Administrative Agent.

 

SECTION 20.                                      RATIFICATION, ETC.

 

Except as expressly amended hereby, the Original A&R Credit Agreement, the other Loan Documents and all documents, instruments and agreements related thereto are hereby ratified and confirmed in all respects and shall continue in full force and effect.  This First Amendment and the Original A&R Credit Agreement shall hereafter be read and construed together as a single document, and all references in the Credit Agreement, any other Loan Document or any agreement or instrument related to the Credit Agreement shall hereafter refer to the Original A&R Credit Agreement as amended by this First Amendment.

 

SECTION 21.                                      GOVERNING LAW.

 

THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 22.                                      COUNTERPARTS.

 

This First Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which counterparts taken together shall be deemed to constitute one and the same instrument.  Any counterpart signed by all parties may be introduced into evidence in any action or proceeding without having to produce or account for the other counterparts.   Likewise, the existence of this First Amendment may be established by the introduction into evidence of counterparts that are separately signed, provided they are otherwise identical in all material respects.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, each of the undersigned has duly executed this First Amendment to Second Amended and Restated Credit Agreement as of the date first set forth above.

 

 

	
LENDERS/AGENT:
    	
BANK   OF MONTREAL, 
   individually in its capacity as Administrative 
   Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Lloyd Baron
    
	
 
    	
 
    	
Name: 
    	
Lloyd Baron
    
	
 
    	
 
    	
Title: 
    	
Director
    

 

[Lender Signature Page]

 

 

	
 
    	
CAPITAL ONE BANK,   NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Chom Young Song
    
	
 
    	
 
    	
Name: 
    	
Chom Young Song
    
	
 
    	
 
    	
Title: 
    	
VP
    

 

 

	
 
    	
CITIZENS BANK, N.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Craig Aframe
    
	
 
    	
 
    	
Name: 
    	
Craig Aframe
    
	
 
    	
 
    	
Title: 
    	
Vice President
    

 

 

	
 
    	
TD BANK, N.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Mary Merrill
    
	
 
    	
 
    	
Name: 
    	
Mary Merrill
    
	
 
    	
 
    	
Title: 
    	
Credit Manager, VP
    

 

 

	
 
    	
REGIONS FINANCIAL   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Paul E. Burgan
    
	
 
    	
 
    	
Name: 
    	
Paul E. Burgan
    
	
 
    	
 
    	
Title: 
    	
Vice President
    

 

 

	
 
    	
BRANCH BANKING AND   TRUST COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark Edwards
    
	
 
    	
 
    	
Name:
    	
Mark Edwards
    
	
 
    	
 
    	
Title:
    	
Senior Vice President
    

 

 

	
BORROWER:
    	
FRANKLIN STREET   PROPERTIES CORP.,
    
	
 
    	
a Maryland corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ George J. Carter
    
	
 
    	
 
    	
Name:
    	
George J. Carter
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    

 

 

EXHIBIT E

 

FORM OF COMPLIANCE CERTIFICATE

 

Financial Statement Date:                 ,       

 

To:          Bank of Montreal, as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Amended and Restated Credit Agreement, dated as of October 29, 2014 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Franklin Street Properties Corp. (the “Borrower”), the Lenders from time to time party thereto, and Bank of Montreal, as Administrative Agent.

 

The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the                                         of Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of the Borrower, and that:

 

[Use following paragraph 1 for fiscal year-end financial statements]

 

1.             The Borrower has delivered the year-end audited financial statements required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.

 

[Use following paragraph 1 for fiscal quarter-end financial statements]

 

1.             The Borrower has delivered the unaudited financial statements required by Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended as of the above date.  Such financial statements fairly present, in all material respects, the financial condition, results of operations and cash flows of the Consolidated Parties in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

 

2.             The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Borrower during the accounting period covered by such financial statements.

 

3.             A review of the activities of the Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Borrower performed and observed all its Obligations under the Loan Documents, and

 

[select one:

]

 

 

[to the knowledge of the undersigned, during such fiscal period no Default or Event of Default has occurred and is continuing.]

 

—or—

 

[to the knowledge of the undersigned, during such fiscal period the following Defaults and Events of Default exist:(1)]

 

4.             The representations and warranties of the Borrower contained in Article V of the Agreement are true and correct in all material respects on and as of the date hereof, except (a) to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and (b) except that (i) the representations and warranties contained in subsections (a), (b) and (c) of Section 5.05 refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01; and (ii) the representations and warranties contained in Section 5.13(a) refer to the most recent update to Schedule 5.13(a) furnished pursuant to Section 6.02(a)(ii), and are true and correct in all material respects as of the effective date of such update, and (iii) the representations and warranties contained in the first and second sentences of Section 5.21 refer to the most recent update to Schedule 5.21 furnished pursuant to Section 6.02(a)(i), and are true and correct in all material respects as of the effective date of such update.

 

5.             The financial covenant analyses and information set forth on Schedule 1 attached hereto are true and accurate in all material respects as of the Financial Statement Date covered by this Certificate.

 

6.             The updates to Schedules 5.21 and 5.13(a) attached hereto and the list of all Projects Under Development attached hereto are true and accurate on and as of the Financial Statement Date covered by this Certificate.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                ,      .

 

	
BORROWER:
    	
Franklin Street Properties   Corp.,
    
	
 
    	
 
    
	
 
    	
a Maryland corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

(1)  Specify nature and extent thereof and what action Borrower proposes to take with respect thereto.

 

 

SCHEDULE 1

 

Franklin Street Properties Corp.

Financial Covenants

 

                        [Date]

 

	
(in thousands, except percentages and ratios)
    	
 
    	
 
    
	
1. Maximum Leverage   Ratio
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Indebtedness to
    
	
 
    	
Total Indebtedness
    	
 
    	
Total Asset Value
    	
 
    	
Total Asset Value
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Not to exceed 60% to be   increased to 65% for the succeeding two fiscal quarters following the   conclusion of the fiscal quarter in which a Significant Acquisition occurs
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total Asset Value
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Unencumbered   Asset Value (see Schedule A)
    	
 
    	
 
    	
 
    	
 
    
	
Encumbered   Asset Value (see Schedule B)
    	
 
    	
 
    	
 
    	
 
    
	
Unrestricted   Cash
    	
 
    	
 
    	
 
    	
 
    
	
Cash   Equivalents
    	
 
    	
 
    	
 
    	
 
    
	
Book   value of unimproved land holdings
    	
 
    	
 
    	
 
    	
 
    
	
Book   value of construction in progress
    	
 
    	
 
    	
 
    	
 
    
	
Carrying   value of performing mortgage loans
    	
 
    	
 
    	
 
    	
 
    
	
Assets   Held for Syndication
    	
 
    	
 
    	
 
    	
 
    
	
Mortgage   Loan Receivable
    	
 
    	
 
    	
 
    	
 
    
	
Investment   in Sponsored REITs
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total   Asset Value
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total   Indebtedness
    	
 
    	
 
    	
 
    	
 
    
	
Revolver   Loan Balance
    	
 
    	
 
    	
 
    	
 
    
	
Term   Loan Balance
    	
 
    	
 
    	
 
    	
 
    
	
Derivative   Termination Value
    	
 
    	
 
    	
 
    	
 
    
	
Secured   Debt
    	
 
    	
 
    	
 
    	
 
    
	
Other   Indebtedness
    	
 
    	
 
    	
 
    	
 
    
	
Exclude   Hedge Ineffectiveness
    	
 
    	
 
    	
 
    	
 
    
	
Consolidated Parties’   Equity Percentage of Indebtedness of Unconsolidated Affiliates
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total Indebtedness
    	
 
    	
 
    	
 
    	
 
    	
 
    
							

 

 

	
2.   Maximum Secured Leverage   Ratio 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
$
    	
 
    
	
Secured   Indebtedness of the Consolidated Parties
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total   Asset Value
    	
 
    	
 
    	
 
    	
 
    
	
% of   Secured Indebtedness over Total Asset Value
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Maximum % of secured   Indebtedness not to exceed 30% of Total Asset Value
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
3.   Minimum Fixed Charge Cover   Ratio
    	
 
    	
 
    	
 
    	
 
    
						

 

	
 
    	
 
    	
Adjusted EBITDA
    	
 
    	
Fixed Charges
    	
 
    	
Adjusted EBITDA to
   Fixed Charge Ratio
    	
 
    
	
Minimum 1.5:1
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

4. Maximum Unencumbered Leverage Ratio

 

	
 
    	
 
    	
Unsecured
   Indebtedness
    	
 
    	
Unencumbered
   Asset Value
    	
 
    	
Leverage
   Ratio
    	
 
    
	
Not to exceed 60% to be   increased to 65% for the succeeding two fiscal quarters following the   conclusion of the fiscal quarter in which a Significant Acquisition occurs   and no one Property to exceed 20%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

5. Minimum Unsecured Interest Coverage

 

	
 
    	
 
    	
Quarterly
   Unencumbered NOI
    	
 
    	
Interest Expense
    	
 
    	
NOI to Interest Expense
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Equal to 1.75:1 or more
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

	
6.   Minimum Tangible Net Worth(2)
    	
 
    	
 
    	
 
    	
 
    
	
Total Assets, less:
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
(a) Book   Value of Intangible Assets
    	
 
    	
 
    	
 
    	
 
    
	
(b) Write-up   of book value subsequent to Balance Sheet date
    	
 
    	
 
    	
 
    	
 
    
	
(c) Subscriptions   Receivable
    	
 
    	
 
    	
 
    	
 
    
	
(d) Derivative   assets
    	
 
    	
 
    	
 
    	
 
    
	
Total   Liabilities (excluding derivative liabilities)
    	
 
    	
 
    	
 
    	
 
    
	
Tangible   Net Worth
    	
 
    	
 
    	
 
    	
 
    
	
Required   Net Worth
    	
 
    	
 
    	
 
    	
 
    
	
Required   as of 6/30/2016
    	
 
    	
 
    	
 
    	
$
    	
682,422,341
    
	
Equity   Offering after 7/21/2016 (add 75% of net proceeds from equity offerings)
    	
 
    	
 
    
	
ATM   Equity Offering after 7/21/2016 (add 75% of net proceeds from equity   offerings)
    	
 
    	
 
    
	
Required   Net Worth
    	
 
    	
 
    
							

 

(2)  Total Assets and Total Liabilities shall also exclude an asset or liability created by Hedge Ineffectiveness and the Swap Termination Value.

 

 

Franklin Street Properties Corp.
 Financial Covenants

 

                   [Date]

 

Schedule A

 

Unencumbered Asset Value

 

 

	
 
    	
 
    	
Date
    	
 
    	
Cap Rate
    	
 
    	
Unencumbered Asset 
   Value
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Quarterly NOI
    	
 
    	
$
    	
        
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
x 4
    	
 
    	
7.0%/7.5% (3)
    	
 
    	
$
    	
        
    	
 
    
	
Annual NOI
    	
 
    	
$
    	
       
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
x 4
    	
 
    	
7.0%/7.5% (3)
    	
 
    	
$
    	
        
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Acquisition   costs of new properties (for first 4 quarters)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
        
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Unencumbered   Asset Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
        
    	
 
    

 

(3)  7.0% for CBD or Urban Infill Property/7.5% for Suburban Property

 

 

Schedule B

 

Encumbered Asset Value

 

	
 
    	
 
    	
Date
    	
 
    	
Cap Rate
    	
 
    	
Encumbered
   Asset Value
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Quarterly NOI
    	
 
    	
$
    	
          
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
x 4
    	
 
    	
7.0%/7.5% (4)
    	
 
    	
$
    	
           
    	
 
    
	
Annual NOI
    	
 
    	
$
    	
          
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
x 4
    	
 
    	
7.0%/7.5% (4)
    	
 
    	
$
    	
          
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Acquisition   costs of new properties (for first 4 quarters)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
          
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Encumbered Asset   Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
          
    	
 
    

 

(4)  7.0% for CBD or Urban Infill Property/7.5% for Suburban Property

 

 

Franklin Street Properties Corp.
 Consolidated Balance Sheets

 

(Audited/Unaudited)

 

                 [Date]

 

[To be inserted]

 

 

Franklin Street Properties Corp.
 Consolidated Statement of Income

(Audited/Unaudited)

 

                  [Date]

 

[To be inserted]

 

	
EBITDA
    	
 
    	
 
    	
 
    	
 
    
	
Net Income
    	
 
    	
 
    	
 
    	
 
    
	
Non-recurring/Extraordinary /GOS/Acq Cost
    	
 
    	
 
    	
 
    	
 
    
	
Interest including deferred financing costs
    	
 
    	
 
    	
 
    	
 
    
	
Taxes
    	
 
    	
 
    	
 
    	
 
    
	
Depreciation & Amortization
    	
 
    	
 
    	
 
    	
 
    
	
Amortization of leases (in revenue)
    	
 
    	
 
    	
 
    	
 
    
	
Pro Rata Share Unconsolidated Affiliates
    	
 
    	
 
    	
 
    	
 
    
	
Hedge ineffectiveness
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
EBITDA
    	
 
    	
 
    	
 
    	
 
    
	
Capital Item allowance ($.30 sf/year)
    	
 
    	
 
    	
 
    	
 
    
	
Adjusted EBITDA
    	
 
    	
 
    	
 
    	
 
    

 

 

Franklin Street Properties Corp.
  Financial Covenants

 

Quarterly Debt Service
                                    [Date]

 

Interest Expense

 

 

Franklin Street Properties Corp.
  Property NOI
                                      [Date]

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Actual
    	
 
    	
Actual
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Cost
    	
 
    	
Q_ NOI
    	
 
    	
Q_ NOI
    	
 
    
	
 
    	
Name
    	
 
    	
City
    	
 
    	
State
    	
 
    	
S.F.
    	
 
    	
Most 
   Recent 
   FQ
    	
 
    	
Most 
   Recent FQ
    	
 
    	
Same 
   Quarter 
   Prior Year
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Unencumbered NOI
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Property NOI for the quarter
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
Less: Capital   Item allowance ($.30 sf/year, including acquisitions)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
Adjustment for management fees to 3%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Property NOI for the quarter
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
Less: New acquisitions (if less than 4 quarters)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
Less: Capital   Item allowance ($.30 sf/year, including acquisitions)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
Adjustment for   management fees to 3% NOI for Unencumbered Asset Value calculation
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Cap rate per loan agreement
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
7.0%/7.5%(5)
    	
 
    	
7.0%/7.5%(6)
    	
 
    
	
 
    	
Value of the Properties:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Calculated above
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
Acquisitions at cost
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
Unencumbered Asset Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Encumbered NOI
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(a)
    	
NOI is net of   actual management fees paid, adjustment is to (increase)/decrease fees to 3%   level
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(5)  7.0% for CBD or Urban Infill Property/7.5% for Suburban Property

 

(6)  7.0% for CBD or Urban Infill Property/7.5% for Suburban Property

 

 

Franklin Street Properties Corp.
  Management Fee Calculation(7)
                                 [Date]

 

	
 
    	
 
    	
9 Months
    	
 
    	
6 Months
    	
 
    	
3 Months
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Calculation:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total rental   revenue for 10-Q/10-K
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Excluded   revenues:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Termination Fees
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Amort -   Favorable lease
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Lease   Induce/Rent reduct
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
FASB 13 Revenue
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Management   fee & interest income
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total excluded   revenues
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Gross revenues
    	
 
    	
$
    	
                
    	
 
    	
$
    	
                
    	
 
    	
$
    	
                
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
3% of Gross   Revenues
    	
 
    	
$
    	
                
    	
 
    	
$
    	
                
    	
 
    	
$
    	
                
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Less Actual   management fees charged:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Adjustment   required
    	
 
    	
$
    	
                
    	
 
    	
$
    	
                
    	
 
    	
$
    	
                
    	
 
    

 

(7)  To be adjusted as appropriate to determine management fees for the quarter.Exhibit 10.1

 

EVINE Live Inc. 

Executives’ Severance Benefit Plan

 

Section 1.History,
Plan Name and Effective Date.   Effective July 25, 2016, the Board of Directors of EVINE Live Inc. established
the EVINE Live Inc. Executives’ Severance Benefit Plan. The following provisions constitute the Plan, effective as of July
25, 2016.

 

Section 2.Purpose.
This Plan is established to provide inducement to the Executives, as determined to be eligible to participate in the Plan
under herein. Such inducement is necessary for the Company to continue to: (i) attract, recruit, and retain such Executives
and assure their continuing dedication to their duties notwithstanding the threat or occurrence of a Change in Control (as defined
in Section 3(d) below) or as a result of a Termination for reasons other than Cause (as defined below in Section 3(c) below);
and (ii) enable the Executives, should the Company receive unsolicited proposals from third parties with respect to its future,
to assess and advise the Board what action on those proposals would be in the best interests of the Company, its shareholders and
customers, and to take such action regarding those proposals as the Board might determine appropriate, without being influenced
by the uncertainties of their own financial situation; and (iii) demonstrate to the Executives of the Company that the Company
is concerned with the welfare of the Executives and intends to assure that loyal Executives are treated fairly; and (iv) ensure
that the Executives are provided with compensation and benefits upon a Change in Control which are appropriate and understood by
both the Executive and the Company.

 

The Plan is intended to comply with section
409A of the Code, and official guidance issued thereunder. Notwithstanding any other provision of this Plan, this Plan shall be
interpreted, operated, and administered in a manner consistent with these intentions.

 

Section 3. Definitions.
Capitalized terms not otherwise defined in this Section 3 shall have the meanings ascribed to them in this Plan. Without limiting
the foregoing, in this Plan, the following definitions will apply.

 

(a)“Affiliate”
means any corporation that is a Subsidiary or Parent of the Company.

 

(b)“Board”
means the Board of Directors of the Company.

 

(c)“Cause”
means what the term is expressly defined to mean in a then-effective written agreement between an Executive and the Company or
any Affiliate or, in the absence of any such then-effective agreement or definition, means (i) a material act of fraud which
results in or is intended to result in an Executive’s personal enrichment at the expense of Company, including without limitation,
theft or embezzlement from Company; (ii) public conduct by an Executive that is materially detrimental to the reputation of
Company; (iii) material violation by an Executive of any written Company policy, regulation or practice; (iv) the willful
or grossly negligent failure to adequately perform the duties of an Executive’s position to the material detriment of the
Company; (v) commission of conduct constituting a felony; (vi) a material breach by an Executive of any of the terms and conditions
of an agreement with the Company or any Affiliate; or (vii) the Executive continues to materially fail to perform the duties
associated with Executive’s employment after being notified of such failure and given a reasonable opportunity to cure such
failure.

 

     

     

    

 

(d)“Change
in Control” means one of the following:

 

(1)The acquisition
by any individual, entity or Group of beneficial ownership (within the meaning of Exchange Act Rule 13d-3) of 30% or more of either
(i) the then outstanding shares of Company Stock, or (ii) the combined voting power of the then outstanding Company Voting Securities.
Notwithstanding the foregoing sentence, the following acquisitions will not constitute a Change in Control:

 

(A) any acquisition of Stock or Company Voting Securities directly from the Company;

 

(B)any acquisition
of Stock or Company Voting Securities by the Company or any of its wholly-owned Subsidiaries;

 

(C)any acquisition
of Stock or Company Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Company or
any of its Subsidiaries; or

 

(D)any acquisition
of beneficial ownership by any entity with respect to which, immediately following such acquisition, more than 70% of, respectively,
the then outstanding shares of common stock and the combined voting power of the outstanding Voting Securities of such entity (or
its Parent) is beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who beneficially
owned, respectively, the outstanding Stock and outstanding Company Voting Securities immediately before such acquisition in substantially
the same proportions as their ownership of the outstanding Stock and outstanding Company Voting Securities, as the case may be,
immediately before such acquisition.

 

(2)Individuals who
are Continuing Directors cease for any reason to constitute a majority of the members of the Board.

 

(3)The consummation
of a Corporate Transaction unless, immediately following such Corporate Transaction, all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the outstanding Stock and outstanding Company Voting Securities immediately
prior to such Corporate Transaction beneficially own, directly or indirectly, more than 70% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding Voting Securities, as the case may be, of the of the
surviving or acquiring entity (or its Parent) resulting from such Corporate Transaction in substantially the same proportions as
their ownership, immediately before such Corporate Transaction, of the outstanding Stock and outstanding Company Voting Securities,
as the case may be.

 

    2 

     

    

 

Notwithstanding the foregoing:

 

(i)               a Change in Control shall not be deemed to occur with respect to an Executive if the acquisition of the 30% or greater interest
referred to in Section 3(d)(1) is by a Group that includes the Participant, or if at least 30% of the then outstanding common stock
or combined voting power of the then outstanding Voting Securities of the surviving or acquiring entity referred to in Section
3(d)(3) shall be beneficially owned, directly or indirectly, immediately after the Corporate Transaction by a Group that includes
the Executive; and

 

(ii)              to the extent that any Award constitutes a deferral of compensation subject to Code Section 409A, and if that Award provides for
a change in the time or form of payment upon a Change in Control, then no Change in Control shall be deemed to have occurred upon
an event described in Section 3(d) unless the event would also constitute a change in ownership or effective control of, or a change
in the ownership of a substantial portion of the assets of, the Company under Code Section 409A.

 

(e)“Code”
means the Internal Revenue Code of 1986, as amended and in effect from time to time, and the regulations promulgated thereunder.

 

(f)“Committee”
means the Human Resources and Compensation Committee of the Company’s Board.

 

(g)“Company”
means EVINE Live Inc., a Minnesota corporation, or any successor thereto.

 

(h)“Continuing
Director” means an individual (1) who is, as of the effective date of the Plan, a director of the Company, or (2) who is
elected as a director of the Company subsequent to the effective date of the Plan and whose initial election, or nomination for
initial election by the Company’s shareholders, was approved by at least a majority of the then Continuing Directors, but
excluding, for purposes of this clause (2), any such individual whose initial assumption of office occurs as a result of an actual
proxy contest.

 

(i)“Corporate
Transaction” means a reorganization, merger or consolidation of the Company, a statutory exchange of outstanding Company
Voting Securities, or a sale or disposition (in one or a series of transactions) of all or substantially all of the assets of the
Company.

 

(j) “Executive” means those individuals eligible to participate in the Plan, who are expressly limited to those
persons in Section 3(j)(1), Section 3(j)(2) or Section 4(b). At all times, the Chief Executive Officer of the Company (the “CEO”),
if such CEO has a separate and independent agreement with the Company that includes severance, shall not be considered an Executive
for purposes of this Plan:

 

(1)              
The then current Section 16 Officers of the Company; and

 

(2)             
Any additional employees designated by name to participate in the Plan by the Committee, or recommended by the CEO and approved
by the Committee (“Designated Employees”).

 

    3 

     

    

 

A current list of the members of Officers,
and a list of the individuals described in this Section 3(j), shall be maintained by the Benefits Administrator, and kept
on file with the Corporate Secretary.

 

(k)“Exchange
Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time.

 

(l)“Good
Reason” means, without the Executive’s written consent:

 

(1)an adverse and
material change in the Executive’s status, positions or responsibilities as compared to the Executive’s status, position
or responsibilities as in effect prior to such change. Notwithstanding the foregoing, neither an increase in the scope or number
of an Executive’s responsibilities, nor a change in the Executive’s reporting relationships (e.g. a change with
respect to the person or position to whom the Executive reports or the individual(s) or position(s) who report to the Executive)
shall be considered an adverse and material change in the Executive’s status or position;

 

(2)a material reduction
in the amount of either the Executive’s annual base salary or target annual incentive program (“Annual Bonus”)
opportunity as in effect on the date she or he became a participant in the Plan, or as the same may be increased from time to time
during the term of the Executive’s participation in this Plan. Notwithstanding the foregoing, an across-the-board compensation
or benefit plan or Annual Bonus reduction applicable on a similar basis to all other Executives of the Company shall not be considered
a material reduction in the Executive’s annual base salary or Annual Bonus;

 

(3)the failure to
provide or continue in effect materially similar compensation and benefits, in accordance with the plans, practices, policies and
programs of the Company and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding
a Change in Control or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its Affiliates; provided, however, that broad-based changes to the benefit plans of the Company
and its Affiliates, affecting a significant portion of the employees of the Company and its Affiliates, shall not be deemed “Good
Reason” under this Section 3(l)(3);

 

(4)the failure of
any successor or assign of the Company to assume and expressly agree to perform the obligations under this Plan;

 

(5) any purported termination
of the Executive’s employment which is not effected pursuant to a Notice of Termination and a resolution satisfying the requirements
of Section 6(e) below; and for purposes of this Plan, no such purported termination shall be effective; or

 

(6) any request by the
Company that the Executive participate in an unlawful act.

 

    4 

     

    

 

(m)“Group”
means two or more persons acting as a partnership, limited partnership, syndicate or other group for the purpose of acquiring,
holding or disposing of securities of an entity.

 

(n)“Notice
of Termination” means a written notice which (1) indicates the specific termination provision relied upon, (2) to
the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of
the Executive’s employment under the provision so indicated and (3) if the date of termination is other than the date
of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving
of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively,
hereunder, or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s
or the Company’s rights hereunder.

 

(o)“Parent”
means a “parent corporation,” as defined in Code Section 424(e).

 

(p)“Plan”
means this EVINE Live Inc. Executive Severance Benefit Plan, as effective June21, 2016 and in effect from time to time.

 

(q)“Share”
means a share of Stock.

 

(r)“Stock”
means the common stock of the Company.

 

(s)“Subsidiary”
means a “subsidiary corporation,” as defined in Code Section 424(f), of the Company.

 

(t)“Tier” means a benefit
level. Tier I executive is defined as Chief Executive Officer and Executive Vice President (EVP), and Tier II executive is defined
as Senior Vice President (SVP).

 

(u)“Voting
Securities” of an entity means the outstanding securities entitled to vote generally in the election of directors (or comparable
equity interests) of such entity.

 

Section 4.Termination
of Participation.   Except as provided in Section 4(b) below, upon termination of participation in the
Plan, the Executive shall thereafter lose entitlement to any benefits under the Plan and all rights hereunder shall be forfeited.

 

(a)Termination
of Participation. Subject to Section 4(b) below, the following events, if occurring before a Change in Control, will
result in the termination of an Executive’s participation in the Plan: (i) the date the Executive separates from service
with the Company and its Affiliates, (ii) the date the Executive ceases to be an Officer without being added as a “Designated
Employee” under Section 3(j)(2) above, or (iii) the date that an Executive, whose participation in the Plan was
approved by the Committee, has his or her participation terminated by the Committee.

 

(b)Deemed
Participation.   Notwithstanding the foregoing, an Executive whose participation in the Plan was terminated shall
nevertheless be deemed to have been a participant in the Plan on the date of a Change in Control and shall be eligible to receive
benefits as provided under this Plan if both of the following requirements are met:

 

    5 

     

    

 

(1)The Executive’s
termination of participation results from: (A) involuntarily termination from service with the Company, other than for Cause;
(B) removal as an Officer; or (C) removal by the Committee; and

 

(2)The Executive’s
termination of participation occurs within the 6-month period immediately preceding the occurrence of a Change in Control.

 

Section 5.Cash
Severance Benefits. 

 

(a)Payments
as a Result of a Change in Control.   In the event Executive’s employment terminates as a result of a Change
in Control, the amount of the cash severance benefit paid under this Plan shall be, with the exception of the CEO if such CEO has
a separate agreement with the Company that includes severance, in the case of a Tier I Executive (1) an amount equal to one and
one half (1 1⁄2) times the Executive’s highest annual rate of base salary during the 12-month period immediately preceding
the date that the Executive Separates from Service (the “Base Salary”), and (2) one and one-half (1 1/2 ) times the
target annual incentive bonus determined from such Base Salary. In the case of a Tier II Executive (1) an amount equal to one and
one quarter (1 1⁄4) times the Executive’s highest annual rate of Base Salary during the 12-month period immediately
preceding the date that the Executive Separates from Service, and (2) one and one-quarter (1 1⁄4) times the target annual
incentive bonus determined from such Base Salary.

 

(b)Cash Severance
Payment for Reasons Other Than a Change in Control. In the event Executive’s employment terminates for reasons other
than a Change in Control and either (i) at the initiation of the Company for reasons other than Cause, or (ii) at the initiation
of the Executive for Good Reason, the amount of the cash severance benefit paid under this Plan shall be , with the exception of
the CEO if such CEO has a separate agreement with the Company that includes severance, in the case of a Tier I Executive (1) an
amount equal to one and one quarter (1 1⁄4) times the Executive’s highest Base Salary. In the case of a Tier II Executive
(1) an amount equal to one (1) times the Executive’s highest annual rate of Base Salary during the 12-month period immediately
preceding the date that the Executive Separates from Service.

 

Section 6.Payment
of Severance Benefits.

 

(a) Payments Following a Change in Control.   If within a one-year period commencing on the date of
a Change in Control (the “Benefit Period”), (i) the Company terminates the employment of an Executive for any
reason other than Cause, death, or the Executive’s becoming Disabled, or (ii) the Executive terminates his employment
for Good Reason, the Executive shall be entitled to benefits under the Plan. An Executive who is deemed to be a participant in
the Plan on the date of the Change in Control pursuant to Section 4(b) shall also be entitled to benefits under Section 5(a)
and 7(a) of the Plan if the Executive’s employment is terminated by the Company during the Benefit Period or the immediately
preceding six (6) months. For purposes of this Plan, “Disabled” means that the Executive has been determined to be
disabled as defined in the EVINE Live Inc. 2011Omnibus Incentive Plan.

 

    6 

     

    

 

If an Executive is
entitled to benefits under Section 5(a) of the Plan, the Executive’s cash severance payment described in Section 5(a)
shall be paid in a lump sum within 30 calendar days of the later of the date that the Executive Separates from Service (within
the meaning of Code section 409A) or the date of the Change in Control. Notwithstanding the foregoing, if the amount is payable
upon an Executive’s Separation from Service and the Executive is a Key Employee as of his or her Separation from Service,
the lump sum payment will be made on the date that is six (6) months after the Separation from Service (or, if earlier, the
date of death of the Key Employee). For this purpose, “Key Employee” means an Executive treated as a “specified
employee” under Code section 409A(a)(2)(B)(i), i.e., a key employee (as defined in Code section 416(i) without regard
to paragraph (5) thereof). Key Employees shall be determined in accordance with Code section 409A using December 31st
as the identification date. A listing of Key Employees as of an identification date shall be effective for the 12-month period
beginning on the April 1st following the identification date.

 

(b) Payments for Reasons Other Than a Change in Control. If the Executive’s employment terminates
for reasons other than a Change in Control and either (i) at the initiation of the Company for any reason other than Cause,
death, or the Executive’s becoming Disabled, or (ii) at the initiation of the Executive for Good Reason, the Executive
shall be entitled to benefits under Section 5(b) and Section 7 of the Plan. For purposes of this Plan, “Disabled” means
that the Executive has been determined to be disabled as defined in the EVINE Live Inc. 2011 Omnibus Incentive Plan.

 

If an Executive is
entitled to benefits under Section 5(b) , the Executive’s cash severance payment described in Section 5(b) shall be
paid in a lump sum within 30 calendar days of the later of the date that the Executive Separates from Service (within the meaning
of Code section 409A) or the date of the Change in Control. Notwithstanding the foregoing, if the amount is payable upon an Executive’s
Separation from Service and the Executive is a Key Employee as of his or her Separation from Service, the lump sum payment will
be made on the date that is six (6) months after the Separation from Service (or, if earlier, the date of death of the Key
Employee). For this purpose, “Key Employee” means an Executive treated as a “specified employee” under
Code section 409A(a)(2)(B)(i), i.e., a key employee (as defined in Code section 416(i) without regard to paragraph (5) thereof).
Key Employees shall be determined in accordance with Code section 409A using December 31st as the identification
date.

 

(c) Termination. Notwithstanding anything herein to the contrary, nothing herein is meant to imply that the Company
cannot terminate an Executive’s employment for Cause, or that an Executive cannot terminate his/her employment for Good Reason,
at any time, including during a Benefit Period.

 

(d) Notice of Termination.   Any termination by the Company for Cause, or by the Executive for Good
Reason, shall be communicated by Notice of Termination to the other party given by hand delivery, registered or certified mail,
return receipt requested, postage prepaid, to the last known home address of the Executive or to the address of the principal office
of the Company, copy to the General Counsel.

 

(e) Future Covenants.   As a condition to the receipt of any payments or benefits under this Plan, the
Executive must sign a release of claims in favor of the Company, all applicable consideration periods, revocation periods, and
rescission periods provided by law shall have expired. Additionally, the Executive must use his or her best efforts and utmost
diligence to guard and protect such confidential information and trade secrets acquired during his or her tenure with the Company
and its Affiliates. Furthermore, the Executive agrees that, for a period of eighteen (18) months following his or her termination
date, that the Executive will not directly or indirectly hire, manage, solicit or recruit any financial planners, agents, salespeople,
financial advisors or employees of the Company or its Affiliates; provided, however, nothing “solicit” shall
not include general newspaper or similar advertisements for employment opportunities with the Executive or with any subsequent
employer of Executive. Finally, the Executive agrees not to disparage the Company or its Affiliates, or any of its employees or
directors.

 

    7 

     

    

 

Section 7.Benefit
Enhancements & Coordination with Other Plans.

 

(a)Upon or
Following a Change in Control. In the event benefits are payable under this Plan to an Executive in accordance with Section 5(a)
or 6(a) above, provided the Executive elects continuation of coverage pursuant to COBRA or similar state laws and also timely returns
to the Company the documents and payments required for such election, the Company shall reimburse the Executive a portion of the
premium amount equal to the amount paid by other similarly situated Executives who have not been terminated and receive similar
group health, dental and life insurance benefits to the extent such benefits were in effect for Executive and his or her dependents.
In the case of a Tier I Executive, the Company shall provide such reimbursement for that election for a period of eighteen (18)
months after the Executive’s employment terminates subject to the Executive’s timely payment of his or her share of
the applicable premiums. In the case of a Tier II Executive, the Company shall provide such reimbursement for that election for
a period of fifteen (15) months after the Executive’s employment terminates subject to the Executive’s timey payment
of his or her share of the applicable premiums.

 

(b)For Reasons
Other Than a Change in Control. In the event benefits are payable under this Plan to an Executive in accordance
with Section 5(b) above, provided the Executive elects continuation of coverage pursuant to COBRA or similar state laws and
also timely returns to the Company the documents and payments required for such election, the Company shall reimburse the Executive
a portion of the premium amount equal to the amount paid by other similarly situated Executives who have not been terminated and
receive similar group health, dental and life insurance benefits to the extent such benefits were in effect for Executive and his
or her dependents. In the case of a Tier I Executive, the Company shall provide such reimbursement for that election for a period
of fifteen (15) months after the Executive’s employment terminates subject to the Executive’s timely payment of his
or her share of the applicable premiums. In the case of a Tier II Executive, the Company shall provide such reimbursement for that
election for a period of twelve (12) months after the Executive’s employment terminates subject to the Executive’s
timely payment of his or her share of the applicable premiums.

 

(c)No Executive
receiving any benefit under this Plan shall be entitled to receive any severance payment under any other severance plan, severance
program, severance arrangement or employment agreement sponsored by or entered into by the Company, except to the extent the plan,
program, agreement or arrangement specifically provides otherwise.

 

(d)Except as otherwise
provided in this Section 7, the Executive’s rights under any other benefit plan maintained by the Company (or successor)
shall be governed by the terms of that plan as in effect on the day immediately preceding the Change in Control.

 

    8 

     

    

 

Section 8.Limitation
on Parachute Payments. 

 

(a) Notwithstanding any provision to the contrary set forth in this Plan, if any of the payments or benefits provided or to
be provided by the Company to Executive or for Executive’s benefit pursuant to the terms of the Plan constitute parachute
payments (“Parachute Payments”) within the meaning of Section 280G of the Code and would, but for this Section 8 be
subject to the excise tax imposed under Section 4999 of the code (or any successor provision thereto) or any similar tax imposed
by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then
the Covered Payments shall be payable either (i) in full or (ii) reduced to the minimum extent necessary to ensure that no portion
of the Covered Payments is subject to the Excise Tax, whichever of the foregoing (i) or (ii) results in the Executive’s
receipt on an after-tax basis of the greatest amount of benefits after taking into account the applicable federal, state, local
and foreign income, employment and excise taxes (including the Excise Tax).

 

(b) The Covered Payments shall be reduced in a manner that maximizes Executive’s economic position. In applying this
principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where two
economically equivalent amounts are subject to reduction by payable at different times, such amounts shall be reduced on a pro
rata basis but not below zero.

 

(c) Any determination required under this Section 8(c) shall be made in writing in good faith by an accounting firm selected
by the Company (the “Accountants”), which shall provide detailed supporting calculations to the Company and the Executive
as required by the Company or the Executive. The Company and the Executive shall provide the Accountants with such information
and documents as the Accountants may reasonably request in order to make a determination under this Section 8(c). The Company
shall be responsible for all fees and expenses of the Accountants.

 

(d) It is possible that after the determinations and selections made pursuant to this Section 8 the Executive will receive
Covered Payments that are in the aggregate more than the amount provided under this Section 8 (“Overpayment”) or less
than the amount provided under this Section 8 (“Underpayment”).

 

		(i)	In
                                         the event that: (A) the Accountants determine, based upon the assertion of a deficiency
                                         by the Internal Revenue Service against either the Company or Executive which the Accountants
                                         believe has a high probability of success, that an Overpayment has been made or (B) it
                                         is established pursuant to a final determination of a court or an Internal Revenue Service
                                         proceeding that has been finally and conclusively resolved that an Overpayment has been
                                         made, then Executive shall pay any such Overpayment to the Company.

 

		(ii)	In
                                         the event that: (A) the Accountants, based upon controlling precedent or substantial
                                         authority, determine that an Underpayment has occurred or (B) a court of competent jurisdiction
                                         determines that an Underpayment has occurred, any such Underpayment will be paid promptly
                                         by the Company to or for the benefit of the Executive.

 

    9 

     

    

 

(e) Any payment made to or on behalf of an Executive under this Section 8 shall be made in compliance with Code section
409A and by the end of the year following the year that the related taxes are remitted to the applicable taxing authority.

 

Section 9.Confidential
Information.   Each Executive who receives a severance benefit under this Plan agrees to retain in confidence
any secret or confidential information known to him or her relating to the Company, its Affiliates and their respective businesses,
which shall have been obtained by the Executive during his or her employment by the Company or any of its Affiliates and shall
not be or become public knowledge (other than by acts of the Executive or a representative of the Executive in violation of this
Plan). After termination of the Executive’s employment with the Company or any of its Affiliates, the Executive shall not,
without prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall a violation
or an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Plan.

 

Section 10.Binding
Plan.   The obligations under this Plan shall be binding upon and inure to the benefit of an Executive, his
or her beneficiary or estate, the Company and any successor to the Company.

 

Section 11.Amendment,
Suspension or Termination of Plan.   This Plan may be amended at any time and from time to time by and on
behalf of the Company by the Board, but no amendment shall operate to give the Executive, either directly or indirectly, any interest
whatsoever in any funds or assets of the Company, except the right upon fulfillment of all terms and conditions hereof, as such
terms and conditions may be amended, to receive the payments herein provided. No amendment, suspension or termination of this Plan
shall operate in any way to reduce, diminish, or adversely affect any of the benefits provided to any Executive if such amendment,
suspension or termination (i) arose by action of the Company in connection with or anticipation of a Change in Control, (ii) occurs
coincident with a Change in Control, or (iii) occurs within one year after a Change in Control has occurred. Any such amendment,
suspension, or termination that occurs within the six (6) month period before a Change in Control is presumed to have been
in anticipation of such Change in Control.

 

Section 12.Plan
Administrator.   The Plan shall be administered by the Benefits Administrator. The Benefits Administrator
shall be the Company’s current or acting head of Human Resources, unless and until the Board delegates this authority elsewhere.
The Benefits Administrator shall have full authority to interpret the Plan, resolve issues pertaining to Plan eligibility, determine
benefits payable under the Plan, and take whatever actions are, in the sole discretion of the Benefits Administrator, necessary
to or desirable for such administration, including, but not limited to: (a) establishing administrative rules consistent with
the provisions of the Plan, (b) delegating the responsibilities of the Benefits Administrator to other persons, and (c) retaining
the services of lawyers, accountants, or other third parties to assist with the administration of the Plan.

 

    10 

     

    

 

Section 13.Claim Procedure.

 

(a) If an Executive’s claim for benefits is denied, the Benefits Administrator will furnish written notice of denial to
the Executive making the claim (the "Claimant") within sixty (60) days of the date the claim is received, unless special
circumstances require an extension of time for processing the claim.  This extension will not exceed sixty (60) days, and
the Claimant must receive written notice stating the grounds for the extension and the length of the extension within the initial
sixty (60) day review period.  If the Benefits Administrator does not provide written notice, the Claimant may deem the claim
denied and seek review according to the appeals procedures set forth below.

 

(b) Denial Notice.   The notice of denial to the Claimant shall state:

 

		(i)	the specific reasons for the denial;
	 	 	 

		(ii)	specific references to pertinent provisions of the Plan upon which the denial was based;
	 	 	 

		(iii)	a description of any additional material or information needed for the Claimant to perfect his
or her claim and an explanation of why the material or information is needed; and
	 	 	 

		(iv)	a statement that the Claimant may request a review upon written application to the Benefits Administrator,
review pertinent Plan documents, and submit issues and comments in writing, and that any appeal that the Claimant wishes to make
of the adverse determination must be in writing to the Benefits Administrator within ninety (90) days after the Claimant receives
notice of denial of benefits.

 

The notice of denial of benefits shall
notify the Claimant of his or her right to appeal the denial through binding arbitration with the American Arbitration Association
(“AAA”) and subject to AAA’s rules and procedures, and such arbitration shall be conducted by a single arbitrator
as mutually agreed to by the Company and Executive and, if no such mutual agreement can be reached, before an arbitrator assigned
by the AAA. The notice may state that failure to appeal the action to the Benefits Administrator in writing within the ninety (90)
day period will render the determination final, binding and conclusive. Notice of the arbitrator’s decision shall be given
within sixty (60) days after close of the arbitration, unless additional time is required due to special circumstances.  In
no event shall the Arbitrator render a decision on an appeal later than one hundred twenty (120) days after the close of arbitration.

 

Section 14.No
Waiver.   Neither the failure nor the delay on the part of the Executive in exercising any right, power or
privilege hereunder shall operate as a waiver of such right, nor shall any single or partial exercise of any such right, power
or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege hereunder. No remedy
conferred hereunder is intended to be exclusive of any other remedy and each shall be cumulative and shall be in addition to every
other remedy now or hereafter existing at law or in equity.

 

    11 

     

    

 

Section 15.Rules of
Construction. The headings in this Plan are for purposes of reference only and shall not limit or otherwise
affect any of the terms hereof.

 

Section 16.Governing
Law.  To the extent not preempted by ERISA, the terms of the Plan shall be governed by, and construed and enforced
in accordance with, the laws of the State of Minnesota, including all matters of construction, validity and performance.

 

Section 17.Employment
at Will.  Nothing contained herein shall confer upon any Executive the right to be retained in the service of
the Company nor limit the right of the Company to discharge or otherwise deal with any Executive with regard to the existence of
the Plan.

 

Section 18.Unfunded. 
The Plan shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating assets
of the Company or an Affiliate for payment of any Severance Payment hereunder.  No Executive or any other person shall have
any interest in any particular assets of the Company or an Affiliate by reason of the right to receive benefits under this Plan
and any such Participant or any other person shall have only the rights of a general unsecured creditor of the Company or an Affiliate
with respect to any rights under the Plan.

 

***

 

    12

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