Document:

Exhibit 10.8

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (the

“lease”) is entered into and dated this 18th day of, June, 2002 by and between Hale

Properties (the “landlord”) and 1st Mariner Bank  (the “Tenant”).

 

RECITALS

 

Landlord agrees to Lease to

Tenant and Tenant agrees to lease from Landlord 16,232 sq. ft of office space,

herein after referred to as “the Premises”, upon the terms and conditions

herein stated.

 

NOW, therefore, in

consideration of the rents, covenants, and agreements herein contained, the Landlord

and Tenant agree as follows:

 

Section 1.              Premises,

term, and Collection Date

 

a.             Lease. 

Landlord hereby leases to the Tenant, and the Tenant rents from the

Landlord, the space comprising of approximately Sixteen Thousand Two Hundred

Thirty Two (16,232) square feet of office space, outlined on the plans attached

hereto as exhibit A (the “Premises”), on the property located at 3301 Boston

Street, Baltimore, Maryland 21224 (the “Building”), subject to such rights,

easements, covenants, conditions, restrictions and other interests of record of

Landlord and persons other than Landlord, and to all zoning rules, restrictions

and governmental regulations now in effect by any governmental authority having

jurisdiction over the Premises and Building.

 

b.             Initial Term. 

The term of this lease shall commence on July 1, 2002  (the “Commencement Date”) and shall extend

for Eleven (11) years and four (4) months (the “Initial Term”) thereafter and

end on October 31, 2013.

 

c.             Rental Year - Defined.  The term “Rental Year” shall mean the period of twelve (12)

consecutive months following the Commencement Date, and each subsequent

twelve-month period thereafter.

 

Section 2.              Rental

 

a.             Annual Base Rent.  Tenant covenants and agrees to pay to Landlord, as rent for the

Premises for the first Rental Year, the sum of Three Hundred Forty Eight  Thousand Nine Hundred Eighty Eight Dollars

($348,988.00) payable in equal monthly installments of Twenty Nine Thousand

Eighty Two Dollars and 34/100 ($29,082.34). 

Thereafter, the annual base Rent shall be adjusted as provided in

paragraph 2.c.

 

 

b.             Payment of Rent.   All payments of Rent shall be due and paid in advance on the

first day of each month without any setoff or deduction for any reason

whatsoever.  Tenant shall deliver all

Rent payable and all statements required thereunder to Landlord at 3301 Boston

Street, Baltimore, Maryland 21224, or any other address, which Landlord may

hereafter designate in writing to Tenant. 

Any payment by Tenant or acceptance by Landlord of a lesser amount than

due shall be treated as a payment on account, and not to be construed to be an

accord and satisfaction or a waiver by Landlord of any sums due hereunder.  Should Tenant fail to pay such rent by the

tenth (10th) day of the month, Tenant shall pay a late payment charge equal to

five percent (5.0%) of the amount due and unpaid.

 

c.             Additional

Rent.  In addition to the Rent set

forth above in Section 2.a., Tenant shall pay an additional amount of rent in

each Rental Year other than the initial Rental Year determined in accordance

with the formula set forth in Exhibit 1, attached hereto.

 

d.             Renewal and Extension.  Tenant shall have the option upon acceptance by Landlord to renew

and extend the term for a time and at a cost mutually agreeable between

Landlord and Tenant, provided that the Tenant, at least ninety (90) days prior

to the expiration of the initial term, gives Landlord written notice of their

intention to exercise such option. 

Landlord upon written notice will have thirty (30) days to acknowledge

acceptance of renewal.

 

e.             Security

Deposit.  Tenant has deposited with

Landlord the Security Deposit, (one months rent) as security for the

performance by Tenant of its obligations under this Lease. If Tenant shall

perform all such obligations, the Security Deposit shall be refunded to Tenant,

with interest at the rate of interest payable by 1st Mariner Bank on its money

market accounts, within ten (10) days after termination of this Lease. If

Tenant shall default in any obligation, Landlord shall be entitled to apply any

or all of the Security Deposit toward Landlord’s damages, and Tenant shall,

within ten (10) days after notice thereof, deposit with Landlord an amount

sufficient to restore the Security Deposit to its original amount, which amount

shall constitute Additional Rent under the Lease.

 

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Section 3.              Utilities

and Services

 

Tenant will pay for all

water and sewer, gas and electricity, janitorial services, appropriate repairs

and trash removal services to the Premises together with any taxes thereon, if

any such services are not separately metered to Tenant, Tenant shall pay a

reasonable proportion to be determined by Landlord of all charges jointly

metered with other premises.  Landlord

shall under no circumstances be liable to Tenant in damages or otherwise for

any interruption in service of electricity, water, gas, heat, telephone or

air-conditioning caused by the making of any repairs or improvements in the

Building unless cause by Landlord’s negligence.

 

Section 4. Landlord Insurance

 

Landlord shall be

responsible for maintaining adequate insurance on the building known as 3301

Boston Street, Baltimore, Md. 21224. 

The cost of this insurance will be allocated to each tenant on a pro rata

basis.

 

Section 5.              Taxes

 

Tenant shall pay prior to

delinquency all taxes assessed against and levied upon trade fixtures,

furnishings, equipment and all other personal property of Lessee contained in

the premises or elsewhere.  When possible,

Tenant shall cause said trade fixtures, furnishings, equipment and all other

personal property to be assessed and billed separately from the real property

of Landlord.

 

If any of Tenant’s said

personal property shall be assessed with Lessor’s real property, Tenant shall

pay Landlord the taxes attributable to Landlord within 10 days after receipt of

a written statement setting forth the taxes applicable to Lessee’s property.

 

Section 6.              Tenant’s

Insurance

 

a.             Coverage. 

Tenant shall procure and maintain the following insurance coverage:

 

(i) Liability Insurance, covering public liability,

personal and bodily injury and death. 

Such insurance shall provide, in the aggregate, a minimum coverage of

One Million Dollars ($ 1,000,000) combined single limit per occurrence and

 

(ii)

Property damage insurance, written at the cost of replacement, covering the

Premises that Landlord shall have installed, including without limitation, all

contents, fixtures, improvements, floor coverings, wall coverings, furniture,

and other property.

 

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Such policies shall  (i) insure against “all risks” and cover

losses caused by fire and all other casualties, specifically including, but not

limited to, falling objects, earthquakes, and flood, and shall contain a

replacement cost endorsement, (ii) be adjusted upward annually for inflation to

reflect the actual replacement cost of such property, and in any case by any

amount at least equal to the increase in the Consumer Price Index, as defined in

Section 3.  Such insurance shall not

require the payment of a deductible exceeding One Thousand Dollars ($ 1,000.00)

 

Section 7.  Default

Clause

 

Following any of these

events, Landlord may terminate this lease and enter and take possession of the

premises from Tenant, all without waiving any rights, which it may have at law

hereunder, without further notice or demand (all such notices and demands being

hereby waived).  In addition, at the

option of Landlord, the balance of the rents for the remainder of this Lease as

well as all other charges agreed to be paid by Tenant during such period, will

become due and payable immediately by Tenant to Landlord, in addition to any

and all rents and other charges already due and payable and in arrears.

 

a.             That Tenant shall fail to pay rent due hereunder within

ten (10) days of due date.

 

b.             That Tenant shall fail to commence to cure any other

violation of its covenants within fifteen (15) days after written notice

thereof, or, having commenced to cure the same as aforesaid, should fail to

carry the same to conclusion with due diligence.

 

c.             Upon the adjudication of Tenant as a bankrupt or the

appointment of a receiver of its property.

 

Section 8.              Exhibits

and Addenda

 

a.             Exhibit “A”, the floor plan, is part of this Lease.

 

b.             Addendum “A”, Inclusions to Lease, is part of this

Lease.

 

c.                                       Addendum “B”, General Terms of Lease, is

part of this Lease.

 

d.             Exhibit 1, CPI Formula.

 

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IN WITNESS WHEREOF, the

parties hereto have executed this Lease under their respective seals as of the

day and year first above written.

 

 

	

  WITNESS:

  	

   

  	

   

  	

   

  	

   

  	

  LANDLORD:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  Hale

  Properties

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  By:

  	

  /s/ Edwin F. Hale, Sr.

  	

   

  	

   

  
	

  (SEAL)

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Edwin F. Hale, Sr

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  President

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  TENANT:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  FIRST MARINER BANK

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  By:

  	

  /s/ George H. Mantakos

  	

   

  	

   

  
	

  (SEAL)

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  George H. Mantakos

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  President

  	

   

  
													

 

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ADDENDUM

A

Inclusions To the Lease

 

Section 1.              Utilities

and Services

 

During the Term of Lease,

Tenant shall have the non-exclusive use, of the common area restroom

facilities, elevators, stairways, hallways, driveways, footway and parking

areas servicing the Building.  Landlord

shall have the right to establish reasonable rules for the use of common

facilities to accommodate the needs and interests of all persons using such

facilities.

 

Additional charges for

electric, water, janitorial in accordance with 3a will be invoiced

monthly.  The tenants pro rata share of

real estate taxes will be invoiced monthly.

 

6

 

Addendum B

General Terms of Lease

 

Section 1.              Tenant’s

Use

 

a.             Use of Premises. 

The Premises shall be used and occupied for general office use and no

other purpose.  Tenant shall have access

to the Premises twenty-four hours per day and seven days per week, provided

that Tenant shall comply with Landlord’s standard security systems and

procedures, as in effect from time-to-time.

 

b.             No Partnership or Joint Venture.  Nothing contained in this Lease shall be

deemed or construed as making any party the agent, employee, joint venture,

partner, or representative of any other party.

 

c.             Quiet Enjoyment. 

So long as the Tenant complies with this Lease, the Tenant shall be

entitled to the quiet and peaceful use and enjoyment of the Premises, and the

Landlord shall defend such rights of the Tenant against the claims the

Landlord, subject to the terms of this Lease.

 

Section 2.              Assignment

and Subletting

 

Tenant shall not assign

Lease or sublet the Premises in whole or in part, permit other persons to

occupy said Premise or any part thereof, or grant a license or concession for

all or any part of said Premises except upon the prior written approval of

Landlord’s sole and absolute discretion which should not be unreasonably

withheld.  Any consent by Landlord to an

assignment or subletting of this lease shall not constitute a waiver of the

necessity of such consent as to any subsequent assignment or subletting.

 

Section 3.              

 

a.             Landlord Obligations.  Landlord shall keep and maintain in good

repair all of the structural elements of the Building including all electrical,

plumbing, heating, air-conditioning or other mechanical installations servicing

the Building, all exterior portions of the Premises (inclusive of doors,

windows, and glass) and the routine maintenance of the interior of the Premises

to the same extent that Landlord maintains the other portions of the Building;

provided that any damage thereto shall not have been caused by Tenant, its

agents, servants, licensees, invitees, contractors or employees, in which event

Tenant shall be responsible therefore and shall promptly perform necessary

repairs.

 

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Tenant shall pay for its pro rata share of expense incurred by the

landlord as outlined in section 7(f). 

Such payment is due within 30 days after invoiced by the Landlord.

 

b.             Tenant Obligations.  Landlord shall have no liability or obligation to repair or

maintain any equipment, facilities, fixtures, installations, or other property

placed or incorporated in the Premises by Tenant, all of which shall be at the

expiration of the Term in as good condition as when received except for

ordinary wear and tear.

 

Section 4.              Tenant’s

Operations, Alterations, Signs, Etc

 

a.             Tenant’s Operations.  Tenant shall  (1) use,

maintain and occupy the Premises in a careful, safe, clean, proper and lawful

manner, (2) conduct its business in a respectable, first-class manner as not

degrade the Building or disturb other tenants; (3) comply with all laws and

ordinances and all rules and regulations of governmental authorities and all

recommendations of the Association of Fire Underwriters or other similar bodies

establishing standards for fire insurance ratings with respect to the use or

occupancy of the Premises by Tenant, and (4) comply such other standards of

operation and requirements as the Building Lease requires of Landlord.

 

b.             Tenant’s Alterations.   Tenant shall not make any alterations whatsoever to the Premises

without Landlord’s prior written consent. 

All alterations made by Tenant, whether or not approved by or subject to

the approval of Landlord, and all air-conditioning, heating, lighting,

electrical, plumbing equipment and fixtures and all wiring and other apparatus

related to air-conditioning, heating, lighting, electrical and plumbing

equipment installed by Tenant at the Premises (whether or not such equipment

and fixtures are affixed to the Premises as to be removable without destroying

the chattels themselves or the property to which they re affixed and whether or

not such equipment and fixtures are real property or personality) unless

Landlord gives notice to Tenant to remove the same, shall remain upon the

Premises at the expiration or earlier termination of the Term of this lease and

shall become the property of Landlord immediately upon installation

thereof.  Landlord may give Tenant

written notice to remove any or all of the aforesaid alterations or fixtures,

in which event the Tenant shall remove such if the alterations and fixtures as

may be specified in Landlords notice to Tenant and Promptly restore the

Premises to the same good order and conditions as they were in at the

Commencement Date.  Tenant shall not

cause or suffer any liens, including but limited to mechanic’s liens, to attach

to the Premise or the building in which the Premises are located.

 

c.             Signs. 

Tenant shall not place, suffer to be placed or maintain any sign,

billboard, marquee, awning, decoration, placard, lettering, advertising matter,

or other 

 

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thing of any kind (herein collectively

“Sign”), whether permanent or temporary on the exterior of the Premises or on

the glass of any window or door of the Premises without first obtaining

Landlord’s written approval thereof, said approval not to be reasonably

withheld.  Tenant further agrees to

maintain any sign approved by Landlord in good condition and repair at all

times.

 

d.             Increase in Insurance.  If anything done, omitted to be done or

suffered to be done by Tenant, or kept, or suffered by cost of fire or other

insurance on the Premises or other property of Landlord in the Building, to be

increased beyond the minimum from time to time applicable to the Premises,

Tenant will pay the amount of such increase within thirty (30) days of the date

of written demand by Landlord.

 

Section 5.              Subordination

and Estoppel Certificate

 

a.             Subordination.  Tenant’s rights under this Lease are and

shall always be subordinate to (i) the terms, conditions, provisions and rights

stated in the Building Lease, (ii) the operation and effect of any mortgage or

deed of trust now or hereafter placed upon the Building or any part thereof by

Landlord or its landlord, or (iii) any renewal, modification, consolidation,

replacement or extension of any such lease, mortgage or deed of trust unless

the lessor, mortgagee or holder of the deed of trust elects in such instrument

to have Tenant’s interest hereunder superior to the interest of the lessor,

mortgagee or holder of such deed of trust. 

This sub-section shall be self-operative and no further instrument or

subordination shall be necessary, but Tenant shall execute promptly any

instrument of subordination that Landlord may request.

 

b.             Estoppel Certificate. Tenant

shall from time to time, upon not less than ten (10) days prior written request

by Landlord, provide, execute, acknowledge, and deliver to Landlord written

acknowledgments and statement s may be required of Landlord under the Building

Lease.

 

Section 6.              Indemnification

 

a.             Tenant

shall indemnify, defend and hold Landlord harmless from and against any and all

claims, actions, damages, liabilities, property damage arising out of or

relating to Tenant’s occupancy or use of the Premises or any other part of the

Building or property or other improvement thereon.  Such Indemnity shall extend to acts and omissions by Tenant, its

employees, agents, contractors, customers, guests, and any other visitor

whomsoever, and include workers compensation claims.

 

b.             Landlord shall indemnify, defend and hold Tenant

harmless from and against any and all claims, actions, damages, liabilities,

and expenses, including reasonable attorney’s fees for, or in connection with,

personal injury, bodily injury, loss of life and/or property damage arising out

of or relating to Landlord’s occupancy or use 

 

9

 

of the Building other than the Premises.  Such indemnity shall extend to acts and omissions

by Landlord, its employees, agents, contractors, customers, guests, and any

other visitor whomsoever, and include workers compensation claims.

 

c.             Neither party shall have any

obligation to indemnify the other for or open account of the illegal acts of

any person.

 

Section 7.                              Tenant’s

Insurance

 

a.             General.  

Tenant shall procure and maintain the insurance coverage specified in

the lease with insurance companies licensed to do business in Maryland and

having a Best rating of at least “A+”. 

Tenant shall also procure and maintain all insurance required by law,

for example, workman’s compensation insurance, in such amounts and in such form

as required by the particular law.  All

liability and property damage policies shall contain an endorsement naming Landlord

as a named insured and a loss payee. 

Tenant shall procure the required coverage promptly, and furnish

Landlord with a certificate reflecting the required coverage and endorsement,

and proof of payment of the premiums for such policies.  Tenant shall provide Landlord promptly with

a copy of all policy renewals and premium notices (within three (3) days of

receipt by Tenant thereof) and with proof of payment of such premiums no later

than thirty (30) days prior to the due date for the payment of such

premium.  All such insurance coverage

shall be exclusive of the cost of legal defense and other attorney’s fees.  Tenant shall ensure that the insurance

policies contain an endorsement requiring the insurance company to provide

Landlord with a thirty (30) day written notice of any change in the coverage

described herein that Tenant or insurance company proposes to make.  Tenant hereby assigns the proceeds of such

insurance as provided in this Agreement, and authorizes Landlord to collect

such sums and to execute and endorse in Tenant’s name all proofs of loss,

drafts, checks, and other documents necessary to accomplish such

collections.  Any persons or entities

making payments to Landlord under the terms of this paragraph hereby are

indemnified against and relieved absolutely from any obligation regarding the

payment or application of any sums so paid.

 

b.             Supplemental Coverage.  Landlord reserves the right, should one or

more claims be made against such insurance coverage to demand the Tenant

promptly procure additional insurance coverage in such an amount as in

Landlord’s reasonable is necessary and prudent to protect Landlord’s interest

in the Building and under this agreement. 

A demand for additional coverage, in an amount equal to claims that have

been filed and either settled, or are in litigation and with respect to which

Landlord’s counsel has furnished an opinion that the Claimant has a legal cause

of action which may result in the relief sought being granted, shall be deemed

to be reasonable demand.

 

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c.             Contractor Insurance.  Tenant shall require any contractor of

Tenant performing work on the Premises to carry and maintain, at no expense to

the Landlord:

 

(i)            comprehensive General Liability Insurance,

including contractor’s liability coverage contractual liability coverage

completed operations coverage broad from property damage endorsement and

contractor’s protective liability coverage to afford protection with limits for

each occurrence of not less than Three Million Dollars ($3,000,000.000) with

respect to personal injury, bodily injury or death, and One Million Dollars

($1,000,000.00) with respect to property damage; and

 

(ii)           worker’s compensation or similar

insurance in form and amounts required by law.

 

d.             Waiver of Subrogation.  Neither party shall be liable to the other

party or to any insurance company (by way of subrogation or otherwise) insuring

the other party for any loss or damage to any building, structure or other

tangible property, or losses under workmen’s compensation laws and benefits,

even though such loss or damage might have been occasioned by negligence of

such party, its agents or employees if any such loss or damage covered by

insurance benefiting the party suffering such damage or loss was required to be

covered by insurance pursuant to this Lease. 

However, if, by reason of the foregoing waiver, either party shall be

unable to obtain any such insurance, such waiver shall be deemed not to have

been made by such party, and provided further that, if either party is unable

to obtain any such insurance without the payment of an additional premium

therefore, then, unless the party claiming the benefit of such additional

premium within thirty (30) days after notice setting forth such requirement and

the amount of the additional premium, such waiver shall be of no force and

effect between such party and such claiming party.

 

Section 8 Additional Rent

 

a.             Additional Rent.  In addition to Base Rent, Tenant shall pay,

as “Additional Rent” hereunder, (i) Tenant’s Proportionate Share of “Common

Area Costs,” as set forth in Section 8(g) hereof; (ii) Tenant’s Proportionate

Share of premiums for the “Insurance” to be obtained by Landlord for the

Property, as set forth in Section 4 hereof, (iii) Tenant’s Proportionate Share

of “Taxes,” as set forth in Section 9(g) hereof; and (iv) all other sums or

charges due or to become due from Tenant to Landlord hereunder.  Any payment of monies called for herein to

be made by Tenant to Landlord is deemed Additional Rent and shall be

collectible as Additional Rent.

 

b.             Common Area Costs.  Tenant agrees to pay as Additional Rent

during each lease year during the Term, Tenant’s Proportionate Share of the

“Common Area Costs,” as hereafter defined. 

For purposes of this Lease, the term “Common Area Costs” shall mean all

costs and expenses incurred by Landlord in operating, 

 

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maintaining, repairing, lighting, signing, cleaning, painting,

stripping, insuring, equipping, staffing, heating and cooling, securing, and

policing of the Common Area, including, without limitation, all costs and

expenses associated with the following items or services, which may be incurred

by Landlord in its sole discretion:  (i)

maintaining and replacing any and all alarm and life safety systems and any

fire alarm monitoring or testing service program or fire suppression system

installed within the Premises or otherwise within the improvements which form a

part of the Property, including without limitation any patrol services; (ii)

maintenance of irrigation systems serving the Property; (iii) insurance,

including, without limitation, liability insurance for personal injury, death

and property damage, to the extent not reimbursed by Tenant under Section 13.2

below; (iv) surcharges levied upon or assessed against parking spaces or areas,

payments toward mass transit or car pooling facilities or otherwise as required

by federal, state or local governmental authorities; (v) all landscaping,

including, but not limited to, lawn maintenance, new plantings and replacement

of existing landscaping; (vi) repairing, cleaning, sweeping, painting,

striping, replacing and repaving of paving, curbs, walkways, guardrails,

bumpers, fences, screens, flagpoles, bicycle racks, signs and other markers,

landscaping, drainage pipes, ducts, conduits, lighting facilities and all other

Common Area site amenities; (vii) maintenance, repair and replacement of

utility systems serving the Property, including, but not limited to, water,

sanitary sewer and storm water lines and drainage systems (whether on-site or

off-site), electrical, gas, telephone and lighting systems (including bulbs,

poles, and fixtures) and other utility lines, pipes and conduits, and all payments

of utility charges in connection with any of the foregoing systems; (viii)

maintenance and repair of all portions of the buildings in the Property

including, but not limited to, walls, roofs and roof flashings, canopies,

skylights, signs, planters, benches, fire exits, doors and hardware, windows,

glass and glazing; (ix) inspection, maintenance, repair and acquisition costs

(including depreciation) of any and all machinery and equipment used in the

operation and maintenance of the Common Area, including personal property taxes

and other charges and taxes incurred in connection with such equipment; (x)

cleaning of any exterior glass; (xi) removal of snow, ice, trash and debris;

(xii) maintenance of and compliance with federal, state or local governmental ambient

air and environmental standards and other laws and regulations; (xiii) all

materials, supplies and services purchased or hired in connection with the

operation of the Common Area; (xiv) compensation and benefits paid to any and

all personnel, including, without limitation, security and maintenance persons,

secretaries, bookkeepers and any other personnel related to the operation of

the Common Area; (xv) management fees charged for management of the Property;

and (xvi) an overhead administrative cost allowance in the amount of fifteen

percent (15%) of the total Common Area Costs. 

Tenant’s Proportionate Share of Common Area Costs shall be paid by

Tenant in monthly installments in such amounts as are estimated and billed by

Landlord to Tenant as of the Commencement Date and then at the beginning of

each calendar year during the Term, each such installment being due on the

first day of each calendar month.  Any

period of less than a full calendar year occurring due to the timing of the

Commencement Date shall be proportionately 

 

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adjusted to reflect such partial year. 

If at any time during such twelve (12) month period it shall appear that

Landlord has underestimated Tenant’s Proportionate Share of Common Area Costs

(whether attributable to a change in Tenant’s Proportionate Share, an increase

in the projected Common Area Costs for such period, mathematical error or

otherwise), Landlord may re-estimate Tenant’s Proportionate Share of Common

Area Costs and may bill Tenant for any deficiency which may have accrued during

such twelve (12) month period and thereafter the monthly installment payable by

Tenant shall also be adjusted.  Within

one hundred twenty (120) days after the end of each such twelve (12) month (or,

if applicable, shorter) period, Landlord shall deliver to Tenant a statement

setting forth the actual Common Area Costs for such period, Tenant’s

Proportionate Share thereof, and the total amount paid by Tenant to Landlord

under this Section 6.3 during such period. 

In the event the amounts paid by Tenant during such period are greater

or lesser than Tenant’s Proportionate Share of the Common Area Costs as set

forth on such statement, Tenant shall pay to Landlord or Landlord shall credit

Tenant’s account (or, if such adjustment occurs at the end of the Term, pay to

Tenant), as the case may be, within thirty (30) days of receipt of such

statement, the amount of any excess or deficiency.  Failure of Landlord to provide the statement called for hereunder

shall not relieve Tenant from its obligations under this Section 6.3 or

elsewhere in this Lease.

 

Section 9  Other

 

a.             Limitations.

The Premises may be used only for the purpose or purposes specified in Section

1.1(j) above and for no other purpose or purposes without the prior written

consent of Landlord.  Tenant shall not

at any time leave the Premises vacant, but shall in good faith continuously

throughout the Term conduct and carry on its business in the entire

Premises.  Tenant shall not, without Landlord’s

prior written consent, keep anything within the Premises for any purpose or use

the Premises in a manner which causes an increase in the insurance premium cost

or invalidates any insurance policy carried on the Premises or other part of

the Property.  Tenant shall pay as

Additional Rent, upon demand of Landlord; any such increased premium cost due

to or associated with Tenant’s use or occupation of the Premises or its storage

of certain goods.  Anything contained

herein to the contrary notwithstanding, all property kept, stored or maintained

within the Premises by Tenant shall be at Tenant’s sole risk.  Tenant shall not (a) permit any

objectionable or unpleasant odors to emanate from the Premises; (b) place or

permit any radio, television, loudspeaker or amplifier on the roof or outside

the Premises or where the same can be seen or heard from outside the Building

or in the Common Area; (c) place an antenna, awning or other projection on the

exterior of the Premises; (d) solicit business or distribute leaflets or other

advertising material in the Common Area; nor (e) take any other action which in

the exclusive judgment of Landlord would constitute a nuisance or would disturb

or endanger other tenants of the Property or unreasonably interfere with their

use of their respective premises.

 

13

 

b.             Environmental.

During the Term and any Renewal Term of the Lease, Tenant warrants, represents

and covenants to and with Landlord as follows: 

The Premises will not contain (A) asbestos in any form, (B) urea

formaldehyde foam insulation, (C) transformers or other equipment which contain

dielectric fluid containing polychlorinated biphenyls, or (D) any flammable

explosives, radioactive materials, hazardous materials, hazardous wastes,

hazardous, controlled or toxic substances, or any pollutant or contaminant, or

related materials defined in or controlled pursuant to the Comprehensive

Environmental Response, Compensation and Liability Act of 1980, as amended (42

U.S.C. Sections 9601 et seq.), the Hazardous Materials Transportation Act, as

amended (49 U.S.C. Sections 1801 et seq.), the Resource Conservation and

Recovery Act, as amended (42 U.S.C. Sections 9601 et seq.), the Federal Water

Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42

U.S.C. Section 7401 et seq.), and in the regulations adopted and publications

promulgated pursuant thereto, or any other Federal, state or local

environmental law, ordinance, rule or regulation (collectively, “Environmental

Laws”); or which, even if not so regulated, may or could pose a hazard to the

health or safety of the occupants of the Building (the substances described in

(A), (B), (C) or (D) above being hereinafter collectively referred to as

“Hazardous Materials”); (ii) the Premises will never be used by Tenant for any

activities involving, directly or indirectly, the use, generation, treatment,

transportation, storage or disposal of any Hazardous Materials or to refine,

produce, store, handle, transfer, process or transport “Hazardous Substances”,

as such term is defined in any such Environmental Laws. Tenant (A) shall comply

with the Environmental Laws and all other applicable laws, rules and

regulations or orders pertaining to health, the environment or Hazardous

Materials, (B) shall not store, utilize, generate, treat, transport or dispose

of (or permit or acquiesce in the storage, utilization, generation,

transportation, treatment or disposal of) any Hazardous Materials on or from

the Premises, and (C) shall to cause its employees, licensees and invitees to

comply with the representations, warranties and covenants herein

contained.  In the event of any storage,

presence, utilization, generation, transportation, treatment or disposal of

Hazardous Materials in, on or about the Premises, or in the event of any

Hazardous Materials Release (as hereinafter defined) Tenant shall, at the

direction of Landlord or any federal, state, or local authority or other

governmental authority, remove or cause the removal of any such Hazardous

Materials and rectify any such Hazardous Materials Release, and otherwise

comply or cause compliance with the laws, rules, regulations or orders of such

authority, all at the expense of Tenant, including without limitation, the

undertaking an completion of all investigations, studies, sampling and testing

and all remedial, removal and other actions necessary to clean up and remove

all Hazardous Materials, on, from or affecting the Premises.  If Tenant shall fail to proceed with such

removal or otherwise comply with such laws, rules, regulations or orders within

the cure period permitted under the applicable regulation or order, the same

shall constitute a default under Section 19.1 hereof, and Landlord may, but

shall not be obligated to, do whatever is necessary to eliminate such Hazardous

Materials from the Premises or 

 

14

 

otherwise comply with the applicable law, rule, regulation or order,

acting either in its own name or in the name of Tenant pursuant to this

Section, and the cost thereof shall be borne by Tenant and thereupon become due

and payable as additional rent hereunder. 

Tenant shall give to Landlord and its agents and employees access to the

Premises for such purposes and hereby specifically grants to Landlord a license

to remove the Hazardous Materials and otherwise comply with such applicable

laws, rules, regulations or orders, acting either in its own name or in the

name of the Tenant pursuant to this Section. 

Tenant hereby indemnifies and holds Landlord and each of its

shareholders, subsidiaries, affiliates, officers, directors, partners,

employees, agents and trustees, and any receiver, trustee or other fiduciary

appointed for the Building, harmless from, against, for and in respect of, any

and all damages, losses, settlement payments, obligations, liabilities, claims,

actions or causes of actions, encumbrances, fines, penalties, and costs and

expenses suffered, sustained, incurred or required to be paid by any such

indemnified party (including, without limitation, reasonable fees and

disbursements or attorneys, engineers, laboratories, contractors and

consultants) because of, or arising out of or relating to (A) Tenant’s

violation of any of its representations, warranties and covenants under this

Section 7.5, and (B) any Environmental Liabilities (as herein below defined) in

connection with the Premises    For

purposes of this indemnification clause, “Environmental Liabilities” shall include

all costs and liabilities with respect to the future presence, removal,

utilization, generation, storage, transportation, disposal or treatment of any

Hazardous Materials or any release, spill, leak, pumping, pouring, emitting,

emptying, discharge, injection, escaping, leaching, dumping or disposing into

the environment (air, land or water) of any Hazardous Materials (each a

“Hazardous Materials Release”), including without limitation, cleanups,

remedial and response actions, remedial investigations and feasibility studies,

permits and licenses required by, or undertaken in order to comply with the

requirements of, any federal, state or local law, regulation, or agency or

court, any damages for injury to person, property or natural resources, claims

of governmental agencies or third parties for cleanup costs and costs of

removal, discharge, and satisfaction of all liens, encumbrances and

restrictions on the Premises relating to the foregoing.  The foregoing indemnification and the

responsibilities of Tenant under this Section shall survive the termination or

expiration of this Lease.

Tenant shall promptly notify Landlord in writing of the occurrence of

any Hazardous Materials Release or any pending or threatened regulatory

actions, or any claims made by any governmental authority or third party,

relating to any Hazardous Materials or Hazardous Materials Release on or from,

the Premises and shall promptly furnish Landlord with copies of any

correspondence or legal pleadings or documents in connection therewith.  Landlord shall have the right, but shall not

be obligated, to notify any governmental authority of any state of facts, which

may come to its attention with respect to any Hazardous Materials or Hazardous

Materials Release on or from the Premises. 

Upon expiration of the Term or any Renewal Term, as applicable, Tenant

shall deliver the Premises to Landlord free of any and all Hazardous Materials

and any liens, encumbrances and restrictions relating to Environmental

Liabilities to the extent 

15

 

Tenant was responsible therefore under the

terms of this Section.   Tenant agrees that Landlord shall have the

right to conduct, or to have conducted by its agents or contractors, such

environmental inspections of the Premises, as Landlord shall reasonably deem

necessary or advisable from time to time. 

Without limitation of the foregoing, in the event of the failure of

Tenant to comply with any of the material requirements of any Environmental

Laws, and/or any related regulations, Landlord shall have the right, at the

sole option of Landlord, to comply with such statutory or regulatory

requirements, and/or to cure any such default at Tenant’s sole expense, and all

costs and expenses of such compliance and/or cure shall be due and payable from

Tenant to Landlord upon demand as additional rent hereunder.   Tenant shall procure, at its sole expense,

all permits and licenses required for its operations and the transaction of

business in the Premises (including without limitation, to the extent

applicable to Tenant’s permitted use, special use permits, business licenses,

health department licenses, and other similar licenses, permits and approvals),

and shall otherwise comply with all applicable laws, ordinances and

governmental regulations, as well as all other covenants and restrictions of

record, affecting the Premises, and the conduct of business therein by Tenant,

including without limitation the Americans with Disabilities Act, as the same

may be amended (“ADA”).

 

c.             Repair by Tenant.  Maintenance of the air conditioning, hot

water and heating equipment shall be solely the responsibility of Tenant

throughout the entire Term.  Landlord

will invoice tenant monthly for the maintenance contract that will protect the

air conditioning, hot water and heating equipment for tenant.  The service contract will include all

services suggested by the equipment manufacturer within the

operation/maintenance manual and will become effective (and a copy thereof

delivered to Landlord) within thirty (30) days of the date Tenant takes

possession of the Premises.

 

d.             Non-Liability.  Landlord and Landlord’s partners, agents,

employees, officers and directors shall not be liable to Tenant or any other

person or entity whomsoever for any damage to property caused by the Premises

or other portions of the Property becoming out of repair or damaged, or by

defect in or failure of equipment, pipes or wiring, or broken glass, or by the

backing up of drains or by gas, water, steam, electricity or oil leaking,

escaping or flowing into the Premises irrespective of the cause. To the extent

Landlord would otherwise be required by Maryland law or common law to correct

any latent or patent defects in the Premises or in the Building of which they

form a part, any obligation on the part of Landlord to correct such latent or

patent defects in the Premises or in the Building shall not extend beyond one

(1) year from the date the Premises are deemed Ready for Occupancy, whether or

not such defects are discovered within such one (1) year period; provided that

the other terms of this Lease shall in all events govern Landlord’s and

Tenant’s respective responsibilities and monetary obligations in connection

with the construction of initial leasehold improvements to the Premises,

correction of 

 

16

 

“punch-list” items,  and any

subsequent repairs and maintenance to the Premises and the Building.  Landlord and Landlord’s partners, agents,

employees, officers and directors shall not be liable to Tenant or to Tenant’s

employees, agents or visitors, or to any person or entity whomsoever, for

injury to person or damage to or loss of property (i) occurring in, on or about

the Premises, regardless of the cause, (ii) occurring within the Common Area,

if caused by the negligence or misconduct of Tenant, its officers, partners,

employees, agents, subtenants, licensees or concessionaires, (iii) arising out

of the use of the Premises by Tenant and the conduct of its business therein,

(iv) arising out of any breach or default by Tenant in the performance of its

obligations hereunder, or (v) occasioned by or through the acts or omissions of

other tenants of the Property or of any other persons or entities whomsoever,

excepting only the negligence or willful misconduct of duly authorized

employees and agents of Landlord to the extent the same is not covered under

insurance Tenant is required to carry pursuant to Section 13.1, above; and, in

any of such events, Tenant hereby agrees to indemnify Landlord and Landlord’s

partners, agents, employees, officers and/or directors and hold each of them

harmless from any and all liability, loss, damage, claim, action or expense

(including, without limitation, all court costs and attorneys’ fees) arising

out of such damage or injury due to any of the causes described above (other

than those described in clause (v), above). 

The provisions of this section shall survive the termination of this

Lease with respect to any claims or liability attributable to acts, omissions,

occurrences and/or conditions existing or occurring prior to such

termination.  In no event shall

Landlord, or any of Landlord’s partners, agents, employees, officers and

directors, be liable to Tenant or any of its agents, employees, contractors,

officers or directors for any lost profits or other loss suffered by Tenant,

due to any interruption in Tenant’s business operation from the Premises,

whether caused by the acts or omissions of Landlord, or its agents, employees,

contractors, officers and/or directors, or by any other cause (other than

Landlord’s intentional misconduct), it being acknowledged that Tenant is

capable of obtaining business interruption insurance covering such loss(es)

including a waiver of subrogation endorsement. .  In the event (but solely to the extent) the limitations on

Landlord’s liability set forth in this Lease would be held to be unenforceable

or void under Maryland law in the absence of a modification holding the

Landlord liable to Tenant or to another person for injury, loss, damage or

liability arising from Landlord’s omission, fault, negligence or other

misconduct on or about the Premises, or other areas of the Building appurtenant

thereto or used in connection therewith and not under Tenant’s exclusive

control, then such provision shall be deemed modified as and to the extent (but

solely to the extent) necessary to render such provision enforceable under

applicable Maryland law.  The foregoing

shall not affect the application this Lease to limit the assets available for

execution of any claim against Landlord, or otherwise.

 

e.             Substantial

Taking.  If more than twenty percent

(20%) of the floor area of the Premises should be taken for any public or

quasi-public use under any governmental law, ordinance or regulation or by

right of eminent domain or 

 

17

 

by private purchase in lieu thereof, this Lease shall terminate and the

Rent (excluding Rent accruing with respect to the period prior to the date of

such termination) shall be abated during the unexpired portion of this Lease,

effective on the date physical possession is taken by the condemning

authority.    If less than twenty

percent (20%) of the floor area of the Premises should be taken as aforesaid,

this Lease shall not terminate; however, the Base Rent payable hereunder during

the unexpired portion of this Lease shall be reduced in proportion to the area

taken, effective on the date physical possession is taken by the condemning

authority.  Following such partial

taking, Landlord shall make all necessary repairs or alterations within the

scope of Landlord’s Work as described in Exhibit C necessary to make the

Premises an architectural whole.  If any

part of the Common Area shall be taken as aforesaid, this Lease shall not

terminate, nor shall the Rent payable hereunder be reduced; provided, however,

either Landlord or Tenant may terminate this Lease if the area of the Common

Area remaining following such taking plus any additional parking area provided

by Landlord in reasonable proximity to the Property shall be less than fifty

percent (50%) of the area of the Common Area immediately prior to the taking.

Any election to terminate this Lease in accordance with this provision shall be

evidenced by written notice of termination delivered to the other party within

thirty (30) days after the date physical possession is taken by the condemning

authority.  All compensation awarded for

any taking for public purposes, whether permanent or temporary (or the proceeds

of private sale in lieu thereof), of the Premises or Common Area shall be the

property of Landlord, and Tenant hereby assigns its interest in any such award

to Landlord; provided, however, Landlord shall have no interest in any award

made to Tenant for loss of business, relocation expenses and/or for the taking

of Tenant’s fixtures and other personal property of Tenant if a separate award

for such items is made to Tenant and does not diminish the award payable to

Landlord.  Tenant shall in no event be

entitled to any award made for the value of the unexpired Term of this Lease.

 

f.              Personal

Property and Fixtures. Tenant shall be liable for all taxes levied against

personal property and trade fixtures placed by Tenant in the Premises.  If any such taxes are levied against

Landlord or Landlord’s property and if Landlord elects to pay the same or if

the assessed value of Landlord’s property is increased by inclusion of personal

and trade fixtures placed by Tenant in the Premises and Landlord elects to pay

the taxes based on such increase, Tenant shall pay to Landlord upon demand that

part of such taxes for which Tenant is primarily liable hereunder.

 

g.  Tax Payment.  Tenant agrees to pay its Proportionate Share

of all taxes, assessments and governmental charges of any kind and nature

whatsoever levied or assessed against the Property, any other charges, taxes

and/or impositions now in existence or hereafter imposed by any governmental

authority based upon the privilege of renting the Premises or upon the amount

of rent collected therefore, and any tax, fee, levy, assessment or charge which

is imposed as the result of the transfer of the leasehold interest in the

Premises 

 

18

 

created by this Lease (all of the foregoing being hereinafter referred

to collectively as “Taxes”).  Taxes

shall also be deemed to include any special taxing district assessment, which

is imposed in order to fund public facilities for the area in which the

Property is located.  During each month

of the Term, Tenant shall make a monthly payment to Landlord equal to

one-twelfth (1/12) of its Proportionate Share of the Taxes on the Property

which Landlord reasonably estimates will be due and payable for the tax year as

to which such payments are being made (the “Tax Payments”).  Tenant acknowledges that, under current

practice, Taxes in Baltimore County, Maryland are assessed (and required to be

paid) in advance, so that it will be required to fund its Proportionate Share

of Taxes for the first Lease Year in advance, and to make estimated monthly Tax

Payments pursuant to this Section during the same Lease Year (such estimated

payments being made in respect of the next tax year’s bill for Taxes).  Tenant authorizes Landlord to use the funds

deposited with Landlord under this Section to pay the Taxes levied or assessed

against the Property.  Each Tax Payment

shall be due and payable at the same time and in the same manner as the time

and manner of the payment of Base Rent as provided herein.  The initial monthly Tax Payment is based

upon Tenant’s Proportionate Share of the Taxes on the Property for the fiscal

tax year in which the Commencement Date is to occur, as estimated by Landlord

in good faith, and the monthly Tax Payment is subject to increase or decrease

as determined by Landlord to reflect accurately Tenant’s Proportionate Share of

the Taxes.  If following Landlord’s

receipt of all Tax bills for any fiscal tax year Landlord determines that

Tenant’s total Tax Payments for such period are less than Tenant’s actual

Proportionate Share of the Taxes on the Property, Tenant shall pay to Landlord

the difference upon demand; if the total Tax Payments of Tenant exceed Tenant’s

actual Proportionate Share of the Taxes on the Property, Landlord shall retain

such excess and credit it to Tenant’s future Tax Payments, except that, upon

expiration of the Lease Term, Landlord will refund such excess to Tenant within

thirty (30) days after the exact amount of such refund can be calculated.

 

h.   Effect of Change in

Control   

 

Upon the sale, transfer, merger, acquisition, or dissolution of the

Tenant to an unrelated third party pursuant to a bona fide transaction at a

price or value reflecting an arms length transaction the provisions of Section

2. a. setting forth the Annual Base Rent shall automatically be amended,

effective on the date of the Change in Control to reflect the then Market Rate

for like property.  Market Rate shall

mean the reasonable rental paid by a willing Tenant without duress or

restriction generally paid and available in the market area of the Premises.

 

 

19

 

EXHIBIT

1

 

ATTACHMENT

TO THE LEASE

 

Consumer Price Index (CPI) Formula

 

Index shall mean the Consumer Price Index for U.S. City Average, All

Urban Consumers-Revised, published by the Bureau of Labor Statistics of the

United States Department of Labor.  If

the index for the calendar month immediately preceding that which during a

Rental Year commences (hereinafter referred to as the “Latest Index”) exceeds

the Index for the calendar month containing the commencement date of this Lease

(hereinafter referred to as the “Base Index”), then the additional rental for

such Rental Year shall be that figure obtained by multiplying the Basic Rent by

that fraction having the Latest Index minus the Base Index as its numerator,

and having the Base Rent as its denominator. 

Such additional amount shall be divided and paid together with the

monthly payment of the Basic Rent in twelve (12) equal monthly installments during

such respective Rental Year in advance on the first day of each month.  If the Index is not so published for such

calendar month, then the Index of the most recent calendar month or other

period for which it is so published shall be used, and if the Index hereafter

uses a different standard reference base or otherwise revised, an adjustment

shall be made therein for purposes of the provisions of this Lease, using such

conversion factor, formula or table for making such adjustments as is published

by such Bureau, or if such Bureau does not publish the same, then as published

by Prentice-Hall, Inc., the Bureau of National Affairs, Commerce Clearing

House, or any other nationally recognized publisher of similar statistical

information, as selected by the Landlord. 

In no event shall the annual rent be less than the previous year’s Base

Rent.  The formula for the calculation

is as follows:

 

Base Rent x (Latest Index — Base Index) = Additional Rent

                               Base

IndexExhibit 10.4

AMENDMENT NO. 9 TO 

LOAN FUNDING AND SERVICING AGREEMENT

(VFCC Transaction with ACS Funding Trust I)

 

THIS

AMENDMENT NO. 9 TO LOAN FUNDING AND SERVICING AGREEMENT, dated as of March 29, 2002 (this “Amendment”), is entered into by and among ACS

FUNDING TRUST I, as the borrower (in such capacity, the “Borrower”), AMERICAN CAPITAL STRATEGIES,

LTD., as the servicer (in such capacity, the “Servicer”),

certain INVESTORS, VARIABLE FUNDING CAPITAL CORPORATION, as a lender (in such

capacity, a “Lender”), FIRST UNION

SECURITIES, INC. (successor-in-interest to First Union Capital Markets Corp.),

as the deal agent (in such capacity, the “Deal

Agent”), WACHOVIA BANK, NATIONAL ASSOCIATION (f/k/a First Union

National Bank) (“WBNA”), as a lender

(in such capacity, a “Lender”) and as

the liquidity agent (in such capacity, the “Liquidity

Agent”), WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (f/k/a

Norwest Bank Minnesota, National Association), as the collateral custodian (in

such capacity, the “Collateral Custodian”)

and as the backup servicer (in such capacity, the “Backup

Servicer”), and is acknowledged and agreed to by WACHOVIA BANK,

NATIONAL ASSOCIATION (f/k/a First Union National Bank), as the hedge

counterparty (in such capacity, the “Hedge

Counterparty”).  Capitalized

terms used and not otherwise defined herein shall have the meanings given to

such terms in the Agreement (as defined below).

R E C I T A L S

WHEREAS, the parties hereto entered into that

certain Loan Funding and Servicing Agreement, dated as of March 31, 1999, as

amended by that Amendment No. 1, dated as of June 30, 1999, Amendment No. 2,

dated as of September 24, 1999, Amendment No. 3, dated as of December 14, 1999,

Amendment No. 4, dated as of June 16, 2000, Amendment No. 5, dated as of December

20, 2000, Amendment No. 6, dated as of March 29, 2001, Amendment No. 7, dated

as of April 19, 2001 and Amendment No. 8, dated as of January 15, 2002 (such

agreement as amended, modified, supplemented, waived or restated from time to

time, the “Agreement”);

WHEREAS, the parties hereto desire to amend the

Agreement in certain respects as provided herein;

NOW,

THEREFORE,

based upon the above Recitals, the mutual premises and agreements contained

herein, and other good and valuable consideration, the receipt and sufficiency

of which are hereby acknowledged, the parties hereto, intending to be legally

bound, hereby agree as follows:

SECTION 1.  Amendments.

(a)           The definition of “Commitment

Termination Date” in Section 1.1

is hereby amended and restated in its entirety as follows:

“Commitment Termination Date:  April 30, 2005 or such later date to which

the Commitment Termination Date may be extended (if extended) in the sole

 

 

discretion of VFCC and each

Investor in accordance with the terms of Section

2.2(b).”

(b)           The definition of “Delinquent”

in Section 1.1 is hereby amended and

restated in its entirety as follows:

“Delinquent:  On any day with respect to any Loan, and any

specified time period, (i) any payment, or portion thereof, due with respect

thereto, has not been made by the Obligor of such Loan for the specified time

period from the due date of such payment or (ii) other than with respect to any

PIK Loans, the related Obligor is not paying any of the accrued and unpaid

interest thereon on a current basis.”

(c)           The definition of “Required Notional

Amount” in Section 1.1

is hereby amended and restated in its entirety as follows:

“Required Notional Amount:  (a) For any day (other than any day in

April, 2002, May, 2002, and June, 2002), the product of (i) 75% and (ii) the

Advances Outstanding on such day, and (b) for any day in April, 2002, May,

2002, and June, 2002, the product of (i) 50% and (ii) the Advances Outstanding

on such day.

(d)           Section

1.1 of the Agreement is hereby amended by adding the following new

definitions thereto:

“Paying Agent:  America Capital Strategies, Ltd. as the

Servicer and any Successor Servicer.”

“Registrar:  Wachovia Bank, National Association, not in

its individual capacity but solely as Registrar, its successor or successors in

interest and any Person which at any time may be selected by the Borrower upon

the resignation of Wachovia Bank, National Association to act as Registrar.”

(e)           Article

II of the Agreement is hereby amended by amending and restating Section 2.5 thereof as follows:

“Section 2.5          The Structured Notes.

(a)           The Borrower shall deliver to the Deal Agent, on behalf of

the Lenders, at the applicable address set forth on the signature pages of this

Agreement, a duly executed structured note, in the form of Exhibit B-2 (the “VFCC Structured Note”),

dated as of the date of this Agreement, in a face amount equal to the

$225,000,000, and otherwise duly completed in the case of VFCC Advances and a

duly executed structured note, in the form of Exhibit

B-1 (the “FUNB Structured Note”) dated as of the date of this

Agreement, in a face amount equal to the $30,000,000, and otherwise duly

completed in the case of FUNB Advances (the VFCC Structured Note together with

the FUNB Structured Note, the “Notes”); provided, however,

that notwithstanding anything to the contrary contained herein or in any other

Transaction Document, the indebtedness of the

 

2

 

Borrower evidenced by the

Notes shall not in the aggregate exceed the Facility Amount.  The Notes are intended to be “securities”

and shall evidence the amount owed by the Borrower to the Lenders hereunder.

(b)           The Deal Agent is hereby authorized to enter on a schedule

attached to the Notes notations (which may be computer generated) or to

otherwise record in its internal books and records or computer system with

respect to each Advance made by each Lender hereunder:  (i) the date and principal amount thereof

and (ii) each payment and repayment of principal thereof and any such recordation

shall constitute prima facie evidence of the accuracy of the information so

recorded.  The failure of the Deal Agent

to make any such notation on the schedule attached to the Notes shall not limit

or otherwise affect the obligation of the Borrower to repay the Advances in

accordance with their respective terms as set forth herein.”

(f)            Section

2.10 of the Agreement is hereby amended by adding the following new Section 2.10(d):

“(c)         Notwithstanding anything to the contrary contained herein or

in any other Transaction Document, all payments required to be made by the

Borrower hereunder shall be made by the Borrower through the Servicer acting as

its Paying Agent.”

(g)           Article II of the Agreement is hereby

amended by adding the following new Section 2.17:

“Section 2.17       Appointment of Registrar and Duties.

(a)           Wachovia Bank, National Association is hereby appointed to

act as Registrar under this Agreement and hereby accepts such appointment and

agrees to perform the duties and obligations with respect thereto set forth in

the Agreement.

(b)           As long as the Notes remain outstanding, the Borrower

shall maintain a Registrar therefor.  As

set forth in subsection 2.17(a) above,

Wachovia Bank, National Association shall initially act as Registrar and shall

perform such duties as are set forth in this Agreement.

(c)           The Borrower shall cause to be kept a register (the “Note Register”)

which contains an accurate and complete list of those Persons who from time to

time shall be holders of the Structured Notes. 

The Note Register shall be maintained by the Registrar, and so long as

Wachovia Bank, National Association is the Registrar, the Registrar may not be

removed by the Borrower.  Upon the

resignation of any Registrar, the Borrower shall promptly appoint a successor

or, if it elects not to make such an appointment, assume the duties of

Registrar.  So long as Wachovia Bank,

National Association is the Registrar, the Note Register shall be kept at One

Wachovia Center, Mail Code: NC0610, Charlotte, North Carolina 28288.

 

3

 

(d)           Upon the resignation of Wachovia Bank, National

Association as Registrar, the Borrower will give the Deal Agent prompt written

notice of the appointment of a successor Registrar and of the location, and any

change in the location, of the Note Register, and the Deal Agent shall have the

right to inspect the Note Register at all reasonable times and to obtain copies

thereof, and the Deal Agent shall have the right to rely upon a certificate

executed on behalf of the Registrar by a Responsible Officer thereof as to the

names and addresses of the holder(s) of the Notes and the principal amounts and

the amounts and number of such Notes.”

SECTION 2.  Agreement in Full Force, and Effect as Amended.

Except as specifically amended hereby, all provisions

of the Agreement shall remain in full force and effect.  After this Amendment becomes effective, all

references to the Agreement, the “Loan Funding and Servicing Agreement,”

“hereof,” “herein,” or words of similar effect referring to the Agreement shall

be deemed to mean the Agreement as amended hereby.  This Amendment shall not constitute a novation of the Agreement,

but shall constitute an amendment thereof. 

This Amendment shall not be deemed to expressly or impliedly waive,

amend or supplement any provision of the Agreement other than as set forth

herein.

SECTION 3.  Representations.

Each of the Borrower and Servicer represent and

warrant as of the date of this Amendment as follows:

(i)            it is duly incorporated or

organized, validly existing and in good standing under the laws of its

jurisdiction of incorporation or organization;

(ii)           the execution, delivery and

performance by it of this Amendment are within its powers, have been duly

authorized, and do not contravene (A) its charter, by-laws, or other

organizational documents, or (B) any Applicable Law;

(iii)          no consent, license, permit, approval

or authorization of, or registration, filing or declaration with any

governmental authority, is required in connection with the execution, delivery,

performance, validity or enforceability of this Amendment by or against it;

(iv)          this Amendment has been duly executed

and delivered by it;

(v)           this Amendment constitutes its legal,

valid and binding obligation enforceable against it in accordance with its

terms, except as enforceability may be limited by applicable bankruptcy,

insolvency, reorganization, moratorium or similar laws affecting the

enforcement of creditors’ rights generally or by general principles of equity;

(vi)          it is not in default under the

Agreement; and

(vii)         there is no Termination Event,

Unmatured Termination Event, or Servicer Termination Event.

 

4

 

SECTION 4.  Conditions to Effectiveness.

This Amendment shall become effective on the date

hereof.

SECTION 5.  Miscellaneous.

(a)           This Amendment may be executed in any

number of counterparts (including by facsimile), and by the different parties

hereto on the same or separate counterparts, each of which shall be deemed to

be an original instrument but all of which together shall constitute one and

the same agreement.

(b)           The descriptive headings of the

various sections of this Amendment are inserted for convenience of reference

only and shall not be deemed to affect the meaning or construction of any of

the provisions hereof.

(c)           This Amendment may not be amended or

otherwise, modified except as provided in the Agreement.

(d)           WBNA certifies by execution hereof

that it is an Investor with Commitments in excess of 66-2/3% of the Facility

Amount, and therefore is a Required Investor pursuant to the Agreement.

(e)           The failure or unenforceability of

any provision hereof shall not affect the other provisions of this Amendment.

(f)            Whenever the context and construction

so require, all words used in the singular number herein shall be deemed to

have been used in the plural, and vice versa, and the masculine gender shall

include the feminine and neuter and the neuter shall include the masculine and

feminine.

(g)           This Amendment represents the final

agreement between the parties and may not be contradicted by evidence of prior,

contemporaneous or subsequent oral agreements between the parties.  There are no unwritten oral agreements between

the parties.

(h)           The Borrower and the Servicer agree

to pay, no later than ten (10) Business Days following receipt of a bill

therefore, the reasonable fees and expenses of Moore & Van Allen PLLC as

counsel to the Deal Agent in connection with the preparation of this Amendment.

(i)            THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE

PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED

IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS

CONFLICT OF LAWS PROVISIONS.

[Remainder of Page Intentionally Left Blank]

 

5

 

IN

WITNESS WHEREOF, the parties have caused this Amendment to be executed by their

respective officers thereunto duly authorized, as of the date first above

written.

	

  THE BORROWER:

  	

  ACS FUNDING TRUST I

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  ACS Funding Trust I

  c/o American Capital Strategies, Ltd.

  2 Bethesda Metro Center, 14th Floor

  Bethesda, Maryland 20814

  
	

   

  	

  Attention:

  	

  Compliance Officer

  
	

   

  	

  Facsimile No.:

  	

  (301) 654-6714

  
	

   

  	

  Confirmation No.:

  	

  (301) 951-6122

  
	

   

  	

   

  
	

   

  	

   

  
	

  THE SERVICER:

  	

  AMERICAN CAPITAL STRATEGIES, LTD.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  American Capital Strategies, Ltd.

  2 Bethesda Metro Center, 10th Floor

  Bethesda, Maryland 20814

  
	

   

  	

  Attention:

  	

  Compliance Officer

  
	

   

  	

  Facsimile No.:

  	

  (301) 654-6714

  
	

   

  	

  Confirmation No.:

  	

  (301) 951-6122

  
				

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

 

6

 

	

  THE INVESTORS:

  	

  WACHOVIA BANK, NATIONAL ASSOCIATION (f/k/a First

  Union National Bank)

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  Commitment: $225,000,000.00; provided, however,

  that the sum of the Commitments of the Investors and the Lender shall not

  exceed the Facility Amount.

  
	

   

  	

   

  
	

   

  	

  Wachovia Bank, National Association

  One Wachovia Center, Mail Code: NC0610

  301 South College Street

  Charlotte, North Carolina 28288

  
	

   

  	

  Attention:

  	

  Capital Markets Credit Administration

  
	

   

  	

  Facsimile No.:

  	

  (704) 374-3254

  
	

   

  	

  Confirmation No.:

  	

  (704) 374-4001

  
				

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

7

 

	

  LENDER:

  	

  VARIABLE FUNDING CAPITAL CORPORATION  

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By First Union Securities, Inc. (successor-in-interest to First Union

  Capital Markets Corp.), as attorney-in-fact

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  Variable Funding Capital Corporation

  c/o First Union Securities, Inc.

  One Wachovia Center, Mail Code: NC0610

  301 South College Street

  Charlotte, North Carolina 28288

  
	

   

  	

  Attention:

  	

  Conduit Administration

  
	

   

  	

  Facsimile No.:

  	

  (704) 383-6036

  
	

   

  	

  Confirmation No.:

  	

  (704) 383-9343

  
	

   

  	

   

  
	

  with a Copy to:

  	

   

  
	

   

  	

   

  
	

   

  	

  Lord Securities Corp.

  2 Wall Street, 19th Floor

  New York, New York 10005

  
	

   

  	

  Attention:

  	

  Vice President

  
	

   

  	

  Facsimile No.:

  	

  (212) 346-9012

  
	

   

  	

  Confirmation No.:

  	

  (212) 346-9008

  
				

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

8

 

	

  THE BACKUP SERVICER:

  	

  WELLS

  FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (f/k/a

  Norwest Bank Minnesota, National Association)

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  Wells Fargo Bank Minnesota, National

  Association

  Sixth Street and Marquette, MAC: N9311-161

  Minneapolis, Minnesota 55479

  
	

   

  	

  Attention:

  	

  Corporate Trust Services Asset-Backed Administration

  
	

   

  	

  Facsimile No.:

  	

  (612) 667-3464

  
	

   

  	

  Confirmation No.:

  	

  (612) 667-8058

  
	

   

  	

   

  
	

   

  	

   

  
	

  THE

  COLLATERAL CUSTODIAN:

  	

  WELLS

  FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (f/k/a

  Norwest Bank Minnesota, National Association)

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  Wells Fargo Bank Minnesota, National

  Association

  Sixth Street and Marquette, MAC: N9311-161

  Minneapolis, Minnesota 55479

  
	

   

  	

  Attention:

  	

  Corporate Trust Services Asset-Backed Administration

  
	

   

  	

  Facsimile No.:

  	

  (612) 667-3464

  
	

   

  	

  Confirmation No.:

  	

  (612) 667-8058

  
				

 

[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]

 

9

 

	

  THE

  DEAL AGENT:

  	

  FIRST

  UNION SECURITIES, INC.

  (successor-in-interest to First Union  Capital Markets Corp.)

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  First Union Securities, Inc.

  One Wachovia Center, Mail Code: NC0610

  301 South College Street

  Charlotte, North Carolina 28288

  
	

   

  	

  Attention:

  	

  Conduit Administration

  
	

   

  	

  Facsimile No.:

  	

  (704) 383-6036

  
	

   

  	

  Confirmation No.:

  	

  (704) 383-9343

  
	

   

  	

   

  
	

   

  	

   

  
	

  LENDER

  AND LIQUIDITY AGENT

  	

  WACHOVIA

  BANK., NATIONAL ASSOCIATION (f/k/a First Union

  National Bank)

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

  Wachovia Bank, National Association

  One Wachovia Center, Mail Code: NC0610

  301 South College Street 

  Charlotte, North Carolina 28288

  
	

   

  	

  Attention:

  	

  Capital Markets Credit Administration

  
	

   

  	

  Facsimile No.:

  	

  (704) 374-3254

  
	

   

  	

  Confirmation No.:

  	

  (704) 374-4001

  
	

   

  	

  Lender Commitment: $30,000,000; provided, however,

  that the sum of the Commitments of the Investors and the Lender shall not

  exceed the Facility Amount.

  
				

 

Acknowledged and Agreed to 

this 29th day of April, 2002.

 

WACHOVIA BANK, NATIONAL 

ASSOCIATION (f/k/a First Union National Bank), 

as the Hedge Counterparty

By:                                                                                                          

Name:                                                                                                     

Title:                                                                                                       

Wachovia Bank,

National Association

One Wachovia Center, Mail Code: NC0610

Charlotte, North Carolina 28288

	

  Attention:

  	

  Capital Markets

  Credit Administration

  
	

  Facsimile No.:

  	

  (704) 374–3254

  
	

  Confirmation

  No.:

  	

  (704) 374–4001

  

 

 

10

 

EXHIBIT B-1

To Loan Funding 

and Servicing

Agreement

$30,000,000; provided, however,

that the sum of the Commitments 

of the Investors and the Lender shall not 

exceed the Facility Amount.

 

March 31, 1999

FUNB STRUCTURED NOTE

THIS FUNI3 STRUCTURED NOTE HAS NOT BEEN REGISTERED

UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES

ACT”) OR UNDER ANY STATE SECURITIES LAWS AND THE BORROWER (AS

DEFINED BELOW) HAS NOT BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF

1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”).  THIS FUNB STRUCTURED NOTE MAY NOT BE SOLD,

OFFERED FOR SALE OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE

SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS EXCEPT IN A TRANSACTION

THAT IS EXEMPTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

THIS FUNB STRUCTURED NOTE IS NOT PERMITTED TO BE

TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN

COMPLIANCE WITH THE TERMS OF THE LOAN FUNDING AND SERVICING AGREEMENT REFERRED

TO HEREIN.

IN NO EVENT SHALL THE BORROWER (DEFINED BELOW) BE

ENTITLED TO HAVE ADVANCES MADE TO IT UNDER THIS FUNB STRUCTURED NOTE AND THE

VFCC STRUCTURED NOTE IN AN AGGREGATE AMOUNT IN EXCESS OF THE FACILITY AMOUNT

(AS DEFINED IN THE LOAN FUNDING AND SERVICING AGREEMENT (AS DEFINED BELOW)).

FOR VALUE RECEIVED, ACS FUNDING TRUST I, a Delaware

business trust (the “Borrower”),

promises to pay to WACHOVIA BANK, NATIONAL ASSOCIATION (f/k/a First Union

National Bank) (the “Lender”), or its

assigns, the principal sum of THIRTY MILLION DOLLARS ($30,000,000) or, if less,

the unpaid principal amount of the aggregate advances (“Advances”) made by the Lender (as defined

below) to the Borrower pursuant to the Loan Funding and Servicing Agreement (as

defined below), as set forth on the attached Schedule, on the dates specified

in Section 2.6 of the Loan Funding and

Servicing Agreement, and to pay interest on the unpaid principal amount of each

Advance on each day that such unpaid principal amount is outstanding at the

Interest Rate related to such Advance as provided in the Loan Funding and

Servicing Agreement on each Payment Date and each other dates specified in the

Loan Funding and Servicing Agreement.

 

This FUNB Structured Note is issued pursuant to the

Loan Funding and Servicing Agreement, dated as of March 31, 1999, as amended by

Amendment No. 1, dated as of June 30, 1999, Amendment No. 2, dated as of

September 24, 1999, Amendment No. 3, dated as of December 14, 1999, Amendment

No. 4, dated as of June 16, 2000, Amendment No. 5, dated as of December 20,

2000, Amendment No. 6, dated as of March 29, 2001, Amendment No. 7, dated as of

April 19, 2001, Amendment No. 8, dated as of January 15, 2002, and Amendment

No. 9, dated as of March 29, 2002 (as amended, modified, waived, supplemented,

or restated from time to time, the “Loan Funding

and Servicing Agreement”), by and among the Borrower, American

Capital Strategies, Ltd., as servicer, Variable Funding Capital Corporation, as

a lender, the Investors named therein, Wells Fargo Bank Minnesota, National

Association (f/k/a Norwest Bank Minnesota, National Association), as backup

servicer and as collateral custodian, First Union Securities, Inc.

(successor-in-interest to First Union Capital Markets Corp.), as deal agent,

and Wachovia Bank, National Association (f/k/a First Union National Bank), as a

lender and as liquidity agent. 

Capitalized terms used but not defined in this Note are used with the

meanings ascribed to them in the Loan Funding and Servicing Agreement.

Notwithstanding any other provisions contained in this

FUNB Structured Note, if at any time the Interest Rate payable by the Paying

Agent on behalf of the Borrower under this Structured Note, when combined with

any and all other charges provided for in this FUNB Structured Note, in the

Loan Funding and Servicing Agreement or in any other document (to the extent

such other charges would constitute interest for the purpose of any applicable

law limiting interest that may be charged on this FUNB Structured Note),

exceeds the highest rate of interest permissible under applicable law (the “Maximum Lawful Rate”), then so long as the

Maximum Lawful Rate would be exceeded the Interest Rate under this FUNB

Structured Note shall be equal to the Maximum Lawful Rate.  If at any time thereafter the Interest Rate

payable under this FUNB Structured Note is less than the Maximum Lawful Rate,

the Paying Agent on behalf of the Borrower shall continue to pay Interest under

this FUNB Structured Note at the Maximum Lawful Rate until such time as the

total Interest paid by the Paying Agent on behalf of the Borrower is equal to

the total Interest that would have been paid had applicable law not limited the

Interest Rate payable under this FUNB Structured Note.  In no event shall the total Interest

received by the Lenders under this FUNB Structured Note exceed the amount which

such Lenders could lawfully have received had the Interest due under this FUNB

Structured Note been calculated since the date of this FUNB Structured Note at

the Maximum Lawful Rate.

Payments of the principal of, and Interest on, the

Advances by the Lenders and represented by this FUNB Structured Note shall be

made by the Paying Agent on behalf of the Borrower to the holder or holders

hereof by wire transfer of immediately available funds in the manner and at the

address specified for such purpose as provided in the Loan Funding and

Servicing Agreement, or in such manner or at such other address as the holder

or holders of this FUNB Structured Note shall have specified in writing to the

Borrower for such purpose, without the presentation or surrender of this FUNB

Structured Note or the making of any notation on this FUNB Structured Note.

If any payment under this FUNB Structured Note falls

due on a day that is not a Business Day, then such due date shall be extended

to the next succeeding Business Day and Interest shall be payable on any

principal so extended at the applicable Interest Rate.

 

12

 

If all or a portion of (i) the principal amount hereof

or (ii) any Interest payable thereon or (iii) any other amounts payable

hereunder shall not be paid when due (whether at maturity, by acceleration or

otherwise), such overdue amount shall bear Interest at a rate per annum that is

equal to the Base Rate plus 1.0%, in

each case from the date of such non–payment to (but excluding) the date

such amount is paid in full.

Portions or all of the principal amount of the FUNB

Structured Note shall become due and payable at the time or times set forth in

the Loan Funding and Servicing Agreement. 

Any portion or all of the principal amount of this FUNB Structured Note

may be prepaid, together with Interest thereon (and, as set forth in the Loan

Funding and Servicing Agreement, certain costs and expenses of the Lenders) at

the time and in the manner set forth in, but subject to the provisions of, the

Loan Funding and Servicing Agreement.

The Borrower expressly waives presentment, demand,

diligence, protest and all notices of any kind whatsoever with respect to this

FUNB Structured Note.

All amounts evidenced by this FUNB Structured Note,

the Advances, Advances Outstanding and all payments and prepayments of the

principal hereof and the respective dates and maturity dates thereof shall be

endorsed by the Deal Agent, as agent for the Lenders, on the Schedule attached

hereto and made a part hereof or on a continuation thereof, which shall be

attached hereto and made a part hereof or otherwise recorded in its internal

books or records or computer system; provided, however,

that the failure of the Deal Agent to make such a notation or recordation shall

not in any way limit or otherwise affect the obligations of the Borrower under

this FUNB Structured Note as provided in the Loan Funding and Servicing Agreement.

The holder or holders hereof may sell, assign,

transfer, negotiate, grant participations in or otherwise dispose of all or any

portion of any Advances, Advances Outstanding or the Commitment represented by

this FUNB Structured Note.  All

transfers and pledges of this FUNB Structured Note must be done in compliance

with the Securities Act, applicable state securities laws and Article 8 of the

UCC.

This FUNB Structured Note is secured by the security

interests granted pursuant to Section 2.9

of the Loan Funding and Servicing Agreement. 

The holder or holders of this FUNB Structured Note are entitled to the

benefits of the Loan Funding and Servicing Agreement and may enforce the

agreements of the Borrower contained in the Loan Funding and Servicing Agreement

and exercise the remedies provided for by, or otherwise available in respect

of, the Loan Funding and Servicing Agreement, all in accordance with, and

subject to the restrictions contained in, the terms of the Loan Funding and

Servicing Agreement.  If a Termination

Event shall occur and the Termination Date has been declared or has otherwise

occurred, the unpaid balance of the principal of all Advances, together with

accrued Interest thereon, shall be declared, and become, due and payable in the

manner and with the effect provided in the Loan Funding and Servicing

Agreement.

This FUNB Structured Note is one of the “Structured Notes” referred to in Section 2.5 of the Loan Funding and Servicing

Agreement.  THIS STRUCTURED NOTE SHALL

BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW

YORK.

 

13

 

This FUNB Structured Note is intended to be and is an

amendment to, and replacement of, the FUNB Note, dated March 31, 1999, in the

maximum principal amount of $30,000,000 (the “Replaced

Note”).  This FUNB Structured

Note evidences the same indebtedness and is secured by the same Collateral

securing the Replaced Notes and is not intended to constitute a novation in any

manner.

 

14

 

IN WITNESS WHEREOF, the

undersigned has executed this FUNB Structured Note as on the date first written

above.

	

   

  	

  ACS

  FUNDING TRUST I

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  

 

 

15

 

 

	

  Schedule attached to FUNB

  Structured Note dated March 31, 1999 of ACS Funding Trust I payable to the

  order of Wachovia Bank, National Association, as the Lender

  
	

  

  Advances Outstanding as of March 29, 2002 (Date of Amendment No. 9)

  	

  $

  	

   

  	

   

  
	

   

  
	

  Date of Advance or Repayment

  	

   

  	

  Principal Amount of Advance

  	

   

  	

  Principal Amount of Repayment

  	

   

  	

  Advances Outstanding

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
										

 

 

16

 

EXHIBIT B–2

To Loan Funding 

and Servicing 

Agreement

$225,000,000; provided, however,

that the sum of the Commitments of 

the Investors and the Lender shall not 

exceed the Facility Amount.

March 31, 1999

VFCC STRUCTURED NOTE

THIS VFCC STRUCTURED NOTE HAS NOT BEEN REGISTERED

UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES

ACT”) OR UNDER ANY STATE SECURITIES LAWS AND THE BORROWER (AS

DEFINED BELOW) HAS NOT BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF

1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”).  THIS VFCC STRUCTURED NOTE MAY NOT BE SOLD,

OFFERED FOR SALE OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES

ACT AND ANY APPLICABLE STATE SECURITIES LAWS EXCEPT IN A TRANSACTION THAT IS

EXEMPTED UNDER THE SECURITIES ACT AND APPLICABLE, STATE SECURITIES LAWS.

THIS VFCC STRUCTURED NOTE IS NOT PERMITTED TO BE

TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN

COMPLIANCE WITH THE TERMS OF THE LOAN FUNDING AND SERVICING AGREEMENT REFERRED

TO HEREIN.

IN NO EVENT SHALL THE BORROWER (DEFINED BELOW) BE

ENTITLED TO HAVE ADVANCES MADE TO IT UNDER THIS VFCC STRUCTURED NOTE AND THE

FUNB STRUCTURED NOTE IN AN AGGREGATE AMOUNT IN EXCESS OF THE FACILITY AMOUNT

(AS DEFINED IN THE LOAN FUNDING AND SERVICING AGREEMENT (AS DEFINED BELOW)).

FOR VALUE RECEIVED, ACS FUNDING TRUST I, a Delaware

business trust (the “Borrower”),

promises to pay to FIRST UNION SECURITIES, INC. (successor-in-interest to First

Union Capital Markets Corp.), as the deal agent for the Lenders (the “Deal Agent”), or the Lenders’ assigns, the

principal sum of TWO HUNDRED AND TWENTY-FIVE MILLION DOLLARS ($225,000,000) or,

if less, the unpaid principal amount of the aggregate advances (“Advances”) made by the Lenders (as defined

below) to the Borrower pursuant to the Loan Funding and Servicing Agreement (as

defined below), as set forth on the attached Schedule, on the dates specified

in Section 2.6 of the Loan Funding and

Servicing Agreement, and to pay interest on the unpaid principal amount of each

Advance on each day that such unpaid principal amount is outstanding at the

Interest Rate related to such Advance as provided in the Loan Funding and

Servicing Agreement on each Payment Date and each other dates specified in the

Loan Funding and Servicing Agreement.

 

17

 

This VFCC Structured Note is issued pursuant to the

Loan Funding and Servicing Agreement, dated as of March 31, 1999, as amended by

Amendment No. 1, dated as of June 30, 1999, Amendment No. 2, dated as of

September 24, 1999, Amendment No. 3, dated as of December 14, 1999, Amendment

No. 4, dated as of June 16, 2000, Amendment No. 5, dated as of December 20,

2000, Amendment No. 6, dated as of March 29, 2001, Amendment No. 7, dated as of

April 19, 2001, Amendment No. 8, dated as of January 15, 2002, and Amendment

No. 9, dated as of March 29, 2002 (as amended, modified, waived, supplemented,

or restated from time to time, the “Loan Funding

and Servicing Agreement”), by and among the Borrower, American

Capital Strategies, Ltd., as servicer, Variable Funding Capital Corporation, as

a lender, the Investors named therein, Wells Fargo Bank Minnesota, National

Association (f/k/a Norwest Bank Minnesota, National Association), as backup

servicer and as collateral custodian, the Deal Agent, and Wachovia Bank,

National Association (f/k/a First Union National Bank), as a lender and as

liquidity agent.  Capitalized terms used

but not defined in this VFCC Structured Note are used with the meanings

ascribed to them in the Loan Funding and Servicing Agreement.

Notwithstanding any other provisions contained in this

VFCC Structured Note, if at any time the Interest Rate payable by the Paying

Agent on behalf of the Borrower under this VFCC Structured Note, when combined

with any and all other charges provided for in this VFCC Structured Note, in

the Loan Funding and Servicing Agreement or in any other document (to the

extent such other charges would constitute interest for the purpose of any

applicable law limiting interest that may be charged on this VFCC Structured

Note), exceeds the highest rate of interest permissible under applicable law

(the “Maximum Lawful Rate”), then so

long as the Maximum Lawful Rate would be exceeded the Interest Rate under this

VFCC Structured Note shall be equal to the Maximum Lawful Rate.  If at any time thereafter the Interest Rate

payable under this VFCC Structured Note is less than the Maximum Lawful Rate,

the Paying Agent on behalf of the Borrower shall continue to pay Interest under

this VFCC Structured Note at the Maximum Lawful Rate until such time as the

total Interest paid by the Paying Agent on behalf of the Borrower is equal to

the total Interest that would have been paid had applicable law not limited the

Interest Rate payable under this VFCC Structured Note.  In no event shall the total Interest

received by the Lenders under this VFCC Structured Note exceed the amount which

such Lenders could lawfully have received had the Interest due under this VFCC

Structured Note been calculated since the date of this VFCC Structured Note at

the Maximum Lawful Rate.

Payments of the principal of, and Interest on, the

Advances by the Lenders and represented by this VFCC Structured Note shall be

made by the Paying Agent on behalf of the Borrower to the holder or holders

hereof by wire transfer of immediately available funds in the manner and at the

address specified for such purpose as provided in the Loan Funding and

Servicing Agreement, or in such manner or at such other address as the holder

or holders of this VFCC Structured Note shall have specified in writing to the

Borrower for such purpose, without the presentation or surrender of this VFCC

Structured Note or the making of any notation on this VFCC Structured Note.

If any payment under this VFCC Structured Note falls

due on a day that is not a Business Day, then such due date shall be extended

to the next succeeding Business Day and Interest shall be payable on any

principal so extended at the applicable Interest Rate.

 

18

 

If all or a portion of (i) the principal amount hereof

or (ii) any Interest payable thereon or (iii) any other amounts payable

hereunder shall not be paid when due (whether at maturity, by acceleration or

otherwise), such overdue amount shall bear Interest at a rate per annum that is

equal to the Base Rate plus 1.0%, in

each case from the date of such non–payment to (but excluding) the date

such amount is paid in full.

Portions or all of the principal amount of the VFCC

Structured Note shall become due and payable at the time or times set forth in

the Loan Funding and Servicing Agreement. 

Any portion or all of the principal amount of this VFCC Structured Note

may be prepaid, together with Interest thereon (and, as set forth in the Loan

Funding and Servicing Agreement, certain costs and expenses of the Lenders) at

the time and in the manner set forth in, but subject to the provisions of, the

Loan Funding and Servicing Agreement.

The Borrower expressly waives presentment, demand,

diligence, protest and all notices of any kind whatsoever with respect to this

VFCC Structured Note.

All amounts evidenced by this VFCC Structured Note,

the Advances, Advances Outstanding and all payments and prepayments of the

principal hereof and the respective dates and maturity dates thereof shall be

endorsed by the Deal Agent, as agent for the Lenders, on the Schedule attached

hereto and made a part hereof or on a continuation thereof, which shall be

attached hereto and made a part hereof or otherwise recorded in its internal

books or records or computer system; provided, however,

that the failure of the Deal Agent to make such a notation or recordation shall

not in any way limit or otherwise affect the obligations of the Borrower under

this VFCC Structured Note as provided in the Loan Funding and Servicing

Agreement.

The holder or holders hereof may sell, assign,

transfer, negotiate, grant participations in or otherwise dispose of all or any

portion of any Advance, Advances Outstanding or the Commitment represented by

this VFCC Structured Note.  All

transfers and pledges of this VFCC Structured Note must be done in compliance

with the Securities Act, applicable state securities laws and Article 8 of the

UCC.

This VFCC Structured Note is secured by the security

interests granted pursuant to Section 2.9

of the Loan Funding and Servicing Agreement. 

The holder or holders of this VFCC Structured Note are entitled to the

benefits of the Loan Funding and Servicing Agreement and may enforce the

agreements of the Borrower contained in the Loan Funding and Servicing

Agreement and exercise the remedies provided for by, or otherwise available in

respect of, the Loan Funding and Servicing Agreement, all in accordance with,

and subject to the restrictions contained in, the terms of the Loan Funding and

Servicing Agreement.  If a Termination

Event shall occur and the Termination Date has been declared or has otherwise

occurred, the unpaid balance of the principal of all Advances, together with

accrued Interest thereon, shall be declared, and become, due and payable in the

manner and with the effect provided in the Loan Funding and Servicing

Agreement.

This VFCC Structured Note is one of the “Structured Notes” referred to in Section 2.5 of the Loan Funding and Servicing

Agreement.  THIS VFCC STRUCTURED NOTE

SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF

NEW YORK.

 

19

 

This VFCC Structured Note is intended to be and is an

amendment to, and replacement of, the VFCC Note, dated March 31, 1999, in the

maximum principal amount of $225,000,000 (the “Replaced

Note”).  This VFCC Structured

Note evidences the same indebtedness and is secured by the same Collateral

securing the Replaced Notes and is not intended to constitute a novation in any

manner.

IN WITNESS WHEREOF, the undersigned has executed this

VFCC Structured Note as on the date first written above.

	

   

  	

  ACS

  FUNDING TRUST I

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By 

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  

 

 

20

 

 

 

	

  Schedule attached to FUNB

  Structured Note dated March 31, 1999 of ACS Funding Trust I payable to the

  order of Wachovia Bank, National Association, as the Lender

  
	

  

  Advances Outstanding as of March 29, 2002 (Date of Amendment No. 9)

  	

  $

  	

   

  	

   

  
	

   

  
	

  Date of Advance or Repayment

  	

   

  	

  Principal Amount of Advance

  	

   

  	

  Principal Amount of Repayment

  	

   

  	

  Advances Outstanding

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