Common use of REIT Savings Provision Clause in Contracts

REIT Savings Provision. Notwithstanding the foregoing, in the event that counsel or independent accountants for the REIT determine that there exists a material risk that any amounts due to a REIT Indemnified Party under Section 6.01 of this Agreement would be treated as Nonqualifying Income upon the payment of such amounts to the REIT Indemnified Party, the amount paid to such REIT Indemnified Party pursuant to Section 6.01 of this Agreement in any tax year shall not exceed the maximum amount that can be paid to the REIT Indemnified Party in such year without causing the REIT to fail to meet the REIT Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which Two Harbors would otherwise be obligated to pay to a REIT Indemnified Party pursuant to Section 6.01 of this Agreement (the “Expense Amount”), then at the REIT’s sole cost and expense, including attorneys’ fees incurred by Two Harbors in complying with this Section 6.05: (1) Two Harbors shall place the Expense Amount into an escrow account (the “Escrow Account”) using an escrow agent and agreement acceptable to the REIT Indemnified Party and shall not release any portion thereof to the REIT Indemnified Party, and the REIT Indemnified Party shall not be entitled to any such amount, unless and until the REIT Indemnified Party delivers to Two Harbors, at the sole option of the REIT, (i) an opinion (an “Expense Amount Tax Opinion”) of the REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying Income, (ii) a letter (an “Expense Amount Accountant’s Letter”) from the REIT’s independent accountants indicating the maximum amount that can be paid at that time to the REIT Indemnified Party without causing the REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the REIT indicating that the receipt of any Expense Amount hereunder will not cause the REIT to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a “Release Document”); and (2) pending the delivery of a Release Document by the REIT Indemnified Party to Two Harbors, the Indemnified Party shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “Indemnity Loan Agreement”) acceptable to the REIT Indemnified Party that (i) requires Two Harbors to lend the REIT Indemnified Party immediately available cash proceeds in an amount equal to the Expense Amount (an “Indemnity Loan”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of the Indemnified Party or any guarantor of the REIT Indemnified Party, including the REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.

REIT Savings Provision. Notwithstanding the foregoing, in the event that counsel or independent accountants for the REIT NREF determine that there exists a material risk that any amounts due to a REIT an NREF Indemnified Party under Section 6.01 5(a) of this Agreement would be treated as an amount that is treated as gross income for purposes of Section 856 of the Code and which is not Qualifying Income (“Nonqualifying Income Income”) of NREF upon the payment of such amounts to the REIT NREF Indemnified Party, the amount paid to such REIT NREF Indemnified Party pursuant to Section 6.01 5(a) of this Agreement in any tax year shall not exceed the maximum amount that can be paid to the REIT NREF Indemnified Party in such year without causing the NREF or NREF OP IV REIT Sub to fail to meet the requirements imposed on REITs pursuant to Sections 856 through and including 860 of the Code (the “REIT Requirements Requirements”) for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the REITNREF. If the amount payable for any tax year under the preceding sentence is less than which the amount which Two Harbors Contributors would otherwise be obligated to pay to a REIT an NREF Indemnified Party pursuant to Section 6.01 5(a) of this Agreement exceeds the maximum amount described in the preceding sentence (the excess being referred to as “Expense Excess Indemnification Amount”), then at the REITNREF’s sole cost and expense, including attorneys’ fees incurred by Two Harbors the Contributions in complying with this Section 6.05: (1) Two Harbors 5(e): the Contributors shall place the Expense Excess Indemnification Amount into an escrow account (the “Escrow Account”) using an escrow agent and agreement acceptable to the REIT NREF Indemnified Party and shall not release any portion thereof to the REIT NREF Indemnified Party, and the REIT NREF Indemnified Party shall not be entitled to any such amount, unless and until the REIT Indemnified Party NREF delivers to Two Harborsthe Contributors, at the sole option of the REITNREF, (i) an opinion (an “Expense Excess Indemnification Amount Tax Opinion”) of the REITNREF’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying IncomeIncome of NREF or NREF OP IV REIT Sub, (ii) a letter (an “Expense Excess Indemnification Amount Accountant’s Letter”) from the REITNREF’s independent accountants indicating the maximum amount that can be paid at that time to the REIT NREF Indemnified Party without causing the NREF or NREF OP IV REIT Sub to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the REIT NREF indicating that the receipt of any Expense Excess Indemnification Amount hereunder will not cause the NREF or NREF OP IV REIT Sub to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Excess Indemnification Amount Tax Opinion and an Expense Excess Indemnification Amount Accountant’s Letter, a “Release Document”); and (2) pending the delivery of a Release Document by the REIT Indemnified Party to Two Harbors, the Indemnified Party shall have the right, but not the obligation, to borrow the Expense Amount from the Escrow Account pursuant to a loan agreement (an “Indemnity Loan Agreement”) acceptable to the REIT Indemnified Party that (i) requires Two Harbors to lend the REIT Indemnified Party immediately available cash proceeds in an amount equal to the Expense Amount (an “Indemnity Loan”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of the Indemnified Party or any guarantor of the REIT Indemnified Party, including the REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.

REIT Savings Provision. Notwithstanding the foregoing, in the event that counsel or independent accountants for the REIT determine that there exists a material risk that any amounts due to a REIT Indemnified Party under Section 6.01 of this Agreement would be treated as Nonqualifying Income of the REIT upon the payment of such amounts to the REIT Indemnified Party, the amount paid to such REIT Indemnified Party pursuant to Section 6.01 of this Agreement in any tax year shall not exceed the maximum amount that can be paid to the REIT Indemnified Party in such year without causing the REIT to fail to meet the REIT Requirements for such year, determined as if the payment of such amount were Nonqualifying Income as determined by such counsel or independent accountants to the REIT. If the amount payable for any tax year under the preceding sentence is less than the amount which Two Harbors would otherwise be obligated to pay to a REIT Indemnified Party pursuant to Section 6.01 of this Agreement exceeds the maximum amount described in the preceding sentence (the excess being referred to as “Expense Excess Indemnification Amount”), then at the REIT’s sole cost and expense, including attorneys’ fees incurred by Two Harbors in complying with this Section 6.05: (1) Two Harbors shall place the Expense Excess Indemnification Amount into an escrow account (the “Escrow Account”) using an escrow agent and agreement acceptable to the REIT Indemnified Party and shall not release any portion thereof to the REIT Indemnified Party, and the REIT Indemnified Party shall not be entitled to any such amount, unless and until the REIT Indemnified Party delivers to Two Harbors, at the sole option of the REIT, (i) an opinion (an “Expense Excess Indemnification Amount Tax Opinion”) of the REIT’s tax counsel to the effect that such amount, if and to the extent paid, would not constitute Nonqualifying IncomeIncome of the REIT, (ii) a letter (an “Expense Excess Indemnification Amount Accountant’s Letter”) from the REIT’s independent accountants indicating the maximum amount that can be paid at that time to the REIT Indemnified Party without causing the REIT to fail to meet the REIT Requirements for any relevant taxable year, or (iii) a private letter ruling issued by the IRS to the REIT indicating that the receipt of any Expense Excess Indemnification Amount hereunder will not cause the REIT to fail to satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively with an Expense Excess Indemnification Amount Tax Opinion and an Expense Excess Indemnification Amount Accountant’s Letter, a “Release Document”); and (2) pending the delivery of a Release Document by the REIT Indemnified Party to Two Harbors, the Indemnified Party REIT shall have the right, but not the obligation, to borrow the Expense Excess Indemnification Amount from the Escrow Account pursuant to a loan agreement (an “Indemnity Loan Agreement”) acceptable to the REIT Indemnified Party that (i) requires Two Harbors a loan from the Escrow Account to lend the REIT Indemnified Party immediately available cash proceeds in an amount equal to the Expense Excess Indemnification Amount (an “Indemnity Loan”), and (ii) provides for (A) a commercially reasonable interest rate and commercially reasonable covenants, taking into account the credit standing and profile of the Indemnified Party or any guarantor of the REIT Indemnified Party, including the REIT, at the time of such Loan, and (B) a 15 year maturity with no periodic amortization.