EXHIBIT 10.3

 
AMENDMENT NO. 1
TO
MASTER REPURCHASE AGREEMENT
 
AMENDMENT NO. 1 TO MASTER REPURCHASE AGREEMENT (this “Amendment”), dated as of
August 16, 2005, by and between:
 
CAPLEASE, LP, a Delaware limited partnership, for itself and on behalf of
certain special-purpose entity subsidiaries thereof (collectively, “Sellers”);
and
 
CAPITAL LEASE FUNDING, INC., a Maryland corporation (“Guarantor”); and
 
CAPLEASE SERVICES CORP., a Delaware corporation (“Services”); and
 
WACHOVIA BANK, NATIONAL ASSOCIATION (“Buyer”).
 
PRELIMINARY STATEMENTS
 
(A) Sellers and Guarantor entered into a certain Master Repurchase Agreement,
dated as of September 22, 2004 with the Buyer (as amended, the “Repurchase
Agreement”); and
 
(B) Services, as a wholly owned subsidiary of Guarantor, desires to be added as
a party to the Repurchase Agreement as a seller, and Buyer is willing to add
Services as a party thereto, all on the terms and conditions hereinafter set
forth; and
 
(C) Sellers and Guarantor have requested that Buyer issue letters of credit to
Sellers, Guarantor, Services or any of their affiliates or subsidiaries under
the Repurchase Agreement; and
 
(D) Sellers and Guarantor have also requested that the Buyer amend certain
provisions of the Repurchase Agreement, and the Buyer is willing to do so, all
on the terms and conditions hereinafter set forth.
 
NOW, THEREFORE, in consideration of the agreements and provisions contained
herein, the parties hereto hereby agree as follows:
 
ARTICLE I.
 
AMENDMENTS
 
Section 1.1.  Definitions.Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Repurchase
Agreement.
 
Section 1.2.  Certain Amendments to Repurchase Agreement. The Repurchase
Agreement is hereby amended as follows:
 
(a)  The definition of “Asset Value” appearing in Section 2.01 of the Repurchase
Agreement is hereby amended by adding the following subclause (c) thereto:
 
 
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“(c)
the aggregate Asset Value shall be reduced on a dollar-for-dollar basis by the
amount of LC Exposure as of such date of determination. Such reduction may be
applied individually against any Eligible Asset or collectively against all
Eligible Assets in the Buyer’s sole discretion; provided, that, the total amount
of reduction shall not exceed the amount of LC Exposure as of such date of
determination.”

 
(b)  The definition of “Consolidated Tangible Net Worth” appearing in Section
2.01 of the Repurchase Agreement is hereby amended by adding the following
subclause (c) thereto:
 

“(c)
for the avoidance of doubt, ‘Consolidated Tangible Net Worth’ shall add back
accumulated depreciation and amortization on real estate investments.”

 
(c)  The definition of “Initial Termination Date “ appearing in Section 2.01 of
the Repurchase Agreement is amended and restated in its entirety as follows:
 
“‘Initial Termination Date’: Shall be August 15, 2006.”
 
(d)  The defined term “LC Disbursement” is hereby added to Section 2.01 of the
Repurchase Agreement in alphabetical order and the definition of such term shall
read in its entirety as follows:
 
“‘LC Disbursement’: A payment made by the Buyer pursuant to a Letter of Credit.
Following such payment, the Buyer shall increase the Purchase Price and
Repurchase Price of any Purchased Asset, as selected by Buyer in its sole
discretion.”
 
(e)  The defined term “LC Documentation” is hereby added to Section 2.01 of the
Repurchase Agreement in alphabetical order and the definition of such term shall
read in its entirety as follows:
 
“‘LC Documentation’: All applications and agreements relating to the issuance by
the Buyer (or any Letter of Credit issuing affiliate) of any Letter of Credit
other than the Wachovia Letter of Credit to either Sellers, Guarantor, Services
or any of their affiliates or subsidiaries (“Applicants”) and all accompanying
ancillary documentation, including, without limitation, all Letters of Credit,
reimbursement agreements and security agreements executed and delivered in
connection therewith.”
 
(f)  The defined term “LC Exposure” is hereby added to Section 2.01 of the
Repurchase Agreement in alphabetical order and the definition of such term shall
read in its entirety as follows:
 
“‘LC Exposure’: At any time, the sum of (a) the aggregate undrawn and unexpired
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have, or are deemed to have, been funded
under this Agreement, provided, that, such LC Disbursements have not resulted in
an increase in the Purchase Price and Repurchase Price of any Purchased Asset.
At no time during the term hereof shall the LC Exposure exceed $20 million (not
including exposure under the Wachovia Letter of Credit). Notwithstanding the
foregoing, any LC Disbursement that has (i) been repaid by the Sellers in cash
or Cash Equivalents, or (ii) resulted in the increase in the Purchase Price and
Repurchase Price of the Purchased Asset, shall not be calculated as part of LC
Exposure.”
 
 
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(g)  The defined term “Letter of Credit” is hereby added to Section 2.01 of the
Repurchase Agreement in alphabetical order and the definition of such term shall
read in its entirety as follows:
 
“‘Letter of Credit’: Any letter of credit issued pursuant to any LC
Documentation.”
 
(h)  The definition of “Maximum Amount“ appearing in Section 2.01 of the
Repurchase Agreement is amended and restated in its entirety as follows:
 
“‘Maximum Amount’: $250,000,000 plus the amount available under the Wachovia
Letter of Credit, or such greater amount as Buyer may determine in accordance
with Section 3.05(b) hereof, less the LC Exposure.”
 
(i)  The definition of “Mortgage Asset“ appearing in Section 2.01 of the
Repurchase Agreement is amended and restated in its entirety as follows:
 
“‘Mortgage Asset’: Any Whole Loan, B Note, Mezzanine Loan, CMBS, Floater, Letter
of Credit Loan or Construction Loan, or any other asset that Buyer agrees in its
sole discretion to purchase hereunder, which the Custodian has been instructed
to hold for Buyer pursuant to the Custodial Agreement listed on a Confirmation.
In no event shall “Mortgage Asset” include any asset (i) not entirely owned by
Seller and (ii) unless otherwise approved by Buyer, except in the case of CMBS,
not a loan secured by real property encumbered by a Credit Tenant Lease.”
 
(j)  The definition of “Sellers” appearing in Section 2.01 of the Repurchase
Agreement is amended and restated in its entirety as follows:
 
“‘Seller(s)’: Caplease, LP, a Delaware limited partnership, certain special
purpose-entity subsidiaries thereof, and Caplease Services Corp., a Delaware
corporation.”

(k)  The definition of “SPE Seller” appearing on Section 2.01 of the Repurchase
Agreement is amended and restated in its entirety as follows:
 
“‘SPE Seller’: A Subsidiary of Caplease or Guarantor formed after the date
hereof solely for the purposes of owning real estate and obtaining credit-tenant
lease mortgage loans from Caplease or Guarantor which will be Mortgage Assets
under Direct CTL Transactions, and which Subsidiary shall have such corporate
and capital structure, and have governing documents having such terms and
restrictions, as shall be consistent with bankruptcy-remote “special-purpose
entities” and otherwise reasonably satisfactory to the Buyer. Notwithstanding
the foregoing, SPE Sellers shall not be required to have independent directors
and “non-consolidation” opinions in connection with any SPE Seller shall only be
required if requested by Buyer.”

 
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(l)  Section 3.04 of the Repurchase Agreement is hereby amended by adding the
following subclause (c) thereto:
 

 
“(c)
Mandatory Repurchases. In the event that a LC Disbursement results in a Margin
Deficit, Seller shall, no later than the close of business on the day that
Seller is provided with either written or telephonic notice of such Margin
Deficit by Buyer: (i) sell to Buyer for no additional consideration Additional
Purchased Assets; (ii) repurchase Purchased Assets at the Repurchase Price;
(iii) make a payment in reduction of the Repurchase Price; or (iv) choose any
combination of the foregoing, so that, after giving effect to such repurchases
and payments, the aggregate Repurchase Price plus LC Exposure of all Mortgage
Assets subject to Transactions then outstanding does not exceed (x) the Maximum
Amount, and/or (y) the aggregate Asset Value. Notwithstanding the foregoing, if
the Seller does not designate the Purchased Asset it will repurchase in a timely
manner, the Buyer (in its sole discretion) will be permitted to designate the
Purchased Assets that are to be repurchased by Seller in order to satisfy the
Margin Deficit.”

 
(m)  Section 9.01(a)(iii) of the Repurchase Agreement is hereby amended and
restated in its entirety as follows:
 
“(iii) with respect to each Mortgage Asset, as soon as available, but in any
event not later than two (2) Business Days prior to each Payment Date, copies of
the monthly servicing report (which will include all available information on
all collections with respect to, and current unpaid principal balances of, the
Mortgage Assets);”
 
(n)  Section 9.01(a)(iv) of the Repurchase Agreement is hereby amended and
restated in its entirety as follows:
 
“(iv) with respect to each Mortgage Asset, to the extent requested in writing by
the Buyer, as soon as available, any Servicer’s report relating to projections
of any protective advances with respect to such Mortgage Asset, which, if
requested by Buyer in writing, shall include, in any event, a description of the
related Seller’s internal risk rating (if applicable), tenant ratings, tenant
KMV ratings (if applicable) and/or surveillance of such Mortgage Asset;”
 
(o)  Section 9.01(a)(v) of the Repurchase Agreement is hereby amended and
restated in its entirety as follows:
 
“(iv) with respect to each Mortgage Asset, to the extent received by any Seller
from the obligor under any Mortgage Asset, if requested in writing by the Buyer,
as soon as available, but in any event not later than thirty (30) days after
receipt thereof, the annual balance sheet with respect to the any tenant to the
extent the Seller has received the same;”
 
(p)  Section 9.01(e) of the Repurchase Agreement is amended by deleting the
words “(other than the Subsidiaries set forth on Schedule 5 hereto)” and
substituting in its place and stead “(other than in the ordinary course of
business in connection with acquiring or financing assets)”.
 
(q)  Section 9.01(l)(i) of the Repurchase Agreement is amended by deleting
reference to “$100,000,000” and substituting in its place and stead
“$180,000,000”.
 
 
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(r)  Section 9.01 of the Repurchase Agreement is hereby amended by adding the
following subclause (y) thereto:
 
“(y) Notwithstanding Section 6.02 of this Agreement, if any LC Exposure exists
at the time that this Agreement terminates: (i) the Sellers shall provide
collateral, in the form of cash or Cash Equivalents, equal to the amount of such
LC Exposure in order to secure the payment obligations under such LC Exposure
(“Cash Collateral”); and (ii) following receipt of the Cash Collateral from the
Sellers and performance of all other obligations hereunder, the Buyer shall
reconvey the Purchased Assets to the Sellers and release its security interest
therein.”
 
ARTICLE II.
 
REPRESENTATIONS AND WARRANTIES
 
In order to induce the Buyer to enter into this Amendment, the Sellers and
Guarantor hereby jointly and severally represent and warrant to the Buyer that:
 
Section 2.1.  No Default. After giving effect to this Amendment, no Default or
Event of Default shall have occurred or be continuing under the Repurchase
Agreement, or any other Agreement between the parties hereto.
 
Section 2.2.  Existing Representations and Warranties. As of the date hereof and
after giving effect to this Amendment, each and every one of the representations
and warranties set forth in the Repurchase Agreement (except for such
representations and warranties that were only required to be true and correct as
of a prior date) are true and correct in all material respects.
 
Section 2.3.  Authority; Enforceability. (a) The execution, delivery and
performance by the Sellers and Guarantor of this Amendment are within their
respective organizational powers and have been duly authorized by all necessary
action on the part of the Sellers and Guarantor, (b) this Amendment is the
legal, valid and binding obligation of the Sellers and Guarantor, enforceable
against the Sellers and Guarantor in accordance with its respective terms, and
(c) this Amendment and the execution, delivery and performance by the Sellers
and Guarantor does not: (i) contravene the terms of any of their respective
organization documents; (ii) conflict with or result in any material breach or
contravention of, or the creation of any Lien under, any document evidencing any
contractual obligation to which it is a party or any order, injunction, writ or
decree to which the Sellers or Guarantor or their respective assets and
properties are subject; or (iii) violate any Requirement of Law.
 
ARTICLE III.
 
REFERENCE TO AND EFFECT UPON THE LOAN AGREEMENT
 
Section 3.1.  Effect. Except as specifically set forth herein, the Repurchase
Agreement and the other ancillary documents entered into in connection therewith
(collectively, “Transaction Documents”) shall remain in full force and effect in
accordance with their terms and are hereby ratified and confirmed.
 
Section 3.2.  No Waiver; References. The execution, delivery and effectiveness
of this Amendment shall not operate as a waiver of any right, power or remedy of
the Buyer under the Repurchase Agreement or the Transaction Documents, nor
constitute a waiver of any provision of the Repurchase Agreement or the
Transaction Documents, except as specifically set forth herein. Upon the
effectiveness of this Amendment, each reference in:
 
(i) the Repurchase Agreement to “this Agreement”, “hereunder”, “hereof”,
“herein” or words of similar import shall mean and be a reference to the
Repurchase Agreement as amended hereby; and
 
(ii) the other Transaction Documents to the “Repurchase Agreement” shall mean
and be a reference to the Repurchase Agreement as amended hereby.
 
Section 3.3.  Waiver. As of the date hereof, Sellers and Guarantor hereby waive,
release and discharge Buyer and its successors, assigns, and past, present and
future affiliates, partners, participants, members, officers, directors,
employees, shareholders, attorneys, and agents from any and all liabilities,
duties, responsibilities, obligations, claims, demands, actions, causes of
action, cases, controversies, damages, costs, losses, and expenses now existing
or hereafter arising out of or in any way relating to or in connection with,
directly or indirectly, the Repurchase Agreement or the Transaction Documents;
provided, that, neither Buyer nor any of its successors, assigns, and past,
present and future affiliates, partners, participants, members, officers,
directors, employees, shareholders, attorneys, and agents has engaged in any act
of gross negligence or willful misconduct in connection with the Repurchase
Agreement or the Transaction Documents.
 
 
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ARTICLE IV.
 
MISCELLANEOUS.
 
Section 4.1.  Expenses. The Sellers and Guarantor agree to pay the Buyer upon
demand for all reasonable expenses, including reasonable attorneys’ fees and
expenses of the Buyer, incurred by the Buyer in connection with the preparation,
negotiation and execution of this Amendment.
 
Section 4.2.  Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
 
Section 4.3.  Successors. This Amendment shall be binding upon the parties
hereto and their respective successors and assigns, and shall inure to the
benefit of the parties hereto and the successors and assigns of the Buyer.
 
Section 4.4.  Assignment. Sellers and Guarantor shall not assign all or any
portion of this Amendment, or any rights or benefits thereof, to any person or
entity without the prior written consent of the Buyer.
 
Section 4.5.  Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute one and the same Amendment.
 

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first written above.
 
SELLERS:
 
CAPLEASE, LP, for itself and on behalf of certain special-purpose entity
subsidiaries thereof
 
By:  CLF OP GENERAL PARTNER LLC, its General Partner
 
By:  Capital Lease Funding, Inc., the sole member of CLF OP GENERAL PARTNER LLC
 
By:  /s/ Paul H. McDowell

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Name: Paul H. McDowell
Title: Chief Executive Officer
 
CAPLEASE SERVICES CORP.
 
 
By:   /s/ Paul H. McDowell

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Name: Paul H. McDowell
Title: Chief Executive Officer
 
GUARANTOR:
 
CAPITAL LEASE FUNDING, INC.
 
 
By:   /s/ Paul H. McDowell

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Name: Paul H. McDowell
Title: Chief Executive Officer
 
BUYER:
 
WACHOVIA BANK, NATIONAL ASSOCIATION
 
 
By:   /s/ R. Steven Hall

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Name: R. Steven Hall
Title: Director
 
 
 
 
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