--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 
EXCHANGE AGREEMENT
 
among
 
CAPITAL TRUST, INC.
 
and
 
TABERNA PREFERRED FUNDING V, LTD.,
 
TABERNA PREFERRED FUNDING VI, LTD.,
 
TABERNA PREFERRED FUNDING VIII, LTD.,
 
and
 
TABERNA PREFERRED FUNDING IX, LTD.
 
 
Dated as of March 16, 2009
 

 

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 
EXCHANGE AGREEMENT
 
THIS EXCHANGE AGREEMENT, dated as of March 16, 2009 (this “Agreement”), is
entered into by and among CAPITAL TRUST, INC., a Maryland corporation (the
“Company”) and TABERNA PREFERRED FUNDING V, LTD. (“Taberna V”), TABERNA
PREFERRED FUNDING VI, LTD. (“Taberna VI”), TABERNA PREFERRED FUNDING VIII, LTD.,
(“Taberna VIII”) and TABERNA PREFERRED FUNDING IX, LTD. (“Taberna IX”, and
together with Taberna V, Taberna VI and Taberna VIII, collectively, “Taberna”).
 
RECITAL:
 
A.           Reference is made to (i) that certain Junior Subordinated Indenture
dated as of February 10, 2006 (the “2006 Indenture”) and (ii) that certain
Junior Subordinated Indenture dated as of March 29, 2007 (the “2007 Indenture”
and together with the 2006 Indenture, the “Existing Indentures”), each by and
between the Company and The Bank of New York Mellon Trust Company, National
Association (“BNYM”) (the “Existing Indenture Trustee”).
 
B.           Reference is made to (i) that certain Amended and Restated Trust
Agreement dated as of February 10, 2006 (the “2006 Trust Agreement”) and (ii)
that certain Amended and Restated Trust Agreement dated as of March 29, 2007
(the “2007 Trust Agreement” and together with the 2006 Trust Agreement, the
“Trust Agreements”), each by and among the Company, as depositor, BNYM, as
property trustee (the “Property Trustee”), BNY Mellon Trust (Delaware), as
Delaware trustee (the “Delaware Trustee”), the respective administrative
trustees named therein and other parties thereto.
 
C.           CT Preferred Trust I (“Trust I”) is the holder of the Junior
Subordinated Note due 2036 in the original principal amount of $51,550,000
issued by the Company pursuant to the 2006 Indenture (“Subordinated Note I”).
 
D.           CT Preferred Trust II (“Trust II”) is the holder of the Junior
Subordinated Note due 2037 in the original principal amount of $77,325,000
issued by the Company pursuant to the 2007 Indenture (“Subordinated Note II” and
together with Subordinated Note I, the “Existing Subordinated Notes”)
 
E.           Taberna V and Taberna VI are the holders of Preferred Securities in
the original aggregate principal amount of $50,000,000 issued by Trust I
pursuant to the 2006 Trust Agreement, copies of which are attached hereto as
Exhibit A-1 (the “Trust I Preferred Securities”).
 
F.           Taberna VIII and Taberna IX are the holders of Preferred Securities
in the original aggregate principal amount of $53,125,000 issued by Trust II
pursuant to the 2007 Trust Agreement, copies of which are attached hereto as
Exhibit A-2 (the “Trust II Preferred Securities” and together with the Trust I
Preferred Securities, the “Original Preferred Securities”).
 
G.           Simultaneously herewith, the Company and BNYM, as trustee (the “New
Indenture Trustee”), have entered into that certain Junior Subordinated
Indenture (the “New Indenture”) pursuant to which Company proposes to issue One
Hundred Eighteen Million Five Hundred Ninety-Three Thousand Seven Hundred Fifty
Dollars ($118,593,750.00) in aggregate principal amount of the Junior
Subordinated Notes due April 30, 2036 of the Company as follows (collectively,
the “Securities”):
 

--------------------------------------------------------------------------------

 
 
(i)
Junior Subordinated Note due 2036 in the original principal amount of
$28,750,000.00 issued by the Company to Taberna V, a copy of which is attached
hereto as Exhibit B-1 (“Note 1”);

 
 
(ii)
Junior Subordinated Note due 2036 in the original principal amount of
$28,750,000.00 issued by the Company to Taberna VI, a copy of which is attached
hereto as Exhibit B-2 (“Note 2”);

 
 
(iii)
Junior Subordinated Note due 2036 in the original principal amount of
$28,750,000.00 issued by the Company to Taberna VIII, a copy of which is
attached hereto as Exhibit B-3 (“Note 3”); and

 
 
(iv)
Junior Subordinated Note due 2036 in the original principal amount of
$32,343,750.00 issued by the Company to Taberna IX, a copy of which is attached
hereto as Exhibit B-4 (“Note 4”);

 
H.           On the terms and subject to the conditions set forth in this
Agreement, the Company and Taberna have agreed to exchange the Original
Preferred Securities for the Securities.
 
NOW, THEREFORE, in consideration of the mutual agreements and subject to the
terms and conditions herein set forth, the parties hereto agree as follows:
 
1. Definitions. This Agreement, the New Indenture and the Securities are
collectively referred to herein as the “Operative Documents.” All other
capitalized terms used but not defined in this Agreement shall have the
respective meanings ascribed thereto in the New Indenture. The following terms
shall have the following meanings:
 
“2006 Indenture” has the meaning set forth in the Recitals.
 
“2007 Indenture” has the meaning set forth in the Recitals.
 
“2006 Trust Agreement” has the meaning set forth in the Recitals.
 
“2007 Trust Agreement” has the meaning set forth in the Recitals.
 
“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, 11 U.S.C. §§101 et
seq., as amended.
 
“Benefit Plan” means an “employee benefit plan” (as defined in ERISA) that is
subject to Title I of ERISA, a “plan” as defined in Section 4975 of the Code or
any entity whose assets include (for purposes of U.S. Department of Labor
Regulations Section 2510.3-101 or otherwise for purposes of Title I of ERISA or
Section 4975 of the Code) the assets of any such “employee benefit plan” or
“plan.”
 
- 2 -

--------------------------------------------------------------------------------

 
“BNYM” has the meaning set forth in the Recitals.
 
“CDO Trustee” has the meaning set forth in Section 2(b)(i).
 
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated under it.
 
“Closing Date” has the meaning set forth in Section 2(b).
 
“Closing Room” has the meaning set forth in Section 2(b).
 
“Company” has the meaning set forth in the introductory paragraph hereof.
 
“Company Counsel” has the meaning set forth in Section 3(b).
 
“Commission” has the meaning set forth in Section 4(v)
 
“Delaware Trustee” has the meaning set forth in the Recitals.
 
“Environmental Law” has the meaning set forth in Section 4(jj).
 
“Environmental Laws” shall have the correlative meaning.
 
“Equity Interests” means with respect to any Person (a) if such a Person is a
partnership, the partnership interests (general or limited) in a partnership,
(b) if such Person is a limited liability company, the membership interests in a
limited liability company and (c) if such Person is a corporation, the shares or
stock interests (both common stock and preferred stock) in a corporation.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated under it.
 
“Exchange” has the meaning set forth in Section 2(b).
 
“Exchange Act” has the meaning set forth in Section 4(j).
 
“Existing Indentures” has the meaning set forth in the Recitals.
 
“Existing Indenture Trustee” has the meaning set forth in the Recitals.
 
“Existing Subordinated Notes” has the meaning set forth in the Recitals.
 
“Financial Statements” has the meaning set forth in Section 4(w).
 
“GAAP” has the meaning set forth in Section 4(w).
 
“Governmental Entities” has the meaning set forth in Section 4(o).
 
“Governmental Licenses” has the meaning set forth in Section 4(r).
 
- 3 -

--------------------------------------------------------------------------------

 
“Hazardous Materials” has the meaning set forth in Section 4(jj).
 
“Holder” has the meaning set forth in the New Indenture.
 
“Impairment” means any claim, counterclaim, setoff, defense, action, demand,
litigation (including administrative proceedings or derivative actions),
encumbrance, right (including expungement, avoidance, reduction, contractual or
equitable subordination, or otherwise) or defect.
 
“Indemnified Party” has the meaning set forth in Section 8(a).  “Indemnified
Parties” shall have the correlative meaning.
 
“Investment Company Act” has the meaning set forth in Section 4(j).
 
“Interim Financial Statements” has the meaning set forth in Section 4(w).
 
“Lien” has the meaning set forth in Section 4(o).
 
“Material Adverse Effect” means a material adverse effect on the condition
(financial or otherwise), earnings, business, liabilities or assets of the
Company and its Significant Subsidiaries taken as a whole, provided, however,
that the disclosure set forth in Schedule 2 shall not be deemed to constitute a
Material Adverse Effect.
 
“Material Adverse Change” has the meaning set forth in Section 3(e)(ii).
 
“New Indenture” has the meaning set forth in the Recitals.
 
“New Indenture Trustee” has the meaning set forth in the Recitals.
 
“Note 1” has the meaning set forth in the Recitals.
 
“Note 2” has the meaning set forth in the Recitals.
 
“Note 3” has the meaning set forth in the Recitals.
 
“Note 4” has the meaning set forth in the Recitals.
 
“Original Preferred Securities” has the meaning set forth in the Recitals.
 
“Properties” has the meaning set forth in Section 4(ii).
 
“Property Trustee” has the meaning set forth in the Recitals.
 
“Regulation D” has the meaning set forth in Section 4(h).
 
“Repayment Event” has the meaning set forth in Section 4(o).
 
“Rule 144A(d)(3)” has the meaning set forth in Section 4(j).
 
- 4 -

--------------------------------------------------------------------------------

 
“Securities” has the meaning set forth in the Recitals.
 
“Securities Act” means the Securities Act of 1933, 15 U.S.C. §§77a et seq., as
amended, and the rules and regulations promulgated under it.
 
“Significant Subsidiary” has the meaning as set forth in Securities and Exchange
Commission Regulation S-X.
 
“Significant Subsidiaries” means, collectively, each and every Significant
Subsidiary.
 
“Subordinated Note I” has the meaning set forth in the Recitals.
 
“Subordinated Note II” has the meaning set forth in the Recitals.
 
“Taberna” has the meaning set forth in the introductory paragraph hereof.
 
“Taberna V” has the meaning set forth in the introductory paragraph hereof.
 
“Taberna VI” has the meaning set forth in the introductory paragraph hereof.
 
“Taberna VIII” has the meaning set forth in the introductory paragraph hereof.
 
“Taberna IX” has the meaning set forth in the introductory paragraph hereof.
 
“Taberna Transferred Rights” means any and all of Taberna’s right, title, and
interest in, to and under the Original Preferred Securities, including, without
limitation, the following:
 
(i)           the Existing Indentures and Trust Agreement;
 
(ii)           all amounts payable to Taberna under the Original Preferred
Securities, the Existing Indentures and/or the Trust Agreements, excluding,
however, amounts payable on account of interest for the period from January 30,
2009 through March [__], 2009;
 
(iii)           all claims (including “claims” as defined in Section §101(5) of
the Bankruptcy Code, suits, causes of action, and any other right of Taberna,
whether known or unknown, against the Company or any of its affiliates
(including the Trusts), agents, representatives, contractors, advisors, or any
other entity that in any way is based upon, arises out of or is related to any
of the foregoing, including all claims (including contract claims, tort claims,
malpractice claims, and claims under any law governing the exchange of, purchase
and sale of, or indentures for, securities), suits, causes of action, and any
other right of Taberna against any attorney, accountant, financial advisor, or
other entity arising under or in connection with the Original Preferred
Securities, the Existing Indentures, the Trust Agreements, the Purchase
Agreements or the transactions related thereto or contemplated thereby;
 
(iv)           all guarantees and all collateral and security of any kind for or
in respect of the foregoing;
 
- 5 -

--------------------------------------------------------------------------------

 
(v)           all cash, securities, or other property, and all setoffs and
recoupments, to be received, applied, or effected by or for the account of
Taberna under the Original Preferred Securities, the Existing Indentures and the
Trust Agreements, other than fees, costs and expenses payable to Taberna
hereunder and all cash, securities, interest, dividends, and other property that
may be exchanged for, or distributed or collected with respect to, any of the
foregoing; and
 
(vi)           all proceeds of the foregoing.
 
“Trust I” has the meaning set forth in the Recitals.
 
“Trust II” has the meaning set forth in the Recitals.
 
 “Trust I Preferred Securities” has the meaning set forth in the Recitals.
 
“Trust II Preferred Securities” has the meaning set forth in the Recitals.
 
“Trust Agreements” has the meaning set forth in the Recitals.
 
“Trusts” has the meaning set forth in the Recitals.
 
“Venable” has the meaning set forth in Section 3(b).
 
 
2.
Exchange of Original Preferred Securities for Securities

 
(a)           The Company agrees to issue the Securities in accordance with the
New Indenture and has requested that Taberna accept such Securities in exchange
for the Original Preferred Securities, and Taberna hereby accepts such
Securities in exchange for the Original Preferred Securities upon the terms and
conditions set forth herein.
 
(b)           The closing of the exchange contemplated herein shall occur at the
offices of Nixon Peabody, LLP in New York, New York (the “Closing Room”), or
such other place as the parties hereto shall agree, at 11:00 a.m. New York time,
on March 16, 2009 or such later date as the parties may agree (such date and
time of delivery the “Closing Date”). The Company and Taberna hereby agree that
the exchange (the “Exchange”) will occur in accordance with the following
requirements:
 
(i)           Taberna Capital Management, LLC (as collateral manager for each of
the Taberna entities) shall have delivered an issuer order instructing each
trustee (in each such capacity, a “CDO Trustee”) under the applicable indenture
pursuant to which such CDO Trustee serves as trustee for the holders of the
Original Preferred Securities to exchange the Original Preferred Securities for
the Securities.
 
(ii)           The Trust I Preferred Securities and the Securities shall have
been delivered to the Closing Room, copies of which Trust I Preferred Securities
and Securities shall have previously been made available for inspection, if so
requested.
 
- 6 -

--------------------------------------------------------------------------------

 
(iii)           The Company shall have directed the New Indenture Trustee to
authenticate the Securities and deliver them to the applicable CDO Trustee, as
follows: (i) Note 1 to Taberna V, (ii) Note 2 to Taberna VI, (iii) Note 3 to
Taberna VIII, and (iv) Note 4 to Taberna IX.
 
(iv)           The New Indenture Trustee shall have authenticated the Securities
in accordance with the terms of the New Indenture and delivered them as provided
above.
 
(v)           The Property Trustee, on behalf of Trust I, shall obtain the Trust
I Preferred Securities and shall promptly after the Exchange and receipt of
direction to do so cancel them and the Property Trustee on behalf of Trust II,
promptly after the Exchange and receipt of direction to do so, enter an order
with the CDO Trustee of Taberna VIII and Taberna IX directing such CDO Trustee
to cancel the position of such CDO Trustee in respect of the respective Trust II
Preferred Securities.
 
(vi)           Simultaneously with the occurrence of the events described in
subsections (iv) and (v) hereof, (A) each Taberna entity holding the applicable
Original Preferred Securities irrevocably transfers, assigns, grants and conveys
the related Taberna Transferred Rights to the Company and the Company assumes
all rights and obligations of Taberna with respect to the Original Preferred
Securities and the Taberna Transferred Rights and (B) each Holder shall be
entitled to all of the rights, title and interest of a Holder of the Securities
under the terms of the Securities, the New Indenture and any other Operative
Documents.
 
(vii)           the Company shall have paid to BNYM all of such party’s
reasonable legal fees, costs and other expenses in connection with the Exchange,
as well as all other accrued and unpaid fees, costs and expenses under the
Existing Indentures and the Trust Agreements, if any.
 
(viii)          The Company shall have paid to the Trustee, for applications
upon the Original Preferred Securities and for distribution to the applicable
Taberna entities holding such Original Preferred Securities pursuant to the
terms of the Existing Indentures, all accrued interest for the period commencing
on the most recent interest payment date under the Original Preferred Securities
and continuing through and including March 16, 2009.
 
3. Conditions Precedent. The obligations of the parties under this Agreement are
subject to the following conditions precedent:
 
(a)           The representations and warranties contained herein shall be
accurate as of the date of delivery of the Securities.
 
- 7 -

--------------------------------------------------------------------------------

 
(b)           Paul, Hastings, Janofsky & Walker LLP, counsel for the Company
(the “Company Counsel”), shall have delivered an opinion, dated the Closing
Date, addressed to each Holder and to the New Indenture Trustee, in
substantially the form set out in Annex A-I hereto, the Company shall have
furnished to the Holders and the New Indenture Trustee, a certificate signed by
the Company’s Chief Executive Officer, President, any Executive Vice President,
Chief Financial Officer, Treasurer or Assistant Treasurer, dated the Closing
Date, addressed to the Holders and to the New Indenture Trustee, in
substantially the form set out in Annex A-II hereto, and Venable LLP, Maryland
counsel for the Company (“Venable”), shall have delivered an opinion, dated the
Closing Date, addressed to the Holders and the New Indenture Trustee, in
substantially the form set out in Annex-III hereto.  In rendering its opinion,
the Company Counsel and Venable may rely as to factual matters upon certificates
or other documents furnished by officers, directors and trustees of the Company
and by government officials; provided, however, that copies of any such
certificates or documents are delivered to the Holders and the New Indenture
Trustee) and by and upon such other documents as such counsel may, in their
reasonable opinion, deem appropriate as a basis for the Company Counsel’s
opinion.  The Company Counsel may specify the jurisdictions in which they are
admitted to practice and that they are not admitted to practice in any other
jurisdiction and are not experts in the law of any other jurisdiction.
 
(c)           Intentionally Omitted.
 
(d)           The Holders of the Securities shall have received the opinion of
Gardere Wynne Sewell LLP, special counsel for the New Indenture Trustee, dated
as of the Closing Date, addressed to the Holders of the Securities and their
successors and assigns, in substantially the form set out in Annex C hereto.
 
(e)           The Company shall have furnished to the Holders of the Securities
a certificate of the Company, signed by the Chief Executive Officer, President
or an Executive Vice President, and the Chief Financial Officer, Treasurer or
Assistant Treasurer of the Company, in their capacities as such, dated as of the
Closing Date, as to (i) and (ii) below:
 
(i)           the representations and warranties in this Agreement and the New
Indenture are true and correct on and as of the Closing Date, and the Company
has complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date; and
 
(ii)           since the date of the latest Interim Financial Statements, there
has been no material adverse change in the condition (financial or other),
earnings, business or assets of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions occurring in the ordinary course
of business, other than the disclosure set forth in Schedule 2, which disclosure
shall not be deemed to constitute a Material Adverse Change. (a “Material
Adverse Change”).
 
(f)           Intentionally omitted.
 
(g)           Prior to the Closing Date, the Company shall have furnished to the
Holders of the Securities and their counsel such further information,
certificates and documents as the Holders of the Securities or such counsel may
reasonably request.
 
If any of the conditions specified in this Section 3 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions,
certificates and documents mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance to the Holders of the
Securities or their counsel, this Agreement and any obligations of Taberna
hereunder, whether as holders of the Original Preferred Securities or as
prospective Holders of the Securities, may be canceled at, or at any time prior
to, the Closing Date by Taberna.  Notice of such cancellation shall be given to
the Company in writing or by telephone and confirmed in writing, or by e-mail or
facsimile.
 
- 8 -

--------------------------------------------------------------------------------

 
Each certificate signed by any officer of the Company and delivered to the
Holders of the Securities or the Holders’ counsel in connection with the
Operative Documents and the transactions contemplated hereby and thereby shall
be deemed to be a representation and warranty of the Company and not by such
officer in any individual capacity.
 
4. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with the Taberna, as holders of the Original Preferred
Securities and with the Holders of the Securities, as follows:
 
(a)           It (i) is duly organized and validly existing under the laws of
its jurisdiction of organization or incorporation, and (ii) has full power and
authority to execute, deliver and perform its obligations under this Agreement
and the other Operative Documents.
 
(b)           Intentionally Omitted.
 
(c)           Intentionally omitted.
 
(d)           None of the Securities, the New Indenture, or the Exchange is or
may be subject to any Impairment.  The Company has no current intention to
initiate any bankruptcy or insolvency proceedings.  The Company (i) has not
entered into the Exchange or any Operative Documents with the actual intent to
hinder, delay, or defraud any creditor and (ii) received reasonably equivalent
value in exchange for its obligations under the Operative Documents.
 
(e)           It (i) is a sophisticated entity with respect to matters such as
the Exchange, (ii) has such knowledge and experience, and has made investments
of a similar nature, so as to be aware of the risks and uncertainties inherent
in the Exchange and (iii) has independently and without reliance upon Taberna,
any Holder of the Securities, Taberna Capital Management, LLC or the Trustee or
any of their affiliates, and based on such information as it has deemed
appropriate, made its own analysis and decision to enter into this Agreement,
except that it has relied upon Taberna’s express representations, warranties,
covenants and agreements in this Agreement.  The Company acknowledges that none
of Taberna, any Holders of the Securities, Taberna Capital Management, LLC or
Trustee or any of their affiliates has given it any investment advice, credit
information or opinion on whether the Exchange is prudent.
 
(f)           It has not engaged any broker, finder or other entity acting under
the authority of it or any of its affiliates that is entitled to any broker’s
commission or other fee in connection with the transaction for which Taberna,
any Holder, Trustee or any of their affiliates could be responsible.
 
(g)           Intentionally Omitted.
 
(h)           Neither the Company nor any of its “Affiliates” (as defined in
Rule 501(b) of Regulation D (“Regulation D”) under the Securities Act (as
defined below)), nor any person acting on its or their behalf, has, directly or
indirectly, made offers or sales of any security, or solicited offers to buy any
security, under circumstances that would require the registration of any of the
Securities under the Securities Act.
 
- 9 -

--------------------------------------------------------------------------------

 
(i)           Neither the Company nor any of its Affiliates, nor any person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with
any offer or sale of any of the Securities.
 
(j)           The Securities (i) are not and have not been listed on a national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or quoted on a U.S. automated
inter-dealer quotation system and (ii) are not of an open-end investment
company, unit investment trust or face-amount certificate company that are, or
are required to be, registered under Section 8 of the Investment Company Act of
1940, as amended (the “Investment Company Act”), and the Securities otherwise
satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to
the Securities Act (“Rule 144A(d)(3)”).
 
(k)           Neither the Company nor any of its Affiliates, nor any person
acting on its or their behalf, has engaged, or will engage, in any “directed
selling efforts” within the meaning of Regulation S under the Securities Act
with respect to the Securities.
 
(l)           The Company is not, and immediately following consummation of the
transactions contemplated hereby, will not be, an “investment company” or an
entity “controlled” by an “investment company,” in each case within the meaning
of Section 3(a) of the Investment Company Act.
 
(m)           Each of this Agreement and the New Indenture and the consummation
of the transactions contemplated herein and therein have been duly authorized by
the Company and, on the Closing Date, will have been duly executed and delivered
by the Company, and, assuming due authorization, execution and delivery by
Taberna and/or the Trustee, as applicable, will be a legal, valid and binding
obligations of the Company enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity.
 
(n)           The Securities have been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered to the Trustee for
authentication in accordance with the New Indenture and, when authenticated in
the manner provided for in the New Indenture and delivered to the Holders in
exchange for the Original Preferred Securities, will constitute legal, valid and
binding obligations of the Company entitled to the benefits of the New
Indenture, enforceable against the Company in accordance with their terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity.
 
- 10 -

--------------------------------------------------------------------------------

 
(o)           Neither the issue of the Securities and exchange of the Securities
for the Original Preferred Securities, nor the execution and delivery of and
compliance with the Operative Documents by the Company, nor the consummation of
the transactions contemplated herein or therein, (i) will conflict with or
constitute a violation or breach of (x) the charter or bylaws or similar
organizational documents of the Company or any subsidiary of the Company or (y)
any applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, governmental authority, agency or instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or their respective properties or assets (collectively, the
“Governmental Entities”), (ii) will conflict with or constitute a violation or
breach of, or a default or Repayment Event (as defined below) under, or result
in the creation or imposition of any pledge, security interest, claim, lien or
other encumbrance of any kind (each, a “Lien”) upon any property or assets of
the Company or any if its subsidiaries pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to which
(A) the Company or any of its subsidiaries is a party or by which it or any of
them may be bound, or (B) to which any of the property or assets of any of them
is subject, or any judgment, order or decree of any court, Governmental Entity
or arbitrator, except, in the case of clause (i)(y) or this clause (ii), for
such conflicts, breaches, violations, defaults, Repayment Events (as defined
below) or Liens which (X) would not, singly or in the aggregate, adversely
affect the consummation of the transactions contemplated by the Operative
Documents and (Y) would not, singly or in the aggregate, have a Material Adverse
Effect or (iii) will require the consent, approval, authorization or order of
any court or Governmental Entity.  As used herein, a “Repayment Event” means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any of its subsidiaries prior to its
scheduled maturity.
 
(p)           The Company has all requisite power and authority to own, lease
and operate its properties and assets and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing in each jurisdiction where the nature of its activities requires such
qualification, except where the failure of the Company to be so qualified would
not, singly or in the aggregate, have a Material Adverse Effect.
 
(q)           The Company has no subsidiaries that are material to its business,
financial condition or earnings, other than those Significant Subsidiaries
listed in Schedule 1 attached hereto (which Schedule 1 includes each of the
Company’s Significant Subsidiaries).  Each Significant Subsidiary is a
corporation, partnership or limited liability company duly and properly
incorporated or organized or formed, as the case may be, validly existing and in
good standing under the laws of the jurisdiction in which it is chartered or
organized or formed, with all requisite corporate power and authority to own,
lease and operate its properties and conduct the business it transacts.  Each
Significant Subsidiary is duly qualified to transact business as a foreign
corporation, partnership or limited liability company, as applicable, and is in
good standing in each jurisdiction where the nature of its activities requires
such qualification, except where the failure to be so qualified would not,
singly or in the aggregate, have a Material Adverse Effect.  No Significant
Subsidiary of the Company (other than a taxable REIT subsidiary, if any) is
currently prohibited, directly or indirectly, under any agreement or other
instrument, other than as required by applicable law, to which it is a party or
is subject , from paying any dividends to the Company, from making  any other
distribution on such Significant Subsidiary’s capital stock or other Equity
Interests, from repaying to the Company any loans or advances to such
Significant Subsidiary from the Company or from transferring any of such
Significant Subsidiary’s properties or assets to the Company or any other
subsidiary of the Company.
 
- 11 -

--------------------------------------------------------------------------------

 
(r)           The Company and each of the Company’s subsidiaries hold all
necessary approvals, authorizations, orders, licenses, consents, registrations,
qualifications, certificates and permits (collectively, the “Governmental
Licenses”) of and from Governmental Entities necessary to conduct their
respective businesses as now being conducted, and neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental License, except where the
failure to be so licensed or approved or the receipt of an unfavorable decision,
ruling or finding, would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity or the failure of such Governmental Licenses
to be in full force and effect, would not, singly or in the aggregate, have a
Material Adverse Effect; and the Company and its subsidiaries are in compliance
with all applicable laws, rules, regulations, judgments, orders, decrees and
consents, except where the failure to be in compliance would not, singly or in
the aggregate, have a Material Adverse Effect.
 
(s)           All of the issued and outstanding Equity Interests of the Company
and each of its subsidiaries are validly issued, fully paid and non-assessable;
all of the issued and outstanding Equity Interests of each consolidated
subsidiary of the Company is owned by the Company, directly or through
subsidiaries, free and clear of any Lien, claim, or equitable right (in each
case, other than preferred equity interests issued by CDO subsidiaries); and
none of the issued and outstanding Equity Interests of the Company or any
subsidiary was issued in violation of any preemptive or similar rights arising
by operation of law, under the charter or by-laws of such entity or under any
agreement to which the Company or any of its subsidiaries is a party.
 
(t)           Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws or similar organizational
documents or (ii) in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which the
Company or any such subsidiary is a party or by which it or any of them may be
bound or to which any of the property or assets of any of them is subject,
except, in the case of clause (ii), where such violation or default would not,
singly or in the aggregate, have a Material Adverse Effect.
 
(u)           There is no action, suit or proceeding before or by any
Governmental Entity, arbitrator or court, domestic or foreign, now pending or,
to the knowledge of the Company after due inquiry, threatened against or
affecting the Company or any of its subsidiaries, except for such actions, suits
or proceedings that, if adversely determined, would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents or have a Material Adverse Effect; and the aggregate of
all pending legal or governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective properties or assets
is subject, including ordinary routine litigation incidental to the business,
are not expected to result in a Material Adverse Effect.
 
(v)           The accountants of the Company who certified the Financial
Statements(defined below) are independent public accountants of the Company and
its subsidiaries within the meaning of the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the “Commission”)
thereunder.
 
- 12 -

--------------------------------------------------------------------------------

 
(w)           The audited consolidated financial statements (including the notes
thereto) and schedules of the Company and its consolidated subsidiaries for the
fiscal year ended December 31, 2007, (the “Financial Statements”) and the
interim [unaudited] consolidated financial statements of the Company and its
consolidated subsidiaries for the quarter ended September 30, 2008 (the “Interim
Financial Statements”) provided to Taberna are the most recent publicly
available audited and unaudited consolidated financial statements of the Company
and its consolidated subsidiaries, respectively, and fairly present in all
material respects, in accordance with U.S. generally accepted accounting
principles (“GAAP”), the financial position of the Company and its consolidated
subsidiaries, and the results of operations and changes in financial condition
as of the dates and for the periods therein specified, subject, in the case of
Interim Financial Statements, to year-end adjustments.  Such consolidated
financial statements and schedules have been prepared in accordance with GAAP
consistently applied throughout the periods involved (except as otherwise noted
therein and subject to normal recurring adjustments in the ordinary course).
 
(x)           Neither the Company nor any of its subsidiaries has any material
liability, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due, including any liability for taxes (and there is no past or
present fact, situation, circumstance, condition or other basis for any present
or future action, suit, proceeding, hearing, charge, complaint, claim or demand
against the Company or any of its subsidiaries that could give rise to any such
liability), except for (i) liabilities set forth in the Financial Statements or
the Interim Financial Statements and (ii) normal fluctuations in the amount of
the liabilities referred to in clause (i) above occurring in the ordinary course
of business of the Company and all of its subsidiaries since the date of the
most recent balance sheet included in such Interim Financial Statements and
(iii) as described on Schedule A.
 
(y)           Since the respective dates of the Interim Financial Statements,
there has not been (A) any Material Adverse Change or (B) any dividend or
distribution of any kind declared, paid or made by the Company on any class of
its Equity Interests, other than regular quarterly dividends on the Company’s
common stock.
 
(z)           The documents of the Company filed with the Commission in
accordance with the Exchange Act, from and including the commencement of the
fiscal year covered by the Company’s most recent Annual Report on Form 10-K, at
the time they were or hereafter are filed by the Company with the Commission
(collectively, the “1934 Act Reports”), complied and will comply in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission thereunder (the “1934 Act Regulations”), and, at the date of
this Agreement and on the Closing Date, do not and will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and other than such
instruments, agreements, contracts and other documents as are filed as exhibits
to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K, there are no instruments, agreements, contracts or
documents of a character described in Item 601 of Regulation S-K promulgated by
the Commission to which the Company or any of its subsidiaries is a party that
are required to be so filed.  To the actual knowledge of the Chief Financial
Officer of the Company, except as set forth in Schedule (x), the Company is in
compliance with all currently applicable requirements of the Exchange Act that
were added by the Sarbanes-Oxley Act of 2002.
 
- 13 -

--------------------------------------------------------------------------------

 
(aa)           No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is imminent, except
those which would not, singly or in the aggregate, have a Material Adverse
Effect.
 
(bb)           No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Governmental Entity, other
than those that have been made or obtained, is necessary or required for the
performance by the Company of its obligations under the Operative Documents, as
applicable, or the consummation by the Company of the transactions contemplated
by the Operative Documents.
 
(cc)           The Company and each of its subsidiaries has good and marketable
title to all of its respective real and personal property, in each case free and
clear of all Liens and defects, except for those that would not, singly or in
the aggregate, have a Material Adverse Effect; and all of the leases and
subleases under which the Company or any of its subsidiaries holds properties
are in full force and effect, except where the failure of such leases and
subleases to be in full force and effect would not, singly or in the aggregate,
have a Material Adverse Effect, and neither the Company nor any of its
subsidiaries has any notice of any claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary of the Company
under any such leases or subleases, or affecting or questioning the rights of
such entity to the continued possession of the leased or subleased premises
under any such lease or sublease, except for such claims that would not, singly
or in the aggregate, have a Material Adverse Effect.
 
(dd)           Commencing with its taxable year ended December 31, 2003, the
Company has been, and upon the completion of the transactions contemplated
hereby, the Company will continue to be (for as long as the Board of Directors
of the Company believes it is in the Company’s best interest to qualify as a
REIT), organized and operated in conformity with the requirements for
qualification and taxation as a real estate investment trust (a “REIT’) under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
“Code”), and the Company’s organizational structure and proposed method of
operation will enable it to continue to meet the requirements for qualification
and taxation as a REIT under the Code, and no actions have been taken (or not
taken which are required to be taken) which would cause such qualification to be
lost.  As long as the Board of Directors of the Company believes it is in the
Company’s best interests to qualify as a REIT, the Company expects to continue
to be organized and to operate in a manner so as to qualify as a REIT in the
taxable year ending December 31, [____] and succeeding taxable years.
 
- 14 -

--------------------------------------------------------------------------------

 
(ee)           The Company and each Significant Subsidiary has timely and duly
filed (or filed extensions thereof (and which extensions are presently in
effect)) all Tax Returns (as defined below) required to be filed by them, except
where such would not, singly or in the aggregate, have a Material Adverse
Effect, and all such Tax Returns are true, correct and complete in all material
respects.  The Company and each Significant Subsidiary has timely and duly paid
in full all Taxes (as defined below) required to be paid by them (whether or not
such amounts are shown as due on any Tax Return), except for any Taxes that are
being disputed in good faith and for which adequate reserves are held.  There
are no federal, state, or other Tax audits or deficiency assessments proposed or
pending with respect to the Company or any of the Significant Subsidiaries, and
no such audits or assessments are threatened.  As used herein, the terms “Tax”
or “Taxes” mean (i) all federal, state, local, and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto, imposed by any Governmental Entity, and (ii) all liabilities in respect
of such amounts arising as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group, as a successor to another
person or by contract.  As used herein, the term “Tax Returns” means all
federal, state, local, and foreign Tax returns, declarations, statements,
reports, schedules, forms, and information returns and any amendments thereto
filed or required to be filed with any Governmental Entity.
 
(ff)           Interest payable by the Company on the Securities is deductible
by the Company  for United Stated Federal income tax purposes and there are no
rulemaking or similar proceedings before the U.S. Internal Revenue Service or
comparable federal, state, local or foreign government bodies which involve or
affect the Company or any subsidiary, which, if the subject of an action
unfavorable to the Company or any subsidiary, would likely result in a Material
Adverse Effect.
 
(gg)           The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries.  The Company and each of its
subsidiaries maintains a system of internal accounting controls to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in accordance with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
 
(hh)           The Company and the Significant Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts in all material respects as are customary in the businesses
in which they are engaged or propose to engage after giving effect to the
transactions contemplated hereby including but not limited to, real or personal
property owned or leased against theft, damage, destruction, act of vandalism
and all other risks customarily insured against.  All policies of insurance and
fidelity or surety bonds insuring the Company or any of the Significant
Subsidiaries or the Company’s or Significant Subsidiaries’ respective
businesses, assets, employees, officers and directors are in full force and
effect.  The Company and each of the Significant Subsidiaries are in compliance
with the terms of such policies and instruments in all material respects.
Neither the Company nor any Significant Subsidiary has reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Material
Adverse Effect.  Within the past twelve months, neither the Company nor any
Significant Subsidiary has been denied any insurance coverage it has sought or
for which it has applied.
 
- 15 -

--------------------------------------------------------------------------------

 
(ii)           The Company and its subsidiaries or any person acting on behalf
of the Company and its subsidiaries including, without limitation, any director,
officer, agent or employee of the Company or its subsidiaries has not, directly
or indirectly, while acting on behalf of the Company and its subsidiaries (i)
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds; (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any other unlawful payment.
 
(jj)           The information provided by the Company pursuant to the Operative
Documents does not, as of the date hereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
 
(kk)           Except as would not, individually or in the aggregate, result in
a Material Adverse Change, (i) to the Company’s actual knowledge, the Company
and its subsidiaries have been and are in compliance with applicable
Environmental Laws (as defined below), (ii) to the Company’s actual knowledge
neither the Company, nor any of its subsidiaries has at any time released (as
such term is defined in CERCLA (as defined below)) or otherwise disposed of
Hazardous Materials (as defined below) on, to, in, under or from any of the real
properties currently or previously owned, leased or operated by the Company or
any of its subsidiaries (collectively, the “Properties”) other than in
compliance with all Environmental Laws, (iii) to the Company’s actual knowledge,
neither the Company nor any of its subsidiaries has used the Properties, other
than in compliance with applicable Environmental Laws, (iv) neither the Company
nor any of its subsidiaries has received any written notice of, or has any
actual knowledge of any occurrence or circumstance which, with notice or passage
of time or both, is reasonably likely to give rise to a claim under or pursuant
to any Environmental Law with respect to the Properties, or their respective
assets or arising out of the conduct of the Company or its subsidiaries, (v) to
the Company’s actual knowledge, none of the Properties are included or proposed
for inclusion on the National Priorities List issued pursuant to CERCLA by the
United States Environmental Protection Agency or proposed for inclusion on any
similar list or inventory issued pursuant to any other Environmental Law or
issued by any other Governmental Entity, (vi) to the Company’s actual knowledge,
none of the Company, any of its subsidiaries or agents or any other person or
entity for whose conduct any of them is reasonably likely to be held
responsible, has generated, manufactured, refined, transported, treated, stored,
handled, disposed, transferred, produced or processed any Hazardous Material at
any of the Properties, except in compliance with all applicable Environmental
Laws, (vii) to the Company’s knowledge, no lien has been imposed on the
Properties by any Governmental Entity in connection with the presence on or off
such Property of any Hazardous Material, and (viii) none of the Company, any of
its subsidiaries or, to the Company’s actual knowledge, any other person or
entity for whose conduct any of them is reasonably likely to be held
responsible, has entered into or been subject to any consent decree, compliance
order, or administrative order with respect to the Properties or any facilities
or improvements or any operations or activities thereon.
 
- 16 -

--------------------------------------------------------------------------------

 
(ll)           As used herein, “Hazardous Materials” shall include, without
limitation, any flammable materials, explosives, radioactive materials,
hazardous materials, hazardous substances, hazardous wastes, toxic substances or
related materials, asbestos, petroleum, petroleum products and any hazardous
material as defined by any federal, state or local environmental law, statute,
ordinance, rule or regulation, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. §§ 9601-9675 (“CERCLA”), the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. §§ 5101-5127, the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. §§ 6901-6992k, the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. §§ 11001-11050, the Toxic Substances
Control Act, 15 U.S.C. §§ 2601-2692, the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. §§ 136-136y, the Clean Air Act, 42 U.S.C.
§§ 7401-7642, the Clean Water Act (Federal Water Pollution Control Act), 33
U.S.C. §§ 1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26, and
the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678, and any analogous
state laws, as any of the above may be amended from time to time and in the
regulations promulgated pursuant to each of the foregoing (including
environmental statutes and laws not specifically defined herein) (individually,
an “Environmental Law” and collectively, the “Environmental Laws”) or by any
Governmental Entity.
 
5. Representations and Warranties of Taberna. Each Taberna entity, for itself,
represents and warrants to, and agrees with, the Company as follows:
 
(a)           It is a company duly formed, validly existing and in good standing
under the laws of the jurisdiction in which it is organized with all requisite
(i) power and authority to execute, deliver and perform its obligations under
the Operative Documents to which it is a party, to make the representations and
warranties specified herein and therein and to consummate the transactions
contemplated in the Operative Documents.
 
(b)           This Agreement and the consummation of the transactions
contemplated herein has been duly authorized by it and, on the Closing Date,
will have been duly executed and delivered by it and, assuming due
authorization, execution and delivery by the Company and Trustee of the
Operative Documents to which each is a party, will be a legal, valid and binding
obligation of such Taberna entity, enforceable against such Taberna entity in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and to general principles of
equity.
 
(c)           No filing with, or authorization, approval, consent, license,
order registration, qualification or decree of, any Governmental Entity or any
other Person, other than those that have been made or obtained, is necessary or
required for the performance by such Taberna entity of its obligations under
this Agreement or to consummate the transactions contemplated herein.
 
(d)           It is a “Qualified Purchaser” as such term is defined in
Section 2(a)(51) of the Investment Company Act.
 
(e)           Taberna V and Taberna VI are the sole legal and beneficial owners
of the Trust I Preferred Securities and the related Taberna Transferred Rights
and shall deliver the Trust I Preferred Securities free and clear of any Lien.
 
- 17 -

--------------------------------------------------------------------------------

 
(f)           Taberna VIII, and Taberna IX are the legal and beneficial owners
of the Trust II Preferred Securities and the related Taberna Transferred Rights
and shall deliver the Trust II Preferred Securities free and clear of any Lien.
 
(g)           Intentionally Omitted.
 
(h)           Intentionally Omitted.
 
(i)           There is no action, suit or proceeding before or by any
Governmental Entity, arbitrator or court, domestic or foreign, now pending or,
to its knowledge, threatened against or affecting it, except for such actions,
suits or proceedings that, if adversely determined, would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents.
 
(j)           The outstanding principal amount of its respective Original
Preferred Securities is the face amount as set forth in such Original Preferred
Securities.
 
(k)           It is aware that the Securities have not been and will not be
registered under the Securities Act and may not be offered or sold within the
United States or to “U.S. persons” (as defined in Regulation S under the
Securities Act) except in accordance with Rule 903 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act.
 
(l)           It is an “accredited investor,” as such term is defined in
Rule 501(a) of Regulation D under the Securities Act. It has not made any offers
to sell, or solicitations of any offers to buy, all or any portion of the
Original Preferred Securities or Taberna Transferred Rights in violation of any
applicable securities laws.
 
(m)           Neither it nor any of its Affiliates, nor any person acting on its
or its Affiliate’s behalf has engaged, or will engage, in any form of “general
solicitation or general advertising” (within the meaning of Regulation D under
the Securities Act) in connection with any offer or sale of the Securities.
 
(n)           It understands and acknowledges that (i) no public market exists
for any of the Securities and that it is unlikely that a public market will ever
exist for the Securities, (ii) such Holder is purchasing the Securities for its
own account, for investment and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the Securities Act or
other applicable securities laws, subject to any requirement of law that the
disposition of its property be at all times within its control and subject to
its ability to resell such Securities pursuant to an effective registration
statement under the Securities Act or pursuant to an exemption therefrom or in a
transaction not subject thereto, and it agrees to the legends and transfer
restrictions applicable to the Securities contained in the New Indenture, and
(iii) it has had the opportunity to ask questions of, and receive answers and
request additional information from, the Company and is aware that it may be
required to bear the economic risk of an investment in the Securities.
 
- 18 -

--------------------------------------------------------------------------------

 
(o)           It has not engaged any broker, finder or other entity acting under
its authority that is entitled to any broker’s commission or other fee in
connection with this Agreement and the consummation of transactions contemplated
in this Agreement and the New Indenture for which the Company could be
responsible.
 
(p)           It (i) is a sophisticated entity with respect to the Exchange,
(ii) has such knowledge and experience, and has made investments of a similar
nature, so as to be aware of the risks and uncertainties inherent in the
Exchange and (iii) has independently and without reliance upon the Company or
any of its affiliates, and based on such information as it has deemed
appropriate, made its own analysis and decision to enter into this Agreement,
except that it has relied upon the Company’s express representations,
warranties, covenants and agreements in the Operative Documents and the other
documents delivered by the Company in connection therewith.
 
Except as expressly stated in this Agreement, Taberna make no representations or
warranties, express or implied, with respect to the Exchange, the Taberna
Transferred Rights, the Original Preferred Securities, the Existing Indentures,
or any other matter.
 
6. Covenants and Agreements of the Company. The Company agrees with the Taberna
and the Holders as follows:
 
(a)           Reserved.
 
(b)           The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Holders of the Securities
may designate and will maintain such qualifications in effect so long as
required for the sale of the Securities.  The Company will promptly advise the
Holders of the Securities of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
 
(c)           Reserved.
 
(d)           The Company will not, nor will it permit any of its Affiliates or
any person acting on their behalf to, engage in any “directed selling efforts”
within the meaning of Regulation S under the Securities Act with respect to the
Securities.
 
(e)           The Company will not, and will not permit any of its Affiliates or
any person acting on its or their behalf to, directly or indirectly, make offers
or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of any of the Securities under
the Securities Act.
 
(f)           The Company will not, and will not permit any of its Affiliates or
any person acting on its or their behalf to, engage in any form of “general
solicitation or general advertising” (within the meaning of Regulation D) in
connection with any offer or sale of the any of the Securities.
 
(g)           So long as any of the Securities are outstanding, (i) the
Securities shall not be listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system and (ii) the Company shall not be an open-end investment
company, unit investment trust or face-amount certificate company that is, or is
required to be, registered under Section 8 of the Investment Company Act, and,
the Securities shall otherwise satisfy the eligibility requirements of
Rule 144A(d)(3).
 
- 19 -

--------------------------------------------------------------------------------

 
(h)           At Closing the Company shall furnish to (i) the Holders of the
Securities, (ii) Taberna Capital Management, LLC and (iii) any beneficial owner
of the Securities reasonably identified to the Company, a duly completed and
executed Officer’s Financial Certificate in the form required pursuant to the
New Indenture.
 
(i)           The Company will, during any period in which it is not subject to
and in compliance with Section 13 or 15(d) of the Exchange Act, or it is not
exempt from such reporting requirements pursuant to and in compliance with
Rule 12g3-2(b) under the Exchange Act, provide to each Holder of the Securities,
upon the request of such Holder, any information required to be provided by
Rule 144A(d)(4) under the Securities Act.  If the Company is required to
register under the Exchange Act, such reports filed in compliance with
Rule 12g3-2(b) shall be sufficient information as required above.  This covenant
is intended to be for the benefit of the Holders of the Securities.
 
(j)           The Company will not, until one hundred eighty (180) days
following the Closing Date, without the Holders’ prior written consent, offer,
sell, contract to sell, grant any option to purchase or otherwise dispose of,
directly or indirectly, (i) any Securities or other securities substantially
similar to the Securities other than as contemplated by the New Indenture, if at
all, or (ii) any other securities convertible into, or exercisable or
exchangeable for, any of the Securities or other securities substantially
similar to the Securities or (ii) any preferred securities, unless the Company
provides the Purchasers with an opinion of counsel (such counsel to have
experience and sophistication in the matters addressed in such opinion)
addressed to the Purchasers stating that any such offer, sale or other
disposition will not result in the Securities being integrated in a transaction
that would require registration under the Securities Act.
 
(k)           The Company will not identify any of the Indemnified Parties (as
defined below) in a press release or any other public statement without the
prior written consent of such Indemnified Party, unless such disclosure is
required by applicable statute, court of law, regulatory authority or securities
exchange.
 
(l)           Intentionally omitted.
 
(m)           The Company will use its commercially reasonable efforts to meet
the requirements to qualify as a REIT under sections 856 through 860 of the
Code, effective for the taxable year ending December 31, 2008 (and each fiscal
quarter of such year) and unless and until the Board of Directors of the Company
determines that it is in the best interests of the Company not to be organized
as a REIT, the Company will be organized in conformity with the requirements for
qualification as a REIT under the Code, and the Company will conduct its
operations in a manner that will enable the Company to meet the requirements for
qualification and taxation as a REIT under the Code.
 
- 20 -

--------------------------------------------------------------------------------

 
7. Payment of Expenses. In addition to the obligations agreed to by the Company
under Section 2(b)(vii) herein, the Company agrees to pay all costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, whether or not the transactions contemplated herein are consummated
or this Agreement is terminated, including all costs and expenses incident to
(i) the authorization, issuance, sale and delivery of the Securities and any
taxes payable in connection therewith; (ii) the fees and expenses of counsel,
accountants and any other experts or advisors retained by the Company; and (iv)
the fees and all reasonable expenses of the New Indenture Trustee and any other
trustee or paying agent appointed under the Operative Documents, including the
fees and disbursements of counsel for such trustees. The fees of the New
Indenture Trustee (excluding fees and disbursements of counsel) shall not exceed
the amounts set forth in that certain Fee Agreement dated as of the date hereof
between the Company and The Bank of New York Mellon Trust Company, National
Association, executed in connection with this Agreement and the New Indenture.
 
8. Indemnification. (a) The Company agrees to indemnify and hold harmless BNYM,
the Holders, Taberna, Taberna Capital Management, LLC, Taberna Securities, LLC,
and their respective affiliates (collectively, the “Indemnified Parties”) the
Indemnified Parties’ respective directors, officers, employees and agents and
each person, if any, who controls the Indemnified parties within the meaning of
the Securities Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which the Indemnified Parties may
become subject, under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based on (i) any untrue statement or alleged untrue statement of a
material fact contained in any information or documents provided by or on behalf
of the Company, (ii) any omission or alleged omission to state a material fact
required to be stated or necessary to make the statements contained in any
information provided by the Company, in light of the circumstances under which
they were made, not misleading, (iii) the breach or alleged breach of any
representation, warranty, or agreement of the Company contained herein, or (iv)
the execution and delivery by the Company of the Operative Documents and the
consummation of the transactions contemplated herein and therein, and agrees to
reimburse each such Indemnified Party, as incurred, for any legal or other
expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability that the Company
may otherwise have.
 
(b)           Promptly after receipt by an Indemnified Party under this Section
8 of notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, promptly notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve the indemnifying party from liability under paragraph (a) above unless
and to the extent that such failure results in the forfeiture by the
indemnifying party of material rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in paragraph (a)
above.  The Indemnified Parties shall be entitled to appoint counsel to
represent the Indemnified Parties in any action for which indemnification is
sought.  An indemnifying party may participate at its own expense in the defense
of any such action; provided, that counsel to the indemnifying party shall not
(except with the consent of the Indemnified Party) also be counsel to the
Indemnified Party.  In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all Indemnified Parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances,
unless an Indemnified Party elects to engage separate counsel because such
Indemnified Party believes that its interests are not aligned with the interests
of another Indemnified Party or that a conflict of interest might result.  An
indemnifying party will not, without the prior written consent of the
Indemnified Parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not the Indemnified Parties are actual or potential parties to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Party from all liability
arising out of such claim, action, suit or proceeding.
 
- 21 -

--------------------------------------------------------------------------------

 
9. Representations and Indemnities to Survive.  The respective agreements,
representations, warranties, indemnities and other statements of the Company
and/or its officers set forth in or made pursuant to this Agreement will remain
in full force and effect and will survive the Exchange.  The provisions of
Sections 7 and 8 shall survive the termination or cancellation of this
Agreement.
 
10. Amendments.  This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement by
each of the parties hereto.
 
11. Notices.  All communications hereunder will be in writing and effective only
on receipt, and will be mailed, delivered by hand or courier or sent by
facsimile and confirmed or by any other reasonable means of communication,
including by electronic mail, to the relevant party at its address specified in
Exhibit C.
 
12. Successors and Assigns.  This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns.  Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any person other than the parties hereto and the
affiliates, directors, officers, employees, agents and controlling persons
referred to in Section 8 hereof and their successors, assigns, heirs and legal
representatives, any right or obligation hereunder.  None of the rights or
obligations of the Company under this Agreement may be assigned, whether by
operation of law or otherwise, without Taberna’s prior written consent.  The
rights and obligations of the Holders under this Agreement may be assigned by
the Holders without the Company’s consent; provided that the assignee assumes
the obligations of any such Holders under this Agreement.
 
13. Applicable Law.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW).
 
- 22 -

--------------------------------------------------------------------------------

 
14. Submission to Jurisdiction.  ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST
ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY BE
BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE
COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT.
 
15. Counterparts and Facsimile.  This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.  This Agreement may be executed by any one or more
of the parties hereto by facsimile.
 
16. Entire Agreement.  This Agreement constitutes the entire agreement of the
parties to this Agreement and supercedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.
 

 
[Signature Page Follows]
 
- 23 -

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, this Agreement has been entered into as of the date first
written above.
 
 

 
CAPITAL TRUST, INC.
         
 
By: 
/s/ Geoffrey G. Jervis       Name: Geoffrey G. Jervis       Title: Chief
Financial Officer          

 
 

 
(Signatures continue on the next page)
 
- 24 -

--------------------------------------------------------------------------------

 
TABERNA, AS HOLDERS OF THE ORIGINAL PREFERRED SECURITIES AND AS HOLDERS (AS
DEFINED IN THE NEW INDENTURE):
 
 

 
TABERNA PREFERRED FUNDING V LTD.
         
 
By: 
/s/ Alasdair Foster       Name:  Alasdair Foster       Title:  Director        
         

 
TABERNA PREFERRED FUNDING VI, LTD.
         
 
By: 
/s/ Alasdair Foster       Name:  Alasdair Foster       Title:  Director        
         

 
TABERNA PREFERRED FUNDING VIII, LTD.
         
 
By: 
/s/ Alasdair Foster       Name:  Alasdair Foster       Title:  Director        
         

 
TABERNA PREFERRED FUNDING IX, LTD.
         
 
By: 
/s/ Alasdair Foster       Name:  Alasdair Foster       Title:  Director        
 

 
 
- 25 -

--------------------------------------------------------------------------------

 
Acknowledged and Agreed:
 
THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION
not in its individual capacity but as Existing Indenture Trustee, Property
Trustee and New Indenture Trustee
 
 
By: 
/s/ Bill Marshall      Name: Bill Marshall     Title: Vice President         

 
 
 
 
- 26 -

--------------------------------------------------------------------------------

 
EXHIBIT A-1
 
Copy of Trust I Preferred Securities
 
A-1

--------------------------------------------------------------------------------

 
EXHIBIT A-2
 
Copies of Trust II Preferred Securities
 
A-2

--------------------------------------------------------------------------------

 
EXHIBIT B-1
 
Copy of Note 1
 
B-1

--------------------------------------------------------------------------------

 
EXHIBIT B-2
 
Copy of Note 2
 
B-2

--------------------------------------------------------------------------------

 
EXHIBIT B-3
 
Copy of Note 3
 
B-3

--------------------------------------------------------------------------------

 
EXHIBIT B-4
 
Copy of Note 4
 
B-4

--------------------------------------------------------------------------------

 
EXHIBIT C
 
Notice Information
 
Taberna:
 
c/o Taberna Capital Management, LLC
450 Park Avenue, 11th Floor
New York, NY  10022
Attention:  Mr. Raphael Licht
Facsimile:  (212) 243-9039
e-mail:  rlicht@raitft.com

Company:

Capital Trust, Inc.
410 Park Avenue, 14th Floor
New York, NY 10022
Attention:  Geoffrey Jervis
 
D-1

--------------------------------------------------------------------------------

 
SCHEDULE 1
 
List of Significant Subsidiaries
 
(See attached)
 
Sch. 1-1

--------------------------------------------------------------------------------

 
ANNEX A-I
 

 
Pursuant to Section 3(b) of the Agreement, Paul, Hastings, Janofsky & Walker LLP
counsel for the Company, shall deliver an opinion to the effect that:
 
 
Annex A-1

--------------------------------------------------------------------------------

 
ANNEX A-II
 

 
CAPITAL TRUST, INC.
 
Chief Financial Officer’s Certificate
 
I, __________________, the Chief Financial Officer of Capital Trust, Inc. (the
“Company”), hereby certify that:
 
(i)           as of December 31, 2008, the Company had total consolidated assets
of approximately $[*], and no event has occurred nor circumstance exists since
such date that materially and adversely affects the total assts of the Company;
and
 
(ii)          the Company (which, for purposes of this certificate, includes any
predecessor entity) has been in operation since at least 1997.
 
[Signature page follows]
 
 
Annex A-1

--------------------------------------------------------------------------------

 
ANNEX A-III
 

 
Venable Opinion
 

 
(see attached)
 
 
Annex A-1

--------------------------------------------------------------------------------

 
ANNEX B
 
Pursuant to Section 3(d) of the Agreement, Paul, Hastings, Janofsky & Walker LLP
shall deliver an opinion to the effect that for U.S. federal income tax
purposes, the Securities will constitute indebtedness of the Company.
 
In rendering such opinion, such counsel may (A) state that its opinion is
limited to the federal laws of the United States and (B) rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers of
the Company and public officials.
 
 
Annex B-1

--------------------------------------------------------------------------------

 
ANNEX C
 
Pursuant to Section 3(d) of the Agreement, Gardere Wynne Sewell LLP, special
counsel for the Trustee, shall deliver to the Holders an opinion to the effect
that:
 
(i)           The Bank of New York Mellon Trust Company, National Association
(the “Bank”) is a national banking association with trust powers, duly and
validly existing under the laws of the United States of America, with corporate
power and authority to execute, deliver and perform its obligations under the
New Indenture and to authenticate and deliver the Securities, and is duly
eligible and qualified to act as Trustee under the New Indenture pursuant to
Section 6.1 thereof.
 
(ii)           The New Indenture has been duly authorized, executed and
delivered by the Bank and constitutes the valid and binding obligation of the
Bank, enforceable against it in accordance with its terms except (A) as may be
limited by bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency,
reorganization, liquidation, receivership, moratorium or other similar laws now
or hereafter in effect relating to creditors’ rights generally, and by general
equitable principles, regardless of whether considered in a proceeding in equity
or at law and (B) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
 
(iii)           Neither the execution or delivery by the Bank of the New
Indenture, the authentication and delivery of the Securities pursuant to the
terms of the New Indenture, nor the performance by the Bank of its obligations
under the New Indenture (A) requires the consent or approval of, the giving of
notice to or the registration or filing with, any governmental authority or
agency under any existing law of the United States of America governing the
banking or trust powers of the Bank or (B) violates or conflicts with the
Articles of Association or By-laws of the Bank or any law or regulation of the
State of New York or the United States of America governing the banking or trust
powers of the Bank.
 
(iv)           The Securities have been authenticated and delivered by a duly
authorized officer of the Bank.
 
In rendering such opinion, such counsel may (A) state that its opinion is
limited to the laws of the State of New York and the laws of the United States
of America, (B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Bank, the Company and public
officials, and (C) make customary assumptions and exceptions as to
enforceability and other matters.
 
 
Annex C-1

--------------------------------------------------------------------------------

 
SCHEDULE 2
 
Disclosure
 
The Company paid approximately $100 million in margin calls in Q4 2008.
 
The risk factors below will appear in the 10-K the Company plans to file after
market close on Monday:
 
We are subject to the general risk of a leveraged investment strategy and the
specific risks of mark to market indebtedness.
 
Our restructured secured debt obligations are secured by our investments, which
are subject to being marked to market by our credit providers. If the market
value of the underlying property collateralizing our investments decline, we may
be required to liquidate our investments if we do not have the liquidity in
excess of minimum required liquidity to pay down the related debt obligation.
Moreover, we cannot assure you that we will be able to meet mark-to-market
capital calls or debt service obligations in general and, to the extent such
obligations are not met, there is a risk of loss of some or all of our
investments through foreclosure or a financial loss if we or they are required
to liquidate assets, the impact of which could be magnified if such a
liquidation is at a commercially inopportune time. In addition, the occurrence
of any event or condition which causes any obligation or liability of more than
$1.0 million to become due prior to its scheduled maturity or any monetary
default under our restructured debt obligations if the amount of such obligation
is at least $1.0 million could constitute a cross-default under our restructured
debt obligations. If a cross-default occurs, the maturity of almost all of our
indebtedness could be accelerated and become immediately due and payable.
 
Our restructured debt obligations with our lenders prohibit new balance sheet
investment activities, which prevents us from growing our balance sheet
portfolio.
 
Following a series of negotiations that were precipitated by our decision to
conserve our cash resources and not meet further margin calls made by our
secured lenders, we have restructured our debt obligations with our
participating secured and unsecured lenders, a development that has consequences
to our business. Under the terms of the restructured debt obligations, we are
prohibited from acquiring or originating new investments. This restriction
precludes us from growing our balance sheet portfolio at a time when investment
opportunities that provide targeted risk-adjusted returns may otherwise be
available to us. Our interest earning investments will continue to be reduced
which will negatively impact our net investment income. There can be no
assurance that we will be able to retire completely or refinance our
restructured debt obligations so that we can resume our balance sheet investment
activities.
 
Sch. 2-1

--------------------------------------------------------------------------------

 
Our secured and unsecured credit agreements may impose restrictions on our
operation of the business.
 
Under our secured and unsecured credit agreements, such as our repurchase
agreements and derivative agreements, we may make certain representations,
warranties and affirmative and negative covenants that may restrict our ability
to operate while still utilizing those sources of credit. Currently, our
restructure plan prohibits us from acquiring or originating new balance sheet
investments or incurring additional indebtedness unless used to pay down such
obligations. Such representations, warranties and covenants may also include,
but are not limited to, restrictions on corporate guarantees, the maintenance of
certain financial ratios, including our ratio of debt to equity capital and our
debt service coverage ratio, as well as the maintenance of a minimum net worth,
restrictions against a change of control of our company and limitations on
alternative sources of capital. In addition, we may be subject to potential
margin calls under the terms of our repurchase facilities should the value of
our investments decline. If margin calls are not met, we would be forced to sell
investments, which could lead to losses. Given current market conditions, in
many cases there is no active market into which to sell our assets and where
offers to purchase our assets are obtainable there is a risk that the prices
quoted will be significantly below their fair value, and consequently, any
forced sales following unmet margin calls will result in significant losses.
 
Sch. 2-2

--------------------------------------------------------------------------------