Exhibit 10.2


 


EXECUTION VERSION




 





 


EXCHANGE AGREEMENT


 


among


 


GKK CAPITAL LP


 


and


 


TABERNA PREFERRED
FUNDING II, LTD.,


 


TABERNA PREFERRED
FUNDING III, LTD.,


 


TABERNA PREFERRED
FUNDING IV, LTD.,


 


TABERNA PREFERRED
FUNDING V, LTD.,


 


TABERNA PREFERRED
FUNDING VII, LTD.


 


and


 


TABERNA PREFERRED
FUNDING VIII, LTD.


 


 




Dated
as of January 30, 2009


 





 

















 


EXCHANGE AGREEMENT


 


THIS EXCHANGE AGREEMENT, dated as of January 30,
2009 (this “Agreement”),
is entered into by and among GKK
CAPITAL LP, a Delaware limited partnership (the “Company”) and TABERNA PREFERRED FUNDING II, LTD. (“Taberna II”), TABERNA PREFERRED FUNDING
III, LTD. (“Taberna III”), TABERNA
PREFERRED FUNDING IV, LTD. (“Taberna IV”),
TABERNA PREFERRED FUNDING V, LTD. (“Taberna V”),
TABERNA PREFERRED FUNDING VII, LTD. (“Taberna
VII”) and TABERNA PREFERRED FUNDING VIII, LTD. (“Taberna VIII”, and together with Taberna
II, Taberna III and Taberna IV, Taberna V, and Taberna VII, collectively, “Taberna”).


 


RECITAL:


 


A.            Reference
is made to (i) that certain Junior Subordinated Indenture dated as of May 20,
2005 (the “May Indenture”), (ii) that
certain Junior Subordinated Indenture dated as of August 9, 2005 (the “August Indenture”) and (iii) that certain Junior
Subordinated Indenture dated as of January 27, 2006 (the “January Indenture”; and together with the May Indenture
and the August Indenture, collectively, the “Existing Indentures”), each by and
between the Company and The Bank of New York Mellon Trust Company, National
Association (“BNYM”) (as successor to JPMorgan
Chase Bank, National Association, as trustee (the “Existing
Indenture Trustee”).


 


B.            Reference
is made to (i) that certain Amended and Restated Trust Agreement dated as
of May 20, 2005 (the “May Trust Agreement”),
(ii) that certain Amended and Restated Trust Agreement dated as of August 9,
2005 (the “August Trust Agreement”) and (iii) that
certain Amended and Restated Trust Agreement dated as of January 27, 2006
(the “January Trust Agreement”; and
together with the May Trust Agreement and the August Trust Agreement,
collectively, the “Trust Agreements”),
each by and among the Company, as depositor, BNYM (successor to JPMorgan Chase
Bank, National Association, as property trustee)(the “Property
Trustee”), BNY Mellon Trust of Delaware (as successor to Chase Bank
USA, National Association, as Delaware trustee)(the “Delaware
Trustee”), and the respective administrative trustees named therein.


 


C.            Gramercy
Capital Trust I (“Trust I”) is
the holder of the Junior Subordinated Note due 2035 in the original principal
amount of $51,550,000 issued by the Company pursuant to the May Indenture
(“Subordinated Note I”).


 


D.            Gramercy
Capital Trust II (“Trust II”) is
the holder of the Junior Subordinated Note due 2035 in the original principal
amount of $51,550,000 issued by the Company pursuant to the August Indenture
(“Subordinated Note II”).


 


E.             Gramercy
Capital Trust III (“Trust III”) 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 January Indenture
(“Subordinated Note III”; and together
with Subordinated Note I and Subordinated Note II, collectively, the “Existing Subordinated Notes”)


 


F.             Taberna
II and Taberna III are the holders of Preferred Securities in the original
aggregate principal amount of $50,000,000 issued by Trust I pursuant to the May Trust



 


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Agreement, copies of
which are attached hereto as Exhibit A-1 (the “Trust I Preferred Securities”).


 


G.            Taberna
III, Taberna IV and Taberna V are the holders of Preferred Securities in the
original aggregate principal amount of $50,000,000 issued by Trust II pursuant
to the August Trust Agreement, copies of which are attached hereto as Exhibit A-2
(the “Trust II Preferred Securities”).


 


H.            Taberna
IV, Taberna VII and Taberna VIII are the holders of Preferred Securities in the
original aggregate principal amount of $50,000,000 issued by Trust III pursuant
to the January Trust Agreement, copies of which are attached hereto as Exhibit A-3
(the “Trust III Preferred Securities;” and together with the Trust I
Preferred Securities and Trust II Preferred Securities, collectively, the “Original Preferred Securities”).


 


I.              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 Fifty Million Dollars ($150,000,000) in
aggregate principal amount of the Junior Subordinated Notes due 2035 of the
Company as follows (collectively, the “Securities”):


 


(i)                                     Junior
Subordinated Note due 2035 in the original principal amount of $37,500,000
issued by the Company to Taberna II, a copy of which is attached hereto as Exhibit B-1
(“Note 1”);


 


(ii)                                  Junior
Subordinated Note due 2035 in the original principal amount of $28,125,000
issued by the Company to Taberna III, a copy of which is attached hereto as Exhibit B-2
(“Note 2”);


 


(iii)                               Junior
Subordinated Note due 2035 in the original principal amount of $24,375,000
issued by the Company to Taberna IV, a copy of which is attached hereto as Exhibit B-3
(“Note 3”);


 


(iv)                              Junior
Subordinated Note due 2035 in the original principal amount of $25,000,000
issued by the Company to Taberna V, a copy of which is attached hereto as Exhibit B-4
(“Note 4”);


 


(v)                                 Junior
Subordinated Note due 2035 in the original principal amount of $10,000,000
issued by the Company to Taberna VII, a copy of which is attached hereto as Exhibit B-5
(“Note 5”); and


 


(vi)                              Junior
Subordinated Note due 2035 in the original principal amount of $25,000,000
issued by the Company to Taberna VIII, a copy of which is attached hereto as Exhibit B-6
(“Note 6”).


 


J.             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.


 


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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.


 


“August Trust
Agreement” has the meaning set forth in the Recitals.


 


“August Indenture”
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.”


 


“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 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.


 


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“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).


 


“Hazardous Materials”
has the meaning set forth in Section 4(jj).


 


“Holder” has the
meaning set forth in the New Indenture.


 


“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).


 


“January Indenture”
has the meaning set forth in the Recitals.


 


“January Trust
Agreement” has the meaning set forth in the Recitals.


 


“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.


 


“Material Adverse Change”
has the meaning set forth in Section 3(e)(ii).


 


“May Indenture”
has the meaning set forth in the Recitals.


 


“May Trust Agreement”
has the meaning set forth in the Recitals.


 


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“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.


 


“Note 5” has the
meaning set forth in the Recitals.


 


“Note 6” 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).


 


“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”
means any Person wherein at least ten percent (10%) of the Equity Interests is
owned, directly or indirectly, by the Company. 
“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.


 


“Subordinated Note III”
has the meaning set forth in the Recitals.


 


“Taberna” has
the meaning set forth in the introductory paragraph hereof.


 


“Taberna II” has
the meaning set forth in the introductory paragraph hereof.


 


“Taberna III”
has the meaning set forth in the introductory paragraph hereof.


 


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“Taberna IV” has
the meaning set forth in the introductory paragraph hereof.


 


“Taberna V” has
the meaning set forth in the introductory paragraph hereof.


 


“Taberna VII”
has the meaning set forth in the introductory paragraph hereof.


 


“Taberna VIII”
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, together with 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 October 30, 2008
through January 29, 2009;


 


(iii)          all
claims (including “claims” as defined in Bankruptcy Code §101(5)), 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 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;


 


(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, 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 III”
has the meaning set forth in the Recitals.


 


“Trust I Preferred
Securities” has the meaning set forth in the Recitals.


 


6

















 


“Trust II Preferred
Securities” has the meaning set forth in the Recitals.


 


“Trust III Preferred
Securities” has the meaning set forth in the Recitals.


 


“Trust
Agreements” has the meaning set forth in the Recitals.


 


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 and BNYM shall agree, at 11:00 a.m.
New York time, on January 30, 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 and to deliver the Original
Preferred Securities to the Property Trustee for cancellation and reissuance in
the name of the Company.


 


(ii)           The
Original Preferred Securities and the Securities shall have been delivered to
the Closing Room, copies of which Original Preferred Securities and Securities
shall have previously been made available for inspection, if so requested.


 


(iii)          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 II, (ii) Note 2 to Taberna III, (iii) Note 3 to Taberna IV, (iv) Note
4 to Taberna V, (v) Note 5 to Taberna VII and (vi) Note 6 to Taberna
VIII.


 


(iv)          New
Indenture Trustee shall have authenticated the Securities in accordance with
the terms of the New Indenture and delivered them as provided above.


 


(v)           Property
Trustee, on behalf of each of the Trusts, shall have obtained the Original
Preferred Securities and shall promptly thereafter, if requested by the
Company, cancel and reissue them in the name of the Company.


 


(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 


 


7

















 


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 the BNYM all of such party’s 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 January 29, 2009, provided,
that the Company and Taberna agree that the amount of interest payable for such
period with respect to the Original Preferred Securities shall be based upon an
interest rate of one half of one percent (0.5%) per annum.


 


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.


 


(b)           Clifford Chance US LLP, counsel for the Company (the “Company Counsel”), shall have
delivered an opinion, dated the Closing Date, addressed to each Holder and its
successors and assigns and to the New Indenture Trustee, in substantially the
form set out in Annex A-1 hereto and the Company shall have furnished to
the Holders of the Securities a certificate signed by the Company’s Chief
Executive Officer, President, an Executive Vice President, Chief Financial
Officer, Treasurer or Assistant Treasurer, dated the Closing Date, addressed to
the Holders of the Securities , in substantially the form set out in Annex D
hereto.  In rendering its opinion, the
Company Counsel may rely as to factual matters upon certificates or other
documents furnished by officers, directors and trustees of the Company or its
general partner and by government officials; provided,
however, that copies of any such
certificates or documents are delivered to the Holders) and by and upon such
other documents as such counsel may, in its reasonable opinion, deem
appropriate as a basis for the Company Counsel’s opinion.  The Company Counsel may specify the
jurisdictions in which it is admitted to practice and that they/it is not
admitted to practice in any other jurisdiction and is not an expert in the law
of any other jurisdiction.  Such Company
Counsel Opinion shall not state that it is to be governed or qualified by, or
that it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).


 


(c)           Taberna shall have been furnished the
opinion of Nixon Peabody, LLP,
dated as of the Closing Date, addressed to the Holders of the Securities and
their respective 


 


8

















 


successors and assigns and the New Indenture Trustee,
in substantially the form set out in Annex  B hereto.


 


(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 Chief
Financial Officer, Treasurer or Assistant Treasurer of the Company, 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 Significant Subsidiaries, taken as a whole, whether
or not arising from transactions occurring in the ordinary course of business
(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.


 


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.


 


9














 


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, (ii) is
in good standing under such laws and (iii) has full power and authority to
execute, deliver and perform its obligations under this Agreement and the other
Operative Documents.


 


(b)           It is an “accredited investor” as
defined in Rule 501 under the Securities Act. Without characterizing the
Original Preferred Securities or any of the Taberna Transferred Rights as a “security”
within the meaning of applicable securities laws, it is not acquiring the
Original Preferred Securities or the Taberna Transferred Rights with a view
towards the sale or distribution thereof in violation of the Securities Act.


 


(c)           Intentionally omitted.


 


(d)           None of the Securities, the New
Indenture, or the Exchange, is or may be void or voidable as an actual or
constructive fraudulent transfer or as a preferential transfer.


 


(e)           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 Taberna, any Holder of the Securities, Taberna Capital
Management, LLC or 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)           No interest in the Taberna
Transferred Rights is being acquired by or on behalf of an entity that is, or
at any time while the Taberna Transferred Rights are held thereby will be, one
or more Benefit Plans.


 


(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; provided that the Company does not make any
representations as to any action taken by an Indemnified Party.


 


10

















 


(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 provided, that the Company does not make any representations
as to any action taken by an Indemnified Party.


 


(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, 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.


 


(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 of
its Significant Subsidiaries 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 


 


11

















 


foreign, having jurisdiction over the Company or any of
its Significant 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 Significant Subsidiaries pursuant to any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which (A) the
Company or any Significant Subsidiary 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. Notwithstanding the
foregoing, solely for purposes of subclause (ii) above, no conflict,
breach, violation, default, Repayment Event, Lien or Material Adverse Effect
will be deemed to have occurred unless (a) acknowledged by the Company or (b) adjudicated
by a court of competent jurisdiction.


 


(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
Subsidiaries listed in Schedule 1 attached hereto (which Schedule 1
lists 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 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.


 


(r)            The Company and each of its
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 Government License, except where the
failure to be so licensed or approved or the 


 


12

















 


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)           Reserved.


 


(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 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.


 


(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 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 (which are expected to consist solely of normal recurring
adjustments).  Such consolidated
financial statements and schedules have been 


 


13

















 


prepared in accordance with GAAP consistently applied
throughout the periods involved (except as otherwise noted therein).


 


(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
Financial Statements.


 


(y)           Since
the respective dates of the Financial Statements and/or 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.


 


(z)            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.


 


(aa)         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.


 


(bb)         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 securing debt in the ordinary course of its
business and 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 Significant Subsidiary 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.


 


(cc)         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, and all such Tax
Returns are true, correct and complete, except for such failures to timely file
or inaccuracies that would not, singularly or in the aggregate, have a Material
Adverse Effect.  The Company and each of
its subsidiaries has 


 


14

















 


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).  There are no
material federal, state, or other Tax audits or deficiency assessments proposed
or pending with respect to the Company or and Significant Subsidiary, 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.


 


(dd)         To the knowledge of the Company 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, could result in a Material
Adverse Effect.


 


(ee)         The books, records and accounts of the
Company and its subsidiaries accurately and fairly reflect, in all material
respects and 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 sufficient
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.


 


(ff)           The Company and its 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.  All policies of insurance and fidelity or
surety bonds insuring the Company or any of its 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.


 


(gg)         Neither the Company and its Significant
Subsidiaries, nor, to the knowledge of the Company, any person acting on behalf
of the Company and/or its Significant 


 


15

















 


Subsidiaries including, without limitation, any
director, officer, manager, agent or employee of the Company or its Significant
Subsidiaries has, directly or indirectly, while acting on behalf of the Company
and/or its Significant Subsidiaries (i) used any corporate, partnership or
company 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, partnership or
company funds; (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.


 


(hh)         Intentionally omitted.


 


(ii)           Except as would not, individually or
in the aggregate, result in a Material Adverse Change, (i) the Company and
its subsidiaries have been and are in material compliance with applicable
Environmental Laws (as defined below), (ii) none of the Company, any of
its subsidiaries or, to the best of the Company’s knowledge, (a) any other
owners of any of the real properties currently or previously owned, leased or
operated by the Company or any of its Significant Subsidiaries (collectively,
the “Properties”) at any time or any other
party, 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 the Properties other than in compliance with all applicable
Environmental Laws, (iii) neither the Company nor any of its subsidiaries
has used nor intends to use the Properties or any subsequently acquired
properties, other than in compliance with applicable Environmental Laws, (iv) neither
the Company nor any of its subsidiaries has received any notice of, or have any
knowledge of any occurrence or circumstance which, with notice or passage of
time or both, would 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) none of the
Properties are included or, to the best knowledge of the Company, proposed for
inclusion on the National Priorities List issued pursuant to CERCLA by the
United States Environmental Protection Agency or, to the best of the Company’s
knowledge, proposed for inclusion on any similar list or inventory issued
pursuant to any other Environmental Law or issued by any other Governmental
Entity, (vi) none of the Company, any of its subsidiaries or agents or, to
the best of the Company’s knowledge, any other person or entity for whose
conduct any of them is or may 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, and has not transported or
arranged for the transport of any Hazardous Material from the Properties to
another property, except in compliance with all applicable Environmental Laws, (vii) 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
or with respect to an Environmental Law, and (viii) none of the Company,
any of its Significant Subsidiaries or, to the best knowledge of the Company,
any other person or entity for whose conduct any of them is or may be held
responsible, has entered into or been subject to any consent decree, compliance
order, or administrative order in connection with an Environmental Law with
respect to the Properties or any facilities or improvements or any operations
or activities thereon.


 


(jj)           As used herein, “Hazardous Materials” shall include, without limitation, any
flammable materials, explosives, radioactive materials, hazardous materials,
hazardous 


 


16

















 


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.


 


Except as expressly stated in the Operative Documents
or any of the other documents delivered by the company in connection herewith,
the Company makes no representations or warranties, express or implied, with
respect to the Exchange, the Taberna Transferred Rights, the Original Preferred
Securities, the Existing Indenture or any other matter.


 


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 under 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, enforceable against such Taberna 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 of
its obligations under this Agreement or to consummate the transactions
contemplated herein.


 


(d)           It is a “Qualified Holder” as such
term is defined in Section 2(a)(51) of the Investment Company Act.


 


17

















 


(e)           Taberna I, Taberna II and Taberna III
are the 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 created by such Taberna entities.


 


(f)            Taberna III, Taberna IV and Taberna
V 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 created by such Taberna entities.


 


(g)           Taberna IV, Taberna VII and Taberna
VIII are the legal and beneficial owners of the Trust III Preferred Securities
and the related Taberna Transferred Rights and shall deliver the Trust III
Preferred Securities free and clear of any Lien created by such Taberna
entities.


 


(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 and has such knowledge and experience in financial and business
matters as to be capable of evaluating the risks and merits of exchanging the
Original Preferred Securities for the Securities. Without characterizing the
Original Preferred Securities or the Taberna Transferred Rights as a “security”
within the meaning of applicable securities laws, 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, 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 


 


18

















 


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.


 


(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 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 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)           The Company has taken all action
reasonably necessary or appropriate to cause its representations and warranties
contained in Section 4 hereof to be true as of the Closing Date and
after giving effect to the Exchange.


 


(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)           The Company will not, and
acknowledges that it is not permitted to, exercise any right to defer interest
for any Extension Period (as defined in the New Indenture) with respect to any
Interest Period commencing prior to January 30, 2019.


 


(d)           Intentionally omitted.


 


19














 


(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 (i) any form of “general solicitation or general advertising”
(within the meaning of Regulation D), or (ii) any “directed selling
efforts” within the meaning of Regulation S under the Securities Act, 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).


 


(h)           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 certificate in the form attached hereto as Annex 
D, including the financial statements referenced in such Annex, which
certificate and financial statements shall be so furnished by the Company not
later than forty-five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of the Company and not later than ninety (90) days
after the end of each fiscal year of the Company.


 


(i)            The Company will, during any period
in which it or its general partner is not subject to and in compliance with Section 13
or 15(d) of the Exchange Act, or it or its general partner 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 or
its general partner 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)            Until one hundred eighty (180) days
following the Closing Date, the Company will not, without the Holders’ or their
assignees’ prior written consent in their sole discretion, 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 expressly 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.


 


(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.


 


20

















 


(l)            The Holders of the Securities are
granted the right under the New Indenture to request the substitution of new
notes for all or a portion of the Securities (the “Replacement Securities”). 
The Replacement Securities shall bear terms identical to the Securities
with the sole exception of interest payment dates (and corresponding redemption
date and maturity date), which will be specified by the Holders of the
Securities.  In no event will the
interest payment dates (and corresponding redemption date and maturity date) on
the Replacement Securities vary by more than sixty (60) calendar days from the
original interest payment dates (and corresponding redemption date and maturity
date) under the Securities.  The Company
agrees to cooperate with all reasonable requests of the Holders of the
Securities, as applicable in connection with any of the foregoing, provided
that no action requested of the Company in connection with such cooperation
shall materially increase the obligations or materially decrease the rights of
the Company pursuant to such documents.


 


21

















 


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, 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 Capital
Management, LLC, Taberna Securities, LLC, and their respective affiliates
(collectively, the “Indemnified Parties”)
each person, if any, who controls any of the Indemnified Parties within the
meaning of the Securities Act or the Exchange Act, and the Indemnified Parties’
respective directors, officers, employees and agents 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, or (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 one 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 


 


22

















 


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.


 


9.                                       Representations and
Indemnities to Survive.  The respective
agreements, representations, warranties, indemnities and other statements of
the Company 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).


 


14.                                 Submission to Jurisdiction. 
ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH
RESPECT TO OR ARISING OUT OF 


 


23

















 


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.


 


[Signature Page Follows]


 


24

















 


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


 


	
   

  	
  GKK
  CAPITAL LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  GRAMERCY CAPITAL CORP.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Roger M. Cozzi

  
	
   

  	
   

  	
  Name:

  	
  Roger M. Cozzi

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  



 


 


(Signature
continue on the next page)


 

















 


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


 


	
   

  	
  TABERNA PREFERRED FUNDING II
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alasdair Foster

  
	
   

  	
   

  	
  Name:

  	
  Alasdair Foster

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TABERNA PREFERRED FUNDING III,
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alasdair Foster

  
	
   

  	
   

  	
  Name:

  	
  Alasdair Foster

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TABERNA PREFERRED FUNDING IV,
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alasdair Foster

  
	
   

  	
   

  	
  Name:

  	
  Alasdair Foster

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TABERNA PREFERRED FUNDING V,
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alasdair Foster

  
	
   

  	
   

  	
  Name:

  	
  Alasdair Foster

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TABERNA PREFERRED FUNDING VII,
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alasdair Foster

  
	
   

  	
   

  	
  Name:

  	
  Alasdair Foster

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TABERNA PREFERRED FUNDING VIII,
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alasdair Foster

  
	
   

  	
   

  	
  Name:

  	
  Alasdair Foster

  
	
   

  	
   

  	
  Title:

  	
  Director

  



 

















 


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