Exhibit 10.4


 




EXECUTION COPY





 


 


EXCHANGE AGREEMENT


 


among


 


 


CRYSTAL RIVER
CAPITAL, INC.,


 


 


TABERNA PREFERRED
FUNDING VIII, LTD.,


 


 


and


 


 


TABERNA PREFERRED
FUNDING IX, LTD.


 


 


Dated as of January 29, 2010


 




 





 

















 


EXCHANGE AGREEMENT


 


THIS EXCHANGE AGREEMENT, dated as of January 29, 2010 (this “Agreement”),
is entered into by and among CRYSTAL RIVER CAPITAL, INC., a Maryland corporation (the “Company”), TABERNA PREFERRED FUNDING VIII, LTD. (“Taberna VIII”)
and TABERNA PREFERRED FUNDING IX,
LTD. (“Taberna IX”, and together
with Taberna VIII, collectively, “Taberna”).


 


R E C I T A L S :


 


A.            Reference
is made to that certain Junior Subordinated Indenture, dated as of March 20, 2007 (the “Indenture”),
by and between the Company and The Bank of New York Trust Company, National
Association (now known as The Bank of New York Mellon Trust Company, National
Association) (“BNYM”) (the “Indenture
Trustee”).


 


B.            Reference
is made to that certain Amended and Restated Trust Agreement, dated as of March 20, 2007 (the “Trust Agreement”), by and among the Company, as depositor,
BNYM, as property trustee (the “Property Trustee”),
The Bank of New York (Delaware), as Delaware trustee, the respective
administrative trustees named therein and other parties thereto, pursuant to
which the Preferred Securities (as defined below) and certain Common Securities
(as defined in the Trust Agreement) were issued.


 


C.            Taberna
VIII is the holder of preferred securities in the original aggregate principal
amount of $25,000,000 issued by Crystal River Preferred Trust I (the “Trust”) pursuant to the Trust Agreement (the “Taberna VIII Preferred
Securities”).


 


D.            Taberna
IX is the holder of preferred securities in the original aggregate principal
amount of $25,000,000 issued by
the Trust pursuant to the Trust Agreement (the “Taberna IX Preferred Securities”, and
together with the Taberna VIII Preferred Securities, collectively, the “Preferred Securities”).


 


E.             On
the terms and subject to the conditions set forth in this Agreement, the
Company and Taberna have agreed to exchange the Preferred Securities for the
Replacement Collateral (as hereinafter defined).


 


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.      All
capitalized terms used but not defined in this Agreement shall have the
respective meanings ascribed thereto in the Indenture.  The following terms shall have the following
meanings:


 


“Affiliate” has
the meaning set forth in Section 4(e).


 


“Bankruptcy Code”
means the Bankruptcy Reform Act of 1978, 11 U.S.C. §§101 et seq., as amended.


 


“BNYM” has the
meaning set forth in the Recitals.


 

















 


“CDO Trustee”
has the meaning set forth in Section 2(b)(i).


 


“Closing Date”
has the meaning set forth in Section 2(b).


 


“Closing Room”
has the meaning set forth in Section 2(b).


 


“CMBS Bond” has
the meaning set forth in Section 2(a)(iii).


 


“Code” means the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated under it.


 


“Common Securities”
has the meaning set forth in the Recitals.


 


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


 


“Company Counsel”
has the meaning set forth in Section 3(b).


 


“Company Maryland Counsel”
has the meaning set forth in Section 3(b).


 


“Exchange” has
the meaning set forth in Section 2(a).


 


“Exchange Act”
has the meaning set forth in Section 4(g).


 


“Forestville Note”
has the meaning set forth in Section 2(a)(ii).


 


“Forestville Mortgage Loan”
has the meaning set forth in Section 2(a)(ii).


 


“Forestville Mortgage Loan
Assignment Documents” has the meaning set forth in Section 2(a).


 


“Forestville Premises”
has the meaning set forth in Section 2(a)(ii).


 


“Governmental Entities”
has the meaning set forth in Section 4(k).


 


“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.


 


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


 


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


 


“Investment Company Act”
has the meaning set forth in Section 4(h).


 


“Lien” has the
meaning set forth in Section 4(k).


 


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“Material Adverse Effect”
means a material adverse effect on the condition (financial or otherwise),
earnings, business, liabilities 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.


 


“Mezz Loan” has
the meaning set forth in Section 2(a)(i).


 


“Operative Documents”
means (i) this Agreement, (ii) the Walgreen’s Mezz Loan Assignment
Documents, (iii) the Forestville Mortgage Loan Assignment Documents and (iv) all
other documents executed and/or delivered in connection with the Exchange.


 


“Other Documents” shall mean and be defined as used and defined in the
Walgreen’s Mezz Loan Assignment Documents and the Forestville Mortgage Loan
Assignment Documents, as applicable.


 


“Permitted Liens” means and includes any pledges, security interests,
charges, options, restrictions, encumbrances or other Liens included in any
owner or lender title policy which is included in the Walgreen’s Mezz Loan
Assignment Documents and the Forestville Mortgage Loan Assignment Documents, as
applicable, or as otherwise approved by Taberna and with respect to the
Walgreen’s Mezzanine Loan, each of the Co-Lending Agreement, Servicing
Agreement, Pooling and Servicing Agreement and each Intercreditor Agreement, as
applicable, as each is defined in the applicable Walgreen Mezz Loan Assignment
Documents.


 


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


 


“Property Trustee”
has the meaning set forth in the Recitals.


 


“Regulation D”
has the meaning set forth in Section 4(e).


 


“Repayment Event”
has the meaning set forth in Section 4(l).


 


“Replacement Collateral”
has the meaning set forth in Section 2.


 


“Replacement Collateral
Interest Amount” means the amount of interest due on the
Replacement Collateral for each interest payment period.


 


“Replacement Collateral Interest
Payment” means an amount equal to (A) the Replacement
Collateral Interest Amount multiplied by (B) a fraction, the numerator of
which is the number of days in the period commencing on the most recent
interest payment date prior to the Closing Date with respect to such
Replacement Collateral and continuing through and including the Closing Date,
and the denominator of which is the number of days in the period
commencing on the most recent interest payment date prior to the Closing Date
with respect to such Replacement Collateral until the next interest payment
date.


 


“Rule 144A(d)(3)”
has the meaning set forth in Section 4(g).


 


“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.


 


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


 


“Taberna Capital”
means Taberna Capital Management, LLC.


 


“Taberna Transferred Rights”
means any and all of Taberna’s right, title, and interest in, to and under the
Preferred Securities, including, without limitation, the following:


 


(i)            the
Indenture and Trust Agreement;


 


(ii)           all
amounts payable to Taberna under the Preferred Securities, the Indenture and/or
the Trust Agreement, excluding, however, amounts payable on account of all
outstanding accrued interest through and including the Closing Date;


 


(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 Trust), 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 Preferred
Securities, the Indenture, the Trust Agreement, 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
Preferred Securities, the Indenture and the Trust Agreement, 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”
has the meaning set forth in the Recitals.


 


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


 


“Walgreen’s Mezz Loan”
has the meaning set forth in Section 2(a)(i).


 


“Walgreen’s
Mezz Loan Assignment Documents” has the meaning set forth in Section 2(a).


 


“Walgreen’s
Mezz Loan Borrowers” has the meaning set forth in Section 2(a)(i).


 


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2.                                           Exchange of Preferred
Securities for Replacement Collateral; Exchange Fee.


 


(a)           Taberna
agrees to assign, transfer and deliver to the Company the Preferred
Securities.  In exchange therefor, the
Company agrees to assign, transfer and deliver to Taberna (or such nominees as
may be designated by Taberna, including Taberna VIII/IX Loan Trust, a New York
common law trust in which each of Taberna VIII and Taberna IX hold a 50%
interest), pursuant to such assignment and assumption documents in form and
substance as reasonably agreed by the parties, as to the Walgreen Mezz Loan (as
hereinafter defined), (collectively, the Walgreen’s Mezz Loan
Assignment Documents”), and as to the Forestville Mortgage Loan (as
hereinafter defined), (collectively, the “Forestville Mortgage Loan
Assignment Documents”) the following (collectively, the “Replacement Collateral”):


 


(i)            the
Company’s undivided 64.609% co-lender interest in those six (6) certain
mezzanine loans (each, a “Mezz Loan” and
collectively, the “Walgreen’s Mezz Loan”)
made by CapMark Finance, Inc. (formerly known as GMAC Commercial Mortgage
Corporation) to DCWI One Mezz, LLC, DCWI Two Mezz, LLC, DCWI Three Mezz, LLC,
DCWI Four Mezz, LLC, DCWI Five Mezz, LLC, and DCWI Six Mezz, LLC (collectively,
the “Walgreen’s Mezz Loan Borrowers”), each
Mezz Loan as evidenced and secured by the applicable Mezzanine Loan Documents
(each as defined in the applicable Walgreen’s Mezz Loan Assignment Documents),
with a current outstanding aggregate principal mezzanine loan balance (in
respect of such undivided 64.609% co-lender interest) of approximately $11.063
million, together with all of the applicable Mezzanine Loan Documents and all
of the applicable Other Documents subject to the applicable Intercreditor
Agreements, Co-Lending Agreement, Servicing Agreement and Pooling and Servicing
Agreement to the extent applicable to each Mezz Loan (each as defined in the
applicable Walgreen’s Mezz Loan Assignment Documents);


 


(ii)           that
certain first mortgage loan evidenced by a promissory note executed by BTR
Kaverton LLC, in favor of the Company in the original stated principal amount
of $3,400,000.00 (the “Forestville Note”)
secured by real property known as Forestville Plaza office condominiums, Prince
George County, MD, less any partial release of property as set forth by in the
most recent lender’s title policy (the “Forestville Premises”),
having a current outstanding balance of $1,658,225.49 (the “Forestville Mortgage Loan”), together with all of the Loan
Documents (as defined in the Forestville Mortgage Loan Assignment Documents)
all Other Documents and also including all sales proceeds actually received by
the Company in December 2009 (in the amount of $863,262) as a partial
principal pay down of the Forestville Note and any other sale proceeds actually
received by the Company with respect to any partial release of Forestville
Premises from November 28, 2009 through the Closing Date; and


 


(iii)          that
certain CMBS bond titled JPMCC 2006-LDP8H (CUSIP# 46629MAW5) having an
aggregate principal balance of $500,000 (the “CMBS Bond”),


 


upon the terms and conditions set forth herein (the “Exchange”).


 


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(b)           The
closing of the Exchange contemplated herein shall occur at the offices of
Dechert LLP in Philadelphia, Pennsylvania (the “Closing Room”),
or such other place as the parties hereto shall agree, at 11:00 a.m. New
York time, on January 29, 2010, 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 will occur in accordance with the
following requirements:


 


(i)            Taberna
Capital (as collateral manager for Taberna) shall have delivered an issuer
order instructing the trustee (in such capacity, the “CDO Trustee”)
under the applicable indenture pursuant to which the CDO Trustee serves as
trustee for the holders of the Preferred Securities to exchange the Preferred
Securities for the Replacement Collateral.


 


(ii)           The
Company and Taberna (or its designee) each shall have executed and delivered
all applicable documents (including the Walgreen’s Mezz Loan Assignment
Documents and the Forestville Mortgage Loan Assignment Documents), paid all
required fees, satisfied all requirements applicable to it and taken all other
actions necessary to cause the delivery of the Replacement Collateral, as
applicable, in exchange for the Preferred Securities.


 


(iii)          The
Replacement Collateral (to the extent applicable) shall have been delivered to
the Closing Room and copies of the Preferred Securities and Replacement
Collateral (to the extent applicable) shall have previously been made available
for inspection, if so requested.


 


(iv)          The
Preferred Securities are global securities held through the Depository Trust
Company.  The Property Trustee, on behalf
of the Trust, shall promptly after the Exchange and receipt of direction to do
so, cancel the Preferred Securities.


 


(v)           Simultaneously
with the occurrence of the events described in subsections (i) through (iv) hereof,
(A) Taberna as holder of the Preferred Securities shall irrevocably
transfer, assign, grant and convey the related Taberna Transferred Rights to
the Company and the Company shall assume all rights of Taberna with respect to
the Preferred Securities and the Taberna Transferred Rights and (B) Taberna
shall be entitled to all of the rights, title and interest of the Company with
respect to the Replacement Collateral.


 


(vi)          The
Company shall have paid to the Indenture Trustee, for application upon the
Preferred Securities and for distribution to Taberna as holder of the Preferred
Securities pursuant to the terms of the Indenture, all accrued interest under
the Preferred Securities through and including the Closing Date.


 


(c)           Simultaneously
with the occurrence of the events described in subsections (i) through (iv) of
Section 2(b) above, the Company shall pay (i) to Taberna
VIII an amount equal to $500,000 minus the sum of (y) one half of the
Replacement Collateral Interest Payment and (z) any amounts paid by the
Company on behalf of Taberna VIII pursuant to Section 3(f) below
and (ii) to Taberna IX an amount equal to $500,000 minus the sum of (y) one
half of the 


 


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Replacement Collateral Interest Payment and (z) any amounts paid
by the Company on behalf of Taberna IX pursuant to Section 3(f) below,
each by wire transfer in immediately available funds.


 


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 Replacement Collateral.


 


(b)           Paul,
Hastings, Janofsky & Walker LLP, counsel for the Company (the “Company Counsel”), shall have
delivered an opinion, dated the Closing Date, addressed to Taberna, in
substantially the form set forth in Exhibit B-1 hereto and Venable
LLP, Maryland counsel for the Company (“Company Maryland Counsel”
and together with Company Counsel, the “Company Counsels”),
shall have delivered an opinion, dated the Closing Date, addressed to Taberna,
in substantially the form set forth in Exhibit B-2 hereto.  In rendering its opinion, the Company
Counsels 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 Taberna) and by and upon such other
documents as such counsel may, in their reasonable opinion, deem appropriate as
a basis for the Company Counsels’ opinion. 
The Company Counsels 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)           On the
Closing Date, the parties to this Exchange Agreement shall have executed and
delivered the Operative Documents to the other parties thereto and in form and
substance acceptable to Taberna and the Company (acceptance of such form and
substance to be evidenced by Taberna’s or the Company’s execution and delivery
thereof).


 


(d)           Prior
to the Closing Date, the Company shall have furnished to Taberna and its
counsel such further information, certificates and documents as Taberna or such
counsel may reasonably request.


 


(e)           The
Company shall have paid all reasonable accrued and unpaid fees, costs and
expenses then due under the Indenture and the Trust Agreement, if any.


 


(f)            Taberna
shall be responsible for all costs and expenses in connection with any title
updates or endorsements with regard to the Replacement Collateral, which costs
and expenses shall be paid by the Company on behalf of Taberna and shall be
deducted from the Company’s payment to Taberna as described in Section 2(c) above.


 


(g)           Taberna shall be responsible for all
costs and expenses in connection with confirming the status of its designee as
a “Qualified Transferee,” as defined in each “Intercreditor Agreement,” as
defined in each of the Walgreen’s Mezz Loan Assignment Documents.


 


If any of the conditions specified in (a) (with
respect to the Company), (b), (c) (with respect to the Company), (d) or
(e) of this Section 3 shall not have been fulfilled when and
as 


 


7

















 


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 Taberna or its counsel, this Agreement and any
obligations of Taberna hereunder, whether as holder of the Preferred Securities
or as prospective holder of the Replacement Collateral, may be canceled at, or
at any time prior to, the Closing Date by Taberna.  If any of the conditions specified in (a) (with
respect to Taberna), (c) (with respect to Taberna) or (f) of this Section 3
shall not have been fulfilled when and as provided in this Agreement or if any
of the documents mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Company, this Agreement
and any obligations of the Company hereunder may be canceled at, or at any time
prior to, the Closing Date by the Company. 
Notice of such cancellation shall be given to the Company or Taberna, as
applicable, 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 Taberna or its 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 Taberna, 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)           It is an “accredited investor” as
such term is defined in Rule 501(a) of Regulation D under the
Securities Act.  Without characterizing
the Preferred Securities or any of the Taberna Transferred Rights as a “security”
within the meaning of applicable securities laws, it is not acquiring the
Preferred Securities or the Taberna Transferred Rights with a view towards the
sale or distribution thereof in violation of the Securities Act.


 


(c)           Neither the Replacement Collateral
nor the Exchange is or may be subject to any Impairment, except to the extent
set forth in the Operative Documents. 
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.


 


(d)           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 or Taberna Capital 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, Taberna Capital or any of their
Affiliates has given it any investment advice, credit information or opinion on
whether the Exchange is prudent.


 


8

















 


(e)           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 this
Agreement and the consummation of transactions contemplated in this Agreement
and the Operative Documents for which Taberna, Taberna Capital or any of their
Affiliates could be responsible.


 


(f)            Neither the Company nor any of its “Affiliates”
(as defined in Rule 501(b) of Regulation D (“Regulation D”) under the Securities Act), 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 Replacement
Collateral under the Securities Act.


 


(g)           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 Replacement
Collateral.


 


(h)           The Replacement Collateral (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 securities
issued by 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, to the Company’s knowledge,
the CMBS Bond otherwise satisfies the eligibility requirements of Rule 144A(d)(3) promulgated
pursuant to the Securities Act (“Rule 144A(d)(3)”).


 


(i)            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.


 


(j)            Each of this Agreement and the
Operative Documents 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, 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.


 


(k)           Subject to Section 5(o) hereof,
neither the exchange of the Replacement Collateral for the 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 


 


9

















 


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.


 


(l)            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.


 


(m)          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 where such violation or default would not,
singly or in the aggregate, have a Material Adverse Effect.


 


(n)           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, materially 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.


 


(o)           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.


 


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(p)                                 Except to the extent otherwise limited
by, qualified and/or set forth in the Operative Documents and subject to the
Permitted Liens, the Company (i) is the legal, record, and beneficial
owner of, and has good and marketable title, if and as applicable, to the
Replacement Collateral other than the items included as Other Documents
described free and clear of, and subject to no, pledges, security interests,
charges, options, restrictions, encumbrances or other Liens, (ii) has the
legal capacity to execute, deliver and perform its obligations under this
Agreement and to transfer its interest in all of the Replacement Collateral of
which it is the legal or beneficial owner pursuant to this Agreement, and (iii) has
not assigned or otherwise transferred the Replacement Collateral.


 


Except as expressly stated in this Agreement, the
Company makes no representations or warranties, express or implied, with
respect to the Exchange, the Taberna Transferred Rights, the Preferred
Securities, the Indenture, the Operative Documents or any other matter.


 


5.                                           Representations and
Warranties of Taberna.  Taberna
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 of the Operative
Documents to which it is a party, will be a legal, valid and binding obligation
of Taberna, enforceable against 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 Taberna 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 is the sole legal and beneficial
owner of the Preferred Securities and the related Taberna Transferred Rights
and shall deliver the Preferred Securities free and clear of any Lien.


 


(f)                                    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.


 


11

















 


(g)                                 The outstanding principal amount of its
respective Preferred Securities is the face amount as set forth in such
Preferred Securities.


 


(h)                                 To the extent applicable, it is aware
that the Replacement Collateral has not been and will not be registered under
the Securities Act and may not be offered or sold within the United States
except pursuant to a registration statement or an exemption from the
registration requirements of the Securities Act.


 


(i)                                     It is an “accredited investor,” as such
term is defined in Rule 501(a) of Regulation D under the Securities
Act.


 


(j)                                     It has not made any offers to sell, or
solicitations of any offers to buy, all or any portion of the Preferred
Securities or Taberna Transferred Rights in violation of any applicable
securities laws.


 


(k)                                  To the extent applicable, 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 Preferred Securities or Taberna Transferred
Rights.


 


(l)                                     To the extent applicable, it understands
and acknowledges that (i) no public market exists for the Replacement
Collateral and that it is unlikely that a public market will ever exist for the
Replacement Collateral, (ii) Taberna is accepting the Replacement
Collateral 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 Replacement Collateral 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 Replacement Collateral,
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
Replacement Collateral indefinitely.


 


(m)                               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 Operative Documents for
which the Company could be responsible.


 


(n)                                 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 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 


 


12

















 


agreements in the Operative Documents and the other documents delivered
by the Company in connection therewith.


 


(o)                                 Taberna’s designee or nominee, as
applicable as the assignee under each of the Walgreen’s Mezz Loan Assignment
Documents, is a “Qualified Transferree,” as defined in each “Intercreditor
Agreement,” as defined in each of the Walgreen’s Mezz Loan Assignment
Documents.


 


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 Preferred Securities, the
Indenture, or any other matter.


 


6.                                           Covenants and Agreements
of the Company.  The Company agrees with Taberna
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 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.


 


(c)                                  The Company and Taberna covenant and
agree to execute and deliver (whether at or after the Closing Date) such other
agreements, opinions and certificates as may be reasonably required in order (i) to
cancel the Preferred Securities and (ii) discharge the Indenture, all on
or after the Closing Date and in accordance with the terms and conditions set
forth in the Indenture.


 


7.                                           Payment of Expenses. 
Except as set forth in Section 3(f) and Section 3(g) hereof,
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 sale and
delivery of the Replacement Collateral to Taberna (or such nominees as may be
designated by Taberna) and any taxes payable in connection therewith; and (ii) the
fees and expenses of counsel, accountants and any other experts or advisors
retained by the Company.


 


8.                                           Indemnification.  (a) The
Company agrees to indemnify and hold harmless Taberna, 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 


 


13

















 


untrue statement
of a material fact contained in any information or documents provided by or on
behalf of the Company to any Indemnified Party in connection with the Exchange,
(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 to any Indemnified Party in connection with the
Exchange, 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 each such Indemnified Party in connection with
investigating or defending any such loss, claim, damage, liability or action,
unless it is finally judicially determined that the losses, claims, damages or liabilities
resulted primarily from the gross negligence or willful misconduct of the
Indemnified Party.  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 Company shall be entitled to participate
in the action and to the extent it elects to do so, assume the defense thereof
with counsel reasonably acceptable to the Indemnified Party.  After notice from the indemnifying party to
the Indemnified Party of its election to assume the defense of such action, the
indemnifying party shall not be liable to the Indemnified Party under this Section 8
for any legal or other expenses subsequently incurred by the Indemnified
Parties in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Indemnified Parties shall have the
right to retain separate counsel, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Parties, unless (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party has failed to assume the
defense and employ counsel as required above, or (iii) the named parties
to any such action (including any impleaded parties) include both (a) the
Indemnified Parties and (b) the indemnifying parties, and the Indemnified
Parties shall have reasonably determined that the defenses available to them
are not available to the indemnifying parties and/or may not be consistent with
the best interests of the indemnifying parties or the Indemnified Parties (in
which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of the Indemnified Parties); it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate, substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for the Indemnified Parties.  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 


 


14

















 


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; Damages.  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.  Notwithstanding each party’s rights and remedies
at law or in equity, no party shall have any liability to any other party for
any special, incidental, indirect, consequential, or punitive damages,
including, without limitation, the loss of opportunity, use, revenue or profit,
in connection with or arising out of this Agreement even if such damages were
foreseeable.  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 A.


 


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 Taberna
under this Agreement may be assigned by Taberna without the Company’s consent;
provided that the assignee assumes the obligations of Taberna 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 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 


 


15

















 


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.  The
parties hereto acknowledge and agree that upon the closing of the Exchange, all
obligations of the parties hereunder and under the other Operative Documents
have been performed and no other obligations remain.


 


17.                                     Further Assurances. 
The parties hereto agree to execute and deliver, and file or record as
applicable, such reasonable and appropriate additional documents, instruments
or other agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement, and shall cooperate with respect to the transfer of
the servicing of the Forestville Mortgage Loan..


 


[Signature Pages Follow]


 


16

















 


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


 


 


	
   

  	
  CRYSTAL
  RIVER CAPITAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rodman L. Drake

  
	
   

  	
   

  	
  Name: Rodman L. Drake
 Title: President and CEO

  



 


 


(Signatures
continue on the next page)


 


17

















 


	
   

  	
  TABERNA PREFERRED FUNDING VIII,
  LTD.

  
	
   

  	
  TABERNA PREFERRED FUNDING IX,
  LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Taberna Capital
  Management, LLC

  as Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Michael A. Fralin

  
	
   

  	
   

  	
   

  	
  Name: Michael A. Fralin

  
	
   

  	
   

  	
   

  	
  Title: Managing
  Director

  



 


18

















 


EXHIBIT A


 


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


 


With a copy to:


 


Dechert LLP


Cira Centre


2929 Arch Street


Philadelphia, PA 19104


Attention:  Ralph R. Mazzeo


Facsimile:  (215) 994-2222


e-mail:  ralph.mazzeo@dechert.com


 


Company:


 


Crystal River
Capital, Inc.


Three World
Financial Center


200 Vesey Street,
10th Floor


New York, NY
10281-1010


Attention:
Jonathan Tyras


Facsimile: (212)
549-8310


e-mail:
jtyras@brookfield.com


 


With a copy to:


 


Paul, Hastings,
Janofsky & Walker LLP


75 East 55th
Street


New York, NY 10022


Attention: Michael
Zuppone


Facsimile: (212)
230-7752


e-mail:
michaelzuppone@paulhastings.com


 

















 


EXHIBIT
B-1


 


Pursuant to Section 3(b) of the
Agreement, Company Counsel shall deliver an opinion to the effect that:


 


(i)                                     The Exchange Agreement will constitute
the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.


 


(ii)                                  The Company is not and, immediately after
the closing of the transaction contemplated by the Exchange Agreement, will not
be an “investment company,” as defined in the Investment Company Act of 1940,
as amended.


 


(iii)                               No registration under the Securities Act
of 1933, as amended, of any of the Replacement Collateral is required in
connection with the exchange and delivery of the Replacement Collateral,
assuming (i) the accuracy of the TRUPS Holders’ representations and
warranties made in Section 5 of the Exchange Agreement and those of the
Company contained in the Exchange Agreement regarding the absence of a general
solicitation in connection with the exchange and delivery of the Replacement
Collateral and (ii) the due performance by the TRUPS Holders of the
agreements of the TRUPS Holders set forth in the Exchange Agreement.


 


(iv)                              The performance by the Company of its
obligations under the Exchange Agreement does not (a) constitute a breach
by the Company of, or constitute a default by the Company under, any agreement
listed on Schedule I to the opinion (collectively, the “Reviewed Agreements”)
or (b) cause the Company to violate any federal or New York law, regulation
or rule applicable to the Company.


 


(v)                                 No consent, approval, authorization or
order of, or filing or registration with, any United States Federal or State of
New York court or governmental agency or body is required for the performance
by the Company of the Exchange Agreement or for the consummation of the
transactions contemplated thereby, except such as may be required under or by
the Securities Act.


 


B-1

















 


EXHIBIT B-2


 


Pursuant to Section 3(b) of the
Agreement, Company Maryland Counsel shall deliver an opinion to the effect
that:


 


(vi)                              The Company is a corporation duly
incorporated and validly existing under and by virtue of the laws of the State
of Maryland and is in good standing with the State Department of Assessments
and Taxation of Maryland.  The Company
has the corporate power to execute and deliver, and to perform its obligations
under, the Operative Documents.  The
Company has the corporate power to own its properties and conduct its business
as described in the 10-K under the caption “Business.”


 


(vii)                           The execution and delivery of the
Operative Documents, and the consummation of the transactions contemplated
thereby, by the Company have been duly authorized by all necessary corporate
action by the Company.


 


(viii)                        The Operative Documents have been duly
executed and, so far as is known to us, delivered by the Company.


 


(ix)                                The execution, delivery and performance
by the Company of its obligations under the Operative Documents, and the
consummation by the Company of the transactions contemplated thereby, do not
and will not conflict with the Charter or Bylaws or with any judgment, ruling,
decree or order known to us, of any court or other government agency or body of
the State of Maryland or any statute, rule or regulation of the State of
Maryland applicable to the Company.  We
call your attention to the fact that, in connection with the delivery of this
opinion, we have not ordered or reviewed judgment, lien or any other searches
of public or private records of the Company or its properties.


 


No filing, registration or qualification with, or
approval, authorization, consent or order of, any governmental authority or
agency of the State of Maryland is required in connection with the execution
and delivery of the Operative Documents or the transactions contemplated
thereby, except such as have been obtained or made.


 


B-2