Document:

Exhibit 10.4

 

EXECUTION VERSION

 

 

 

MASTER REPURCHASE AGREEMENT

 

 

Dated as of June 28, 2017

 

 

by and between

 

 

GP COMMERCIAL CB LLC,
 as Seller,

 

 

and

 

 

CITIBANK, N.A.,
 as Purchaser

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE 1   APPLICABILITY
    	
 
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE 2   DEFINITIONS
    	
 
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE 3   INITIATION; CONFIRMATION; TERMINATION; FEES
    	
 
    	
22
    
	
 
    	
 
    	
 
    
	
ARTICLE 4 MARGIN   MAINTENANCE
    	
 
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE 5   PAYMENTS; COLLECTION ACCOUNT
    	
 
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE 6 SECURITY   INTEREST
    	
 
    	
37
    
	
 
    	
 
    	
 
    
	
ARTICLE 7 TRANSFER   AND CUSTODY
    	
 
    	
39
    
	
 
    	
 
    	
 
    
	
ARTICLE 8 SALE,   TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
    	
 
    	
40
    
	
 
    	
 
    	
 
    
	
ARTICLE 9   REPRESENTATIONS AND WARRANTIES
    	
 
    	
40
    
	
 
    	
 
    	
 
    
	
ARTICLE 10   NEGATIVE COVENANTS OF SELLER
    	
 
    	
47
    
	
 
    	
 
    	
 
    
	
ARTICLE 11   AFFIRMATIVE COVENANTS OF SELLER
    	
 
    	
48
    
	
 
    	
 
    	
 
    
	
ARTICLE 12 SINGLE   PURPOSE ENTITY
    	
 
    	
53
    
	
 
    	
 
    	
 
    
	
ARTICLE 13 EVENTS   OF DEFAULT; REMEDIES; SET-OFF
    	
 
    	
55
    
	
 
    	
 
    	
 
    
	
ARTICLE 14 SINGLE   AGREEMENT
    	
 
    	
60
    
	
 
    	
 
    	
 
    
	
ARTICLE 15   RECORDING OF COMMUNICATIONS
    	
 
    	
61
    
	
 
    	
 
    	
 
    
	
ARTICLE 16 NOTICES   AND OTHER COMMUNICATIONS
    	
 
    	
61
    
	
 
    	
 
    	
 
    
	
ARTICLE 17 ENTIRE   AGREEMENT; SEVERABILITY
    	
 
    	
61
    
	
 
    	
 
    	
 
    
	
ARTICLE 18   NON-ASSIGNABILITY
    	
 
    	
62
    
	
 
    	
 
    	
 
    
	
ARTICLE 19   GOVERNING LAW
    	
 
    	
63
    
	
 
    	
 
    	
 
    
	
ARTICLE 20 NO   WAIVERS, ETC.
    	
 
    	
63
    
	
 
    	
 
    	
 
    
	
ARTICLE 21 INTENT
    	
 
    	
64
    
	
 
    	
 
    	
 
    
	
ARTICLE 22 DISCLOSURE   RELATING TO CERTAIN FEDERAL PROTECTIONS
    	
 
    	
65
    
	
 
    	
 
    	
 
    
	
ARTICLE 23 CONSENT   TO JURISDICTION; WAIVERS
    	
 
    	
65
    
	
 
    	
 
    	
 
    
	
ARTICLE 24 NO   RELIANCE
    	
 
    	
66
    
	
 
    	
 
    	
 
    
	
ARTICLE 25   INDEMNITY AND EXPENSES
    	
 
    	
67
    
	
 
    	
 
    	
 
    
	
ARTICLE 26 DUE   DILIGENCE
    	
 
    	
68
    
	
 
    	
 
    	
 
    
	
ARTICLE 27   SERVICING
    	
 
    	
69
    
	
 
    	
 
    	
 
    
	
ARTICLE 28   MISCELLANEOUS
    	
 
    	
71
    

 

i

 

EXHIBITS

 

	
Exhibit I
    	
Names and Addresses for   Communications
    
	
Exhibit II
    	
Form of   Transaction Request
    
	
Exhibit III
    	
Form of   Confirmation Statement
    
	
Exhibit IV
    	
Authorized   Representatives of Seller
    
	
Exhibit V
    	
Form of Power of   Attorney
    
	
Exhibit VI
    	
Form of Covenant   Compliance Certificate
    
	
Exhibit VII
    	
Due Diligence Checklist
    
	
Exhibit VIII
    	
Form of Margin   Call Notice
    
	
Exhibit IX
    	
Form of Servicer Acknowledgment   and Instruction Letter
    
	
Exhibit X
    	
Representations and   Warranties Regarding Each Individual Purchased Asset
    

 

ii

 

MASTER REPURCHASE AGREEMENT

 

MASTER REPURCHASE AGREEMENT, dated as of June 28, 2017 (as amended, restated, supplemented or otherwise modified and in effect from time to time, this “Agreement”), by and between GP COMMERCIAL CB LLC, a Delaware limited liability company (“Seller”), and CITIBANK, N.A., a national banking association (including any successor thereto, “Purchaser”).

 

ARTICLE 1
 APPLICABILITY

 

Subject to the terms of the Transaction Documents, from time to time the parties hereto may enter into transactions in which Seller will sell to Purchaser, all of Seller’s right, title and interest in and to certain Eligible Assets (as defined herein) and the other related Purchased Items (as defined herein) (collectively, the “Assets”) against the transfer of funds by Purchaser to Seller, with a simultaneous agreement by Purchaser to re-sell back to Seller, and by Seller to repurchase, such Assets at a date certain or on demand, against the transfer of funds by Seller to Purchaser.  Each such transaction shall be referred to herein as a “Transaction” and, unless otherwise agreed in writing by Seller and Purchaser, shall be governed by this Agreement, including any supplemental terms or conditions contained in any exhibits, schedules or annexes identified herein as applicable hereunder.  Each individual transfer of an Eligible Asset shall constitute a distinct Transaction.  Notwithstanding any provision or agreement herein, this Agreement is not a commitment by Purchaser to engage in Transactions, but sets forth the requirements under which Purchaser would consider entering into Transactions from time to time.  At no time shall Purchaser be obligated to purchase or effect the transfer of any Eligible Asset from Seller to Purchaser.  Any commitment to enter into a Transaction shall be subject to Purchaser’s sole discretion, shall be evidenced by Purchaser’s delivery of a Confirmation pursuant to Article 3(c)(ii) and shall be subject to satisfaction of all terms and conditions of this Agreement.

 

ARTICLE 2
 DEFINITIONS

 

The following capitalized terms shall have the respective meanings set forth below.

 

“Accelerated Repurchase Date” shall have the meaning specified in Article 13(b)(i).

 

“Accepted Servicing Practices” shall mean with respect to any Purchased Asset, those mortgage loan servicing practices of prudent mortgage lending institutions that service mortgage loans of the same type as such Purchased Asset in the state where the related underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

 

“Account Bank” shall mean Wells Fargo Bank, N.A. or any successor approved by Purchaser in its sole discretion.

 

“Account Control Agreement” shall mean that certain Account Control Agreement, dated as of the Closing Date, among Purchaser, Seller and Account Bank with respect to the Collection Account, as the same may be amended, modified, and/or restated from time to time, and/or any replacement agreement.

 

 

“Act of Insolvency” shall mean, with respect to any Person, (a) the filing of a petition, commencing, or authorizing the commencement of any case or proceeding, or the voluntary joining of any case or proceeding under any Insolvency Law, or suffering any such petition or proceeding to be commenced by another which is consented to, not timely contested or results in entry of an order for relief; (b) the seeking of or consenting to the appointment of a receiver, trustee, custodian or similar official for such Person or all or substantially all of the property of such Person; (c) the appointment of a receiver, conservator, or manager for such Person by any governmental agency or authority having the jurisdiction to do so; (d) the making of a general assignment for the benefit of creditors; or (e) the admission in writing by such Person of its inability to pay its debts or discharge its obligations as they become due or mature (including without limitation, its obligations under any Transaction Documents); or (f) that any Governmental Authority or agency or any person, agency or entity acting at the direction of any Governmental Authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or substantially all of the property of such Person, or shall have taken any action to displace the management of such Person or to curtail its authority in the conduct of the business of such Person.

 

“Affiliate” shall mean, when used with respect to any specified Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person; provided, however, that in no event shall any of the following entities be considered an “Affiliate” of Seller or Guarantor: (i) the Pine River Entities, or (ii) any Subsidiary or affiliates or any fund or other entity managed or advised from time to time by any of the Pine River Entities, other than the Seller Parties or any other direct or indirect Subsidiary of Guarantor, solely to the extent that such Person would be considered an “Affiliate” solely as a result of a Pine River Entity’s direct or indirect ownership therein.

 

“Agreement” shall have the meaning specified in the introductory paragraph hereof.

 

“Alternative Rate” shall have the meaning specified in Article 3(g).

 

“Alternative Rate Transaction” shall mean, any Transaction with respect to which the Pricing Rate is determined with reference to the Alternative Rate.

 

“Anti-Money Laundering Laws” shall have the meaning specified in Article 9(kk).

 

“Applicable Spread” shall have the meaning specified in the Fee Letter.

 

“Appraisal” shall mean a FIRREA compliant appraisal of the related Mortgaged Property from a third party appraiser in form and substance satisfactory to Purchaser.

 

“Asset Schedule and Exception Report” shall have the meaning specified in the Custodial Agreement.

 

“Assets” shall have the meaning specified in Article 1.

 

“Assignment of Mortgage” shall mean, with respect to any Mortgage, an assignment of the mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws

 

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of the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment and pledge of the Mortgage.

 

“Bailee Agreement” shall have the meaning specified in the Custodial Agreement.

 

“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended from time to time, or any successor statute.

 

“Business Day” shall mean a day other than (i) a Saturday or Sunday, or (ii) a day in which the New York Stock Exchange or banks in the State of New York are authorized or obligated by law or executive order to be closed.

 

“Capital Stock” shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent equity ownership interests in a Person which is not a corporation, including, without limitation, any and all member or other equivalent interests in any limited liability company, and any and all warrants or options to purchase any of the foregoing.

 

“Capitalized Lease Obligations” shall mean obligations under a lease that are required to be capitalized for financial reporting purposes in accordance with GAAP.  The amount of a Capitalized Lease Obligation is the capitalized amount of such obligation as would be required to be reflected on the balance sheet prepared in accordance with GAAP of the applicable Person as of the applicable date.

 

“Change of Control” shall mean the occurrence of any of the following events: (a) any “person” or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the beneficial owner, directly or indirectly, of 35% or more of the total voting power of all classes of Capital Stock of Guarantor entitled to vote generally in the election of the directors, (b) Manager or any other Pine River Entity or any other person directly or indirectly Controlling, Controlled by or under common Control with any Pine River Entity shall at any time cease to act as the external manager of the Guarantor, or (c) the Guarantor shall cease to directly own and control, of record and beneficially, 100% of the indirect Capital Stock of Seller.

 

“Closing Date” shall mean June 28, 2017.

 

“Collateral” shall have the meaning specified in Article 6(a).

 

“Collection Account” shall have the meaning specified in Article 5(c).

 

“Commercial Asset” shall mean, an Eligible Asset with respect to which the Mortgaged Property consists of office, retail, industrial and/or self-storage properties.

 

“Confidential Information” shall have the meaning specified in Article 28(j).

 

“Confirmation” shall mean a confirmation substantially in the form of Exhibit III hereto, as same may be amended, modified and/or restated from time to time.

 

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“Contingent Liabilities” shall mean, with respect to any Person as of any date of determination, all of the following as of such date: (a) liabilities and obligations (including any Guarantees) of such Person in respect of “off-balance sheet arrangements” (as defined in the Off-Balance Sheet Rules defined below), (b) obligations, including Guarantees, whether or not required to be disclosed in the footnotes to such Person’s financial statements, guaranteeing in whole or in part any Non-Recourse Indebtedness, lease, dividend or other obligation, excluding, however, (i) contractual indemnities (including any indemnity or price-adjustment provision relating to the purchase or sale of securities or other assets), (ii) guarantees of non-monetary obligations which have not yet been called on or quantified, of such Person or any other Person and (iii) reasonable and customary “bad boy” acts agreed to by such person (as a guarantor thereunder) in connection with a mortgage loan or mezzanine loan transaction, and (c) forward commitments or obligations to fund or provide proceeds with respect to any loan or other financing which is obligatory and non-discretionary on the part of the lender which is not or, in the case of a future advance obligation under an Eligible Asset, will not be fully offset by a corresponding asset.  The amount of any Contingent Liabilities described in the preceding clause (b) shall be deemed to be (i) with respect to a guarantee of interest or interest and principal, or operating income guarantee, the sum of all payments required to be made thereunder (which, in the case of an operating income guarantee, shall be deemed to be equal to the debt service for the note secured thereby), through (x) in the case of an interest or interest and principal guarantee, the stated date of maturity of the obligation (and commencing on the date interest could first be payable thereunder), or (y) in the case of an operating income guarantee, the date through which such guarantee will remain in effect, and (ii) with respect to all guarantees not covered by the preceding clause (i), an amount equal to the stated or determinable amount of the primary obligation in respect of which such guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as recorded on the balance sheet and in the footnotes to the most recent financial statements of such Person.  “Off-Balance Sheet Rules” shall mean the Disclosure in Management’s Discussion and Analysis About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, Securities Act Release Nos. 33-8182; 34-47264; FR-67 International Series Release No. 1266 File No. S7-42-02, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified of 17 CFR Parts 228, 229 and 249).

 

“Control” means, with respect to any Person, the direct or indirect possession of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, the ability to exercise voting power, by contract or otherwise. “Controlling,” “Controlled” and “under common Control” have correlative meanings.

 

“Covenant Compliance Certificate” means an officer’s certificate from Seller substantially in the form of Exhibit VI attached hereto.

 

“Covered Taxes”: Any Taxes imposed on or with respect to any payment made by or on account of any obligation of Seller under any Transaction Document or required to be withheld or deducted from a payment by Seller to Purchaser under the Transaction Documents excluding (a) income taxes, branch profits taxes, franchise taxes or any other Taxes imposed on or measured by net income (however denominated) or any similar Taxes, in each case, (i) imposed by the jurisdiction in which Purchaser is organized, or maintains either its principal office or a lending or purchasing office in, or any political subdivision of any thereof, or (ii) that are Other Connection Taxes, (b) any and all withholding Taxes imposed by the laws of the United States of America that

 

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are in effect (x) as of the date of this Agreement, (y) as of the date on which Purchaser changes its principal office or its lending or purchasing office, or (z) as of the date when Purchaser becomes a buyer pursuant to Article 18(b), (c) any Taxes attributable to Purchaser’s or any assignee’s of Purchaser failure to comply with Article 5(k)(v), Article 5(k)(vi) or Article 18(f), (d) any Taxes imposed under FATCA, and (e) any Tax imposed on a transferee, assignee or participant at the time it acquired its interest in a Transaction (or if such transferee, assignee or participant is an intermediary, partnership or other flow-through entity for U.S. tax purposes, the date on which the relevant beneficiary, partner or member of such transferee, assignee or participant becomes a beneficiary, partner or member thereof, if later), except, in each case, to the extent the relevant transferor, assignor or Purchaser was entitled to receive additional amounts hereunder.

 

“Credit Event” shall mean, with respect to any Purchased Asset, a material adverse change in the credit characteristics of, without limitations, the related Mortgaged Property, any related Mortgagor, Mezzanine Borrower or other obligor (including, without limitation, any guarantor, participant or sponsor) or the related commercial real estate market in which the Mortgaged Property is located;  provided, however, that a Credit Event shall not be deemed to exist solely as a result of any event that results in the increase or decrease of interest rate spreads or other similar benchmarks (including, without limitation, U.S. treasury rates, interest rate swaps, LIBOR or the prime rate) or any disruption in the commercial mortgage backed securities market, capital markets or credit markets.  Any determination that a Credit Event has occurred shall be made by Purchaser in its sole but good faith business judgment.

 

“Custodial Agreement” shall mean the Custodial Agreement, dated as of the Closing Date, by and among Custodian, Seller and Purchaser, as the same may be amended, modified and/or restated from time to time, and/or any replacement agreement.

 

“Custodial Delivery” shall mean compliance by Seller with the delivery obligations set forth in Section 2.01 of the Custodial Agreement.

 

“Custodian” shall mean Wells Fargo Bank, N.A., or any successor custodian approved by Purchaser in its sole discretion.

 

“Default” shall mean any event which, with the giving of notice, the passage of time, or both, would constitute an Event of Default.

 

“Dollars” and “$” shall mean freely transferable lawful money of the United States of America.

 

“Due Diligence Checklist” shall mean, with respect to any Eligible Asset, the due diligence materials set forth on Exhibit VII hereto.

 

“Due Diligence Package” shall mean, with respect to any Eligible Asset, (a) the items on the Due Diligence Checklist, in the case of each item, to the extent applicable, (b) the Requested Exceptions Report and (c) such other documents or information as Purchaser or its counsel shall reasonably deem necessary.

 

“Early Repurchase” shall mean a repurchase of a Purchased Asset as described in Article 3(d).

 

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“Early Repurchase Date” shall have the meaning specified in Article 3(d).

 

“Economic Sanctions” shall have the meaning specified in Article 9(hh).

 

“Effective Date” shall mean June 28, 2017.

 

“Eligibility Criteria” shall mean (i) the proposed Purchased Asset is a performing Mortgage Loan or Mezzanine Loan accruing interest at a floating rate based on LIBOR, (ii) after giving effect to the purchase of the proposed Purchased Asset, the Portfolio Purchase Price Debt Yield (including the proposed Purchased Asset), as determined by Purchaser, will be greater than the Minimum Portfolio Purchase Price Debt Yield, (iii) there is no monetary or material non-monetary default or event of default (beyond all applicable notice and grace periods) under the related Purchased Asset Documents, (iv) the Mortgaged Property LTV of the proposed Purchase Asset will not exceed the Mortgaged Property LTV Threshold and (v) the maximum term of the proposed Purchased Asset, including all extension options, is not more than five (5) years.

 

“Eligible Asset” shall mean any performing, floating-rate Mortgage Loan or Mezzanine Loan (i) that is approved by Purchaser in its sole and absolute discretion, (ii) with respect to which, upon such Eligible Asset becoming a Purchased Asset, the applicable representations and warranties set forth in this Agreement (including the exhibits hereto) are true and correct in all material respects except to the extent disclosed in a Requested Exceptions Report approved by Purchaser, (iii) which, in the case of a Mortgage Loan, is secured by stabilized or un-stabilized Commercial Assets, Multifamily Assets or Hotel Assets and is not secured by a healthcare facility, construction properties, for-sale residential properties or any land loans (or, in the case of a Mezzanine Loan, is secured by first priority pledges of all of the Capital Stock of Persons that directly or indirectly own stabilized or un-stabilized Commercial Assets, Multifamily Assets or Hotel Assets and not any healthcare facility, construction properties, for-sale residential properties or land loans), (iv) with respect to which, in the case of a Mezzanine Loan, the related Mortgage Loan is a Purchased Asset, and (v) that satisfies the Eligibility Criteria as of any date of determination as determined by Purchaser in its sole discretion (except to the extent waived by Purchaser as of the Purchase Date).

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.  Section references to ERISA are to ERISA, as in effect at the date of this Agreement and, as of the relevant date, any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

 

“ERISA Affiliate” shall mean any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the Internal Revenue Code of which Seller is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Internal Revenue Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Internal Revenue Code, described in Section 414(m) or (o) of the Internal Revenue Code of which Seller is a member.

 

“Event of Default” shall have the meaning specified in Article 13(a).

 

“Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.

 

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“Exit Fee” shall have the meaning specified in the Fee Letter.

 

“Exit Fee Side Letter” shall mean the side letter agreement, dated as of the date hereof, from Citigroup Capital Markets, Inc. and accepted and agreed by Seller, as same may be amended, modified and/or restated from time to time.

 

“Facility Amount” shall have the meaning specified in the Fee Letter.

 

“Facility Availability Period Expiration Date” shall mean the Facility Expiration Date.

 

“Facility Expiration Date” shall mean the day that is the earlier of (i) the Stated Facility Expiration Date and (ii) any Accelerated Repurchase Date.

 

“FATCA” means Internal Revenue Code sections 1471 through 1474, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to section 1471(b)(1) of the Internal Revenue Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities entered into in connection with the implementation of the foregoing.

 

“FDIA” shall have the meaning specified in Article 21(c).

 

“FDICIA” shall have the meaning specified in Article 21(d).

 

“Federal Funds Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by Purchaser from three (3) federal funds brokers of recognized standing selected by it; provided that such selected brokers shall be the same brokers as selected for all of Purchaser’s other repurchase customers where the Federal Funds Rate is to be applied, to the extent such brokers are available.

 

“Fee Letter” shall mean the letter agreement, dated as of the date hereof, from Purchaser and accepted and agreed by Seller, as same may be amended, modified and/or restated from time to time.

 

“Filings” shall have the meaning specified in Article 6(c).

 

“Future Advance Failure” shall have the meaning specified in Article 11(m).

 

“Future Funding Advance Draw” shall have the meaning specified in Article 3(e)(iii).

 

“Future Funding Advance Draw Request” shall have the meaning specified in Article 3(e)(iii).

 

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“GAAP” shall mean United States generally accepted accounting principles consistently applied as in effect from time to time.

 

“Governmental Authority” shall mean any national or federal government, any state, regional, local or other political subdivision thereof with jurisdiction and any Person with jurisdiction exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any supra national bodies such as the European Union or the European Central Bank).

 

“Guarantee” shall mean, with respect to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Guarantee of a Person shall be deemed to be an amount equal to the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith in accordance with GAAP.  The terms “Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.

 

“Guarantor” shall mean Granite Point Mortgage Trust, Inc., a Maryland corporation, or any respective successor thereto, and any other guarantor that joins the Guaranty with the consent of Purchaser granted in its sole discretion.

 

“Guarantor Threshold” shall have the meaning specified in the Fee Letter.

 

“Guaranty” shall mean the Guaranty, dated as of the date hereof, from Guarantor in favor of Purchaser, as same may be amended, modified and/or restated from time to time.

 

“Hotel Asset” shall mean, an Eligible Asset with respect to which the Mortgaged Property consists of one or more hotel properties.

 

“Income” shall mean, with respect to any Purchased Asset at any time, all monies collected from or in respect of such Purchased Asset, including without limitation, payments of interest, principal, repayment, rental or other income, insurance and liquidation proceeds, plus all proceeds from sale or other disposition of such Purchased Asset, but excluding all related escrow and reserve payments, all expense reimbursement payments, which shall be applied pursuant to the Servicing Agreement, and all servicing fees with respect to the Purchased Assets payable pursuant to the Servicing Agreement.  For the avoidance of doubt, Income shall not include origination fees and expense deposits paid in connection with the origination and closing of the Purchased Asset.

 

“Indebtedness” shall mean, with respect to any Person on any date, all of the following on such date, whether or not included as indebtedness or liabilities in accordance with GAAP determined without duplication:

 

(i)                                     obligations in respect of money borrowed (including principal, interest, assumption fees, prepayment fees, yield maintenance charges, penalties, exit fees, contingent interest and other monetary obligations whether choate or inchoate and whether by loan, the issuance and sale of

 

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debt securities or the sale of property or assets to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets, or otherwise);

 

(ii)                                  obligations, whether or not for money borrowed (A) represented by notes payable, letters of credit or drafts accepted, in each case representing extensions of credit, (B) evidenced by bonds, debentures, notes or similar instruments, (C) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property or services rendered, or (D) in connection with the issuance of preferred equity or trust preferred securities;

 

(iii)                               Capitalized Lease Obligations;

 

(iv)                              reimbursement obligations under any letters of credit or acceptances (whether or not the same have been presented for payment);

 

(v)                                 Off-Balance Sheet Obligations;

 

(vi)                              obligations to purchase, redeem, retire, defease or otherwise make any payment in respect of any mandatory redeemable stock issued by such Person or any other Person (inclusive of forward equity contracts), valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;

 

(vii)                           as applicable, all obligations of such Person (but not the obligation of others) in respect of any keep well arrangements, credit enhancements, committed future funding obligations which are not fully offset by a corresponding asset, purchase obligations, repurchase obligations, sale/buy-back agreements, takeout commitments or forward equity commitments which are not or, in the case of a future advance obligation under an Eligible Asset, will not be fully offset by a corresponding asset, in each case evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be satisfied by the issuance of equity interests (other than mandatory redeemable stock));

 

(viii)                        all Non-Recourse Indebtedness, recourse indebtedness and all indebtedness of other Persons which such Person has guaranteed or is otherwise recourse to such Person (other than pursuant to any guarantee of customary non-recourse exceptions, but only to the extent they are contingent);

 

(ix)                              all indebtedness of another Person secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien (other than Liens permitted hereunder) on property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness or other payment obligation; provided that, if such Person has not assumed or become liable for the payment of such indebtedness, then for the purposes of this definition the amount of such indebtedness shall not exceed the market value of the property subject to such Lien;

 

(x)                                 all Contingent Liabilities;

 

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(xi)                              all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person or obligations of such Person to pay the deferred purchase or acquisition price of property or assets, including contracts for the deferred purchase price of property or assets that include the procurement of services;

 

(xii)                           indebtedness of general partnerships for which such Person is liable as a general partner (whether secondarily or contingently liable or otherwise); and

 

(xiii)                        obligations to fund capital commitments under any articles or certificate of incorporation or formation, by-laws, partnership, limited liability company, operating or trust agreement and/or other organizational, charter or governing documents, subscription agreement or otherwise.

 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.

 

“Indemnified Amounts” and “Indemnified Parties” shall each have the meaning specified in Article 25(a).

 

“Independent Member” shall mean a natural Person who:

 

(a)                                 is not at the time of initial appointment and has never been, and will not while serving as Independent Member be: (i) a stockholder, director, officer, employee, partner, member (other than a “special member” or “springing member”), manager (with the exception of serving as the Independent Member of Seller or any Affiliate thereof), attorney or counsel of any Seller Party or any Affiliate or equity owner of any Seller Party; (ii) a customer, supplier or other Person who derives any of its purchases or revenues (other than any revenue derived from serving as the Independent Member of such party) from its activities with any Seller Party, or any Affiliate or equity owner of any Seller Party; (iii) a Person Controlled, Controlling or under common Control with any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person of any Seller Party or any Affiliate or equity owner of any Seller Party; or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person of any Seller Party or any Affiliate or equity owner of any Seller Party; and

 

(b)                                 has (i) prior experience as an independent director or independent member for a corporation, a trust or limited liability company whose charter documents required the unanimous consent of all independent directors or independent members thereof before such corporation, trust or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three (3) years of employment experience and who is provided by CT Corporation, Corporation Service Company, National Corporate Research, Ltd., National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company or Lord Securities Company, or if none of these companies is then providing professional

 

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independent directors, another nationally recognized company reasonably acceptable to Purchaser, that is not an Affiliate of Seller and that provides, inter alia, professional independent directors or independent members in the ordinary course of their respective business to issuers of securitization or structured finance instruments, agreements or securities or lenders originating commercial real estate loans for inclusion in securitization or structured finance instruments, agreements or securities (a “Professional Independent Member”) and is an employee of such a company or companies at all times during his or her service as an Independent Member.

 

A natural Person who satisfies the foregoing definition except for being (or having been) the independent director or independent member of a “special purpose entity” that is an Affiliate of any Seller Party (provided that such Affiliate does not or did not own a direct or indirect equity interest in Seller) shall not be disqualified from serving as an Independent Member, provided that such natural Person satisfies all other criteria set forth above and that the fees such individual earns from serving as independent director or independent member of Affiliates of Seller or in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year.  A natural person who satisfies the foregoing definition other than subparagraph (a)(ii) shall not be disqualified from serving as an Independent Member if such individual is a Professional Independent Member and such individual complies with the requirements of the previous sentence.

 

“Insolvency Laws” shall mean the Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, dissolution, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments and similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

 

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute, and the regulations promulgated and rulings issued thereunder.

 

“IRS” shall mean the United States Internal Revenue Service.

 

“Knowledge” shall mean, whenever in this Agreement or any of the Transaction Documents, or in any document or certificate executed on behalf of any Person pursuant to the Transaction Documents, reference is made to the knowledge of any such Person (whether by use of the words “knowledge” or “know”), unless otherwise expressly specified, same shall mean (a) the actual knowledge of the individuals of such Person or its Affiliates who have responsibility for any day-to-day decision making, or the legal, operational or financial affairs of such Person; or (b) with respect to any representations, warranties, certifications or statements with respect to any Purchased Asset, the actual knowledge of those individuals who have responsibility for the origination or acquisition, as applicable, underwriting, servicing or sale of such Purchased Asset.

 

“LIBOR” shall mean, with respect to each Pricing Rate Period, the rate (expressed as a percentage per annum and rounded upward, if necessary, to the next nearest 1/1000 of 1%) for deposits in U.S. dollars, for a one month period, that appears on “Page BBAM” of the Bloomberg Financial Markets Services Screen (or the successor thereto) as of 11:00 a.m., London time, on the related Pricing Rate Determination Date.  If such rate does not appear on “Page BBAM” of the Bloomberg Financial Markets Services Screen (or the successor thereto) as of 11:00 a.m., London

 

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time, on such Pricing Rate Determination Date, Purchaser shall request the principal London office of any four major reference banks in the London interbank market selected by Purchaser to provide such bank’s offered quotation (expressed as a percentage per annum) to prime banks in the London interbank market for deposits in U.S. dollars for a one month period as of 11:00 a.m., London time, on such Pricing Rate Determination Date for amounts of not less than the Repurchase Price of the applicable Transaction. If at least two such offered quotations are so provided, LIBOR shall be the arithmetic mean of such quotations.  If fewer than two such quotations are so provided, Purchaser shall request any three major banks in New York City selected by Purchaser to provide such bank’s rate (expressed as a percentage per annum) for loans in U.S. dollars to leading European banks for a one month period as of approximately 11:00 a.m., New York City time on the applicable Pricing Rate Determination Date for amounts of not less than the Repurchase Price of such Transaction. If at least two such rates are so provided, LIBOR shall be the arithmetic mean of such rates. LIBOR shall be determined by Purchaser or its agent, which determination shall be conclusive absent manifest error.  Purchaser’s determination of LIBOR shall be binding and conclusive on Seller absent manifest error.  Notwithstanding the foregoing, in no event shall LIBOR be less than zero.

 

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any financing lease having substantially the same economic effect as any of the foregoing), and the filing of any financing statement under the UCC or comparable law of any jurisdiction in respect of any of the foregoing.

 

“London Business Day” shall mean any day other than (a) a Saturday, (b) a Sunday or (c) any other day on which commercial banks in London, England are not open for business.

 

“Manager” shall mean Pine River Capital Management L.P., a Delaware limited partnership.

 

“Mandatory Early Repurchase Event” shall mean, with respect to any Purchased Asset  (a) such Purchased Asset is subject to a material breach of a representation and warranty set forth in Exhibit X hereto, as determined by Purchaser, in its sole discretion (except to the extent disclosed in a Requested Exceptions Report and approved by Purchaser in writing), (b) in respect of which any material portion of the Purchased Asset File has not been delivered to the Custodian in accordance with the terms of the Custodial Agreement (except to the extent disclosed in a Trust Receipt issued by the Custodian on or prior to the Purchase Date), (c) such Purchased Asset has been released from the possession of the Custodian under the Custodial Agreement to the Seller for a period in excess of the time period permitted under the Custodial Agreement, (d) a Purchased Asset Event of Default exists with respect to such Purchased Asset or any Related Purchased Asset, (e) such Purchased Asset has not been repurchased on the applicable Repurchase Date, (f) the failure of any Purchased Asset to qualify for safe harbor treatment as contemplated in Article 23 or (g) Seller fails to purchase any Related Purchased Asset simultaneously with the repurchase of any Purchased Asset.

 

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“Margin Amount” shall mean, with respect to any Purchased Asset on any date, an amount equal to the product of (a) the related Margin Percentage on such date multiplied by (b) the Purchase Price of such Purchased Asset on such date.

 

“Margin Call Notice” shall have the meaning specified in Article 4(a).

 

“Margin Deficit” shall mean an amount equal to the positive difference (if any) between the aggregate Margin Amount for all Purchased Assets and the aggregate Market Value of all Purchased Assets.

 

“Margin Excess” shall mean, with respect to any Purchased Asset on any date, the product of (a) the amount by which the Market Value of such Purchased Asset exceeds the Margin Amount of such Purchased Asset on such date, multiplied by (b) the Maximum Purchase Price Percentage for such Purchased Asset.

 

“Margin Excess Advance” shall have the meaning specified in Article 3(e)(iv).

 

“Margin Excess Request” shall have the meaning specified in Article 3(e)(iv).

 

“Margin Percentage” shall mean, with respect to any Purchased Asset as of any date, a percentage equal to the quotient of (i) one (1) divided by (ii) the Maximum Purchase Price Percentage for such Purchased Asset as of any such date.

 

“Market Value” shall mean, with respect to any Purchased Asset, on any date, the lesser of (i) the market value for such Purchased Asset, as determined by Purchaser in its sole discretion exercised in good faith, and (ii) the outstanding principal balance of such Purchased Asset.  The Market Value of a Purchased Asset as of the Purchase Date will be set forth in the Confirmation executed in connection with the Transaction for such Purchased Asset, and notwithstanding anything to the contrary contained herein or in any Transaction Document, such Market Value will not be adjusted by Purchaser for any Purchased Asset after the related Purchased Date except upon the occurrence and during the continuance of a Credit Event with respect to such Purchased Asset.   Without limiting the foregoing, the Market Value may be reduced by Purchaser, at Purchaser’s discretion, exercised in good faith (including to zero) with respect to any Purchased Asset (i) in respect of which there is a material breach of any representation or warranty contained in this Agreement (other than a breach disclosed to Purchaser in a Requested Exceptions Report), (ii) in respect of which a Purchased Asset Event of Default has occurred and is continuing under the related Purchased Asset Documents, or (iii) if such Purchased Asset is not repurchased on its Repurchase Date, from and after the Repurchase Date of such Purchased Asset.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the property, business, condition (financial or otherwise), assets, or results of operations (or prospects) of any Seller Party, (b) the ability of any Seller Party to perform its obligations under any of the Transaction Documents, (c) the validity or enforceability of any of the Transaction Documents or (d) the rights and remedies of Purchaser under any of the Transaction Documents.

 

“Maximum Purchase Price LTV” shall have the meaning specified in the Fee Letter.

 

“Maximum Purchase Price Percentage” shall have the meaning specified in the Fee Letter.

 

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“Mezzanine Borrower” shall mean the obligor on any applicable Mezzanine Note.

 

“Mezzanine Loan” shall mean a performing mezzanine loan secured by pledges of 100% of the Capital Stock of the Mortgagor under a related Mortgage Loan which is a Purchased Asset.

 

“Mezzanine Loan Documents” shall mean, respect to any Purchased Asset that is a Mezzanine Loan, the Mezzanine Note, those documents executed in connection with, evidencing or governing such Mezzanine Loan, including, without limitation, those documents which are required to be delivered to Custodian under the Custodial Agreement.

 

“Mezzanine Note” shall mean the original executed promissory note or other tangible evidence of the Mezzanine Loan indebtedness.

 

“Minimum Portfolio Purchase Price Debt Yield” shall have the meaning specified in the Fee Letter.

 

“Mortgage” shall mean a mortgage, deed of trust, deed to secure debt or other instrument, creating a valid and enforceable first Lien on or a first priority ownership interest in (subject to Permitted Encumbrances) an estate in fee simple in real property and the improvements thereon or a ground lease, securing a Mortgage Note or similar evidence of indebtedness.

 

“Mortgage Loan” shall mean a whole mortgage loan that is secured by a first Lien on one or more commercial (including office, retail, industrial and self-storage), multi-family, or hospitality properties.

 

“Mortgage Note” shall mean a note or other evidence of indebtedness of a Mortgagor secured by a Mortgage.

 

“Mortgaged Property” shall mean (i) with respect to any Mortgage Loan, the mortgaged property securing such Mortgage Loan and (ii) with respect to any Mezzanine Loan, the real property owned by the Person the Capital Stock of which is pledged as collateral for such Mezzanine Loan.

 

“Mortgaged Property LTV” shall mean, on any date with respect to any Purchased Asset, a fraction (expressed as a percentage) (A) the numerator of which is the outstanding principal balance of such Purchased Asset and any Related Purchased Asset and (B) the denominator of which is the “as-is” appraised value of the related Mortgaged Property.

 

“Mortgaged Property LTV Threshold” shall have the meaning set forth in the Fee Letter.

 

“Mortgagor” shall mean the obligor on a Mortgage Note and the grantor of the related Mortgage.

 

“Multiemployer Plan” shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been, or were required to have been, made by Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.

 

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“Multifamily Asset” shall mean, an Eligible Asset with respect to which the Mortgaged Property consists of real property with five (5) or more residential units (including mixed use multi-family/office and multi-family retail) as to which the majority of the underwritten revenue is from residential rental units, and which may include mobile housing and student housing.

 

“Non-Recourse Indebtedness” shall mean Indebtedness of a Person for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, Act of Insolvency, non-approved transfers or other events) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness or to a special purpose vehicle subsidiary of such Person whose only assets are such specific assets (solely to the extent that such special purpose vehicle is not subject to a substantive consolidation with such Person).

 

“Non-U.S. Person” shall have the meaning specified in Article 5(k)(v).

 

“Off-Balance Sheet Obligations” shall mean, with respect to any Person on any date, to the extent not included as a liability on the balance sheet of such Person, all of the following with respect to such Person as of such date: (a) monetary obligations under any financing lease or so-called “synthetic,” tax retention or off-balance sheet lease transaction which, upon the application of any Insolvency Laws, would be characterized as Indebtedness, (b) monetary obligations under any sale and leaseback transaction which does not create a liability on the balance sheet of such Person, or (c) any other monetary obligation arising with respect to any other transaction which (i) is characterized as Indebtedness for tax purposes but not for accounting purposes, or (ii) is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person (for purposes of this clause (c), any transaction structured to provide tax deductibility as interest expense of any dividend, coupon or other periodic payment will be deemed to be the functional equivalent of a borrowing).

 

“Other Connection Taxes” shall mean Taxes imposed on Purchaser, or an assignee of the Purchaser’s rights and obligations under this Agreement as a result of a present or former connection between Purchaser or such assignee and the jurisdiction imposing such Tax (other than connections arising from Purchaser or such assignee having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Transaction Document).

 

“Other Taxes” shall have the meaning specified in Article 5(k)(ii).

 

“Participant Register” shall have the meaning specified in Article 18(e).

 

“Patriot Act” shall have the meaning specified in Article 9(hh).

 

“Permitted Encumbrances” shall mean, with respect to any Purchased Asset (a) such liens, easements, rights and encumbrances as are permitted by the related Purchased Asset Documents and (b) Liens granted pursuant to the Transaction Documents.

 

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“Person” shall mean an individual, corporation, limited liability company, business trust, partnership, joint tenant or tenant-in-common, trust, joint stock company, joint venture, unincorporated organization, or any other entity of whatever nature, or a Governmental Authority.

 

“Pine River Entities” shall mean Manager, Pine River Domestic Management L.P., Pine River Capital Management LLC and PRCM Advisers LLC.

 

“Plan” shall mean an employee benefit or other plan established or maintained by Seller or any ERISA Affiliate during the five year period ended prior to the date of this Agreement or to which Seller or any ERISA Affiliate makes, is obligated to make or has, within the five year period ended prior to the date of this Agreement, been required to make contributions and that is covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Internal Revenue Code, other than a Multiemployer Plan.

 

“Portfolio Purchase Price Debt Yield” shall have the meaning specified in the Fee Letter.

 

“Pricing Rate” shall have the meaning specified in the Fee Letter.

 

“Pre-Purchase Due Diligence” shall have the meaning specified in Article 3(c).

 

“Pricing Rate Determination Date” shall mean with respect to any Pricing Rate Period with respect to any Transaction, the second (2nd) London Business Day preceding the first day of such Pricing Rate Period.

 

“Pricing Rate Period” shall mean, with respect to any Transaction and any Remittance Date, (a) in the case of the first Pricing Rate Period, the period commencing on and including the Purchase Date for such Transaction and ending on and excluding the following Remittance Date, and (b) in the case of any subsequent Pricing Rate Period, the period commencing on and including the immediately preceding Remittance Date and ending on and excluding the following Remittance Date; provided, however, that in no event shall any Pricing Rate Period for a Purchased Asset end subsequent to the scheduled Repurchase Date for such Purchased Asset.

 

“Principal Payment” shall mean, with respect to any Purchased Asset, any payment or prepayment of principal received as, or applied to, as a payment or prepayment of principal in respect thereof.

 

“Prohibited Person” shall mean (i) a person or entity whose name appears on, is directly or indirectly owned or controlled by anyone appearing on the list of Specially Designated Nationals and Blocked Persons by the Office of Foreign Asset Control (“OFAC”), (ii) any foreign shell bank and (iii) any person or entity resident in or whose subscription  funds are transferred from or through an account in a jurisdiction that has been designated as a non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering (“FATF”), of which the U.S. is a member and with which designation the U.S. representative to the group or organization continues to concur.  See http://www.fatf-gati.org for FATF’s list of Non-Cooperative Countries and Territories.

 

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“Purchase Date” shall mean, with respect to any Purchased Asset, the date on which Purchaser purchases such Purchased Asset from Seller hereunder.

 

“Purchase Price” shall have the meaning specified in the Fee Letter.

 

“Purchase Price Debt Yield” shall have the meaning specified in the Fee Letter.

 

“Purchase Price Differential” shall have the meaning specified in the Fee Letter.

 

“Purchase Price LTV” shall have the meaning specified in the Fee Letter.

 

“Purchase Price Percentage” shall have the meaning specified in the Fee Letter.

 

“Purchased Asset” shall mean (a) with respect to any Transaction, the Eligible Asset, and any related rights, interests or claims of any kind with respect to such Eligible Asset sold by Seller to Purchaser in such Transaction and (b) with respect to the Transactions in general, all Eligible Assets sold by Seller to Purchaser (other than Purchased Assets that have been repurchased by Seller), in the case of each of sub-clauses (a) and (b) above, including to the extent related to the Purchased Assets, all of Seller’s right, title and interest in and to, (i) the Purchased Asset Documents, (ii) the Servicing Rights, (iii) the Servicing Agreement, (iv) the Servicing Records, (v) mortgage guaranties, mortgage insurance, insurance policies, insurance certificates, insurance claims, insurance proceeds, collection and escrow accounts, letters of credit, forward trades and take out commitments, (vi) the principal balances of the Purchased Assets, not just the amount advanced by Purchaser to Seller in respect of the Purchase Price of such Purchased Asset, (vii) Income, (viii) indemnities, warranties or other credit support or enhancement, (ix) all related pledged collateral and (x) all supporting obligations of any kind.  Any Purchased Asset that is repurchased by Seller in accordance with this Agreement shall cease to be a Purchased Asset.

 

“Purchased Asset Documents” shall mean, with respect to a Purchased Asset, the documents comprising the Purchased Asset File for such Purchased Asset.

 

“Purchased Asset Event of Default” shall mean for any Purchased Asset, an “Event of Default” as defined in the Purchased Asset Documents for such Purchased Asset.

 

“Purchased Asset File” shall mean the documents specified as the “Purchased Asset File” with respect to each Purchased Asset in the Custodial Agreement, together with any additional documents and information required to be delivered to Purchaser or its designee (including the Custodian) pursuant to this Agreement and/or the Custodial Agreement.

 

“Purchased Items” shall mean all of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located:

 

(a)                                 the Purchased Assets;

 

(b)                                 all proceeds relating to the sale, securitization, liquidation, or other disposition of the Purchased Assets;

 

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(c)                                  all “general intangibles”, “accounts”, “chattel paper”, “investment property”, “instruments”, “securities accounts” and “deposit accounts”, each as defined in the UCC, relating to or constituting any and all of the foregoing; and

 

(d)                                 all replacements, substitutions or distributions on or proceeds, payments, Income and profits of, and records (but excluding any financial models or other proprietary information) and files relating to any and all of any of the foregoing.

 

“Purchaser” shall have the meaning specified in the introductory paragraph hereof.

 

“Qualified Transferee” shall mean any insurance company, bank, savings and loan association, investment bank, trust company, commercial credit corporation, pension plan, pension fund, pension fund advisory firm, mutual fund, government entity or plan or any Affiliate of Purchaser.

 

“Qualified Transferee Requirements” shall mean any requirement under any Purchased Asset Document that the holder or the transferee of the related Purchased Asset be a qualified or eligible transferee, qualified institutional lender or qualified or eligible lender (however defined).

 

“Register” shall have the meaning specified in Article 18(d).

 

“Related Credit Enhancement” shall have the meaning specified in Article 6(a).

 

“Related Purchased Asset” shall mean (i) with respect to any Mortgage Loan which is a Purchased Asset, any Mezzanine Loan related to such Mortgage Loan and (ii) with respect to any Mezzanine Loan which is a Purchased Asset, the related Mortgage Loan.

 

“Remittance Date” shall mean the seventeenth (17th) calendar day of each month, or the immediately succeeding Business Day, if such calendar day shall not be a Business Day, or such other day as is mutually agreed to in writing by Seller and Purchaser.

 

“Representatives” shall have the meaning specified in Article 28(j).

 

“Repurchase Date” shall mean, with respect to any Purchased Asset, the earliest to occur of (a) the date set forth in the applicable Confirmation, or if such day is not a Business Day, the immediately following Business Day; (b) the maturity date of such Purchased Asset (as same may be extended pursuant to the Purchased Asset Documents); (c) the Facility Expiration Date; (d) the Early Repurchase Date with respect to such Purchased Asset; (e) the Accelerated Repurchase Date; (f) the date set forth in Article 3(i)(1)(B); or (g) the date that is two (2) Business Days after Seller receives written notice of the occurrence of a Future Advance Failure with respect to such Purchased Asset.

 

“Repurchase Obligations” shall have the meaning specified in Article 6(a).

 

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any Repurchase Date or any date on which the Repurchase Price is required to be determined hereunder, the price at which such Purchased Asset is to be transferred from Purchaser to Seller; such price will be determined in each case as the sum of (i) the outstanding Purchase Price of such Purchased Asset

 

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as of such date; (ii) the accrued and unpaid Purchase Price Differential with respect to such Purchased Asset as of such date; (iii) all accrued and unpaid costs and expenses (including, without limitation, the fees and expenses of counsel) of Purchaser relating to such Purchased Assets; and (iv) any other amounts due and owing by Seller to Purchaser and its Affiliates pursuant to the terms of the Transaction Documents as of such date (including, without limitation, any amount payable pursuant to Article 3(f)(ii) or any Exit Fee payable pursuant to the Fee Letter).

 

“Requested Exceptions Report” shall mean, with respect to any proposed Purchased Asset, a list delivered to Purchaser as part of the Due Diligence Package containing any and all exceptions to the representations and warranties and any other Eligibility Criteria contained in this Agreement applicable to such proposed Purchased Asset (or that will be applicable to such proposed Purchased Asset if it becomes a Purchased Asset).

 

“Requirement of Law” shall mean, as of any date, any applicable law, treaty, rule, regulation, code, directive, policy, order or requirement or determination of an arbitrator or a court or other Governmental Authority whether now or hereafter enacted or in effect.

 

“S&P” shall mean Standard and Poor’s Ratings Services and any successor or successors thereto.

 

“SEC” shall have the meaning specified in Article 22(a).

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Seller” shall have the meaning specified in the introductory paragraph hereof.

 

“Seller Threshold” shall have the meaning specified in the Fee Letter.

 

“Seller Party” shall mean, collectively or individually, as the context may require, Seller and Guarantor.

 

“Servicer” shall mean (i) Trimont Real Estate Advisors, LLC, for so long as it maintains a primary and special servicer rating of “above average” or better from S&P, or (ii) any other third-party servicer (a) having a primary and special servicer rating of “above average” or better from S&P, and (b) approved by Purchaser in its reasonable discretion.

 

“Servicer Letter” shall have the meaning specified in Article 27(e).

 

“Servicing Agreement” shall mean the Servicing and Asset Management Agreement, dated as of July 6, 2015, by and between Servicer and TH Commercial Holdings LLC, and to which Seller has been joined as a party pursuant to that certain Joinder Agreement dated as of June 28, 2017, as same may be amended, modified and/or restated, or any replacement thereof with a successor Servicer, which replacement servicing agreement is acceptable to Purchaser in its reasonable discretion and any servicing agreement hereafter entered into with any additional Servicer which additional servicing agreement is acceptable to Purchaser in its reasonable discretion.

 

“Servicing Records” shall have the meaning specified in Article 27(f).

 

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“Servicing Rights” shall mean rights of any Person, to administer, service or subservice the Purchased Assets or to possess related Servicing Records.

 

“Settlement Agent” shall mean a nationally recognized title company, escrow company or law firm, as applicable, in accordance with local law and practice, which is a party to the Bailee Agreement and is approved by Purchaser in its sole and absolute discretion.

 

“Significant Modification” shall mean:

 

(i)                                     any modification, consent to a modification or waiver of any monetary term or material non-monetary term (including, without limitation, prepayment terms, timing of payments and acceptance of discounted payoffs) of a Purchased Asset (or related Mortgage Loan, as applicable) or any extension of the maturity date of such Purchased Asset (or related Mortgage Loan, as applicable), except pursuant to the exercise of any extension term expressly provided in the related Purchased Asset Documents for which there is no material lender discretion;

 

(ii)                                  any release of collateral or any acceptance of substitute or additional collateral for a Purchased Asset (or related Mortgage Loan, as applicable) or any consent to either of the foregoing, other than if required pursuant to the specific terms of the related Purchased Asset Documents (or related Mortgage Loan, as applicable) and for which there is no material lender discretion (it being acknowledged that Seller’s right to calculate the debt service coverage ratio, debt yield, loan to value ratio or other similar financial tests (but not the waiver or modification of any such tests) shall not be considered material lender discretion for purposes of this clause (ii));

 

(iii)                               any waiver of a “due-on-sale” or “due-on-encumbrance” clause with respect to a Purchased Asset (or related Mortgage Loan, as applicable) or, if lender consent is required, any consent to such a waiver or consent to a transfer of a Mortgaged Property or interests in the Mortgagor or consent to the incurrence of additional debt, other than any such transfer or incurrence of debt as may be effected without the consent of the lender under the related Purchased Asset Documents; and

 

(iv)                              any acceptance of an assumption agreement releasing a Mortgagor or Mezzanine Borrower from liability under a Purchased Asset (or related Mortgage Loan, as applicable) other than pursuant to the specific terms of such Purchased Asset (or related Mortgage Loan, as applicable) and for which there is no material lender discretion.

 

“SIPA” shall have the meaning specified in Article 22(a).

 

“Stated Facility Expiration Date” shall mean June 28, 2020.

 

“Subsidiary” shall mean, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Seller.

 

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“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Transaction” shall have the meaning specified in Article 1.

 

“Transaction Documents” shall mean, collectively, this Agreement, the Fee Letter, the Exit Fee Side Letter, the Guaranty, the Custodial Agreement, the Servicer Letter, the Account Control Agreement, all Confirmations and assignment documentation executed pursuant to this Agreement in connection with specific Transactions, all other documents executed in connection with this Agreement or any Transaction and all exhibits, annexes, schedules and other attachments to any of the foregoing, in each case, as such document may be amended, modified and/or restated from time to time.

 

“Transaction Request” shall mean a transaction request substantially in the form of Exhibit II hereto.

 

“Transfer” shall mean, with respect to any Person, any sale or other whole or partial conveyance of all or any portion of such Person’s assets, or any direct or indirect interest therein to a third party (other than in connection with the transfer of a Purchased Asset to Purchaser in accordance herewith), including the granting of any purchase options, rights of first refusal, rights of first offer or similar rights in respect of any portion of such assets or the subjecting of any portion of such assets to restrictions on transfer.

 

“Trust Receipt” shall have the meaning specified in the Custodial Agreement.

 

“Type” shall mean, with respect to an Eligible Asset, such Eligible Asset’s classification as one of the following, in each case, as determined by Purchaser: Multifamily Assets, Commercial Assets or Hotel Assets (or, in the case of a Mezzanine Loan, the related Mortgage Loan’s classification as one of the following, in each case, as determined by Purchaser: Multifamily Assets, Commercial Assets or Hotel Assets).

 

“UCC” shall have the meaning specified in Article 6(c).

 

“UCC Filing Jurisdiction” shall mean, with respect to Seller, the State of Delaware.

 

“UCC Financing Statement” shall have the meaning specified in Article 3(b)(i)(K).

 

“Underwritten Net Operating Income” shall have the meaning specified in the Fee Letter.

 

“Upfront Fee” shall have the meaning specified in the Fee Letter.

 

“U.S. Person” shall mean any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Internal Revenue Code.

 

“U.S. Tax Compliance Certificate” shall have the meaning specified in Article 5(k)(v).

 

“Volcker Rule” shall have the meaning specified in Article 9(x).

 

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The terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender.  All references to articles, schedules and exhibits are to articles, schedules and exhibits in or to this Agreement unless otherwise specified.  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  The term “include” or “including” shall mean without limitation by reason of enumeration.  All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles.  References to “good faith” in this Agreement shall mean “honesty in fact in the conduct or transaction concerned”.  In addition, whenever Purchaser has a decision or right of determination, opinion or request, exercises any right given to it to agree, disagree, accept, consent, grant waivers, take action or no action or to approve or disapprove (or any similar language or terms), or any arrangement or term is to be satisfactory or acceptable to or approved by Purchaser (or any similar language or terms), the decision of Purchaser with respect thereto shall be subject in all cases to the implied covenant of good faith and fair dealing.

 

ARTICLE 3
 INITIATION; CONFIRMATION; TERMINATION; FEES

 

(a)                                 Initiation and Confirmation.  (i) On or after the Effective Date but prior to the Facility Availability Period Expiration Date, Seller may, from time to time request that Purchaser enter into a Transaction with respect to a proposed Purchased Asset by delivering to Purchaser a Transaction Request and Due Diligence Package.  Purchaser shall have the right to request such additional diligence materials with respect to a proposed Purchased Asset as Purchaser deems necessary in its sole discretion.  Purchaser shall use commercially reasonable efforts to, within ten (10) Business Days after receipt of a Transaction Request, Due Diligence Package and additionally requested diligence materials, (i)(A) complete its due diligence review of the proposed Purchased Asset and (B) receive an internal credit decision with respect to the proposed Transaction and (ii) upon completion of the conditions in the preceding clause, (A) notify Seller that the proposed Transaction is approved by delivering to Seller a duly completed Confirmation executed by Purchaser or (B) notify Seller that the proposed Transaction is disapproved; provided that Purchaser’s decision to approve any Transaction shall be made in Purchaser’s sole and absolute discretion.  Upon receipt of a completed Confirmation executed by Purchaser, Seller shall evidence its agreement to proceed with the proposed Transaction by promptly returning to Purchaser a counter-executed Confirmation.  Unless Purchaser and Seller agree otherwise in writing, Purchaser’s failure to respond to Seller within the time period set forth in the preceding sentence shall be deemed disapproval of Seller’s request to enter into a proposed Transaction.  For the avoidance of doubt, Seller acknowledges that at no time shall Purchaser be obligated to agree to purchase or effect the transfer of any asset proposed by Seller.

 

(ii)                                  Upon the satisfaction of all conditions set forth in Article 3(b) for the initial Transaction and Article 3(c) for each Transaction (including the initial Transaction), the proposed Purchased Asset shall be transferred to Purchaser as specified in Article 7(a).

 

(iii)                               Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the Transaction covered thereby.  In the event of any conflict

 

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between the terms of such Confirmation and the terms of this Agreement, the Confirmation shall prevail.

 

(b)                                 Conditions Precedent to Initial Transaction.  Purchaser’s agreement to enter into the initial Transaction is subject to the satisfaction, immediately prior to or concurrently with the making of such Transaction, of the following conditions precedent:

 

(i)                                     Delivery of Documents.  The following documents, shall have been delivered to Purchaser:

 

(A)                               this Agreement, duly completed and executed by each of the parties hereto;

 

(B)                               the Fee Letter, duly completed and executed by each of the parties thereto;

 

(C)                               the Exit Fee Side Letter, duly completed and executed by each of the parties thereto;

 

(D)                               the Custodial Agreement, duly completed and executed by each of the parties thereto;

 

(E)                                the Account Control Agreement, duly completed and executed by each of the parties thereto;

 

(F)                                 the Guaranty, duly completed and executed by each of the parties thereto;

 

(G)                               the Servicing Agreement, duly completed and executed by each of the parties thereto;

 

(H)                              the Servicer Letter, duly completed and executed by each of the parties thereto;

 

(I)                                   any and all consents and waivers applicable to Seller;

 

(J)                                   a power of attorney from Seller substantially in the form of Exhibit V hereto, duly completed and executed;

 

(K)                               a UCC financing statement for filing in the UCC Filing Jurisdiction of Seller, naming Seller as “Debtor” and Purchaser as “Secured Party”, with the following collateral description “all assets of the debtor whether now owned or existing or hereafter acquired or arising and wheresoever located, including all accessions thereto and products and proceeds thereof” or words to that effect (the “UCC Financing Statement”), together with any other documents necessary or reasonably requested by Purchaser to perfect the security interests granted by Seller in favor of Purchaser under this Agreement or any other Transaction Document;

 

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(L)                                opinions of outside counsel to the Seller Parties reasonably acceptable to Purchaser (including, but not limited to, those relating to enforceability, corporate matters, applicability of the Investment Company Act of 1940 with respect to Seller, security interests and a Bankruptcy Code safe harbor opinion);

 

(M)                            for each of the Seller Parties, good standing certificates, certified copies of organizational documents and certified copies of resolutions (or similar authority documents) with respect to the execution, delivery and performance of the Transaction Documents and each other document to be delivered by the Seller Parties from time to time in connection herewith; and

 

(N)                               all such other and further documents and documentation as Purchaser in its discretion shall reasonably require.

 

(ii)                                  Payment of Expenses.  Purchaser shall have received payment from Seller in the amount of all expenses, including but not limited to reasonable out-of-pocket legal fees and due diligence fees, actually incurred by Purchaser in connection with the preparation and execution of this Agreement, the other Transaction Documents and any other documents prepared in connection herewith or therewith and required to be paid by Seller pursuant to Article 25(b).

 

(iii)                               Payment of Fees.  Purchaser shall have received payment from Seller of the Upfront Fee.

 

(c)                                  Conditions Precedent to All Transactions.  Purchaser’s agreement to enter into each Transaction (including the initial Transaction) is subject to the satisfaction of the following further conditions precedent, both immediately prior to entering into such Transaction and also after giving effect to the consummation thereof and the intended use of the proceeds of the sale:

 

(i)                                     Transaction Approval.  Purchaser shall have (A) determined, in its sole discretion, that the each related proposed Purchased Asset is an Eligible Asset and (B) received internal credit approval with respect to the proposed Transaction, each of the foregoing, as evidenced by Purchaser’s execution and delivery of a Confirmation with respect thereto.

 

(ii)                                  Confirmation.  Seller shall have received from Purchaser a duly completed and executed Confirmation, and Seller shall have duly executed the same and delivered such Confirmation to Purchaser.

 

(iii)                               Waiver of Exceptions.  Purchaser shall have waived all exceptions contained in the related Requested Exceptions Report (as evidenced by its execution and delivery of a Confirmation with respect thereto).

 

(iv)                              Custodial Delivery; Trust Receipt; Asset Schedule and Exception Report.  Seller shall have delivered to Custodian, in accordance with the Custodial Agreement, the Custodial Delivery and the Purchased Asset File with respect to each Eligible Asset and (A) Custodian shall have issued to Purchaser a Trust Receipt and a final Asset Schedule

 

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and Exception Report and (B) Purchaser shall have, in its sole and absolute discretion, approved any and all exceptions listed on such Asset Schedule and Exception Report.

 

(v)                                 Due Diligence.  Any due diligence review performed by Purchaser with respect to the Eligible Asset (including without limitation, confirmation by Purchaser that it meets any applicable Qualified Transferee Requirements) or otherwise in accordance with Article 26 is satisfactory to Purchaser in its sole discretion.

 

(vi)                              Facility Amount.  The sum of (A) the aggregate Purchase Price for all Purchased Assets, plus (B) the requested Purchase Price for the pending Transaction, plus (C) the aggregate amount of each proposed Future Funding Advance Draw with respect to all Purchased Assets (if any), plus (D) the amount of any Margin Excess, in the aggregate, shall not exceed Facility Amount.

 

(vii)                           No Margin Deficit.  No Margin Deficit shall exist, either immediately prior to or after giving effect to the requested Transaction.

 

(viii)                        No Default or Event of Default.  No Default or Event of Default shall have occurred and be continuing under any Transaction Document.

 

(ix)                              No Material Adverse Effect.  No event shall have occurred which has, or could be expected to have, a Material Adverse Effect.

 

(x)                                 Representations and Warranties.  The representations and warranties made by Seller in Article 9 shall be true and correct on and as of the Purchase Date for the pending Transaction in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

 

(xi)                              Acknowledgement of Servicer.  Purchaser shall have received a Servicer Letter (to the extent a Servicer Letter has not been previously delivered by the applicable Servicer).

 

(xii)                           No Change in Law.  Purchaser shall not have determined that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Purchaser to enter into Transactions.

 

(xiii)                        Repurchase Date.  The Repurchase Date for such Transaction is not later than the Stated Termination Date.

 

(xiv)                       Security Interest.  Seller shall have taken such other action as is necessary or, in the reasonable opinion of Purchaser, desirable in order to transfer the related Eligible Asset to Purchaser pursuant to this Agreement and to perfect all security interests granted under this Agreement or any other Transaction Document in favor of Purchaser as secured party under the UCC with respect to such Eligible Asset.

 

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(xv)                          Other Documents.  Purchaser shall have received all such other and further documents, documentation as Purchaser in its reasonable discretion shall require including, but not limited to, endorsements in blank of the original Mortgage Note and, as applicable, the Mezzanine Note and the original certificate evidencing the Capital Stock securing such Mezzanine Loan and assignments in blank of the underlying Mortgage and related Mortgage documents.

 

(xvi)                       Payment of Expenses.  Purchaser shall have received payment from Seller of all reasonable, out-of-pocket costs and expenses, including, but not limited to, reasonable attorney’s fees and disbursements in connection with the proposed Transaction.

 

(xvii)                    Mezzanine Loans.  With respect to any proposed Purchased Asset which constitutes a Mezzanine Loan, Purchaser shall have received an opinion of outside counsel acceptable to Purchaser that the pledge of such Mezzanine Loan as a Related Credit Enhancement pursuant to Article 6(a) constitutes “a security agreement or other arrangement or other credit enhancement” that is “related to” the Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A), and 741(7)(A)(xi) of the Bankruptcy Code.

 

(d)                                 Early Repurchase of Purchased Assets.  Seller shall be entitled to terminate a Transaction on demand and repurchase the Purchased Asset subject to such Transaction on any Business Day prior to the Repurchase Date (as determined in accordance with subclauses (a), (b), (c) and (e) of the definition of Repurchase Date) (an “Early Repurchase Date”); provided, however, that:

 

(i)                                     no later than five (5) Business Days prior to such Early Repurchase Date, Seller notifies Purchaser in writing of its intent to terminate such Transaction and repurchase such Purchased Asset, setting forth the Early Repurchase Date and identifying with particularity the Purchased Asset to be repurchased on such Early Repurchase Date;

 

(ii)                                  no Default or Event of Default shall have occurred and be continuing both as of the date notice is delivered pursuant to Article 3(d)(i) above and as of the applicable Early Repurchase Date, unless such Default or Event of Default is cured by such repurchase;

 

(iii)                               on such Early Repurchase Date, Seller pays to Purchaser an amount equal to the Repurchase Price for the applicable Purchased Asset and any other amounts then due and payable under this Agreement, including, without limitation, any amount payable pursuant to Article 3(f)(ii) or any Exit Fee payable pursuant to the Fee Letter;

 

(iv)                              no Margin Deficit shall exist both as of the date notice is delivered pursuant to Article 3(d)(i) above and as of the applicable Early Repurchase Date unless such Margin Deficit is cured contemporaneously with such repurchase; and

 

(v)                                 Seller repurchases any Related Purchased Asset simultaneously therewith.

 

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With respect to any Purchased Asset, two (2) Business Days after receipt of written notice from Purchaser or Seller that a Mandatory Early Repurchase Event has occurred and is continuing with respect to a Purchased Asset, Seller shall be required to terminate the relevant Transaction and repurchase such Purchased Asset and pay to Purchaser cash in an amount equal to the Repurchase Price for such Purchased Asset.

 

(e)                                  Repurchase of Purchased Assets; Prepayment; Future Funding Advances; Margin Excess .

 

(i)                                     Repurchase.  On the Repurchase Date for any Transaction, termination of the Transaction will be effected by transfer to Seller of the Purchased Assets being repurchased and any Income in respect thereof received by Purchaser (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Article 5) against the simultaneous transfer of the Repurchase Price (and the Repurchase Price of any Related Purchased Asset) to an account of Purchaser; provided, however, that Purchaser shall have no obligation to permit Seller to repurchase any Purchased Asset if a Default or an Event of Default shall have occurred and be continuing or any unsatisfied Margin Deficit shall exist.  Concurrently with payment of the Repurchase Price to Purchaser in accordance with the foregoing on such Repurchase Date, Purchaser’s security interest in the related Collateral shall terminate in accordance with Article 6(c).

 

(ii)                                  Prepayment.  On any Remittance Date before the Repurchase Date for a Purchased Asset, Seller shall have the right, from time to time, to transfer cash to Purchaser for the purpose of reducing the Purchase Price of, but not terminating, a Transaction and without the release of any Collateral and without any prepayment fee or penalty.

 

(iii)                               Future Funding Advance Draws.  In the event that (i) Seller is contractually obligated to make a future funding advance of loan proceeds to the Mortgagor or Mezzanine Borrower, as applicable, under a Purchased Asset pursuant to the related Purchased Asset Documents  and (ii) Purchaser has agreed in its sole discretion to make an additional advance with respect to the Purchase Price of such Purchased Asset (which agreement of Purchaser may be made prior to the initial Purchase Date for such Purchased Asset and set forth in the Confirmation therefor), in connection with making such future funding advance to such Mortgagor or Mezzanine Borrower, Seller may submit to Purchaser a written request (a “Future Funding Advance Draw Request”) requesting that Purchaser transfer to Seller cash in an amount that is not less than $250,000 (with respect to one or more future funding advances to the applicable Mortgagor or Mezzanine Borrower, in the aggregate) but does not exceed the Margin Excess for such Purchased Asset, and Purchaser shall (x) transfer to Seller the amount of cash so requested (such transfer, a “Future Funding Advance Draw”) (which shall increase the Purchase Price for such Purchased Asset) and (y) deliver to Seller a revised Confirmation reflecting the corresponding increase in the Purchase Price of such Purchased Asset and the increased principal amount outstanding under the Purchased Asset and accordingly, the increase in Market Value and such other consequential revisions as may be appropriate, in each case, by no later than 5:00 p.m. (New York City time) on the second (2nd) Business Day following the Business Day on which Purchaser determines in its sole discretion,

 

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exercised in good faith, that the conditions precedent set forth below are satisfied (or, in Purchaser’s sole discretion, waived):

 

(A)                               no Default or Event of Default shall have occurred and be continuing both as of the date of such request and as of the date of the Future Funding Advance Draw;

 

(B)                               the Future Funding Advance Draw shall not cause the sum of the (A) the aggregate Purchase Price for all Purchased Assets, plus (B) the requested Purchase Price for any pending Transaction, plus (C) the aggregate amount of each proposed Future Funding Advance Draw with respect to all Purchased Assets, plus (D) the amount of any Margin Excess (after giving effect to such Margin Excess Advance), in the aggregate, to exceed the Facility Amount;

 

(C)                               the Purchase Price Percentage after giving effect to such Future Funding Advance Draw and the corresponding increase in the outstanding principal balance of the Purchased Asset shall not exceed the Purchase Price Percentage set forth in the related Confirmation for such Purchased Asset;

 

(D)                               there is no Margin Deficit immediately prior to and immediately after the Future Funding Advance Draw;

 

(E)                                if the Confirmation of the Transaction relating to the applicable Purchased Asset specifies additional future advance conditions precedent (including, without limitation, debt yield, debt service coverage ratio and loan-to-value ratio tests as determined by Purchaser and Seller), such additional conditions precedent shall be satisfied immediately upon the Future Funding Advance Draw;

 

(F)                                 Seller shall have delivered evidence reasonably satisfactory to Purchaser that all conditions precedent to the future funding advance under the related Purchased Asset Documents shall have been satisfied in all material respects;

 

(G)                               No event shall have occurred which has, or could reasonably be expected to have, a Material Adverse Effect.

 

(H)                              The representations and warranties made by Seller in Article 9 shall be true and correct on and as of the date of such Future Funding Advance Draw in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and

 

(I)                                   Purchaser shall have received all such other and further documents and documentation as Purchaser in its reasonable discretion shall require in connection with such Future Funding Advance Draw, provided that such documents or documentation are in Seller’s possession or reasonably obtainable to Seller.

 

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The failure or delay of Seller, on any one or more occasions, to exercise its rights under this Article 3(e)(iii) shall not change or alter the terms and conditions of this Agreement or limit or waive the right of Seller to request a Future Funding Advance Draw Request at a later date.

 

(i)                                     Margin Excess.  With respect to any Purchased Asset, Seller may submit to Purchaser a written request, to be delivered no more frequently than once each calendar month (a “Margin Excess Request”), requesting that Purchaser make an additional advance (a “Margin Excess Advance”) with respect to the applicable Purchased Asset in the amount requested by Seller in such Margin Excess Request that is not less than $250,000 (but not to exceed the Margin Excess for such Purchased Asset). Purchaser shall by no later than 5:00 p.m. (New York City time) on the second (2nd) Business Day following the Business Day of Purchaser’s receipt of such Margin Excess Request, (x) transfer to Seller the amount of cash requested by Seller, and (y) deliver to Seller a revised Confirmation reflecting the corresponding increase in the Purchase Price of such Purchased Asset.  Purchaser’s disbursement of any Margin Excess Advance (if any) shall be subject to satisfaction of the following conditions precedent, as determined by Purchaser in its sole discretion (or, in Purchaser’s sole discretion, waived):

 

(A)                               no Default or Event of Default shall have occurred and be continuing both as of the date of such request and as of the date of the Margin Excess Advance;

 

(B)                               the Margin Excess Advance shall not cause (A) the aggregate Purchase Price for all Purchased Assets, plus (B) the requested Purchase Price for any pending Transaction, plus (C) the aggregate amount of each proposed Future Funding Advance Draw with respect to all Purchased Assets, plus (D) the amount of any Margin Excess (after giving effect to such Margin Excess Advance), in the aggregate, to exceed the Facility Amount;

 

(C)                               the Purchase Price Percentage after giving effect to such Margin Excess Advance shall not exceed the Purchase Price Percentage set forth in the related Confirmation for such Purchased Asset;

 

(D)                               there is no Margin Deficit immediately prior to and immediately after the Margin Excess Advance;

 

(E)                                no event shall have occurred which has, or could reasonably be expected to have, a Material Adverse Effect; and

 

(F)                                 the representations and warranties made by Seller in Article 9 shall be true and correct on and as of the date of such Margin Excess Advance in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

 

(f)                                   Costs and Expenses.  Upon written demand by Purchaser, Seller shall indemnify Purchaser and hold Purchaser harmless from any actual, out-of-pocket cost or expense (including, without limitation, reasonable attorneys’ fees and disbursements) that Purchaser may sustain or

 

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incur as a consequence of (i) a failure by Seller in repurchasing any Purchased Asset on the Early Repurchase Date after Seller has given a notice in accordance with Article 3(d) of an Early Repurchase Date, (ii) any payment of the Repurchase Price on any day other than a Remittance Date, or any conversion to the Alternative Rate in accordance with Article 3(g) on any day other than a Pricing Rate Determination Date, and/or (iii) any determination by Seller to not sell an Eligible Asset to Purchaser after Seller has notified Purchaser of a proposed Transaction and Purchaser has agreed to purchase such Eligible Assets in accordance with the provisions of this Agreement.

 

(g)                                  Alternative Rate.  If on the Pricing Rate Determination Date for any Pricing Rate Period with respect to any Transaction, Purchaser shall have determined in the exercise of its sole and absolute business judgment (which determination shall be conclusive and binding upon Seller) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining LIBOR for such Pricing Rate Period, Purchaser shall give written notice thereof to Seller as soon as practicable thereafter.  If such notice is given, the Pricing Rate with respect to such Transaction for the Pricing Rate Period to which such Pricing Rate Determination Date relates, and for any subsequent Pricing Rate Periods until such notice has been withdrawn by Purchaser (which withdrawal shall be delivered by Purchaser promptly after Purchaser becomes aware that the condition for switching to the Alternative Rate no longer exists), shall be a per annum rate equal to the Federal Funds Rate plus the Applicable Spread (the “Alternative Rate”).  Notwithstanding the foregoing, Purchaser shall not determine the Pricing Rate hereunder based on the Alternative Rate pursuant to this Article 3(g) unless Purchaser is calculating the interest rate or pricing rate based on such Alternative Rate on all of its similarly situated customers under similar facilities.

 

(h)                                 Requirements of Law.  (1)  Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof after the date of this Agreement shall make it unlawful for Purchaser (A) to enter into Transactions, then the commitment of Purchaser hereunder to enter into new Transactions shall forthwith be canceled, (B) to maintain or continue Transactions, then a Repurchase Date shall occur for all Transactions on the next Remittance Date or on such earlier date as may be required by law, or (C) to accrue Purchase Price Differential based on a LIBOR rate, then the Transactions then outstanding shall be converted automatically to Alternative Rate Transactions on the next Pricing Rate Determination Date or within such earlier period as may be required by law.  If any termination or conversion of a Transaction shall occur in accordance with subclause (B) or (C) of the preceding sentence, Seller shall pay to Purchaser such amounts as may be required pursuant to Article 3(f)(ii).  Notwithstanding the foregoing, Purchaser shall not determine the Pricing Rate hereunder based on the Alternative Rate pursuant to this Article 3(h)(1) unless Purchaser is calculating the interest rate or pricing rate based on such Alternative Rate on all of its similarly situated customers under similar facilities.

 

(2)                                 If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by any Governmental Authority or compliance by Purchaser with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority having jurisdiction over Purchaser made subsequent to the date hereof:

 

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(A)                               shall subject Purchaser to any Taxes (other than (i) Covered Taxes and (ii) Taxes described in clauses (a) through (e) of the definition of Covered Taxes) with respect to the Transaction Documents, any Purchased Asset or any Transaction;

 

(B)                               shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of Purchaser that is not otherwise included in the determination of LIBOR hereunder; or

 

(C)                               shall impose on Purchaser any other condition;

 

and the result of any of the foregoing is to increase the cost to Purchaser, then Seller shall promptly pay Purchaser, upon demand therefor, any additional amounts necessary to compensate Purchaser for such increased cost or reduced amount receivable.  This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.  Notwithstanding the foregoing, Purchaser shall not exercise its rights to impose any such additional amounts on Seller under this Article 3(h)(2) unless Purchaser is contemporaneously imposing such additional amounts on all of its similarly situated counterparties.

 

(3)                                 If Purchaser shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by Purchaser or any corporation controlling Purchaser with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof has the effect of reducing the rate of return on Purchaser’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which Purchaser or such corporation could have achieved but for such adoption, change or compliance (taking into consideration Purchaser’s or such corporation’s policies with respect to capital adequacy), then Seller shall promptly pay to Purchaser such additional amount or amounts as will compensate Purchaser for such reduction.

 

(4)                                 If Purchaser becomes entitled to claim any amount pursuant to clauses (2) or (3) above, Purchaser shall, within ten (10) Business Days after becoming aware that it is so entitled, notify Seller in writing specifying the event by reason of which it has become so entitled and setting forth the calculation of any such amount, which calculation shall be conclusive evidence of any such amount absent manifest error.  Without limiting the foregoing, Seller shall not be required to compensate Purchaser pursuant to clauses (2) or (3) above for any increased costs incurred or reductions suffered more than twelve (12) months prior to the date that Purchaser notifies Seller of the change in Requirement of Law giving rise to such increased costs or reductions, and of Purchaser’s intention to claim compensation thereof (except that, if the change in Requirement of Law giving rise to such increased costs or reductions is retroactive, then the twelve-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

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(i)                                     If Purchaser shall exercise its rights under Articles 3(g) or 3(h) hereof, then Seller shall have the right, within ninety (90) days after Purchaser has delivered written notice to Seller that it will exercise its rights under Articles 3(g) or 3(h) hereof (unless Purchaser has at such time waived any claims pursuant to such Articles or such Articles no longer apply) to terminate this Agreement and all Transactions hereunder by payment in full to Purchaser of the then outstanding Repurchase Price of all Purchased Assets, and, in connection with any such termination, notwithstanding anything to the contrary contained herein or in any other Transaction Document, there shall be no Exit Fee or prepayment fee or premium due.

 

ARTICLE 4
 MARGIN MAINTENANCE

 

(a)                                 Upon the occurrence and continuation of a Credit Event with respect to any Purchased Asset, Purchaser may, in its sole discretion exercised in good-faith, re-determine the Market Value for such Purchased Asset.  At any time that a Margin Deficit with respect to any Purchased Asset exceeds an amount equal to the lesser of (i) $500,000 or (ii) two percent (2%) of the Purchase Price of such Purchased Asset, Purchaser may deliver written notice to Seller substantially in the form of Exhibit VIII (a “Margin Call Notice”).

 

(b)                                 No later than 10:00 a.m. (New York City time) on the second (2nd) Business Day following receipt of such Margin Call Notice, Seller shall (at Seller’s election) utilize one of any combination of the following, so that after giving effect to such payment or repurchase, no Margin Deficit shall be outstanding: (A) make a payment in reduction of the Purchase Prices of one or more Purchased Assets; or (B) repurchase one of more Purchased Assets pursuant to Article 3(d). .

 

(c)                                  The failure or delay by Purchaser or Seller, on any one or more occasions, to exercise its rights under this Article 4 shall not (i) change or alter the terms and conditions of this Agreement, (ii) limit or waive the right of Purchaser or Seller to exercise its rights under this Agreement at a later date or (iii) in any way create additional rights for any party hereto.

 

ARTICLE 5
 PAYMENTS; COLLECTION ACCOUNT

 

(a)                                 All transfers of funds to be made by Seller hereunder shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim.

 

(b)                                 All payments required to be made directly to Purchaser shall be made in accordance with the wiring instructions set forth below (or such other wire instructions provided by Purchaser to Seller in writing), not later than 2:00 p.m. (New York City time), on the date on which such payment shall become due (and each such payment made after such time shall be deemed to have been made on the next succeeding Business Day).

 

Bank Name:

ABA Number:

Account Number:

Account Name:

Attention:

 

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Reference:

 

(c)                                  Concurrently with the execution and delivery of this Agreement, Seller shall establish a segregated deposit account (the “Collection Account”) in the name of Seller for the benefit of Purchaser at Account Bank.  The Collection Account shall be subject to the Account Control Agreement in favor of Purchaser.  All amounts required to be deposited to the Collection Account shall be sent in accordance with the wiring instructions set forth below.

 

Bank Name:

 

ABA Number:

Account Number:

Account Title:

 

(d)                                 On each Remittance Date, Seller shall pay to Purchaser all accrued and unpaid Purchase Price Differential with respect to such Remittance Date, to the extent not paid to Purchaser in accordance with Article 5(g).

 

(e)                                  Seller shall cause all Income it receives with respect to the Purchased Assets to be deposited directly into the Collection Account. In furtherance of the foregoing, Seller shall cause Servicer to remit to the Collection Account all Income received in respect of the Purchased Assets in accordance with the Servicer Letter.  In addition, Seller shall require any Servicer that is an Affiliate of Seller or Guarantor to deposit any Income received by such Servicer into the Collection Account within two (2) Business Days of its receipt of properly identified funds.  If a Servicer, Mortgagor, Mezzanine Borrower, issuer of a Participation Interest or any other Person, as applicable, forwards any Income with respect to a Purchased Asset to Seller rather than directly to the Collection Account or the Servicer, Seller shall (i) take commercially reasonable efforts to cause such Servicer, Mortgagor, Mezzanine Borrower, issuer of a Participation Interest or Person, as applicable, to forward any such future amounts directly to the Collection Account or the Servicer, as applicable, and (ii) deposit in the Collection Account any such amounts within two (2) Business Days of Seller’s receipt thereof (provided that, if such Income is forwarded to Seller by a Servicer that is an Affiliate of Seller or Guarantor, such two (2) Business Days period shall run concurrently with the two (2) Business Days period given to such Servicer pursuant to the preceding sentence).  Amounts in the Collection Account shall be remitted by Account Bank in accordance with the applicable provisions of Articles 5(f), (g), and (i).

 

(f)                                   Intentionally omitted.

 

(g)                                  So long as no Event of Default shall have occurred and be continuing, Account Bank shall, on each Remittance Date (or, with respect to Principal Payments received by Account Bank, within one (1) Business Day after receipt), remit all amounts on deposit in the Collection Account in the following amounts and order of priority:

 

(i)                                     first, to pay all fees and other amounts then due and payable to Custodian pursuant to the Custodial Agreement and Servicer pursuant to the Servicing Agreement then due and payable;

 

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(ii)                                  second, to Purchaser, an amount equal to all accrued and unpaid Purchase Price Differential then due and payable;

 

(iii)                               third, to Purchaser, an amount equal to all accrued and unpaid Non-Utilization Fee (if any) then due and payable;

 

(iv)                              fourth, to Purchaser, an amount equal to any unpaid Margin Deficit;

 

(v)                                 fifth, to the extent any Principal Payment is received for any Purchased Asset, to Purchaser to be applied in reduction of the Purchase Price by an amount equal to the product of (x) the amount of such Principal Payment multiplied by (y) the related Purchase Price Percentage for such Purchased Asset;

 

(vi)                              sixth, to Purchaser, an amount equal to any other amounts then due and payable to Purchaser under any Transaction Document; and

 

(vii)                           seventh, the surplus, if any, to Seller.

 

(h)                                 Upon receipt of notice from Purchaser that an Event of Default shall have occurred and is continuing, and so long as Purchaser has not withdrawn such notice, Account Bank shall cease remitting funds to, or at the direction of, Seller pursuant to Article 5(i) and shall instead remit, on each Business Day beginning on the Business Day after receipt of such notice from Purchaser, all amounts on deposit in the Collection Account as of the prior Business Day to Purchaser for application to the Repurchase Obligations in such order of priority as Purchaser shall determine in its sole and absolute discretion

 

(i)                                     Intentionally omitted.

 

(j)                                    If the amounts applied by Purchaser as provided in Articles 5(g) or (h) above are insufficient to pay all amounts due and payable from Seller to Purchaser under this Agreement or any Transaction Document on a Remittance Date, the Repurchase Date, upon the occurrence of an Event of Default or otherwise, Seller shall nevertheless remain liable for and shall pay to Purchaser when due all such amounts.

 

(k)                                 Withholding Taxes.

 

(i)                                     All payments made by Seller under the Transaction Documents shall be made free and clear of and without deduction or withholding for or on account of any Taxes unless the withholding or deduction is required by applicable law. If Seller is required by applicable law (as determined in the good faith discretion of Seller) to deduct or withhold any Taxes from any such payment, Seller shall: (i) make such deduction or withholding; (ii) pay the amount so deducted or withheld to the appropriate Governmental Authority not later than the date when due; (iii) deliver to Purchaser, as soon as practicable, original tax receipts or other evidence reasonably satisfactory to Purchaser of the payment when due of the full amount of such Taxes; and (iv) if such deduction or withholding is in respect of Covered Taxes, then the sum payable by Seller shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under

 

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this Article 5(k)) Purchaser receives an amount equal to the sum it would have received had no such deduction or withholding been made.

 

(ii)                                  In addition, Seller agrees to pay to the relevant Governmental Authority in accordance with applicable law any current or future recordation, stamp, documentary, intangible, filing or similar taxes or any other property taxes, charges or similar levies (including mortgage recording taxes, transfer taxes and similar fees) that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Transaction Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment of the Purchaser’s rights and obligations under this Agreement  (“Other Taxes”).

 

(iii)                               Without duplication of the obligation of Seller to pay additional amounts on account of Covered Taxes pursuant to Article 5(k)(i) and to pay Other Taxes pursuant to Article 5(k)(ii), Seller agrees to indemnify Purchaser for the full amount of any and all Covered Taxes and Other Taxes, and the full amount of any Covered Taxes imposed on amounts payable under this Article 5(k)(iii), and any reasonable expenses arising therefrom or with respect thereto,  (excluding any Taxes that are neither Covered Taxes nor Other Taxes), whether or not such Covered Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Government Authority.  A certificate as to the amount of such payment or liability delivered to Seller by Purchaser shall be conclusive absent manifest error.

 

(iv)                              Without prejudice to the survival of any other agreement hereunder, the agreements and obligations of each party contained in this Article 5(k) shall survive the termination of this Agreement. Nothing contained in this Article 5(k) shall require Purchaser to make available any of its tax returns or other information that it deems to be confidential or proprietary.

 

(v)                                 If a Person acquires any of the rights and obligations of Purchaser as an assignee under this Agreement, and such Person is not a U.S. Person (a “Non-U.S. Person”), then such Non-U.S. Person shall, to the extent it is legally entitled to do so, deliver to Seller on or before the date when such Person becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Seller), two duly completed and executed copies of, as applicable, IRS Form W-8BEN, IRS Form W-8BEN-E or IRS Form W-8ECI or any successor forms thereto designated as such by the IRS.  If the Non-U.S. Person is eligible for and wishes to claim exemption from US federal withholding tax under Section 881(c) of the Internal Revenue Code with respect to payments of “portfolio interest,” then such Person shall deliver both the Form W-8BEN or Form W-8BEN-E and a statement certifying that such Person is not a bank, a “10 percent shareholder” or a “controlled foreign corporation” within the meaning of Section 881(c)(3) of the Internal Revenue Code (a “U.S. Tax Compliance Certificate”). If the Non-U.S. Person is not the beneficial owner, then such Person shall deliver executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if such Person is a

 

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partnership and one or more direct or indirect partners of such Person are claiming the portfolio interest exemption, such Person may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner. If a payment made to a Non-U.S. Person under any Transaction Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Non-U.S. Person were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Non-U.S. Person shall deliver to the Seller at the time or times prescribed by law and at such time or times reasonably requested by the Seller such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Seller as may be necessary for the Seller to comply with its obligations under FATCA and to determine that such Non-U.S. Person has complied with such Non-U.S. Person’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this Article 5(k)(v), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. In addition, any Non-U.S. Person shall, to the extent it is legally entitled to do so, deliver to Seller (in such number of copies as shall be requested by Seller) on or prior to the date on which such Non-U.S. Person becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Seller), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Seller to determine the withholding or deduction required to be made.

 

(vi)                              Purchaser shall deliver to Seller on or prior to the date upon which Purchaser becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Seller) an executed copy of IRS Form W-9 certifying that Purchaser is exempt from U.S. federal backup withholding tax. If Seller is required by law or regulation to deduct or withhold any Taxes from or in respect of any amount payable hereunder and Purchaser is entitled to an exemption from or reduction of such Taxes, Purchaser agrees that it will deliver to Seller and, if applicable, to the authority imposing the Taxes, any properly completed and executed certificate or document reasonably requested by Seller that would entitle Purchaser to an exemption from, or reduction in the rate of, withholding or deduction of Taxes form amounts payable hereunder by Seller to Purchaser. In addition, Purchaser, if reasonably requested by Seller, shall deliver such other documentation prescribed by applicable law or reasonably requested by Seller as will enable Seller to determine whether or not Purchaser is subject to backup withholding or information reporting requirements.

 

(vii)                           If any previously delivered form, statement or other documentation described in paragraphs (v) or (vi) of this Article 5(k) becomes inaccurate with respect to the Person that delivered it, such Person shall promptly notify Seller of this fact.

 

(viii)                        If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Article 5(k) (including by the payment of additional amounts pursuant to this Article 5(k)), it shall pay to the indemnifying party an amount equal to such refund (but only to the

 

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extent of the indemnity payments made under this Article 5(k) with respect to Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Article 5(k)(viii) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this Article 5(k)(viii), in no event will the indemnified party be required to pay any amounts to an indemnifying party pursuant to this Article 5(k)(viii) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to the indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

(ix)                              If Purchaser requests compensation under this Article 5(k), Seller may, at its option, within thirty (30) days after delivery of such request, terminate this facility by payment in full to Purchaser of the then outstanding Repurchase Price of all Purchased Assets and any other amounts then otherwise due and payable under the facility (excluding any compensation which is not already due and payable pursuant to this Agreement), and, in connection with any such termination, notwithstanding anything to the contrary contained herein or in any other Transaction Document, there shall be no Exit Fee or prepayment fee or premium due.

 

ARTICLE 6
 SECURITY INTEREST

 

(a)                                 Purchaser and Seller intend that the Transactions hereunder be sales to Purchaser of the Purchased Assets and not loans from Purchaser to Seller secured by the Purchased Assets (other than as described in Article 21(g)).  However, in order to preserve Purchaser’s rights under the Transaction Documents, in the event that a court or other forum re-characterizes the Transactions hereunder as other than sales, and as security for the performance by Seller of all of Seller’s obligations to Purchaser under the Transaction Documents and the Transactions entered into hereunder, or in the event that a transfer of a Purchased Asset is otherwise ineffective to effect an outright transfer of such Purchased Asset to Purchaser, Seller hereby assigns, pledges and grants a security interest in all of its right, title and interest in, to and under the Collateral, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, subject to the terms and conditions of this Agreement, to Purchaser to secure the payment of the Repurchase Price on all Transactions to which Seller is a party and all other amounts owing by Seller to Purchaser hereunder, including, without limitation, amounts owing pursuant to Article 25, and under the other Transaction Documents (collectively, the “Repurchase Obligations”).  Without limiting the generality of the foregoing and for the avoidance of doubt, if any determination is made that any Mezzanine Loan which is a Purchased Asset was not sold by Seller to Purchaser pursuant to this Agreement, or that mezzanine loans do not qualify for the safe harbor treatment

 

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provided by the Bankruptcy Code, then Seller hereby pledges, assigns and grants to Purchaser as further security for Seller’s obligations to Purchaser hereunder, a continuing first priority security interest in and Lien upon each such Mezzanine Loan which constitutes a Purchased Asset hereunder, and Purchaser shall have all the rights and remedies of a “secured party” under the Uniform Commercial Code with respect thereto (such pledge, the “Related Credit Enhancement”).  For purposes of this Agreement, “Collateral” shall mean:

 

(i)                                     the Collection Account and all monies from time to time on deposit in the Collection Account and any and all replacements, substitutions, distributions on, income relating to or proceeds of any and all of the foregoing; and

 

(ii)                                  the Purchased Items.

 

(b)                                 Seller, as of the Closing Date, hereby assigns, pledges and grants a security interest, subject to the terms and conditions of this Agreement, in all of its right, title and interest in, to and under the Collection Account and all monies from time to time on deposit in the Collection Account and any and all replacements, substitutions, distributions on, income relating to or proceeds of any and all of the foregoing, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, to Purchaser to secure the Repurchase Obligations.

 

(c)                                  Purchaser’s security interest in the Collateral and the Collection Account shall terminate only upon satisfaction of the Repurchase Obligations.  Upon such satisfaction and upon request of Seller, Purchaser shall, at Seller’s sole expense, deliver to Seller such UCC termination statements and other release documents as may be commercially reasonable and return (or approve the return by Custodian in accordance with the Custodial Agreement, as applicable) the Purchased Assets, Purchased Asset Documents and Purchased Asset Files to Seller and reconvey the Purchased Assets to Seller and release its security interest in the Collateral and the Collection Account, such release to be effective automatically without further action by any party.  For purposes of the grant of the security interest pursuant to this Article 6, this Agreement shall be deemed to constitute a security agreement under the New York Uniform Commercial Code (the “UCC”).  Purchaser shall have all of the rights and may exercise all of the remedies of a secured creditor under the UCC and the other laws of the State of New York.  In furtherance of the foregoing, (i) Purchaser, at Seller’s sole cost and expense, shall cause to be filed in such locations as may be necessary to perfect and maintain perfection and priority of the security interest granted hereby, UCC financing statements and continuation statements (collectively, the “Filings”), and shall forward copies of such Filings to Seller upon completion thereof, and (ii)  Seller shall from time to time take such further actions as may be requested by Purchaser in its sole discretion to maintain and continue the perfection and priority of the security interest granted hereby (including marking its records and files to evidence the interests granted to Purchaser hereunder).  Notwithstanding the foregoing, the Repurchase Obligations shall be full recourse to Seller.

 

(d)                                 Seller acknowledges that it has no rights to service the Purchased Assets but only has rights granted to it pursuant to Article 27.  Without limiting the generality of the foregoing and the grant of a security interest pursuant to Article 6(a), and in the event that Seller is deemed by a court, other forum or otherwise to retain any residual Servicing Rights (notwithstanding that such Servicing Rights are Purchased Items hereunder), and for the avoidance of doubt, Seller hereby acknowledges and agrees that the Servicing Rights constitute Collateral hereunder for all purposes.

 

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The foregoing provision is intended to constitute a security agreement or other arrangement or other credit enhancement related to the Agreement and Transactions hereunder as defined under Section 741(7)(xi) of the Bankruptcy Code.

 

(e)                                  Seller agrees, to the extent permitted by applicable law, that neither it nor anyone claiming through or under it will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in force in any locality where any Purchased Asset may be situated in order to prevent, hinder or delay the enforcement or foreclosure of this Agreement, or the absolute sale of any of the Purchased Assets, in each case in accordance with the terms of this Agreement, or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereof, and Seller, for itself and all who may at any time claim through or under it, hereby waives until the Repurchase Obligations are paid in full, to the full extent that it may be lawful so to do, the benefit of all such laws and any and all right to have any of the properties or assets constituting the Purchased Assets marshaled upon any such sale, and agrees that, upon the occurrence and during the continuance of an Event of Default, Purchaser or any court having jurisdiction to foreclose the security interests granted in this Agreement may, upon the occurrence and during the continuance of an Event of Default, sell the Purchased Assets as an entirety or in such parcels as Purchaser or such court may determine.

 

ARTICLE 7
 TRANSFER AND CUSTODY

 

(a)                                 On the Purchase Date for each Transaction, ownership of the related proposed Purchased Assets and other Purchased Items shall be transferred to Purchaser or its designee (including the Custodian) against the simultaneous transfer of the Purchase Price for such proposed Purchased Asset to an account of Seller specified in the related Confirmation and such proposed Purchased Asset shall become a Purchased Asset hereunder.

 

(b)                                 Seller shall deposit the Purchased Asset Files representing the Purchased Assets, or direct that such Purchased Asset Files be deposited directly with the Custodian in accordance with the Custodial Agreement.  The Purchased Asset Files shall be maintained in accordance with the Custodial Agreement.  If a Purchased Asset File is not delivered to Purchaser or its designee (including the Custodian), such Purchased Asset File shall be held in trust by Seller or its designee for the benefit of Purchaser as the owner thereof.  Seller or its designee shall maintain a copy of the Purchased Asset File and the originals of the Purchased Asset File not delivered to Purchaser or its designee (including the Custodian).  The possession of the Purchased Asset File by Seller or its designee is at the will of Purchaser for the sole purpose of servicing the related Purchased Asset, and such retention and possession by Seller or its designee is in a custodial capacity only.  The books and records (including, without limitation, any computer records or tapes) of Seller or its designee shall be marked appropriately to reflect clearly the sale of the related Purchased Asset to Purchaser.  Seller or its designee (including the Custodian) shall release its custody of the Purchased Asset File only in accordance with a written request acknowledged in writing by Purchaser and otherwise in accordance with the Custodial Agreement.

 

(c)                                  From time to time, Seller shall forward to the Custodian, with copy to Purchaser, additional original documents or additional documents evidencing any assumption, modification, consolidation or extension of a Purchased Asset approved (if and to the extent required) in

 

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accordance with the terms of this Agreement, and upon receipt of any such other documents (which shall be clearly marked as to which Purchased Asset File such documents relate) Custodian will be required to hold such other documents in the related Purchased Asset File in accordance with the Custodial Agreement.

 

ARTICLE 8
 SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

 

(a)                                 Title to each Purchased Assets shall pass to Purchaser on the related Purchase Date, and Purchaser shall have free and unrestricted use of all Purchased Assets, subject, however, to the terms of this Agreement.  Nothing in this Agreement or any other Transaction Document shall preclude Purchaser from engaging in repurchase transactions with the Purchased Assets or otherwise selling, transferring, pledging, repledging, hypothecating or rehypothecating the Purchased Assets, all on terms that Purchaser may determine in its sole discretion, but no such transaction shall (i) relieve Purchaser of its obligations to transfer the same Purchased Assets to Seller pursuant to Article 3.

 

(b)                                 Nothing contained in this Agreement or any other Transaction Document shall obligate Purchaser to segregate any Purchased Assets delivered to Purchaser by Seller.  Except to the extent expressly set forth in this Agreement or any other Transaction Document, no Purchased Asset shall remain in the custody of Seller or any Affiliate of Seller.

 

ARTICLE 9
 REPRESENTATIONS AND WARRANTIES

 

Seller represents and warrants to Purchaser as of the Closing Date, each Purchase Date, the date of any Future Funding Advance Draw and the date of any Margin Excess Transaction as follows:

 

(a)                                 Organization, Etc.  Seller (i) is duly organized, validly existing and in good standing under the laws and regulations of the State of Delaware, (ii) is duly licensed, qualified, and in good standing in every state where such licensing or qualification is necessary for the transaction of its business, (iii) has the limited liability company power to own and hold the assets it purports to own and hold, and to carry on its business as now being conducted and proposed to be conducted and (iv) has the limited liability company power to execute, deliver, and perform its obligations under the Transaction Documents.

 

(b)                                 Authorization, Acting as Principal, Approvals, Compliance.  Seller represents that (i) it is duly authorized to execute and deliver the Transaction Documents to which it is a party, to enter into Transactions as contemplated hereunder and to perform its obligations under the Transaction Documents, and has taken all necessary action to authorize such execution, delivery and performance, (ii) it will engage in Transactions as principal, (iii) each person signing any Transaction Document on its behalf is duly authorized to do so on its behalf, (iv) it has obtained all authorizations of any Governmental Authority required in connection with the Transaction Documents and the Transactions hereunder and such authorizations are in full force and effect, and (v) the execution, delivery and performance of the Transaction Documents and the Transactions hereunder will not violate (1) any Requirement of Law applicable to it, (2) its

 

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organizational documents or (3) any agreement by which it is bound or by which any of its assets are affected.

 

(c)                                  Consents.  No consent, approval or other action of, or filing by Seller with, any Governmental Authority or any other Person is required to authorize, or is otherwise required in connection with, the execution, delivery and performance of any of the Transaction Documents (other than consents, approvals and filings that have been obtained or made, as applicable).

 

(d)                                 Licenses and Permits.  Seller is duly licensed, qualified and in good standing in every jurisdiction where such licensing, qualification or standing is necessary, except where failure to do so could not be reasonably likely to result in a Material Adverse Effect, and has all licenses, permits and other consents that are necessary, for the transaction of Seller’s business, including the acquisition, origination (if applicable), ownership or sale of any Purchased Asset or other Purchased Item.

 

(e)                                  Due Execution; Enforceability.  The Transaction Documents to which it is a party have been or will be duly executed and delivered by Seller, for good and valuable consideration.  Once executed by each applicable counterparty, the Transaction Documents constitute the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms subject to bankruptcy, insolvency, and other limitations on creditors’ rights generally and to general principles of equity.

 

(f)                                   Ability to Perform.  Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant applicable to it and contained in the Transaction Documents to which it is a party.

 

(g)                                  Non-Contravention.  Neither the execution and delivery of the Transaction Documents, nor consummation by Seller of the transactions contemplated by the Transaction Documents (or any of them), nor compliance by Seller with the terms, conditions and provisions of the Transaction Documents (or any of them) will conflict with or result in a breach of any of the terms, conditions or provisions of (i) the organizational documents of Seller, (ii) any contractual obligation to which Seller is now a party or the rights under which have been assigned to Seller or the obligations under which have been assumed by Seller or to which the assets of Seller is subject or constitute a default thereunder, or result thereunder in the creation or imposition of any lien upon any of the assets of Seller, other than pursuant to the Transaction Documents, (iii) any judgment or order, writ, injunction, decree or demand of any court applicable to Seller, or (iv) any applicable Requirement of Law.

 

(h)                                 Litigation; Requirements of Law.  As of the date hereof, and except as disclosed in writing to Purchaser prior to the Purchase Date, date of any Future Funding Advance Draw or the date of any Margin Excess Transaction hereunder, there is no action, suit, proceeding, investigation or arbitration pending or, to Seller’s Knowledge, threatened against Seller or any of its Affiliates or assets that (i) is in an amount greater than the Seller Threshold with respect to Seller or the Guarantor Threshold with respect to Guarantor or (ii) if adversely determined would be reasonably expected to result in any Material Adverse Effect.  Seller is in compliance in all material respects with all Requirements of Law.  Neither Seller nor any of its Affiliates is in default in any material respect with respect to any judgment, order, writ, injunction, or decree of any arbitrator or

 

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Governmental Authority that may result in a Material Adverse Effect or could reasonably be expected to constitute a Default or an Event of Default or that would adversely affect the legality, validity or enforceability of any Transaction Document.

 

(i)                                     Judgments.  Except as disclosed in writing to Purchaser, there are no judgments against Seller in the amount of the Seller Threshold, or against Guarantor in the aggregate in an amount greater than the Guarantor Threshold that, in each case, are unsatisfied of record or docketed in any court located in the United States of America.

 

(j)                                    No Bankruptcies.  No Act of Insolvency has ever occurred with respect to any Seller Party.

 

(k)                                 Intentionally Omitted.

 

(l)                                     No Broker.  Seller has not dealt with any broker, investment banker, agent, or other Person (other than Purchaser or an Affiliate of Purchaser) who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to any of the Transaction Documents.

 

(m)                             No Default.  No Event of Default or to Seller’s Knowledge, except as disclosed in writing by Seller to and approved by Purchaser prior to the Purchase Date, the date of any Future Funding Advance Draw or the date of any Margin Excess Transaction for any Purchased Asset, no Default has occurred and is continuing under or with respect to the Transaction Documents.

 

(n)                                 No Decline in Market Value.  To Seller’s Knowledge, there are no facts or circumstances that are reasonably likely to cause or have caused the Market Value of any Purchased Asset to decline in any material respect from the Market Value set forth in the Confirmation therefor as of the Purchase Date (and as such Market Value may have been reduced by Purchaser after the Purchase Date), except as disclosed in writing by Seller to prior to the Purchase Date, the date of any Future Funding Advance Draw or the date of any Margin Excess Transaction for any Purchased Asset.

 

(o)                                 No Material Adverse Effect.  Seller has no knowledge of any actual or prospective development, event or other fact that could reasonably be expected to have a Material Adverse Effect except as disclosed in writing by Seller prior to the Purchase Date for any Purchased Asset.

 

(p)                                 Intentionally Omitted.

 

(q)                                 Authorized Representatives.  The duly authorized representatives of Seller are listed on and true signatures of such authorized representatives are set forth on Exhibit IV hereto, or such other most recent list of authorized representatives substantially in the form of Exhibit IV hereto as Seller may from time to time deliver to Purchaser.

 

(r)                                    Chief Executive Office; Jurisdiction of Organization; Location of Books and Records.  Each Seller Party’s chief executive office is located at the address for notices specified for such Seller Party on Exhibit I, unless such Seller Party has provided a new chief executive office address to Purchaser in writing.  Seller’s jurisdiction of organization is the State of

 

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Delaware.  The location where Seller keeps its books and records, including all computer tapes and records relating to the Collateral, is its chief executive office.

 

(s)                                   Representations and Warranties Regarding the Purchased Assets.  Each of the representations and warranties made in respect of the Purchased Assets pursuant to Exhibit X are true, complete and correct except as disclosed in writing by Seller prior to the Purchase Date, the date of any Future Funding Advance Draw or the date of any Margin Excess Transaction for any Purchased Asset.

 

(t)                                    Good Title to Purchased Assets.  Immediately prior to the purchase of any Purchased Assets by Purchaser from Seller, (i) such Purchased Assets are free and clear of any lien, encumbrance or impediment to transfer (including any “adverse claim” as defined in Article 8-102(a)(1) of the UCC), (ii) such Purchased Assets are not subject to any right of set-off, any prior sale, transfer, assignment or participation (other than a transfer or chain of transfers from Affiliates of Seller to Seller on or prior to the Purchase Date), or any agreement by Seller to assign, convey, transfer or participate such Purchased Assets, in each case, in whole or in part, (iii) Seller is the sole record and beneficial owner of and has good and marketable title to such Purchased Assets and (iv)  Seller has the right to sell and transfer such Purchased Assets to Purchaser.  Upon the purchase of any Purchased Assets by Purchaser from Seller, Purchaser shall be the sole owner of such Purchased Assets free of any adverse claim existing as of the Purchase Date, subject to the terms and conditions of the Purchased Asset Documents and Seller’s rights under this Agreement.

 

(u)                                 No Encumbrances.  There are (i) no outstanding rights, options, warrants or agreements on the part of Seller for a purchase, sale or issuance, in connection with any Purchased Asset or other Purchased Item, (ii) no agreements on the part of Seller to issue, sell or distribute any Purchased Asset or other Purchased Item and (iii) no obligations on the part of Seller (contingent or otherwise) to purchase, redeem or otherwise acquire any securities or interest therein, in each case, except as contemplated by the Transaction Documents.

 

(v)                                 Security Interest in Collateral.  Upon execution and delivery of the Account Control Agreement, Purchaser shall have a legal, valid, enforceable and fully perfected first priority security interest in all right, title and interest of Seller in the Collection Account and all funds credited thereto.  In the event any related Transaction is recharacterized as a secured financing of the Purchased Assets, the provisions of this Agreement are effective to create in favor of Purchaser a valid “security interest” (as defined in Section 1-201(b)(35) of the UCC) in all rights, title and interest of Seller in, to and under the Collateral, and:

 

(i)                                     with respect to the portion of the Collateral constituting an “instrument” (as defined in Section 9-102(a)(47) of the UCC), upon possession of such Collateral constituting an “instrument” by the Custodian in accordance with the Custodial Agreement or by a bailee pursuant to a Bailee Agreement, Purchaser shall have a valid, perfected first priority security interest in such Collateral constituting an “instrument”; and

 

(ii)                                  upon filing the UCC Financing Statements in the applicable UCC Filing Jurisdiction, Purchaser shall have a valid, perfected first priority security interest in the

 

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Collateral to the extent that a security interest in the Collateral can be perfected under the UCC by the filing of financing statements.

 

(w)                               Delivery of Purchased Asset File.  With respect to each Purchased Asset, the Mortgage Note, the Mortgage, the Assignment of Mortgage, any applicable Mezzanine Note and Mezzanine Loan Documents, and any other document required to be delivered under this Agreement and the Custodial Agreement for such Purchased Asset has been delivered to the Purchaser or the Custodian on its behalf (or shall be delivered in accordance with the time periods set forth herein).

 

(x)                                 Covered Fund.  Seller has been structured so as not to constitute, and is not, a “covered fund” for purposes of Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”), and is relying upon an exception or exemption from the registration requirements of the Investment Company Act set forth in Section 3(c)(5)(C) of the Investment Company Act.

 

(y)                                 Federal Regulations.   Seller is not required to register as an “investment company,” or a company “controlled by an investment company,” within the meaning of the Investment Company Act of 1940, as amended.  Seller is not a “holding company,” or a “subsidiary company of a holding company,” or an “affiliate” of either a “holding company” or a “subsidiary company of a holding company,” as such terms are defined in the Public Utility Holding Company Act of 2005, as amended.

 

(z)                                  Taxes.  Seller has filed or caused to be filed all required U.S. federal income and other material tax returns or extensions thereto that, to Seller’s Knowledge, would be delinquent if they had not been filed on or before the date hereof (taking into account any extensions) and has paid all U.S. federal and other material Taxes imposed on it or any of its property and shown to be due and payable on or before the date hereof on such returns or on any assessments made against it or any of its property (in each case taking into account any extensions) except for any such Taxes as are being appropriately contested in good faith by appropriate proceedings and with respect to which adequate reserves have been provided in accordance with GAAP; to Seller’s Knowledge, no Tax liens have been filed against any of Seller’s assets, except for such Tax liens as are being appropriately contested in good faith by appropriate proceedings and with respect to which adequate reserves have been provided in accordance with GAAP, and, to Seller’s Knowledge, no material claims are being asserted with respect to any such Taxes.

 

(aa)                          ERISA.  Seller does not have any Plans or any ERISA Affiliates and makes no contributions to any Plans or any Multiemployer Plans.

 

(bb)                          Solvency; No Fraudulent Transfer.  Seller has adequate capital for the normal obligations foreseeable in a business of its size and character and in light of its contemplated business operations.  Seller is generally able to pay, and is paying, its debts as they come due. Neither the Transaction Documents nor any Transaction thereunder are entered into in contemplation of insolvency or with intent to hinder, delay or defraud any creditors of Seller.  As of each Purchase Date, Seller is not insolvent within the meaning of 11 U.S.C. Section 101(32) or any successor provision thereof and the transfer and sale of the related Purchased Assets on such Purchase Date pursuant hereto and the obligation to repurchase such Purchased Assets (i) will not

 

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cause the liabilities of Seller to exceed the assets of Seller, (ii) will not result in Seller having unreasonably small capital, and (iii) will not result in debts that would be beyond Seller’s ability to pay as the same mature.  Seller received reasonably equivalent value in exchange for each transfer and sale of the Purchased Assets subject hereto to Purchaser.  No Act of Insolvency has occurred with respect to Seller.  Seller has only entered into agreements on terms that would be considered arm’s length and otherwise on terms consistent with other similar agreements with other similarly situated entities.

 

(cc)                            Use of Proceeds; Margin Regulations.  All proceeds of each Transaction shall be used by Seller for purposes permitted under Seller’s governing documents, provided that no part of the proceeds of any Transaction shall be used by Seller to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.  Neither the entering into of any Transaction nor the use of any proceeds thereof shall violate, or be inconsistent with, any provision of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

(dd)                          Full and Accurate Disclosure.  All information, reports, statements, exhibits, schedules and certificates (i) furnished in writing by or on behalf of any Seller Party in connection with the negotiation, preparation or delivery of the Transaction Documents, or after the date hereof pursuant to the terms of any Transaction Document or (ii) included in any Transaction Document, when taken as a whole, do not and will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances under which they were made, or (in the case of projections) is or will be based on reasonable estimates, on the date as of which such information is stated or certified.

 

(ee)                            Financial Information; Business Condition.  All financial data concerning the Purchased Assets and the other Purchased Items prepared by or on behalf of any Person other than any Seller Party, Pine River Entity or any Affiliate thereof is, to Seller’s Knowledge, true, complete and correct in all material respects on the date of the delivery thereof to Purchaser.  All financial data concerning the Purchased Assets and the other Purchased Items prepared by or on behalf of any Seller Party, Pine River Entity or any Affiliate thereof, is true, complete and correct in all material respects on the date of the delivery thereof to Purchaser.  All financial data concerning the Seller Parties that has been delivered by or on behalf of any of the Seller Parties, Pine River Entity or any Affiliate thereof to Purchaser is true, complete and correct in all material respects and has been prepared fairly in accordance with, to the extent applicable, GAAP.  Since the delivery of such data, except as otherwise disclosed in writing to Purchaser, there has been no change in the business condition (financial or otherwise) or the results of operations (or prospects) of any Seller Party or in the results of operations of any Seller Party, or the Purchased Assets, which change could result in a Material Adverse Effect.

 

(ff)                              Intentionally Omitted.

 

(gg)                            No Reliance.  Seller has made its own independent decisions to enter into the Transaction Documents and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including without limitation, legal counsel and accountants) as it has deemed necessary.  Seller is not relying

 

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upon any advice from Purchaser as to any aspect of the Transactions, including without limitation, the legal, accounting or tax treatment of the Transactions.

 

(hh)                          Economic Sanctions, Patriot Act and Foreign Corrupt Practices Act.   The Seller Parties are in compliance, in all material respects, with (i) the U. S. laws related to economic sanctions administered by the U.S. Department of Treasury, including its Office of Foreign Assets Control, or the U.S. Department of State (the “Economic Sanctions”), including the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other applicable enabling legislation or executive order relating thereto, and (ii) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (the “Patriot Act”).  No part of the proceeds of any Transaction will be used, directly or indirectly (i) for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, or (ii) to fund or finance any activities or business of or with any individual or entity or in any country or territory that, at the time of such funding or financing, is subject to country-wide or territory-wide Economic Sanctions (including, as of the date hereof, Cuba, Iran, North Korea, Sudan and Syria) or of or with any individual or entity that, at the time of such funding or financing, is subject to Economic Sanctions.

 

(ii)                                  Prohibited Persons.  No Seller Party is a Prohibited Person, or is located, organized or resident in a country or territory that is subject to country-wide or territory-wide Economic Sanctions (including, as of the date hereof, Cuba, Iran, North Korea, Sudan and Syria).

 

(jj)                                Insider.  Seller is not an “executive officer,” “director,” or “person who directly or indirectly or acting through or in concert with one or more persons owns, controls, or has the power to vote more than 10% of any class of voting securities” (as those terms are defined in 12 U.S.C. § 375(b) or in regulations promulgated pursuant thereto) of Purchaser, of a bank holding company of which Purchaser is a Subsidiary, or of any Subsidiary of a bank holding company of which Purchaser is a Subsidiary, of any bank at which Purchaser maintains a correspondent account or of any lender which maintains a correspondent account with Purchaser.

 

(kk)                          Anti-Money Laundering Laws.  Seller has complied in all material respects with all applicable anti-money laundering laws and regulations (collectively, the “Anti-Money Laundering Laws”) in connection with the origination of each Purchased Asset.

 

(ll)                                  Notice Address; Jurisdiction of Organization.  Seller’s address for notices is as specified on Exhibit I hereto, unless Seller has provided a new address to Purchaser in writing.  Seller’s jurisdiction of organization is the State of Delaware. The location where Seller keeps its books and records, including all computer tapes and records relating to the Collateral, is its notice address, unless Seller has provided a different address to Purchaser in writing within thirty (30) days following any change of address.

 

(mm)                  Ownership.  Seller is and shall remain at all times a wholly-owned direct or indirect Subsidiary of the Guarantor.

 

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(nn)                          Tax Status.  For U.S. federal income tax purposes, Seller is a disregarded entity.

 

(oo)                          No Real Property.  Seller has not at any time since its formation held title to any real property.

 

ARTICLE 10
 NEGATIVE COVENANTS OF SELLER

 

On and as of the date hereof and at all times while this Agreement or any Transaction hereunder is in effect, Seller shall not, without the prior written consent of Purchaser:

 

(a)                                 take any action that would directly or indirectly impair or adversely affect Purchaser’s title to the Purchased Assets;

 

(b)                                 transfer, assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose of, or pledge or hypothecate, directly or indirectly, any interest in any Purchased Assets to any Person other than Purchaser, or engage in repurchase transactions or similar transactions with respect to any Purchased Assets with any Person other than Purchaser;

 

(c)                                  create, incur, assume or suffer to exist any Lien, encumbrance or security interest in or on any of the Purchased Assets or the other Collateral, whether now owned or hereafter acquired, other than the Liens and security interest granted by Seller pursuant to the Transaction Documents;

 

(d)                                 incur or permit to exist any Indebtedness if the same would cause Seller to violate the covenants contained in Article 12;

 

(e)                                  subject to Article 27, permit (through the giving of consent, waiver, failure to object or otherwise) any Mortgaged Property, any Capital Stock in any Mortgagor securing any Mezzanine Loan,  Mortgagor or Mezzanine Borrower, in each case, relating to any Purchased Asset, to create, incur, assume or suffer to exist any Liens or Indebtedness, including without limitation, junior mortgage debt or mezzanine debt (in each case, excluding Permitted Encumbrances against the related Mortgaged Property and except to the extent that any such Liens or Indebtedness are otherwise created, incurred, assumed or permitted in accordance with the Purchased Asset Documents);

 

(f)                                   consent or assent to any Significant Modification relating to any Purchased Asset other than in accordance with Article 27 and the Servicing Agreement or Servicer Letter (as applicable);

 

(g)                                  permit the organizational documents or organizational structure of Seller to be amended in any material respect without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed;

 

(h)                                 enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution), sell all or substantially all of its assets;

 

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(i)                                     suffer a Change of Control of Seller;

 

(j)                                    after the occurrence and during the continuance of an Event of Default, make any distribution, payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any Capital Stock of Seller, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller;

 

(k)                                 acquire or maintain any right or interest in any Purchased Asset or Mortgaged Property relating to any Purchased Asset that is senior to or pari passu with the rights and interests of Purchaser therein under the Transaction Documents;

 

(l)                                     use any part of the proceeds of any Transaction hereunder for any purpose which violates, or would be inconsistent with, the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System;

 

(m)                             directly, or through a Subsidiary, acquire or hold title to any real property; or

 

(n)                                 make any election or otherwise take any action that would cause Seller to be treated as an association taxable as a corporation for U.S. federal income tax purposes.

 

ARTICLE 11
 AFFIRMATIVE COVENANTS OF SELLER

 

On and as of the date hereof and at all times while this Agreement or any Transaction hereunder is in effect, Seller covenants that:

 

(a)                                 Seller Notices.

 

(i)                                     Material Adverse Effect.  Seller shall promptly notify Purchaser of any Material Adverse Effect of which Seller has Knowledge; provided, however, that nothing in this Article 11 shall relieve Seller of its obligations under this Agreement.

 

(ii)                                  Default or Event of Default.  Seller shall notify Purchaser of the occurrence of any Default or Event of Default with respect to Seller as soon as possible but in no event later than two (2) Business Days after obtaining Knowledge of such event.

 

(iii)                               Purchased Asset Defaults.  Seller shall promptly, and in any event not later than two (2) Business Days following receipt thereof, deliver to Purchaser any notice of the occurrence of any Purchased Asset Event of Default.

 

(iv)                              Other Defaults, Litigation and Judgments.

 

(A)                               Seller shall promptly, and in any event not later than two (2) Business Days, after obtaining Knowledge thereof, notify Purchaser of (x) any event of default (beyond applicable notice and grace periods) on the part of  Seller under any Indebtedness or other material contractual obligations; and (y) the commencement or written threat of, or judgment in, any action, suit, proceeding,

 

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investigation or arbitration before any Governmental Authority involving Seller or any of its respective assets.

 

(B)                               Seller shall promptly, and in any event not later than two (2) Business Days after obtaining Knowledge thereof, notify Purchaser of (1) to the extent such default or event of default could reasonably be expected to constitute an Event of Default hereunder, any default or event of default (or similar event) on the part of Guarantor under any Indebtedness over the Guarantor Threshold; and (2) the commencement or written threat of, or judgment in, any action, suit, proceeding, investigation or arbitration before any Governmental Authority involving Guarantor or any of its assets, which is likely (in Seller’s reasonable judgment) to be adversely determined and, if so, could reasonably be expected to have a Material Adverse Effect as reasonably determined by Seller.

 

(v)                                 Mandatory Early Repurchase Event.  Seller shall promptly, and in any event not later than one (1) Business Day after obtaining Knowledge thereof, notify Purchaser of any Mandatory Early Repurchase Event that has occurred, which notice to Purchaser shall state the details of such Mandatory Early Repurchase Event including the related Purchased Assets for which such Mandatory Early Repurchase Event has occurred and whether such Mandatory Early Repurchase Event is continuing.

 

(vi)                              Decline in Market Value.  Seller shall notify Purchaser of any events, facts or circumstances that, in Seller’s good faith determination, have caused or are reasonably likely to cause the Market Value of any Purchased Asset to decline in any material respect from the Market Value set forth in the Confirmation therefor as of the Purchase Date, promptly, and in any event not later than two (2) Business Days, after obtaining Knowledge thereof.

 

(vii)                           Corporate Change.  Seller shall advise Purchaser in writing of the opening of any new chief executive office, or the closing of any such office, of any Seller Party and of any change in any Seller Party’s name or the places where the books and records pertaining to the Purchased Asset are held not less than fifteen (15) Business Days prior to taking any such action.

 

(viii)                        Anti-Terrorism; Anti-Bribery and Anti-Money Laundering Laws.  Seller shall promptly (and in any event within two (2) Business Days after obtaining Knowledge thereof) notify Purchaser of any violation of the representation and warranty contained in Article 9(hh) (Economic Sanctions, Patriot Act and Foreign Corrupt Practices Act), Article 9(ii) (Prohibited Persons) or Article 9(kk) (Anti-Money Laundering Laws).

 

(b)                                 Reporting.

 

(i)                                     Purchased Asset Information.  Seller shall provide, or shall cause to be provided, to Purchaser (A) no later than the fifteenth (15th) day of each month, any and all property level financial information (including, without limitation, operating and financial statements) with respect to the Purchased Assets that was received during the preceding calendar month and is in the possession of Seller or an Affiliate, including, without

 

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limitation, rent rolls, income statements and STR reports; and (B) promptly upon request, such other information with respect to the Purchased Assets that may be reasonably requested by Purchaser from time to time and to the extent in Seller’s possession or reasonably obtainable by Seller.

 

(ii)                                  Monthly Servicing Report.  With respect to the Purchased Assets and related Mortgaged Properties, no later than the fifteenth (15th) day of each calendar month, Seller shall provide, or shall cause to be provided, to Purchaser a monthly operations/servicing report covering collections, delinquencies, losses, recoveries, and cash flows, in form reasonably acceptable to Purchaser.

 

(iii)                               Quarterly Purchased Asset Reports.  With respect to the Purchased Assets and related Mortgaged Properties, as frequently as provided, but in no event later than within seventy (70) days after the last day of any calendar quarter in any fiscal year, Seller shall provide, or shall cause to be provided, to Purchaser an asset management report prepared by Seller or Guarantor (to the extent of information in the possession of Seller or an Affiliate), in form reasonably acceptable to Purchaser.

 

(iv)                              Covenant Compliance Certificate.  Simultaneously with the delivery of financial statements for each fiscal quarter in any fiscal year, Seller shall deliver to Purchaser an officer’s certificate substantially in the form of Exhibit VI attached hereto.

 

(v)                                 Quarterly Financial Reports.  Seller shall provide, or shall cause to be provided, to Purchaser within forty-five (45) days after the end of the first three quarterly fiscal periods of each fiscal year of Guarantor, the unaudited consolidated balance sheets of Guarantor, as at the end of such period and the related unaudited, consolidated statements of income and member equity of Guarantor for such period (without footnotes) and the portion of the fiscal year through the end of such period, accompanied by an officer’s certificate of Guarantor, which certificate shall state that said consolidated financial statements fairly present the financial condition of Guarantor, in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments) and Seller shall provide, or cause to be provided, to Purchaser within such time period the separately prepared financial statements or Seller, if any.

 

(vi)                              Annual Financial Reports.  Seller shall provide, or shall cause to be provided, to Purchaser within ninety (90) days after the end of each fiscal year of the Guarantor, the audited consolidated balance sheets of Guarantor, as at the end of such fiscal year and the related audited, consolidated statements of income, member equity and cash flows of Guarantor for such fiscal year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall not be qualified as to scope of audit or going concern and shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of Guarantor in accordance with GAAP, as at the end of, and for, such period (subject to normal year-end audit adjustments) and Seller shall provide, or cause to be provided, to Purchaser within such time period the separately prepared financial statements or Seller, if any.

 

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(vii)                           Other Information.  Seller shall provide, or shall cause to be provided, to Purchaser such other information regarding the financial condition, operations or business of Seller, any Mortgagor or any Mezzanine Borrower or underlying guarantor with respect to a Purchased Asset as Purchaser may reasonably request and to the extent same is in Seller’s possession or reasonably obtainable by Seller, including without limitation, such documents as Purchaser may reasonably request evidencing the truthfulness of the representations set forth in Article 9.

 

(c)                                  Additional Rights.  If Seller shall at any time become entitled to receive or shall receive any rights, whether in addition to, in substitution of, as a conversion of, or in exchange for a Purchased Asset, or otherwise in respect thereof, Seller shall accept the same as Purchaser’s agent, hold the same in trust for Purchaser and deliver the same forthwith to Purchaser (or the Custodian, as appropriate) in the exact form received, duly endorsed by Seller to Purchaser, if required, together with an undated power covering such rights duly executed in blank to be held by Purchaser hereunder as additional collateral security for the Transactions.  If any sums of money or property so paid or distributed in respect of the Purchased Assets shall be received by Seller, Seller shall, until such money or property is paid or delivered to Purchaser, hold such money or property in trust for Purchaser, segregated from other funds of Seller, as additional collateral security for the Transactions.  If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, other instrument or certificated security, such note, instrument or certificated security shall be promptly delivered to Purchaser, duly endorsed in a manner satisfactory to Purchaser, to be itself held as Collateral pursuant to the Transaction Documents.

 

(d)                                 Defense of Purchaser’s Security Interest; Further Assurances.  At any time from time to time, at the sole expense of Seller, Seller shall (i) defend the right, title and interest of Purchaser in and to the Purchased Assets and other Collateral against, and take such other action as is necessary to remove, the Liens, security interests, claims and demands of all Persons, (ii) at Purchaser’s reasonable request, take all action Purchaser reasonably deems necessary or desirable to ensure that Purchaser will have a first priority security interest in the Purchased Assets and other Collateral subject to any of the Transactions in the event such Transactions are recharacterized as secured financings and (iii) at Purchaser’s reasonable request, promptly and duly execute and deliver such further instruments, documents and information and take such further actions as Purchaser may deem reasonably necessary or desirable to (1) obtain or preserve the security interest granted hereunder, (2) ensure that such security interest remains fully perfected at all times and remains at all times first in priority as against all other creditors of Seller (whether or not existing as of the date hereof or in the future), (3) obtain or preserve the rights and powers herein granted (including, among other things, filing such UCC financing statements as Purchaser may request) or (4) ensure compliance with the Patriot Act or any other Requirements of Law in all material respects.

 

(e)                                  Preservation of Existence; Compliance with Law.  Seller shall, and shall cause Guarantor to, at all times (i) comply with all material contractual obligations, (ii) comply in all material respects with all applicable laws, ordinances, rules, regulations and orders (including, without limitation, environmental laws) of any Governmental Authority or any other federal, state, municipal or other public authority having jurisdiction over it or its assets and (iii) maintain and preserve its legal existence and all of its material rights, privileges, licenses and franchises

 

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necessary for the operation of its business (including, without limitation, with respect to Seller, all lending licenses held by it and its status as a “qualified transferee” (however denominated) under all documents which govern the Purchased Assets).

 

(f)                                   Operations.  Seller shall continue to engage in business of the same general type as now conducted by it or otherwise as approved by Purchaser prior to the date hereof.  Seller shall maintain records with respect to the Collateral and the conduct and operation of its business with no less a degree of prudence than if the Collateral were held by Seller for its own account and shall furnish Purchaser, upon reasonable request by Purchaser or its designated representative, with reasonable information obtainable by Seller with respect to the Collateral and the conduct and operation of its business.

 

(g)                                  Books and Record.  Seller shall at all times keep proper books and records in which full, true and correct entries shall be made of its transactions fairly in accordance with GAAP, and set aside on its books from its earnings for each fiscal year all such proper reserves in accordance with GAAP.

 

(h)                                 Compliance with Transaction Documents.  Seller shall observe, perform and satisfy all the terms, provisions and covenants required to be observed, performed or satisfied by it, and shall pay when due all costs, fees and expenses required to be paid by it, under the Transaction Documents.  Seller shall cause the Guarantor to at all times comply with the terms and conditions of the Guaranty, including without limitation, any financial covenants contained therein.  Seller shall be solely responsible for the fees and expenses of Custodian, Account Bank, and Servicer.

 

(i)                                     Taxes and Other Charges.  Seller shall timely file all material income, franchise and other tax returns required to be filed by it and shall timely (a) pay all material taxes, levies, assessments and other charges that are imposed on it, on its income or profits, on any of its property or on the Collateral and (b) discharge all liens that are imposed on any of its property or on the Collateral, in each case prior to the date on which penalties attach thereto, except for any such tax, levy, assessment, other charge or lien which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained in accordance with GAAP.

 

(j)                                    ERISA.  Seller shall not violate the representations and warranties contained in Article 9(xx).

 

(k)                                 Ownership.  Seller is and shall remain at all times a wholly-owned direct or indirect Subsidiary of the Guarantor.

 

(l)                                     Economic Sanctions, Patriot Act and Foreign Corrupt Practices Act.  Seller shall not violate the representations and warranties contained in Article 9(hh) (Economic Sanctions, Patriot Act and Foreign Corrupt Practices Act), Article 9(ii) (Prohibited Persons) or Article 9(kk) (Anti-Money Laundering Laws).

 

(m)                             Future Advances.  To the extent any future advance is required to be made pursuant to the Purchased Asset Documents with respect to any Purchased Asset, Seller shall be required to fund such future advance in accordance with such Purchased Asset Documents, regardless of whether Purchaser agrees to fund an increase in the Purchase Price or the conditions for increasing the Purchase Price under this Agreement have been satisfied with regard to such future advance.

 

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Any Purchased Asset with respect to which there is any litigation or other proceeding alleging a failure to fund any future advance as and when required (collectively, a “Future Advance Failure”) shall cease being an Eligible Asset and shall be repurchased by Seller within two (2) Business Days after Seller receives written notice of the commencement of such litigation or proceeding.

 

ARTICLE 12
 SINGLE PURPOSE ENTITY

 

On and as of the date hereof and at all times while this Agreement or any Transaction hereunder is in effect and Seller covenants that:

 

(a)                                 Seller shall own no assets, and shall not engage in any business, other than the Purchased Assets, proposed Purchased Assets and Purchased Assets reacquired by Seller from Purchaser, and other assets incidental to the origination, acquisition, ownership, financing and disposition of the Purchased Assets;

 

(b)                                 Seller shall not make any loans or advances to any Affiliate or third party and shall not acquire obligations or securities of its Affiliates other than those obligations related to Purchased Assets or securities consisting of Purchased Assets;

 

(c)                                  Seller shall pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) only from its own assets;

 

(d)                                 Seller shall comply with the provisions of its organizational documents;

 

(e)                                  Seller shall do all things necessary to observe its organizational formalities and to preserve its existence;

 

(f)                                   Seller shall maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates (except that such financial statements may be consolidated to the extent consolidation is permitted or required under GAAP or as a matter of Requirements of Law;

 

(g)                                  Seller shall be, and at all times shall hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate) (other than for tax purposes), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, and shall not identify itself or any of its Affiliates as a division of the other;

 

(h)                                 Seller shall maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and shall remain solvent; provided that the foregoing shall not require any member, partner or shareholder of Seller to make additional capital contributions to Seller;

 

(i)                                     Seller shall not commingle its funds or other assets with those of any Affiliate or any other Person and shall maintain its properties and assets in such a manner that it would not be costly or difficult to identify, segregate or ascertain its properties and assets from those of others;

 

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(j)                                    Seller shall maintain its properties, assets and accounts separate from those of any Affiliate or any other Person;

 

(k)                                 Seller shall not hold itself out to be responsible for the debts or obligations of any other Person;

 

(l)                                     Seller shall not, without the prior written consent of its Independent Member, take any action that will result in an Act of Insolvency;

 

(m)                             Seller shall, at all times, have at least one (1) Independent Member;

 

(n)                                 Seller’s organizational documents shall provide (i) that Purchaser be given at least two (2) Business Days prior notice of the removal and/or replacement of any Independent Member, together with the name and contact information of the replacement Independent Member and evidence of the replacement’s satisfaction of the definition of Independent Member and (ii) that any Independent Member of Seller shall not have any fiduciary duty to anyone including the holders of the equity interest in Seller and any Affiliates of Seller except Seller and the creditors of Seller with respect to taking of, or otherwise voting on, any Act of Insolvency; provided that the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing;

 

(o)                                 Seller shall not enter into any transaction with an Affiliate of Seller except on commercially reasonable terms similar to those available to unaffiliated parties in an arm’s length transaction;

 

(p)                                 Seller shall maintain a sufficient number of employees in light of contemplated business operations; provided, however, that Seller shall not be required to maintain any employees;

 

(q)                                 Intentionally omitted;

 

(r)                                    Seller shall not pledge its assets to secure the obligations of any other Person;

 

(s)                                   Seller shall not form, acquire or hold any Subsidiary or own any equity interest in any other entity; and

 

(t)                                    Seller shall not create, incur, assume or suffer to exist any Indebtedness, Lien, encumbrance or security interest in or on any of its property, assets, revenue, the Purchased Assets, the other Collateral, whether now owned or hereafter acquired, other than (i) obligations under the Transaction Documents, (ii) obligations under the documents evidencing the Purchased Assets, and (iii) unsecured trade payables, in an aggregate amount not to exceed the Seller Threshold at any one time outstanding, incurred in the ordinary course of acquiring, owning, financing and disposing of the Purchased Assets; provided, however, that any such trade payables incurred by Seller shall be paid within sixty (60) days of the date incurred.

 

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ARTICLE 13
 EVENTS OF DEFAULT; REMEDIES; SET-OFF

 

(a)                                 Events of Default.  Each of the following events shall constitute an “Event of Default” under this Agreement:

 

(i)                                     Failure to Repurchase or Repay.  Seller shall fail to repurchase Purchased Assets upon the applicable Repurchase Date or shall fail to repay the Purchase Price with respect to any Purchased Asset when and as required pursuant to the Transaction Documents.

 

(ii)                                  Failure to Pay Purchase Price Differential.  Purchaser shall fail to receive on or before any Remittance Date the accrued and unpaid Purchase Price Differential when due.

 

(iii)                               Failure to Cure Margin Deficit.  Seller shall fail to cure any Margin Deficit in accordance with Article 4 when due.

 

(iv)                              Failure to Remit Principal Payment.  Seller fails to remit (or cause to be remitted) to Purchaser any Principal Payment received with respect to a Purchased Asset for application to the payment of the Repurchase Price for such Purchased Asset in accordance with Article 5(e).

 

(v)                                 Failure to Pay Fees. Purchaser shall fail to receive (A) any Exit Fee, as and when due, provided that if Seller requests that Purchaser notify Seller of the amount of the Exit Fee due and payable hereunder together with Seller’s notice of early repurchase pursuant to Article 3(d)(i) hereof and Purchaser fails to provide such Exit Fee amount on or prior to the Early Repurchase Date, such Exit Fee shall be due and payable within one (1) Business Day after Seller’s receipt of notice from Purchaser of the Exit Fee due, or (B) any other fee hereunder, within three (3) Business Days after Seller’s receipt of written notice from Purchaser that the same is due.

 

(vi)                              Other Failure to Pay.  Seller shall fail to make any payment not otherwise enumerated that is owing to Purchaser under the Transaction Documents that has become due, whether by acceleration or otherwise, within five (5) Business Days after receipt of demand therefor from Purchaser.

 

(vii)                           Act of Insolvency.   An Act of Insolvency occurs with respect to Seller or Guarantor.

 

(viii)                        Admission of Inability to Pay.  Seller or Guarantor shall admit in writing to any Person its inability to, or its intention not to, perform any of its respective obligations under any Transaction Document.

 

(ix)                              Transaction Documents.  Any Transaction Document shall for whatever reason be terminated (other than by Purchaser without cause) or cease to be in full force and effect, or shall not be enforceable in accordance with its terms, or any Seller Party or Affiliate of a Seller Party shall contest in writing the validity or enforceability of any Transaction Document or the validity, perfection or priority of any Lien granted thereunder, or any Seller Party or Affiliate of a Seller Party shall seek to disaffirm, terminate or reduce its obligations under any Transaction Document.

 

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(x)                                 Cross-Default.

 

(A)                               Seller shall be in default (beyond any applicable notice and cure periods) under any of its Indebtedness which default involves the failure to pay a due and payable obligation of at least the Seller Threshold, and Seller fails to repurchase all Purchased Assets within one (1) Business Day thereafter.

 

(B)                               Guarantor shall be in default (beyond any applicable notice and cure periods) under any of its Indebtedness which default involves the failure to pay a due and payable obligation of at least the Guarantor Threshold and Seller fails to repurchase all Purchased Assets within one (1) Business Day thereafter.

 

(C)                               Guarantor shall be in a material non-payment default (beyond any applicable notice and cure periods) under any of its Indebtedness which default results in the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness with an asserted damage claim in excess of the Guarantor Threshold and Seller fails to repurchase all Purchased Assets within one (1) Business Day thereafter.

 

(xi)                              Judgment.  A final non appealable judgment by any competent court in the United States of America for the payment of money shall have been (A) rendered against any Seller in an amount greater than the Seller Threshold or (B) rendered against Guarantor in an amount greater than the Guarantor Threshold, and in each case, such judgment remains undischarged or unpaid, unless the execution of such judgment is stayed by posting of cash, bond or other collateral acceptable to Purchaser in the amount of such judgment within thirty (30) days after the entry thereof.

 

(xii)                           ERISA.  Seller shall violate the representations and warranties contained in Article 9(aa) (ERISA).

 

(xiii)                        Ownership; Security Interest.  If (i) any Transaction is recharacterized as a secured financing, rather than a “securities contract”, as that term is defined in Section 741 of Title 11 of the United States Code, or (ii) if the Transaction Documents with respect to any Transaction shall for any reason cease to create and maintain a valid first priority security interest in favor of Purchaser in any of the Collateral.

 

(xiv)                       Government or Regulatory Action.   Any Governmental Authority, or agency, any person, agency or entity acting at the direction of any Governmental Authority or any regulatory or self-regulatory authority shall (1) have taken any action to displace the management of Seller in any material respect or curtail its authority in any material respect in the conduct of the business of Seller and such action has not been dismissed or stayed within thirty (30) days or (2) have taken any action to remove, limit, restrict, suspend or terminate the rights, privileges, or operations of Seller or Guarantor.

 

(xv)                          Conveyance of Assets.  Any conveyance, transfer or disposal of all or substantially all assets of Guarantor to any Person.

 

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(xvi)                       Change of Control.  A Change of Control shall occur without the prior written consent of Purchaser.

 

(xvii)                    Representations.  Any representation, warranty or certification made by any Seller Party or any Servicer that is an Affiliate of any Seller Party to Purchaser under this Agreement or any Transaction Document (other than any representation contained in Article 9(s)) shall have been incorrect or untrue when made or repeated or deemed to have been made or repeated in any material respect and, to the extent that such incorrect or untrue representation is capable of being cured by Seller, such breach is not cured by Seller within five (5) Business Days after the earlier of receipt of written notice thereof from Purchaser or Seller’s Knowledge of such incorrect or untrue representation.

 

(xviii)                 Guarantor Breach.  The breach by Guarantor of the covenants made by it in Article V(j) (Limitation on Distributions) or Article V(l) (Financial Covenants) of the Guaranty.

 

(xix)                       Merger; Consolidation.  A merger or consolidation of Seller or Guarantor shall occur and either Guarantor and/or an Affiliate of Guarantor is not the direct or indirect controlling surviving entity.

 

(xx)                          Sale of Assets.  The sale or transfer of all or substantially all assets of Seller or Guarantor to any person or entity other than an Affiliate of Seller or Guarantor other than sales of assets of Seller in accordance with the Transaction Documents.

 

(xxi)                       Other Covenant Default.  If Seller, or any Servicer that is an Affiliate of Seller, shall breach or fail to perform any of the terms, covenants or obligations under this Agreement or any other Transaction Document, other than as specifically otherwise referred to in this definition of “Event of Default”, and if such breach or failure is susceptible to cure, such breach or failure is not remedied within ten (10) Business Days after the earlier of (A) delivery of notice thereof to Seller by Purchaser or (B) Knowledge on the part of Seller of such breach; provided, however, that if such breach is not reasonably susceptible of cure within such ten (10) Business Day period, then, provided that Seller commences within such ten (10) Business Day period and diligently pursues a cure, such ten (10) Business Day period shall be extended as reasonably necessary to complete the cure thereof for a period not to exceed thirty (30) days.

 

(b)                                 Remedies.  Seller hereby appoints Purchaser as attorney-in-fact of Seller for the purpose of taking any action and executing or endorsing any instruments that Purchaser may deem necessary or advisable to accomplish the purposes of this Agreement, which appointment as attorney-in-fact is irrevocable and coupled with an interest.  If an Event of Default shall occur and be continuing with respect to Seller, the following rights and remedies shall be available to Purchaser:

 

(i)                                     At the option of Purchaser, the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, immediately occur (such date, the “Accelerated Repurchase Date”).

 

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(ii)                                  If Purchaser exercises or is deemed to have exercised the option referred to in Article 13(b)(i):

 

(A)                               Seller’s obligations hereunder to repurchase all Purchased Assets shall become immediately due and payable on and as of the Accelerated Repurchase Date and Purchaser may immediately terminate all Transactions pursuant to the Transaction Documents, in each case, without notice to Seller;

 

(B)                               to the extent permitted by applicable law, the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall be increased by the aggregate amount obtained by daily application of, on a 360 day per year basis for the actual number of days during the period from and including the Accelerated Repurchase Date to, but excluding, the date of payment of the Repurchase Price (as so increased), (x) the Pricing Rate for such Transaction multiplied by (y) the Repurchase Price for such Transaction (decreased by (I) any amounts actually remitted to Purchaser by the Account Bank or Seller pursuant to this Agreement and applied to such Repurchase Price, and (II) any amounts applied to the Repurchase Price pursuant to Article 13(b)(ii)(D));

 

(C)                               the Custodian shall, upon the request of Purchaser, deliver to Purchaser all instruments, certificates and other documents then held by the Custodian relating to the Purchased Assets; and

 

(D)                               Purchaser may in accordance with Requirements of Law (1) immediately  after the Accelerated Repurchase Date, sell any and all of the Purchased Assets in its sole discretion, and/or (2) in its sole and absolute discretion elect, in lieu of selling all or a portion of such Purchased Assets, to give Seller credit for such Purchased Assets in an amount equal to the fair market value of such Purchased Assets, as determined by Purchaser in its sole discretion, against the aggregate unpaid Repurchase Price for such Purchased Assets and any other amounts owing by Seller under the Transaction Documents.  The proceeds of any disposition of Purchased Assets effected pursuant to sub-clause (1) above shall be applied by Purchaser in the order and manner set forth in Article 5(i).

 

(iii)                               The parties acknowledge and agree that (A) the Purchased Assets subject to any Transaction hereunder are not instruments traded in a recognized market, (B) in the absence of a generally recognized source for prices or bid or offer quotations for any Purchased Asset, the Purchaser may establish the source therefor in its sole and absolute discretion and (C) all prices, bids and offers shall be determined together with accrued Income (except to the extent contrary to market practice with respect to the relevant Purchased Assets).  The parties recognize that it may not be possible to purchase or sell all of the Purchased Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets may not be liquid.  In view of the nature of the Purchased Assets, the parties agree that liquidation of a Transaction or the Purchased Assets does not require a public purchase or sale and that a good faith private purchase or sale shall be deemed to have been made in a commercially reasonable manner.  Accordingly, Purchaser may elect, in its sole and

 

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absolute discretion, the time and manner of liquidating any Purchased Assets, and nothing contained herein shall (A) obligate Purchaser to liquidate any Purchased Assets on the occurrence and during the continuance of an Event of Default or to liquidate all of the Purchased Assets in the same manner or on the same Business Day or (B) constitute a waiver of any right or remedy of Purchaser.

 

(iv)                              Seller shall be liable to Purchaser and its Affiliates and shall indemnify Purchaser and its Affiliates for the amount (including in connection with the enforcement of this Agreement) of all losses, reasonable out-of-pocket costs and expenses, including reasonable legal fees and expenses, actually incurred by Purchaser in connection with or as a consequence of an Event of Default.

 

(v)                                 Purchaser shall have, in addition to its rights and remedies under the Transaction Documents, all of the rights and remedies provided by applicable federal, state, foreign (where relevant), and local laws (including, without limitation, if the Transactions are recharacterized as secured financings, the rights and remedies of a secured party under the UCC, to the extent that the UCC is applicable, and the right to offset any mutual debt and claim), in equity, and under any other agreement between Purchaser and Seller.  Without limiting the generality of the foregoing, Purchaser shall be entitled to set off the proceeds of the liquidation of the Purchased Assets against all of Seller’s obligations to Purchaser under this Agreement, without prejudice to Purchaser’s right to recover any deficiency.

 

(vi)                              Purchaser may exercise any or all of the remedies available to Purchaser immediately upon the occurrence of an Event of Default and at any time during the continuance thereof.  All rights and remedies arising under the Transaction Documents, as amended from time to time, are cumulative and not exclusive of any other rights or remedies that Purchaser may have.

 

(vii)                           Purchaser may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives any defenses Seller might otherwise have to require Purchaser to enforce its rights by judicial process.  Seller also waives, to the extent permitted by law, any defense Seller might otherwise have arising from the use of nonjudicial process, disposition of any or all of the Purchased Assets, or from any other election of remedies.  Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s length.

 

(c)                                  Set-off.  In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, Seller hereby grants to Purchaser and its Affiliates a right of set-off, without notice to Seller, any sum or obligation (whether or not arising under this Agreement, whether matured or unmatured, whether or not contingent and irrespective of the currency, place of payment or booking office of the sum or obligation) owed by Seller to Purchaser or any Affiliate of Purchaser against (i) any sum or obligation (whether or not arising under this Agreement, whether matured or unmatured, whether or not contingent and irrespective of the currency, place of payment or booking office of the sum or obligation) owed by Purchaser or its Affiliates to Seller and (ii) any and all deposits (general or specified), monies,

 

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credits, securities, collateral or other property of Seller and the proceeds therefrom, now or hereafter held or received for the account of Seller (whether for safekeeping, custody, pledge, transmission, collection, or otherwise) by Purchaser or its Affiliates or any entity under the control of Purchaser or its Affiliates and its respective successors and assigns (including, without limitation, branches and agencies of Purchaser, wherever located).

 

Purchaser and its Affiliates are hereby authorized at any time and from time to time upon the occurrence and during the continuance of an Event of Default, without notice to Seller, to set-off, appropriate, apply and enforce such right of set-off against any and all items hereinabove referred to against any amounts owing to Purchaser or its Affiliates by Seller under the Transaction Documents, irrespective of whether Purchaser or its Affiliates shall have made any demand hereunder and although such amounts, or any of them, shall be contingent or unmatured and regardless of any other collateral securing such amounts.  If a sum or obligation is unascertained, Purchaser may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.  Nothing in this Article 13(c) shall be effective to create a charge or other security interest. This Article 13(c) shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other rights to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).

 

ANY AND ALL RIGHTS TO REQUIRE PURCHASER OR ITS AFFILIATES TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL OR PURCHASED ITEMS THAT SECURE THE AMOUNTS OWING TO PURCHASER OR ITS AFFILIATES BY SELLER UNDER THE TRANSACTION DOCUMENTS, PRIOR TO EXERCISING THEIR RIGHT OF SET-OFF WITH RESPECT TO SUCH MONIES, SECURITIES, COLLATERAL, DEPOSITS, CREDITS OR OTHER PROPERTY OF SELLER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER.

 

ARTICLE 14
 SINGLE AGREEMENT

 

Purchaser and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder (as well as the grant of the security interest in Article 6 hereof) constitute a single business and contractual relationship and have been made in consideration of each other.  Accordingly, each of Purchaser and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set-off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.

 

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ARTICLE 15
 RECORDING OF COMMUNICATIONS

 

PURCHASER AND SELLER SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) FROM TIME TO TIME TO MAKE OR CAUSE TO BE MADE TAPE RECORDINGS OF COMMUNICATIONS BETWEEN ITS EMPLOYEES, IF ANY, AND THOSE OF THE OTHER PARTY WITH RESPECT TO TRANSACTIONS; PROVIDED, HOWEVER, THAT SUCH RIGHT TO RECORD COMMUNICATIONS SHALL BE LIMITED TO COMMUNICATIONS OF EMPLOYEES TAKING PLACE ON THE TRADING FLOOR OF THE APPLICABLE PARTY.  PURCHASER AND SELLER HEREBY CONSENT TO THE ADMISSIBILITY OF SUCH TAPE RECORDINGS IN ANY COURT, ARBITRATION, OR OTHER PROCEEDINGS, AND AGREES THAT A DULY AUTHENTICATED TRANSCRIPT OF SUCH A TAPE RECORDING SHALL BE DEEMED TO BE A WRITING CONCLUSIVELY EVIDENCING THE PARTIES’ AGREEMENT.

 

ARTICLE 16
 NOTICES AND OTHER COMMUNICATIONS

 

Unless otherwise provided in this Agreement, all notices, consents, approvals and requests required or permitted hereunder shall be given in writing and shall be effective for all purposes if sent by (a) hand delivery, with proof of delivery, (b) certified or registered United States mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of delivery, (d) by telecopier (with answerback acknowledged) provided that such telecopied notice must also be delivered by one of the means set forth in (a), (b) or (c) above, or (e) by electronic mail provided that such electronic mail notice must also be delivered by one of the means set forth in (a), (b) or (c) above, to the address and person specified in Exhibit I hereto or to such other address and person as shall be designated from time to time by any party hereto in a written notice to the other parties hereto in the manner provided for in this Article 16.  A notice shall be deemed to have been given: (v) in the case of hand delivery, at the time of delivery, (w) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day, (x) in the case of expedited prepaid delivery, upon the first attempted delivery on a Business Day, (y) in the case of telecopier, upon receipt of answerback confirmation, provided that such telecopied notice was also delivered as required in this Article 16 or (z) in the case of electronic mail, upon receipt of a verbal or electronic communication confirming receipt thereof, provided that such electronic mail notice was also delivered as required in this Article 16.  A party receiving a notice that does not comply with the technical requirements for notice under this Article 16 may elect to waive any deficiencies and treat the notice as having been properly given.

 

ARTICLE 17
 ENTIRE AGREEMENT; SEVERABILITY

 

This Agreement shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions.  Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

 

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ARTICLE 18
 NON-ASSIGNABILITY

 

(a)                                 No Seller Party may assign any of its rights or obligations under this Agreement or the other Transaction Documents without the prior written consent of Purchaser (which may be granted or withheld in Purchaser’s sole and absolute discretion) and any attempt by any Seller Party to assign any of its rights or obligations under this Agreement or any other Transaction Document without the prior written consent of Purchaser shall be null and void.

 

(b)                                 Purchaser may, upon prior written notice to Seller (so long as no Event of Default has occurred and is continuing) but without consent of Seller, at any time and from time to time, assign or participate some or all of its rights and obligations under the Transaction Documents and/or under any Transaction (subject to Article 8(a)) to any Person and, in connection therewith, may bifurcate or allocate (i.e. senior/subordinate) amounts due to Purchaser; provided, that, so long as no Event of Default has occurred and is continuing, (i) such Person shall be a Qualified Transferee, (ii) Purchaser shall act as exclusive agent for all assignees or participants with respect to any such assignment or participation in any dealings with Seller (subject to the immediately succeeding sentence) with regard to this Agreement and the Transactions and (iii) Seller’s obligations hereunder are not increased and its rights hereunder are not impaired without Seller’s written consent.  In connection with any sale, assignment or transfer by Purchaser hereunder, other than a sale, assignment, transfer or participation of one hundred percent (100%) of its rights and obligations under the Transaction Documents, provided that no Event of Default has occurred and is continuing, Purchaser shall continue to control decision-making with respect to the Purchased Assets, determining whether to purchase any Eligible Asset in a Transaction and determining the Market Value of the Purchased Assets.  Seller agrees to cooperate with Purchaser in connection with any such assignment, transfer or sale of participating interest and to enter into such restatements of, and amendments, supplements and other modifications to, the Transaction Documents to which it is a party in order to give effect to such assignment, transfer or sale of participating interest.

 

(c)                                  Subject to the foregoing, the Transaction Documents and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. Nothing in the Transaction Documents, express or implied, shall give to any Person, other than the parties to the Transaction Documents and their respective successors, any benefit or any legal or equitable right, power, remedy or claim under the Transaction Documents.

 

(d)                                 Seller shall maintain a record of ownership (the “Register”) identifying the name and address of each assignee hereunder and the amount of each such assignee’s interest in the Purchased Assets, which Register is intended to be maintained in accordance with Section 5f.103-1(c) of the Treasury Regulations.  Transfers made pursuant to Article 18(b) shall be recorded upon such Register.  Such Register shall be available for inspection by Purchaser at any reasonable time and from time to time upon reasonable prior notice.  The entries in the Register shall be conclusive absent manifest error, and Seller and Purchaser shall treat each person whose name is recorded in the Register pursuant to the terms hereof as a Purchaser hereunder for all purposes of this Agreement.

 

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(e)                                  If Purchaser sells a participation with respect to its rights under this Agreement or under any other Transaction Document with respect to the Purchased Assets, Purchaser shall, acting for this purposes as an agent of the Seller, maintain a record of ownership (the “Participant Register”) identifying the name and address of each participant and the amount of each such participant’s interest in the Purchased Assets, provided that the Purchaser and any such other participant shall not have any obligation to disclose all or any portion of the Participation Register (including the identity of any participant or any information related to a participant’s interest in any Transaction Document) to any Person except to the extent necessary to establish that such interests are in registered form under Section 5f.103-1(c) of the Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error and Purchaser shall treat each Person whose name is recorded in the Participant Register as the owners of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

(f)                                   Purchaser shall cause each assignee, participant or other transferee of Purchaser to provide to Seller a properly completed and duly executed IRS form W-9, W-8BEN, W-8BEN-E, W-8ECI, W-8IMY, U.S. Tax Compliance Certificate and/or, as appropriate, other applicable forms as described by the IRS or other certifications reasonably requested by Seller for purposes of compliance with applicable withholding provisions pursuant to the Internal Revenue Code and underlying Treasury Regulations.  Purchaser and each assignee, participant or transferee hereby agrees to notify Seller of any change in circumstance that causes a form, certificate or document provided by it to Seller to no longer be true and to provide updated forms upon the obsolescence of any previously delivered form or promptly notify the Seller in writing of its legal inability to do so. Seller shall have no obligation to pay any additional amounts hereunder that may result from the tax status of any assignee, participant or transferee differing from the tax status of Purchaser.

 

ARTICLE 19
 GOVERNING LAW

 

THIS AGREEMENT (AND ANY CLAIM OR CONTROVERSY HEREUNDER) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

 

ARTICLE 20
  NO WAIVERS, ETC.

 

No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder.  No modification or waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto.

 

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ARTICLE 21
 INTENT

 

(a)                                 The parties intend and acknowledge that (i) each Transaction is a “repurchase agreement” as that term is defined in Section 101(47) of Title 11 of the United States Code, as amended (except insofar as the type of Assets subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a “securities contract” as that term is defined in Section 741(7) of the Bankruptcy Code (except insofar as the type of assets subject to such Transaction would render such definition inapplicable), (ii) each Purchased Asset constitutes either a “mortgage loan” or “an interest in a mortgage” as such terms are used in the Bankruptcy Code and (iii) all payments hereunder are deemed “margin payments” or settlement payments” as defined in the Bankruptcy Code.

 

(b)                                 The parties intend and acknowledge that either party’s right to cause the termination, liquidation or acceleration of, or to set-off or net termination values, payment amounts or other transfer obligations arising under, or in connection with, this Agreement or any Transaction hereunder or to exercise any other remedies pursuant to Article 13 is in each case a contractual right to cause or exercise such right as described in Sections 362(b)(6), 555  and 561 of the Bankruptcy Code.

 

(c)                                  The parties intend and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then this Agreement and each Transaction hereunder is a “qualified financial contract,” as that term is defined in the FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

 

(d)                                 The parties intend and acknowledge that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).

 

(e)                                  The parties intend and acknowledge that this Agreement constitutes a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code, and as used in Section 561 of the Bankruptcy Code and a “securities contract” with the meaning of Section 555 and Section 559 of the Bankruptcy Code.

 

(f)                                   The parties intend and acknowledge that any provisions hereof or in any other document, agreement or instrument that is related in any way to this Agreement shall be deemed “related to” this Agreement within the meaning of Section 741 of the Bankruptcy Code.  The parties intend and acknowledge that the pledge of the Related Credit Enhancement set forth in Article 6(a) to constitute “a security agreement or other arrangement or other credit enhancement” that is “related to” the Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A), and 741(7)(A)(xi) of the Bankruptcy Code.

 

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(g)                                  It is the intention of the parties that, for U.S. Federal, state and local income and franchise tax purposes and for accounting purposes, each Transaction constitute a financing to Seller (or any person from whom Seller is disregarded for U.S. federal income tax purposes), and that Seller (or any person from whom Seller is disregarded for U.S. federal income tax purposes) be (except to the extent that Purchaser shall have exercised its remedies following an Event of Default) the owner of the Purchased Assets for such purposes.  Unless prohibited by applicable law, Seller and Purchaser agree to treat the Transactions consistently as described in the preceding sentence, including on any and all filings with any U.S. Federal, state, or local taxing authority.

 

ARTICLE 22
 DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

 

The parties acknowledge that they have been advised that:

 

(a)                                 in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Exchange Act, the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder;

 

(b)                                 in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and

 

(c)                                  in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable.

 

ARTICLE 23
 CONSENT TO JURISDICTION; WAIVERS

 

(a)                                 Each party irrevocably and unconditionally (i) submits to the exclusive jurisdiction of any United States Federal or New York State court sitting in Manhattan, and any appellate court from any such court, solely for the purpose of any suit, action or proceeding brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement and (ii) waives, to the fullest extent it may effectively do so, any defense of an inconvenient forum to the maintenance of such action or proceeding in any such court and any right of jurisdiction on account of its place of residence or domicile.

 

(b)                                 To the extent that either party has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set off or any legal process (whether service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, such party hereby irrevocably waives and agrees not to plead or claim such immunity in respect of any action brought to enforce its obligations under this Agreement or relating in any way to this Agreement or any Transaction under this Agreement.

 

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(c)                                  The parties hereby irrevocably waive, to the fullest extent each may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding and irrevocably consent to the service of any summons and complaint and any other process by the mailing of copies of such process to them at their respective address specified herein.  The parties hereby agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Article 23 shall affect the right of either party to serve legal process in any other manner permitted by law or affect the right of either party to bring any action or proceeding against the other party or its property in the courts of other jurisdictions.

 

(d)                                 EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.

 

(e)                                  EACH PARTY HEREBY WAIVES ANY RIGHT TO CLAIM OR RECOVER FROM THE OTHER PARTY OR ANY INDEMNIFIED PARTY ANY SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES, WHETHER THE LIKELIHOOD OF SUCH DAMAGES WAS KNOWN AND REGARDLESS OF THE FORM OF THE CLAIM OF ACTION.

 

ARTICLE 24
 NO RELIANCE

 

Seller hereby acknowledges, represents and warrants to Purchaser that, in connection with the negotiation of, the entering into, and the performance under, the Transaction Documents and each Transaction thereunder:

 

(a)                                 it is not relying (for purposes of making any investment decision or otherwise) upon any advice, counsel or representations (whether written or oral) of Purchaser, other than the representations expressly set forth in the Transaction Documents;

 

(b)                                 it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and it has made its own investment, hedging and trading decisions (including decisions regarding the suitability of any Transaction) based upon its own judgment and upon any advice from such advisors as it has deemed necessary and not upon any view expressed by Purchaser;

 

(c)                                  it is a sophisticated and informed Person that has a full understanding of all the terms, conditions and risks (economic and otherwise) of the Transaction Documents and each Transaction thereunder and is capable of assuming and willing to assume (financially and otherwise) those risks;

 

(d)                                 it is entering into the Transaction Documents and each Transaction thereunder for the purposes of managing its borrowings or investments or hedging its assets or liabilities and not for purposes of speculation;

 

66

 

(e)                                  no joint venture exists between Purchaser and any Seller Party; and

 

(f)                                   Purchaser is not acting as a fiduciary or financial, investment or commodity trading advisor for any Seller Party and Purchaser has not given to any Seller Party (directly or indirectly through any other Person) any assurance, guarantee or representation whatsoever as to the merits (either legal, regulatory, tax, business, investment, financial accounting or otherwise) of the Transaction Documents or any Transaction thereunder.

 

ARTICLE 25
 INDEMNITY AND EXPENSES

 

(a)                                 Seller hereby agrees to indemnify Purchaser, Purchaser’s Affiliates and each of their officers, directors, employees and agents (“Indemnified Parties”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, fees, reasonable, out-of-pocket costs and expenses or disbursements (including  reasonable and documented  attorneys’ fees and disbursements of outside counsel) (all of the foregoing included amounts, collectively “Indemnified Amounts”)  that may at any time (including, without limitation, such time as this Agreement shall no longer be in effect and the Transactions shall have been repaid in full) be imposed on or asserted against any Indemnified Party in any way arising out of or in connection with, or relating to, or as a result of, this Agreement, the other Transaction Documents, any Event of Default or any Transaction or any action taken or omitted to be taken by any Indemnified Party under or in connection with any of the foregoing; provided that Seller shall not be liable for Indemnified Amounts resulting from the gross negligence or willful misconduct of any Indemnified Party and, provided further, that this Article 25 shall have no application with respect to Taxes other than in connection with any non-Tax claim.  Without limiting the generality of the foregoing, Seller agrees to hold Purchaser harmless from and indemnify Purchaser against all Indemnified Amounts with respect to all Purchased Assets relating to or arising out of any violation or alleged violation of any environmental law, rule or regulation or any consumer credit laws, including without limitation ERISA, the Truth in Lending Act and/or the Real Estate Settlement Procedures Act.  In any suit, proceeding or action brought by Purchaser in connection with any Purchased Asset for any sum owing thereunder, or to enforce any provisions of any Purchased Asset, Seller shall save, indemnify and hold Purchaser harmless from and against all Indemnified Amounts suffered by reason of any defense, set-off, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by any Seller Party or any Affiliate thereof of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from Seller.  Seller also agrees to reimburse Purchaser as and when billed by Purchaser for all Purchaser’s out-of-pocket costs and expenses incurred in connection with the enforcement or the preservation of Purchaser’s rights under any Transaction Document or Transaction, including without limitation the reasonable and documented fees and disbursements of its counsel.  Seller hereby acknowledges that the obligations of Seller hereunder are recourse obligations of Seller.

 

(b)                                 Seller agrees to pay or reimburse on demand all of Purchaser’s reasonable costs and expenses, including, without limitation, the reasonable fees and expenses of accountants, attorneys and advisors, incurred in connection with (i) the preparation, negotiation, execution and consummation of, and any amendment, supplement or modification to, any Transaction Document

 

67

 

or any Transaction thereunder, whether or not such Transaction Document (or amendment thereto) or such Transaction is ultimately consummated, (ii) the consummation and administration of any Transaction, (iii) any enforcement of any of the provisions of the Transaction Documents, any preservation of the Purchaser’s rights under the Transaction Documents or any performance by Purchaser of any obligations of Seller in respect of any Purchased Asset, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement in respect of any of the Collateral and for the custody, care or preservation of the Collateral (including insurance, filing and recording costs) and defending or asserting rights and claims of Purchaser in respect thereof, by litigation or otherwise, (iv) the maintenance of the Collection Account and registering the Collateral in the name of Purchaser or its nominee, (v) any default by Seller in repurchasing the Purchased Asset after Seller has given a notice in accordance with Article 3(e) of an Early Repurchase Date, (vi) any payment of the Repurchase Price on any day other than a Remittance Date or conversion to the Alternative Rate in accordance with Article 3(g) on any day other than a Pricing Rate Determination Date (including in each case, without limitation, actual breakage costs incurred by Purchaser as a consequence of terminating any hedging transactions entered into by Purchaser in relation to the Purchased Asset) (“Breakage Costs”), (vii) any failure by Seller to sell any Eligible Asset to Purchaser on the Purchase Date thereof, (viii) any actions taken to perfect or continue any lien created under any Transaction Document, (ix) Purchaser owning any Purchased Asset or other Purchased Item and/or (x) any due diligence performed by Purchaser in accordance with Article 26.  All such expenses shall be recourse obligations of Seller to Purchaser under this Agreement.  A certificate as to such costs and expenses, setting forth the calculations thereof shall be conclusive and binding upon Seller absent manifest error.

 

(a)                                 This Article 25 shall survive termination of this Agreement and the repurchase of all Purchased Assets.

 

ARTICLE 26
 DUE DILIGENCE

 

(a)                                 Seller acknowledges that Purchaser has the right to perform continuing due diligence reviews with respect to the Purchased Assets, the Seller Parties and Servicer for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise.  Seller agrees that upon reasonable prior notice (unless an Event of Default has occurred and is continuing, in which case no prior notice shall be required), Seller shall provide (or shall cause any other Seller Party or Servicer, as applicable, to provide) reasonable access to Purchaser and any of its agents, representatives or permitted assigns to the offices of Seller, such other Seller Party or Servicer, as the case may be, during normal business hours and permit them to examine, inspect, and make copies and extracts of the Purchased Asset Files, Servicing Records and any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession or under the control of such party; provided, that prior to the occurrence and continuance of an Event of Default, notwithstanding anything in this Agreement to the contrary, Purchaser shall not contact any Mortgagor or Mezzanine Borrower of an Eligible Asset, any related sponsor or other obligor, any related tenant or any other loan party with respect to a proposed Transaction or a Purchased Asset, without Seller’s prior consent.

 

(b)                                 Seller agrees that it shall, promptly upon reasonable request of Purchaser, deliver (or shall cause to be delivered) to Purchaser and any of its agents, representatives or permitted

 

68

 

assigns copies of any documents permitted to be reviewed by Purchaser in accordance with Article 26(a).

 

(c)                                  Seller agrees to make available (or to cause any other Seller Party or Servicer, as applicable, to make available) to Purchaser and any of its agents, representatives or permitted assigns (i) in person at the time of any inspection pursuant to Article 26(a) or (ii) upon prior written notice (unless an Event of Default has occurred and is continuing, in which case no prior notice shall be required and there shall be no limitation on frequency), by phone, as applicable, a knowledgeable financial or accounting officer or asset manager, as applicable, of Seller, such other Seller Party or Servicer, as the case may be, for the purpose of answering questions about any of the foregoing Persons, or any other matters relating to the Transaction Documents or any Transaction that Purchaser wishes to discuss with such Person.

 

(d)                                 Without limiting the generality of the foregoing, Seller acknowledges that Purchaser may enter into Transactions with Seller based solely upon the information provided by Seller to Purchaser and the representations, warranties and covenants contained herein, and that Purchaser, at its option, has the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Assets.  Purchaser may underwrite such Purchased Assets itself or engage a third-party underwriter to perform such underwriting.  Seller agrees to cooperate with Purchaser and any third party underwriter in connection with such underwriting, including, but not limited to, providing Purchaser and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession, or under the control, of any Seller Party or any Affiliate thereof.

 

(e)                                  Seller hereby acknowledges and agrees that Purchaser shall have the right to commission and order an Appraisal of any Mortgaged Property at any time and from time to time, provided, however, that Seller shall not be responsible for the costs and expenses incurred by Purchaser in obtaining more than one Appraisal of any Mortgaged Property in any twelve (12) month period.  Seller shall cooperate with Purchaser in connection with the commission or order of any Appraisal by Purchaser, and Seller shall use commercially reasonable efforts to cause the applicable Mortgagor or Mezzanine Borrower to cooperate with Purchaser in obtaining any such Appraisal, including, without limitation, by providing Purchaser with access to the Mortgaged Property.

 

(f)                                   Seller agrees to reimburse Purchaser on demand for any and all reasonable out-of-pocket costs and expenses (including, without limitation, the reasonable fees and expenses of counsel) incurred by Purchaser in connection with its due diligence activities pursuant to this Article 26.

 

ARTICLE 27
 SERVICING

 

(a)                                 The parties hereto agree and acknowledge that the Purchased Assets are sold to Purchaser on a “servicing released” basis and Purchaser is the sole owner of all Servicing Rights so long as the Purchased Assets are subject to this Agreement.  Notwithstanding the foregoing, Seller shall be granted a revocable license (which license shall automatically be revoked (i) every thirty (30) days unless Purchaser provides written notice to Seller that such license is extended for

 

69

 

another thirty (30) days, which notice, if given, shall be included in the monthly remittance notice delivered to Account Bank and Servicer, or (ii) upon the occurrence of an Event of Default) to cause Servicer to service the Purchased Assets, and Seller shall, at Seller’s sole cost and expense, cause the Servicer to servicer the Purchased Assets in accordance with the Servicing Agreement and this Article 27 and for the benefit of Purchaser.  Notwithstanding the foregoing, Seller shall not take any Significant Modification of any Purchased Asset without first having given prior notice thereof to Purchaser in each such instance and receiving the prior written consent of Purchaser.

 

(b)                                 The obligation of Servicer (or Seller to cause Servicer) to service any of the Purchased Assets shall cease, at Purchaser’s option, upon the earliest of (i) Purchaser’s termination of Servicer in accordance with Article 27(c), (ii) Purchaser not extending Seller’s revocable licenses in accordance with Article 27(a) or (iii) the transfer of servicing to any other Servicer and the assumption of such servicing by such other Servicer.  Seller agrees to cooperate with Purchaser in connection with any termination of Servicer.  Upon any termination of Servicer, if no Event of Default shall have occurred and be continuing, Seller shall at its sole cost and expense transfer the servicing of the affected Purchased Assets to another Servicer designated by Purchaser as expeditiously as possible.

 

(c)                                  Purchaser may, in its sole and absolute discretion, terminate Servicer or any sub-servicer with respect to any Purchased Asset (i) upon the occurrence of a default by the Servicer under the Servicing Agreement, with respect to the Purchased Assets or Servicer Letter (as applicable) in each case, beyond applicable notice and cure periods, or (ii) during the continuance of an Event of Default, without payment of any penalty or termination fee.

 

(d)                                 Except as expressly permitted under the Servicing Agreement, Seller shall not, and shall not permit Servicer to, employ any other sub-servicers to service the Purchased Assets without the prior written approval of Purchaser, which approval shall not be unreasonably withheld conditioned or delayed.  If the Purchased Assets are serviced by a sub-servicer, Seller shall irrevocably assign all rights, title and interest in the servicing agreements with such sub-servicer to Purchaser.

 

(e)                                  Seller shall cause Servicer and any sub-servicer to service the Purchased Assets in accordance with Accepted Servicing Practices.  Seller shall cause Servicer (at the request of Purchaser) and any sub-servicers engaged by Seller to execute a letter agreement with Purchaser substantially in the form attached as Exhibit IX hereto (a “Servicer Letter”) acknowledging Purchaser’s security interest in the Purchased Assets and agreeing to remit all Income received with respect to the Purchased Asset to the Collection Account in accordance with Article 5(e) or as otherwise directed by Purchaser in accordance with the Servicer Letter.

 

(f)                                   Seller agrees that Purchaser is the owner of all servicing records relating to the Purchased Assets, including but not limited to the Servicing Agreement, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of Purchased Assets (the “Servicing Records”) so long as the Purchased Assets are subject to this Agreement.  Seller covenants to (or to cause Servicer to)

 

70

 

safeguard such Servicing Records and to deliver them promptly to Purchaser or its designee (including the Custodian) at Purchaser’s request.

 

(g)                                  The payment of servicing fees shall be solely the responsibility of Seller.

 

ARTICLE 28
 MISCELLANEOUS

 

(a)                                 All rights, remedies and powers of Purchaser hereunder and in connection herewith are irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all other rights, remedies and powers of Purchaser whether under law, equity or agreement.  In addition to the rights and remedies granted to it in this Agreement, to the extent this Agreement is determined to create a security interest, Purchaser shall have all rights and remedies of a secured party under the UCC.

 

(b)                                 The Transaction Documents may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.

 

(c)                                  The headings in the Transaction Documents are for convenience of reference only and shall not affect the interpretation or construction of the Transaction Documents.

 

(d)                                 Each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or be invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

(e)                                  This Agreement together with the other Transaction Documents contains a final and complete integration of all prior expressions by the parties with respect to the subject matter hereof and thereof and shall constitute the entire agreement among the parties with respect to such subject matter, superseding all prior oral or written understandings.

 

(f)                                   The parties understand that this Agreement is a legally binding agreement that may affect such party’s rights.  Each party represents to the other that it has received legal advice from counsel of its choice regarding the meaning and legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received from it.

 

(g)                                  Should any provision of this Agreement require judicial interpretation, it is agreed that a court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against any Person by reason of the rule of construction that a document is to be construed more strictly against the Person who itself or through its agent prepared the same, it being agreed that all parties have participated in the preparation of this Agreement.

 

(h)                                 Unless otherwise specifically enumerated, wherever pursuant to this Agreement Purchaser exercises any right given to it to consent or not consent, or to approve or disapprove, or any arrangement or term is to be satisfactory to, Purchaser in its sole and absolute discretion,

 

71

 

Purchaser shall decide to consent or not consent, or to approve or disapprove or to decide that arrangements or terms are satisfactory or not satisfactory, in its sole and absolute discretion and such decision by Purchaser shall be final and conclusive.

 

(i)                                     Purchaser hereby acknowledges and agrees that except to the extent of the Guaranteed Obligations (as defined in the Guaranty) of the Guarantor pursuant to the Guaranty, and subject to the terms, conditions and limitations set forth therein, (a) all obligations of Seller under this Agreement and the other Transaction Documents are recourse obligations solely of Seller, and (b) none of the obligations of Seller under this Agreement and the other Transaction Documents are recourse to the  Guarantor or any of their Affiliates, subsidiaries, members, partners, officers, directors or personnel.

 

(j)                                    All information regarding the terms set forth in any of the Transaction Documents, the Transactions, or either party hereto or its Affiliates received in connection with the Transactions (the “Confidential Information”) shall be kept confidential and shall not be disclosed by either Seller or Purchaser to any Person except (a) to the Affiliates of such party or its or their respective directors, officers, employees, agents, accountants, attorneys, advisors and other representatives (collectively, “Representatives”) who are informed of the confidential nature of such information and instructed to keep it confidential, (b) to the extent requested by any regulatory authority or Governmental Authority or required by Requirements of Law (including any disclosures required pursuant to any subpoena, legal process or other court or regulatory authority order), (c) to the extent required to be included in the financial statements of either Seller or Purchaser or their respective Affiliates, (d) to the extent required to exercise any rights or remedies under the Transaction Documents or Purchased Asset Documents, (e) to the extent required to consummate and administer a Transaction, and (f) to any actual or prospective holder of a Participation Interest or other Person which agrees to comply with this Article 28(j); provided, however, that, except for disclosures made pursuant to clause (f) of this sentence, no such disclosure made with respect to any Transaction Document shall include a copy of such Transaction Document to the extent that a summary would suffice, but if it is necessary for a copy of any Transaction Document to be disclosed, all pricing and other economic terms set forth therein shall be redacted before disclosure.  In furtherance of the foregoing, Purchaser agrees to keep confidential all non-public information delivered by or on behalf of Seller or either Guarantor or any of their Affiliates and shall not disclose such information other than as permitted or required pursuant to the foregoing clauses (a) through (f), inclusive, except that, after the occurrence of an Event of Default, all such information relating solely to any Purchased Asset and the Collateral, but not, for the avoidance of doubt, any such information relating to Guarantor or any of its Affiliates, shall be automatically excluded from the provisions of this Article 28(j).  Notwithstanding anything in this Article 28(j) to the contrary, Confidential Information shall not include any information that (i) is or becomes generally available to the public through no fault of Purchaser or any of its Representatives in violation of this Article 28(j); (ii) is or becomes available to Purchaser or any of its Representatives on a non-confidential basis from a source other than Seller not known to Purchaser or its Representatives to be prohibited from disclosing such information by a contractual, legal or fiduciary obligation of confidentiality after due inquiry; (iii) is independently developed by Purchaser or any of its Representatives without use of or reliance on, either directly or indirectly, any Confidential Information; (iv) was known to or in the possession of Purchaser or any of its Representatives on a non-confidential basis, without appropriate documentary evidence thereof, prior to disclosure by Seller.

 

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[SIGNATURES FOLLOW]

 

73

 

IN WITNESS WHEREOF, the parties have executed this Agreement as a deed as of the day first written above.

 

	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
GP COMMERCIAL CB LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ John A. Taylor
    
	
 
    	
 
    	
Name:
    	
John A. Taylor
    
	
 
    	
 
    	
Title:
    	
President and CEO
    

 

[Signature Page to Master Repurchase Agreement]

 

 

	
 
    	
PURCHASER:
    
	
 
    	
 
    
	
 
    	
CITIBANK, N.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Richard B. Schlenger
    
	
 
    	
 
    	
Name:
    	
Richard B. Schlenger
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page to Master Repurchase Agreement]

 

 

EXHIBIT I

 

NAMES AND ADDRESSES FOR COMMUNICATIONS

 

	
Purchaser:
    	
 
    	
Citibank, N.A.
    
	
 
    	
 
    	
390 Greenwich Street
    
	
 
    	
 
    	
New York, New York 10013
    
	
 
    	
 
    	
Attn: 
    	
Richard Schlenger
    
	
 
    	
 
    	
Tel: 
    	
(212) 816-7806
    
	
 
    	
 
    	
Fax: 
    	
(212) 816-8307
    
	
 
    	
 
    	
Email: 
    	
richard.schlenger@citi.com
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
with copies to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Dechert LLP
    
	
 
    	
 
    	
Cira Centre
    
	
 
    	
 
    	
2929 Arch Street
    
	
 
    	
 
    	
Philadelphia, PA 19104
    
	
 
    	
 
    	
Attn: 
    	
Richard D. Jones
    
	
 
    	
 
    	
Tel: 
    	
(215) 994-3844
    
	
 
    	
 
    	
Fax: 
    	
(215) 655-2501
    
	
 
    	
 
    	
Email: 
    	
richard.jones@dechert.com
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
GP COMMERCIAL CB LLC
   601 Carlson Parkway, Suite 1400
   Minnetonka, MN 55305
    
	
 
    	
 
    	
Attn: 
   Tel: 
   Email: 
    	
General Counsel
   (212) 364-5500
   legal-gp@prcm.com
    
	
 
    	
 
    	

   and
    
   Sidley Austin LLP
   787 Seventh Avenue
   New York, New York 10019
    
	
 
    	
 
    	
Attn: 
   Tel: 
   Fax: 
   Email: 
    	
Robert L. Boyd, Esq.
   (212) 839-7352
   (212) 839-5599
   rboyd@sidley.com
    

 

Ex. I-1

 

EXHIBIT II

 

FORM OF TRANSACTION REQUEST

 

[DATE]

 

To:          Citibank, N.A.

 

Re:                             Master Repurchase Agreement, dated as of June 28, 2017 (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Repurchase Agreement”) by and among GP COMMERCIAL CB LLC and Citibank, N.A. (“Purchaser”).

 

Ladies and Gentlemen:

 

Pursuant to Article 3(a) of the Repurchase Agreement, the undersigned hereby requests that Purchaser enter into a Transaction with respect to the Eligible Asset(s) specified below in accordance with the other terms specified below.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Repurchase Agreement.

 

	
Eligible Asset(s):
    	
 
    	
As identified on attached Schedule 1
    
	
 
    	
 
    	
 
    
	
Aggregate Principal Amount of Eligible Asset(s):
    	
 
    	
As identified on attached Schedule 1
    
	
 
    	
 
    	
 
    
	
Governing Agreements:
    	
 
    	
As identified on attached Schedule 1
    
	
 
    	
 
    	
 
    
	
Requested Purchase Price:
    	
 
    	
$             
    
	
 
    	
 
    	
 
    
	
Purchase Price Percentage:
    	
 
    	
   %
    
	
 
    	
 
    	
 
    
	
Maximum Purchase Price Percentage:
    	
 
    	
   %
    
	
 
    	
 
    	
 
    
	
Amount of Seller’s Future Funding Obligations:
    	
 
    	
$
    
	
 
    	
 
    	
 
    
	
Amount of Purchaser’s Future Funding Advance   Obligations:
    	
 
    	
$
    
	
 
    	
 
    	
 
    
	
Requested Purchase Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Seller’s Wiring Instructions:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Bank Name:
    	
 
    	
 
    
	
ABA Number:
    	
 
    	
 
    
	
Account Number:
   Account Name:
   Attention:
    	
 
    	
 
    
	
Reference:
    	
 
    	
 
    

 

Ex. II-1

 

In connection with this request for a Transaction, the Requested Exceptions Report is attached as Schedule 2 hereto.  The applicable materials listed on the Due Diligence Checklist are also enclosed herewith or have been otherwise provided.

 

Ex. II-2

 

	
 
    	
GP COMMERCIAL CB LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
 
    
	
 
    	
 
    	
Name: 
    
	
 
    	
 
    	
Title:
    

 

Ex. II-3

 

Schedule 1 to Confirmation Statement

 

ASSET INFORMATION

 

	
Loan / Property Flag:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Number of Properties:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Borrower:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Property Name (for each property):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Property Address (for each property):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Origination Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Loan Amount:
    	
 
    	
 
    
	
Current   Principal Balance
    	
 
    	
$
    
	
Maximum Principal   Balance
    	
 
    	
$
    
	
 
    	
 
    	
 
    
	
Interest Rate:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Maturity Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Governing Agreements:
    	
 
    	
 
    

 

Ex. II-4

 

Schedule 2 to Confirmation Statement

 

REQUESTED EXCEPTIONS REPORT

 

INSTRUCTIONS:  LIST ANY AND ALL EXCEPTIONS TO THE REPRESENTATIONS AND WARRANTIES AND ANY OTHER ELIGIBILITY CRITERIA CONTAINED IN THE REPURCHASE AGREEMENT THAT ARE APPLICABLE TO THE PROPOSED ASSET(S).

 

Ex. II-5

 

EXHIBIT III

 

FORM OF CONFIRMATION STATEMENT

 

[DATE]

 

To:          GP COMMERCIAL CB LLC

 

Re:                             Master Repurchase Agreement, dated as of June 28, 2017 (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Repurchase Agreement”) by and among GP COMMERCIAL CB LLC and Citibank, N.A. (“Purchaser”).

 

Ladies and Gentlemen:

 

In accordance with Article 3(a) of the Repurchase Agreement, Purchaser is pleased to deliver this written CONFIRMATION of its agreement to enter into a Transaction with you pursuant to which Purchaser will purchase from you the Eligible Asset identified below on the terms set forth herein and in accordance with the Repurchase Agreement.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Repurchase Agreement.

 

	
Purchase Date:
    	
 
    	
          ,   20  
    
	
 
    	
 
    	
 
    
	
Eligible Asset(s):
    	
 
    	
As identified on attached Schedule 1
    
	
 
    	
 
    	
 
    
	
Aggregate Principal Amount of Eligible Asset(s):
    	
 
    	
As identified on attached Schedule 1
    
	
 
    	
 
    	
 
    
	
Governing Agreements:
    	
 
    	
As identified on attached Schedule 1
    
	
 
    	
 
    	
 
    
	
Repurchase Date:
    	
 
    	
          ,   20  
    
	
 
    	
 
    	
 
    
	
Purchase Price:
    	
 
    	
$
    
	
 
    	
 
    	
 
    
	
Initial Market Value of Purchased Asset:
    	
 
    	
$
    
	
 
    	
 
    	
 
    
	
Purchase Price Debt Yield
    	
 
    	
                  %
    
	
 
    	
 
    	
 
    
	
Pricing Rate:
    	
 
    	
LIBOR plus Applicable Spread of           basis points
    
	
 
    	
 
    	
 
    
	
Purchase Price Percentage:
    	
 
    	
     %
    
	
 
    	
 
    	
 
    
	
Maximum Purchase Price Percentage:
    	
 
    	
     %
    
	
 
    	
 
    	
 
    
	
Amount of Seller’s Future Funding Obligations:
    	
 
    	
$
    
	
 
    	
 
    	
 
    
	
Purchase Price LTV:
    	
 
    	
     %
    

 

Ex. III-1

 

	
Amount of Purchaser’s Future Funding Advance   Obligations:
    	
 
    	
$                     
    

 

[FOR FUTURE FUNDING ADVANCE DRAW, IF APPLICABLE][In addition to the satisfaction of all terms and conditions set forth in the Repurchase Agreement, the pending Transaction shall be subject to the following conditions precedent:]

 

[FUTURE FUNDING ADVANCE DRAW CONDITIONS PRECEDENT TO BE ADDED]

 

	
Seller’s Wiring   Instructions:
    	
 
    	
 
    
	
Bank Name:
    	
 
    	
 
    
	
ABA Number:
    	
 
    	
 
    
	
Account Number:
   Account Name:
   Attention:
    	
 
    	
 
    
	
Reference:
    	
 
    	
 
    

 

You hereby certify that the proposed Purchased Asset is an Eligible Asset and that the representations and warranties in Article 9 of the Repurchase Agreement (subject to other Transactions and subject to any exceptions set forth in the Requested Exceptions Report attached to the Transaction Request for the pending Transaction which Purchaser hereby acknowledges have been approved by Purchaser) are true correct and complete on and as of the Purchase Date for the pending Transaction in all material respects (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

 

Please evidence your agreement to proceed with the proposed Transaction by promptly returning to Purchaser a countersigned counterpart of this Confirmation.

 

	
 
    	
CITIBANK,   N.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:  
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
AGREED   AND ACKNOWLEDGED:
    	
 
    
	
 
    	
 
    
	
GP   COMMERCIAL CB LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:  
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
					

 

Ex. III-2

 

Schedule 1 to Confirmation Statement

 

ASSET INFORMATION

 

	
Loan / Property Flag:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Number of Properties:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Borrower:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Property Name (for each property):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Property Address (for each property):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Origination Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Loan Amount:
    	
 
    	
 
    
	
Current   Principal Balance
    	
 
    	
$                  
    
	
Maximum   Principal Balance
    	
 
    	
$                  
    
	
 
    	
 
    	
 
    
	
Interest Rate:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Maturity Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Governing Agreements:
    	
 
    	
 
    

 

Ex. III-3

 

EXHIBIT IV

 

AUTHORIZED REPRESENTATIVES OF SELLER

 

	
Name
    	
 
    	
Title
    	
 
    	
Specimen Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Ex. IV-1

 

EXHIBIT V

 

FORM OF POWER OF ATTORNEY

 

Know All Men by These Presents, that GP COMMERCIAL CB LLC, a Delaware limited liability company (“Seller”), does hereby appoint Citibank, N.A. (“Purchaser”), its attorney-in-fact to act in Seller’s name, place and stead, in any way that Seller could do with respect to (a) if determined by Purchaser in its sole discretion to be necessary or desirable in order to protect or perfect Purchaser’s rights, title or interest in or to the Purchased Assets and the Purchased Asset Documents pursuant to this Agreement (i) the completion of the endorsements of the Purchased Assets, including without limitation the Mortgage Notes, Mezzanine Notes, Assignments of Mortgages and Participation Certificates, and any transfer documents related thereto, (ii) the recordation of the Assignments of Mortgages and (iii) the preparation and filing, in form and substance satisfactory to Purchaser, of such financing statements, continuation statements, and other uniform commercial code forms, as Purchaser may from time to time, reasonably consider necessary to create, perfect, and preserve Purchaser’s security interest in the Purchased Assets and (b) upon the occurrence of an Event of Default, the enforcement of Seller’s rights under the Purchased Assets purchased by Purchaser pursuant to the Master Repurchase Agreement, dated as of June 28, 2017 (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and between Seller and Purchaser, and to take such other steps as may be necessary or desirable to enforce Purchaser’s rights against such Purchased Assets, the related Purchased Asset Files and the Servicing Records to the extent that Seller is permitted by law to act through an agent.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Repurchase Agreement.

 

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OR SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND SELLER ON ITS OWN BEHALF AND ON BEHALF OF SELLER’S ASSIGNS, HEREBY AGREES TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT AND ACTED AT THE DIRECTION OF PURCHASER.

 

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTION 1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

 

[SIGNATURE PAGE FOLLOWS]

 

Ex. V-1

 

IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be executed as a deed this     day of       , 20  .

 

	
 
    	
GP COMMERCIAL CB LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

	
STATE OF
    	
)
    
	
COUNTY OF
    	
)
    

 

On         , 20  , before me,                      , a Notary Public, personally appeared                    , who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of the                that the foregoing paragraph is true and correct.

 

	
WITNESS my hand and   official seal.
    
	
 
    
	
Signature
    	
 
    	
 
    
	
(Seal)
    	
 
    	
 
    

 

Ex. V-2

 

EXHIBIT VI

 

COVENANT COMPLIANCE CERTIFICATE

 

(attached)

 

Ex. VI-1

 

EXHIBIT VII

 

DUE DILIGENCE CHECKLIST

 

General Information

Asset Summary Report, including without limitation, material issues summary (credit and/or underwriting) and market analysis

Site Inspection Report

Maps and Photos

Summary of Qualified Transferee Requirements

 

Borrower/Sponsor Information

Credit Reports

Financial Statements

Tax Returns (to the extent obtained by the applicable Seller or required by the loan documents)

Borrower Structure or Org Chart

Bankruptcy and Foreclosure History

 

Property Information

Historical Operating Statements

Rent Rolls

Budget

Retail Sales Figures (to the extent obtained by the applicable Seller or required by the loan documents)

 

Leasing Information

Stacking Plan

Major Leases and Abstracts (to the extent abstracts are prepared or available)

Tenant Estoppels

Standard Lease Forms

SNDA’s

 

Third Party Reports(1) and Internal Reviews

Appraisals

Environmental Site Assessments

Engineering Reports

Environmental Reports (Phase I and II)

Insurance Review (including Evidence of Insurance if not otherwise included in Legal Binder)

Seismic Reports

Title Policy or final Pro Forma or binding “marked commitment”

Survey

Zoning Report

Flood Zone Certificates

 

For Hotel Assets

Hotel Franchise Compliance Reports

Hotel Franchise Agreement and Abstract

Hotel Franchise Comfort Letters

 

Documentation

Purchase and Sale Agreement

Closing Statement

Complete Legal Binder

Ground Lease and Abstract (to the extent abstracts are prepared or available)

Management Contract and Abstract (to the extent abstracts are prepared or available)

 

(1)  All third party reports must be (1) satisfactory to Purchaser in its sole discretion and (2) sufficient to cause Purchaser to be in compliance with all applicable regulatory requirements.

 

Ex. VII-1

 

EXHIBIT VIII

 

FORM OF MARGIN CALL NOTICE

 

[DATE]

 

Via Electronic Transmission

 

To:                             GP COMMERCIAL CB LLC

 

Re:                             Master Repurchase Agreement, dated as of June 28, 2017 (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and between GP COMMERCIAL CB LLC (“Seller”) and Citibank, N.A. (“Purchaser”).

 

Ladies and Gentlemen:

 

Pursuant to Article 4(a) of the Repurchase Agreement, Purchaser hereby notifies Seller that a Margin Deficit has occurred as set forth below.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Repurchase Agreement.

 

(a)                                 Aggregate Market Value of all Purchased Assets:        $          

(b)                                 Aggregate Margin Amount of all Purchased Assets:    $

 

A Margin Deficit exists when the amount in (a) above is less than the amount in (b) above.

 

(d)                                 Margin Deficit ((b) above minus (a) above):     $

 

WHEN A MARGIN DEFICIT EXISTS, SELLER IS REQUIRED TO CURE THE MARGIN DEFICIT SPECIFIED IN (d) ABOVE IN ACCORDANCE WITH THE REPURCHASE AGREEMENT AND WITHIN THE TIME PERIOD SPECIFIED IN ARTICLE 4(b) THEREOF.

 

	
 
    	
CITIBANK, N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Ex. VIII-1

 

EXHIBIT IX

 

FORM OF SERVICER LETTER

 

(attached)

 

Ex. IX-1

 

EXHIBIT X

 

REPRESENTATIONS AND WARRANTIES
 REGARDING EACH INDIVIDUAL PURCHASED ASSET

 

(attached)

 

Ex. XI-1Exhibit 10.5

 

EXECUTION VERSION

 

MASTER REPURCHASE AGREEMENT AND SECURITIES CONTRACT

 

 Dated as of June 28, 2017

 

 between

 

 GP COMMERCIAL WF LLC, as Seller

 

 and

 

 WELLS FARGO BANK, NATIONAL ASSOCIATION, as Buyer

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE 1   APPLICABILITY
    	
1
    
	
Section 1.01
    	
 
    	
Applicability
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 2   DEFINITIONS AND INTERPRETATION 
    	
1
    
	
Section 2.01
    	
 
    	
Definitions
    	
1
    
	
Section 2.02
    	
 
    	
Rules of Interpretation
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 3   THE TRANSACTIONS 
    	
32
    
	
Section 3.01
    	
 
    	
Procedures 
    	
32
    
	
Section 3.02
    	
 
    	
Transfer of Purchased   Assets; Servicing Rights
    	
34
    
	
Section 3.03
    	
 
    	
Maximum Facility Amount
    	
34
    
	
Section 3.04
    	
 
    	
Early Repurchase Date;   Mandatory Repurchases
    	
34
    
	
Section 3.05
    	
 
    	
Repurchase
    	
35
    
	
Section 3.06
    	
 
    	
Termination Date   Extension Options and Maximum Facility Amount Upsize Option 
    	
35
    
	
Section 3.07
    	
 
    	
Payment of Price   Differential and Fees 
    	
36
    
	
Section 3.08
    	
 
    	
Payment, Transfer and   Custody 
    	
36
    
	
Section 3.09
    	
 
    	
Repurchase Obligations   Absolute
    	
37
    
	
Section 3.10
    	
 
    	
Future Funding   Transaction
    	
38
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 4   MARGIN MAINTENANCE 
    	
39
    
	
Section 4.01
    	
 
    	
Margin Deficit
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 5   APPLICATION OF INCOME 
    	
40
    
	
Section 5.01
    	
 
    	
Waterfall Account
    	
40
    
	
Section 5.02
    	
 
    	
Before a Default or an   Event of Default
    	
40
    
	
Section 5.03
    	
 
    	
After Default or Event   of Default
    	
41
    
	
Section 5.04
    	
 
    	
Seller to Remain Liable
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 6   CONDITIONS PRECEDENT 
    	
41
    
	
Section 6.01
    	
 
    	
Conditions Precedent to   Initial Transaction
    	
41
    
	
Section 6.02
    	
 
    	
Conditions Precedent to   All Transactions
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 7   REPRESENTATIONS AND WARRANTIES OF SELLER 
    	
44
    
	
Section 7.01
    	
 
    	
Seller
    	
44
    
	
Section 7.02
    	
 
    	
Repurchase Documents
    	
45
    
	
Section 7.03
    	
 
    	
Solvency
    	
45
    
	
Section 7.04
    	
 
    	
Taxes
    	
45
    
	
Section 7.05
    	
 
    	
Financial Condition
    	
46
    
	
Section 7.06
    	
 
    	
True and Complete   Disclosure
    	
46
    
	
Section 7.07
    	
 
    	
Compliance with Laws
    	
46
    
	
Section 7.08
    	
 
    	
Compliance with ERISA
    	
47
    
	
Section 7.09
    	
 
    	
No Default or Material   Adverse Effect
    	
47
    
	
Section 7.10
    	
 
    	
Purchased Assets
    	
48
    

 

i

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
Section 7.11
    	
 
    	
Purchased Assets   Acquired from Transferors
    	
48
    
	
Section 7.12
    	
 
    	
Transfer and Security   Interest
    	
49
    
	
Section 7.13
    	
 
    	
No Broker
    	
49
    
	
Section 7.14
    	
 
    	
Reserved
    	
49
    
	
Section 7.15
    	
 
    	
Separateness
    	
49
    
	
Section 7.16
    	
 
    	
Investment Company Act
    	
49
    
	
Section 7.17
    	
 
    	
Other Indebtedness
    	
49
    
	
Section 7.18
    	
 
    	
Location of Books and   Records
    	
49
    
	
Section 7.19
    	
 
    	
Chief Executive Office;   Jurisdiction of Organization
    	
50
    
	
Section 7.20
    	
 
    	
Anti-Money Laundering   Laws and Anti-Corruption Laws
    	
50
    
	
Section 7.21
    	
 
    	
Sanctions
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 8   COVENANTS OF SELLER 
    	
50
    
	
Section 8.01
    	
 
    	
Existence; Governing   Documents; Conduct of Business
    	
50
    
	
Section 8.02
    	
 
    	
Compliance with Laws,   Contractual Obligations and Repurchase Documents
    	
51
    
	
Section 8.03
    	
 
    	
Structural Changes
    	
51
    
	
Section 8.04
    	
 
    	
Protection of Buyer’s   Interest in Purchased Assets
    	
51
    
	
Section 8.05
    	
 
    	
Actions of Seller   Relating to Distributions, Indebtedness, Guarantee Obligations,   Contractual Obligations, Investments and Liens
    	
52
    
	
Section 8.06
    	
 
    	
Maintenance of   Property, Insurance and Records
    	
52
    
	
Section 8.07
    	
 
    	
Delivery of Income
    	
53
    
	
Section 8.08
    	
 
    	
Delivery of Financial   Statements and Other Information
    	
53
    
	
Section 8.09
    	
 
    	
Delivery of Notices
    	
54
    
	
Section 8.10
    	
 
    	
Reserved
    	
55
    
	
Section 8.11
    	
 
    	
Escrow Imbalance
    	
55
    
	
Section 8.12
    	
 
    	
Pledge and Security   Agreement 
    	
55
    
	
Section 8.13
    	
 
    	
Taxes 
    	
55
    
	
Section 8.14
    	
 
    	
Reserved
    	
56
    
	
Section 8.15
    	
 
    	
Management   Internalization 
    	
56
    
	
Section 8.16
    	
 
    	
Reserved 
    	
56
    
	
Section 8.17
    	
 
    	
Anti-Corruption Laws,   Anti-Money Laundering Laws and Sanctions 
    	
56
    
	
Section 8.18
    	
 
    	
Compliance with   Sanctions 
    	
56
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 9   SINGLE-PURPOSE ENTITY 
    	
57
    
	
Section 9.01
    	
 
    	
Covenants Applicable to   Seller
    	
57
    
	
Section 9.02
    	
 
    	
Covenants Applicable to   Pledgor
    	
58
    
	
Section 9.03
    	
 
    	
Covenants Applicable to   Seller and Pledgor
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 10   EVENTS OF DEFAULT AND REMEDIES 
    	
61
    
	
Section 10.01
    	
 
    	
Events of Default
    	
61
    
	
Section 10.02
    	
 
    	
Remedies of Buyer as   Owner of the Purchased Assets
    	
63
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 11   SECURITY INTEREST 
    	
65
    
	
Section 11.01
    	
 
    	
Grant
    	
65
    
	
Section 11.02
    	
 
    	
Effect of Grant
    	
65
    

 

ii

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
Section 11.03
    	
 
    	
Seller to Remain Liable
    	
66
    
	
Section 11.04
    	
 
    	
Waiver of Certain Laws
    	
66
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 12   INCREASED COSTS; CAPITAL ADEQUACY 
    	
66
    
	
Section 12.01
    	
 
    	
Market Disruption
    	
66
    
	
Section 12.02
    	
 
    	
Illegality
    	
66
    
	
Section 12.03
    	
 
    	
Breakfunding
    	
67
    
	
Section 12.04
    	
 
    	
Increased Costs
    	
67
    
	
Section 12.05
    	
 
    	
Capital Adequacy
    	
67
    
	
Section 12.06
    	
 
    	
Taxes
    	
68
    
	
Section 12.07
    	
 
    	
Payment and Survival of   Obligations
    	
71
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 13   INDEMNITY AND EXPENSES 
    	
71
    
	
Section 13.01
    	
 
    	
Indemnity
    	
71
    
	
Section 13.02
    	
 
    	
Expenses
    	
73
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 14   INTENT 
    	
73
    
	
Section 14.01
    	
 
    	
Safe Harbor Treatment 
    	
73
    
	
Section 14.02
    	
 
    	
Liquidation 
    	
74
    
	
Section 14.03
    	
 
    	
Qualified Financial   Contract 
    	
74
    
	
Section 14.04
    	
 
    	
Netting Contract 
    	
74
    
	
Section 14.05
    	
 
    	
Master Netting   Agreement 
    	
74
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 15   DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS 
    	
74
    
	
 
    	
 
    
	
ARTICLE 16   NO RELIANCE 
    	
75
    
	
 
    	
 
    
	
ARTICLE 17   SERVICING 
    	
76
    
	
Section 17.01
    	
 
    	
Servicing Rights 
    	
76
    
	
Section 17.02
    	
 
    	
Accounts Related to   Purchased Assets 
    	
77
    
	
Section 17.03
    	
 
    	
Servicing Reports 
    	
77
    
	
Section 17.04
    	
 
    	
Servicer Event of   Default 
    	
77
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 18   MISCELLANEOUS 
    	
77
    
	
Section 18.01
    	
 
    	
Governing Law 
    	
77
    
	
Section 18.02
    	
 
    	
Submission to   Jurisdiction; Service of Process 
    	
78
    
	
Section 18.03
    	
 
    	
IMPORTANT WAIVERS 
    	
78
    
	
Section 18.04
    	
 
    	
Integration 
    	
79
    
	
Section 18.05
    	
 
    	
Single Agreement 
    	
79
    
	
Section 18.06
    	
 
    	
Use of Employee Plan   Assets 
    	
80
    
	
Section 18.07
    	
 
    	
Survival and Benefit of   Seller’s Agreements 
    	
80
    
	
Section 18.08
    	
 
    	
Assignments and   Participations 
    	
80
    
	
Section 18.09
    	
 
    	
Ownership and   Hypothecation of Purchased Assets 
    	
82
    
	
Section 18.10
    	
 
    	
Confidentiality 
    	
82
    
	
Section 18.11
    	
 
    	
No Implied Waivers;   Amendments 
    	
83
    
	
Section 18.12
    	
 
    	
Notices and Other   Communications 
    	
83
    
	
Section 18.13
    	
 
    	
Counterparts;   Electronic Transmission 
    	
83
    
	
Section 18.14
    	
 
    	
No Personal Liability 
    	
83
    

 

iii

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
Section 18.15
    	
 
    	
Protection of Buyer’s   Interests in the Purchased Assets; Further Assurances 
    	
84
    
	
Section 18.16
    	
 
    	
Default Rate 
    	
85
    
	
Section 18.17
    	
 
    	
Set-off 
    	
85
    
	
Section 18.18
    	
 
    	
Seller’s Waiver of   Set-off 
    	
86
    
	
Section 18.19
    	
 
    	
Power of Attorney 
    	
86
    
	
Section 18.20
    	
 
    	
Periodic Due Diligence   Review 
    	
86
    
	
Section 18.21
    	
 
    	
Time of the Essence 
    	
87
    
	
Section 18.22
    	
 
    	
Reserved 
    	
87
    
	
Section 18.23
    	
 
    	
PATRIOT Act Notice 
    	
87
    
	
Section 18.24
    	
 
    	
Successors and Assigns;   No Third Party Beneficiaries 
    	
87
    
	
Section 18.25
    	
 
    	
Acknowledgement of   Anti-Predatory Lending Policies 
    	
87
    
	
 
    	
 
    	
 
    	
 
    
	
SCHEDULES
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Schedule   1(a)
    	
 
    	
Representations and   Warranties with Respect to Purchased Assets Consisting of Whole Loans
    	
 
    
	
Schedule   1(b)
    	
 
    	
Representations and   Warranties with Respect to Purchased Assets Consisting of Mezzanine Loans
    	
 
    
	
Schedule   2
    	
 
    	
Notice Addresses and   Wire Instructions
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
EXHIBITS
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Exhibit A
    	
 
    	
[Reserved]
    	
 
    
	
Exhibit B
    	
 
    	
Form of   Confirmation
    	
 
    
	
Exhibit C
    	
 
    	
Form of Power of   Attorney
    	
 
    
	
Exhibit D-1
    	
 
    	
Form of Closing   Certificate
    	
 
    
	
Exhibit D-2
    	
 
    	
Form of Compliance   Certificate
    	
 
    
	
Exhibit E
    	
 
    	
Form of Purchased Asset   Data Summary
    	
 
    
	
Exhibit F
    	
 
    	
Form of Assignment   and Acceptance
    	
 
    
	
Exhibit G
    	
 
    	
Form of Servicer   Notice
    	
 
    
	
Exhibit H
    	
 
    	
Form of   Irrevocable Redirection Notice
    	
 
    
	
Exhibit I
    	
 
    	
Form of Servicing   Agreement
    	
 
    
	
Exhibit J
    	
 
    	
Form of Amended   and Restated Confirmation
    	
 
    
	
Exhibit K
    	
 
    	
Form of Servicing   Agreement Extension Notice
    	
 
    

 

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THIS MASTER REPURCHASE AGREEMENT AND SECURITIES CONTRACT, dated as of June 28, 2017 (as amended, modified, waived, supplemented, extended, restated or replaced from time to time, this “Agreement”), is made by and between GP COMMERCIAL WF LLC, a Delaware limited liability company (as more specifically defined below, (“Seller”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (as more specifically defined below, “Buyer”).  Seller and Buyer (each also a “Party” and, collectively, the “Parties”) hereby agree as follows:

 

ARTICLE 1

 

APPLICABILITY

 

Section 1.01                             Applicability.  Subject to the terms and conditions of the Repurchase Documents, on each Purchase Date during the Ramp-Up Period, the Parties may enter into transactions in which Seller agrees to sell, transfer and assign to Buyer certain Assets and all related rights in, and interests related to, such Assets on a servicing released basis, against the transfer of funds by Buyer representing the Purchase Price for such Assets (and from time to time after such Purchase Date and prior to the Termination Date with respect to Future Funding Transactions, Buyer may transfer funds increasing such Purchase Price for certain Assets), with a simultaneous agreement by Buyer to transfer such Assets to Seller for subsequent repurchase on the related Repurchase Date, which date shall not be later than the Termination Date, against the transfer of funds by Seller representing the Repurchase Price for such Assets.

 

ARTICLE 2

 

DEFINITIONS AND INTERPRETATION

 

Section 2.01                             Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

“Accelerated Repurchase Date”:  Defined in Section 10.02.

 

“Actual Knowledge”:  With respect to any Person, the actual knowledge of such Person without further inquiry or investigation; provided, that for the avoidance of doubt, such actual knowledge shall include the actual knowledge of such Person and each of its employees, officers, directors and agents.

 

“Affiliate”:  With respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person; provided, however, that in no event shall any of the following entities be considered an “Affiliate” of Seller or Guarantor; (i) the Pine River Entities or (ii) any Subsidiary or other Affiliates of, or any fund or other entity managed or advised from time to time by, any of the Pine River Entities solely to the extent that such Person would be considered an Affiliate solely as a result of a Pine River Entity’s direct or indirect ownership therein.

 

“Agreement”:  The meaning set forth in the initial paragraph hereof.

 

 

“Aggregate Amount Outstanding”:  On each date of the determination thereof, the total amount due and payable to Buyer by Seller in connection with all Transactions (including all Future Funding Transactions) under this Agreement outstanding on such date.

 

“Alternative Rate”:  A per annum rate based on an index approximating the behavior of LIBOR, as determined by Buyer.

 

“Amended and Restated Confirmation”:  Defined in Section 3.01(d).

 

“Anti-Corruption Laws”:  The U.S. Foreign Corrupt Practices Act, the UK Bribery Act, the Canadian Corruption of Foreign Public Officials Act or any other law applicable to Seller or any of its Affiliates  that prohibits the bribery of foreign officials to gain a business advantage.

 

“Anti-Money Laundering Laws”: The applicable laws or regulations in any jurisdiction in which Seller, Guarantor or any Affiliate of Seller or Guarantor is located or doing business that relate to money laundering, any predicate crime to money laundering or any financial record keeping and reporting requirements related  hereto.

 

“Applicable Percentage”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Appraisal”:  An appraisal of the related Mortgaged Property conducted by an Independent Appraiser in accordance with the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, and, in addition, certified by such Independent Appraiser as having been prepared in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation, addressed to (either directly or pursuant to a reliance letter in favor of Buyer or reliance language in such Appraisal running to the benefit of Buyer as a successor and/or assign) and reasonably satisfactory to Buyer.

 

“Approved Representation Exception”:  With respect to a Purchased Asset, any Representation Exception furnished by Seller to Buyer and approved in writing by Buyer in its discretion prior to the related Purchase Date for such Purchased Asset.

 

“Asset”:  Each Whole Loan or Mezzanine Loan referenced on Schedule 2 to the Fee Letter.

 

“Assignee”:  Defined in Section 18.08(c).

 

“Assignment and Acceptance”:  Defined in Section 18.08(c).

 

“Bankruptcy Code”:  Title 11 of the United States Code, as amended.

 

“Basic Mortgage Asset Documents”:  Means the following original (except as otherwise permitted in Section 2.01 of the Custodial Agreement), fully executed and complete documents (in each case together with an original general assignment, an original assignment or allonge, as applicable, executed in blank and, as applicable, an original assignment and assumption agreement or any similar document required by the terms of the applicable Purchased Asset Documents to effectuate an assignment of such Asset, executed by Seller in blank):  (1) the

 

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Mortgage Note or the Mezzanine Note, as applicable, (2) the Mortgage (and, in the case of a Mezzanine Loan, all related pledge and security agreements and UCC-1 financing statements executed in connection therewith), (3) the assignment of Mortgage, (4) the assignment of leases and rents, if any, (5) the assignment of assignment of leases and rents (if applicable), and (6) the related security agreement (if applicable) and, in the case of a Mezzanine Loan, each original certificate representing the related Equity Interests, together with an undated stock power, covering each such certificate, duly executed in blank).

 

“Blank Assignment Documents”:  Defined in Section 6.02(l).

 

“Book Value”:  For each Purchased Asset, as of any date, an amount equal to the lesser of (a) the outstanding principal amount or par value thereof as of such date, and (b) the price that Seller initially paid or advanced in respect thereof, plus any additional amounts advanced by Seller that were funded in connection with Seller’s future funding obligations under the related Purchased Asset Documents minus Principal Payments received by Seller and as further reduced by losses realized and write-downs taken by Seller, together with all other reductions in the unpaid balance due in connection with the related Whole Loan. The Book Value of each Purchased Asset shall be certified by Seller in the related Confirmation.

 

“Business Day”:  Any day other than (a) a Saturday or a Sunday, (b) a day on which banks in the States of New York, Minnesota or North Carolina are authorized or obligated by law or executive order to be closed, (c) any day on which the New York Stock Exchange, the Federal Reserve Bank of New York or the Custodian is authorized or obligated by law or executive order to be closed, or (d) if the term “Business Day” is used in connection with the determination of LIBOR, a day on which dealings in Dollar deposits are not carried on in the London interbank market.

 

“Buyer”:  Wells Fargo Bank, National Association, in its capacity as Buyer under this Agreement and the other Repurchase Documents, together with its successors and permitted assigns.

 

“Capital Lease Obligations”:  With respect to any Person, the amount of all obligations of such Person to pay rent or other amounts under a lease of property to the extent and in the amount that such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person.

 

“Capital Stock”:  Any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent equity ownership interests in a Person which is not a corporation, including, without limitation, any and all member or other equivalent interests (certificated or uncertificated) in any limited liability company, and any and all partnership or other equivalent interests in any partnership or limited partnership, and any and all warrants or options to purchase any of the foregoing.

 

“Cause”:  With respect to an Independent Director or Independent Manager, (i) acts or omissions by such Independent Director or Independent Manager that constitute willful disregard of, or bad faith or gross negligence with respect to, such Independent Director or Independent Manager’s duties under the applicable by-laws, limited partnership agreement or

 

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limited liability company agreement, (ii) that such Independent Director or Independent Manager has engaged in or has been charged with, or has been convicted of, fraud or other acts constituting a crime under any law applicable to such Independent Director or Independent Manager, (iii) that such Independent Director or Independent Manager is unable to perform his or her duties as Independent Director or Independent Manager due to death, disability or incapacity, or (iv) that such Independent Director or Independent Manager no longer meets the definition of Independent Director or Independent Manager.

 

“Change of Control”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Closing Certificate”:  A true and correct certificate in the form of Exhibit D-1, executed by a Responsible Officer of Seller.

 

“Closing Date”:  June 28, 2017.

 

“Code”:  The Internal Revenue Code of 1986, and the regulations promulgated and rulings issued thereunder, in each case as amended, modified or replaced from time to time.

 

“Commercial Asset”:  An Asset that is not a Multifamily Asset but is otherwise secured by an acceptable Type of Mortgaged Property.

 

“Compliance Certificate”:  A true and correct certificate in the form of Exhibit D-2, executed by a Responsible Officer of Seller and Guarantor.

 

“Confirmation”:  A purchase confirmation in the form of Exhibit B, duly completed, executed and delivered by Seller and Buyer in accordance with Section 3.01.

 

“Connection Income Taxes”:  Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

“Contingent Liabilities”:  With respect to any Person as of any date of determination, all of the following as of such date: (a) liabilities and obligations (including any Guarantee Obligations) of such Person in respect of “off-balance sheet arrangements” (as defined in the Off-Balance Sheet Rules defined below in this definition), (b) obligations of such Person, including Guarantee Obligations, whether or not required to be disclosed in the footnotes to such Person’s financial statements, guaranteeing in whole or in part any Non-Recourse Indebtedness, lease, dividend or other obligation, excluding, however (i) contractual indemnities (including any indemnity or price-adjustment provision relating to the purchase or sale of securities or other assets) and (ii) guarantees of non-monetary obligations that have not yet been called on or quantified, of such Person or any other Person, and (c) forward commitments or obligations to fund or provide proceeds with respect to any loan or other financing that is obligatory and non-discretionary on the part of the lender.  The amount of any Contingent Liabilities described in the preceding clause (b) shall be deemed to be (i) with respect to a guarantee of interest or interest and principal, or operating income guarantee, the sum of all payments required to be made thereunder (which, in the case of an operating income guarantee, shall be deemed to be equal to the debt service for the note secured thereby), through (x) in the case of an interest or interest and

 

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principal guarantee, the stated date of maturity of the obligation (and commencing on the date interest could first be payable thereunder), or (y) in the case of an operating income guarantee, the date through which such guarantee will remain in effect, and (ii) with respect to all guarantees not covered by the preceding clause (i), an amount equal to the stated or determinable amount of the primary obligation in respect of which such guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as recorded on the balance sheet and in the footnotes to the most recent financial statements of such Person.  “Off-Balance Sheet Rules” means the Disclosure in Management’s Discussion and Analysis About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, Securities Act Release Nos. 33-8182; 34-47264; FR-67 International Series Release No. 1266 File No. S7-42-02, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17 CFR Parts 228, 229 and 249).

 

“Contractual Obligation”:  With respect to any Person, any provision of any securities issued by such Person or any indenture, mortgage, deed of trust, deed to secure debt, contract, undertaking, agreement, instrument or other document to which such Person is a party or by which it or any of its property or assets are bound or are subject.

 

“Contribution Agreement”: For each Purchased Asset, collectively, the allonge, the general assignment, the assignment of security instrument and the assignment of assignment of leases and rents from Residual Pledgor to Seller.

 

“Control”:  With respect to any Person, the direct or indirect possession of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling,” “Controlled” and “under common Control” have correlative meanings.

 

“Controlled Account Agreement”:  Those certain control agreements with respect to (i) the Waterfall Account, dated as of the date of this Agreement, among Seller, Buyer and Deposit Account Bank and (ii) the Servicer Account, dated as of the date of this Agreement, among Seller, Servicer, Buyer and Deposit Account Bank.

 

“Core Purchased Asset”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Current Mark-to-Market Value”:  For any Purchased Asset as of any date, the market value for such Purchased Asset as of such date as determined by Buyer in its sole discretion.

 

“Custodial Agreement”:  The Custodial Agreement, dated as of the Closing Date, among Buyer, Seller and Custodian, as the same may be amended, modified, waived, supplemented, extended, replaced or restated from time to time.

 

“Custodian”:  Wells Fargo Bank, National Association, or any successor permitted by the Custodial Agreement.

 

“Debt Yield”:  With respect to any Purchased Asset, as of any date of determination, the percentage equivalent of the quotient obtained by dividing (i) the underwritten annual net cash flow as of such date with respect to the Mortgaged Properties securing such

 

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Purchased Asset, as determined by Buyer in its discretion, by (ii) the Purchase Price of such Purchased Asset as of such date.

 

“Default”:  Any event that, with the giving of notice or the lapse of time, or both, would become an Event of Default.

 

“Default Rate”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Defaulted Asset”:  Any Purchased Asset (and any related Whole Loan, as applicable), (a) that is thirty (30) or more days (or, in the case of payments due at maturity, one (1) day) delinquent in the payment of principal, interest, fees, distributions or any other amounts payable under the related Purchased Asset Documents, in each case, without regard to any waivers or modifications of, or amendments to, the related Purchased Asset Documents, other than those that were disclosed in writing to Buyer prior to the Purchase Date of the related Purchased Asset, unless consented to by Buyer in accordance with the terms of this Agreement, (b) for which there is a material non-monetary event of default under the related Purchased Asset Documents beyond any applicable notice or cure period in each case, without regard to any waivers or modifications of, or amendments to, the related Purchased Asset Documents other than those that were disclosed in writing to Buyer prior to the Purchase Date of the related Purchased Asset, (c) as to which an Insolvency Event has occurred with respect to the Underlying Obligor, (d) as to which a Material Modification is made without the prior written consent of Buyer or (e) for which Seller or a Servicer has received notice of the foreclosure or proposed foreclosure of any Lien on the related Mortgaged Property; provided that with respect to any Mezzanine Loan, in addition to the foregoing such Mezzanine Loan will also be considered a Defaulted Asset to the extent that the related Whole Loan would be considered a Defaulted Asset as described in this definition provided, further, in each case, without regard to any waivers or modifications of, or amendments to, the related Purchased Asset Documents.

 

“Deposit Account Bank”:  Wells Fargo Bank, National Association, or any other bank approved by Buyer.

 

“Derivatives Contract”:  Any rate swap transaction, basis swap, credit derivative transaction, forward rate transaction, commodity swap, commodity option, forward commodity contract, equity or equity index swap or option, bond or bond price or bond index swap or option or forward bond or forward bond price or forward bond index transaction, interest rate option, forward foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross—currency rate swap transaction, currency option, spot contract, or any other similar transaction or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, including any obligations or liabilities thereunder.

 

“Derivatives Termination Value”:  With respect to any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Derivatives Contracts, (a) for any date on or after the date such Derivatives Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in the preceding clause (a), the amount(s)

 

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determined as the mark—to—market value(s) for such Derivatives Contracts, as determined based on one or more mid—market or other readily available quotations provided by any recognized dealer in such Derivatives Contracts (which may include Buyer).

 

“Dollars” and “$”:  Lawful money of the United States of America.

 

“Early Repurchase Date”:  Defined in Section 3.04.

 

“Eligible Asset”:  An Asset that is either a Core Purchased Asset or a Low Cash Flow Purchased Asset and identified on Schedule 2 to the Fee Letter and satisfies each of the following additional criteria at all times:

 

(a)                                 such Asset has been approved as a Purchased Asset by Buyer in its sole discretion as of the related Purchase Date;

 

(b)                                 with respect to such Asset, no Representation Breach exists (other than an Approved Representation Exception);

 

(c)                                  such Asset is not a Defaulted Asset;

 

(d)                                 with respect to such Asset there are no future funding obligations, other than future funding obligations of Seller that are set forth in the Purchased Asset Documents delivered to Buyer and which future funding obligations are expressly retained by Seller;

 

(e)                                  immediately after giving effect to the purchase of such Asset by Buyer, such Asset does not result in a failure of the Facility Debt Yield Test;

 

(f)                                   the Mortgaged Property related to such Asset is located in the United States;

 

(g)                                  the Underlying Obligors related to such Asset are domiciled in the United States;

 

(h)                                 all obligations under the Asset and the Purchased Asset Documents are denominated and payable in Dollars;

 

(i)                                     with respect to such Asset, none of the Underlying Obligors (and any of their respective Affiliates) related to such Assets are Sanctioned Targets;

 

(j)                                    No Seller Party nor Manager shall hold an Equity Interest with respect to such Asset;

 

(k)                                 such Asset is secured by, or with respect to a Mezzanine Loan, the related Whole Loan is secured by a perfected, first-priority security interest on either a “stabilized” or a “transitional” commercial or multi-family property;

 

(l)                                     all Purchased Asset Documents related to such Asset have been delivered to Custodian in accordance with the terms hereof and the Custodial Agreement;

 

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(m)                             the interest rate on the Mortgage Note related to such Asset is a floating rate;

 

(n)                                 if any portion of the Mortgaged Property related to such Asset is subject to a partial release, Buyer shall have received, on or before the effective date of such partial release, an Appraisal (which Appraisal may be the initial Appraisal delivered by the Underlying Obligor in connection with the origination of such Asset) specifying the value of the Mortgaged Properties which remain as security for the related Asset following the date of consummation for such partial release;

 

(o)                                 Seller has delivered an executed Irrevocable Redirection Notice to Buyer; and

 

(p)                                 all escrows, reserves and other collateral accounts related to such Asset are subject to a perfected security interest in favor of Seller, and each such security interest has been assigned to Buyer;

 

provided, that, notwithstanding the failure of an Asset or Purchased Asset to conform to the requirements of this definition, Buyer may, subject to such terms, conditions and requirements and Applicable Percentage adjustments as Buyer may require, designate in writing any such non-conforming Asset or Purchased Asset as an Eligible Asset, which designation (1) may include a temporary or permanent asset-specific waiver of one or more Eligible Asset requirements, and (2) shall not be deemed a waiver of the requirement that all other Assets and Purchased Assets must be Eligible Assets (including any Assets that are similar or identical to the Asset or Purchased Asset subject to the waiver).

 

“Environmental Laws”:  Any federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guideline, written policy and rule of common law now or hereafter in effect, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, employee health and safety or hazardous materials, including CERCLA, RCRA, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water Act, the Oil Pollution Act of 1990, the Emergency Planning and the Community Right-to-Know Act of 1986, the Hazardous Material Transportation Act, the Occupational Safety and Health Act, and any state and local or foreign counterparts or equivalents.

 

“Equity Interests”:  With respect to any Person, (a) any share, interest, participation and other equivalent (however denominated) of Capital Stock of (or other ownership, equity or profit interests in) such Person, (b) any warrant, option or other right for the purchase or other acquisition from such Person of any of the foregoing, (c) any security convertible into or exchangeable for any of the foregoing, and (d) any other ownership or profit interest in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized but unissued on any date.

 

“ERISA”:  The Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.  Section references to ERISA are

 

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to ERISA, as in effect at the date of this Agreement and, as of the relevant date, any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

 

“ERISA Affiliate”:  Any trade or business (whether or not incorporated) that is a member of any Seller Party’s controlled group or under common control with any Seller Party, within the meaning of Section 414 of the Code.

 

“Event of Default”:  Defined in Section 10.01.

 

“Exchange Act”:  The Securities Exchange Act of 1934, as amended.

 

“Excluded Taxes”:  Any of the following Taxes imposed on or with respect to Buyer or required to be withheld or deducted from a payment to Buyer:  (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of Buyer being organized under the laws of, or having its principal office or the office from which it books the Transactions located in, the jurisdiction imposing such Taxes (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal withholding Taxes imposed on amounts payable to or for the account of Buyer with respect to an interest in the Repurchase Obligations pursuant to a law in effect on the date on which such Buyer (i) acquires such interest in the Repurchase Obligations or (ii) changes the office from which it books the Transactions, except in each case to the extent that, pursuant to Section 12.06, amounts with respect to such Taxes were payable either to such Buyer’s assignor immediately before such Buyer became a Party hereto or to such Buyer immediately before it changed the office from which it books the Transactions, (c) Taxes attributable to Buyer’s failure to comply with Section 12.06(e) and (d) any U.S. federal withholding Taxes imposed under FATCA.

 

“Exit Fee”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Extension Conditions”:  Defined in Section 3.06.

 

“Extension Fee”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Extension Period”:  Defined in Section 3.06.

 

“Facility Debt Yield”:  As of any date of determination, the weighted average Debt Yield of all Purchased Assets subject to Transactions as of such date (weighted based upon the respective outstanding Purchase Prices of the Purchased Assets).

 

“Facility Debt Yield Test”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“FATCA”:  Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any

 

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intergovernmental agreement entered into in connection with the implementation of such sections of the Code.

 

“FDIA”:  Defined in Section 14.03.

 

“FDICIA”:  Defined in Section 14.04.

 

“Fee Letter”:  The fee and pricing letter, dated as of the Closing Date, between Buyer and Seller, as amended, modified, waived, supplemented, extended, restated or replaced from time to time.

 

“Financial Covenants”: The financial covenants of Guarantor as set forth in Section 9 of the Guarantee.

 

“Fitch”:  Fitch, Inc. or, if Fitch, Inc. is no longer issuing ratings, another nationally recognized rating agency reasonably acceptable to Buyer.

 

“Foreign Buyer”:  A Buyer that is not a U.S. Person.

 

“Future Funding Amount”:  With respect to any Purchased Asset for which a Future Funding Transaction has been requested by Seller and approved by Buyer pursuant to Section 3.10, the product of (a) the amount that Seller is funding (or has funded) as a post-closing advance on or prior to the related Future Funding Date as required by the related Purchased Asset Documents relating to such Purchased Asset (which amount, for the avoidance of doubt, shall exclude any post-closing advance relating to such Purchased Asset which was the subject of a previous Future Funding Transaction by Seller and approved by Buyer pursuant to Section 3.10), and (b) the Applicable Percentage for such Purchased Asset; provided, in no event shall the aggregate amount so requested by Seller exceed the amount of future funding set forth on the related Confirmation for the Transaction relating to such Purchased Asset, minus all previous Future Funding Amounts funded by Buyer relating to such Purchased Asset.

 

“Future Funding Date”:  With respect to any Purchased Asset for which a Future Funding Transaction has been requested by Seller and approved by Buyer, the date on which Buyer funds a Future Funding Amount relating to such Purchased Asset.

 

“Future Funding Request Package”:  With respect to one or more Future Funding Transactions, the following, to the extent applicable and available, unless any such items were previously delivered to Buyer and have not been modified since the date of each such delivery:  (a) the related request for advance, executed by the related Underlying Obligor (which shall include evidence of Seller’s approval of the related Future Funding Transaction), and any other documents that require Seller to fund; (b) the related affidavit executed by the related Underlying Obligor which covers such issues as Buyer shall request, and any other related documents; (c) the executed fund control agreement (or the executed escrow agreement, if funding through escrow); (d) certified copies of all relevant trade contracts; (e) the title policy endorsement for the advance; (f) certified copies of any tenant leases; (g) certified copies of any service contracts; (h) updated financial statements, operating statements and rent rolls; (i) evidence of required insurance; (j) engineering reports and updates to the engineering reports; (k) an updated Underwriting

 

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Package for the related Purchased Asset; and (l) copies of any additional documentation as required in connection therewith, or as otherwise requested by Buyer.

 

“Future Funding Transaction”:  Any Transaction approved by Buyer pursuant to Section 3.10.

 

“GAAP”:  Generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

 

“Governing Documents”:  With respect to any Person, its articles or certificate of incorporation or formation, by-laws, partnership, limited liability company, memorandum and articles of association, operating or trust agreement and/or other organizational, charter or governing documents.

 

“Governmental Authority”:  Any (a) national or federal government, (b) state, regional or local or other political subdivision thereof, (c) central bank or similar monetary or regulatory authority, (d) Person, agency, authority, instrumentality, court, regulatory body, central bank or other body or entity exercising executive, legislative, judicial, taxing, quasi—judicial, quasi—legislative, regulatory or administrative functions or powers of or pertaining to government, (e) court or arbitrator having jurisdiction over such Person, its Affiliates or its assets or properties, (f) stock exchange on which shares of stock of such Person are listed or admitted for trading, (g) accounting board or authority that is responsible for the establishment or interpretation of national or international accounting principles, in each case, whether foreign or domestic, and (h) supra-national body such as the European Union or the European Central Bank.

 

“Ground Lease”:  A ground lease containing the following terms and conditions: (a) a remaining term (exclusive of any unexercised extension options) of thirty (30) years or more from the Purchase Date of the related Asset, (b) the right of the lessee to mortgage and encumber its interest in the leased property without the consent of the lessor or with such consent given, (c) the obligation of the lessor to give the holder of any mortgage lien on such leased property written notice of any defaults on the part of the lessee and agreement of such lessor that such lease will not be terminated until such holder has had a reasonable opportunity to cure or complete foreclosures, and fails to do so, (d) reasonable transferability of the lessee’s interest under such lease, including ability to sublease, and (e) such other rights customarily required by mortgagees making a loan secured by the interest of the holder of the leasehold estate demised pursuant to a ground lease.

 

“Ground Lease Asset”:  An Asset the Mortgaged Property for which is secured or supported in whole or in part by a Ground Lease.

 

“Guarantee Agreement”: The Guarantee Agreement dated as of the Closing Date, made by Guarantor in favor of Buyer.

 

“Guarantee Obligation”:  With respect to any Person (the “guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of the obligations for which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends, Contractual Obligation, Derivatives

 

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Contract or other obligations or Indebtedness (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation, or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term “Guarantee Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the maximum stated amount of the primary obligation relating to such Guarantee Obligation (or, if less, the maximum stated liability set forth in the instrument embodying such Guarantee Obligation); and provided, further, that in the absence of any such stated amount or stated liability, the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum anticipated liability in respect thereof as reasonably determined by such Person.

 

“Guarantor”:  Granite Point Mortgage Trust Inc., a Maryland corporation.

 

“Guarantor Threshold Amount” Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Income”:  With respect to any Purchased Asset, all of the following (in each case with respect to the entire par amount of the Asset represented by such Purchased Asset and not just with respect to the portion of the par amount represented by the Purchase Price advanced against such Asset) without duplication:  (a) all Principal Payments, (b) all Interest Payments, and (c) all other income, distributions, receipts, payments, collections, prepayments, recoveries, proceeds (including insurance and condemnation proceeds) and other payments or amounts of any kind paid, received, collected, recovered or distributed on, in connection with or in respect of such Purchased Asset, including Principal Payments, Interest Payments, prepayment fees, extension fees, exit fees, defeasance fees, transfer fees, make whole fees, late charges, late fees and all other fees or charges of any kind or nature, premiums, yield maintenance charges, penalties, default interest, dividends, gains, receipts, allocations, rents, interests, profits, payments in kind, returns or repayment of contributions, net sale, foreclosure, liquidation, securitization or other disposition proceeds, insurance payments, settlements and proceeds; provided, that any amounts that under the applicable Purchased Asset Documents are required to be deposited into and held in escrow or reserve to be used for a specific purpose, such as taxes and insurance, shall not be included in the term “Income” unless and until (i) an event of default exists under such Purchased Asset Documents, (ii) the holder of the related Purchased Asset has exercised or is entitled to exercise rights and remedies with respect to such amounts, (iii) such amounts are no longer required to be held for such purpose under such Purchased Asset Documents, or (iv) such amounts may be applied to all or a portion of the outstanding indebtedness under such Purchased Asset Documents.

 

“Indebtedness”:  With respect to any Person and any date, all of the following with respect to such Person as of such date, without duplication:  (a) obligations in respect of money

 

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borrowed (including principal, interest, assumption fees, prepayment fees, yield maintenance charges, penalties, exit fees, contingent interest and other monetary obligations whether choate or inchoate and whether by loan, the issuance and sale of debt securities or the sale of property or assets to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets, or otherwise), (b) obligations, whether or not for money borrowed: (i) represented by notes payable, letters of credit or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property or services rendered, or (iv) in connection with the issuance of Preferred Equity or trust preferred securities, (c) Capital Lease Obligations, (d) reimbursement obligations under any letters of credit or acceptances (whether or not the same have been presented for payment), (e) Off—Balance Sheet Obligations, (f) obligations to purchase, redeem, retire, defease or otherwise make any payment in respect of any mandatory redeemable stock issued by such Person or any other Person (inclusive of forward equity contracts), valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (g) as applicable, all obligations of such Person (but not the obligations of others) in respect of any keep well arrangements, credit enhancements, contingent or future funding obligations under any Purchased Asset or any obligation senior to any Purchased Asset, unfunded interest reserve amount under any Purchased Asset or any other obligation of such Person with respect to such Purchased Asset that is senior to such Purchased Asset, purchase obligation, repurchase obligation, sale/buy-back agreement, takeout commitment or forward equity commitment, in each case evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be satisfied by the issuance of Equity Interests (other than mandatory redeemable stock)), (h) net obligations under any Derivatives Contract not entered into as a hedge against existing indebtedness, in an amount equal to the Derivatives Termination Value thereof, (i) all Non-Recourse Indebtedness, recourse indebtedness and all indebtedness of other Persons that such Person has guaranteed or is otherwise recourse to such Person, (j) all indebtedness of another Person secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien (other than, except with respect to any Purchased Asset, any Liens granted pursuant to the Repurchase Documents) on property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness or other payment obligation; provided, that if such Person has not assumed or become liable for the payment of such indebtedness, then for the purposes of this definition the amount of such indebtedness shall not exceed the market value of the property subject to such Lien, (k) all Contingent Liabilities, (l) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person or obligations of such Person to pay the deferred purchase or acquisition price of property or assets, including contracts for the deferred purchase price of property or assets that include the procurement of services, (m) indebtedness of general partnerships of which such Person is liable as a general partner (whether secondarily or contingently liable or otherwise), and (n) obligations to fund capital commitments under any Governing Document, subscription credit agreement or otherwise.

 

“Indemnified Amounts”:  Defined in Section 13.01(a).

 

“Indemnified Person”:  Defined in Section 13.01(a).

 

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“Indemnified Taxes”:  (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Seller under any Repurchase Document and (b) to the extent not otherwise described in (a), Other Taxes.

 

“Independent Appraiser”:  A professional real estate appraiser that (i) is approved by Buyer in its sole discretion; (ii) was not selected or identified by the Underlying Obligor and is not affiliated with the lender under the mortgage or the Underlying Obligor; (iii) if engaged by Seller or any of its Affiliates, Seller or such Affiliate, as applicable, is a “financial services institution” within the meaning of the Interagency Guidelines on Evaluations and Appraisals, (iv) is a member in good standing of the American Appraisal Institute; (v) is certified or licensed in the state where the subject Mortgaged Property is located and (vi) in each such case, has a minimum of five years’ experience in the subject property type.

 

“Independent Director” or “Independent Manager”:  An individual who has prior experience as an independent director, independent manager or independent member with at least three (3) years of employment experience and who is provided by CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, or Lord Securities Corporation or, if none of those companies is then providing professional Independent Directors or Independent Managers, another nationally recognized company approved by Buyer, in each case that is not an Affiliate of Seller and that provides professional independent directors, independent managers and/or other corporate services in the ordinary course of its business, and which individual is duly appointed as Independent Director or Independent Manager and is not, has never been, and will not while serving as Independent Director or Independent Manager be, any of the following:

 

(a)                                 a member, partner, equity holder, manager, director, officer or employee of Seller, Pledgor, or any of their respective equity holders or Affiliates (other than as an Independent Director or Independent Manager of Seller or Pledgor or an Affiliate of Seller or Pledgor that does not own a direct or indirect ownership interest in Seller or Pledgor and that is required by a creditor to be a single purpose bankruptcy remote entity, provided, however, that such Independent Director or Independent Manager is employed by a company that routinely provides professional Independent Directors or Independent Managers);

 

(b)                                 a creditor, supplier or service provider (including provider of professional services) to Seller, Pledgor or any of their respective equity holders or Affiliates (other than through a nationally-recognized company that routinely provides professional Independent Directors, Independent Managers and/or other corporate services to Seller, Pledgor, or any of their respective equity holders or Affiliates in the ordinary course of business);

 

(c)                                  a family member of any such member, partner, equity holder, manager, director, officer, employee, creditor, supplier or service provider; or

 

(d)                                 a Person who controls (whether directly, indirectly or otherwise) any of the individuals described in the preceding clauses (a), (b) or (c).

 

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An individual who otherwise satisfies the preceding definition and satisfies subparagraph (a) by reason of being the Independent Director or Independent Manager of a Special Purpose Entity affiliated with Seller or Pledgor that does not own a direct or indirect ownership interest in Seller or Pledgor shall be qualified to serve as an Independent Director or Independent Manager of Seller or Pledgor if the fees that such individual earns from serving as Independent Director or Independent Manager of Affiliates of Seller or Pledgor in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year.

 

“Initial Termination Date”:  June 28, 2019.

 

“Insolvency Action”:  With respect to any Person, the taking by such Person of any action resulting in an Insolvency Event, other than solely under clause (g) of the definition thereof.

 

“Insolvency Event”:  With respect to any Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises with respect to such Person or any substantial part of its assets or property in an involuntary case under any applicable Insolvency Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of thirty (30) days, (b) the commencement by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect, (c) the consent by such Person to the entry of an order for relief in an involuntary case under any Insolvency Law, (d) the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its assets or property, (e) the making by such Person of any general assignment for the benefit of creditors, (f) the admission in a legal proceeding of the inability of such Person to pay its debts generally as they become due, (g) the failure by such Person generally to pay its debts as they become due, or (h) the taking of action by such Person in furtherance of any of the foregoing.

 

“Insolvency Laws”:  The Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments and similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

 

“Insolvency Proceeding”:  Any case, action or proceeding before any court or other Governmental Authority relating to any Insolvency Event.

 

“Interest Expense”:  With respect to any Person and for any relevant time period, the amount of total interest expense incurred by such Person, and its consolidated Subsidiaries, including capitalized or accruing interest (but excluding interest funded under a construction loan), plus such Person’s proportionate share of interest expense from the joint venture investments and unconsolidated Affiliates of such Person, all with respect to such period.

 

“Interest Payments”:  With respect to any Purchased Asset, all payments of interest, income, receipts, dividends, and any other collections and distributions received from time to time in connection with any such Purchased Asset.

 

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“Intermediate Entity”:  Granite Point Operating Company LLC, TH Commercial Holdings LLC, Residual Pledgor and all other Persons, if any, that are Subsidiaries of Guarantor and have a direct or indirect ownership interest in Pledgor and Seller.

 

“Internal Control Event”:  (i) Fraud that involves management or other employees who have a significant role in the internal controls of any Seller Party over financial reporting, or (ii) fraud that involves management or other employees who have a significant role in the internal controls of Manager that could reasonably be expected to have a material adverse effect on the Guarantor or the Purchased Assets.

 

“Investment”: With respect to any Person, any acquisition or investment (whether or not of a controlling interest) by such Person, whether by means of (a) the purchase or other acquisition of any Equity Interest in another Person, (b) a loan, advance or extension of credit to, capital contribution to, guaranty or credit enhancement of Indebtedness of, or purchase or other acquisition of any Indebtedness of, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute the business or a division or operating unit of another Person.  Any binding commitment or option to make an Investment in any other Person shall constitute an Investment.  Except as expressly provided otherwise, for purposes of determining compliance with any covenant contained in this Agreement, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

“Investment Company Act”:  The Investment Company Act of 1940, as amended, restated or modified from time to time, including all rules and regulations promulgated thereunder.

 

“Irrevocable Redirection Notice”:  A notice in a form acceptable to Buyer that is executed by Seller and directs the remittance of all Income with respect to a Purchased Asset to an account designated by Buyer, which notice shall be held by Buyer in escrow pending automatic authorization to release upon the occurrence of an Event of Default.

 

“IRS”:  The United States Internal Revenue Service.

 

“Knowledge”:  With respect to any Person, means collectively (i) the Actual Knowledge of such Person, (ii) notice of any fact, event, condition or circumstance that would cause a reasonably prudent Person to conduct an inquiry that would give such Person Actual Knowledge, whether or not such Person actually undertook such an inquiry, and (iii) all knowledge that is imputed to a Person under any statute, rule, regulation, ordinance, or official decree or order.

 

“LIBOR”:  The rate of interest per annum determined by Buyer on the basis of the rate for deposits in Dollars for delivery on the first (1st) day of each Pricing Period, for a period approximately equal to such Pricing Period, as reported on Reuters Screen LIBOR01 Page (or any successor page) at approximately 11:00 a.m., London time, on the Pricing Rate Determination Date (or if not so reported, then as determined by Buyer from another recognized source or interbank quotation).  Each calculation by Buyer of LIBOR shall be conclusive and binding for all purposes, absent manifest error.  If the calculation of LIBOR results in a LIBOR rate of less than

 

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zero percent (0%), LIBOR shall be deemed to be zero percent (0%) for all purposes of this Agreement.

 

“Lien”:  Any mortgage, statutory or other lien, pledge, charge, right, claim, adverse claim, attachment, levy, hypothecation, assignment, deposit arrangement, security interest, UCC financing statement or encumbrance of any kind on or otherwise relating to any Person’s assets or properties in favor of any other Person or any preference, priority or other security agreement or preferential arrangement of any kind.

 

“Lockup Period Expiration Date”:  The last day of the lockup period set forth in Guarantor’s Form S-11 filing with the Securities and Exchange Commission (as the same may be amended) during which Sponsor is prohibited from distributing the Capital Stock of Guarantor to its shareholders.

 

“Low Cash Flow Purchased Asset”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Manager”:  Pine River Capital Management L.P., a Delaware limited partnership.

 

“Margin Call”:  Defined in Section 4.01.

 

“Margin Deficit”:  Defined in Section 4.01.

 

“Margin Percentage”:  For any Purchased Asset as of any date of determination, the percentage equivalent of the quotient obtained by dividing one (1) by the Applicable Percentage used to calculate the Purchase Price on the related Purchase Date.

 

“Market Disruption Event”:  Any event or events that, in the good faith determination of Buyer, results in (a) the effective absence of a “repo market” or related “lending market” for purchasing (subject to repurchase) or financing debt obligations secured by commercial mortgage loans or securities, (b) Buyer not being able to finance Purchased Assets through the “repo market” or “lending market” with traditional counterparties at rates that would have been reasonable prior to the occurrence of such event or events, (c) the effective absence of a “securities market” for securities backed by Purchased Assets, or (d) Buyer not being able to sell securities backed by Purchased Assets at prices that would have been reasonable prior to the occurrence of such event or events.

 

“Market Value”: Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Material Adverse Effect”:  Any event, development or circumstance that has a material adverse effect on or material adverse change in or to (a) the property, assets, business, operations, financial condition, credit quality or prospects of any Seller Party, (b) the ability of Seller to pay and perform the Repurchase Obligations or the ability of Guarantor to pay and perform its obligations under the Guaranty, (c) the validity, legality, binding effect or enforceability of any Repurchase Document, Purchased Asset Document, Purchased Asset or security interest granted hereunder or thereunder, (d) the rights and remedies of Buyer or any Indemnified Person under any Repurchase Document, Purchased Asset Document or Purchased

 

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Asset, or (e) the perfection or priority of any Lien granted under any Repurchase Document or Purchased Asset Document.

 

“Material Modification”:  Any (i) material amendment, waiver, termination, rescission, cancellation, release or any other material modification to the terms of, or any collateral, guaranty or indemnity for, or the exercise of any material right or remedy of a holder (including all lending, corporate rights, remedies, consents, approvals and waivers) of, any Purchased Asset, or Purchased Asset Document or (ii) extension or release of collateral for any Purchased Asset (other than any such extension or release that is expressly permitted under the terms of the Purchased Asset documents without lender discretion).

 

“Materials of Environmental Concern”:  Any hazardous, toxic or harmful substances, materials, wastes, pollutants or contaminants defined as such in or regulated under any Environmental Law.

 

“Maximum Aggregate Purchase Price”: Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Maximum Applicable Percentage”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Maximum Facility Amount”: The Maximum Aggregate Purchase Price; provided, that the Maximum Facility Amount on the expiration date of the Ramp-Up Period and on each date thereafter shall be an amount equal to the sum of (a) the then-current Aggregate Amount Outstanding, and (b) the product of (x) the Applicable Percentage and (y) those remaining future funding obligations that are scheduled in the Confirmation for the related Purchased Assets,  and have not yet been funded by Buyer as of such date. For the avoidance of doubt, the “Maximum Facility Amount” shall be reduced as Purchased Assets are repurchased, in whole or in part, and Margin Deficits are satisfied, all in accordance with the applicable terms of this Agreement.

 

“Maximum Purchased Asset PPV Requirement”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Mezzanine Loan”:  A performing mezzanine loan secured by pledges of 100% of the Equity Interests of the Mortgagor or an Affiliate of the Mortgagor under the related Whole Loan.

 

“Mezzanine Loan Documents”:  With respect to any Purchased Asset that is a Mezzanine Loan, the Mezzanine Note, those documents executed in connection with, evidencing or governing such Mezzanine Loan and the Mortgage Loan Documents for the related Whole Loan including, without limitation, those documents which are required to be delivered to Custodian under the Custodial Agreement (which documents so required to be delivered to Custodian shall only be required to include, for the avoidance of doubt, copies of the Mortgage Loan Documents for the related Whole Loan).

 

“Mezzanine Note”:  The original executed promissory note or other tangible evidence of Mezzanine Loan indebtedness.

 

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“Minimum Purchased Asset Debt Yield Requirement”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Moody’s”:  Moody’s Investors Service, Inc. or, if Moody’s Investors Service, Inc. is no longer issuing ratings, another nationally recognized rating agency reasonably acceptable to Buyer.

 

“Mortgage”:  Any mortgage, deed of trust, assignment of rents, security agreement and fixture filing, or other instruments creating and evidencing a lien on real property and other property and rights incidental thereto.

 

“Mortgage Asset File”:  The meaning specified in the Custodial Agreement.

 

“Mortgage Loan Documents”: With respect to any Whole Loan, those documents executed in connection with and/or evidencing or governing the related Whole Loan, including, without limitation those that are required to be delivered to Custodian under the Custodial Agreement.

 

“Mortgage Note”:  The original executed promissory note or other evidence of the indebtedness of a Mortgagor with respect to a commercial mortgage loan.

 

“Mortgaged Property”:  (I) In the case of a Whole Loan, the real property (including all improvements, buildings, fixtures, building equipment and personal property thereon and all additions, alterations and replacements made at any time with respect to the foregoing) and all other collateral directly or indirectly securing repayment of the debt evidenced by (I) a Mortgage Note (in the case of a Whole Loan) and (II) in the case of a Mezzanine Loan, the real property (including all improvements, buildings, fixtures, building equipment and personal property thereon and all additions, alterations and replacements made at any time with respect to the foregoing) and all other collateral owned by the Person (or Affiliate of such Person) the equity of which is pledged as collateral security for such Mezzanine Loan.

 

“Mortgagee”:  The record holder of a Mortgage Note secured by a Mortgage.

 

“Mortgagor”:  The obligor on a Mortgage Note, including any Person who has assumed or guaranteed the obligations of the obligor thereunder.

 

“Multiemployer Plan”:  A Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Multifamily Asset”:  An Asset with respect to which the Mortgaged Property consists of real property with five or more residential rental units (including mixed use multi-family/office and multi-family retail) as to which the majority of the underwritten revenue is from residential rental units.

 

“Non-Recourse Indebtedness”:  With respect to any Person and any date, indebtedness of such Person as of such date for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental

 

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indemnities, Insolvency Events, non-approved transfers or other events) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness.

 

“Off-Balance Sheet Obligations”:  With respect to any Person and any date, to the extent not included as a liability on the balance sheet of such Person, all of the following with respect to such Person as of such date: (a) monetary obligations under any financing lease or so—called “synthetic,” tax retention or off-balance sheet lease transaction that, upon the application of any Insolvency Laws, would be characterized as indebtedness, (b) monetary obligations under any sale and leaseback transaction that does not create a liability on the balance sheet of such Person, or (c) any other monetary obligation arising with respect to any other transaction that (i) is characterized as indebtedness for tax purposes but not for accounting purposes, or (ii) is the functional equivalent of or takes the place of borrowing but that does not constitute a liability on the balance sheet of such Person (for purposes of this clause (c), any transaction structured to provide Tax deductibility as Interest Expense of any dividend, coupon or other periodic payment will be deemed to be the functional equivalent of a borrowing).

 

“Other Connection Taxes”:  With respect to Buyer, Taxes imposed as a result of a present or former connection between Buyer and the jurisdiction imposing such Taxes (other than a connection arising from Buyer having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Repurchase Document, or sold or assigned an interest in any Transaction or Repurchase Document).

 

“Other Taxes”: Any and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under any Repurchase Document or from the execution, delivery, performance, or enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Repurchase Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.

 

“Participant”:                     Defined in Section 18.08(b).

 

“Participant Register”:  Defined in Section 18.08(g).

 

“Party”:  The meaning set forth in the preamble to this Agreement.

 

“PATRIOT Act”:  The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended, modified or replaced from time to time.

 

“Person”:  An individual, corporation, limited liability company, business trust, partnership, trust, unincorporated organization, joint stock company, sole proprietorship, joint venture, Governmental Authority or any other form of entity.

 

“Pine River Entities”: Manager, Pine River Domestic Management L.P., Pine River Capital Management LLC and PRCM Advisers LLC.

 

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“Plan”:  An employee benefit or other plan, as defined in Section 3(3) of ERISA, established or maintained by Seller or any ERISA Affiliate during the five year period ended prior to the date of this Agreement or to which Seller or any ERISA Affiliate makes, is obligated to make or has, within the five year period ended prior to the date of this Agreement, been required to make contributions, and that is covered by or subject to Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code, other than a Multiemployer Plan.

 

“Plan Asset Regulation”:  The regulation of the United States Department of Labor at 29 C.F.R. § 2510.3-101 (as modified by Section 3(42) of ERISA).

 

“Pledge and Security Agreement”:  The Pledge and Security Agreement, dated as of the Closing Date, made by Pledgor in favor of Buyer, as amended, modified, waived, supplemented, extended, restated or replaced from time to time.

 

“Pledged Assets”:  Defined in the Residual Pledge Agreement.

 

“Pledged Collateral”:  Defined in the Pledge and Security Agreement.

 

“Pledgor”:  GP Commercial WF Holdings LLC, a Delaware limited liability company, together with its successors and permitted assigns.

 

“Power of Attorney”: Defined in Section 18.19.

 

“PPV”:  With respect to any Purchased Asset as of any date, the ratio (expressed as a percentage) of the related Purchase Price to the Market Value of the related Mortgaged Property as of such date, as determined by Buyer in its discretion.

 

“Preferred Equity”:  A performing current pay preferred equity position (with a put or synthetic maturity date structure replicating a debt instrument and excluding any perpetual preferred equity positions) evidenced by a stock share certificate or other similar ownership certificate representing the entire equity ownership interest in entities that own income producing commercial real estate.

 

“Price Differential”:  For any Pricing Period or portion thereof, (a) for any  Transaction outstanding, the sum of the products, for each day during such Pricing Period or portion thereof, of (i) 1/360th of the Pricing Rate in effect for each Purchased Asset subject to such Transaction during such Pricing Period, times (ii) the outstanding Purchase Price for such Purchased Asset on each such day or (b) for all Transactions outstanding, the sum of the amounts calculated in accordance with the preceding clause (a) for all Transactions

 

“Pricing Margin”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Pricing Period”:  For any Purchased Asset, (a) in the case of the first Remittance Date for such Purchased Asset, the period from the Purchase Date for such Purchased Asset to but excluding such Remittance Date, and (b) in the case of any subsequent Remittance Date, the one-month period commencing on and including the prior Remittance Date and ending on but excluding such Remittance Date; provided, that no Pricing Period for a Purchased Asset shall end

 

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after the Repurchase Date for such Purchased Asset to the extent such Purchased Asset is actually repurchased on such Repurchase Date.

 

“Pricing Rate”:  For any Pricing Period, the sum of (a) LIBOR for such Pricing Period plus (b) the applicable Pricing Margin, which shall be subject to adjustment and/or conversion as provided in Sections 12.01 and 12.02; provided, that while an Event of Default is continuing, the Pricing Rate shall be the Default Rate.

 

“Pricing Rate Determination Date”:  (a) In the case of the first Pricing Period for any Purchased Asset, the related Purchase Date for such Purchased Asset, and (b) in the case of each subsequent Pricing Period, two (2) Business Days prior to the Remittance Date on which such Pricing Period begins.

 

“Principal Payments”:  For any Purchased Asset, all payments and prepayments of principal received for such Purchased Asset, including insurance and condemnation proceeds which are permitted by the terms of the Purchased Asset Documents to be applied to principal and are, in fact, so applied and recoveries of principal from liquidation or foreclosure which are permitted by the terms of the Purchased Asset Documents to be applied to principal and are, in fact, so applied.

 

“Purchase Agreement”:  Any purchase agreement between Seller and any Transferor pursuant to which Seller purchased or acquired an Asset which is subsequently sold to Buyer hereunder, which Purchase Agreement shall contain a grant of a security interest in favor of Seller and authorize the filing of UCC financing statements against the Transferor with respect to such Asset.

 

“Purchase Date”:  For any Purchased Asset, the date on which such Purchased Asset is purchased by Buyer from Seller in connection with a Transaction as set forth in the related Confirmation.

 

“Purchase Price”:  For any Purchased Asset, (a) as of the related Purchase Date and, as initially set forth in the related Confirmation as may be updated by Buyer and Seller from time to time, an amount equal to the product of the Market Value of such Purchased Asset, times the Applicable Percentage for such Purchased Asset, and (b) as of any other date, the amount described in the preceding clause (a), (i) increased by any Future Funding Amounts disbursed by Buyer to Seller or the related borrower with respect to such Purchased Asset, (ii) reduced by any amount of Margin Deficit transferred by Seller to Buyer pursuant to Section 4.01 and applied to the Purchase Price of such Purchased Asset, (iii) reduced by any Principal Payments remitted to the Waterfall Account and which were applied to the Purchase Price of such Purchased Asset by Buyer pursuant to clause fifth of Section 5.02, and (iv) reduced by any payments made by Seller in reduction of the outstanding Purchase Price,  in each case on or prior to such date of determination with respect to such Purchased Asset.

 

“Purchased Asset Data Summary”:  A monthly report from Seller to Buyer on each Purchased Asset, as required pursuant to Section 8.08(d), substantially in the form of Exhibit E.

 

“Purchased Asset Documents”:  Individually or collectively, as the context may require, the related Mortgage Loan Documents and the Mezzanine Loan Documents.

 

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“Purchased Assets”:  (a) For any Transaction, each Asset sold by Seller to Buyer in such Transaction, and (b) in respect of the Transactions in general, all Assets sold by Seller to Buyer, in each case including, to the extent relating to such Asset or Assets, all of Seller’s right, title and interest in and to (i) Purchased Asset Documents, (ii) Servicing Rights, (iii) Servicing Files, (iv) mortgage guaranties and insurance (issued by Governmental Authorities or otherwise) and claims, payments and proceeds thereunder, (v) insurance policies, certificates of insurance and claims, payments and proceeds thereunder, (vi) the principal balance of such Assets, not just the amount advanced, (vii) amounts and property from time to time on deposit in the Waterfall Account or the Servicer Account, together with the Waterfall Account itself, (viii) collection, escrow, reserve, collateral or lock—box accounts and all amounts and property from time to time on deposit therein, to the extent of Seller’s or the holder’s interest therein, (ix) Income, (x) security interests of Seller in Derivatives Contracts entered into by Underlying Obligors, (xi) rights of Seller under any letter of credit, guarantee, warranty, indemnity or other credit support or enhancement, (xii) [reserved], (xiii) all supporting obligations of any kind, and (xiv) all proceeds related to the sale, securitization or other disposition thereof; provided, that (A) Purchased Assets shall not include any obligations of Seller or any Retained Interests, and (B) for purposes of the grant of security interest by Seller to Buyer set forth in Section 11.01, together with the other provisions of Article 11, Purchased Assets shall include all of the following: general intangibles, accounts, chattel paper, deposit accounts, securities accounts, instruments, securities, financial assets, uncertificated securities, security entitlements and investment property (as such terms are defined in the UCC) and replacements, substitutions, conversions, distributions or proceeds relating to or constituting any of the items described in the preceding clauses (i) through (xiv).

 

“Ramp-Up Period”:  The period from the Closing Date to and including the thirtieth (30th) calendar day following the Closing Date.

 

“Rating Agency”:  Each of Fitch, Moody’s and S&P.

 

“Register”:  Defined in Section 18.08(f).

 

“REIT”:  A Person satisfying the conditions and limitations set forth in Section 856(b), Section 856(c), and Section 857(a) of the Code and qualifying as a real estate investment trust, as defined in Section 856(a) of the Code.

 

“Release”:  Any generation, treatment, use, storage, transportation, manufacture, refinement, handling, production, removal, remediation, disposal, presence or migration of Materials of Environmental Concern on, about, under or within all or any portion of any property or Mortgaged Property.

 

“Release Amount”:  With respect to any Purchased Asset, an amount, equal to the lesser of (i) the product of (x) the applicable Release Percentage and (y) the outstanding Purchase Price of such Purchased Asset, and (ii) the Aggregate Amount Outstanding.

 

“Release Percentage”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Remedial Work”:  Any investigation, inspection, site monitoring, containment, clean—up, removal, response, corrective action, mitigation, restoration or other remedial work of

 

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any kind or nature because of, or in connection with, the current or future presence, suspected presence, Release or threatened Release in or about the air, soil, ground water, surface water or soil vapor at, on, about, under or within all or any portion of any property or Mortgaged Property of any Materials of Environmental Concern, including any action to comply with any applicable Environmental Laws or directives of any Governmental Authority with regard to any Environmental Laws.

 

“Remittance Date”:  The seventeenth (17th) day of each month (or if such day is not a Business Day, the next following Business Day), or such other day as is mutually agreed to by Seller and Buyer.

 

“REOC”:  A Real Estate Operating Company within the meaning of Regulation Section 2510.3-101(e) of the Plan Asset Regulation.

 

“Representation Breach”:  Any representation, warranty, certification, statement or affirmation made or deemed made by any Seller, Pledgor or Guarantor in any Repurchase Document (including in Schedule 1) or in any certificate, notice, report or other document delivered pursuant to any Repurchase Document, that proves to be incorrect, false or misleading in any material respect when made or deemed made, without regard to any Knowledge or lack of Knowledge thereof by such Person; provided that no representation or warranty with respect to which a related Approved Representation Exception exists shall constitute a Representation Breach.

 

“Representation Exceptions”:  With respect to each Purchased Asset, a written list prepared by Seller and delivered to Buyer prior to the Purchase Date of such Purchased Asset specifying, in reasonable detail, the representations and warranties (or portions thereof) set forth in this Agreement (including in Schedule 1) that are not satisfied with respect to an Asset or Purchased Asset.

 

“Repurchase Date”:  For any Purchased Asset, the earliest to occur of (a) the Termination Date, without giving effect to any unexercised extensions thereof, (b) any Early Repurchase Date therefor, and (c) the Business Day on which Seller is to repurchase such Purchased Asset as specified by Seller and agreed to by Buyer in the related Confirmation.

 

“Repurchase Documents”:  Collectively, this Agreement, the Custodial Agreement, the Fee Letter, the Controlled Account Agreements, the Servicing Agreement and any related sub-servicing agreements, the Pledge and Security Agreement, the Residual Pledge Agreement, the Guarantee Agreement, the Servicing Agreement Side Letter, the Servicer Joinder Agreement, the Power of Attorney, the Contribution Agreement for each Purchased Asset, all Irrevocable Redirection Notices, all Confirmations, all UCC financing statements, amendments and continuation statements filed pursuant to any other Repurchase Document, and all additional documents, certificates, agreements or instruments, the execution of which is required, necessary or incidental to or desirable for performing or carrying out any other Repurchase Document.

 

“Repurchase Obligations”:  All obligations of Seller to pay the Repurchase Price on the Repurchase Date and all other obligations and liabilities of Seller to Buyer arising under or in connection with the Repurchase Documents, whether now existing or hereafter arising, and,

 

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without duplication, all interest and fees that accrue after the commencement by or against any Seller Party of any Insolvency Proceeding naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding (in each case, whether due or accrued).

 

“Repurchase Price”:  For any Purchased Asset as of any date, an amount equal to the sum of (a) the outstanding Purchase Price as of such date (as increased by any Future Funding Amounts advanced in connection with such Purchased Asset), (b) the accrued and unpaid Price Differential for such Purchased Asset as of such date, (c) all other amounts that are, or otherwise would be, due and payable as of such date by Seller to Buyer under this Agreement or any Repurchase Document, (d) any accrued and unpaid fees and expenses and accrued indemnity amounts, late fees, default interest, breakage costs and any other amounts owed by Seller or Guarantor to Buyer or any of its Affiliates under this Agreement, any Repurchase Document or otherwise, (e)  unless, simultaneously with such repurchase, all other amounts otherwise due and payable under this Agreement are being repaid in full in connection with the termination of this Agreement, any Release Amounts payable in connection with such Purchased Asset, and (f) any applicable Exit Fee, then-currently due in connection with the related Purchased Asset.

 

“Requirements of Law”:  With respect to any Person or property or assets of such Person and as of any date, all of the following applicable thereto as of such date: all Governing Documents and existing and future laws, statutes, rules, regulations, treaties, codes, ordinances, permits, certificates, orders and licenses of and interpretations by any Governmental Authority (including Environmental Laws, ERISA, Anti-Corruption Laws, Anti-Money Laundering Laws, Sanctions, regulations of the Board of Governors of the Federal Reserve System, and laws, rules and regulations relating to usury, licensing, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or other Governmental Authority.

 

“Residual Pledge Agreement”: The Residual Pledge Agreement, dated as of the Closing Date, by Residual Pledgor in favor of Buyer, as the same may be amended, modified, waived, supplemented, extended, replaced or restated from time to time.

 

“Residual Pledgor”: TH Commercial Mortgage LLC, a Delaware limited liability company, together with its successors and permitted assigns.

 

“Responsible Officer”:  With respect to any Person, the chief executive officer, the chief financial officer, the chief accounting officer, the treasurer or the chief operating officer of such Person or such other officer designated as an authorized signatory pursuant to such Person’s Governing Documents.

 

“Retained Interest”:  (a) With respect to any Purchased Asset, (i) all duties, obligations and liabilities of Seller thereunder, including payment and indemnity obligations, (ii) all obligations of agents, trustees, servicers, administrators or other Persons under the documentation evidencing such Purchased Asset, and (iii) if any portion of the Indebtedness related to such Purchased Asset is owned by another lender or is being retained by Seller, the interests, rights and obligations under such documentation to the extent they relate to such portion,

 

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and (b) with respect to any Purchased Asset with an unfunded commitment on the part of Seller, all obligations to provide additional funding, contributions, payments or credits.

 

“S&P”:  Standard and Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or, if Standard & Poor’s Ratings Services is no longer issuing ratings, another nationally recognized rating agency reasonably acceptable to Buyer.

 

“Sanction” or “Sanctions”: Individually and collectively, any and all economic or financial sanctions, trade embargoes and anti-terrorism laws imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), the U.S. State Department, the U.S. Department of Commerce, or through any existing or future Executive Order; (b) the United Nations Security Council; (c) the European Union; (d) the United Kingdom; or (e) any other governmental authorities with jurisdiction over Seller or Guarantor or any of their Affiliates.

 

“Sanctioned Target”:  Any individual, entity, group, sector, territory, or country that is the target of any Sanctions, including without limitation, any legal entity that is deemed to be a target of Sanctions based on the direct or indirect ownership or control of such entity by any other Sanctioned Target(s).

 

“Seller”:  The Seller named in the preamble of this Agreement, together with its permitted successors and assigns.

 

“Seller Party”: Each of Seller, Pledgor, each Intermediate Entity and Guarantor.

 

“Servicer”: For each Purchased Asset, as determined in accordance with Article 17, either (a) Wells Fargo Bank, National Association, or its designee, (b) Trimont Real Estate Advisors, LLC. or, (c) another servicer acceptable to Buyer, servicing such Purchased Asset under a Servicing Agreement.

 

“Servicer Account”:  The segregated, non-interest bearing account, created and maintained pursuant to the Servicing Agreement, established at Deposit Account Bank, in the name of Seller, pledged to Buyer and subject to a Controlled Account Agreement.

 

“Servicer Event of Default”:  With respect to a Servicer, (a) any event of default (however defined) under the Servicing Agreement between Servicer, Seller and Buyer (if applicable), or (b) any failure of such Servicer to be rated by a Rating Agency as an approved servicer of commercial mortgage loans.

 

“Servicer Joinder Agreement” The Servicer Joinder Agreement, dated as of the Closing Date, between GP Commercial WF LLC and Trimont Real Estate Advisors, LLC., as the same may be amended, modified, waived, supplemented, extended, replaced or restated from time to time.

 

“Servicer Notice”:  A notice in the form of Exhibit G sent by Seller to Servicer, and countersigned and returned by Servicer, directing the remittance of all Income directly into the Waterfall Account.

 

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“Servicing Agreement”:  (i) That certain Servicing and Asset Management Agreement, dated as of July 6, 2015, between Trimont Real Estate Advisors, LLC, as servicer and asset manager and TH Commercial Holdings LLC, as client or (ii) any other agreement acceptable to Buyer entered into by Seller and a Servicer, or among Buyer, Seller, and a Servicer, as applicable, for the servicing of the Purchased Assets.

 

“Servicing Agreement Extension Notice”: A notice in the form of Exhibit K sent by Buyer to Servicer, extending the termination date of the related Servicing Agreement pursuant to the terms of Section 17.01(b).

 

“Servicing Agreement Side Letter”: The Servicing Agreement Side Letter, dated as of the Closing Date, among Buyer, Seller and Servicer, as the same may be amended, modified, waived, supplemented, extended, replaced or restated from time to time.

 

“Servicing File”:  With respect to any Purchased Asset, the file retained and maintained by Seller or the related Servicer, including the originals or copies of all Purchased Asset Documents and other documents and agreements (i) relating to such Purchased Asset and/or the related Whole Loan, (ii) relating to the origination and/or servicing and administration of such Purchased Asset and/or the related Whole Loan, or (iii) that are otherwise reasonably necessary for the ongoing administration and/or servicing of such Purchased Asset and/or the related Whole Loan or for evidencing or enforcing any of the rights of the holder of such Purchased Asset or holders of interests therein, including to the extent applicable all servicing agreements, files, documents, records, data bases, computer tapes, insurance policies and certificates, appraisals, other closing documentation, payment history and other records relating to or evidencing the servicing of such Purchased Asset.

 

“Servicing Rights”:  With respect to any Purchased Asset, all right, title and interest of any Seller Party, or any other Person, in and to any and all of the following:  (a) rights to service and/or sub-service, and collect and make all decisions with respect to, the Purchased Assets and/or any related Whole Loans, (b) amounts received by any Seller Party or any other Person, for servicing and/or sub-servicing the Purchased Assets and/or any related Whole Loans, (c) late fees, penalties or similar payments as compensation with respect to the Purchased Assets and/or any related Whole Loans, (d) agreements and documents creating or evidencing any such rights to service and/or sub-service (including, without limitation, all Servicing Agreements), together with all documents, files and records relating to the servicing and/or sub-servicing of the Purchased Assets and/or any related Whole Loans, and rights of each Seller Party and Affiliate thereof, and any other Person thereunder, (e) escrow, reserve and similar amounts with respect to the Purchased Assets and/or any related Whole Loans, (f) rights to appoint, designate and retain any other servicers, sub-servicers, special servicers, agents, custodians, trustees and liquidators with respect to the Purchased Assets and/or any related Whole Loans, and (g) accounts and other rights to payment related to the Purchased Assets and/or any related Whole Loans.

 

“Solvent”:  With respect to any Person at any time, having a state of affairs such that all of the following conditions are met at such time:  (a) the fair value of the assets and property of such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy Code, (b) the present fair salable value of the assets

 

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and property of such Person in an orderly liquidation of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its assets and property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s assets and property would constitute unreasonably small capital.

 

“Special Purpose Entity”: A corporation, limited partnership or limited liability company that, since the date of its formation (unless otherwise indicated in this Agreement) and at all times on and after the date hereof, has complied with and shall at all times comply with the provisions of Article 9.

 

“Sponsor”: Two Harbors Investment Corp., a Maryland corporation.

 

“Structuring Fee”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Subsequent Transaction”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Subsidiary”: With respect to any Person, any corporation, partnership, limited liability company or other entity (heretofore, now or hereafter established) of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, and shall include all Persons the accounts of which are consolidated with those of such Person pursuant to GAAP.

 

“Taxes”:  All present or future taxes, levies, imposts, duties,  deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Termination Date”:  The earliest of (a) the Initial Termination Date, as such date may be extended pursuant to Section 3.06,  (b)  any Accelerated Repurchase Date, and (c) any date on which the Termination Date shall otherwise occur in accordance with the provisions hereof or Requirements of Law.

 

“Transaction”:  With respect to the Assets purchased on each Purchase Date, the sale and transfer of all such Assets from Seller to Buyer pursuant to the Repurchase Documents against the transfer of funds from Buyer to Seller representing the Purchase Price or any additional Purchase Price for such Assets.

 

“Transferor”:  The seller of an Asset under a Purchase Agreement.

 

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“Type”:  With respect to a Mortgaged Property underlying any Purchased Asset, such Mortgaged Property’s classification as one of the following, as designated by Buyer in its sole discretion on the related Confirmation: multifamily or commercial.  For the avoidance of doubt, the Type shall reflect a Mortgaged Property’s primary use.  If a Mortgaged Property is a mixed use property, then Buyer shall determine, in its sole discretion, the primary use of such Mortgaged Property.

 

“UCC”:  The Uniform Commercial Code as in effect in the State of New York; provided, that, if, by reason of a Requirement of Law, the perfection, effect on perfection or non-perfection or priority of the security interest in any Purchased Asset is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, then “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority.

 

“Underlying Obligor”:  Individually and collectively, as the context may require, (a) in the case of any Purchased Asset that is a Whole Loan, the Mortgagor and each obligor and guarantor under such Purchased Asset, including (i) any Person who has not signed the related Mortgage Note but owns an interest in the related Mortgaged Property, which interest has been encumbered to secure such Purchased Asset, and (ii) any other Person who has assumed or guaranteed the obligations of such Mortgagor under the Purchased Asset Documents relating to such Purchased Asset, and (b) in the case of any Purchased Asset that is a Mezzanine Loan, the borrower under the related Mezzanine Loan, and any other Person who has assumed or guaranteed the obligation of such Mezzanine Loan borrower.

 

“Underwriting Package”:  With respect to one or more Assets, the internal document or credit committee memorandum setting forth all material information relating to an Asset which is known by Seller, prepared by Seller for its evaluation of such Asset, to include at a minimum all the information required to be set forth in the relevant Confirmation.  In addition, the Underwriting Package shall include all of the following, to the extent applicable and available:

 

(a)                                 all Purchased Asset Documents required to be delivered to Custodian under Section 2.01 of the Custodial Agreement;

 

(b)                                 an Appraisal, together with a property condition report, a Phase I environmental report and, if appropriate, a seismic report;

 

(c)                                  the current occupancy report, tenant stack and rent roll;

 

(d)                                 at least two (2) years of property-level financial statements;

 

(e)                                  the current financial statement of the Underlying Obligor;

 

(f)                                   the Mortgage Asset File;

 

(g)                                  third-party reports and agreed-upon procedures, letters and reports (whether drafts or final forms), site inspection reports, market studies and other due diligence materials prepared by or on behalf of or delivered to Seller;

 

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(h)                                 aging of accounts receivable and accounts payable;

 

(i)                                     copies of all Purchased Asset Documents not otherwise required to be delivered pursuant to clause (a) above;

 

(j)                                    such further documents or information as Buyer may request;

 

(k)                                 any and all agreements, documents, reports, or other information concerning the Purchased Assets (including, without limitation, all of the related Purchased Asset Documents) received or obtained in connection with the origination of the Purchased Assets;

 

(l)                                     any other material documents or reports concerning the Purchased Assets prepared or executed by any Seller Party; and

 

(m)                             if the related Asset was acquired by Seller from a third party, all documents, instruments and agreements received in respect of the closing of the acquisition transaction under the Purchase Agreement.

 

“Upsize Fee”:  Defined in the Fee Letter, which definition is incorporated herein by reference.

 

“Upsize Option”:  Defined in Section 3.06(b).

 

“U.S. Person”:  Any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

 

“U.S. Tax Compliance Certificate”:  Defined in Section 12.06(e).

 

“VCOC”: A “venture capital operating company” within the meaning of Section 2510.3-101(d) of the Plan Asset Regulations.

 

“Waterfall Account”:  A segregated non-interest bearing account established at Deposit Account Bank, in the name of Seller, pledged to Buyer and subject to a Controlled Account Agreement.

 

“Whole Loan”:  A performing commercial real estate whole loan made to the related Underlying Obligor and secured primarily by a perfected, first priority Lien in the related underlying Mortgaged Property, including, without limitation with respect to any Mezzanine Loan, the Whole Loan made to the Mortgagor or Affiliate of such Mortgagor whose Equity Interests, directly or indirectly, secure such Mezzanine Loan.

 

Section 2.02                             Rules of Interpretation.  Headings are for convenience only and do not affect interpretation.  The following rules of this Section 2.02 apply unless the context requires otherwise.  The singular includes the plural and conversely.  A gender includes all genders.  Where a word or phrase is defined, its other grammatical forms have a corresponding meaning.  A reference to an Article, Section, Subsection, Paragraph, Subparagraph, Clause, Annex, Schedule, Appendix, Attachment, Rider or Exhibit is, unless otherwise specified, a reference to an Article,

 

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Section, Subsection, Paragraph, Subparagraph or Clause of, or Annex, Schedule, Appendix, Attachment, Rider or Exhibit to, this Agreement, all of which are hereby incorporated herein by this reference and made a part hereof.  A reference to a party to this Agreement or another agreement or document includes the party’s successors, substitutes or assigns in each case permitted by the Repurchase Documents.  A reference to an agreement or document is to the agreement or document as amended, restated, modified, novated, supplemented or replaced, except to the extent prohibited by any Repurchase Document.  A reference to legislation or to a provision of legislation includes a modification, codification, replacement, amendment or reenactment of it, a legislative provision substituted for it and a rule, regulation or statutory instrument issued under it.  A reference to writing includes a facsimile or electronic transmission and any means of reproducing words in a tangible and permanently visible form.  A reference to conduct includes an omission, statement or undertaking, whether or not in writing.  A Default or Event of Default exists until it has been cured or waived in writing by Buyer.  The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement, unless the context clearly requires or the language provides otherwise.  The word “including” is not limiting and means “including without limitation.”  The word “any” is not limiting and means “any and all” unless the context clearly requires or the language provides otherwise.  In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding,” and the word “through” means “to and including.”  The words “will” and “shall” have the same meaning and effect.  A reference to day or days without further qualification means calendar days.  A reference to any time means New York time.  This Agreement may use several different limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their respective terms.  Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed in accordance with GAAP, and all accounting determinations, financial computations and financial statements required hereunder shall be made in accordance with GAAP, without duplication of amounts, and on a consolidated basis with all Subsidiaries.  All terms used in Articles 8 and 9 of the UCC, and used but not specifically defined herein, are used herein as defined in such Articles 8 and 9.  A reference to “fiscal year” and “fiscal quarter” means the fiscal periods of the applicable Person referenced therein.  A reference to an agreement includes a security interest, guarantee, agreement or legally enforceable arrangement whether or not in writing.  A reference to a document includes an agreement (as so defined) in writing or a certificate, notice, instrument or document, or any information recorded in computer disk form.  Whenever a Person is required to provide any document to Buyer under the Repurchase Documents, the relevant document shall be provided in writing or printed form unless Buyer requests otherwise.  At the request of Buyer, the document shall be provided in computer disk form or both printed and computer disk form.  The Repurchase Documents are the result of negotiations between the Parties, have been reviewed by counsel to Buyer and counsel to Seller, and are the product of both Parties.  No rule of construction shall apply to disadvantage one Party on the ground that such Party proposed or was involved in the preparation of any particular provision of the Repurchase Documents or the Repurchase Documents themselves.  Except where otherwise expressly stated, Buyer may give or withhold, or give conditionally, approvals and consents, and may form opinions and make determinations, in its sole and absolute discretion.  Reference herein or in any other Repurchase Document to Buyer’s discretion, shall mean, unless otherwise expressly stated herein or therein, Buyer’s sole and absolute discretion, and the exercise 

 

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of such discretion shall be final and conclusive.  In addition, whenever Buyer has a decision or right of determination, opinion or request, exercises any right given to it to agree, disagree, accept, consent, grant waivers, take action or no action or to approve or disapprove (or any similar language or terms), or any arrangement or term is to be satisfactory or acceptable to or approved by Buyer (or any similar language or terms), the decision of Buyer with respect thereto shall be in the sole and absolute discretion of Buyer, and such decision shall be final and conclusive, except as may be otherwise specifically provided herein.

 

ARTICLE 3

 

THE TRANSACTIONS

 

Section 3.01                             Procedures.

 

(a)                                 From time to time during the Ramp-Up Period, Seller shall initiate the related Transactions by requesting that Buyer enter into a proposed Transaction and sending Buyer a notice which (i) describes the proposed Transaction and each proposed Asset and any related Mortgaged Property and other security therefor in reasonable detail, (ii) transmits a complete Underwriting Package for each proposed Asset, (iii) set forth the Representation Exceptions requested, if any, with respect to each proposed Asset, and (iv) indicates the amount of all then-currently unfunded future funding obligations, and the portion thereof expected to be funded by Buyer under Section 3.10.  Seller shall promptly deliver to Buyer any supplemental materials requested at any time by Buyer.  Buyer shall conduct such review of the Underwriting Package and each such Asset as Buyer determines appropriate.  Buyer shall determine whether or not it is willing to purchase any or all of the proposed Assets, and if so, on what terms and conditions.  For the avoidance of doubt, it is contemplated that there will only be twelve (12) Transactions entered into hereunder between Seller and Buyer (excluding any Future Funding Transactions in respect thereof pursuant to Section 3.10), and the Purchase Date for such Transactions will occur during the Ramp-Up Period  It is expressly agreed and acknowledged that Buyer is entering into the Transactions on the basis of all such representations and warranties and on the completeness and accuracy of the information contained in the applicable Underwriting Package, and any incompleteness or inaccuracies in the related Underwriting Package will only be acceptable to Buyer if disclosed in writing to Buyer by Seller in advance of the related Purchase Date, and then only if Buyer opts to purchase the related Purchased Asset from Seller notwithstanding such incompleteness and inaccuracies.  In the event of a Representation Breach with respect to a particular Purchased Asset, Seller shall immediately repurchase the related Asset or Assets in accordance with Section 3.05.

 

(b)                                 Buyer shall give Seller notice of the date when Buyer has received a complete Underwriting Package, supplemental materials and any other documentation required pursuant to Section 3.01(a) or otherwise required under any Repurchase Documents.

 

(c)                                  If Buyer communicates to Seller a final non-binding determination that it is willing to purchase any or all of such Assets, Seller shall deliver to Buyer an executed preliminary Confirmation for such Transaction, describing each such Asset and its proposed Purchase Date, Market Value, Applicable Percentage, Purchase Price and such other terms and conditions as Buyer may require prior to the related Purchase Date.  If Buyer requires changes to any preliminary

 

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Confirmation, Seller shall make such changes and re-execute such preliminary Confirmation.  If Buyer determines to enter into a Transaction with respect to such Asset on the terms described in the related preliminary Confirmation, Buyer shall promptly execute and return the same to Seller, which shall thereupon become effective as the Confirmation of the Transaction with respect to such Asset.  Buyer’s approval of the purchase of an Asset on such terms and conditions as Buyer may require shall be evidenced only by its execution and delivery of the related Confirmation.  For the avoidance of doubt, Buyer shall not (i) be bound by any preliminary or final non-binding determination referred to above, (ii) be deemed to have approved the purchase of an Asset by virtue of the approval or entering into by Buyer of a rate lock agreement, interest rate protection agreement, total return swap or any other agreement with respect to such Asset, or (iii) be obligated to purchase an Asset notwithstanding a Confirmation executed by the Parties unless and until all applicable conditions precedent in Article 6 have been satisfied or waived by Buyer.

 

(d)                                 Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of each Transaction covered thereby, and shall be construed to be cumulative to the extent possible, but in no way shall be construed as evidence of Buyer’s agreement subsequently to purchase additional amounts of, or other, Assets.  If terms in a Confirmation are inconsistent with terms in this Agreement with respect to a particular Transaction, such Confirmation shall prevail.  Whenever the Applicable Percentage or any other term of a Transaction (other than the Market Value and outstanding Purchase Price) with respect to an Asset is revised or adjusted in accordance with this Agreement, an amended and restated Confirmation in the form attached hereto as Exhibit J (an “Amended and Restated Confirmation”) reflecting such revision or adjustment and that is otherwise acceptable to the Parties shall be prepared by Seller and executed by the Parties.

 

(e)                                  The fact that Buyer has conducted or has failed to conduct any partial or complete examination or any other due diligence review of any Asset or Purchased Asset shall in no way affect any rights Buyer may have under the Repurchase Documents or otherwise with respect to any representations or warranties or other rights or remedies thereunder or otherwise, including the right to determine at any time that such Asset or Purchased Asset is not an Eligible Asset.

 

(f)                                   Neither any Transaction nor any Future Funding Transaction shall be entered into if (i) any Margin Deficit, Default, Event of Default, Market Disruption Event or Material Adverse Effect exists or would exist as a result of such Transaction, (ii) the Repurchase Date for the Purchased Assets subject to such Transaction would be later than the Termination Date, (iii) the proposed Purchased Asset does not qualify as an Eligible Asset, (iv) after giving effect to such Transaction, the Aggregate Amount Outstanding would exceed the Maximum Facility Amount, (v) if Buyer determines not to enter into such Transaction for any reason or for no reason, (vi) all Purchased Asset Documents have not been delivered to Custodian in accordance with the applicable provisions of this Agreement and the Custodial Agreement, (vii) the Facility Debt Yield Test is then-currently being breached, (viii) the proposed Purchased Asset does not comply with either the Minimum Purchased Asset Debt Yield Requirement or the Maximum Purchased Asset PPV Requirement, or (ix) with respect to Transactions (other than Future Funding Transactions), such Purchase Date would occur after expiration of the Ramp-Up Period.

 

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Section 3.02                             Transfer of Purchased Assets; Servicing Rights.  On the Purchase Date for each Purchased Asset, and subject to the satisfaction of all applicable conditions precedent in Article 6, (a) ownership of and title to such Purchased Asset shall be transferred to and vest in Buyer or its designee against the simultaneous transfer of the Purchase Price to the account of Seller specified in Schedule 2 (or if not specified therein, in the related Confirmation or as directed by Seller), and (b) Seller hereby sells, transfers, conveys and assigns to Buyer on a servicing-released basis all of Seller’s right, title and interest (except with respect to any Retained Interests) in and to such Purchased Asset, together with all related Servicing Rights.  For the avoidance of doubt, the facility provided hereunder is not a revolving facility and Seller shall not have the right to (i) enter into any Transactions (other than Future Funding Transactions prior to the Termination Date) after the expiration of the Ramp-Up Period or (ii) repurchase and re-sell Purchased Assets to Buyer after the related Purchase Date.  The Servicing Rights and other servicing provisions under this Agreement are not severable from or to be separated from the Purchased Assets under this Agreement, and such Servicing Rights and other servicing provisions of this Agreement constitute (a) “related terms” under this Agreement within the meaning of Section 101(47)(A)(i) of the Bankruptcy Code and/or (b) a security agreement or other arrangement or other credit enhancement related to the Repurchase Documents.

 

Section 3.03                             Maximum Facility Amount.  The Aggregate Amount Outstanding as of any date of determination shall not exceed the Maximum Facility Amount.  If the Aggregate Amount Outstanding as of any date of determination exceeds the Maximum Facility Amount, Seller shall immediately pay to Buyer an amount necessary to reduce such aggregate outstanding Purchase Price to an amount equal to or less than the Maximum Facility Amount.

 

Section 3.04                             Early Repurchase Date; Mandatory Repurchases.  Seller may terminate the Transaction with respect to any or all Purchased Assets and repurchase such Purchased Assets on any date prior to the scheduled Repurchase Date (including in connection with a full payoff of all amounts due in respect of such Purchased Asset by the related Underlying Obligor) (an “Early Repurchase Date”); provided, that (a) Seller notifies Buyer at least three (3) Business Days before the proposed Early Repurchase Date identifying the Purchased Asset(s) to be repurchased and the Repurchase Price thereof, (b) Seller delivers a certificate from a Responsible Officer of Seller in form and substance satisfactory to Buyer certifying that no Margin Deficit, Default or Event of Default exists or would exist as a result of such repurchase, there are no other Liens on the remaining Purchased Assets, Pledged Collateral or Pledged Assets other than Liens granted pursuant to the Repurchase Documents, and such repurchase would not cause Seller to violate the Facility Debt Yield Test, (c) if the Early Repurchase Date is not a Remittance Date, Seller pays to Buyer any amount due under Section 12.03, and (d) Seller pays to Buyer any Exit Fee due in accordance with Section 3.07 and Seller thereafter complies with Section 3.05.  Notwithstanding the foregoing, should any Margin Deficit exist after giving effect to any repurchase under this Section 3.04, Seller shall also pay the amount of each related Margin Deficit to Buyer at the same time that Seller pays the related Repurchase Price to Buyer hereunder.

 

In addition to other rights and remedies of Buyer under any Repurchase Document, Seller shall, in accordance with the procedures set forth in this Section 3.04 and Section 3.05 immediately repurchase any Purchased Asset that (I) either (a) no longer qualifies as an Eligible Asset, as determined by Buyer, or (b) for which all documents required to be delivered to

 

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Custodian under the Custodial Agreement have not been so delivered on a timely basis or (II) is a Mezzanine Loan, immediately after the related Whole Loan is no longer a Purchased Asset.

 

Section 3.05                             Repurchase.  On the Repurchase Date for each Purchased Asset, Seller shall transfer to Buyer the Repurchase Price for such Purchased Asset as of the Repurchase Date, and, so long as no Default or Event of Default has occurred and is continuing and no unsatisfied Margin Deficit exists, Buyer shall transfer to Seller such Purchased Asset, whereupon the Transaction with respect to such Purchased Asset shall terminate; provided, however, that Buyer shall have no obligation to transfer to Seller, or release any interest in, such Purchased Asset until Buyer shall have received payment in full of the Repurchase Price therefor.  Any Release Amount which is paid by Seller as part of the Repurchase Price shall be applied by Buyer pursuant to clause sixth of Section 5.01 to reduce the outstanding Purchase Price of the remaining Purchased Assets as determined by Buyer in its discretion.  So long as no Default or Event of Default has occurred and is continuing, upon receipt by Buyer of the Repurchase Price and all other amounts due and owing to Buyer and its Affiliates under this Agreement and each other Repurchase Document as of such Repurchase Date, Buyer shall be deemed to have simultaneously released its security interest in such Purchased Asset, shall authorize Custodian (in accordance with the terms of the Custodial Agreement) to release to Seller the Purchased Asset Documents for such Purchased Asset and, to the extent any UCC financing statement filed against Seller specifically identifies such Purchased Asset, Buyer shall deliver an amendment thereto or termination thereof evidencing the release of such Purchased Asset from Buyer’s security interest therein.  Any such transfer or release shall be without recourse to Buyer and without representation or warranty by Buyer.  Any Income with respect to such Purchased Asset received by Buyer or Deposit Account Bank after payment of the Repurchase Price therefor shall be remitted to Seller.  Notwithstanding the foregoing, on or before the Termination Date, Seller shall repurchase all Purchased Assets by paying to Buyer the outstanding Repurchase Price therefor and all other outstanding Repurchase Obligations.  Notwithstanding any provision to the contrary contained elsewhere in any Repurchase Document, at any time during the existence of an unsatisfied Margin Deficit, an uncured Default or Event of Default, Seller shall only be permitted to repurchase a Purchased Asset in connection with a full payoff of all amounts due in respect of such Purchased Asset by the Underlying Obligor or a sale of such Purchased Asset to an independent third party, if Seller shall pay directly to Buyer an amount equal to the sum of (i) the greater of (x) the Repurchase Price of the related Purchased Asset, and (y) one-hundred percent (100%) of the net proceeds paid in connection with the payoff of such Purchased Asset or one hundred percent (100%) of the net proceeds received by Seller in connection with the sale of such Purchased Asset, as applicable, plus (ii) an amount equal to the related unpaid Margin Deficit, if any.  The portion of all such net proceeds in excess of the then-current Repurchase Price of the related Purchased Asset, if any, shall be applied by Buyer to reduce any other amounts then due and payable to Buyer, as determined in its discretion, under this Agreement.

 

Section 3.06                             Termination Date Extension Options and Maximum Facility Amount Upsize Option.

 

(a)                                 Termination Date Extension Options. At the request of Seller delivered to Buyer in writing no earlier than ninety (90) days and no later than thirty (30) days before the then-current Termination Date, provided that the Extension Conditions set forth below are fully satisfied both on the date of Seller’s written request and as of the then-current Termination Date, Buyer

 

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shall grant to Seller an option to separately extend the Termination Date for two (2) consecutive one-year periods (each, an “Extension Period”). Any extension of the Termination Date shall be subject to the satisfaction of the following conditions, as determined by Buyer in its sole discretion (each, an “Extension Condition”):  (i) no Default or any Event of Default has occurred and is continuing, (ii) no Margin Deficit shall be outstanding, (iii) Seller shall have made a timely written request to extend the then-current Termination Date as provided in this Section 3.06, (iv) each of the Purchased Assets shall be in compliance with the Facility Debt Yield Test, (v) all Purchased Assets otherwise qualify as Eligible Assets, and (vi) Seller has paid to Buyer the Extension Fee on or before the then-current Termination Date.  If the Extension Conditions are not fully satisfied as of the current Termination Date, then notwithstanding any prior approval by Buyer of Seller’s request to extend the then-current Termination Date, Seller shall have no right to extend the then-current Termination Date, and any pending request to extend the then-current Termination Date shall be deemed to be denied.  Notwithstanding anything to the contrary in this Section 3.06, in no event shall the Termination Date be extended for more than two (2) Extension Periods. For the avoidance of doubt, exercise of an extension of the Termination Date pursuant to this Section 3.06 shall not extend the scheduled Repurchase Date of any Transaction for any period in excess of one (1) year.

 

(b)                                 Maximum Facility Amount Upsize Option.         At any time during the Ramp-Up Period, Seller may request an increase of the Maximum Facility Amount (the “Upsize Option”) by written notice delivered to Buyer.  Buyer may, in its sole discretion, upon written notice to Seller and receipt of the applicable Upsize Fee, agree to the Upsize Option and enter into a Subsequent Transaction.

 

Section 3.07                             Payment of Price Differential and Fees.

 

(a)                                 Notwithstanding that Buyer and Seller intend that each Transaction entered into hereunder constitute a sale to Buyer of the Purchased Assets subject thereto, Seller shall pay to Buyer the accrued value of the Price Differential for each Purchased Asset on each Remittance Date.  Buyer shall give Seller notice of the Price Differential and any fees and other amounts due under the Repurchase Documents on or prior to the second (2nd) Business Day preceding each Remittance Date; provided, that Buyer’s failure to deliver such notice shall not affect (i) the accrual of such obligations in accordance with this Agreement or (ii) Seller’s obligation to pay such amounts.  If the Price Differential includes any estimated Price Differential, Buyer shall recalculate such Price Differential after the Remittance Date and, if necessary, make adjustments to the Price Differential amount due on the following Remittance Date.

 

(b)                                 Seller shall pay to Buyer all fees and other amounts as and when due as set forth in this Agreement and in the Fee Letter.

 

Section 3.08                             Payment, Transfer and Custody.

 

(a)                                 Unless otherwise expressly provided herein, all amounts required to be paid or deposited by Seller or Guarantor under the Repurchase Documents shall be paid or deposited in accordance with the terms hereof no later than 3:00 p.m. on the day when due, in immediately available Dollars and without deduction, set-off or counterclaim, and if not received before such time shall be deemed to be received on the next Business Day.  Whenever any payment under the

 

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Repurchase Documents shall be stated to be due on a day other than a Business Day, such payment shall be made on the next following Business Day, and such extension of time shall in such case be included in the computation of such payment.  Seller shall, to the extent permitted by Requirements of Law, pay to Buyer interest in connection with any amounts not paid when due under the Repurchase Documents, which interest shall be calculated at a rate equal to the Default Rate, until all such amounts are received in full by Buyer.  Amounts payable to Buyer and not otherwise required to be deposited into the Servicer Account shall be deposited into an account of Buyer.  Seller shall have no rights in, rights of withdrawal from, or rights to give notices or instructions regarding Buyer’s account or the Waterfall Account or the Servicer Account.

 

(b)                                 Any Purchased Asset Documents not delivered to Buyer or Custodian on the relevant Purchase Date and subsequently received or held by or on behalf of Seller are and shall be held in trust by Seller or its agent for the benefit of Buyer as the owner thereof until so delivered to Buyer or Custodian.  Seller or its agent shall maintain a copy of such Purchased Asset Documents and the originals of the Purchased Asset Documents not delivered to Buyer or Custodian.  The possession of Purchased Asset Documents by Seller or its agent is in a custodial capacity only at the will of Buyer for the sole purpose of assisting the related Servicer with its duties under the Servicing Agreement.  Each Purchased Asset Document retained or held by or on behalf of Seller or its agent shall be segregated on Seller’s books and records from the other assets of Seller or its agent, and the books and records of Seller or its agent shall be marked to reflect clearly the sale of the related Purchased Asset to Buyer on a servicing-released basis.  Seller or its agent shall release its custody of the Purchased Asset Documents only in accordance with written instructions from Buyer, unless such release is required as incidental to the servicing of the Purchased Assets by Servicer or is in connection with a repurchase of any Purchased Asset by Seller, in each case in accordance with the Custodial Agreement.

 

Section 3.09                             Repurchase Obligations Absolute.  All amounts payable by Seller under the Repurchase Documents shall be paid without notice, demand, counterclaim, set-off, deduction or defense (as to any Person and for any reason whatsoever) and without abatement, suspension, deferment, diminution or reduction (as to any Person and for any reason whatsoever), and the Repurchase Obligations shall not be released, discharged or otherwise affected, except as expressly provided herein, by reason of:  (a) any damage to, destruction of, taking of, restriction or prevention of the use of, interference with the use of, title defect in, encumbrance on or eviction from, any Purchased Asset, the Pledged Collateral or related Mortgaged Property, (b) any Insolvency Proceeding relating to Seller, any Underlying Obligor, or any action taken with respect to any Repurchase Document, Purchased Asset Document by any trustee or receiver of Seller, any Underlying Obligor, or by any court in any such proceeding, (c) any claim that Seller has or might have against Buyer under any Repurchase Document or otherwise, (d) any default or failure on the part of Buyer to perform or comply with any Repurchase Document or other agreement with Seller, (e) the invalidity or unenforceability of any Purchased Asset, Repurchase Document or Purchased Asset Document, or (f) any other occurrence whatsoever, whether or not similar to any of the foregoing, and whether or not Seller has notice or Knowledge of any of the foregoing.  The Repurchase Obligations shall be full recourse to Seller and limited recourse to Guarantor to the extent of, and subject to the specified full-recourse provisions set forth in, the Guarantee Agreement.  This Section 3.09 shall survive the termination of the Repurchase Documents and the payment in full of the Repurchase Obligations.

 

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Section 3.10                             Future Funding Transaction.  Buyer’s agreement to enter into any Future Funding Transaction is subject to the satisfaction of the following conditions precedent, both immediately prior to entering into such Future Funding Transaction and also after giving effect to the consummation thereof:

 

(i)                                     Seller shall give Buyer written notice of each Future Funding Transaction, together with a signed Amended and Restated Confirmation prior to the related Future Funding Date, signed by a Responsible Officer of Seller.  Each Amended and Restated Confirmation shall identify the related Whole Loan and/or Mezzanine Loan, shall identify Buyer and Seller, shall set forth the requested Future Funding Amount and shall be executed by both Buyer and Seller; provided, however, that Buyer shall not be liable to Seller if it inadvertently acts on an Amended and Restated Confirmation that has not been signed by a Responsible Officer of Seller.  Each Amended and Restated Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the Future Funding Transaction covered thereby, and shall be construed to be cumulative to the extent possible.  If terms in an Amended and Restated Confirmation are inconsistent with terms in this Agreement with respect to a particular Future Funding Transaction, such Amended and Restated Confirmation shall prevail.

 

(ii)                                  For each proposed Future Funding Transaction, no less than seven (7) Business Days prior to the proposed Future Funding Date, Seller shall deliver to Buyer a Future Funding Request Package.  Buyer shall have the right to conduct an additional due diligence investigation of the Future Funding Request Package and/or the related Whole Loan and/or Mezzanine Loan as Buyer determines.  Buyer shall be entitled to make a determination, in the exercise of its sole and absolute discretion whether, in the case of a Future Funding Transaction, it shall or shall not advance the requested Future Funding Amount.  If Buyer determines not to advance a requested Future Funding Amount with respect to any Purchased Asset, Seller shall promptly satisfy all future funding obligations with respect to each Purchased Asset as and when required pursuant to the related Purchased Asset Documents, together with the terms of this Agreement.  Prior to the approval of each proposed Future Funding Transaction by Buyer, Buyer shall have determined, in its sole and absolute discretion, that (A) all of the applicable conditions precedent for a Transaction, as described in Section 6.02, have been met by Seller, (B) the Facility Debt Yield Test is in compliance both before and after giving effect to the proposed Transaction, (C) the related Purchased Asset is not a Defaulted Asset, (D) the related Purchased Asset satisfies the Maximum Purchased Asset PPV Requirement and the Minimum Purchased Asset Debt Yield Requirement both before and after giving effect to the proposed Transaction and (E) all related conditions precedent set forth in the related Purchased Asset Documents have been satisfied. Notwithstanding any other provision herein or otherwise, Buyer shall have no obligation to enter into any Future Funding Transaction (even with respect to any Purchased Asset identified on the applicable Purchase Date as having future funding obligations).  Any determination to enter into a Future Funding Transaction shall be made in Buyer’s sole and absolute discretion.

 

(iii)                               Upon the approval by Buyer of a particular Future Funding Transaction, Buyer shall deliver to Seller a signed copy of the related Amended and Restated Confirmation, on or before the related Future Funding Date.  On the related Future

 

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Funding Date, which shall occur no later than three (3) Business Days after the final approval of the Future Funding Transaction by Buyer (a) if an escrow agreement has been established in connection with such Future Funding Transaction, Buyer shall remit the related Future Funding Amount to the related escrow account, (b) if the terms of the Purchased Asset Documents provide for a reserve account in connection with future advances, Buyer shall remit the related Future Funding Amount to the applicable reserve account and (c) otherwise, Buyer shall remit the related Future Funding Amount directly to the related Underlying Obligor.

 

ARTICLE 4

 

MARGIN MAINTENANCE

 

Section 4.01                             Margin Deficit.

 

(a)                                 If on any date (I) the Market Value of a Purchased Asset (excluding any changes in the Market Value that are due to interest rate or credit spread movements) is less than the product of (A) the Margin Percentage times (B) the outstanding Purchase Price for such Purchased Asset as of such date (the excess, if any, a “Margin Deficit”) or (II) the Facility Debt Yield Test is not satisfied as of such date, then Buyer shall have the right from time to time as determined in its sole discretion to make a margin call on Seller (a “Margin Call”).

 

(b)                                 Upon Buyer making a Margin Call in accordance with this Agreement, Seller shall, within two (2) Business Days after notice of such Margin Call from Buyer, transfer cash to Buyer, so that, after giving effect to such transfer, the Margin Deficit is cured or the Facility Debt Yield Test is satisfied, as applicable.

 

(c)                                  Buyer’s election not to deliver, or to forbear from delivering, a Margin Call at any time shall not waive or be deemed to waive the Margin Call  or in any way limit, stop or impair Buyer’s right to deliver a Margin Call at any time when the same or any other Margin Call exists.  Buyer’s rights relating to Margin Calls under this Section 4.01 are cumulative and in addition to and not in lieu of any other rights of Buyer under the Repurchase Documents or Requirements of Law.

 

(d)                                 A Margin Call may be made with respect to a single Purchased Asset or multiple Purchased Assets in Buyer’s sole and absolute discretion. Seller and Buyer shall execute and deliver updated Confirmations for all related Purchased Assets to reflect the terms and conditions of any Margin Calls effectuated pursuant to the terms of this Article 4.

 

(e)                                  All cash transferred to Buyer pursuant to this Section 4.01 with respect to a Purchased Asset shall be deposited into the Waterfall Account, except as directed by Buyer, and notwithstanding any provision in Section 5.02 to the contrary, shall be applied to reduce the Purchase Price of such Purchased Asset.

 

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ARTICLE 5

 

APPLICATION OF INCOME

 

Section 5.01                             Waterfall Account.  The Waterfall Account shall be established at Deposit Account Bank.  Buyer shall have sole dominion and control (including, without limitation, “control” within the meaning of Section 9-104(a)(2) of the UCC) over the Waterfall Account pursuant to the terms of the applicable Controlled Account Agreement.  Neither Seller nor any Person claiming through or under Seller shall have any claim to or interest in the Waterfall Account.  All Income received in respect of the Purchased Assets, shall be transferred by Servicer, subject to the applicable provisions of the Servicing Agreement, from the Servicer Account into the Waterfall Account within two (2) Business Days of receipt of properly identified funds.  All such Income, once deposited in the Waterfall Account, shall be applied to and remitted by Deposit Account Bank in accordance with this Article 5.

 

Section 5.02                             Before a Default or an Event of Default.  If no Default or Event of Default exists, all Income described in Section 5.01 and other amounts deposited into the Waterfall Account during each Pricing Period shall be applied by Deposit Account Bank on the next following Remittance Date in the following order of priority:

 

first, to pay to Buyer an amount equal to the Price Differential accrued with respect to all Purchased Assets as of such Remittance Date;

 

second, to pay to Buyer an amount equal to all default interest, late fees, fees, expenses and Indemnified Amounts then due and payable from Seller and other applicable Persons to Buyer under the Repurchase Documents;

 

third, to pay to Buyer an amount sufficient to eliminate any outstanding Margin Call (without limiting Seller’s obligation to satisfy a Margin Call in a timely manner as required by Section 4.01);

 

fourth, to pay any custodial and servicing fees and expenses due and payable under the Custodial Agreement and any Servicing Agreement;

 

fifth, to pay to Buyer, the Applicable Percentage of any Principal Payments (to the extent actually deposited into the Waterfall Account);

 

sixth, to pay to Buyer the Release Amount then due pursuant to Section 3.05, if any, which Release Amount shall be applied to reduce the then-current unpaid Purchase Prices of one or more of the remaining Purchased Assets, as Buyer shall determine in its discretion;

 

seventh, to pay to Buyer any other amounts due and payable from Seller and other applicable Persons to Buyer under the Repurchase Documents; and

 

eighth, to pay to Seller any remainder for its own account, subject, however, to the covenants and other requirements of the Repurchase Documents.

 

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Section 5.03                             After Default or Event of Default.  If a Default or Event of Default exists, all Income deposited into the Waterfall Account in respect of the Purchased Assets shall be applied by Deposit Account Bank, on the Business Day next following the Business Day on which each amount of Income is so deposited, in the following order of priority:

 

first, to pay to Buyer an amount equal to the Price Differential accrued with respect to all Purchased Assets as of such date;

 

second, to pay to Buyer an amount equal to all default interest, late fees, fees, expenses and Indemnified Amounts then due and payable from Seller and other applicable Persons to Buyer under the Repurchase Documents;

 

third, to pay any custodial and servicing fees and expenses due and payable under the Custodial Agreement and any Servicing Agreement (excluding any fees due and payable to a Servicer that is an Affiliate of Seller);

 

fourth, to pay to Buyer an amount equal to the aggregate Repurchase Price of all Purchased Assets (to be applied in such order and in such amounts as determined by Buyer, until the Aggregate Amount Outstanding has been reduced to zero); and

 

fifth, to pay to Buyer all other Repurchase Obligations due to Buyer.

 

Section 5.04                             Seller to Remain Liable.  If the amounts remitted to Buyer as provided in Sections 5.02 and 5.03 are insufficient to pay all amounts due and payable to Buyer under this Agreement or any Repurchase Document on a Remittance Date, a Repurchase Date or Termination Date, whether due to the occurrence of an Event of Default or otherwise, Seller shall remain liable to Buyer for payment of all such amounts when due.

 

ARTICLE 6

 

CONDITIONS PRECEDENT

 

Section 6.01                             Conditions Precedent to Initial Transaction.  Buyer shall not be obligated to enter into any Transaction or purchase any Asset until the following conditions have been satisfied or waived by Buyer, on and as of the Closing Date and the first Purchase Date:

 

(a)                                 Buyer has received the following documents, each dated the Closing Date unless otherwise specified: (i) each Repurchase Document duly executed and delivered by the parties thereto, (ii) an official good standing certificate or its documentary equivalent dated a recent date with respect to Seller, Pledgor, Residual Pledgor and Guarantor (including, with respect to Seller, in each jurisdiction where any Mortgaged Property is located to the extent necessary for Buyer to enforce its rights and remedies thereunder), (iii) certificates of the secretary or an assistant secretary of Seller, Pledgor, Residual Pledgor and Guarantor with respect to attached copies of the Governing Documents and applicable resolutions of Seller, Pledgor, Residual Pledgor and Guarantor, and the incumbencies and signatures of officers of Seller, Pledgor, Residual Pledgor and Guarantor executing the Repurchase Documents to which each is a party, evidencing the authority of Seller, Pledgor, Residual Pledgor and Guarantor with respect to the execution, delivery

 

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and performance thereof, (iv) a Closing Certificate, (v) an executed Power of Attorney, (vi) such opinions from counsel to Seller, Pledgor, Residual Pledgor and Guarantor as Buyer may require, including with respect to corporate matters (including, without limitation, (1) the valid existence and good standing of Seller, Pledgor, Residual Pledgor and Guarantor and the enforceability of their respective operating agreements), (2) the due authorization, execution, delivery and enforceability of each of the Repurchase Documents, (3) non-contravention, no governmental consents or approvals required other than those that have been obtained, and no violation of law, (4) validly granted and perfected security interests in the Purchased Assets, the Pledged Collateral and any other collateral pledged pursuant to the Repurchase Documents, (5) Investment Company Act matters (including Volcker rule compliance) and (6) the applicability of Bankruptcy Code safe harbors (including Buyer’s related liquidation, termination and offset rights), (vii) a duly completed Compliance Certificate, and (viii) all other documents, certificates, information, financial statements, reports, approvals and opinions of counsel as Buyer may require;

 

(b)                                 (i) UCC financing statements have been filed against Seller, Pledgor and Residual Pledgor in all filing offices required by Buyer, (ii) Buyer has received such searches of UCC filings, tax liens, judgments, pending litigation and other matters relating to Seller and the Purchased Assets as Buyer may require, and (iii) the results of such searches are satisfactory to Buyer;

 

(c)                                  Buyer has received payment from Seller of all fees and expenses then payable under Section 3.07(b), the related provisions of the Fee Letter and all expenses payable as contemplated by Section 13.02, together with any other fees and expenses otherwise due and payable pursuant to any of the other Repurchase Documents;

 

(d)                                 Buyer has completed to its satisfaction such due diligence (including, Buyer’s “Know Your Customer”, Anti-Corruption Laws, Sanctions and Anti-Money Laundering Laws diligence) and modeling as Buyer may require;

 

(d)                                 Buyer has received approval from its internal credit committee and all other necessary approvals required for Buyer, to enter into this Agreement and consummate Transactions hereunder;

 

(e)                                  Guarantor has completed its initial public offering of Capital Stock; and

 

(f)                                   No Material Adverse Effect with respect to Guarantor shall exist.

 

Section 6.02                             Conditions Precedent to All Transactions.  In addition to the conditions set forth in Section 6.01, Buyer shall not be obligated to enter into any Transaction or any Future Funding Transaction, purchase any Asset, or be obligated to take, fulfill or perform any other action hereunder, until the following additional conditions have been satisfied or waived by Buyer, with respect to each Asset on and as of the related Purchase Date and each Future Funding Date therefor:

 

(a)                                 Buyer has received the following documents for each prospective Purchased Asset:  (i) [reserved], (ii) an Underwriting Package or a Future Funding Underwriting Package, as applicable, (iii) a Confirmation, (iv) [reserved], (v) Irrevocable Redirection Notices, (vi) a trust receipt and other items required to be delivered under the Custodial Agreement, (vi) the

 

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related Servicing Agreement, if a copy was not previously delivered to Buyer, (vii) a Servicer Notice, (viii) a duly completed Compliance Certificate and (ix) all other documents, certificates, information, financial statements, reports, approvals and opinions of counsel as Buyer may require;

 

(b)                                 immediately before such Transaction (including any Future Funding Transaction) and immediately after giving effect thereto and to the intended use thereof, no Representation Breach (including with respect to any Purchased Asset), Default, Event of Default, Margin Deficit, Market Disruption Event or Material Adverse Effect shall have occurred, and the Facility Debt Yield Test is in compliance, and no default or event of default exists under any other financing, hedging, security or other agreement (other than this Agreement) between a Seller Party and/or any Affiliate thereof, and Buyer or any Affiliate thereof;

 

(c)                                  Buyer has completed its due diligence review of the Underwriting Package, Purchased Asset Documents and such other documents, records and information as Buyer deems appropriate, and the results of such reviews are satisfactory to Buyer;

 

(d)                                 Buyer has received payment from Seller of the Upsize Fee, if applicable;

 

(e)                                  Buyer has (i) determined that such Asset is an Eligible Asset and complies, on the related Purchase Date, with both the Minimum Purchased Asset Debt Yield Requirement and the Maximum Purchased Asset PPV Requirement, (ii) approved the purchase of such Asset, (iii) obtained all necessary internal credit and other approvals for such Transaction or Future Funding Transaction, as applicable, and (iv) executed the Confirmation;

 

(f)                                   Guarantor is in compliance with the applicable Financial Covenants;

 

(g)                                  immediately after giving effect to such Transaction or Future Funding Transaction, as applicable, the Aggregate Amount Outstanding does not exceed the Maximum Facility Amount;

 

(h)                                 the Repurchase Date specified in the Confirmation is not later than the Termination Date;

 

(i)                                     Seller has satisfied all requirements and conditions and has performed all covenants, duties, obligations and agreements contained in the other Repurchase Documents to be performed by such Person on or before the related Purchase Date;

 

(j)                                    to the extent the related Purchased Asset Documents contain notice, cure and other provisions in favor of a pledgee under a repurchase or warehouse facility, and without prejudice to the sale treatment of such Asset to Buyer, Buyer has received satisfactory evidence that Seller has given notice to the applicable Persons of Buyer’s interest in such Asset and otherwise satisfied any other applicable requirements under such pledgee provisions so that Buyer is entitled to the rights and benefits of a pledgee under such pledgee provisions;

 

(k)                                 Seller has provided Buyer with copies of any license, registration or other similar certification or official document available to Seller from the jurisdiction where the related underlying Mortgaged Property is located, to the extent necessary for Seller to enforce its rights and remedies under the related Purchased Asset Documents;

 

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(l)                                     if requested by Buyer, to the extent not covered by opinions previously delivered under similar facts and circumstances where there has been no change in Requirements of Law in connection with this Agreement, such customary opinions from counsel to Seller, Pledgor and Guarantor as Buyer may require, including, without limitation, with respect to the perfected security interest in the Purchased Assets, the Pledged Collateral and any other collateral pledged pursuant to the Repurchase Document, and true sale opinions for each Purchased Asset purchased or transferred to Seller from an Affiliate of Seller or from any third party in a transaction not on arm’s-length terms or for other than fair market value, to the extent such transfer was in a manner or structure different from the manner or structure of transfer and sale analyzed in a true sale opinion previously delivered in connection with such Purchased Asset; and

 

(m)                             Custodian shall have received executed blank assignments of all Purchased Asset Documents in appropriate form for recording in the jurisdiction in which the underlying real estate is located, together with executed blank assignments of all Purchased Asset Documents (the “Blank Assignment Documents”).

 

Each Confirmation delivered by Seller shall constitute a certification by Seller that all of the conditions precedent in this Article 6 have been satisfied.

 

The failure of Seller to satisfy any of the conditions precedent in this Article 6 with respect to any Transaction or any Future Funding Transaction, as applicable, or Purchased Asset shall, unless such failure was set forth in an exceptions schedule to the relevant Confirmation or otherwise waived in writing by Buyer on or before the related Purchase Date or Future Funding Date, give rise to the right of Buyer at any time to rescind the related Transaction, whereupon Seller shall immediately pay to Buyer the Repurchase Price of such Purchased Asset.

 

ARTICLE 7

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants, on and as of the date of this Agreement, each Purchase Date, and at all times when any Repurchase Document or any Transaction is in full force and effect as follows:

 

Section 7.01                             Seller.  Seller has been duly organized and validly exists in good standing as a limited liability company under the laws of the jurisdiction of its formation.  Seller (a) has all requisite power, authority, legal right, licenses and franchises, (b) is duly qualified to do business in all jurisdictions necessary, and (c) has been duly authorized by all necessary action, to (w) own, lease and operate its properties and assets, (x) conduct its business as presently conducted, (y) execute, deliver and perform its obligations under the Repurchase Documents to which it is a party, and (z) originate, service, acquire, own, sell, assign, pledge and repurchase the Purchased Assets.  Seller’s exact legal name is set forth in the preamble and signature pages of this Agreement.  Seller’s location (within the meaning of Article 9 of the UCC), and the office where Seller keeps all records (within the meaning of Article 9 of the UCC) relating to the Purchased Assets is at the address of Seller referred to in Schedule 2.  Seller has not changed its name or location within the past twelve (12) months.  Seller’s organizational identification number is 6416354 and its tax identification number is 61-1843143.  Seller is a one hundred percent

 

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(100%) direct and wholly-owned Subsidiary of Pledgor.  The fiscal year of Seller is the calendar year.  Seller has no Indebtedness, Contractual Obligations or Investments other than (a) ordinary trade payables, (b) in connection with Assets acquired or originated for the Transactions, and (c) under the Repurchase Documents.  Seller has no Guarantee Obligations.  Seller has no Subsidiaries.

 

Section 7.02                             Repurchase Documents.  Each Repurchase Document to which Seller is a party has been duly executed and delivered by Seller and constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as such enforceability may be limited by Insolvency Laws and general principles of equity. The execution, delivery and performance by Seller of each Repurchase Document to which it is a party do not and will not (a) conflict with, result in a breach of, or constitute (with or without notice or lapse of time or both) a default under, any (i) Governing Document, Indebtedness, Guarantee Obligation or Contractual Obligation applicable to Seller or any of its properties or assets, (ii) Requirements of Law, or (iii) approval, consent, judgment, decree, order or demand of any Governmental Authority, or (b) result in the creation of any Lien (other than, except with respect to any Purchased Asset, any Liens granted pursuant to the Repurchase Documents) on any of the properties or assets of Seller.  All approvals, authorizations, consents, orders, filings, notices or other actions of any Person or Governmental Authority required for the execution, delivery and performance by Seller of the Repurchase Documents to which it is a party and the sale of and grant of a security interest in each Purchased Asset to Buyer, have been obtained, effected, waived or given and are in full force and effect.  The execution, delivery and performance of the Repurchase Documents do not require compliance by Seller with any “bulk sales” or similar law.  Except as disclosed to Buyer in writing, there is no material litigation, proceeding or investigation pending or, to the Knowledge of Seller threatened, against any Seller, Pledgor or Guarantor before any Governmental Authority (a) asserting the invalidity of any Repurchase Document, (b) seeking to prevent the consummation of any Transaction, or (c) seeking any determination or ruling that could reasonably be expected to have a Material Adverse Effect.

 

Section 7.03                             Solvency.  None of any Seller, Pledgor, Residual Pledgor or Guarantor is or has ever been the subject of an Insolvency Proceeding.  Seller, Pledgor, Residual Pledgor and Guarantor are Solvent and the Transactions do not and will not render any of Seller, Pledgor, Residual Pledgor or Guarantor not Solvent.  Seller is not entering into the Repurchase Documents or any Transaction with the intent to hinder, delay or defraud any creditor of any Seller, Pledgor, Residual Pledgor or Guarantor.  Seller has received or will receive reasonably equivalent value for the Repurchase Documents and each Transaction.  Seller has adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations.  Seller is generally able to pay, and as of the date hereof is paying, its debts as they come due.

 

Section 7.04                             Taxes.  Guarantor is a REIT.  Seller is a disregarded entity of Guarantor for U.S. federal income tax purposes.  Seller, Pledgor and Guarantor have timely filed all required federal tax returns and all other material tax returns, domestic and foreign, required to be filed by them and have (for all prior fiscal years and for the current fiscal year to date) timely paid all federal and other material taxes (including mortgage recording taxes), assessments, fees, and other governmental charges (whether imposed with respect to their income or any of their properties or assets) which have become due and payable, other than any such taxes, assessments,

 

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fees, or other governmental charges that are being contested in good faith by appropriate proceedings diligently conducted and for which appropriate reserves have been established in accordance with GAAP.  Except as disclosed to Buyer in writing, there is no material suit or claim relating to any such taxes now pending or, to the Knowledge of Seller, threatened by any Governmental Authority which is not being contested in good faith as provided above.

 

Section 7.05                             Financial Condition.  On the Closing Date, the most recent available balance sheet of Guarantor and the related statements of income and retained earnings and of cash flows, copies of which have been delivered to Buyer, are complete and correct and presently fairly the financial condition of Guarantor and the results of its operations and cash flows for the period then ended.  Beginning with the 2017 financial statements, the audited balance sheet of Guarantor as at the fiscal year most recently ended for which such audited balance sheet is available, and the related audited statements of income and retained earnings and of cash flows for the fiscal year then ended, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification arising out of the audit conducted by Guarantor’s independent certified public accountants, copies of which have been delivered to Buyer, are complete and correct and present fairly the financial condition of Guarantor as of such date and the results of its operations and cash flows for the fiscal year then ended.  All such financial statements, including related schedules and notes, were prepared in accordance with GAAP except as disclosed therein.  Except as disclosed in writing to Buyer, Guarantor has no material contingent liability or liability for taxes or any long term lease or unusual forward or long term commitment, including any Derivatives Contract, which is not accounted for in the foregoing statements or notes.

 

Section 7.06                             True and Complete Disclosure.  The information, reports, certificates, documents, financial statements, operating statements, forecasts, books, records, files, exhibits and schedules furnished by or on behalf of Seller to Buyer in connection with the Repurchase Documents and the Transactions, when taken as a whole, do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading.  All written information furnished after the date hereof by or on behalf of Seller to Buyer in connection with the Repurchase Documents and the Transactions will be true, correct and complete in all material respects, or in the case of projections will be based on reasonable estimates prepared and presented in good faith, on the date as of which such information is stated or certified.

 

Section 7.07                             Compliance with Laws.

 

(a)                                 Each of Seller, Pledgor and Guarantor have complied in all respects with all Requirements of Laws.

 

(b)                                 None of any Seller Party nor any Subsidiaries thereof, nor to the knowledge of Seller or Guarantor or any Affiliates of Seller or Guarantor (i) is in violation of any Sanctions or (ii) is a Sanctioned Target.  The proceeds of any Transaction (including, for the avoidance of doubt, any Future Funding Transaction) have not been and will not be used, directly or indirectly, to fund any operations in, finance any investments or activities in or make any payments to a Sanctioned Target or otherwise in violation of Sanctions, Anti-Corruptions Laws or Anti-Money Laundering Laws.

 

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(c)                                  Seller (i) is not a “broker” or “dealer” as defined in, or could be subject to a liquidation proceeding under, the Securities Investor Protection Act of 1970, or (ii) is not subject to regulation by any Governmental Authority limiting its ability to incur the Repurchase Obligations.

 

(d)                                 No properties presently or previously owned or leased by Seller or Guarantor, contain or previously contained any Materials of Environmental Concern that constitute or constituted a violation of Environmental Laws or reasonably could be expected to give rise to liability of any Seller Party thereunder.  Seller has no Knowledge of any violation, alleged violation, non-compliance, liability or potential liability of Seller or Guarantor under any Environmental Law.  Materials of Environmental Concern have not been released on properties presently or previously owned or leased by Seller or Guarantor, in violation of Environmental Laws or in a manner that reasonably could be expected to give rise to liability of Seller or Guarantor thereunder.

 

(e)                                  Seller and all Affiliates of Seller are in compliance with the Foreign Corrupt Practices Act of 1977, as amended, and any foreign counterpart thereto.  Neither Seller nor any Affiliate of Seller has made, offered, promised or authorized a payment of money or anything else of value (i) in order to assist in obtaining or retaining business for or with, or directing business to, any foreign official, foreign political party, party official or candidate for foreign political office, (ii) to any foreign official, foreign political party, party official or candidate for foreign political office, or (iii) with the intent to induce the recipient to misuse his or her official position to direct business wrongfully to Seller, any Affiliate of Seller or any other Person, in violation of the Foreign Corrupt Practices Act, as amended.

 

Section 7.08                             Compliance with ERISA.

 

(a)                                 Seller has no employees as of the date of this Agreement.

 

(b)                                 Each Seller Party either (i) qualifies as a VCOC or a REOC, (ii) complies with an exception set forth in the Plan Asset Regulation such that its assets would not be subject to Title I of ERISA and/or Section 4975 of the Code, or (iii) does not hold any “plan assets” within the meaning of the Plan Asset Regulation that are subject to ERISA.

 

(c)                                  Assuming that no portion of the Purchased Assets are funded by Buyer with “plan assets” within the meaning of the Plan Asset Regulations, none of the transactions contemplated by the Repurchase Documents will constitute a nonexempt prohibited transaction under Section 4975 of the Code or Section 406 of ERISA that could subject the Buyer to any tax or penalty or prohibited transactions imposed under Section 4975 of the Code or Section 502(i) of ERISA.

 

Section 7.09                             No Default or Material Adverse Effect.  To Seller’s Knowledge, no Default or Event of Default exists.  No default or event of default (however defined) exists under any Indebtedness, Guarantee Obligations or Contractual Obligations of Seller.  Seller believes that it is and will be able to pay and perform each agreement, duty, obligation and covenant contained in the Repurchase Documents and Purchased Asset Documents to which it is a party, and that it is not subject to any agreement, obligation, restriction or Requirements of Law that would unduly

 

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burden its ability to do so or could reasonably be expected to have a Material Adverse Effect.  Seller has no Knowledge of any actual or prospective development, event or other fact that could reasonably be expected to have a Material Adverse Effect.  No Internal Control Event has occurred.  Seller has delivered to Buyer all underlying servicing agreements (or provided Buyer with access to a service, internet website or other system where Buyer can successfully access such agreements) with respect to the Purchased Assets, and to Seller’s Knowledge no material default or event of default (however defined) exists thereunder.

 

Section 7.10                             Purchased Assets.  Each representation and warranty of Seller set forth in the Repurchase Documents (including in Schedule 1) with respect to each Purchased Asset is true and correct.  The review and inquiries made on behalf of Seller in connection with the next preceding sentence have been made by Persons having the requisite expertise, knowledge and background to verify such representations and warranties.  Seller has complied with all requirements of the Custodial Agreement with respect to each Purchased Asset, including delivery to Custodian of all required Purchased Asset Documents.  Seller has no Knowledge of any fact that could reasonably lead it to expect that any Purchased Asset will not be paid in full.  No Purchased Asset is or has been the subject of any compromise, adjustment, extension, satisfaction, subordination, rescission, setoff, counterclaim, defense, abatement, suspension, deferment, deduction, reduction, termination or modification, whether arising out of transactions concerning such Purchased Asset or otherwise, by Seller or any Affiliate of Seller, any Transferor, any Underlying Obligor, Guarantor or any other Person, except as set forth in the Purchased Asset Documents delivered to Buyer.  Each proposed Purchased Asset was underwritten in accordance with and satisfies applicable standards established by Seller or any Affiliate of Seller.  None of the Purchased Asset Documents has any marks or notations indicating that it has been sold, assigned, pledged, encumbered or otherwise conveyed to any Person other than Buyer. If any Purchased Asset Document requires the holder or transferee of the related Purchased Asset to be a qualified transferee, qualified institutional lender or qualified lender (however defined), Seller meets such requirement.  Assuming that Buyer also meets such requirement, the assignment and pledge of such Purchased Asset to Buyer pursuant to the Repurchase Documents do not violate such Purchased Asset Document.  Seller and all Affiliates of Seller have sold and transferred all Servicing Rights with respect to the Purchased Assets to Buyer.  At Buyer’s election at any time during the term of this Agreement, Buyer may, at Seller’s sole cost and expense, complete and record any or all of the Blank Assignment Documents as further evidence of Buyer’s ownership interest in the related Purchased Assets.

 

Section 7.11                             Purchased Assets Acquired from Transferors.  With respect to each Purchased Asset purchased by Seller or an Affiliate of Seller from a Transferor, (a) such Purchased Asset was acquired and transferred pursuant to a Purchase Agreement, (b) such Transferor received reasonably equivalent value in consideration for the transfer of such Purchased Asset, (c) no such transfer was made for or on account of an antecedent debt owed by such Transferor to Seller or an Affiliate of Seller, (d) no such transfer is or may be voidable or subject to avoidance under the Bankruptcy Code, (e) if a plausible argument could be made that any interest in such Purchased Asset had been retained, or could be clawed back, by the Transferor, a pledge of such residual interests was made by such Transferor in favor of Buyer and (f) the representations and warranties made by such Transferor to Seller or such Affiliate in such Purchase Agreement are hereby incorporated herein mutatis mutandis and are hereby remade by Seller to Buyer on each date as of which they speak in such Purchase Agreement.  Seller or such Affiliate of Seller has

 

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been granted a security interest in each such Purchased Asset, filed one or more UCC financing statements against the Transferor to perfect such security interest, and assigned such financing statements in blank and delivered such assignments to Buyer or Custodian.

 

Section 7.12                             Transfer and Security Interest.  The Repurchase Documents constitute a valid and effective transfer to Buyer of all right, title and interest of Seller in, to and under all Purchased Assets (together with all related Servicing Rights), free and clear of any Liens (other than those granted in the Repurchase Documents).  With respect to the protective security interest granted by Seller in Section 11.01, upon the delivery of the Confirmations and the Purchased Asset Documents to Custodian, the execution and delivery of the Controlled Account Agreements and the filing of the UCC financing statements as provided herein, such security interest shall be a valid first priority perfected security interest to the extent such security interest can be perfected by possession, filing or control under the UCC.  Upon receipt by Custodian of each Purchased Asset Document required to be endorsed in blank by Seller and payment by Buyer of the Purchase Price for the related Purchased Asset, Buyer shall either own such Purchased Asset and the related Purchased Asset Documents or have a valid first priority perfected security interest in such Purchased Asset Document.  The Purchased Assets constitute the following, as defined in the UCC: a general intangible, instrument, investment property, security, deposit account, financial asset, uncertificated security, securities account, or security entitlement.  Seller has not sold, assigned, pledged, granted a security interest in, encumbered or otherwise conveyed any of the Purchased Assets to any Person other than pursuant to the Repurchase Documents. Seller has not authorized the filing of and has no Knowledge of any UCC financing statements filed against Seller as debtor that include the Purchased Assets, other than any financing statement that has been terminated or filed pursuant to this Agreement.

 

Section 7.13                             No Broker.  Neither Seller nor any Affiliate of Seller has dealt with any broker, investment banker, agent or other Person, except for Buyer or an Affiliate of Buyer, who may be entitled to any commission or compensation in connection with any Transaction.

 

Section 7.14                             Reserved.

 

Section 7.15                             Separateness.  Seller is in compliance with the requirements of Article 9.

 

Section 7.16                             Investment Company Act.  None of Seller, Pledgor or Guarantor is required to be registered as, or is controlled by, an “investment company” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act, or otherwise required to register thereunder.  Seller is exempt from the registration requirements of the Investment Company Act pursuant to an exemption other than the exemption set forth in Section 3(c)(1) or 3(c)(7) of the Investment Company Act.

 

Section 7.17                             Other Indebtedness.  Seller has no Indebtedness other than Indebtedness as evidenced by this Agreement.

 

Section 7.18                             Location of Books and Records.  The location where each Seller keeps its books and records, including all computer tapes and records relating to the Purchased Assets is its chief executive office.

 

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Section 7.19                             Chief Executive Office; Jurisdiction of Organization.  On the Closing Date, each of Seller’s, Pledgor’s, Residual Pledgor’s and Guarantor’s chief executive office, is, and has been, located at 590 Madison Avenue, 36th Floor, New York, New York  10022.  On the Closing Date, (i) Seller’s jurisdiction of organization is Delaware, (ii) Pledgor’s jurisdiction of organization is Delaware, (iii) Residual Pledgor’s jurisdiction of organization is Delaware, and (iv) Guarantor’s jurisdiction of organization is Maryland.    Each of Seller, Pledgor, Residual Pledgor and Guarantor shall provide Buyer with thirty (30) days advance notice of any change in its principal office or place of business or jurisdiction.  No Seller Party has a trade name.  During the preceding five (5) years, none of Seller, Pledgor, Residual Pledgor or Guarantor has been known by or done business under any other name, corporate or fictitious, and none of Seller, Pledgor, Residual Pledgor or Guarantor has filed or had filed against it any bankruptcy receivership or similar petitions or made any assignments for the benefit of creditors.

 

Section 7.20                             Anti-Money Laundering Laws and Anti-Corruption Laws. The operations of each Seller Party are, and have been, conducted at all times in compliance with all applicable Anti-Money Laundering Laws and Anti-Corruption Laws.  No litigation, regulatory or administrative proceedings of or before any court, tribunal or agency with respect to any Anti-Money Laundering Laws or Anti-Corruption Laws have been started or (to the best of its knowledge and belief) threatened against any Seller Party or, to the knowledge of any Seller Party, any Affiliates thereof.

 

Section 7.21                             Sanctions.  No Seller Party or any Subsidiaries thereof nor, to the knowledge of any Seller Party, any Affiliates thereof (a) is a Sanctioned Target, (b) is controlled by or is acting on behalf of a Sanctioned Target, or (c) to the best knowledge of Seller Parties after due inquiry, is under investigation for an alleged breach of Sanctions by a governmental authority that enforces Sanctions.

 

ARTICLE 8

 

COVENANTS OF SELLER

 

From the date hereof until the Repurchase Obligations are indefeasibly paid in full and the Repurchase Documents are terminated, Seller shall perform and observe the following covenants, which shall be given independent effect (so that if a particular action or condition is prohibited by any covenant, the fact that it would be permitted by an exception to or be otherwise within the limitations of another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists):

 

Section 8.01                             Existence; Governing Documents; Conduct of Business.  Seller shall (a) preserve and maintain its legal existence, (b) qualify and remain qualified in good standing in each jurisdiction where the failure to be so qualified would have a Material Adverse Effect, (c) comply with its Governing Documents, including all special purpose entity provisions, and (d) not modify, amend or terminate its Governing Documents; provided, however, that Buyer’s consent shall not be required for ministerial, typographical or clerical modifications or amendments with no material effect on the management, ownership or administration of the Purchased Assets, this Agreement or the other Repurchase Documents, so long as Seller provides Buyer with prior written notice thereof.  Seller shall (a) continue to engage in the same (and no

 

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other) general lines of business as presently conducted by it, (b) maintain and preserve all of its material rights, privileges, licenses and franchises necessary for the operation of its business, and (c) maintain Seller’s status as a qualified transferee, qualified lender or any similar term (however defined) under the Purchased Asset Documents.  Seller shall not (A) change its name, organizational number, tax identification number, fiscal year, method of accounting, identity, structure or jurisdiction of organization (or have more than one such jurisdiction), move the location of its principal place of business and chief executive office (as defined in the UCC) from the location referred to in Section 7.19, or (B) move, or consent to Custodian moving, the Purchased Asset Documents from the location thereof on the applicable Purchase Date for the related Purchased Asset, unless in each case Seller has given at least thirty (30) days prior notice to Buyer and has taken all actions required under the UCC to continue the first priority perfected security interest of Buyer in the Purchased Assets.  Seller shall enter into each Transaction as principal.

 

Section 8.02                             Compliance with Laws, Contractual Obligations and Repurchase Documents.  Seller shall comply in all material respects with each and every Requirements of Law, including those relating to any Purchased Asset and to the reporting and payment of taxes.   No part of the proceeds of any Transaction (including, for the avoidance of doubt, any Future Funding Transaction) shall be used for any purpose that violates Regulation T, U or X of the Board of Governors of the Federal Reserve System.  Seller shall maintain the Custodial Agreement and Controlled Account Agreements in full force and effect.  Seller shall not directly or indirectly enter into any agreement that would be violated or breached by any Transaction or the performance by Seller of any Repurchase Document.

 

Section 8.03                             Structural Changes.  Seller shall not enter into merger or consolidation, or liquidate, wind up or dissolve, or sell all or substantially all of its assets or properties (except as permitted under the Repurchase Documents), or permit any changes in the ownership of the Equity Interests of Seller, without the consent of Buyer.  Seller shall ensure that all Equity Interests of Seller shall continue to be directly owned by the owner or owners thereof as of the date hereof.  Seller shall ensure that neither the Equity Interests of Seller nor any property or assets of Seller shall be pledged to any Person other than Buyer.  Excluding sales of the Purchased Assets, Seller shall not enter into any transaction with an Affiliate of Seller unless (a) Seller notifies Buyer of such transaction at least ten (10) days before entering into it, and (b) such transaction is on market and arm’s-length terms and conditions, as demonstrated in Seller’s notice.

 

Section 8.04                             Protection of Buyer’s Interest in Purchased Assets.  With respect to each Purchased Asset, Seller shall take all action necessary or required by the Repurchase Documents, Purchased Asset Documents and each and every Requirements of Law, or requested by Buyer, to perfect, protect and more fully evidence the security interest granted in the Purchase Agreements and Buyer’s ownership of and first priority perfected security interest in such Purchased Asset and related Purchased Asset Documents, including executing or causing to be executed (a) such other instruments or notices as may be necessary or appropriate and filing and maintaining effective UCC financing statements, continuation statements and assignments and amendments thereto, and (b) all documents necessary to both collaterally and absolutely and unconditionally assign all rights (but none of the obligations) of Seller under each Purchase Agreement, in each case as additional collateral security for the payment and performance of each

 

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of the Repurchase Obligations. Seller shall (a) not pledge, hypothecate or grant, create, incur, assume, suffer or permit to exist any security interest in or Lien (other than, except with respect to any Purchased Asset, any Liens granted pursuant to the Repurchase Documents) on any Purchased Asset to or in favor of any Person other than Buyer or assign, sell or transfer any Purchased Asset to any Person other than Buyer (except as permitted under this Agreement), (b) defend such Purchased Asset against, and take such action as is necessary to remove, any such Lien, and (c) defend the right, title and interest of Buyer in and to all Purchased Assets against the claims and demands of all Persons whomsoever. Seller shall comply with all requirements of the Custodial Agreement with respect to each Purchased Asset.  Notwithstanding the foregoing, if Seller grants a Lien on any Purchased Asset in violation of this Section 8.04 or any other Repurchase Document, Seller shall be deemed to have simultaneously granted an equal and ratable Lien on such Purchased Asset in favor of Buyer to the extent such Lien has not already been granted to Buyer; provided, that such equal and ratable Lien shall not cure any resulting Event of Default.  Seller shall not materially amend, modify, waive or terminate any provision of any Purchase Agreement or Servicing Agreement.  Seller shall not, or permit any Servicer to, enter into a Material Modification with respect to any Purchased Asset or Purchased Asset Document, without the prior written consent of Buyer.  Seller shall use appropriate documentation to evidence the interests granted to Buyer hereunder.  Seller shall not take any action to cause any Purchased Asset that is not evidenced by an instrument or chattel paper (as defined in the UCC) to be so evidenced.  If a Purchased Asset becomes evidenced by an instrument or chattel paper, the same shall be immediately delivered to Custodian on behalf of Buyer, together with endorsements required by Buyer.

 

Section 8.05                             Actions of Seller Relating to Distributions, Indebtedness, Guarantee Obligations, Contractual Obligations, Investments and Liens.  Seller shall not declare or make any payment on account of, or set apart assets for, a sinking or similar fund for the purchase, redemption, defeasance, retirement or other acquisition of any Equity Interest of Seller, whether now or hereafter outstanding, or, following the occurrence of an Event of Default, make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Seller.  Seller shall not contract, create, incur, assume or permit to exist any Indebtedness, Guarantee Obligations, Contractual Obligations or Investments, except to the extent (a) arising or existing under the Repurchase Documents, (b) existing as of the Closing Date, and any renewals, refinancings or extensions thereof in a principal amount not exceeding that outstanding as of the date of such renewal, refinancing or extension, (c) incurred after the Closing Date to originate or acquire Assets to provide funding with respect to Assets, and (d) permitted by the terms of Section 9.01.  Seller shall not (a) contract, create, incur, assume or permit to exist any Lien on or with respect to any of its property or assets (including the Purchased Assets) of any kind (whether real or personal, tangible or intangible), whether now owned or hereafter acquired, other than, except with respect to any Purchased Asset, any Liens granted pursuant to the Repurchase Documents, or (b) except as provided in the preceding clause (a), grant, allow or enter into any agreement or arrangement with any Person that prohibits or restricts or purports to prohibit or restrict the granting of any Lien on any of the foregoing.

 

Section 8.06                             Maintenance of Property, Insurance and Records.  Seller shall (a) keep all property useful and necessary in its business in good working order and condition, (b) maintain insurance in accordance with customary and prudent practices of companies engaged in the same or a similar business, and (c) furnish to Buyer upon request information and certificates

 

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with respect to such insurance.  Seller shall maintain and implement administrative and operating procedures (including the ability to recreate records evidencing the Purchased Assets if the original records are destroyed) and shall keep and maintain all documents, books, records and other information (including with respect to the Purchased Assets) that are reasonably necessary or advisable in the conduct of its business.

 

Section 8.07                             Delivery of Income.  Seller shall and shall cause the Underlying Obligors under the Purchased Assets to, remit all Income in respect of the Purchased Assets to Servicer for prompt deposit by Servicer into the Servicer Account, and Seller shall cause Servicer to transfer all such Income into the Waterfall Account in accordance with Section 5.01 hereof. Following the occurrence of an Event of Default, Buyer shall deliver Irrevocable Redirection Notices to the Underlying Obligors. Seller and Servicer (a) shall comply with and enforce each Irrevocable Redirection Notice, (b) shall not amend, modify, waive, terminate or revoke any Irrevocable Redirection Notice without Buyer’s consent, and (c) shall take all reasonable steps to enforce each Irrevocable Redirection Notice.  In connection with each principal payment or prepayment under a Purchased Asset, Seller shall provide or cause to be provided to Buyer and Servicer sufficient detail to enable Buyer and Servicer to identify the Purchased Asset to which such payment applies.  If Seller receives any rights, whether in addition to, in substitution of, as a conversion of, or in exchange for any Purchased Assets, or otherwise in respect thereof, Seller shall accept the same as Buyer’s agent, hold the same in trust for Buyer and immediately deliver the same to Buyer or its designee in the exact form received, together with duly executed instruments of transfer, stock powers or assignment in blank and such other documentation as Buyer shall reasonably request.  If any Income is received by Seller, Guarantor or any Affiliate of Seller or Guarantor, Seller shall pay or deliver such Income to Servicer for deposit into the Servicer Account within two (2) Business Days after receipt, and, until so paid or delivered, hold such Income in trust for Buyer, segregated from other funds of Seller.

 

Section 8.08                             Delivery of Financial Statements and Other Information.  Seller shall deliver the following to Buyer, as soon as available and in any event within the time periods specified:

 

(a)                                 within forty-five (45) days after the end of the first three (3) fiscal quarters of Guarantor, (i) the unaudited balance sheets of Guarantor as at the end of such period, (ii) the related unaudited statements of income, retained earnings and cash flows for such period and the portion of the fiscal year through the end of such period, setting forth in each case in comparative form the figures for the previous year, and (iii) a Compliance Certificate;

 

(b)                                 within ninety (90) days after the end of each fiscal year of Guarantor, (i) the audited balance sheets of Guarantor as at the end of such fiscal year, (ii) the related statements of income, retained earnings and cash flows for such year, setting forth in each case in comparative form the figures for the previous year, (iii) an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall not be qualified as to scope of audit or going concern and shall state that said financial statements fairly present the financial condition and results of operations of Guarantor as at the end of and for such fiscal year in accordance with GAAP and (iv) a Compliance Certificate;

 

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(c)                                  notice of material audit findings or other information submitted to Guarantor by independent certified public accountants in connection with each annual, interim or special audit of the books and records of Guarantor made by such accountants that would impact the audit opinion upon disclosure to the Guarantor’s audit committee, and notice of any management letter issued to Guarantor by its independent certified public accountants;

 

(d)                                 with respect to each Purchased Asset and related Mortgaged Property serviced by a Servicer other than Wells Fargo Bank, National Association:  (i) within sixty (60) days after the end of each fiscal quarter of Seller, a quarterly report of the following: delinquency, loss experience, internal risk rating and surveillance, rent roll, occupancy and other property-level information, and (ii) within fifteen (15) days after the end of each month (x) remittance and servicing reports, (y) any and all operating and financial statements and rent rolls received from all Underlying Obligors (including for each Mezzanine Loan, all such information relating to the underlying Mortgaged Property), and (z) a completed Purchased Asset Data Summary, substantially in the form of Exhibit E, with respect to each Asset;

 

(e)                                  all financial statements, reports, notices and other documents that Guarantor sends to holders of its Equity Interests or makes to or files with any Governmental Authority, promptly after the delivery or filing thereof;

 

(f)                                   [intentionally omitted];

 

(g)                                  [intentionally omitted];

 

(h)                                 any other material agreements, correspondence, documents or other information not included in an Underwriting Package which is related to Seller or the Purchased Assets, as soon as possible after the discovery thereof by Seller;  and

 

(i)                                     such other information regarding (i) the financial condition, operations or business of each Seller Party or any Underlying Obligor and (ii) only to the extent they relate to the foregoing or the Purchased Assets, the operations or business of Manager (to the extent reasonably available to or reasonably obtainable by any of Seller, Guarantor or employees of Manager who are dedicated to Guarantor), each as Buyer may reasonably request including, without limitation, any such information that is otherwise necessary to allow Buyer to monitor compliance with the terms of the Repurchase Documents.

 

(j)                                    any material change in accounting policies or financial reporting practices by Seller or Guarantor or notice from Seller’s or Guarantor’s accountants;

 

(k)                                 [intentionally omitted]; and

 

(l)                                     any amendment to the Governing Documents of Guarantor or any amendment or supplement to any prospectus issued by Guarantor contemporaneously with the public filing of the same, which in either case may be delivered to Buyer by email.

 

Section 8.09                             Delivery of Notices.  Seller shall promptly, but in any event within one (1) Business Day, notify Buyer of the occurrence of any of the following of which Seller has

 

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Knowledge, together with a certificate of a Responsible Officer of Seller setting forth details of such occurrence and any action Seller has taken or proposes to take with respect thereto:

 

(a)                                 a Representation Breach;

 

(b)                                 any of the following:  (i) with respect to any Purchased Asset or related Mortgaged Property: material change in market value, material loss or damage, material licensing or permit issues, violation of Requirements of Law, discharge of or damage from Materials of Environmental Concern or any other actual or expected event or change in circumstances that could reasonably be expected to result in a default or material decline in value or cash flow, and (ii) with respect to Seller: violation of Requirements of Law, material decline in the value of Seller’s assets or properties, an Internal Control Event or other event or circumstance that could reasonably be expected to have a Material Adverse Effect;

 

(c)                                  the existence of any Default, Event of Default or material default under or related to a Purchased Asset, Purchased Asset Document, Indebtedness, Guarantee Obligation or Contractual Obligation of Seller;

 

(d)                                 the resignation or termination of any Servicer under any Servicing Agreement with respect to any Purchased Asset;

 

(e)                                  the establishment of a rating by any Rating Agency applicable to Guarantor and any downgrade in or withdrawal of such rating once established; and

 

(f)                                   the commencement of, settlement of or material judgment in any litigation, action, suit, arbitration, investigation or other legal or arbitrable proceedings before any Governmental Authority that (i) affects any Seller Party, any Purchased Asset, Pledged Collateral or any Mortgaged Property, (ii) questions or challenges the validity or enforceability of any Repurchase Document, Transaction, Purchased Asset or Purchased Asset Document, or (iii) individually or in the aggregate, if adversely determined, could reasonably be likely to have a Material Adverse Effect.

 

Section 8.10                             Reserved.

 

Section 8.11                             Escrow Imbalance.  Seller shall, no later than five (5) Business Days after learning of any material overdraw, deficit or imbalance in any escrow or reserve account relating to a Purchased Asset, use commercially reasonable efforts to cause the related Underlying Obligor to correct and eliminate the same, including by depositing its own funds into such account.

 

Section 8.12                             Pledge and Security Agreement.  Seller shall not take any direct or indirect action inconsistent with the Pledge and Security Agreement or the security interest granted thereunder to Buyer in the Pledged Collateral.  Seller shall not permit any additional Persons to acquire Equity Interests in Seller other than the Equity Interests owned by Pledgor and pledged to Buyer on the Closing Date, and Seller shall not permit any sales, assignments, pledges or transfers of the Equity Interests in Seller other than to Buyer.

 

Section 8.13                             Taxes.  Guarantor will continue to be a REIT.  Seller will continue to be a disregarded entity of Guarantor for U.S. federal income tax purposes.  Seller and Guarantor

 

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will each timely file all required federal tax returns and all other material tax returns, domestic and foreign, required to be filed by them and will timely pay all federal and other material taxes (including mortgage recording taxes), assessments, fees, and other governmental charges (whether imposed with respect to their income or any of their properties or assets) which become due and payable, other than any such taxes, assessments, fees, or other governmental charges that are being contested in good faith by appropriate proceedings diligently conducted and for which appropriate reserves are established in accordance with GAAP.  Seller will provide Buyer with written notice of any material suit or claim relating to any such taxes, whether pending or, to the Knowledge of Seller, threatened by any Governmental Authority.

 

Section 8.14                             Reserved.

 

Section 8.15                             Management Internalization.  Seller shall not permit Guarantor to internalize its management without the prior written consent of Buyer.

 

Section 8.16                             Reserved.

 

Section 8.17                             Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions.

 

(a)                                 The proceeds of any Transaction (including, for the avoidance of doubt, any Future Funding Transaction) shall not be used, directly or indirectly, for any purpose which would breach any applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions.

 

(b)                                 Each Seller Party shall (i) conduct its business in compliance with applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions; and (ii) maintain policies and procedures designed to promote and achieve compliance with applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions.

 

(c)                                  The repurchase of any Purchased Asset or any other payment due to Buyer under this Agreement or any other Repurchase Document shall not be funded, directly or indirectly, with proceeds derived from a transaction that would be prohibited by Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions, or in any manner that would cause any Seller Party, or to the knowledge of a Seller Party, any Affiliates thereof to be in breach of any Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions.

 

(d)                                 With respect to the Purchased Assets that were originated by Seller, Seller has conducted the customer identification and customer due diligence required in connection with the origination of each Purchased Asset for purposes of complying with all Anti-Money Laundering Laws, and will maintain sufficient information to identify each such customer for purposes of such Anti-Money Laundering Laws.

 

Section 8.18                             Compliance with Sanctions. The proceeds of any Transaction (including, for the avoidance of doubt, any Future Funding Transaction) hereunder will not, directly or indirectly, be used to lend, contribute, or otherwise made available: (i) to fund any activities or business of or with a Sanctioned Target, or (ii) in any manner that would be prohibited by Sanctions or would otherwise cause Buyer to be in breach of any Sanctions. Seller or Guarantor

 

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shall notify the Buyer in writing not more than three (3) Business Days after becoming aware of any breach of Section 7.21 or this Section 8.18.

 

ARTICLE 9

 

SINGLE-PURPOSE ENTITY

 

Section 9.01                             Covenants Applicable to Seller.  Seller shall (a) own no assets, and shall not engage in any business, other than the assets and transactions specifically contemplated by this Agreement and any other Repurchase Document; (b) not incur any Indebtedness or other obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (I) with respect to the Purchased Asset Documents and the Retained Interests, (II) commitments to make loans which may become Eligible Assets, and (III) as otherwise permitted under this Agreement; (c) not make any loans or advances to any Affiliate or any other Person and shall not acquire obligations or securities of its Affiliates, in each case other than in connection with the origination or acquisition of Assets for purchase under the Repurchase Documents; (d) pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) only from its own assets; (e) comply with the provisions of its Governing Documents; (f) do all things necessary to observe organizational formalities and to preserve its existence, and shall not amend, modify, waive provisions of or otherwise change its Governing Documents with respect to the matters set forth in this Article 9 without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed; (g) maintain all of its books, records and bank accounts separate from those of any other Person; (h) maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person and not have its assets listed on any financial statement of any other Person; provided, however, that the Seller’s assets and liabilities may be included in a consolidated financial statement of its Affiliate provided that appropriate disclosure shall be made on such consolidated financial statements to indicate which of Seller’s assets are pledged as collateral for any security agreement; (i) file its own tax returns separate from those of any other Person, except to the extent that Seller is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under Requirements of Law; (j) be, and at all times shall hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, and shall not identify itself or any of its Affiliates as a division of the other; (k) maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; (l) to the fullest extent permitted by law, not engage in or suffer any Change of Control, dissolution, winding up, liquidation, consolidation or merger in whole or in part or convey or transfer all or substantially all of its properties and assets to any Person (except as contemplated herein); (m) not commingle its funds or other assets with those of any Affiliate or any other Person; (n) maintain its properties, assets and accounts separate from those of any Affiliate or any other Person, (o) not guarantee any obligation of any Person, including any Affiliate, become obligated for the debts of any other Person, or hold out its credit or assets as being available pay the obligations of any other Person, (p) not, without the prior unanimous written consent of all of its Independent Directors or Independent Managers, take any Insolvency Action, (q) (I) have at all times at least one (1) Independent Director or Independent Manager whose vote is required to take any Insolvency

 

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Action, and (II) provide Buyer with up-to-date contact information for each such Independent Director or Independent Manager and a copy of the agreement pursuant to which such Independent Director or Independent Manager consents to and serves as an “Independent Director” or “Independent Manager” for Seller; (r) have Governing Documents that provide that for so long as any Repurchase Obligations remain outstanding, (I) the Independent Manager or Independent Director may be removed only for Cause, (II) that Buyer be given at least five (5) Business Days prior notice of the removal and/or replacement of any Independent Director or Independent Manager, together with the name and contact information of the replacement Independent Director or Independent Manager and evidence of the replacement’s satisfaction of the definition of Independent Director or Independent Manager, (III) that, to the fullest extent permitted by law, and notwithstanding any duty otherwise existing at law or in equity, any Independent Director or Independent Manager shall consider only the interests of Seller, including its respective creditors, in acting or otherwise voting on the Insolvency Action, and (IV) that, except for duties to Seller as set forth in the immediately preceding clause (including duties to the holders of the Equity Interests in Seller or Seller’s respective creditors solely to the extent of their respective economic interests in Seller, but excluding (A) all other interests of the holders of the Equity Interests in Seller, (B) the interests of other Affiliates of Seller, and (C) the interests of any group of Affiliates of which Seller is a part), the Independent Directors or Independent Managers shall not have any fiduciary duties to the holders of the Equity Interests in Seller, any officer or any other Person bound by the Governing Documents; provided, however, the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing; (s) except for capital contributions or capital distributions permitted under the terms and conditions of its Governing Documents and properly reflected on the books and records of the Seller, not enter into any transaction with an Affiliate of Seller except on commercially reasonable terms similar to those available to unaffiliated parties in an arm’s-length transaction; (t) maintain a sufficient number of employees in light of contemplated business operations and pay the salaries of its own employees, if any, only from its own funds; (u) [reserved]; (v) allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, including for shared office space and for services performed by an employee of an Affiliate; (w) not pledge its assets to secure the obligations of any other Person; and (x) not form, acquire or hold any Subsidiary or own any Equity Interest in any other entity. Seller has complied with the covenants set forth in this Section 9.01 since the date of its formation.

 

Section 9.02                             Covenants Applicable to Pledgor.  Pledgor shall, and Seller shall ensure that Pledgor shall, (a) own no assets other than its Equity Interest in Seller, and shall not engage in any business other than acting as a member of Seller and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing; (b) not incur any Indebtedness or other obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), except as otherwise expressly permitted under this Agreement; (c) not make any loans or advances to any Affiliate or any other Person and shall not acquire obligations or securities of its Affiliates, other than with respect to its Equity Interest in Seller; (d) pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) only from its own assets; (e) comply with the provisions of its Governing Documents; (f) do all things necessary to observe organizational formalities and to preserve its existence, and shall not amend, modify, waive provisions of or otherwise change its Governing Documents with respect to the matters set forth in this Article 9 without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed; (g) maintain all of its books, records and bank accounts separate from those of any other Person; (h) maintain separate financial

 

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statements, showing its assets and liabilities separate and apart from those of any other Person and not have its assets listed on any financial statement of any other Person; provided, however, that the Pledgor’s assets and liabilities may be included in a consolidated financial statement of its Affiliate provided that appropriate disclosure shall be made on such consolidated financial statements to indicate which of Seller’s assets are pledged as collateral for any security agreement; (i) file its own tax returns separate from those of any other Person, except to the extent that Pledgor is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under Requirements of Law; (j) be, and at all times shall hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, and shall not identify itself or any of its Affiliates as a division of the other; (k) maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and shall remain Solvent; (l) to the fullest extent permitted by law, not engage in or suffer any Change of Control, dissolution, winding up, liquidation, consolidation or merger in whole or in part or convey or transfer all or substantially all of its properties and assets to any Person (except as contemplated herein); (m) not commingle its funds or other assets with those of any Affiliate or any other Person; (n) maintain its properties, assets and accounts separate from those of any Affiliate or any other Person; (o) except as contemplated by the Pledge and Security Agreement with respect to the Seller, not guarantee any obligation of any Person, including any Affiliate, become obligated for the debts of any other Person, or hold out its credit or assets as being available to pay the obligations of any other Person; (p) not, without the prior unanimous written consent of all of its Independent Directors, take any Insolvency Action; (q) (I) have at all times at least one Independent Director or Independent Manager whose vote is required to take any Insolvency Action and (II) provide Buyer with up-to-date contact information for each such Independent Director or Independent Manager and a copy of the agreement pursuant to which such Independent Director or Independent Manager consents to and serves as an “Independent Director” or “Independent Manager” for Pledgor; (r) have Governing Documents that provide (I) that the Independent Manager or Independent Director may be removed only for Cause; (II) Buyer be given at least five (5) Business Days prior notice of the removal and/or replacement of any Independent Director or Independent Manager, together with the name and contact information of the replacement Independent Director or Independent Manager and evidence of the replacement’s satisfaction of the definition of Independent Director or Independent Manager and (III) that, to the fullest extent permitted by law, and notwithstanding any duty otherwise existing at law or in equity, any Independent Director or Independent Manager shall consider only the interests of Pledgor, including its respective creditors, in acting or otherwise voting on the Insolvency Action, and (IV) that, except for duties to Pledgor as set forth in the immediately preceding clause (including duties to the holders of the Equity Interests in Pledgor or Pledgor’s respective creditors solely to the extent of their respective economic interests in Pledgor, but excluding (A) all other interests of the holders of the Equity Interests in Pledgor, (B) the interests of other Affiliates of Pledgor, and (C) the interests of any group of Affiliates of which Pledgor is a part), the Independent Directors or Independent Managers shall not have any fiduciary duties to the holders of the Equity Interests in Pledgor, any officer or any other Person bound by the Governing Documents; provided, however, the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing; (s) except for capital contributions or capital distributions permitted under the terms and conditions of its Governing Documents and properly reflected on the books and records of Pledgor, not enter into any

 

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transaction with an Affiliate of the Pledgor except on commercially reasonable terms similar to those available to unaffiliated parties in an arm’s-length transaction; (t) maintain a sufficient number of employees in light of contemplated business operations and pay the salaries of its own employees, if any, only from its own funds; (u) [reserved]; (v) allocate fairly and reasonably any overhead for shared office space and for services performed by an employee of an Affiliate; (w) except as contemplated by the Pledge and Security Agreement with respect to the Seller, not pledge its assets to secure the obligations of any other Person; (x) not form, acquire or hold any Subsidiary or own any Equity Interest in any other entity, except for its Equity Interest in Seller. Pledgor has complied with the covenants set forth in this Section 9.02 since the date of its formation.

 

Section 9.03                             Covenants Applicable to Seller and Pledgor.  Seller and Pledgor shall, and Seller shall ensure that Pledgor shall, comply with the following additional provisions if either Seller or Pledgor is a limited partnership, a corporation, a limited liability company with more than one member or a single-member limited liability company (as the case may be):

 

(a)                                 if either Seller or Pledgor is a limited partnership, each such entity shall have at least one general partner and shall have, as its only general partners, Special Purpose Entities each of which (i) is a corporation or single-member Delaware limited liability company, (ii) has at least one Independent Director or Independent Manager, and (iii) holds a direct interest as general partner in the limited partnership of not less than 0.5% (or 0.1% if the limited partnership is a Delaware entity);

 

(b)                                 if either Seller or Pledgor is a corporation, each such entity shall have at least one Independent Director or Independent Manager, and shall not cause or permit the board of directors of such entity to take any Insolvency Action either with respect to itself and, if the corporation is a Pledgor, with respect to Seller, or any action requiring the unanimous affirmative vote of 100% of the members of its board of directors unless all of its Independent Directors or Independent Managers shall have participated in such vote and shall have voted in favor of such action;

 

(c)                                  if either Seller or Pledgor is a limited liability company (other than a limited liability company meeting all of the requirements applicable to a single-member limited liability company set forth in Section 9.03(d), shall have at least one member that is a Special Purpose Entity, that is a corporation or a single-member Delaware limited liability company, that has at least one Independent Director or Independent Manager and that directly owns at least 0.5% of the equity of the limited liability company (or 0.1% if the limited liability company is a Delaware entity); and

 

(d)                                 if either Seller or Pledgor is a single-member limited liability company, such entity (i) shall be a Delaware limited liability company, (ii) shall have at least one Independent Director or Independent Manager serving as manager of such company, (iii) shall not take any Insolvency Action and shall not cause or permit the members or managers of such entity to take any Insolvency Action, either with respect to itself or, if the company is a Pledgor, with respect to Seller, in each case unless all of its Independent Director(s) or Independent Manager(s) then serving as managers of the company shall have consented in writing to such action (directly or indirectly), and (iv) shall have either (A) a member which owns no economic interest in the

 

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company, has signed the company’s limited liability company agreement and has no obligation to make capital contributions to the company, or (B) two natural persons or one entity that is not a member of the company, that has signed its limited liability company agreement and that, under the terms of such limited liability company agreement becomes a member of the company immediately prior to the resignation or dissolution of the last remaining member of the company.

 

ARTICLE 10

 

EVENTS OF DEFAULT AND REMEDIES

 

Section 10.01                      Events of Default.  Each of the following events shall be an “Event of Default”:

 

(a)                                 Seller fails to make a payment of (i) Margin Deficit or Repurchase Price (other than Price Differential) when due under the Repurchase Documents, whether by acceleration or otherwise (including, if applicable, any Future Funding Amounts related to a Future Funding Transaction), (ii) Price Differential when due under the Repurchase Documents, (iii) any fee within three (3) Business Days of when due under the Repurchase Documents or (iv) any other amount within five (5) Business Days of when due under the Repurchase Documents;

 

(b)                                 Seller fails to observe or perform in any material respect any other Repurchase Obligation of Seller under the Repurchase Documents or Purchased Asset Documents to which Seller is a party, and (except in the case of a failure to perform or observe the Repurchase Obligations of Seller under Section 8.04 and 18.08(a)) such failure continues unremedied for five (5) Business Days after the earlier of receipt of notice thereof from Buyer or the discovery of such failure by Seller;

 

(c)                                  any Representation Breach (other than a Representation Breach arising out of the representations and warranties set forth in Schedule 1) exists and continues unremedied for ten (10) Business Days after the earlier of receipt of notice thereof from Buyer or the discovery of such failure by Seller;

 

(d)                                 any of Seller, Pledgor or Guarantor defaults beyond any applicable grace period in paying any amount or performing any obligation under any Indebtedness, Guarantee Obligation or Contractual Obligation with an outstanding amount of at least $250,000 with respect to Seller or Pledgor, or the Guarantor Threshold Amount with respect to Guarantor, and Seller fails to repurchase all Purchased Assets subject to Transactions in accordance with the terms of the Repurchase Documents within one (1) Business Day of the occurrence of such default;

 

(e)                                  any Seller Party or Affiliate thereof defaults beyond any applicable grace period in paying any amount or performing any obligation due to Buyer or any Affiliate of Buyer under any other financing, hedging, security or other agreement (other than under this Agreement) between Seller, Pledgor, Guarantor or any Affiliate of Seller, Pledgor or Guarantor and Buyer or any Affiliate of Buyer, including, without limitation, Guarantor’s obligations under the Guarantee Agreement and Seller fails to repurchase all Purchased Assets subject to Transactions in accordance with the terms of the Repurchase Documents within one (1) Business Day of the occurrence of such default;

 

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(f)                                   an Insolvency Event occurs with respect to any Seller Party;

 

(g)                                  a Change of Control occurs and Seller fails to repurchase all Purchased Assets subject to Transactions in accordance with the terms of the Repurchase Documents within one (1) Business Day of the occurrence of such Change of Control;

 

(h)                                 a final judgment or judgments for the payment of money in excess of $250,000 with respect to Seller or Pledgor or the Guarantor Threshold Amount with respect to Guarantor in the aggregate is entered against Seller, Pledgor, or Guarantor by one or more Governmental Authorities and the same is not satisfied, discharged (or provision has not been made for such discharge) or bonded, or a stay of execution thereof has not been procured, within sixty (60) days from the date of entry thereof;

 

(i)                                     a Governmental Authority takes any action to (i) condemn, seize or appropriate, or assume custody or control of, all or any substantial part of the property of any or Seller, Pledgor or Guarantor, (ii) displace the management of any of Seller, Pledgor or Guarantor or curtail its authority in the conduct of its business, (iii) terminate the activities of any of Seller, Pledgor or Guarantor as contemplated by the Repurchase Documents, or (iv) remove, limit or restrict the approval of Seller or Guarantor as an issuer, buyer or a seller of commercial mortgage loans, and in each case such action is not discontinued or stayed within thirty (30) days;

 

(j)                                    any of Seller, Pledgor, Residual Pledgor or Guarantor admits that it is not Solvent or is not able or not willing to perform any of its Repurchase Obligations, Contractual Obligations, Guarantee Obligations, Capital Lease Obligations or Off-Balance Sheet Obligations;

 

(k)                                 any provision of the Repurchase Documents, any right or remedy of Buyer or obligation, covenant, agreement or duty of Seller thereunder, or any Lien, security interest or control granted under or in connection with the Repurchase Documents, Pledged Collateral, Pledged Assets or Purchased Assets terminates, is declared null and void, ceases to be valid and effective, ceases to be the legal, valid, binding and enforceable obligation of Seller or any other Person, or the validity, effectiveness, binding nature or enforceability thereof is contested, challenged, denied or repudiated by Seller or any Affiliate thereof, in each case directly, indirectly, in whole or in part, except that, Seller shall have a period of three (3) Business Days from the date of each such violation to either repurchase the related Purchased Asset from Buyer pursuant to Section 3.04 or cure the related breach, as such cure is determined by Buyer;

 

(l)                                     Buyer ceases for any reason to have a valid and perfected first priority security interest in any Purchased Asset, any Pledged Collateral or any Pledged Assets, except that, Seller shall have a period of three (3) Business Days from the date of each such violation to either repurchase the related Purchased Asset from Buyer pursuant to Section 3.04 or cure the related breach, as such cure is determined by Buyer;

 

(m)                             any of Seller, Pledgor or Guarantor is required to register as an “investment company” (as defined in the Investment Company Act) or the arrangements contemplated by the Repurchase Documents shall require registration of any Seller Party as an “investment company”;

 

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(n)                                 any of Seller, Pledgor, Residual Pledgor or Guarantor engages in any conduct or action where Buyer’s prior consent is required by any Repurchase Document and such Person fails to obtain such consent;

 

(o)                                 (i) Seller or Servicer fails to deposit to the Waterfall Account all Income and other amounts as required by Section 5.01 and other provisions of this Agreement when due, or (ii) a Servicer Event of Default (excluding Servicer’s failure to deposit Income in the Waterfall Account) shall have occurred and either (x) such Servicer Event of Default has not been cured, or (y) servicing of the Purchased Assets has not been transferred to Buyer or a designee of Buyer, in each case in respect of this clause (ii), within five (5) Business Days of such Servicer Event of Default;

 

(p)                                 Guarantor’s audited annual financial statements or the notes thereto or other opinions or conclusions stated therein are qualified or limited by reference to the status of Guarantor as a “going concern” or a reference of similar import, other than a qualification or limitation expressly related to Buyer’s rights in the Purchased Assets;

 

(q)                                 Guarantor breaches any of the obligations, terms or conditions set forth in the Guarantee Agreement; provided that if such breached obligation, term or condition is susceptible of being cured (as determined by Buyer), such breach is not cured within three (3) Business Days of the occurrence of such breach;

 

(r)                                    any Material Modification is made to any Purchased Asset or any Purchased Asset Document without the prior written consent of Buyer; or

 

(s)                                   (1) Guarantor fails to qualify as a REIT (after giving effect to any cure or corrective periods or allowances pursuant to the Code), or (2) Seller becomes subject to U.S. federal income tax on a net income basis.

 

Section 10.02                      Remedies of Buyer as Owner of the Purchased Assets.  If an Event of Default exists, at the option of Buyer, exercised by notice to Seller (which option shall be deemed to be exercised, even if no notice is given, automatically and immediately upon the occurrence of an Event of Default under Section 10.01(f) or (g)), the Repurchase Date for all Purchased Assets shall be deemed automatically and immediately to occur (the date on which such option is exercised or deemed to be exercised, the “Accelerated Repurchase Date”).  If Buyer exercises or is deemed to have exercised the foregoing option:

 

(a)                                 All Repurchase Obligations shall become immediately due and payable on and as of the Accelerated Repurchase Date.

 

(b)                                 All amounts in either the Servicer Account with respect to the Purchased Assets or the Waterfall Account and all Income paid after the Accelerated Repurchase Date shall be retained by Buyer and applied in accordance with Article 5.

 

(c)                                  Buyer may complete any assignments, allonges, endorsements, powers or other documents or instruments executed in blank and otherwise obtain physical possession of all Purchased Asset Documents and all other instruments, certificates and documents then held by or on behalf of Custodian under the Custodial Agreement.  Buyer may obtain physical possession of

 

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all Servicing Files, Servicing Agreements and other files and records of Seller or any Servicer.  Seller shall deliver to Buyer such assignments and other documents with respect thereto as Buyer shall request.

 

(d)                                 Buyer may immediately, at any time, and from time to time, exercise either of the following remedies with respect to any or all of the Purchased Assets:  (i)  sell such Purchased Assets on a servicing-released basis and/or without providing any representations and warranties on an “as-is where is” basis, in a recognized market and by means of a public or private sale at such price or prices as Buyer accepts, and apply the net proceeds thereof in accordance with Article 5, or (ii) retain such Purchased Assets and give Seller credit against the Repurchase Price for such Purchased Assets (or if the amount of such credit exceeds the Repurchase Price for such Purchased Assets, to credit against Repurchase Obligations due and any other amounts (without duplication) then owing to Buyer by any other Person pursuant to any Repurchase Document, in such order and in such amounts as determined by Buyer), in an amount equal to the Market Value of such Purchased Assets on the date of the related Event of Default.  Until such time as Buyer exercises either such remedy with respect to a Purchased Asset, Buyer may hold such Purchased Asset for its own account and retain all Income with respect thereto in accordance with Article 5.

 

(e)                                  The Parties agree that the Purchased Assets are of such a nature that they may decline rapidly in value, and may not have a ready or liquid market.  Accordingly, Buyer shall not be required to sell more than one Purchased Asset on a particular Business Day, to the same purchaser or in the same manner.  Buyer may determine whether, when and in what manner a Purchased Asset shall be sold, it being agreed that both a good faith public and a good faith private sale shall be deemed to be commercially reasonable.  Other than notice of the Accelerated Repurchase Date, to the extent required, Buyer shall not be required to give notice to Seller or any other Person prior to exercising any remedy in respect of an Event of Default.  If no prior notice is given, Buyer shall give notice to Seller of the remedies exercised by Buyer promptly thereafter.

 

(f)                                   Seller shall be liable to Buyer for (i) any amount by which the Repurchase Obligations due to Buyer exceed the aggregate of the net proceeds and credits referred to in the preceding clause (d), (ii) the amount of all actual out-of-pocket expenses, including reasonable legal fees and expenses, actually incurred by Buyer in connection with or as a consequence of an Event of Default, (iii) any costs and losses payable under Section 12.03, and (iv) any other actual loss, damage, cost or expense resulting from the occurrence of an Event of Default.

 

(g)                                  Buyer shall be entitled to an injunction, an order of specific performance or other equitable relief to compel Seller to fulfill any of its obligations as set forth in the Repurchase Documents, including this Article 10, if Seller fails or refuses to perform its obligations as set forth herein or therein.

 

(h)                                 Seller hereby appoints Buyer as attorney-in-fact of Seller for purposes of carrying out the Repurchase Documents, including executing, endorsing and recording any instruments or documents and taking any other actions that Buyer deems necessary or advisable to accomplish such purposes, which appointment is coupled with an interest and is irrevocable.

 

(i)                                     Buyer may, without prior notice to Seller, exercise any or all of its set-off rights including those set forth in Section 18.17 and pursuant to any other Repurchase Document.

 

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This Section 10.02(i) shall be without prejudice and in addition to any right of set-off, combination of accounts, Lien or other rights to which Buyer is at any time otherwise entitled.

 

(j)                                    All rights and remedies of Buyer under the Repurchase Documents, including those set forth in Section 18.17, are cumulative and not exclusive of any other rights or remedies that Buyer may have and may be exercised at any time when an Event of Default exists.  Such rights and remedies may be enforced without prior judicial process or hearing.  Seller agrees that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s-length.  Seller hereby expressly waives any defenses Seller might have to require Buyer to enforce its rights by judicial process or otherwise arising from the use of nonjudicial process, disposition of any or all of the Purchased Assets, or any other election of remedies.

 

ARTICLE 11

 

SECURITY INTEREST

 

Section 11.01                      Grant.  Buyer and Seller intend each Transaction to be a sale to Buyer of the Purchased Assets and not a loan from Buyer to Seller secured by the Purchased Assets.  However, to preserve and protect Buyer’s rights with respect to the Purchased Assets and under the Repurchase Documents if any Governmental Authority recharacterizes any Transaction with respect to a Purchased Asset as other than a sale, and as security for Seller’s performance of the Repurchase Obligations, Seller hereby grants to Buyer a present Lien on and security interest in all of the right, title and interest of Seller in, to and under the Purchased Assets (which for this purpose shall be deemed to include the items described in the proviso in the definition thereof), , and the transfer of the Purchased Assets to Buyer shall be deemed to constitute and confirm such grant, to secure the payment and performance of the Repurchase Obligations (including the obligation of Seller to pay the Repurchase Price, or if the related Transaction is recharacterized as a loan, to repay such loan for the Repurchase Price).

 

Section 11.02                      Effect of Grant.  If any circumstance described in Section 11.01 occurs, (a) this Agreement shall also be deemed to be a security agreement as defined in the UCC, (b) Buyer shall have all of the rights and remedies provided to a secured party by Requirements of Law (including the rights and remedies of a secured party under the UCC and the right to set off any mutual debt and claim) and under any other agreement between Buyer and Seller, (c) without limiting the generality of the foregoing, Buyer shall be entitled to set off the proceeds of the liquidation of the Purchased Assets against all of the Repurchase Obligations, without prejudice to Buyer’s right to recover any deficiency, (d) the possession by Buyer or any of its agents, including Custodian, of the Purchased Asset Documents, the Purchased Assets and such other items of property as constitute instruments, money, negotiable documents, securities or chattel paper shall be deemed to be possession by the secured party for purposes of perfecting such security interest under the UCC and Requirements of Law, and (e) notifications to Persons (other than Buyer) holding such property, and acknowledgments, receipts or confirmations from Persons (other than Buyer) holding such property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, securities intermediaries, bailees or agents (as applicable) of the secured party for the purpose of perfecting such security interest under the UCC and Requirements of Law.  The security interest of Buyer granted herein shall be, and Seller hereby represents and

 

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warrants to Buyer that it is, a first priority perfected security interest.  For the avoidance of doubt, (i) each Purchased Asset secures the Repurchase Obligations of Seller with respect to all other Purchased Assets, including any Purchased Assets that are junior in priority to the Purchased Asset in question, and (ii) if an Event of Default exists, no Purchased Asset will be released from Buyer’s Lien or transferred to Seller until the Repurchase Obligations are indefeasibly paid in full.  Notwithstanding the foregoing, the Repurchase Obligations shall be full recourse to Seller.

 

Section 11.03                      Seller to Remain Liable.  Buyer and Seller agree that the grant of a security interest under this Article 11 shall not constitute or result in the creation or assumption by Buyer of any Retained Interest or other obligation of Seller or any other Person in connection with any Purchased Asset whether or not Buyer exercises any right with respect thereto.  Seller shall remain liable under the Purchased Assets and the Purchased Asset Documents to perform all of Seller’s duties and obligations thereunder to the same extent as if the Repurchase Documents had not been executed.

 

Section 11.04                      Waiver of Certain Laws.  Seller agrees, to the extent permitted by Requirements of Law, that neither it nor anyone claiming through or under it will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in force in any locality where any Purchased Assets may be situated in order to prevent, hinder or delay the enforcement or foreclosure of this Agreement, or the absolute sale of any of the Purchased Assets, or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereof, and Seller, for itself and all who may at any time claim through or under it, hereby waives, to the full extent that it may be lawful so to do, the benefit of all such laws and any and all right to have any of the properties or assets constituting the Purchased Assets marshaled upon any such sale, and agrees that Buyer or any court having jurisdiction to foreclose the security interests granted in this Agreement may sell the Purchased Assets as an entirety or in such parcels as Buyer or such court may determine.

 

ARTICLE 12

 

INCREASED COSTS; CAPITAL ADEQUACY

 

Section 12.01                      Market Disruption.  If prior to any Pricing Period, Buyer determines that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining LIBOR for such Pricing Period, Buyer shall give prompt notice thereof to Seller, whereupon the Pricing Rate for such Pricing Period, and for all subsequent Pricing Periods until such notice has been withdrawn by Buyer, shall be the Alternative Rate.

 

Section 12.02                      Illegality.  If the adoption of or any change in any Requirements of Law or in the interpretation or application thereof after the date hereof shall make it unlawful for Buyer to effect or continue the Transactions as contemplated by the Repurchase Documents, (a) any commitment of Buyer hereunder to enter into any new Transaction (if any) shall be terminated, (b) the Pricing Rate shall be converted automatically to the Alternative Rate on the last day of the then current Pricing Period or within such earlier period as may be required by Requirements of Law, and (c) if required by such adoption or change, the Termination Date shall be deemed to have occurred; provided that any such determination by Buyer shall be applied to all sellers under similar repurchase facilities with Buyer with assets of similar credit quality.

 

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Section 12.03                      Breakfunding.  In the event of (a) the failure by Seller to terminate any Transaction after Seller has given a notice of termination pursuant to Section 3.04, (b) any payment to Buyer on account of the outstanding Repurchase Price, including a payment made pursuant to Section 3.04 but excluding a payment made pursuant to Section 5.02, on any day other than a Remittance Date (based on the assumption that Buyer funded its commitment with respect to such Transaction in the London Interbank Eurodollar market and using any reasonable attribution or averaging methods that Buyer deems appropriate and practical), (c) any failure by Seller to sell Eligible Assets to Buyer after Seller has notified Buyer of a proposed Transaction and Buyer has agreed to purchase such Eligible Assets in accordance with this Agreement, or (d) any conversion of the Pricing Rate to the Alternative Rate because LIBOR is not available for any reason on a day that is not the last day of the then-current Pricing Period, Seller shall compensate Buyer for the cost and expense attributable to such event.  A certificate of Buyer setting forth any amount or amounts that Buyer is entitled to receive pursuant to this Section 12.03 shall be delivered to Seller and shall be conclusive to the extent calculated in good faith and absent manifest error.  Seller shall pay Buyer the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

Section 12.04                      Increased Costs.  If the adoption of, or any change in, any Requirements of Law or in the interpretation or application thereof by any Governmental Authority, or compliance by Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority having jurisdiction over Buyer made after the date of this Agreement, shall:  (a) subject Buyer to any Taxes (other than (i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (d) of the definition of “Excluded Taxes” or (iii) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, (b) impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of Buyer, or (c) impose on Buyer (other than Taxes) any other condition; and the result of any of the preceding clauses (a), (b) and (c) is to increase the cost to Buyer, by an amount that Buyer deems to be material, of entering into, continuing or maintaining the Transactions, or to reduce any amount receivable under the Repurchase Documents in respect thereof, then, in any such case, upon not less than thirty (30) days’ prior written notice to Seller, Seller shall pay to Buyer such additional amount or amounts as reasonably necessary to fully compensate Buyer for such increased cost or reduced amount receivable; provided that any such determination by Buyer shall be applied to all sellers under similar repurchase facilities with Buyer with assets of similar credit quality.

 

Section 12.05                      Capital Adequacy.  If Buyer determines that any change in a Requirement of Law or internal policy regarding capital requirements has or would have the effect of reducing the rate of return on Buyer’s capital as a consequence of this Agreement or its obligations under the Transactions hereunder to a level below that which Buyer could have achieved but for such change in a Requirement of Law or internal policy (taking into consideration Buyer’s policies with respect to capital adequacy), then from time to time Seller will promptly upon demand pay to Buyer such additional amount or amounts as will compensate Buyer for any such reduction suffered; provided that any such determination by Buyer shall be applied to all sellers under similar repurchase facilities with Buyer with assets of similar credit quality.

 

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Section 12.06                      Taxes.

 

(a)                                 Any and all payments by or on account of any obligation of Seller under any Repurchase Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law requires the deduction or withholding of any Tax from any such payment, then Seller shall make (or cause to be made) such deduction or withholding and shall timely pay (or cause to be timely paid) the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by Seller shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 12.06) Buyer receives an amount equal to the sum it would have received had no such deduction or withholding been made in respect of such Indemnified Taxes.

 

(b)                                 Seller shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)                                  Seller shall indemnify Buyer, within ten (10) Business Days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 12.06) payable or paid by Buyer or required to be withheld or deducted from a payment to Buyer, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to Seller by Buyer shall be conclusive absent manifest error.

 

(d)                                 As soon as practicable after any payment of Taxes by Seller to a Governmental Authority pursuant to this Section 12.06, Seller shall deliver to Buyer the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Buyer.

 

(e)                                  (i) If Buyer is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Repurchase Document, Buyer shall deliver to Seller, at the time or times reasonably requested by Seller, such properly completed and executed documentation reasonably requested by Seller as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, Buyer, if reasonably requested by Seller, shall deliver such other documentation prescribed by applicable law or reasonably requested by Seller as will enable Seller to determine whether or not Buyer is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 12.06(e)(ii)(A), Section 12.06(e)(ii)(B) and Section 12.06(e)(ii)(D) below) shall not be required if in Buyer’s reasonable judgment such completion, execution or submission would subject Buyer to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of Buyer.

 

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(ii)                                  Without limiting the generality of the foregoing:

 

(A)                               if Buyer is a U.S. Person, it shall deliver to Seller on or prior to the date on which Buyer becomes a Party under this Agreement (and from time to time thereafter upon the reasonable request of Seller), executed copies of IRS Form W-9 certifying that Buyer is exempt from U.S. federal backup withholding tax;

 

(B)                               if Buyer is a Foreign Buyer, it shall, to the extent it is legally entitled to do so, deliver to Seller (in such number of copies as shall be requested by Seller) on or prior to the date on which Buyer becomes a Party under this Agreement (and from time to time thereafter upon the reasonable request of Seller), whichever of the following is applicable:

 

(I)                                   in the case of a Foreign Buyer claiming the benefits of an income tax treaty to which the United States is a party, (x) with respect to payments of interest under any Repurchase Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Repurchase Document, IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(II)                              executed copies of IRS Form W-8ECI;

 

(III)                         in the case of a Foreign Buyer claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such Foreign Buyer is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Seller within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable); or

 

(IV)                          to the extent a Foreign Buyer is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Buyer is a partnership and one or more direct or indirect partners of such Foreign Buyer are claiming the portfolio interest exemption, such Foreign Buyer may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner;

 

(C)                               if Buyer is a Foreign Buyer, it shall, to the extent it is legally entitled to do so, deliver to Seller (in such number of copies as shall be requested by Seller)

 

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on or prior to the date on which Buyer becomes a Party under this Agreement (and from time to time thereafter upon the reasonable request of Seller), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Seller to determine the withholding or deduction required to be made; and

 

(D)                               if a payment made to Buyer under any Repurchase Document would be subject to U.S. federal withholding Tax imposed by FATCA if Buyer were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), Buyer shall deliver to Seller at the time or times prescribed by law and at such time or times reasonably requested by Seller such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Seller as may be necessary for Seller to comply with its obligations under FATCA and to determine that Buyer has complied with Buyer’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

Buyer agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Seller in writing of its legal inability to do so.

 

(f)                                   If any Party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 12.06 (including by the payment of additional amounts pursuant to this Section 12.06), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 12.06 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 12.06(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this Section 12.06(f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 12.06(f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This Section 12.06(f) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

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(g)                                  For the avoidance of doubt, for purposes of this Section 12.06, the term “applicable law” includes FATCA.

 

Section 12.07                      Payment and Survival of Obligations.  Buyer may at any time send Seller a notice showing the calculation of any amounts payable pursuant to this Article 12, and Seller shall pay such amounts to Buyer within ten (10) Business Days after Seller receives such notice.  Each Party’s obligations under this Article 12 shall survive any assignment of rights by, or the replacement of the Buyer, the termination of the Transactions and the repayment, satisfaction or discharge of all obligations under any Repurchase Document.

 

ARTICLE 13

 

INDEMNITY AND EXPENSES

 

Section 13.01                      Indemnity.

 

(a)                                 Seller shall release, defend, indemnify and hold harmless Buyer, Affiliates of Buyer and its and their respective officers, directors, shareholders, partners, members, owners, employees, agents, attorneys, Affiliates and advisors (each an “Indemnified Person” and collectively the “Indemnified Persons”), against, and shall hold each Indemnified Person harmless from any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, fees, costs, expenses (including reasonable legal fees, charges, and disbursements of any counsel for any such Indemnified Person and expenses), penalties or fines of any kind that may be imposed on, incurred by or asserted against any such Indemnified Person (collectively, the “Indemnified Amounts”) in any way relating to, arising out of or resulting from or in connection with (i) the Repurchase Documents, the Purchased Asset Documents, the Purchased Assets, the Pledged Collateral, the Pledged Assets, the Transactions, any Mortgaged Property or related property, or any action taken or omitted to be taken by any Indemnified Person in connection with or under any of the foregoing, or any transaction contemplated hereby or thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect of any Repurchase Document, any Transaction (including, for the avoidance of doubt, all Future Funding Transactions), any Purchased Asset, any Purchased Asset Document, any Pledged Collateral or any Pledged Assets, (ii) any claims, actions or damages by an Underlying Obligor or lessee with respect to a Purchased Asset, (iii) any violation or alleged violation of, non—compliance with or liability under any Requirements of Law, (iv) ownership of, Liens on, security interests in or the exercise of rights or remedies under any of the items referred to in the preceding clause (i), (v) any accident, injury to or death of any person or loss of or damage to property occurring in, on or about any Mortgaged Property or on the adjoining sidewalks, curbs, parking areas, streets or ways, (vi) any use, nonuse or condition in, on or about, or possession, alteration, repair, operation, maintenance or management of, any Mortgaged Property or on the adjoining sidewalks, curbs, parking areas, streets or ways, (vii) any failure by Seller to perform or comply with any Repurchase Document, Purchased Asset Document or Purchased Asset, (viii) performance of any labor or services or the furnishing of any materials or other property in respect of any Mortgaged Property or Purchased Asset, (ix) any claim by brokers, finders or similar Persons claiming to be entitled to a commission in connection with any lease or other transaction involving any Repurchase Document, Purchased Asset or Mortgaged Property, (x) the execution, delivery, filing or recording of any Repurchase Document, Purchased Asset Document or any memorandum of any of the

 

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foregoing, (xi) any Lien or claim arising on or against any Purchased Asset or related Mortgaged Property under any Requirements of Law or any liability asserted against Buyer or any Indemnified Person with respect thereto, (xii) (1) a past, present or future violation or alleged violation of any Environmental Laws in connection with any Mortgaged Property by any Person or other source, whether related or unrelated to Seller or any Underlying Obligor, (2) any presence of any Materials of Environmental Concern in, on, within, above, under, near, affecting or emanating from any Mortgaged Property in violation of Environmental Law, (3) the failure to timely perform any Remedial Work required under the Purchased Asset Documents or pursuant to Environmental Law, (4) any past, present or future activity by any Person or other source, whether related or unrelated to Seller or any Underlying Obligor in connection with any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or other release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling, transfer or transportation to or from any Mortgaged Property of any Materials of Environmental Concern at any time located in, under, on, above or affecting any Mortgaged Property, in each case, in violation of Environmental Law, (5) any past, present or future actual Release (whether intentional or unintentional, direct or indirect, foreseeable or unforeseeable) to, from, on, within, in, under, near or affecting any Mortgaged Property by any Person or other source, whether related or unrelated to Seller or any Underlying Obligor, in each case, in violation of Environmental Law, (6) the imposition, recording or filing or the threatened imposition, recording or filing of any Lien on any Mortgaged Property with regard to, or as a result of, any Materials of Environmental Concern or pursuant to any Environmental Law, or (7) any misrepresentation or failure to perform any obligations pursuant to any Repurchase Document or Purchased Asset Document relating to environmental matters in any way, or (xiii) Seller’s conduct, activities, actions and/or inactions in connection with, relating to or arising out of any of the foregoing clauses of this Section 13.01, that, in each case, results from anything whatsoever other than any Indemnified Person’s gross negligence or willful misconduct, as determined by a court of competent jurisdiction pursuant to a final, non-appealable judgment.  In any suit, proceeding or action brought by an Indemnified Person in connection with any Purchased Asset for any sum owing thereunder, or to enforce any provisions of any Purchased Asset, Seller shall defend, indemnify and hold such Indemnified Person harmless from and against all expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction of liability whatsoever of the account debtor or Underlying Obligor arising out of a breach by Seller of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or Underlying Obligor from Seller.  In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 13.01 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by Seller, an Indemnified Person or any other Person or any Indemnified Person is otherwise a party thereto and whether or not any Transaction or any Future Funding Transaction is entered into.  This Section 13.01(a) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

 

(b)                                 If for any reason the indemnification provided in this Section 13.01 is unavailable to the Indemnified Person or is insufficient to hold an Indemnified Person harmless, even though such Indemnified Person is entitled to indemnification under the express terms thereof, then Seller shall contribute to the amount paid or payable by such Indemnified Person as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the

 

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relative benefits received by such Indemnified Person on the one hand and Seller on the other hand, the relative fault of such Indemnified Person, and any other relevant equitable considerations.

 

(c)                                  An Indemnified Person may at any time send Seller a notice showing the calculation of Indemnified Amounts, and Seller shall pay such Indemnified Amounts to such Indemnified Person within ten (10) Business Days after Seller receives such notice.  The obligations of Seller under this Section 13.01 shall apply (without duplication) to Assignees and Participants and survive the termination of this Agreement.

 

Section 13.02                      Expenses.  Seller shall promptly on demand pay to or as directed by Buyer all third-party out-of-pocket costs and expenses (including reasonable legal, accounting and advisory fees and expenses) incurred by Buyer in connection with (a) the development, evaluation, preparation, negotiation, execution, consummation, delivery and administration of, and any amendment, supplement or modification to, or extension, renewal or waiver of, the Repurchase Documents and the Transactions, (b) any Asset or Purchased Asset, including pre-purchase and/or ongoing due diligence, inspection, testing, review, recording, registration, travel custody, care, insurance or preservation, (c) the enforcement of the Repurchase Documents or the payment or performance by Seller of any Repurchase Obligations, and (d) any actual or attempted sale, exchange, enforcement, collection, compromise or settlement relating to the Purchased Assets.

 

ARTICLE 14

 

INTENT

 

Section 14.01                      Safe Harbor Treatment.  The Parties intend (a) for each Transaction to qualify for the safe harbor treatment provided by the Bankruptcy Code and for Buyer to be entitled to all of the rights, benefits and protections afforded to Persons under the Bankruptcy Code with respect to a “repurchase agreement” as defined in Section 101(47) of the Bankruptcy Code (to the extent that a Transaction has a maturity date of less than one (1) year) and a “securities contract” as defined in Section 741(7) of the Bankruptcy Code and that payments and transfers under this Agreement constitute transfers made by, to or for the benefit of a financial institution, financial participant or repo participant within the meaning of Section 546(e) or 546(f) of the Bankruptcy Code, (b) the Guarantee Agreement and the Pledge and Security Agreement each constitute a security agreement or arrangement or other credit enhancement within the meaning of Section 101 of the Code related to a “securities contract” as defined in Section 741(7)(A)(xi) of the Bankruptcy Code and, to the extent that a Transaction that has a maturity date of less than one (1) year, a “repurchase agreement” as that term is defined in Section 101(47)(A)(v) of the Bankruptcy Code, and (c) that Buyer (for so long as Buyer is a “financial institution,” “financial participant,” “repo participant,” “master netting participant” or other entity listed in Section 555, 362(b)(6) or 362(b)(7) of the Bankruptcy Code) shall be entitled to the “safe harbor” benefits and protections afforded under the Bankruptcy Code with respect to a “repurchase agreement,” “securities contract” and a “master netting agreement,” including (x) the rights, set forth in Article 10 and in Sections 555, 559 and 561 of the Bankruptcy Code, to liquidate the Purchased Assets and terminate this Agreement, and (y) the right to offset or net out as set forth in Article 10 and Section 18.17 and in Sections 362(b)(6), 362(b)(7), 362(b)(27), 362(o) and 546 of the Bankruptcy Code.

 

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Section 14.02                      Liquidation.  The Parties acknowledge and agree that (a) Buyer’s right to liquidate Purchased Assets delivered to it in connection with the Transactions hereunder or to exercise any other remedies pursuant to Articles 10 and 11 and as otherwise provided in the Repurchase Documents is a contractual right to liquidate such Transactions as described in Sections 555, 559 and 561 of the Bankruptcy Code.

 

Section 14.03                      Qualified Financial Contract.  The Parties acknowledge and agree that if a Party is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

 

Section 14.04                      Netting Contract.  The Parties acknowledge and agree that this Agreement constitutes a “netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction (including, for the avoidance of doubt, any Future Funding Transaction) shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation,” respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA).

 

Section 14.05                      Master Netting Agreement.  The Parties intend that this Agreement, the Guarantee Agreement and the Pledge and Security Agreement each constitute a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code.

 

ARTICLE 15

 

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

 

The Parties acknowledge that they have been advised and understand that:

 

(a)                                 if one of the Parties is a broker or dealer registered with the Securities and Exchange Commission under Section 14 of the Exchange Act, the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 do not protect the other Party with respect to any Transaction;

 

(b)                                 if one of the Parties is a government securities broker or a government securities dealer registered with the Securities and Exchange Commission under Section 14C of the Exchange Act, the Securities Investor Protection Act of 1970 will not provide protection to the other Party with respect to any Transaction;

 

(c)                                  if one of the Parties is a financial institution, funds held by or on behalf of the financial institution pursuant to any Transaction are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable; and

 

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(d)                                 if one of the Parties is an “insured depository institution” as that term is defined in Section 1813(c)(2) of Title 12 of the United States Code, funds held by or on behalf of the financial institution pursuant to any Transaction are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund or the Bank Insurance Fund, as applicable.

 

ARTICLE 16

 

NO RELIANCE

 

Each Party acknowledges, represents and warrants to the other Party that, in connection with the negotiation of, entering into, and performance under, the Repurchase Documents and each Transaction:

 

(a)                                 It is not relying (for purposes of making any investment decision or otherwise) on any advice, counsel or representations (whether written or oral) of the other Party, other than the representations expressly set forth in the Repurchase Documents;

 

(b)                                 It has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and it has made its own investment, hedging and trading decisions (including decisions regarding the suitability of any Transaction) based on its own judgment and on any advice from such advisors as it has deemed necessary and not on any view expressed by the other Party;

 

(c)                                  It is a sophisticated and informed Person that has a full understanding of all the terms, conditions and risks (economic and otherwise) of the Repurchase Documents and each Transaction and is capable of assuming and willing to assume (financially and otherwise) those risks;

 

(d)                                 It is entering into the Repurchase Documents and each Transaction for the purposes of managing its borrowings or investments or hedging its underlying assets or liabilities and not for purposes of speculation;

 

(e)                                  It is not acting as a fiduciary or financial, investment or commodity trading advisor for the other Party and has not given the other Party (directly or indirectly through any other Person) any assurance, guaranty or representation whatsoever as to the merits (either legal, regulatory, tax, business, investment, financial accounting or otherwise) of the Repurchase Documents or any Transaction; and

 

(f)                                   No partnership or joint venture exists or will exist as a result of the Transactions or entering into and performing the Repurchase Documents.

 

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ARTICLE 17

 

SERVICING

 

This Article 17 shall apply to all Purchased Assets.

 

Section 17.01                      Servicing Rights.  Buyer is the owner of all Servicing Rights.  Without limiting the generality of the foregoing, Buyer shall have the right to hire or otherwise engage any Person to service or sub-service all or part of the Purchased Assets, provided, however, that at any time prior to an Event of Default, Seller may designate a Servicer to be selected by Buyer, so long as such Servicer is reasonably acceptable to Buyer, and such Person shall have only such servicing obligations with respect to such Purchased Assets as are approved by Buyer.  Notwithstanding the preceding sentence, Buyer agrees with Seller as follows with respect to the servicing of the Purchased Assets:

 

(a)                                 Each Servicer shall service the Purchased Assets on behalf of Buyer.  Each Servicing Agreement shall contain provisions which are consistent with this Article 17 and must otherwise be in form and substance reasonably satisfactory to Buyer, it being understood that (i) in all cases where an Affiliate of Seller is the Servicer, the related Servicing Agreement shall be in the form approved by Buyer, and (ii) in all cases where Wells Fargo Bank, National Association is the Servicer, the related Servicing Agreement shall be in the form attached hereto as Exhibit I.

 

(b)                                 Contemporaneously with the execution of this Agreement on the Closing Date, Buyer will enter into, and cause Servicer to enter into, the Servicing Agreement.  Each Servicing Agreement, where the Servicer is not Buyer or an Affiliate of Buyer, shall automatically terminate at the end of the calendar month following its execution and at the end of each calendar month period thereafter, unless, in each case, Buyer shall agree, by delivery of a Servicing Agreement Extension Notice to the related Servicer on or before the Remittance Date immediately preceding each such scheduled termination date, to extend the termination date for an additional calendar month period.  Neither Seller nor the related Servicer may assign its rights or obligations under the related Servicing Agreement without the prior written consent of Buyer.

 

(c)                                  Seller shall not and shall not direct or otherwise permit any Servicer to (i) make any Material Modification without the prior written consent of Buyer or (ii) take any action which would result in a violation of the obligations of any Person under the related Servicing Agreement, this Agreement or any other Repurchase Document, or which would otherwise be inconsistent with the rights of Buyer under the Repurchase Documents.  Buyer, as owner of the Purchased Assets, shall own all related servicing and voting rights and, as owner, shall grant Seller a revocable license to direct each related Servicer, so long as no Default or Event of Default has occurred and is continuing; provided, however, that Seller cannot give any direction or take any action that could materially adversely affect the value or collectability of any amounts due with respect to the Purchased Assets without the consent of Buyer.  Such revocable option is not evidence of any ownership or other interest or right of Seller in any Purchased Asset.

 

(d)                                 The servicing fee payable to each Servicer shall be payable as a servicing fee in accordance with this Agreement and each Servicing Agreement, including without limitation pursuant to priority fourth of Section 5.02 or priority third of Section 5.03, as applicable.

 

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(e)                                  Upon the occurrence and during the continuance of an Event of Default under this Agreement, in addition to all of the other rights and remedies of Buyer and Servicer under each Servicing Agreement, this Agreement and the other Repurchase Documents (and in addition to the provisions of each Servicing Agreement providing for termination of each such Servicing Agreement pursuant to its terms), (i)  the right, if any, of each Servicer to direct the servicing of the Purchased Assets shall immediately and automatically cease to exist, and (ii) either Buyer or each Servicer may at any time terminate the related Servicing Agreement immediately upon the delivery of a written termination notice from either Buyer or the related Servicer to Seller.  Seller shall pay all expenses associated with any such termination, including without limitation any fees and expenses required in connection with the transfer of servicing to the related Servicer and/or a replacement Servicer.

 

Section 17.02                      Accounts Related to Purchased Assets.  All accounts directly related to the Purchased Assets shall be maintained at institutions reasonably acceptable to Wells Fargo Bank, N.A., and Seller shall cause each Underlying Obligor to enter into the contractual arrangements with Seller that are necessary in order to create a perfected security interest in favor of Seller in all such accounts.  Seller shall execute all documents necessary to assign all of Seller’s rights in such accounts to Buyer.

 

Section 17.03                      Servicing Reports.  Seller shall deliver and cause each Servicer to deliver to Buyer a monthly remittance report on or before the second Business Day immediately preceding each monthly Remittance Date containing servicing information, including those fields reasonably requested by Buyer from time to time, on an asset by asset basis and in the aggregate, with respect to the Purchased Assets for the month (or any portion thereof) before the date of such report

 

Section 17.04                      Servicer Event of Default.  If an Event of Default or Servicer Event of Default exists, Buyer shall have the right at any time thereafter to terminate the Servicing Agreement with respect to the Purchased Assets and transfer servicing of the related Purchased Assets to Buyer or its designee, at no cost or expense to Buyer, it being agreed that Seller will pay any fees and expenses required to terminate such Servicing Agreement and transfer servicing to Buyer or its designee.

 

ARTICLE 18

 

MISCELLANEOUS

 

Section 18.01                      Governing Law.  THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT, THE RELATIONSHIP OF THE PARTIES TO THIS AGREEMENT, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES TO THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF.  THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.

 

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Section 18.02                      Submission to Jurisdiction; Service of Process.  Each Party irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to the Repurchase Documents, or for recognition or enforcement of any judgment, and each Party irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such State court or, to the fullest extent permitted by applicable law, in such Federal court.  Each Party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or the other Repurchase Documents shall affect any right that Buyer may otherwise have to bring any action or proceeding arising out of or relating to the Repurchase Documents against Seller or its properties in the courts of any jurisdiction.  Each Party irrevocably and unconditionally waives, to the fullest extent permitted by Requirements of Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to the Repurchase Documents in any court referred to above, and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.  Each Party irrevocably consents to service of process in the manner provided for notices in Section 18.12.  Nothing in this Agreement will affect the right of any Party hereto to serve process in any other manner permitted by applicable law.

 

Section 18.03                      IMPORTANT WAIVERS.

 

(a)                                 SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY ACTION OR PROCEEDING BROUGHT AGAINST IT BY BUYER OR ANY INDEMNIFIED PERSON.

 

(b)                                 TO THE EXTENT PERMITTED BY REQUIREMENTS OF LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE BETWEEN THEM, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH OR RELATED TO THE REPURCHASE DOCUMENTS, THE PURCHASED ASSETS, THE TRANSACTIONS, ANY DEALINGS OR COURSE OF CONDUCT BETWEEN THEM, OR ANY STATEMENTS (WRITTEN OR ORAL) OR OTHER ACTIONS OF EITHER PARTY. NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

 

(c)                                  TO THE EXTENT PERMITTED BY REQUIREMENTS OF LAW, SELLER HEREBY WAIVES ANY RIGHT TO CLAIM OR RECOVER IN ANY LITIGATION WHATSOEVER INVOLVING ANY INDEMNIFIED PERSON, ANY SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES, WHETHER SUCH WAIVED DAMAGES ARE BASED ON STATUTE, CONTRACT, TORT, COMMON LAW OR ANY OTHER LEGAL

 

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THEORY, WHETHER THE LIKELIHOOD OF SUCH DAMAGES WAS KNOWN AND REGARDLESS OF THE FORM OF THE CLAIM OF ACTION.  NO INDEMNIFIED PERSON SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH ANY REPURCHASE DOCUMENT OR THE TRANSACTIONS.

 

(d)                                 SELLER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF BUYER OR AN INDEMNIFIED PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BUYER OR AN INDEMNIFIED PERSON WOULD NOT SEEK TO ENFORCE ANY OF THE WAIVERS IN THIS SECTION 18.03 IN THE EVENT OF LITIGATION OR OTHER CIRCUMSTANCES.  THE SCOPE OF SUCH WAIVERS IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THE REPURCHASE DOCUMENTS, REGARDLESS OF THEIR LEGAL THEORY.

 

(e)                                  EACH PARTY ACKNOWLEDGES THAT THE WAIVERS IN THIS SECTION 18.03 ARE A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT SUCH PARTY HAS ALREADY RELIED ON SUCH WAIVERS IN ENTERING INTO THE REPURCHASE DOCUMENTS, AND THAT SUCH PARTY WILL CONTINUE TO RELY ON SUCH WAIVERS IN THEIR RELATED FUTURE DEALINGS UNDER THE REPURCHASE DOCUMENTS.  EACH PARTY FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED SUCH WAIVERS WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL AND OTHER RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

(f)                                   THE WAIVERS IN THIS SECTION 18.03 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND SHALL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO ANY OF THE REPURCHASE DOCUMENTS.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

(g)                                  THE PROVISIONS OF THIS SECTION 18.03 SHALL SURVIVE TERMINATION OF THE REPURCHASE DOCUMENTS AND THE INDEFEASIBLE PAYMENT IN FULL OF THE REPURCHASE OBLIGATIONS.

 

Section 18.04                      Integration.  The Repurchase Documents supersede and integrate all previous negotiations, contracts, agreements and understandings (whether written or oral) between the Parties relating to a sale and repurchase of Purchased Assets and the other matters addressed by the Repurchase Documents, and contain the entire final agreement of the Parties relating to the subject matter thereof.

 

Section 18.05                      Single Agreement.  Seller agrees that (a) each Transaction (including each Future Funding Transaction) is in consideration of and in reliance on the fact that all transactions constitute a single business and contractual relationship, and that each transaction

 

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has been entered into in consideration of the other transactions, (b) a default by it in the payment or performance of any its obligations under a Transaction shall constitute a default by it with respect to all transactions, (c) Buyer may set off claims and apply properties and assets held by or on behalf of Buyer with respect to a Purchased Asset against the Repurchase Obligations owing to Buyer with respect to other Purchased Assets, and (d) payments, deliveries and other transfers made by or on behalf of Seller with respect to any Purchased Asset or any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers with respect to all Purchased Assets or such other transactions, and the obligations of Seller to make any such payments, deliveries and other transfers may be applied against each other and netted.

 

Section 18.06                      Use of Employee Plan Assets.  No assets of an employee benefit plan subject to any provision of ERISA shall be used by either Party in a Transaction.

 

Section 18.07                      Survival and Benefit of Seller’s Agreements.  The Repurchase Documents and the Transactions shall be binding on and shall inure to the benefit of the Parties and their successors and permitted assigns.  All of Seller’s representations, warranties, agreements and indemnities in the Repurchase Documents shall survive the termination of the Repurchase Documents and the payment in full of the Repurchase Obligations, and shall apply to and benefit all Indemnified Persons, Buyer and its successors and assigns, Assignees and Participants.  No other Person shall be entitled to any benefit, right, power, remedy or claim under the Repurchase Documents.

 

Section 18.08                      Assignments and Participations.

 

(a)                                 Seller shall not sell, assign or transfer any of its rights or the Repurchase Obligations or delegate any of its duties under this Agreement or any other Repurchase Document without the prior written consent of Buyer, and any attempt to do so without such consent shall be null and void.

 

(b)                                 Buyer may at any time, without the consent of Seller, sell participations to any Person (other than a natural person or Seller, Guarantor or any Affiliate of Seller or Guarantor) (a “Participant”) in all or any portion of Buyer’s rights and/or obligations under the Repurchase Documents; provided that,  as conditions to the sale of such participations, (i) Buyer’s obligations under the Repurchase Documents shall remain unchanged, (ii) Buyer shall remain solely responsible to Seller for the performance of such obligations, (iii) Seller shall continue to deal solely and directly with Buyer in connection with Buyer’s rights and obligations under the Repurchase Documents, and (iv) each Participant agrees to be bound by the confidentiality provisions set forth in Section 18.10;  provided, that, so long as no Event of Default has occurred and is continuing, Buyer shall retain full decision-making authority under the Repurchase Documents.  No Participant shall have any right to approve any amendment, waiver or consent with respect to any Repurchase Document, except to the extent that the Repurchase Price or Price Differential of any Purchased Asset would be reduced or the Repurchase Date of any Purchased Asset would be postponed.  Each Participant shall be entitled to the benefits of Article 12 (subject to the requirements and limitations therein, including the requirements under Section 12.06(e) (it being understood that the documentation required under Section 12.06(e) shall be delivered to the participating Buyer)) and Article 13 to the same extent as if it had acquired its interest by assignment pursuant to Section 18.08(c), provided that such Participant shall not be entitled to

 

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receive any greater payment under Section 12.04 or Section 12.06 than its participating Buyer would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from the adoption of or any change in any Requirements of Law or in the interpretation or application thereof by a Governmental Authority or compliance by Buyer or such Participant with a request or directive (whether or not having the force of law) from a central bank or other Governmental Authority having jurisdiction over Buyer or such Participant, in each case made or issued after the Participant acquired the applicable participation.  To the extent permitted by Requirements of Law, each Participant shall also be entitled to the benefits of Sections 10.02(i) and 18.17 to the same extent as if it had acquired its interest by assignment pursuant to Section 18.08(c).

 

(c)                                  Buyer may at any time, without the consent of Seller but upon notice to Seller, sell and assign to any Person (an “Assignee”) all or any portion of all of the rights and obligations of Buyer under the Repurchase Documents. Each such assignment shall be made pursuant to an Assignment and Acceptance substantially in the form of Exhibit F (an “Assignment and Acceptance”). From and after the effective date of such Assignment and Acceptance, (i) such Assignee shall be a Party and, to the extent provided therein, have the rights and obligations of Buyer under the Repurchase Documents with respect to the percentage and amount of the Repurchase Price allocated to it, (ii) Buyer shall, to the extent provided therein, be released from such obligations (and in the case of an Assignment and Acceptance covering all or the remaining portion of Buyer’s rights and obligations under the Repurchase Documents, Buyer shall cease to be a Party), (iii) the obligations of Buyer shall be deemed to be so reduced, and (iv) Buyer will give prompt written notice thereof (including identification of the Assignee and the amount of Repurchase Price allocated to it) to each Party (but Buyer shall not have any liability for any failure to timely provide such notice).  Any sale or assignment by Buyer of rights or obligations under the Repurchase Documents that does not comply with this Section 18.08(c) shall be treated for purposes of the Repurchase Documents as a sale by such Buyer of a participation in such rights and obligations in accordance with Section 18.08(b).

 

(d)                                 Seller shall cooperate with Buyer in connection with any such sale and assignment of participations or assignments and shall enter into such restatements of, and amendments, supplements and other modifications to, the Repurchase Documents to give effect to any such sale or assignment; provided, that none of the foregoing shall change any economic or other material term of the Repurchase Documents in a manner adverse to Seller without the consent of Seller.

 

(e)                                  Buyer shall have the right to partially or completely syndicate any or all of its rights under the Agreement and the other Repurchase Documents to any Assignee.

 

(f)                                   Buyer, acting solely for this purpose as a non-fiduciary agent of Seller, shall maintain a copy of each Assignment and Acceptance and a register for the recordation of the names and addresses of the Assignees that become Parties hereto and, with respect to each such Assignee, the aggregate assigned Purchase Price and applicable Price Differential (the “Register”).  The entries in the Register shall be conclusive absent manifest error, and the Parties shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Buyer for all purposes of this Agreement.  The Register shall be available for inspection by the Parties at any reasonable time and from time to time upon reasonable prior notice.

 

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(g)                                  Each Party that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Seller, maintain a register on which it enters the name and address of each Participant and, with respect to each such Participant, the aggregate participated Purchase Price and applicable Price Differential, and any other interest in any obligations under the Repurchase Documents (the “Participant Register”); provided that no Party shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any obligations under any Repurchase Document) to any Person except to the extent that such disclosure is necessary to establish that such obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and the participating Party shall treat each Person whose name is recorded in the Participant Register as the owner of the applicable participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

Section 18.09                      Ownership and Hypothecation of Purchased Assets.  Title to all Purchased Assets shall pass to and vest in Buyer on the applicable Purchase Dates and, subject to the terms of the Repurchase Documents, Buyer or its designee shall have free and unrestricted use of all Purchased Assets and be entitled to exercise all rights, privileges and options relating to the Purchased Assets as the owner thereof, including rights of subscription, conversion, exchange, substitution, voting, consent and approval, and to direct any servicer or trustee.  Buyer or its designee may, at any time, without the consent of Seller engage in repurchase transactions with the Purchased Assets or otherwise sell, pledge, repledge, transfer, hypothecate, or rehypothecate the Purchased Assets, all on terms that Buyer may determine; provided, that no such transaction shall affect the obligations of Buyer to transfer the Purchased Assets to Seller on the applicable Repurchase Dates free and clear of any pledge, Lien, security interest, encumbrance, charge or other adverse claim.  In the event Buyer engages in a repurchase transaction with any of the Purchased Assets or otherwise pledges or hypothecates any of the Purchased Assets, Buyer shall have the right to assign to Buyer’s counterparty any of the applicable representations or warranties herein and the remedies for breach thereof, as they relate to the Purchased Assets that are subject to such repurchase transaction.

 

Section 18.10                      Confidentiality.  All information regarding the terms set forth in any of the Repurchase Documents or the Transactions shall be kept confidential and shall not be disclosed by either Party to any Person except (a) to the Affiliates of such Party or its or their respective directors, officers, employees, agents, advisors, attorneys, accountants and other representatives who are informed of the confidential nature of such information and instructed to keep it confidential, (b) to the extent requested by any regulatory authority, stock exchange, government department or agency, or required by Requirements of Law, (c) to the extent required to be included in the financial statements of either Party or an Affiliate thereof, (d) to the extent required to exercise any rights or remedies under the Repurchase Documents, Purchased Assets or Mortgaged Properties, (e) to the extent required to consummate and administer a Transaction, (f) in the event any Party is legally compelled to make pursuant to deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process by court order of a court of competent jurisdiction, and (g) to any actual or prospective Participant or Assignee that agrees to comply with this Section 18.10; provided, that, except with respect to the disclosures by Buyer under clause (g) of this Section 18.10, no such disclosure made with respect to any Repurchase Document shall include a copy of such Repurchase Document to the extent that a

 

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summary would suffice, but if it is necessary for a copy of any Repurchase Document to be disclosed, all pricing and other economic terms set forth therein shall be redacted before disclosure.  In furtherance of the foregoing, Buyer agrees to keep confidential all non-public information delivered by or on behalf of any Seller Party or any of their Affiliates and shall not disclose such information other than as permitted or required pursuant to the foregoing clauses (a) through (g).

 

Section 18.11                      No Implied Waivers; Amendments.  No failure on the part of Buyer to exercise, or delay in exercising, any right or remedy under the Repurchase Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy thereunder preclude any further exercise thereof or the exercise of any other right.  The rights and remedies in the Repurchase Documents are cumulative and not exclusive of any rights and remedies provided by law.  Application of the Default Rate after an Event of Default shall not be deemed to constitute a waiver of any Event of Default or Buyer’s rights and remedies with respect thereto, or a consent to any extension of time for the payment or performance of any obligation with respect to which the Default Rate is applied.  Except as otherwise expressly provided in the Repurchase Documents, no amendment, waiver or other modification of any provision of the Repurchase Documents shall be effective without the signed agreement of Seller and Buyer.  Any waiver or consent under the Repurchase Documents shall be effective only if it is in writing and only in the specific instance and for the specific purpose for which given.

 

Section 18.12                      Notices and Other Communications.  Unless otherwise provided in this Agreement, all notices, consents, approvals, requests and other communications required or permitted to be given to a Party hereunder shall be in writing and sent prepaid by hand delivery, by certified or registered mail, by expedited commercial or postal delivery service, or by facsimile or email if also sent by one of the foregoing, to the address for such Party specified in Schedule 2 or such other address as such Party shall specify from time to time in a notice to the other Party.  Any of the foregoing communications shall be effective when delivered, if such delivery occurs a Business Day; otherwise, each such communication shall be effective on the first Business Day following the date of such delivery.  A Party receiving a notice that does not comply with the technical requirements of this Section 18.12 may elect to waive any deficiencies and treat the notice as having been properly given.

 

Section 18.13                      Counterparts; Electronic Transmission.  Any Repurchase Document may be executed in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which shall together constitute but one and the same instrument.  The Parties agree that this Agreement, any documents to be delivered pursuant to this Agreement, any other Repurchase Document and any notices hereunder may be transmitted between them by email and/or facsimile.  The Parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties.

 

Section 18.14                      No Personal Liability.  No administrator, incorporator, Affiliate, owner, member, partner, stockholder, officer, director, employee, agent or attorney of Buyer, any Indemnified Person, or any of Seller, Pledgor or Guarantor, as such, shall be subject to any recourse or personal liability under or with respect to any obligation of Buyer, or any of Seller, Pledgor or Guarantor under the Repurchase Documents, whether by the enforcement of any assessment, by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed that the obligations of Buyer, Seller, Pledgor and Guarantor under the Repurchase Documents are

 

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solely their respective corporate, limited liability company or partnership obligations, as applicable, and that any such recourse or personal liability is hereby expressly waived.  This Section 18.14 shall survive the termination of the Repurchase Documents and the repayment in full of the Repurchase Obligations.

 

Section 18.15                      Protection of Buyer’s Interests in the Purchased Assets; Further Assurances.

 

(a)                                 Seller shall take such action as necessary to cause the Repurchase Documents and/or all financing statements and continuation statements and any other necessary documents covering the right, title and interest of Buyer to the Purchased Assets to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, all in such manner and in such places as may be required by law fully to preserve and protect such right, title and interest.  Seller shall deliver to Buyer file—stamped copies of, or filing receipts for, any document recorded, registered or filed as provided above, as soon as available following such recording, registration or filing.  Seller shall execute any and all documents reasonably required to fulfill the intent of this Section 18.15.

 

(b)                                 Seller will promptly at its expense execute and deliver such instruments and documents and take such other actions as Buyer may reasonably request from time to time in order to perfect, protect, evidence, exercise and enforce Buyer’s rights and remedies under and with respect to the Repurchase Documents, the Transactions and the Purchased Assets.  Seller, Pledgor and Guarantor shall, promptly upon Buyer’s request, deliver documentation in form and substance satisfactory to Buyer which Buyer deems necessary or desirable to evidence compliance with all applicable “know your customer” due diligence checks.

 

(c)                                  If Seller fails to perform any of its Repurchase Obligations, then Buyer may (but shall not be required to), upon prior notice to Seller, perform or cause to be performed such Repurchase Obligation, and the costs and expenses incurred by Buyer in connection therewith shall be payable by Seller.  Without limiting the generality of the foregoing, Seller authorizes Buyer, at the option of Buyer and the expense of Seller, at any time and from time to time, to take all actions and pay all amounts that Buyer deems necessary or appropriate to protect, enforce, preserve, insure, service, administer, manage, perform, maintain, safeguard, collect or realize on the Purchased Assets and Buyer’s Liens and interests therein or thereon and to give effect to the intent of the Repurchase Documents.  No Default or Event of Default shall be cured by the payment or performance of any Repurchase Obligation by Buyer on behalf of Seller.  Buyer may make any such payment in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax Lien, title or claim except to the extent such payment is being contested in good faith by Seller in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.

 

(d)                                 Without limiting the generality of the foregoing, Seller will no earlier than six (6) months or later than three (3) months before the fifth (5th) anniversary of the date of filing of each UCC financing statement filed in connection with to any Repurchase Document or any Transaction, (i)  deliver and file or cause to be filed an appropriate continuation statement with respect to such financing statement (provided that Buyer may elect to file such continuation

 

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statement), and (ii) if requested by Buyer, deliver or cause to be delivered to Buyer an opinion of counsel, in form and substance reasonably satisfactory to Buyer, confirming and updating the security interest opinion delivered pursuant to Section 6.01(a) with respect to perfection and otherwise to the effect that the security interests hereunder continue to be enforceable and perfected security interests, senior to the rights of any other creditor of Seller, which opinion may contain usual and customary assumptions, limitations and exceptions.

 

(e)                                  Except as provided in the Repurchase Documents, the sole duty of Buyer, Custodian or any other designee or agent of Buyer with respect to the Purchased Assets shall be to use reasonable care in the custody, use, operation and preservation of the Purchased Assets in its possession or control.  Buyer shall incur no liability to Seller or any other Person for any act of Governmental Authority, act of God or other destruction in whole or in part or negligence or wrongful act of custodians or agents selected by Buyer with reasonable care, or Buyer’s failure to provide adequate protection or insurance for the Purchased Assets.  Buyer shall have no obligation to take any action to preserve any rights of Seller in any Purchased Asset against prior parties, and Seller hereby agrees to take such action.  Buyer shall have no obligation to realize upon any Purchased Asset except through proper application of any distributions with respect to the Purchased Assets made directly to Buyer or its agent(s).  So long as Buyer and Custodian shall act in good faith in their handling of the Purchased Assets, Seller waives or is deemed to have waived the defense of impairment of the Purchased Assets by Buyer and Custodian.

 

Section 18.16                      Default Rate.  To the extent permitted by Requirements of Law, Seller shall pay interest at the Default Rate on the amount of all Repurchase Obligations not paid when due under the Repurchase Documents until such Repurchase Obligations are paid or satisfied in full.

 

Section 18.17                      Set-off.  In addition to any rights now or hereafter granted under the Repurchase Documents, Requirements of Law or otherwise, Seller hereby grants to Buyer and each of its Affiliates, to secure repayment of the Repurchase Obligations, a right of set-off upon any and all of the following: monies, securities, collateral or other property of Seller and any proceeds from the foregoing, now or hereafter held or received by Buyer or any Affiliate of Buyer, for the account of Seller, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and also upon any and all deposits (general, specified, special, time, demand, provisional or final) and credits, claims or Indebtedness of Seller at any time existing, and any obligation owed by Buyer or any Affiliate of Buyer to Seller and to set—off against any Repurchase Obligations or Indebtedness owed by Seller and any Indebtedness owed by Buyer or any Affiliate of Buyer to Seller, , in each case whether direct or indirect, absolute or contingent, matured or unmatured, whether or not arising under the Repurchase Documents and irrespective of the currency, place of payment or booking office of the amount or obligation and in each case at any time held or owing by Buyer or any Affiliate of Buyer to or for the credit of Seller, without prejudice to Buyer’s right to recover any deficiency.  Each of Buyer and each Affiliate of Buyer is hereby authorized upon any amount becoming due and payable by Seller, to Buyer or any Affiliate of Buyer under the Repurchase Documents, the Repurchase Obligations or otherwise or upon the occurrence of an Event of Default, without notice to Seller, any such notice being expressly waived by Seller to the extent permitted by any Requirements of Law, to set—off, appropriate, apply and enforce such right of set—off against any and all items hereinabove referred to against any amounts owing to Buyer or any Affiliate of Buyer by Seller under the Repurchase Documents and the

 

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Repurchase Obligations, irrespective of whether Buyer, any Affiliate of Buyer or any Affiliate of Buyer shall have made any demand under the Repurchase Documents and regardless of any other collateral securing such amounts, and in all cases without waiver or prejudice of Buyer’s rights to recover a deficiency.  Seller shall be deemed directly indebted to Buyer and its Affiliates in the full amount of all amounts owing to Buyer and its Affiliates by Seller under the Repurchase Documents and the Repurchase Obligations and Buyer and its Affiliates shall be entitled to exercise the rights of set—off provided for above.  ANY AND ALL RIGHTS TO REQUIRE BUYER OR ITS AFFILIATES TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO THE PURCHASED ASSETS OR ITS AFFILIATES UNDER THE REPURCHASE DOCUMENTS, PRIOR TO EXERCISING THE FOREGOING RIGHT OF SET—OFF, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER.

 

Buyer or its Affiliate shall promptly notify Seller after any such set-off and application made by Buyer or such Affiliate, provided that the failure to give such notice shall not affect the validity of such set—off and application.  If an amount or obligation is unascertained, Buyer may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other party when the amount or obligation is ascertained.  Nothing in this Section 18.17 shall be effective to create a charge or other security interest.  This Section 18.17 shall be without prejudice and in addition to any right of set-off, combination of accounts, Lien or other rights to which Buyer is at any time otherwise entitled.

 

Section 18.18                      Seller’s Waiver of Set-off.  Seller hereby waives any right of set-off it may have or to which it may be or become entitled under the Repurchase Documents or otherwise against Buyer, any Affiliate of Buyer or their respective assets or properties.

 

Section 18.19                      Power of Attorney.  Seller hereby authorizes Buyer to file such financing statement or statements relating to the Purchased Assets as Buyer deems appropriate.  Seller hereby appoints Buyer as Seller’s agent and attorney in fact to file any such financing statement or statements and, after the occurrence and during the continuance of a Default or Event of Default, to perform all other acts which Buyer deems appropriate to perfect and continue its ownership interest in and/or the security interest granted hereby, if applicable, and to protect, preserve and realize upon the Purchased Assets in accordance with the terms of this Agreement and the other Repurchase Documents, including, but not limited to, the right to endorse notes, complete blanks in documents, transfer servicing (including, but not limited, to sending “good-bye letters” to any Mortgagor with respect to Purchased Assets which are Whole Loans, each to be in a form acceptable to Buyer), and sign assignments on behalf of such Seller as its agent and attorney in fact.  This agency and power of attorney is coupled with an interest and is irrevocable without Buyer’s consent.  Seller shall pay the filing costs for any financing statement or statements prepared pursuant to this Section 18.19.  In addition, Seller shall execute and deliver to Buyer a power of attorney in the form and substance of Exhibit C hereto (“Power of Attorney”).

 

Section 18.20                      Periodic Due Diligence Review.  Buyer may perform continuing due diligence reviews with respect to any or all of the Purchased Assets and each of Seller, Pledgor and Guarantor, including ordering new third party reports, for purposes of, among other things, verifying compliance with the representations, warranties, covenants, agreements, duties, obligations and specifications made under the Repurchase Documents or otherwise. Upon

 

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reasonable prior notice to Seller, unless a Default or Event of Default exists, in which case no notice is required, Buyer or its representatives may during normal business hours inspect any properties and examine, inspect and make copies of the books and records of each of Seller, Pledgor and Guarantor and the Servicing Files. Seller shall make available to Buyer one or more knowledgeable financial or accounting officers and representatives of the independent certified public accountants of Seller for the purpose of answering questions of Buyer concerning any of the foregoing.  Seller shall cause Servicer to cooperate with Buyer by permitting Buyer to conduct due diligence reviews of the Servicing Files.  Buyer may purchase Purchased Assets from Seller based solely on the information provided by Seller to Buyer in the Underwriting Package and the representations, warranties, duties, obligations and covenants contained herein, and Buyer may at any time conduct a partial or complete due diligence review on some or all of the Purchased Assets, including ordering new credit reports and new Appraisals on the Mortgaged Properties and otherwise re-generating the information used to originate and underwrite such Purchased Assets.  Buyer may underwrite such Purchased Assets itself or engage a mutually acceptable third-party underwriter to do so.

 

Section 18.21                      Time of the Essence.  Time is of the essence with respect to all obligations, duties, covenants, agreements, notices or actions or inactions of the parties under the Repurchase Documents.

 

Section 18.22                      Reserved.

 

Section 18.23                      PATRIOT Act Notice.  Buyer hereby notifies Seller that Buyer is required by the PATRIOT Act to obtain, verify and record information that identifies Seller.

 

Section 18.24                      Successors and Assigns; No Third Party Beneficiaries.  Subject to the foregoing, the Repurchase Documents and the Transactions shall be binding upon and shall inure to the benefit of the Parties and their successors and permitted assigns.

 

Section 18.25                      Acknowledgement of Anti-Predatory Lending Policies.  Seller and Buyer each have in place internal policies and procedures that expressly prohibit their purchase of any high cost mortgage loan.

 

[ONE OR MORE UNNUMBERED SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

 

 

	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GP   COMMERCIAL WF LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   John A. Taylor
    
	
 
    	
 
    	
Name:   John A. Taylor
    
	
 
    	
 
    	
Title:   President and CEO
    

 

Wells/Granite Point – Master Repurchase Agreement

 

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Melissa A. Dolski
    
	
 
    	
 
    	
Its:   Melissa A. Dolski
    
	
 
    	
 
    	
Title:   Director
    

 

Wells/Granite Point – Master Repurchase Agreement

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