Document:

Unassociated Document

  

Exhibit 10.12

 

Confidential Treatment Requested by Capital Trust, Inc.

 

EXECUTION COPY

 

AMENDED AND RESTATED

 

MASTER REPURCHASE AGREEMENT

 

Dated as of March 31, 2011

 

Between

 

CT LEGACY CITI SPV, LLC,

 

as Seller,

 

and

 

CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC.,

 

as Buyer

 

  

  

  

 

TABLE OF CONTENTS

 

Page

 

	
ARTICLE 1 APPLICABILITY

	
1

	 	 
	
DEFINITIONS

	
1

	 	 
	
INITIATION; CONFIRMATION; TERMINATION; FEES

	
18

	 	 
	
INCOME PAYMENTS AND PRINCIPAL PAYMENTS

	
26

	 	 
	
SECURITY INTEREST

	
28

	 	 
	
PAYMENT, TRANSFER AND CUSTODY

	
30

	 	 
	
SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

	
32

	 	 
	
REPRESENTATIONS AND WARRANTIES

	
32

	 	 
	
NEGATIVE COVENANTS OF SELLER

	
41

	 	 
	
AFFIRMATIVE COVENANTS OF SELLER

	
43

	 	 
	
EVENTS OF DEFAULT; REMEDIES

	
49

	 	 
	
SINGLE AGREEMENT

	
55

	 	 
	
RECORDING OF COMMUNICATIONS

	
55

	 	 
	
ARTICLE 14 NOTICES AND OTHER COMMUNICATIONS

	
55

	 	 
	
ARTICLE 15 ENTIRE AGREEMENT; SEVERABILITY

	
56

	 	 
	
ARTICLE 16 NON ASSIGNABILITY

	
56

	 	 
	
ARTICLE 17 GOVERNING LAW

	
57

	 	 
	
ARTICLE 18 NO WAIVERS, ETC.

	
57

 

  

-i-

  

 

	 	 
	
ARTICLE 19 USE OF EMPLOYEE PLAN ASSETS

	
57

	 	 
	
ARTICLE 20 INTENT

	
58

	 	 
	
ARTICLE 21 DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

	
59

	 	 
	
ARTICLE 22 CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

	
59

	 	 
	
ARTICLE 23 NO RELIANCE

	
60

	 	 
	
ARTICLE 24 INDEMNITY

	
61

	 	 
	
ARTICLE 25 DUE DILIGENCE

	
61

	 	 
	
ARTICLE 26 SERVICING

	
62

	 	 
	
ARTICLE 27 TERMS OF OTHER REPURCHASE OR CREDIT FACILITIES

	
64

	 	 
	
ARTICLE 28 MISCELLANEOUS

	
64

 

  

-ii-

  

ANNEXES, EXHIBITS AND SCHEDULES

 

	
ANNEX I

	
Names and Addresses for Communications between Parties

	 	 
	
ANNEX II

	
Scheduled Assets

	 	 
	
EXHIBIT I

	
Form of Confirmation

	 	 
	
EXHIBIT II

	
Authorized Representatives of Seller

	 	 
	
EXHIBIT III-A

	
Monthly Reporting Package

	 	 
	
EXHIBIT III-B

	
Quarterly Reporting Package

	 	 
	
EXHIBIT III-C

	
Annual Reporting Package

	 	 
	
EXHIBIT IV

	
Form of Custodial Delivery

	 	 
	
EXHIBIT V

	
Form of Power of Attorney

	 	 
	
EXHIBIT VI

	
Representations and Warranties Regarding Individual Purchased Assets

	 	 
	
EXHIBIT VII

	
Asset Information

	 	 
	
EXHIBIT VIII

	
Advance Procedures

	 	 
	
EXHIBIT IX

	
Form of Bailee Letter

	 	 
	
EXHIBIT X

	
UCC Filing Jurisdictions

	 	 
	
EXHIBIT XI

	
Form of Servicer Notice

	 	 
	
EXHIBIT XII

	
Form of Release Letter

	 	 
	
EXHIBIT XIII

	
Covenant Compliance Certificate

	 	 
	
EXHIBIT XIV

	
Form of Re-Direction Letter

   

  

-iii-

  

 

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

 

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT, dated as of March 31, 2011, by and between CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC., each a Delaware corporation (collectively, “Buyer”) and CT LEGACY CITI SPV, LLC, a Delaware limited liability company (“Seller”).

 

ARTICLE 1

 

APPLICABILITY

  

Capital Trust, Inc. (“Original Seller”) and Buyer are parties to that certain Master Repurchase Agreement, dated as of July 30, 2007, as amended by that certain Amendment No. 1 to Master Repurchase Agreement, dated as of June 26, 2008, that certain Amendment No. 2 to Master Repurchase Agreement, dated as of July 24, 2008, that certain Amendment No. 3 to Master Repurchase Agreement, dated as of March 16, 2009 and that certain Amendment No. 4 to Master Repurchase Agreement, dated as of October 1, 2009 (as the same may be further amended or modified, the “Existing Agreement”).

 

Original Seller and Buyer have agreed that the Existing Agreement shall be amended, restated and superseded in it entirety by this Agreement.  This Agreement hereby amends, restates and supersedes the Existing Agreement in its entirety.  All transactions (as defined in the Existing Agreement) outstanding under the Existing Agreement shall be Transactions hereunder commencing on and after the date hereof.

 

From time to time the parties hereto may enter into transactions in which Seller and Buyer agree to the transfer from Seller to Buyer of all of its rights, title and interest to certain Eligible Assets (as defined herein) or other assets and, in each case, the other related Purchased Items (as defined herein) (collectively, the “Assets”) against the transfer of funds by Buyer to Seller, with a simultaneous agreement by Buyer to transfer back to Seller such Assets at a date certain or on demand, against the transfer of funds by Seller to Buyer.  Each such transaction shall be referred to herein as a “Transaction” and, unless otherwise agreed in writing, shall be governed by this Agreement, including any supplemental terms or conditions contained in any exhibits identified herein as applicable hereunder.  Each individual transfer of an Eligible Asset shall constitute a distinct Transaction.  Notwithstanding any provision or agreement herein, at no time shall Buyer be obligated to purchase or effect the transfer of any Eligible Asset from Seller to Buyer.

 

ARTICLE 2

 

DEFINITIONS

“A-Note” shall mean the original promissory note, if any, that was executed and delivered in connection with the senior position of a Senior Mortgage Loan.

 

“Accelerated Repurchase Date” shall have the meaning specified in Article 11(b)(i) of this Agreement.

 

  

  

  

 

“Acceptable Attorney” means an attorney-at-law that has delivered at Seller’s request a Bailee Letter, with the exception of an attorney whom Buyer has notified Seller is not satisfactory to Buyer.

 

“Accepted Servicing Practices” shall mean with respect to any applicable Purchased Asset, those mortgage loan, participation interest or mezzanine loan servicing practices of prudent mortgage lending institutions that service mortgage loans, participation interests and/or mezzanine 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.

 

“Act of Insolvency” shall mean, with respect to any Person, (i) the filing of a petition, commencing, or authorizing the commencement of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, 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; (ii) the seeking or consenting to the appointment of a receiver, trustee, custodian or similar official for such Person or any substantial part of the property of such Person; (iii) the appointment of a receiver, conservator, or manager for such Person by any governmental agency or authority having the jurisdiction to do so; (iv) the making of a general assignment for the benefit of creditors; (v) the admission by such Person of its inability to pay its debts or discharge its obligations as they become due or mature; or (vi) that any Governmental Authority or agency or any person, agency or entity acting or purporting to act under Governmental Authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part 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.

 

“Advance Rate” shall mean, with respect to each Transaction and any Pricing Rate Period, the initial Advance Rate selected by Buyer for such Transaction as shown in the related Confirmation, unless otherwise agreed to by Buyer and Seller.

 

“Affiliate” shall mean, when used with respect to any specified Person, (i) any other Person directly or indirectly controlling, controlled by, or under common control with, such Person.  Control shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise and “controlling” and “controlled” shall have meanings correlative thereto, or (ii) any “affiliate” of such Person, as such term is defined in the Bankruptcy Code.

 

“Affiliated Hedge Counterparty” shall mean Citigroup Financial Products Inc. or Citigroup Global Markets Inc., or any Affiliate thereof, in its capacity as a party to any Hedging Transaction with Seller.

 

“Agreement” shall mean this Amended and Restated Master Repurchase Agreement, dated as of March 31, 2011 by and between Citigroup Financial Products Inc. and Citigroup Global Markets Inc. and CT Legacy Citi SPV, LLC as such agreement may be modified or supplemented from time to time.

 

  

2

  

 

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

 

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

 

“Annual Reporting Package” shall mean the reporting package described on Exhibit III-C.

 

“Anti-Money Laundering Laws” shall have the meaning specified in Article 8(b)(xxxi) of this Agreement.

 

“Applicable Spread” shall mean, with respect to a Transaction involving a Purchased Asset:

 

(i)           with respect to each Purchased Asset and so long as no Event of Default shall have occurred and be continuing, the incremental per annum rate of (a) for the period from the Closing Date through and including October 8, 2011, one hundred fifty (150) basis points, (b) for the period from October 9, 2011 through and including June 8, 2012, one hundred seventy five (175) basis points, and (c) for the period from June 9, 2012 through and including March 31, 2013, two hundred (200) basis points; and

 

(ii)           after the occurrence and during the continuance of an Event of Default, the applicable incremental per annum rate described in clause (i) of this definition, plus 400 basis points (4.0%).

 

“Asset Information” shall mean, with respect to each Purchased Asset, the information set forth in Exhibit VII attached hereto.

 

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

 

“B-Note” shall mean the original promissory note, if any, that was executed and delivered in connection with the subordinate portion of a Senior Mortgage Loan.

 

“Bailee Letter” shall mean a letter from an Acceptable Attorney or from a Title Company, in the form attached to this Agreement as Exhibit IX, wherein such Acceptable Attorney or Title Company in possession of a Purchased Asset File (i) acknowledges receipt of such Purchased Asset File, (ii) confirms that such Acceptable Attorney, Title Company, or other Person acceptable to Buyer is holding the same as bailee of Buyer under such letter and (iii) agrees that such Acceptable Attorney or Title Company shall deliver such Purchased Asset File to the Custodian by not later than the second (2nd) Business Day following the Purchase Date for the related Purchased Asset.

 

“Bankruptcy Code” shall mean The United States Bankruptcy Code of 1978, as amended from time to time.

 

  

3

  

 

“Breakage Costs” shall have the meaning assigned thereto in Article 3(l).

 

“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.  Notwithstanding the foregoing sentence, when used with respect to the determination of LIBOR, “Business Day” shall only be a day on which commercial banks are open for international business (including dealings in U.S. Dollar deposits) in London, England.

 

“Buyer” shall mean Citigroup Financial Products Inc. and Citigroup Global Markets Inc., or any successor.

 

“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, with respect to any Person, if either (a) any “person” or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a percentage of the total voting power of all classes of equity of Seller entitled to vote generally in the election of directors, members or partners of 20% or more or (b) Guarantor shall cease to own and control, of record and beneficially, directly 100% of each class of outstanding equity of Seller.  Notwithstanding the foregoing, neither Buyer nor any other Person shall be deemed to approve or to have approved any internalization of management as a result of this definition or any other provision herein.  Notwithstanding anything to the contrary contained herein, in no event shall a “Change of Control” of Capital Trust, Inc. constitute a “Change of Control” under this Agreement.

 

“Closing Date” shall mean March 31, 2011.

 

“CMBS” shall mean pass-through certificates representing beneficial ownership interests in one or more first lien mortgage loans secured by commercial and/or multifamily properties, regardless of rating.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Collateral” shall have the meaning specified in Article 5 of this Agreement.

 

“Collection Period” shall mean with respect to the Remittance Date in any month, the period beginning on but excluding the Cut-off Date in the month preceding the month in which such Remittance Date occurs and continuing to and including the Cut-off Date immediately preceding such Remittance Date.

 

“Confirmation” shall have the meaning specified in Article 3(b)(i) of this Agreement.

 

  

4

  

 

“Core Property Types” shall mean the following types of properties: multi-family, mixed-use, retail, industrial, office building and hospitality, or such other types of properties that Buyer may agree to in its sole and absolute discretion.

 

“Covenant Compliance Certificate” shall mean a properly completed and executed Covenant Compliance Certificate in form and substance identical to the certificate attached hereto as Exhibit XIII.

 

“Custodial Agreement” shall mean the Amended and Restated Custodial Agreement, dated as of the date hereof, by and among the Custodian, Seller and Buyer.

 

“Custodial Delivery” shall mean the form executed by Seller in order to deliver the Purchased Asset Schedule and the Purchased Asset File to Buyer or its designee (including the Custodian) pursuant to Article 6 of this Agreement, a form of which is attached hereto as Exhibit IV.

 

“Custodian” shall mean Deutsche Bank Trust Company Americas, or any successor Custodian appointed by Buyer.

 

“Cut-off Date” shall mean the second (2nd) Business Day preceding each Remittance Date.

 

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

 

 “Depository” shall mean PNC Bank, National Association, or any successor depository mutually selected by Buyer and Seller.

 

“Depository Account” shall mean one or more segregated interest bearing accounts, in the name of Seller, established at Depository pursuant to the Depository Agreement.

 

“Depository Agreement” shall mean that certain Amended and Restated Depository Agreement, dated as of the date hereof, among Buyer, Seller and Depository.

 

“Draft Appraisal” shall mean a short form appraisal, “letter opinion of value,” or any other form of draft appraisal acceptable to Buyer.

 

“Due Diligence Package” shall have the meaning specified in Exhibit VIII to this Agreement.

 

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

 

“Early Repurchase Date” shall have the meaning specified in Article 3(e) of this Agreement.

 

“Eligible Assets” shall mean the Scheduled Assets.

 

  

5

  

 

“Eligible Loans” shall mean any Senior Mortgage Loans, B-Notes, Participation Interests and  Mezzanine Loans that are also Eligible Assets.

 

“Environmental Law” shall mean 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 in each case as amended, 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, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq. and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.

 

“Environmental Site Assessment” shall have the meaning specified in paragraph 30 of the sections of Exhibit VI dealing with Eligible Loans.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.  Article 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 Article 414(b) or (c) of the Code of which Seller is a member and (ii) solely for purposes of potential liability under Article 302(c)(11) of ERISA and Article 412(c)(11) of the Code and the lien created under Article 302(f) of ERISA and Article 412(n) of the Code, described in Article 414(m) or (o) of the Code of which Seller is a member.

 

“Event of Default” shall have the meaning specified in Article 11(a) of this Agreement.

 

“Facility  Amount” shall mean $38,056,249.

 

“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 Buyer from three (3) federal funds brokers of recognized standing selected by it.

 

“Filings” shall have the meaning specified in Article 5(d) of this Agreement.

 

“Financing Lease” shall mean any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee.

 

  

6

  

 

“Fitch” shall mean Fitch, Inc.

 

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

 

“Governing Documents” shall mean, with respect to any Person, its 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.

 

“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 Agreement” shall mean the Guarantee Agreement, dated as of the date hereof, from Guarantor in favor of Buyer, in form and substance acceptable to Buyer.

 

“Guarantor” shall mean CT Legacy Asset, LLC, a Delaware limited liability company.

 

“Hedge-Required Asset” shall mean any Eligible Asset that is a fixed rate Eligible Asset.

 

“Hedging Transactions” shall mean, with respect to any or all of the Purchased Assets, any short sale of U.S. Treasury Securities or mortgage-related securities, futures contract (including Eurodollar futures) or options contract or any interest rate swap, cap or collar agreement or similar arrangements providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, entered into by any Affiliated Hedge Counterparty or Qualified Hedge Counterparty with Seller, either generally or under specific contingencies that is required by Buyer, or otherwise pursuant to this Agreement, to hedge the financing of a Hedge-Required Asset, or that Seller has elected to pledge or transfer to Buyer pursuant to this Agreement.

 

“Income” shall mean, with respect to any Purchased Asset at any time, (x) any collections of principal, interest, dividends, receipts or other distributions or collections, (y) all net sale proceeds received by Seller or any Affiliate of Seller in connection with a sale or liquidation of such Purchased Asset and (z) all payments actually received by Buyer on account of Hedging Transactions.

 

  

7

  

 

“Indebtedness” shall mean, for any Person,  (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a lien on the property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (e) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements; (f) Indebtedness of others guaranteed by such Person; (g) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (h) Indebtedness of general partnerships of which such Person is secondarily or contingently liable (other than by endorsement of instruments in the course of collection), whether by reason of any agreement to acquire such indebtedness to supply or advance sums or otherwise; (i) Capitalized Lease Obligations of such Person; (j) all net liabilities or obligations under any interest rate, interest rate swap, interest rate cap, interest rate floor, interest rate collar, or other hedging instrument or agreement; and (k) all obligations of such Person under Financing Leases.

 

“Indemnified Amounts” and “Indemnified Parties” shall have the meaning specified in Article 24 of this Agreement.

 

“Intercreditor Agreement” shall mean that certain Intercreditor Agreement, acceptable in form and substance to Buyer, duly executed by Buyer, Morgan Stanley Asset Funding Inc., JPMorgan Chase Bank, N.A., JPMorgan Chase Funding Inc. and Five Mile Capital II CT Mezz SPE LLC.

 

“Interim Servicing Agreement” shall mean the Interim Servicing Agreement, dated as of the date hereof, by and among the Servicer, Seller and Buyer.

 

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

 

“JPMorgan Facility” shall mean that certain (i) Master Repurchase Agreement, dated as of March 31, 2011 (as amended, restated, supplemented or otherwise modified and in effect from time to time), by and among CT Legacy JPM SPV, LLC , as seller and JPMorgan Chase Bank, N.A., as buyer, and any documents related thereto and/or (ii) Master Repurchase Agreement, dated as of March 31, 2011 (as amended, restated, supplemented or otherwise modified and in effect from time to time), by and among CT Legacy JPM SPV, LLC, as seller and JPMorgan Chase Funding, Inc., as buyer, and any documents related thereto.

 

“LIBOR” shall mean, with respect to each Pricing Rate Period, the rate determined by Buyer to be (i) the per annum rate for deposits in U.S. dollars for a period equal to the applicable Pricing Rate Period, which appears on the Reuters Screen LIBOR01 Page (or any successor thereto) as the London Interbank Offering Rate as of 11:00 a.m., London time, on the day that is two (2) London Business Days prior to that respective Pricing Rate Determination Date (rounded upwards, if necessary, to the nearest 1/1000 of 1%); (ii) if such rate does not appear on said Reuters Screen LIBOR01 Page, the arithmetic mean (rounded as aforesaid) of the offered quotations of rates obtained by Buyer from the Reference Banks for deposits in U.S. dollars for a period equal to the applicable Pricing Rate Period to prime banks in the London Interbank market as of approximately 11:00 a.m., London time, on the day that is two (2) London Business Days prior to that Pricing Rate Determination Date and in an amount that is representative for a single transaction in the relevant market at the relevant time; or (iii) if fewer than two (2) Reference Banks provide Buyer with such quotations, the rate per annum which Buyer determines to be the arithmetic mean (rounded as aforesaid) of the offered quotations of rates which major banks in New York, New York selected by Buyer are quoting at approximately 11:00 a.m., New York City time, on the Pricing Rate Determination Date for loans in U.S. dollars to leading European banks for a period equal to the applicable Pricing Rate Period in amounts of not less than U.S. $1,000,000.00.  Buyer’s determination of LIBOR shall be binding and conclusive on Seller absent manifest error.  LIBOR may or may not be the lowest rate based upon the market for U.S. Dollar deposits in the London Interbank Eurodollar Market at which Buyer prices loans on the date which LIBOR is determined by Buyer as set forth above.

 

  

8

  

 

“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.

 

“Market Value” shall mean, with respect to any Purchased Asset as of any date of determination, the market value for such Purchased Asset on such date as determined by Buyer in its sole and absolute discretion, exercised in good faith.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the property, business, operations, financial condition or prospects of Seller or Guarantor, taken as a whole, (b) the ability of Seller or Guarantor to perform its obligations under any of the Transaction Documents, (c) the validity or enforceability of any of the Transaction Documents, (d) the rights and remedies of Buyer under any of the Transaction Documents, or (e) the timely payment of any amounts payable under any of the Transaction Documents.

 

“Materials of Environmental Concern” shall mean any toxic mold, any petroleum (including, without limitation, crude oil or any fraction thereof) or petroleum products (including, without limitation, gasoline) or any hazardous or toxic substances, materials or wastes, defined as such in or regulated under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls, and urea-formaldehyde insulation.

 

“Maturity Date” shall mean March 31, 2013.

 

“Mezzanine Loan” shall mean a performing loan (or a participation therein) primarily secured by a pledge of full or partial equity ownership interests in one or more entities that own directly or indirectly multifamily or commercial properties that serve as collateral for Senior Mortgage Loans.

 

“Mezzanine Note” shall mean the original promissory note that was executed and delivered in connection with a particular Mezzanine Loan.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

  

9

  

 

“Monthly Reporting Package” shall mean the reporting package described on Exhibit III-A.

 

“Morgan Stanley Facility” shall mean that certain Master Repurchase Agreement, dated as of March 31, 2011 (as amended, restated, supplemented or otherwise modified and in effect from time to time), by and among CT Legacy MS SPV, LLC, CT XLC Holding, LLC, Bellevue C2 Holdings, LLC and CNL Hotel JV, LLC, as sellers, and Morgan Stanley Asset Funding Inc., as buyer, and any documents related thereto.

 

“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 an estate in fee simple in real property and the improvements thereon, securing a Mortgage Note or similar evidence of indebtedness.

 

“Mortgage Note” shall mean a note or other evidence of indebtedness of a Mortgagor secured by a Mortgage, including any A-Note, B-Note or Participation Certificate that is a Purchased Asset.

 

“Mortgagor” shall mean the obligor on a Mortgage Note and the grantor of the related Mortgage, or the obligor on a Mezzanine Note or Participation Interest.

 

“Multiemployer Plan” shall mean a multiemployer plan defined as such in Article 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.

 

“Net Proceeds” shall mean, with respect to any Early Repurchase, the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

 

(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fess, costs and commissions that, in each case, are (a) disclosed to Buyer in accordance with obtaining Buyer’s consent pursuant to Articles 3(e)(i) and (ii), and (b) actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of the Seller;

 

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

 

(c)           the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a lien on the property and assets subject to such Early Repurchase and is required to be repaid under the terms of such Indebtedness as a result of such Early Repurchase, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of Seller;

 

  

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provided, that any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such Early Repurchase or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

 

“New Asset” shall mean an Eligible Asset that Seller proposes to be included as a Purchased Item.

 

“Original Closing Date” shall mean July 30, 2007.

 

“Originated Asset” shall mean any Eligible Asset originated by Seller.

 

“Participation Certificate” shall mean the original participation certificate, if any, that was executed and delivered in connection with a Participation Interest.

 

“Participation Interest” shall mean a performing senior, pari passu or junior participation interest in a performing Senior Mortgage Loan, B-Note, or Mezzanine Loan, in each case evidenced by a Participation Certificate.

 

“Permitted Liens” shall have the meaning specified in Article 9(e) of this Agreement.

 

“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.

 

“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 Article 302 of ERISA or Article 412 of the Code, other than a Multiemployer Plan.

 

“Plan Party” shall have the meaning set forth in Article 19(a) of this Agreement.

 

“Potential Event of Default” shall mean any condition or event that, after notice or lapse of time, would constitute an Event of Default.

 

“Pre-Existing Asset” shall mean any Eligible Asset that is not an Originated Asset.

 

“Pre-Purchase Due Diligence” shall have the meaning set forth in Article 3(b)(ii) of this Agreement.

 

  

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“Pre-Purchase Legal Expenses” shall mean all of the reasonable and necessary out of pocket legal fees, costs and expenses incurred by Buyer in connection with the Pre-Purchase Due Diligence associated with Buyer’s decision as to whether or not to enter into a particular Transaction and preparation of any required documents to effect the related Transaction.

“Price Differential” shall mean, with respect to any Purchased Asset as of any date, the aggregate amount obtained by daily application of the applicable Pricing Rate for such Purchased Asset to the Purchase Price of such Purchased Asset on a 360-day-per-year basis for the actual number of days during each Pricing Rate Period commencing on (and including) the Purchase Date for such Purchased Asset and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Purchased Asset).

 

“Pricing Rate” shall mean, for any Pricing Rate Period, an annual rate equal to the sum of (i) LIBOR and (ii) the relevant Applicable Spread, in each case, for the applicable Pricing Rate Period for the related Purchased Asset. The Pricing Rate shall be subject to adjustment and/or conversion as provided in the Transaction Documents or the related Confirmation.

 

“Pricing Rate Determination Date” shall mean with respect to any Pricing Rate Period with respect to any Transaction, the second (2nd) 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 such Remittance Date; provided, however, that in no event shall any Pricing Rate Period for a Purchased Asset end subsequent to the Repurchase Date for such Purchased Asset.

 

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

 

“Prohibited Investor” shall mean (1) a person or entity whose name appears on the list of Specially Designated Nationals and Blocked Persons by the Office of Foreign Asset Control (“OFAC”), (2) any foreign shell bank, and (3) 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.

 

“Properties” shall have the meaning specified in Article 8(b)(xxvii)(A) of this Agreement.

 

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

 

  

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“Purchase Price” shall mean, with respect to any Purchased Asset, the price at which such Purchased Asset is transferred by Seller to Buyer on the applicable Purchase Date, adjusted after the Purchase Date as set forth herein.

 

“Purchased Asset” shall mean (i) with respect to any Transaction, the Eligible Asset sold by Seller to Buyer in such Transaction and (ii) with respect to the Transactions in general, all Eligible Assets sold by Seller to Buyer (other than Purchased Assets that have been repurchased by Seller).

 

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

 

“Purchased Asset File” shall mean the documents specified as the “Purchased Asset File” in Article 6(b), together with any additional documents and information required to be delivered to Buyer or its designee (including the Custodian) pursuant to this Agreement; provided that to the extent that Buyer waives, including pursuant to Article 6(c), receipt of any document in connection with the purchase of an Eligible Asset (but not if Buyer merely agrees to accept delivery of such document after the Purchase Date), such document shall not be a required component of the Purchased Asset File until such time as Buyer determines in good faith that such document is necessary or appropriate for the servicing of the applicable Purchased Asset.

 

“Purchased Asset Schedule” shall mean a schedule of Purchased Assets attached to each Trust Receipt and Custodial Delivery containing information substantially similar to the Asset Information.

 

“Purchased Items” shall have the meaning specified in Article 5(a) of this Agreement.

 

“Qualified Hedge Counterparty” shall mean, with respect to any Hedging Transaction, any entity, other than an Affiliated Hedge Counterparty, that (a) qualifies as an “eligible contract participant” as such term is defined in the Commodity Exchange Act (as amended by the Commodity Futures Modernization Act of 2000), (b) the long-term debt of which is rated no less than “A+” by S&P and “A1” by Moody’s and (c) is reasonably acceptable to Buyer; provided, that with respect to clause (c), if Buyer has approved an entity as a counterparty, it may not thereafter deem such counterparty unacceptable with respect to any previously outstanding Transaction unless clause (a) or clause (b) no longer applies with respect to such counterparty.

 

“Quarterly Reporting Package” shall mean the reporting package described on Exhibit III-B.

 

“Rating Agency” shall mean any of Fitch, Moody’s and S&P.

 

“Redirection Letter” shall have the meaning specified in Article 4(b).

 

“Reference Banks” shall mean banks each of which shall (i) be a leading bank engaged in transactions in Eurodollar deposits in the international Eurocurrency market and (ii) have an established place of business in London.  Initially, the Reference Banks shall be JPMorgan Chase Bank, N.A., Barclays Bank, Plc and Deutsche Bank AG.  If any such Reference Bank should be unwilling or unable to act as such or if Buyer shall terminate the appointment of any such Reference Bank or if any of the Reference Banks should be removed from the Reuters Monitor Money Rates Service or in any other way fail to meet the qualifications of a Reference Bank, Buyer, in its sole discretion exercised in good faith, may designate alternative banks meeting the criteria specified in clauses (i) and (ii) above.

 

  

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“Release Letter” shall mean a letter substantially in the form of Exhibit XII hereto (or such other form as may be acceptable to Buyer).

 

“REMIC” shall mean a real estate mortgage investment conduit, within the meaning of Section 860D(a) of the Internal Revenue Code.

 

“Remittance Date” shall mean the fifteenth (15th) 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 by Seller and Buyer.

 

“Repurchase Date” shall mean, with respect to a Purchased Asset, the earliest to occur of (i) the Termination Date, (ii) the date set forth in the applicable Confirmation or (iii) the Accelerated Repurchase Date.

 

“Repurchase Obligations” shall have the meaning assigned thereto in Article 5(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 Buyer to Seller; such price will be determined in each case as the sum of the (i) Purchase Price of such Purchased Asset (as increased by any additional funds advanced in connection with such Purchased Asset); (ii) the accreted and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination; (iii) any other amounts due and owing by Seller to Buyer and its Affiliates pursuant to the terms of this Agreement as of such date; and (iv) if such Repurchase Date is not a Remittance Date, any Breakage Costs payable in connection with such repurchase.  In addition to the forgoing, the Repurchase Price shall be decreased by (A) the portion of any Principal Payments on such Purchased Asset that is applied pursuant to Article 4 to reduce such Repurchase Price and (B) any other amounts paid to Buyer by Seller to reduce such Repurchase Price.

 

“Requested Exceptions Report” shall have the meaning specified in Article 3(b)(ii)(E) of this Agreement.

 

“Requirement of Law” shall mean any 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.

 

“Reserve Requirement” shall mean, with respect to any Pricing Rate Period, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect during such Pricing Rate Period (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of such Board of Governors) maintained by Buyer.

 

  

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“Responsible Officer” shall mean any executive officer of Seller.

 

“S&P” shall mean Standard and Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

 

“Scheduled Assets” shall mean each of the Purchased Assets set forth on Annex II hereto, which shall include, as of the Closing Date (and subject to subsequent change in accordance with the definition thereof and the other terms of this Agreement), the Repurchase Price (as of March 14, 2011 only and subject to the subsequent adjustment in accordance with the definition thereof and the other terms of this Agreement) for each of such Scheduled Assets.

 

“SEC” shall have the meaning specified in Article 21(a) of this Agreement.

 

“Seller” shall mean the entity identified as “Seller” in the Recitals hereto and such other sellers as may be approved by Buyer in its sole discretion from time to time.

 

“Senior Mortgage Loans”  shall mean performing senior commercial or multifamily fixed or floating rate mortgage loans or A-Notes related to performing senior commercial or multifamily fixed or floating rate mortgage loans, in each case secured by first liens on multifamily or commercial properties.

 

“Servicer” shall mean Midland Loan Services a division of PNC Bank, National Association, as successor by merger with Midland Loan Services, Inc.

 

“Servicer Notice” shall mean a notice substantially in the form of Exhibit XI hereto, as amended, supplemented or otherwise modified from time to time.

 

“Servicing Agreement” shall have the meaning specified in Article 26(b) of this Agreement.

 

“Servicing Records” shall have the meaning specified in Article 26(b) of this Agreement.

 

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

 

“Servicing Tape” shall have the meaning specified in Exhibit III-A hereto.

 

“SIPA” shall have the meaning specified in Article 21(a) of this Agreement.

 

  

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“Solvent” shall mean, 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 91(32) of the Bankruptcy Code, (b) the present fair salable value of the assets 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.

 

“Subordinate Eligible Assets” shall mean Eligible Assets described in items (ii) and (iii) of the definition of Eligible Assets.

 

“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.

 

“Survey” shall mean a certified ALTA/ACSM (or applicable state standards for the state in which the collateral is located) survey of the underlying real estate directly or indirectly securing or supporting such Purchased Asset prepared by a registered independent surveyor or engineer and in form and content satisfactory to Buyer and the company issuing the Title Policy for such Property.

 

“Termination Date” means, with respect to any Transaction, the earlier of (a) three hundred sixty-four (364) days from the date of such Transaction, or if such Transaction is extended, the date to which it is extended; (b) any Early Repurchase Date for such Transaction; (c) the Maturity Date; or (d) the date of the occurrence of an Event of Default.

 

“Termination Date Extension Conditions” shall have the meaning specified in Article 3(f) of this Agreement.

 

“Title Company” shall mean a nationally-recognized title insurance company acceptable to Buyer.

 

“Title Policy” shall have the meaning specified in paragraph 9 of the sections of Exhibit VI dealing with Eligible Loans.

 

“Transaction” shall mean a Transaction, as specified in Article 1 of this Agreement.

 

“Transaction Documents” shall mean, collectively, this Agreement, any applicable Annexes to this Agreement, the Guarantee Agreement, the Custodial Agreement, the Interim Servicing Agreement, the Depository Agreement, all Hedging Transactions and all Confirmations and assignment documentation executed pursuant to this Agreement in connection with specific Transactions.

 

  

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“Trust Receipt” shall mean a trust receipt issued by Custodian to Buyer confirming the Custodian’s possession of certain Purchased Asset Files that are the property of and held by Custodian for the benefit of Buyer (or any other holder of such trust receipt) or a bailment arrangement with counsel or other third party acceptable to Buyer in its sole discretion.

 

“UCC” shall have the meaning specified in Article 5(d) of this Agreement.

 

“Underlying Mortgage Loan” shall mean, with respect to any B-Note, Participation Interest, Mezzanine Loan or CMBS, a mortgage loan made in respect of the related Underlying Mortgaged Property.

 

“Underlying Mortgaged Property” shall mean, in the case of:

 

(a)           a Senior Mortgage Loan, the Mortgaged Property securing such Senior Mortgage Loan, as applicable;

 

(b)           a Participation Interest, the Mortgaged Property securing such Participation Interest, or the Mortgaged Property securing the Mortgage Loan in which such Participation Interest represents a participation, as applicable;

 

(c)           a B-Note, the Mortgaged Property securing such B-Note;

 

(d)           a Mezzanine Loan, the Mortgaged Property that is owned by the Person the equity of which is pledged as collateral security for such Mezzanine Loan; and

 

(e)           CMBS, the Mortgaged Properties securing the mortgage loans related to such security.

 

“Underwriting Issues” shall mean, with respect to any Purchased Asset as to which Seller intends to request a Transaction, all material information that has come to Seller’s attention that, based on the making of reasonable inquiries and the exercise of reasonable care and diligence under the circumstances, would be considered a materially “negative” factor (either separately or in the aggregate with other information), or a material defect in loan documentation or closing deliveries (such as any absence of any material Purchased Asset Document(s)), to a reasonable institutional mortgage buyer in determining whether to originate or acquire the Purchased Asset in question.

 

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.  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”.

 

  

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ARTICLE 3

 

INITIATION; CONFIRMATION; TERMINATION; FEES

 

Buyer’s agreement to enter into the initial Transaction hereunder is subject to the satisfaction, immediately prior to or concurrently with the making of such Transaction, of the condition precedent that Buyer shall have received from Seller payment of an amount equal to all fees and expenses payable hereunder, and all of the following items, each of which shall be satisfactory in form and substance to Buyer and its counsel:

 

(a)           The following documents, delivered to Buyer:

 

(i)           this Agreement, duly completed and executed by each of the parties hereto (including all exhibits hereto);

 

(ii)           a Custodial Agreement, duly executed and delivered by each of the parties thereto;

 

(iii)           a Depository Agreement, duly completed and executed by each of the parties thereto;

 

(iv)           a Guarantee Agreement, duly completed and executed by each of the parties thereto;

 

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

 

(vi)           any and all consents and waivers applicable to Seller or to the Purchased Assets;

 

(vii)           UCC financing statements for filing in each of the UCC filing jurisdictions described on Exhibit X hereto, each naming Seller as “Debtor” and Buyer as “Secured Party” and describing as “Collateral” all of the items set forth in the definition of Collateral and Purchased Items in this Agreement, together with any other documents necessary or requested by Buyer to perfect the security interests granted by Seller in favor of Buyer under this Agreement or any other Transaction Document;

 

(viii)           any documents relating to any Hedging Transactions;

 

(ix)           an Intercreditor Agreement, duly completed and executed by each of the parties thereto;

 

(x)           opinions of outside counsel to Seller reasonably acceptable to Buyer (including, but not limited to, those relating to enforceability, corporate matters, bankruptcy law matters, applicability of the Investment Company Act of 1940 and security interests);

 

  

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(xi)           good standing certificates and certified copies of the certificate of formation and limited liability company agreement (or equivalent documents) of Seller and Guarantor and of all corporate or other authority for Seller and Guarantor with respect to the execution, delivery and performance of the Transaction Documents and each other document to be delivered by Seller and Guarantor from time to time in connection herewith (and Buyer may conclusively rely on such certificate until it receives notice in writing from Seller to the contrary);

 

(xii)           with respect to any Eligible Asset to be purchased hereunder on the related Purchase Date that is not serviced by Seller, Seller shall have provided to Buyer a copy of the related Servicing Agreement, certified as a true, correct and complete copy of the original, together with a Servicer Notice, fully executed by Seller and Servicer;

 

(xiii)           Buyer shall have received payment from Seller of an amount equal to the amount of actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with the development, preparation and execution of this Agreement, the other Transaction Documents and any other documents prepared in connection herewith or therewith;

 

(xiv)           Buyer shall have received payment from Seller, as consideration for Buyer’s agreement to enter into this Agreement, an amount equal to $4,228,472, such amount to be paid to Buyer in U.S. Dollars on the Closing Date, in immediately available funds, without deduction, set-off or counterclaim; and

 

(xv)           all such other and further documents, documentation and legal opinions as Buyer in its discretion shall reasonably require.

 

(b)           Buyer’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)           Seller shall give Buyer no less than one (1) Business Days prior written notice of each Transaction (including the initial Transaction), together with a signed, written confirmation substantially in the form of Exhibit I attached hereto prior to each Transaction (a “Confirmation”).  Each Confirmation shall describe the Purchased Assets, shall identify Buyer and Seller and shall be executed by both Buyer and Seller; provided, however, that Buyer shall not be liable to Seller if it inadvertently acts on a Confirmation that has not been signed by a Responsible Officer of Seller, and shall set forth:

 

(A)           the Purchase Date;

 

(B)           the Purchase Price for the Purchased Asset included in the Transaction;

 

(C)           the Repurchase Date; and

 

  

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(D)           any additional terms or conditions not inconsistent with this Agreement.

 

No Confirmation may be amended unless in a writing executed by Buyer and Seller.  Neither (i) changes in the Repurchase Price related to a Purchased Asset (due to the application of Principal Payments) nor (ii) periodic adjustments to LIBOR related to a Purchased Asset shall require an amendment to the related Confirmation.

 

(ii)           Buyer shall have the right to review, as described in Exhibit VIII hereto, the Eligible Assets Seller proposes to sell to Buyer in any Transaction and to conduct its own due diligence investigation of such Eligible Assets as Buyer determines (“Pre-Purchase Due Diligence”).  Buyer shall be entitled to make a determination, in the exercise of its sole discretion, that, in the case of a Transaction, it shall or shall not purchase any or all of the assets proposed to be sold to Buyer by Seller.  On the Purchase Date for the Transaction, which shall be not less than one (1) Business Day following the final approval of an Eligible Asset by Buyer in accordance with Exhibit VIII hereto, the Eligible Assets shall be transferred to Buyer or the Custodian against the transfer of the Purchase Price to an account of Seller.  Buyer shall inform Seller of its determination with respect to any such proposed Transaction solely in accordance with Exhibit VIII attached hereto.  Upon the approval by Buyer of a particular proposed Transaction, Buyer shall deliver to Seller a signed copy of the related Confirmation described in clause (ii) above, on or before the scheduled date of the underlying proposed Transaction. Prior to the approval of each proposed Transaction by Buyer:

 

(A)           Buyer shall have (i) determined, in its sole and absolute discretion, that the asset proposed to be sold to Buyer by Seller in such Transaction is an Eligible Asset and (ii) obtained internal credit approval, to be granted or denied in Buyer’s sole and absolute discretion, for the inclusion of such Eligible Asset as a Purchased Asset in a Transaction, without regard for any prior credit decisions by Buyer or any Affiliate of Buyer, and with the understanding that Buyer shall have the absolute right to change any or all of its internal underwriting criteria at any time, without notice of any kind to Seller;

 

(B)           Buyer shall have fully completed all external legal due diligence;

 

(C)           Buyer shall have determined the Pricing Rate applicable to the Transaction (including the Applicable Spread);

 

(D)           no Default or Event of Default shall have occurred and be continuing under this Agreement or any other Transaction Document and no event shall have occurred which has, or would reasonably be expected to have, a Material Adverse Effect;

 

(E)           Seller shall have delivered to Buyer a list of all exceptions to the representations and warranties relating to the Purchased Asset and any other eligibility criteria for such Purchased Asset (the “Requested Exceptions Report”);

 

  

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(F)           Buyer shall have waived all exceptions in the Requested Exceptions Report;

 

(G)           both immediately prior to the requested Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by Seller in Exhibit VI and Article 8, as applicable, shall be true, correct and complete on and as of such Purchase Date in all 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;

 

(H)           subject to Buyer’s right to perform one or more due diligence reviews pursuant to Article 25, Buyer shall have completed its due diligence review of the Purchased Asset File, and such other documents, records, agreements, instruments, mortgaged properties or information relating to such Purchased Asset as Buyer in its sole discretion deems appropriate to review and such review shall be satisfactory to Buyer in its sole discretion and Buyer has consented in writing to the Eligible Asset becoming a Purchased Asset;

 

(I)           with respect to any Eligible Loan to be purchased hereunder on the related Purchase Date that is not primarily serviced by Servicer or an Affiliate thereof, Seller shall have provided to Buyer a copy of the related Servicing Agreement, certified as a true, correct and complete copy of the original, together with a Servicer Notice, fully executed by Seller and the servicer named in the related Servicing Agreement;

 

(J)           Seller shall have paid to Buyer all legal fees and expenses and the reasonable costs and expenses incurred by Buyer in connection with the entering into of any Transaction hereunder, including, without limitation, costs associated with Pre-Purchase Legal Expenses, recording or other administrative expenses necessary or incidental to the execution of any Transaction hereunder, which amounts, at Buyer’s option, may be withheld from the sale proceeds of any Transaction hereunder;

 

(K)           Buyer shall have received from Custodian on each Purchase Date an Asset Schedule and Exception Report (as defined in the Custodial Agreement) with respect to each Purchased Asset, dated the Purchase Date, duly completed and with exceptions acceptable to Buyer in its sole discretion in respect of Eligible Assets to be purchased hereunder on such Business Day;

 

(L)           Buyer shall have received from Seller a Release Letter covering each Eligible Asset to be sold to Buyer;

 

(M)           Buyer shall have reasonably determined that the introduction of, or a change in, any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Buyer has not made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Buyer to enter into Transactions;

 

  

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(N)           the Repurchase Date for such Transaction is not later than the Maturity Date;

 

(O)           Seller shall have taken such other action as Buyer shall have reasonably requested in order to transfer the Purchased Assets pursuant to this Agreement and to perfect all security interests granted under this Agreement or any other Transaction Document in favor of Buyer with respect to the Purchased Assets;

 

(P)           with respect to any Eligible Asset to be purchased hereunder, if such Eligible Asset was acquired by Seller, Seller shall have disclosed to Buyer the acquisition cost of such Eligible Asset (including therein reasonable supporting documentation required by Buyer, if any);

 

(Q)           Buyer shall have received all such other and further documents, documentation and legal opinions (including, without limitation, opinions regarding the perfection of Buyer’s security interests) as Buyer in its reasonable discretion shall reasonably require;

 

(R)           Buyer shall have received a copy of any documents relating to any Hedging Transaction, and Seller shall have pledged and assigned to Buyer, pursuant to Article 5 hereunder, all of Seller’s rights under each Hedging Transaction included within a Purchased Asset, if any;

 

(S)           no “Termination Event”, “Event of Default”, “Potential Event of Default” or any similar event by Seller, however defined therein, shall have occurred and be continuing under any Hedging Transaction;

 

(T)           the counterparty to Seller in any Hedging Transaction shall be an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty, and, in the case of a Qualified Hedge Counterparty, in the event that such counterparty no longer qualifies as a Qualified Hedge Counterparty, then, at the election of Buyer or Seller shall ensure that such counterparty posts additional collateral in an amount satisfactory to Buyer under all its Hedging Transactions with Seller, or Seller shall immediately terminate the Hedging Transactions with such counterparty and enter into new Hedging Transactions with a Qualified Hedge Counterparty.

Notwithstanding the foregoing, Buyer and Seller hereby acknowledge and agree that the only Transactions hereunder are with respect to the Scheduled Assets and that no additional Transaction shall be entered into pursuant to this Agreement.

 

  

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(c)           Upon the satisfaction of all conditions set forth in Articles 3(a) and (b), the Eligible Asset shall be transferred to Buyer or the Custodian against the transfer of the Purchase Price to an account of Seller.  With respect to any Transaction, the Pricing Rate shall be determined initially on the Pricing Rate Determination Date applicable to the first Pricing Rate Period for such Transaction, and shall be reset on the Pricing Rate Determination Date for each of the next succeeding Pricing Rate Periods for such Transaction.  Buyer or its agent shall determine in accordance with the terms of this Agreement the Pricing Rate on each Pricing Rate Determination Date for the related Pricing Rate Period in Buyer’s sole and absolute discretion, exercised in good faith, and notify Seller of such rate for such period each such Pricing Rate Determination Date.

 

(d)           Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the Transaction covered thereby.  In the event of any conflict between the terms of such Confirmation and the terms of this Agreement, other than with respect to the Advance Rate or the applicable Price Differential set forth in the related Confirmation, this Agreement shall prevail.  Buyer and Seller hereby acknowledge and agree that, upon Seller’s satisfaction of the conditions set forth in Articles 3(a) and (b)(i) on the Closing Date, each of the Scheduled Assets shall be approved Purchased Assets subject to Transactions.  Notwithstanding anything to the contrary contained herein, the Scheduled Assets shall at all times be deemed to be Eligible Assets for all purposes under this Agreement.

 

(e)           Seller shall be entitled to terminate a Transaction on demand and repurchase the Purchased Asset subject to a Transaction on any Business Day prior to the Repurchase Date (an “Early Repurchase Date”) upon satisfaction of the following conditions:

 

(i)           Seller notifies Buyer 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 and the amount of proceeds to be realized from the sale or refinancing of such Purchased Asset (including, without limitation, a statement of the anticipated Net Proceeds and the calculation thereof), no later than five (5) Business Days prior to such Early Repurchase Date,

 

(ii)           the prior written consent of Buyer, if the amount of proceeds to be realized from the sale or refinancing of such Purchased Asset is less than the par principal amount of such Purchased Asset (except that, with respect to a sale of all Purchased Assets subject to Transactions, such consent shall not be required, subject to the satisfaction by Seller of all obligations under the Transaction Documents), and

 

(iii)           on such Early Repurchase Date, Seller pays to Buyer an amount equal to the greater of (A) one hundred percent (100%) of the Net Proceeds actually received in connection with such sale or refinancing and (B) the Repurchase Price for such Purchased Asset plus, in all instances, any accreted Price Differential as of the date of determination, together with all other amounts payable under this Agreement with respect to such Purchased Asset.

 

  

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(f)           On the Termination Date (including any Early Repurchase Date) for any Transaction, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Assets being repurchased and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Article 4 of this Agreement) against the simultaneous transfer of the Repurchase Price to an account of Buyer.  Notwithstanding the foregoing, provided that all of the extension conditions listed in clauses (i) through (iii) of this Article 3(f) (collectively, the “Termination Date Extension Conditions”) shall have been satisfied, as determined by Buyer in its sole and absolute discretion, Seller may request to extend such Termination Date by no more than three hundred sixty-four (364) days from the date of such extension request by giving written notice to Buyer of such request.  In no event shall the Termination Date be extended beyond the Maturity Date.  For purposes of the preceding sentence, the Termination Date Extension Conditions shall be deemed to have been satisfied if:

 

(i)           Seller shall have given Buyer written notice, not less than sixty (60) days prior but no more than one hundred and eighty (180) days prior to the originally scheduled Termination Date, of Seller’s desire to extend the Termination Date; and if Seller fails to give such notice, Seller shall be deemed to have elected not to extend the Termination Date;

 

(ii)           no Material Adverse Effect, Default or Event of Default under this Agreement shall have occurred and be continuing as of the date notice is given under subclause (i) above or as of the originally scheduled Termination Date and no “Termination Event,” “Event of Default” or “Potential Event of Default” or any similar event by Seller, however denominated, shall have occurred and be continuing under any Hedging Transaction; and

 

(iii)           all representations and warranties (other than those contained in Article 8(b)(viii) (as they relate solely to Purchased Assets) and Article 8(b)(x)(D)) shall be true, correct, complete and accurate in all respects as of the scheduled Repurchase Date.

 

(g)           If prior to the first day of any Pricing Rate Period with respect to any Transaction, (i) Buyer shall have determined in the exercise of its reasonable 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, or (ii) LIBOR determined or to be determined for such Pricing Rate Period will not adequately and fairly reflect the cost to Buyer (as determined and certified by Buyer) of making or maintaining Transactions during such Pricing Rate Period, Buyer shall give telecopy or telephonic notice thereof to Seller as soon as practicable thereafter.  If such notice is given, the Pricing Rate with respect to such Transaction for such Pricing Rate Period, and for any subsequent Pricing Rate Periods until such notice has been withdrawn by Buyer, shall be a per annum rate equal to the Federal Funds Rate plus the Applicable Spread (the “Alternative Rate”).

 

(h)           Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for Buyer to enter into or maintain Transactions as contemplated by the Transaction Documents, (a) the commitment of Buyer hereunder to enter into new Transactions and to continue Transactions as such shall forthwith be canceled, and (b) the Transactions then outstanding shall be converted automatically to Alternative Rate Transactions on the last day of the then current Pricing Rate Period or within such earlier period as may be required by law.  If any such conversion of a Transaction occurs on a day that is not the last day of the then current Pricing Rate Period with respect to such Transaction, Seller shall pay to Buyer such amounts, if any, as may be required pursuant to Article 3(l) of this Agreement.

 

  

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(i)           Upon demand by Buyer, Seller shall indemnify Buyer and hold Buyer harmless from any loss, cost or expense (including, without limitation, attorneys’ fees and disbursements) that Buyer may sustain or incur as a consequence of (i) default by Seller repurchasing any Purchased Asset after Seller has given a notice in accordance with Article 3(e) of an Early Repurchase, (ii) any payment of the Repurchase Price on any day other than a Remittance Date, including Breakage Costs, (iii) a default by Seller in selling Eligible Assets after Seller has notified Buyer of a proposed Transaction and Buyer has agreed to purchase such Eligible Assets in accordance with the provisions of this Agreement, (iv) Buyer’s enforcement of the terms of any of the Transaction Documents, (v) any actions taken to perfect or continue any lien created under any Transaction Documents, and/or (vi) Buyer entering into any of the Transaction Documents or owning any Purchased Item.  A certificate as to such costs, losses, damages and expenses, setting forth the calculations therefor shall be submitted promptly by Buyer to Seller and shall be prima facie evidence of the information set forth therein.

 

(j)           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 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 subsequent to the date hereof:

 

(i)           shall subject Buyer to any tax of any kind whatsoever with respect to the Transaction Documents, any Purchased Asset or any Transaction, or change the basis of taxation of payments to Buyer in respect thereof (except for income taxes and any changes in the rate of tax on Buyer’s overall net income);

 

(ii)           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 Buyer that is not otherwise included in the determination of LIBOR hereunder; or

 

(iii)           shall impose on Buyer any other condition;

 

and the result of any of the foregoing is to increase the cost to Buyer, by an amount that Buyer deems, in the exercise of its reasonable business judgment, to be material, of entering into, continuing or maintaining Transactions or to reduce any amount receivable under the Transaction Documents in respect thereof; then, in any such case, Seller shall promptly pay Buyer, upon its demand, any additional amounts necessary to compensate Buyer for such increased cost or reduced amount receivable.  If Buyer becomes entitled to claim any additional amounts pursuant to this Article 3(j), it shall, within ten (10) Business Days of such event, notify Seller of the event by reason of which it has become so entitled.  Such notification as to the calculation of any additional amounts payable pursuant to this subsection shall be submitted by Buyer to Seller and shall be prima facie evidence of such additional amounts.  This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.

 

  

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(k)           If Buyer 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 Buyer or any corporation controlling Buyer 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 does or shall have the effect of reducing the rate of return on Buyer’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which Buyer or such corporation could have achieved but for such adoption, change or compliance (taking into consideration Buyer’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by Buyer, in the exercise of its reasonable business judgment, to be material, then from time to time, after submission by Buyer to Seller of a written request therefor, Seller shall pay to Buyer such additional amount or amounts as will compensate Buyer for such reduction.  Such notification as to the calculation of any additional amounts payable pursuant to this subsection shall be submitted by Buyer to Seller and shall be prima facie evidence of such additional amounts.  This covenant shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.

 

(l)           If Seller repurchases Purchased Assets on a day other than the last day of a Pricing Rate Period, Seller shall indemnify Buyer and hold Buyer harmless from any actual losses, costs and/or expenses which Buyer sustains as a direct consequence thereof (“Breakage Costs”), in each case for the remainder of the applicable Pricing Rate Period.  Buyer shall deliver to Seller a statement setting forth the amount and basis of determination of any Breakage Costs in reasonable detail, it being agreed that such statement and the method of its calculation shall be conclusive and binding upon Seller absent manifest error.  This Article 3(l) shall survive termination of this Agreement and the repurchase of all Purchased Assets subject to Transactions hereunder.

 

ARTICLE 4

 

INCOME PAYMENTS AND PRINCIPAL PAYMENTS

 

(a)           The Depository Account shall be established at the Depository pursuant to the Depository Agreement concurrently with the execution and delivery of this Agreement by Seller and Buyer.  Buyer shall have sole dominion and control over the Depository Account, which shall be subject to the Depository Agreement after the transfer thereof to the Depository pursuant to Article 4(b) below.  All Income in respect of the Purchased Assets and any payments made to Seller in respect of associated Hedging Transactions, as well as any interest received from the reinvestment of such Income, shall be deposited directly by Servicer into the Depository Account in accordance with the Interim Servicing Agreement (or the related Servicer Notice) and shall be remitted by the Depository in accordance with the applicable provisions of Articles 4(c) through 4(e) of this Agreement.

 

  

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(b)           Immediately upon the sale to Buyer of any Purchased Asset that is serviced primarily by Servicer, Seller shall deliver to each Mortgagor, issuer of a participation, servicer and trustee with respect to each Purchased Asset or borrower under a Purchased Asset an irrevocable direction letter in the form of Exhibit XIV (the “Redirection Letter”), instructing, as applicable, the Mortgagor, issuer of a participation, servicer or trustee with respect to such Purchased Asset or borrower to pay all amounts payable under the related Purchased Asset to Servicer pursuant to the Interim Servicing Agreement, for immediate deposit by Servicer into the  Depository Account pursuant to the Interim Servicing Agreement.  If a Mortgagor, issuer of a participation, servicer or trustee with respect to a Purchased Asset for which Servicer is the Primary Servicer forwards any Income with respect to such Purchased Asset to Seller or any Affiliate of Seller rather than directly to Servicer, Seller shall, or shall cause such Affiliate to, (i) deliver an additional Re-Direction Letter to the applicable Mortgagor, issuer of a participation, servicer or trustee with respect to the Purchased Asset and make other best efforts to cause such Mortgagor, issuer of a participation, servicer or trustee with respect to the Purchased Asset to forward such amounts directly to Servicer for immediate deposit into the Depository Account and (ii) immediately transfer such amounts directly to Servicer.

 

(c)           So long as no Event of Default with respect to any Purchased Asset shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Assets (other than scheduled or unscheduled Principal Payments and net sale proceeds) and the associated Hedging Transactions during each Collection Period shall be applied by the Depository on the related Remittance Date in the following order of priority:

 

(i)           first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding as of such Remittance Date and (B) to any Affiliated Hedge Counterparty, any amount then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to a Purchased Asset;

 

(ii)           second, to Buyer, an amount equal to any other amounts then due and payable to Buyer or its Affiliates under any Transaction Document;

 

(iii)           third, to the Seller, the remainder, if any.

 

(d)           So long as no Event of Default shall have occurred and be continuing, any Principal Payments (whether scheduled or unscheduled, including, without limitation, net sale proceeds) shall be applied by the Depository on the Business Day following the Business Day on which such funds are deposited in the Depository Account in the following order of priority:

 

(i)           first, pro rata, (A) to Buyer, until the Repurchase Price for such Purchased Asset has been reduced to zero and (B) solely with respect to any Hedging Transaction with an Affiliated Hedge Counterparty related to such Purchased Asset, to such Affiliated Hedge Counterparty an amount equal to any accrued and unpaid breakage costs under such Hedging Transaction related to such Purchased Asset; and

 

(ii)           second, to Buyer, to reduce the Repurchase Price of all other Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero;

 

(iii)           third, to Buyer, an amount equal to any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

 

  

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(iv)           fourth, in the event that all of Seller’s obligations to Buyer under the Transaction Documents have been satisfied, to the Seller, the remainder, if any.

 

(e)           If an Event of Default shall have occurred and be continuing, all Income (including, without limitation, any Principal Payments, reserve amounts, or any other amounts received, without regard to their source) received by the Depository in respect of a Purchased Asset shall be applied by the Depository on the Business Day next following the Business Day on which such funds are deposited in the  Depository Account in the following order of priority:

 

(i)           first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all of the Purchased Assets as of such Business Day and (B) to any Affiliated Hedge Counterparty, any amounts then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset;

 

(ii)           second, to Buyer, on account of the Repurchase Price of such Purchased Asset until the Repurchase Price has been reduced to zero;

 

(iii)           third, to Buyer, an amount equal to any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

 

(iv)           fourth, to Seller, any remainder for its own account; provided, however, that in the event that Buyer has exercised the remedies described in Article 11(b)(iii)(B) with respect to any or all Purchased Assets, Seller shall not be entitled to any proceeds from any eventual sale of such Purchased Assets.

 

ARTICLE 5

SECURITY INTEREST

 

(a)           Buyer and Seller intend that the Transactions hereunder be sales to Buyer of the Purchased Assets and not loans from Buyer to Seller secured by the Purchased Assets.  However, in order to preserve Buyer’s rights under this Agreement in the event that a court or other forum re-characterizes the Transactions hereunder as loans and as security for the performance by Seller of all of Seller’s obligations to Buyer 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 Buyer, Seller hereby assigns, pledges and grants a security interest in all of its right, title and interest in, to and under the Purchased Items (as defined below) to Buyer to secure the payment of the Repurchase Price on all Transactions to which it is a party and all other amounts owing by it to Buyer and any of its present or future Affiliates hereunder, including, without limitation, amounts owing pursuant to Article 24, and under the other Transaction Documents, including any obligations of Seller under any Hedging Transaction entered into with any Affiliated Hedge Counterparty (including, without limitation, all amounts anticipated to be paid to Buyer by an Affiliated Hedge Counterparty as provided for in the definition of Repurchase Price) (collectively, the “Repurchase Obligations”).  Seller agrees to mark its computer records and tapes to evidence the interests granted to Buyer hereunder.  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, is hereinafter referred to as the “Purchased Items”:

 

  

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(i)           the Purchased Assets and all “securities accounts” (as defined in Article 8-501(a) of the UCC) to which any or all of the Purchased Assets are credited;

 

(ii)           the Purchased Asset Documents, Servicing Agreements, Servicing Records, insurance policies relating to the Purchased Assets, and collection and escrow accounts and letters of credit relating to the Purchased Assets;

 

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

 

(iv)           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.

 

(b)           Without limiting Article 5(a) hereto, to secure payment of the Repurchase Obligations owing to Buyer, Seller hereby grants to Buyer a security interest in 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, hereinafter referred to as the “Collateral”:

 

(i)           the  Depository Account and all monies from time to time on deposit in the  Depository Account;

 

(ii)           the Purchased Items;

 

(iii)           any and all replacements, substitutions, distributions on, income relating to or proceeds of any and all of the foregoing; and

 

(iv)           Seller’s right under each Hedging Transaction, if any, relating to the Purchased Assets to secure the Repurchase Obligations.

 

(c)           Buyer agrees to act as agent for and on behalf of the Affiliated Hedge Counterparties with respect to the security interest granted hereby to secure the obligations owing to the Affiliated Hedge Counterparties under any Hedging Transactions, including, without limitation, with respect to the Purchased Assets and the Purchased Asset Files held by the Custodian pursuant to the Custodial Agreement.

 

  

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(d)           Buyer’s security interest in the Collateral shall terminate only upon termination of Seller’s obligations under this Agreement, all Hedging Transactions and the documents delivered in connection herewith and therewith.  Upon such termination, Buyer shall deliver to Seller such UCC termination statements and other release documents as may be commercially reasonable and return the Purchased Assets to Seller and reconvey the Purchased Items to Seller and release its security interest in the Collateral.  For purposes of the grant of the security interest pursuant to this Article 5, this Agreement shall be deemed to constitute a security agreement under the New York Uniform Commercial Code (the “UCC”).  Buyer 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, (a) Buyer, at Seller’s sole cost and expense, as applicable, 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 (b) Seller shall from time to time take such further actions as may be requested by Buyer 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 Buyer hereunder).

 

(e)           Seller and Guarantor each acknowledge that neither has rights to service the Purchased Assets but only has rights as a party to the current Interim Servicing Agreement or any other Servicing Agreement with respect to the Purchased Assets.  Without limiting the generality of the foregoing and in the event that Seller or Guarantor is deemed to retain any residual Servicing Rights, and for the avoidance of doubt, each of Seller and Guarantor grants, assigns and pledges to Buyer a security interest in the Servicing Rights and proceeds related thereto and in all instances, whether now owned or hereafter acquired, now existing or hereafter created.  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 Sections 101(47)(v) and 741(7)(x) of the Bankruptcy Code.

 

ARTICLE 6

 

PAYMENT, TRANSFER AND CUSTODY

 

(a)           On the Purchase Date for each Transaction, ownership of the Purchased Asset shall be transferred to Buyer or its designee (including the Custodian) against the simultaneous transfer of the Purchase Price in immediately available funds to an account of Seller specified in the Confirmation relating to such Transaction.

 

(b)           On or before each Purchase Date, (or with respect to the Scheduled Assets, on or before the Closing Date) Seller shall deliver or cause to be delivered to Buyer or its designee the Custodial Delivery in the form attached hereto as Exhibit IV; provided, that notwithstanding the foregoing, upon request of Seller, Buyer in its sole but good faith discretion may elect to permit Seller to make such delivery by not later than the third (3rd) Business Day after the related Purchase Date, so long as Seller causes an Acceptable Attorney, Title Company or other Person acceptable to Buyer to deliver to Buyer and the Custodian a Bailee Letter on or prior to such Purchase Date; and Buyer hereby permits Seller to make the Custodial Delivery of the Scheduled Assets in this manner.  Subject to Article 6(c) and the previous sentence, in connection with each sale, transfer, conveyance and assignment of a Purchased Asset, on or prior to each Purchase Date with respect to such Purchased Asset, Seller shall deliver or cause to be delivered and released to the Custodian a copy or original of each document as specified in the Asset File (as defined in the Custodial Agreement, and collectively, the “Purchased Asset File”), pertaining to each of the Purchased Assets identified in the Custodial Delivery delivered therewith, together with any other documentation in respect of such Purchased Asset requested by Buyer, in Buyer’s sole but good faith discretion.

  

  

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(c)           From time to time, Seller shall forward to the Custodian additional original documents or additional documents evidencing any assumption, modification, consolidation or extension of a Purchased Asset approved in accordance with the terms of this Agreement, and upon receipt of any such other documents, the Custodian shall hold such other documents as Buyer shall request from time to time.  With respect to any documents that have been delivered or are being delivered to recording offices for recording and have not been returned to Seller in time to permit their delivery hereunder at the time required, in lieu of delivering such original documents, Seller shall deliver to Buyer a true copy thereof with an officer’s certificate certifying that such copy is a true, correct and complete copy of the original, which has been transmitted for recordation.  Seller shall deliver such original documents to the Custodian promptly when they are received.  With respect to all of the Purchased Assets delivered by Seller to Buyer or its designee (including the Custodian), Seller shall execute an omnibus power of attorney substantially in the form of Exhibit V attached hereto irrevocably appointing Buyer its attorney-in-fact with full power upon the occurrence of an Event of Default to (i) complete and record each assignment of mortgage, (ii) complete the endorsement of each Mortgage Note or Mezzanine Note, (iii) take any action (including exercising voting and/or consent rights) with respect to CMBS, Participation Interests, or intercreditor or participation agreements, (iv) complete the preparation and filing, in form and substance satisfactory to Buyer, of such financing statements, continuation statements, and other UCC forms, as Buyer may from time to time, reasonably consider necessary to create, perfect, and preserve Buyer’s security interest in the Purchased Assets, and (v) take such other steps as may be necessary or desirable to enforce Buyer’s rights against, under or with respect to such Purchased Assets and the related Purchased Asset Files and the Servicing Records.  Buyer shall deposit the Purchased Asset Files representing the Purchased Assets, or direct that the Purchased Asset Files be deposited directly, with the Custodian.  The Purchased Asset Files shall be maintained in accordance with the Custodial Agreement.  If a Purchased Asset File is not delivered to Buyer or its designee (including the Custodian), such Purchased Asset File shall be held in trust by Seller or its designee for the benefit of Buyer 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 Buyer or its designee.  The possession of the Purchased Asset File by Seller or its designee is at the will of Buyer 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 Buyer.  Seller or its designee (including the Custodian) shall release its custody of the Purchased Asset File only in accordance with written instructions from Buyer, unless such release is required as incidental to the servicing of the Purchased Assets, is in connection with a repurchase of any Purchased Asset by Seller or as otherwise required by law.

 

(d)           Upon the occurrence and during the continuation of an Event of Default, subject to the provisions of the Purchased Asset Documents, Buyer shall be entitled to exercise all voting and corporate rights with respect to the Purchased Assets without regard to Seller’s instructions (including, but not limited to, if an Act of Insolvency shall occur with respect to Seller, to the extent Seller controls or is entitled to control selection of any servicer, Buyer may transfer any or all of such servicing to an entity satisfactory to Buyer).  The Seller shall give prior written notice to Buyer of its intention to exercise any voting or corporate rights with respect to a Purchased Asset that could materially impair the Market Value of the Purchased Asset.

 

  

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(e)           Notwithstanding the provisions of Article 6(b) above requiring the execution of the Custodial Delivery and corresponding delivery of the Purchased Asset File to the Custodian on or prior to the related Purchase Date, with respect to each Transaction involving a Purchased Asset that is identified in the related Confirmation as a “Table Funded” Transaction, Seller shall, in lieu of effectuating the delivery of all or a portion of the Purchased Asset File on or prior to the related Purchase Date, (i) deliver to the Custodian by facsimile on or before the related Purchase Date for the Transaction (A) the promissory note(s), original stock certificate or participation certificate in favor of Seller evidencing the making of the Purchased Asset, with Seller’s endorsement of such instrument to Buyer, (B) the mortgage, security agreement or similar item creating the security interest in the related collateral and the applicable assignment document evidencing the transfer to Buyer, (C) such other components of the Purchased Asset File as Buyer may require on a case by case basis with respect to the particular Transaction, and (D) evidence satisfactory to Buyer that all documents necessary to perfect Seller’s (and, by means of assignment to Buyer on the Purchase Date, Buyer’s) interest in the Collateral for the Purchased Asset, and (ii) not later than the third (3rd) Business Day following the Purchase Date, deliver to Buyer the Custodial Delivery and to the Custodian the entire Purchased Asset File.

 

ARTICLE 7

 

SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

 

(a)           Title to all Purchased Assets and Purchased Items shall pass to Buyer on and as of the applicable Purchase Date, it being understood and agreed that title passed to Buyer with respect to the Scheduled Assets in and as of the Purchase Dates indicated on Annex II, and Buyer shall have free and unrestricted use of all Purchased Assets, subject to the terms of this Agreement.  Nothing in this Agreement or any other Transaction Document shall preclude Buyer from engaging in repurchase transactions with the Purchased Assets or Purchased Items or otherwise selling, transferring, pledging, repledging, hypothecating, or rehypothecating the Purchased Assets or Purchased Items, but no such transaction shall relieve Buyer of its obligations to transfer the Purchased Assets to Seller pursuant to Article 3 of this Agreement or of Buyer’s obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Article 4 hereof.

 

(b)           Nothing contained in this Agreement or any other Transaction Document shall obligate Buyer to segregate any Purchased Assets or Purchased Items delivered to Buyer by Seller.  Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, no Purchased Asset shall remain in the custody of Seller or an Affiliate of Seller.

 

ARTICLE 8

 

REPRESENTATIONS AND WARRANTIES

  

  

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(a)           Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in writing, in the form of an annex hereto or otherwise, in advance of any Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal), (iv) it has obtained all authorizations of any governmental body required in connection with this Agreement and each Transaction and such authorizations are in full force and effect and (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance or rule applicable to it or its organizational documents or any agreement by which it is bound or by which any of its assets are affected.  On the Purchase Date for any Transaction for the purchase of any Purchased Assets by Buyer from Seller and any Transaction hereunder and covenants that at all times while this Agreement and any Transaction thereunder is in effect, Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it.

 

(b)           In addition to the representations and warranties in subsection (a) above, Seller represents and warrants to Buyer as of the date of this Agreement and will be deemed to represent and warrant to Buyer as of the Purchase Date for the purchase of any Purchased Assets by Buyer from Seller and any Transaction thereunder and covenants that at all times while this Agreement and any Transaction thereunder is in effect, unless otherwise stated herein:

 

(i)           Organization.  Seller is duly organized, validly existing and in good standing under the laws and regulations of the jurisdiction of Seller’s incorporation or organization, as the case may be, and is duly licensed, qualified, and in good standing in every state where such licensing or qualification is necessary for the transaction of Seller’s business, except where failure to so qualify could not be reasonably likely to have a Material Adverse Effect.  Seller has the 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 has the power to execute, deliver, and perform its obligations under this Agreement and the other Transaction Documents.

 

(ii)           Due Execution; Enforceability.  The Transaction Documents have been or will be duly executed and delivered by Seller, for good and valuable consideration.  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 equitable principles.

 

(iii)           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 contained in the Transaction Documents applicable to it to which it is a party.

  

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(iv)           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, in the case of clauses (ii) or (iii) above, to the extent that such conflict or breach would have a Material Adverse Effect upon Seller’s ability to perform its obligations hereunder.

 

(v)           Litigation; Requirements of Law.  As of the date hereof and as of the Purchase Date for any Transaction hereunder, there is no action, suit, proceeding, investigation, or arbitration pending or, to the best knowledge of Seller, threatened against Seller, any Affiliate of Seller or any of their respective assets, nor is there any action, suit, proceeding, investigation, or arbitration pending or threatened against Seller or any Affiliate of Seller that may 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, decree, rule or regulation of any arbitrator or Governmental Authority.

 

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

 

(vii)           Good Title to Purchased Assets.  Immediately prior to the purchase of any Purchased Assets by Buyer from Seller, 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), and Seller is the record and beneficial owner of and has good and marketable title to and the right to sell and transfer such Purchased Assets to Buyer and, upon transfer of such Purchased Assets to Buyer, Buyer shall be the owner of such Purchased Assets free of any adverse claim.  In the event the related Transaction is recharacterized as a secured financing of the Purchased Assets, the provisions of this Agreement are effective to create in favor of Buyer a valid “security interest” (as defined in Section 1-201(b)(37) of the UCC) in all rights, title and interest of Seller in, to and under the Purchased Assets and Buyer shall have a valid, perfected first priority security interest in the Purchased Assets (and without limitation on the foregoing, Buyer, as entitlement holder, shall have a “security entitlement” to the Purchased Assets).

 

(viii)           No Decline in Market Value; No Defaults.  Other than as previously disclosed to Buyer in writing prior to the Closing Date in a Requested Exceptions Report, Seller is not aware of any post-Transaction facts or circumstances that are reasonably likely to cause or have caused the Market Value of any Purchased Asset to decline.  No Default or Event of Default has occurred or exists under or with respect to the Transaction Documents.

 

  

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(ix)           Authorized Representatives.  The duly authorized representatives of Seller are listed on, and true signatures of such authorized representatives are set forth on, Exhibit II attached to this Agreement.

 

(x)           Representations and Warranties Regarding Purchased Assets; Delivery of Purchased Asset File.

 

(A)           As of the date hereof, Seller has not assigned, pledged, or otherwise conveyed or encumbered any Purchased Asset to any other Person, and immediately prior to the sale of such Purchased Asset to Buyer, Seller was the sole owner of such Purchased Asset and had good and marketable title thereto, free and clear of all liens, in each case except for (1) liens to be released simultaneously with the sale to Buyer hereunder and (2) liens granted by Seller in favor of the counterparty to any Hedging Transaction, solely to the extent such liens are expressly subordinate to the rights and interests of Buyer hereunder.

 

(B)           The provisions of this Agreement and the related Confirmation are effective to either constitute a sale of Purchased Items to Buyer or to create in favor of Buyer a legal, valid and enforceable security interest in all right, title and interest of Seller in, to and under the Purchased Items.

 

(C)           Upon receipt by the Custodian of each Mortgage Note, Mezzanine Note, B-Note or Participation Certificate, endorsed in blank by a duly authorized officer of Seller, either a purchase shall have been completed by Buyer of such Mezzanine Note, B-Note or Participation Certificate, as applicable, or Buyer shall have a valid and fully perfected first priority security interest in all right, title and interest of Seller in the Purchased Items described therein.

 

(D)           Each of the representations and warranties made in respect of the Purchased Assets pursuant to Exhibit VI are true, complete and correct, except to the extent disclosed in a Requested Exceptions Report.

 

(E)           Upon the filing of financing statements on Form UCC-1 naming Buyer as “Secured Party”, Seller as “Debtor” and describing the Purchased Items, in the jurisdiction and recording office listed on Exhibit X attached hereto, the security interests granted hereunder in that portion of the Purchased Items which can be perfected by filing under the Uniform Commercial Code will constitute fully perfected security interests under the Uniform Commercial Code in all right, title and interest of Seller in, to and under such Purchased Items.

 

(F)           Upon execution and delivery of the Depository Agreement, Buyer shall either be the owner of, or have a valid and fully perfected first priority security interest in, the “investment property” and all “deposit accounts” (each as defined in the Uniform Commercial Code) comprising Purchased Items or any after-acquired property related to such Purchased Items.  Except to the extent disclosed in a Requested Exceptions Report, Seller or its designee is in possession of a complete, true and accurate Purchased Asset File with respect to each Purchased Asset, except for such documents the originals of which have been delivered to the Custodian.

 

  

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(xi)           Adequate Capitalization; No Fraudulent Transfer.  Seller has, as of such Purchase Date, 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 as of the date hereof is paying, its debts as they come due.  Seller has not become, or is presently, financially insolvent nor will Seller be made insolvent by virtue of Seller’s execution of or performance under any of the Transaction Documents within the meaning of the bankruptcy laws or the insolvency laws of any jurisdiction.  Seller has not entered into any Transaction Document or any Transaction pursuant thereto in contemplation of insolvency or with intent to hinder, delay or defraud any creditor.

 

(xii)           No Conflicts or Consents.  Neither the execution and delivery of this Agreement and the other Transaction Documents by Seller, nor the consummation of any of the transactions by it herein or therein contemplated, nor compliance with the terms and provisions hereof or with the terms and provisions thereof, will contravene or conflict with or result in the creation or imposition of (or the obligation to create or impose) any lien upon any of the property or assets of Seller pursuant to the terms of any indenture, mortgage, deed of trust, or other agreement or instrument to which Seller is a party or by which Seller may be bound, or to which Seller may be subject, other than liens created pursuant to the Transaction Documents.  No consent, approval, authorization, or order of any third party is required in connection with the execution and delivery by Seller of the Transaction Documents to which it is a party or to consummate the transactions contemplated hereby or thereby which has not already been obtained.

 

(xiii)           Governmental Approvals.  No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any Governmental Authority is required to authorize, or is required in connection with, (i) the execution, delivery and performance of any Transaction Document to which Seller is or will be a party, (ii) the legality, validity, binding effect or enforceability of any such Transaction Document against Seller or (iii) the consummation of the transactions contemplated by this Agreement (other than the filing of certain financing statements in respect of certain security interests).

 

(xiv)           Organizational Documents.  Seller has delivered to Buyer certified copies of its organization documents, together with all amendments thereto, if any.

 

(xv)           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 the Purchased Assets, (ii) no agreements on the part of Seller to issue, sell or distribute the Purchased Assets, and (iii) no obligations on the part of Seller (contingent or otherwise) to purchase, redeem or otherwise acquire any securities or interests therein, except as contemplated by the Transaction Documents.

 

(xvi)           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.

 

  

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(xvii)           Taxes.  Seller has filed or caused to be filed all tax returns that, to the knowledge of Seller, would be delinquent if they had not been filed on or before the date hereof and has paid all taxes 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 and all other taxes, fees or other charges imposed on it and any of its assets by any Governmental Authority except for any such taxes as (A) are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided in accordance with GAAP or (B) are de minimis in amount; no tax liens have been filed against any of Seller’s assets and, no claims are being asserted with respect to any such taxes, fees or other charges.

 

(xviii)           Judgments/Bankruptcy.  Except as disclosed in writing to Buyer, there are no judgments against Seller unsatisfied of record or docketed in any court located in the United States of America and no Act of Insolvency has ever occurred with respect to Seller.

 

(xix)           Solvency.  Neither the Transaction Documents nor any Transaction thereunder are entered into in contemplation of insolvency or with intent to hinder, delay or defraud any of Seller’s creditors.  The transfer of the Purchased Assets subject hereto and the obligation to repurchase such Purchased Assets is not undertaken with the intent to hinder, delay or defraud any of Seller’s creditors.  As of the 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 Purchased Assets pursuant hereto and the obligation to repurchase such Purchased Asset (i) will not 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 the transfer and sale of the Purchased Assets and the Purchased Items subject hereto.  No petition in bankruptcy has been filed against Seller in the last ten (10) years, and Seller has not in the last ten (10) years made an assignment for the benefit of creditors or taken advantage of any debtors relief laws.  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.  On the Purchase Date for each Transaction, Seller shall be deemed to repeat all of the foregoing representations made by it.

 

(xx)           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 will 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 will violate, or be inconsistent with, any provision of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

  

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(xxi)           Full and Accurate Disclosure.  No information contained in the Transaction Documents, or any written statement furnished by or on behalf of Seller pursuant to the terms of the Transaction Documents, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made.

 

(xxii)           Financial Information.  All financial data concerning Seller and the Purchased Assets that has been delivered by or on behalf of Seller to Buyer is true, complete and correct in all material respects.  All financial data concerning Seller has been prepared fairly in accordance with GAAP (except that such financial statement may be consolidated to the extent required under GAAP).  All financial data concerning the Purchased Assets has been prepared in accordance with standard industry practices.  Since the delivery of such data, except as otherwise disclosed in writing to Buyer, there has been no change in the financial position of Seller or the Purchased Assets, or in the results of operations of Seller, which change is reasonably likely to have a Material Adverse Effect on Seller.

 

(xxiii)           Hedging Transactions.  To the actual knowledge of Seller, as of the Purchase Date for any Purchased Asset that is subject to a Hedging Transaction, each such Hedging Transaction is in full force and effect in accordance with its terms, each counterparty thereto is an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty, and no “Termination Event”, “Event of Default”, “Potential Event of Default” or any similar event, however denominated, has occurred and is continuing with respect thereto.

 

(xxiv)           Servicing Agreements.  Seller has delivered to Buyer all Servicing Agreements pertaining to the Purchased Assets and to the actual knowledge of Seller, as of the date of this Agreement and as of the Purchase Date for the purchase of any Purchased Assets subject to a Servicing Agreement, each such Servicing Agreement is in full force and effect in accordance with its terms and no default or event of default exists thereunder.

 

(xxv)           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 upon any advice from Buyer as to any aspect of the Transactions, including without limitation, the legal, accounting or tax treatment of such Transactions.

  

  

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(xxvi)           Patriot Act.

 

(A)           Seller is in compliance, in all material respects, with the (i) 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 (USA Patriot Act of 2001).  No part of the proceeds of any Transaction will be used, directly or indirectly, 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.

 

(B)           Seller agrees that, from time to time upon the prior written request of Buyer, it shall (i) execute and deliver such further documents, provide such additional information and reports and perform such other acts as Buyer may reasonably request in order to insure compliance with the provisions hereof (including, without limitation, compliance with the USA Patriot Act of 2001 and to fully effectuate the purposes of this Agreement and (ii) provide such opinions of counsel concerning matters relating to this Agreement as Buyer may reasonably request; provided, however, that nothing in this Article 8(b)(xxvi) shall be construed as requiring Buyer to conduct any inquiry or decreasing Seller’s responsibility for its statements, representations, warranties or covenants hereunder.  In order to enable Buyer and its Affiliates to comply with any anti-money laundering program and related responsibilities including, but not limited to, any obligations under the USA Patriot Act of 2001 and regulations thereunder, Seller on behalf of itself and its Affiliates makes the following representations and covenants to Buyer and its Affiliates (for purposes of this Article 8(b)(xxvi), the “Seller Entities”) that neither Seller, nor, to Seller’s actual knowledge, any of its Affiliates, is a Prohibited Investor, and Seller is not acting on behalf of or for the benefit of any Prohibited Investor.  Seller agrees to promptly notify Buyer or a person appointed by Buyer to administer their anti-money laundering program, if applicable, of any change in information affecting this representation and covenant.

 

(xxvii)                       Environmental Matters.

 

(A)           No properties owned or leased by Seller and no properties formerly owned or leased by Seller, its predecessors, or any former Subsidiaries or predecessors thereof (the “Properties”), contain, or have previously contained, any Materials of Environmental Concern in amounts or concentrations which constitute or constituted a violation of, or reasonably could be expected to give rise to liability under, Environmental Laws;

 

(B)           Seller is in compliance with all applicable Environmental Laws, and there is no violation of any Environmental Laws which reasonably would be expected to interfere with the continued operations of Seller;

 

(C)           Seller has not received any notice of violation, alleged violation, non-compliance, liability or potential liability under any Environmental Law, nor does Seller have knowledge that any such notice will be received or is being threatened;

 

  

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(D)           Materials of Environmental Concern have not been transported or disposed by Seller in violation of, or in a manner or to a location which reasonably would be expected to give rise to liability under, any applicable Environmental Law, nor has Seller generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that reasonably would be expected to give rise to liability under, any applicable Environmental Law;

 

(E)           No judicial proceedings or governmental or administrative action is pending, or, to the knowledge of Seller, threatened, under any Environmental Law which Seller is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements arising out of judicial proceedings or governmental or administrative actions, outstanding under any Environmental Law to which Seller is a party;

 

(F)           There has been no release or threat of release of Materials of Environmental Concern in violation of or in amounts or in a manner that reasonably would be expected to give rise to liability under any Environmental Law for which Seller may become liable; and

 

(G)           Each of the representations and warranties set forth in the preceding clauses (A) through (G) is true and correct with respect to each parcel of real property owned or operated by Seller.

 

(xxviii)                      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 Buyer, of a bank holding company of which Buyer is a Subsidiary, or of any Subsidiary, of a bank holding company of which Buyer is a Subsidiary, of any bank at which Buyer maintains a correspondent account or of any lender which maintains a correspondent account with Buyer.

 

(xxix)           Office of Foreign Assets Control.  Seller is not a person (i) whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) who engages in any dealings or transactions prohibited by Section 2 of such executive order, or to the best of Seller’s knowledge,  is otherwise associated with any such person in any manner in violation of Section 2 of such executive order, or (iii) on the current list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order.

 

  

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(xxx)           Notice Address; Jurisdiction of Organization.  On the date of this Agreement, Seller’s address for notices is as specified on Annex I.  Seller’s jurisdiction of organization is Delaware.  The location where Seller keeps its books and records, including all computer tapes and records relating to the Collateral and Purchased Items, is its notice address.  Seller may change its address for notices and for the location of its books and records by giving Buyer written notice of such change.

 

(xxxi)           Anti-Money Laundering Laws.  Seller either (1) is entirely exempt from or (2) has otherwise fully complied with all applicable anti-money laundering laws and regulations (collectively, the “Anti-Money Laundering Laws”), by (A) establishing an adequate anti-money laundering compliance program as required by the Anti-Money Laundering Laws, (B) conducting the requisite due diligence in connection with the origination of each Purchased Asset for purposes of the Anti-Money Laundering Laws, including with respect to the legitimacy of the related obligor (if applicable) and the origin of the assets used by such obligor to purchase the property in question, and (C) maintaining sufficient information to identify the related obligor (if applicable) for purposes of the Anti-Money Laundering Laws.

(xxxii)          Ownership.  Seller is and shall remain at all times a wholly owned subsidiary of Guarantor.

   

ARTICLE 9

  

NEGATIVE COVENANTS OF SELLER

On and as of the date hereof and each Purchase Date and until this Agreement is no longer in force with respect to any Transaction, Seller shall not without the prior written consent of Buyer:

 

(a)          take any action that would directly or indirectly impair or adversely affect Buyer’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 the Purchased Assets (or any of them) to any Person other than Buyer, or engage in repurchase transactions or similar transactions with respect to the Purchased Assets (or any of them) with any Person other than Buyer;

 

(c)          modify in any material respect any Servicing Agreements to which it is a party, without the consent of Buyer in its sole and absolute discretion;

 

(d)          create, incur or permit to exist any lien, encumbrance or security interest in or on any of the Purchased Assets, the other Collateral or Purchased Items, other than the security interest granted by Seller pursuant to Article 5 of this Agreement;

 

(e)          create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for the following, hereinafter referred to as the “Permitted Liens”:

 

  

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(i)           Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided, that adequate reserves with respect thereto are maintained on the books of the related borrower or its subsidiaries, as the case may be, in conformity with GAAP; and

 

(ii)           Liens created pursuant to the Transaction Documents;

 

(f)          enter into any transaction of merger or consolidation or amalgamation, that is likely to have a material adverse effect on the creditworthiness or financial condition of Seller, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution), sell all or substantially all of its assets without the consent of Buyer in its sole and absolute discretion;

 

(g)          consent or assent to any amendment or supplement to, or termination of, any note, loan agreement, mortgage or guarantee relating to the Purchased Assets or other agreement or instrument relating to the Purchased Assets other than in accordance with Article 26;

 

(h)          permit the organizational documents or organizational structure of Seller to be amended without the prior written consent of Buyer in its sole and absolute discretion;

 

(i)          acquire or maintain any right or interest in any Purchased Asset or Underlying Mortgaged Property that is senior to or pari passu with the rights and interests of Buyer therein under this Agreement and the other Transaction Documents;

 

(j)          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; and

 

(k)          enter into any Hedging Transaction with respect to any Purchased Asset with any entity that is not an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty;

 

(l)          from and after August 9, 2012, and through and including March 31, 2013, permit the aggregate Repurchase Price of all Purchased Assets under this Agreement to exceed an amount equal to $15,632,725.46;

 

(m)          permit more than one of Stephen Plavin, Geoff  Jervis and Tom Ruffing to discontinue their current employment with his current responsibilities throughout the term of this Agreement; provided, that if more than one of Stephen Plavin, Geoff  Jervis and Tom Ruffing are no longer so employed, one replacement (if two discontinue) or two replacements (if all three discontinue), as appropriate, acceptable to Buyer in its sole and absolute discretion shall be appointed within thirty (30) days after his departure; and

 

(n)          (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

 

  

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Compliance with covenants in this Article 9 must be evidenced by a compliance certificate furnished together therewith as further provided in Article 10(j)(ii) below, and compliance with all such covenants are subject to verification by Buyer.

 

ARTICLE 10

 

AFFIRMATIVE COVENANTS OF SELLER

(a)          Seller shall promptly notify Buyer of any material adverse change in its business operations and/or financial condition; provided, however, that nothing in this Article 10 shall relieve Seller of its obligations under this Agreement.

 

(b)          Seller shall provide Buyer with copies of such documents as Buyer may reasonably request evidencing the truthfulness of the representations set forth in Article 8.

 

(c)          Seller shall (1) defend the right, title and interest of Buyer in and to the Collateral and Purchased Items against, and take such other action as is necessary to remove, the Liens, security interests, claims and demands of all Persons (other than security interests by or through Buyer) and (2) at Buyer’s reasonable request, take all action necessary to ensure that Buyer will have a first priority security interest in the Purchased Assets subject to any of the Transactions in the event such Transactions are recharacterized as secured financings.

 

(d)          Seller shall notify Buyer and the Depository of the occurrence of any Default or Event of Default with respect to Seller as soon as possible but in no event later than the immediately succeeding Business Day after obtaining actual knowledge of such event.

 

(e)          Seller shall cause the special servicer rating of the special servicer with respect to all mortgage loans underlying Purchased Assets to be no lower than “average” by S&P to the extent Seller controls or is entitled to control the selection of the special servicer.  In the event the special servicer rating with respect to any Person acting as special servicer for any mortgage loans underlying Purchased Assets shall be below “average” by S&P, or if an Act of Insolvency occurs with respect to Seller or Guarantor, Buyer shall be entitled to transfer special servicing with respect to all Purchased Assets to an entity satisfactory to Buyer, to the extent Seller controls or is entitled to control the selection of the special servicer.

 

(f)          Seller shall promptly (and in any event not later than two (2) Business Days following receipt) deliver to Buyer (i) any notice of the occurrence of an event of default under or report received by Seller pursuant to the Purchased Asset Documents; (ii) any notice of transfer of servicing under the Purchased Asset Documents and (iii) any other information with respect to the Purchased Assets that may be requested by Buyer from time to time.

 

  

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(g)          Seller will permit Buyer or its designated representative to inspect Seller’s records with respect to the Collateral and the Purchased Items and the conduct and operation of its business related thereto upon reasonable prior written notice from Buyer or its designated representative, at such reasonable times and with reasonable frequency, and to make copies of extracts of any and all thereof, subject to the terms of any confidentiality agreement between Buyer and Seller.  Buyer shall act in a commercially reasonable manner in requesting and conducting any inspection relating to the conduct and operation of Seller’s business.

 

(h)          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 Buyer’s agent, hold the same in trust for Buyer and deliver the same forthwith to Buyer (or the Custodian, as appropriate) in the exact form received, duly endorsed by Seller to Buyer, if required, together with an undated bond power covering such certificate duly executed in blank to be held by Buyer 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 Buyer, hold such money or property in trust for Buyer, segregated from other funds of Seller, as additional collateral security for the Transactions.

 

(i)          At any time from time to time upon the reasonable request of Buyer, at the sole expense of Seller, Seller will promptly and duly execute and deliver such further instruments and documents and take such further actions as Buyer may deem necessary or desirable to (i) obtain or preserve the security interest granted hereunder, (ii) 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 Closing Date or in the future) and (iii) obtain or preserve the rights and powers herein granted (including, among other things, filing such UCC financing statements as Buyer may request).  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 Buyer, duly endorsed in a manner satisfactory to Buyer, to be itself held as Collateral pursuant to the Transaction Documents.

 

(j)          Seller shall provide, or to cause to be provided, to Buyer the following financial and reporting information:

 

(i)           Within fifteen (15) calendar days after each month-end, a monthly reporting package substantially in the form of Exhibit III-A attached hereto (the “Monthly Reporting Package”);

 

(ii)            Within forty-five (45) calendar days after the last day of each of the first three fiscal quarters in any fiscal year, a quarterly reporting package substantially in the form of Exhibit III-B attached hereto (the “Quarterly Reporting Package”);

 

(iii)           Within ninety (90) calendar days after the last day of its fiscal year, an annual reporting package substantially in the form of Exhibit III-C attached hereto (the “Annual Reporting Package”); and

 

(iv)           Upon Buyer’s request:

 

  

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(A)           a listing of any changes in Hedging Transactions with Qualified Hedge Counterparties, the names of the Qualified Hedge Counterparties and the material terms of such Hedging Transactions, delivered within ten (10) days after Buyer’s request; and

 

(B)           copies of Seller’s and Guarantor’s Federal Income Tax returns, if any, delivered within thirty (30) days after the earlier of (A) filing or (B) the last filing extension period.

 

Notwithstanding anything to the contrary in Article 11, if Seller fails to deliver the complete Monthly Reporting Package described in clause (j)(i) above as a result of the failure of the related borrower to deliver any information as required by the underlying loan documents, then Seller shall immediately repurchase the related Purchased Asset at the Repurchase Price; provided, however, that Seller shall have a period of seven (7) calendar days from the date of delivery of the incomplete Monthly Reporting Package to provide any missing information.

 

(k)          Seller shall make a representative available to Buyer every month for attendance at a telephone conference, the date of which to be mutually agreed upon by Buyer and Seller, regarding the status of each Purchased Asset, Seller’s compliance with the requirements of Articles 9 and 10, and any other matters relating to the Transaction Documents or Transactions that Buyer wishes to discuss with Seller.

 

(l)          Seller shall and shall cause Guarantor to at all times (i) comply with all contractual obligations, (ii) comply in all respects with all 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 Seller and Guarantor or any of its assets and Seller and Guarantor shall do or cause to be done all things necessary to preserve and maintain in full force and effect its legal existence, and all licenses material to its business and (iii) maintain and preserve its legal existence and all of its material rights, privileges, licenses and franchises necessary for the operation of its business (including, without limitation, preservation of all lending licenses held by Seller and of Seller’s status as a “qualified transferee” (however denominated) under all documents which govern the Purchased Assets).

 

(m)          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 required under GAAP or as a matter of Requirements of Law; provided, that (i) appropriate notation shall be made on such financial statements to indicate the separateness of the Seller from such Affiliate and to indicate that the Seller’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (ii) such assets shall also be listed on the Seller’s own separate balance sheet) and file its own tax returns (except to the extent consolidation is required or permitted under Requirements of Law).  Seller shall cause Guarantor to at all times keep proper books of records and accounts 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.

 

  

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(n)          Seller shall observe, perform and satisfy all the terms, provisions, covenants and conditions 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 pay and discharge all taxes, levies, liens and other charges on its assets and on the Collateral that, in each case, in any manner would create any lien or charge upon the Collateral, other than any such taxes that are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided in accordance with GAAP.

 

(o)          Seller shall advise Buyer in writing of the opening of any new chief executive office or the closing of any such office of Seller or Guarantor and of any change in Seller’s or Guarantor’s name or the places where the books and records pertaining to the Purchased Assets are held not less than fifteen (15) Business Days prior to taking any such action.

 

(p)          Seller will maintain records with respect to the Collateral and Purchased Items and the conduct and operation of its business with no less a degree of prudence than if the Collateral and Purchased Items were held by Seller for its own account and will furnish Buyer, upon reasonable request by Buyer or its designated representative, with reasonable information obtainable by Seller with respect to the Collateral and Purchased Items and the conduct and operation of its business.

 

(q)          Seller shall provide Buyer and its Affiliates with reasonable access plus any such additional reports as Buyer may request.  Upon two (2) Business Day’s prior notice (unless a Default or an Event of Default shall have occurred and is continuing, in which case, no prior notice shall be required), during normal business hours, Seller shall allow Buyer to (i) review any operating statements, occupancy status and other property level information with respect to the underlying real estate directly or indirectly securing or supporting the Purchased Assets that either is in Seller’s possession or is available to Seller, (ii) examine, copy (at Buyer’s expense) and make extracts from its books and records, to inspect any of its Properties, and (iii) discuss Seller’s business and affairs with its officers.

 

(r)          Seller shall maintain or replace the Hedging Transactions with respect to each of the Hedge-Required Assets that are in place as of the Closing Date, to the extent necessary to hedge interest rate risk associated with the Purchase Price on such Hedge-Required Assets, in a manner reasonably acceptable to Buyer, to the extent that such Hedging Transactions will not give rise to non-qualifying REIT income under Section 856 of the Code.

 

(s)          Seller shall take all such steps as Buyer deems necessary to perfect the security interest granted pursuant to Article 5 in the Hedging Transactions, shall take such action as shall be necessary or advisable to preserve and protect Seller’s interest under all such Hedging Transactions (including, without limitation, requiring the posting of any required additional collateral thereunder, and hereby authorizes Buyer to take any such action that Seller fails to take after demand therefor by Buyer.  Seller shall provide the Custodian with copies of all documentation relating to Hedging Transactions with Qualified Hedge Counterparties promptly after entering into same.  All Hedging Transactions, if any, entered into by Seller with Buyer or any of its Affiliates in respect of any Purchased Asset shall be terminated contemporaneously with the repurchase of such Purchased Asset on the Repurchase Date therefor.

 

  

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(t)          Seller shall:

 

(i)           continue to engage in business of the same general type as now conducted by it or otherwise as approved by Buyer prior to the date hereof and maintain and preserve its legal existence and all of its material rights, privileges, licenses and franchises necessary for the operation of its business (including, without limitation, preservation of all lending licenses held by Seller and of Seller’s status as a “qualified transferee” (however denominated) under all documents which govern the Purchased Assets);

 

(ii)           comply with all contractual obligations and with the requirements of all applicable laws, rules, regulations and orders of Governmental Authorities (including, without limitation, all environmental laws) if failure to comply with such requirements would be reasonably likely (either individually or in the aggregate) to have a Material Adverse Effect;

 

(iii)           keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied;

 

(iv)           not (a) cause or permit any change to be made in its name, organizational identification number, identity or corporate structure, or the places where the books and records pertaining to the Purchased Asset are held, (b) cause or permit the opening of any new chief executive office or the closing of any such office of Seller, or (c) change its jurisdiction of organization, unless it shall have provided Buyer thirty (30) days’ prior written notice of such change and shall have first taken all action required by Buyer for the purpose of perfecting or protecting the lien and security interest of Buyer established hereunder;

 

(v)           pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained;

 

(vi)           own no assets, and shall not engage in any business, other than the assets and transactions specifically contemplated by this Agreement and any other Transaction Document;

 

(vii)           not incur any Indebtedness or other obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than as otherwise permitted under this Agreement;

 

(viii)           not make any loans or advances to any Affiliate or third party 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 Transaction Documents;

 

  

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

 

(x)           comply with the provisions of its Governing Documents;

 

(xi)           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;

 

(xii)           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;

 

(xiii)           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;

 

(xiv)           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);

 

(xv)           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;

 

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

 

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

 

(xviii)           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;

 

(xix)           maintain a sufficient number of employees in light of contemplated business operations;

 

(xx)           use separate stationary, invoices and checks bearing its own name;

 

(xxi)           allocate fairly and reasonably any overhead for shared office space and for services performed by an employee of an Affiliate;

 

(xxii)           not pledge its assets to secure the obligations of any other Person; and

 

  

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(xxiii)           not form, acquire or hold any Subsidiary or own any equity interest in any other entity, except, subject to Buyer’s prior written consent, as may be required to maintain REIT compliance.

 

(u)          With respect to any Purchased Asset that is not serviced by Buyer, Seller shall cause each servicer of such Purchased Assets to provide to Buyer and to the Custodian via Electronic Transmission, promptly upon request by Buyer a Servicing Tape for the month (or any portion thereof) prior to the date of Buyer’s request; provided, that to the extent any servicer does not provide any such Servicing Tape, Seller shall prepare and provide to Buyer and the Custodian via Electronic Transmission a remittance report containing the servicing information that would otherwise be set forth in the Servicing Tape; providedfurther, that regardless of whether Seller at any time delivers any such remittance report, Seller shall at all times use commercially reasonable efforts to cause each servicer to provide each Servicing Tape in accordance with this Article 10(u).

 

(v)          With respect to each Eligible Asset to be purchased hereunder that is an Eligible Loan, Seller shall notify Buyer in writing of the creation of any right or interest in such Eligible Loan or related Underlying Mortgaged Property that is senior to or pari passu with the rights and interests that are to be transferred to Buyer under this Agreement and the other Transaction Documents, and whether any such interest will be held or obtained by Seller or an Affiliate of Seller.

 

(w)          Seller shall be solely responsible for the fees and expenses of the Custodian, Depository and Servicer.

 

ARTICLE 11

 

EVENTS OF DEFAULT; REMEDIES

 

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

 

(i)           Seller or Guarantor shall fail to repurchase Purchased Assets upon the applicable Repurchase Date;

 

(ii)           Buyer shall fail to receive on any Remittance Date the accreted value of the Price Differential (less any amount of such Price Differential previously paid by Seller to Buyer) (including, without limitation, in the event the Income paid or distributed on or in respect of the Purchased Assets is insufficient to make such payment and Seller does not make such payment or cause such payment to be made) (except that such failure shall not be an Event of Default by Seller if sufficient Income, other than Principal Payments, is on deposit in the  Depository Account and the Depository fails to remit such funds to Buyer);

 

(iii)           Seller or Guarantor shall fail to make any payment not otherwise addressed under this Article 11(a) owing to Buyer that has become due, whether by acceleration or otherwise under the terms of this Agreement, which failure is not remedied within three (3) Business Days of notice thereof;

 

  

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(iv)           Seller shall default in the observance or performance of any agreement contained in Article 9 of this Agreement and, such default shall not be cured within five (5) Business Days after notice by Buyer to Seller thereof;

 

(v)           an Act of Insolvency occurs with respect to Seller or Guarantor;

 

(vi)           either Seller or Guarantor shall admit to any Person its inability to, or its intention not to, perform any of its respective obligations under any Transaction Document;

 

(vii)           the Custodial Agreement, the Depository Agreement or any other Transaction Document or a replacement therefor acceptable to Buyer shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by Seller;

 

(viii)           Seller or Guarantor shall be in default under (i) any Indebtedness of Seller or Guarantor, as applicable, which default (1) involves the failure to pay a matured obligation of any amount with respect to Seller or $250,000, with respect to Guarantor or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness with respect to Seller, or if the aggregate amount of the Indebtedness in respect of which such default or defaults shall have occurred is at least $250,000, with respect to Guarantor; or (ii) any other material contract to which Seller or Guarantor is a party which default (1) involves the failure to pay a matured obligation or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary of such contract in any amount, with respect to Seller or $250,000, with respect to Guarantor;

 

(ix)           Seller or Guarantor shall be in default under any Indebtedness to Buyer or any of its respective present or future Affiliates, which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness;

 

(x)           (i) Seller or an ERISA Affiliate shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan that is not exempt from such Sections of ERISA and the Code, (ii) any material “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of Seller or any ERISA Affiliate, (iii) a Reportable Event (as referenced in Section 4043(b)(3) of ERISA) shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of Buyer, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Plan shall terminate for purposes of Title IV of ERISA, (v) Seller or any ERISA Affiliate shall, or in the reasonable opinion of Buyer is likely to, incur any liability in connection with a withdrawal from, or the insolvency or reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect;

 

  

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(xi)           either (A) the Transaction Documents shall for any reason not cause, or shall cease to cause, Buyer to be the owner free of any adverse claim of any of the Purchased Assets, and such condition is not cured by Seller within five (5) Business Days after notice thereof from Buyer to Seller, or (B) if a Transaction is recharacterized as a secured financing, and 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 Buyer in any of the Purchased Assets;

 

(xii)           an “Event of Default,” “Termination Event,” “Potential Event of Default” or other default or breach, however defined therein, occurs under any Hedging Transaction on the part of Seller, or the counterparty to Seller on any such Hedging Transaction with a Qualified Hedge Counterparty ceases to be a Qualified Hedge Counterparty, that is otherwise not cured within any applicable cure period thereunder or, if no cure period exists thereunder, which is not cured by Seller within three (3) Business Days after notice thereof from an Affiliated Hedge Counterparty or Qualified Hedge Counterparty to Seller;

 

(xiii)           any governmental, regulatory, or self-regulatory authority shall have taken any action to remove, limit, restrict, suspend or terminate the rights, privileges, or operations of Seller or Guarantor, which suspension has a Material Adverse Effect in the determination of Buyer and that is not cured by Seller within fifteen (15) Business Days after notice thereof from Buyer to Seller;

 

(xiv)           any condition shall exist that constitutes a Material Adverse Effect in Buyer’s sole discretion exercised in good faith and that is not cured by Seller within three (3) Business Days after notice thereof from Buyer to Seller;

 

(xv)           any representation made by Seller to Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated (other than the representations and warranties of Seller set forth in Exhibit VI and Article 8(b)(x)(D) or Article 8(b)(viii) (as they relate solely to the Purchased Assets));

 

(xvi)           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 Seller or (b) rendered against Guarantor in an amount greater than $250,000, and remained undischarged or unpaid for a period of sixty (60) days, during which period execution of such judgment is not effectively stayed by bonding over or other means acceptable to Buyer;

 

  

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(xvii)           if Seller shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement, other than as specifically otherwise referred to in this definition of “Event of Default”, and such breach or failure to perform is not remedied within the earlier of fifteen (15) days after (a) delivery of notice thereof to Seller by Buyer, or (b) actual knowledge on the part of Seller of such breach or failure to perform; provided, that, if Buyer determines, in its sole discretion, that any such breach is capable of being cured and such Seller is diligently and continuously pursuing such a cure in good faith but is not able to do so on a timely basis, such Seller shall have an additional period of time, not to exceed thirty (30) additional days, within which to complete such cure;

 

(xviii)           the Guarantee Agreement or a replacement therefor acceptable to Buyer shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by Guarantor or Seller;

 

(xix)           the breach by Guarantor of any term or condition set forth in the Guarantee Agreement or of any representation, warranty, certification or covenant made or deemed made in the Guarantee Agreement by Guarantor or if any certificate furnished by Guarantor to Buyer pursuant to the provisions hereof or thereof or any information with respect to the Purchased Assets furnished in writing on behalf of Guarantor shall prove to have been false or misleading in any respect as of the time made or furnished; and

 

(xx)           (A) an Event of Default (as such term is defined in the Morgan Stanley Facility documents) occurs under the Morgan Stanley Facility or (B) an Event of Default (as such term is defined in the JPMorgan Facility documents) occurs under the JPMorgan Facility.

 

(b)          After the occurrence and during the continuance of an Event of Default, Seller hereby appoints Buyer as attorney-in-fact of Seller for the purpose of carrying out the provisions of this Agreement and taking any action and executing or endorsing any instruments that Buyer may deem necessary or advisable to accomplish the purposes hereof, 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 Buyer:

 

(i)           At the option of Buyer, exercised by written notice to Seller (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency with respect to Seller or Guarantor), the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (the date on which such option is exercised or deemed to have been exercised being referred to hereinafter as the “Accelerated Repurchase Date”).

 

(ii)           If Buyer exercises or is deemed to have exercised the option referred to in Article 11(b)(i) of this Agreement:

 

  

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(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

 

(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 Buyer by the Depository or Seller from time to time pursuant to Article 4 of this Agreement and applied to such Repurchase Price, and (II) any amounts applied to the Repurchase Price pursuant to Article 11(b)(iii) of this Agreement); and

 

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

 

(iii)           Upon the occurrence of an Event of Default with respect to Seller, Buyer may (A) immediately sell, at a public or private sale in a commercially reasonable manner and at such price or prices as Buyer may deem satisfactory any or all of the Purchased Assets, and/or (B) in its sole 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 Market Value of such Purchased Assets 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 this Article 11(b)(iii) shall be applied, (u) first, to the costs and expenses incurred by Buyer in connection with Seller’s default; (v) second, to consequential damages, including, but not limited to, costs of cover and/or Hedging Transactions, if any; (w) third, to actual, out-of-pocket damages incurred by Buyer in connection with Seller’s default, (x) fourth, to the Repurchase Price; (y) fifth, to any Breakage Costs or any other outstanding obligation of Seller to Buyer; and (z) sixth, to return any excess to Seller.

 

(iv)           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, Buyer may elect, in its sole discretion, the time and manner of liquidating any Purchased Assets, and nothing contained herein shall (A) obligate Buyer 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 Buyer.

 

  

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(v)           Seller shall be liable to Buyer and its Affiliates and shall indemnify Buyer and its Affiliates for (A) the amount (including in connection with the enforcement of this Agreement) of all actual out-of-pocket losses, costs and expenses, including reasonable legal fees and expenses, actually incurred by Buyer in connection with or as a consequence of an Event of Default with respect to Seller and (B) all costs incurred by Buyer in connection with Hedging Transactions in the event that Seller, from and after an Event of Default, takes any action to impede or otherwise affect Buyer’s remedies under this Agreement.

 

(vi)           Buyer 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 of the State of New York, 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 Buyer and Seller.  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 Seller’s obligations to Buyer under this Agreement, without prejudice to Buyer’s right to recover any deficiency.

 

(vii)           Subject to the notice and cure periods set forth herein, Buyer may exercise any or all of the remedies available to Buyer immediately upon the occurrence of an Event of Default with respect to Seller 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 Buyer may have.

 

(viii)           Buyer 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 Buyer 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)           As an administrative note to Buyer, and without impairing any right or remedy of Buyer hereunder or creating any duty or obligation of Buyer to Seller or any other Person under this Agreement, it is noted that the Buyer may be required to deliver a notice in connection with actions described in this Article 11(b) pursuant to the Intercreditor Agreement.

  

  

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ARTICLE 12

 

SINGLE AGREEMENT

 

Buyer 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 constitute a single business and contractual relationship and have been made in consideration of each other.  Accordingly, each of Buyer 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.

 

ARTICLE 13

 

RECORDING OF COMMUNICATIONS

 

EACH OF BUYER 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.  EACH OF BUYER AND SELLER HEREBY CONSENTS 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 14

 

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 hand delivered or 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 or (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, to the address specified in Annex I hereto or at such other address and person as shall be designated from time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided for in this Article 14.  A notice shall be deemed to have been given: (w) in the case of hand delivery, at the time of delivery, (x) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day, (y) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day, or (z) in the case of telecopier, upon receipt of answerback confirmation, provided that such telecopied notice was also delivered as required in this Article 14.  A party receiving a notice that does not comply with the technical requirements for notice under this Article 14 may elect to waive any deficiencies and treat the notice as having been properly given.

 

  

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ARTICLE 15

 

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.

 

ARTICLE 16

 

NON-ASSIGNABILITY

 

(a)           Subject to Article 16(b) below, Seller may not assign any of its rights or obligations under this Agreement without the prior written consent of Buyer (not to be unreasonably withheld or delayed) and any attempt by Seller to assign any of its rights or obligations under this Agreement without the prior written consent of Buyer shall be null and void.  Buyer may, without consent of Seller, sell to one or more banks, financial institutions or other entities (“Participants”) participating interests in any Transaction, its interest in the Purchased Assets, or any other interest of Buyer under this Agreement.  Buyer may, at any time and from time to time, assign to any Person (an “Assignee” and together with Participants, each a “Transferee” and collectively, the “Transferees”) all or any part of its rights its interest in the Purchased Assets, or any other interest of Buyer under this Agreement.  Each of Seller and Guarantor agree to cooperate with Buyer 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, this Agreement in order to give effect to such assignment, transfer or sale.

 

  

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(b)           Title to all Purchased Assets and Purchased Items shall pass to Buyer and Buyer shall have free and unrestricted use of all Purchased Assets.  Nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Assets and Purchased Items or otherwise selling, pledging, repledging, transferring, hypothecating, or rehypothecating the Purchased Assets and Purchased Items, all on terms that Buyer may determine in its sole discretion; provided, however, that Buyer shall (i) transfer the Purchased Assets to Seller on the applicable Repurchase Date free and clear of any pledge, lien, security interest, encumbrance, charge or other adverse claim on any of the Purchased Assets and (ii) credit Income and Principal Payments to Seller in accordance with Article 4 hereof.  Nothing contained in this Agreement shall obligate Buyer to segregate any Purchased Assets or Purchased Items transferred to Buyer by Seller.

 

ARTICLE 17

 

GOVERNING LAW

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

ARTICLE 18

 

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.  Without limitation of any of the foregoing, the failure to give a notice pursuant to Articles 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date.

 

ARTICLE 19

 

USE OF EMPLOYEE PLAN ASSETS

 

(a)           If assets of an employee benefit plan subject to any provision of ERISA are intended to be used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction.  The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed.

 

(b)           Subject to the last sentence of subparagraph (a) of this Article 19, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition.

  

  

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(c)           By entering into a Transaction, pursuant to this Article 19, Seller shall be deemed (i) to represent to Buyer that since the date of Seller’s latest such financial statements, there has been no material adverse change in Seller’s financial condition that Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is Seller in any outstanding Transaction involving a Plan Party.

 

ARTICLE 20

 

INTENT

 

(a)           The parties recognize that 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 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

 

 

(b)           It is understood that either party’s right to liquidate Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Article 11 hereof is a contractual right to liquidate such Transaction as described in Sections 555, 559 and 561 of Title 11 of the United States Code, as amended.

 

 

(c)           The parties agree 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 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)           It is understood 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)           It is understood that this Agreement constitutes a “master netting agreement” as defined in Section 101(38A) of Title 11 of the United States Code, as amended, and as used in Section 561 of Title 11 of the United States Code, as amended.

 

 

(f)           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, and that Seller be (except to the extent that Buyer 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 Buyer agree to treat the Transactions as described in the preceding sentence on any and all filings with any U.S. Federal, state, or local taxing authority.

 

  

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ARTICLE 21

  

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 Securities Exchange Act of 1934, 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 22

 

CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

 

(a)           Each party irrevocably and unconditionally (i) submits to the non-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.

 

(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 22 shall affect the right of Buyer to serve legal process in any other manner permitted by law or affect the right of Buyer to bring any action or proceeding against Seller or its property in the courts of other jurisdictions.

  

  

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(d)           SELLER 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.

 

ARTICLE 23

 

NO RELIANCE

 

Each of Buyer and Seller hereby acknowledges, represents and warrants to the other 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 the other party to the Transaction Documents, 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 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 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; and

 

(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, 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.

 

  

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ARTICLE 24

  

INDEMNITY

 

Seller hereby agrees to indemnify Buyer, Buyer’s designee, Buyer’s Affiliates and each of its officers, directors, employees and agents (“Indemnified Parties”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, taxes (including stamp, excise, sales or other taxes that may be payable or determined to be payable with respect to any of the Purchased Assets, Purchased Items or Collateral or in connection with any of the transactions contemplated by this Agreement and the documents delivered in connection herewith, other than income, withholding or other taxes imposed upon Buyer), fees, costs, expenses (including attorneys’ fees and disbursements) or disbursements (all of the foregoing, 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 whatsoever arising out of or in connection with, or relating to, this Agreement or any Transactions hereunder 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 losses resulting from the gross negligence or willful misconduct of Buyer or any other Indemnified Party.  Without limiting the generality of the foregoing, Seller agrees to hold Buyer harmless from and indemnify Buyer 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; provided, that Seller shall not be liable for losses resulting from the gross negligence or willful misconduct of Buyer or any other Indemnified Party.  In any suit, proceeding or action brought by Buyer in connection with any Purchased Asset for any sum owing thereunder, or to enforce any provisions of any Purchased Asset, Seller will save, indemnify and hold Buyer harmless from and against all expense (including attorneys’ fees), loss or damage 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 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 obligor or its successors from Seller.  Seller also agrees to reimburse Buyer as and when billed by Buyer for all Buyer’s reasonable costs and out-of-pocket expenses incurred in connection with Buyer’s due diligence reviews with respect to the Purchased Assets (including, without limitation, those incurred pursuant to Article 25 and Article 3 (including, without limitation, all Pre-Purchase Legal Expenses, even if the underlying prospective Transaction for which they were incurred does not take place for any reason) and the enforcement or the preservation of Buyer’s rights under this Agreement, any Transaction Documents or Transaction contemplated hereby, including without limitation the fees and disbursements of its counsel.  Seller hereby acknowledges that the obligation of Seller hereunder is a recourse obligation of Seller.  This Article 24 shall survive the termination of this Agreement and the repurchase by Seller of any or all of the Purchased Assets.

 

ARTICLE 25

 

DUE DILIGENCE

 

  

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Seller acknowledges that Buyer has the right to perform continuing due diligence reviews with respect to the Purchased Assets, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and Seller agrees that upon reasonable prior notice to Seller, Buyer or its authorized representatives will be permitted during normal business hours 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 Seller, any other servicer or subservicer and/or the Custodian.  Seller agrees to reimburse Buyer for any and all reasonable out-of-pocket costs and expenses incurred by Buyer with respect to the Purchased Assets during the term of this Agreement, which shall be paid by Seller to Buyer within five (5) days after receipt of an invoice therefor.  Seller also shall make available to Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Purchased Asset Files and the Purchased Assets.  Without limiting the generality of the foregoing, Seller acknowledges that Buyer may enter into Transactions with Seller based solely upon the information provided by Seller to Buyer and the representations, warranties and covenants contained herein, and that Buyer, 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.  Buyer may underwrite such Purchased Assets itself or engage a third party underwriter to perform such underwriting.  Seller agrees to cooperate with Buyer and any third party underwriter in connection with such underwriting, including, but not limited to, providing Buyer 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 Seller.  Seller further agrees that Seller shall reimburse Buyer for any and all attorneys’ fees, costs and expenses incurred by Buyer in connection with continuing due diligence on Eligible Assets and Purchased Assets.

 

ARTICLE 26

 

SERVICING

 

(a)           Notwithstanding the purchase and sale of the Purchased Assets hereby, Seller, Servicer or a third party servicer approved by Buyer shall service the Purchased Assets that are Eligible Loans (such Purchased Assets, “Serviced Assets”) for the benefit of Buyer and, if Buyer shall exercise its rights to pledge or hypothecate the Serviced Assets prior to the Repurchase Date pursuant to Article 7, for the benefit of Buyer’s assigns.  Seller shall service or cause Servicer to service the Serviced Assets at Seller’s sole cost and for the benefit of Buyer in accordance with Accepted Servicing Practices approved by Buyer in the exercise of its reasonable business judgment and maintained by other prudent mortgage or mezzanine lenders with respect to mortgage and/or mezzanine loans similar to the Serviced Assets, provided, however, that the obligations of Seller to service any of the Serviced Assets shall cease, at Buyer’s option, upon the earliest of (i) an Event of Default, or (ii) the delivery by Buyer to Seller of at least five (5) days’ prior written notice of the decision by Buyer to transfer the servicing rights of any or all of the Serviced Assets to either Servicer or another third party servicer selected by Buyer.  In either case, Seller shall take all actions necessary to effectuate the underlying servicing transfer as expeditiously as possible.  Notwithstanding the foregoing, neither Seller nor Servicer shall take any action or effect any modification or amendment to any Purchased Asset without first having given prior notice thereof to Buyer in each such instance and receiving the prior written consent of Buyer.

 

  

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(b)           Seller agrees that Buyer is the owner of all servicing records, including but not limited to any and all servicing agreements and pooling and servicing agreements (including, without limitation any “Interim Servicing Agreement” with Servicer) (collectively, the “Servicing Agreements”), 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 grants Buyer a security interest in all servicing fees and rights relating to the Purchased Assets and all Servicing Records to secure the obligation of Seller or its designee to service in conformity with this Article 26 and any other obligation of Seller to Buyer.  Seller covenants to safeguard such Servicing Records and to deliver them promptly to Buyer or its designee (including the Custodian) at Buyer’s request.

 

(c)           Upon the occurrence and during the continuance of an Event of Default, Buyer may, in its sole discretion, (i) sell its right to the Purchased Assets on a servicing released basis or (ii) terminate Seller, Servicer or any sub-servicer of the Purchased Assets with or without cause, in each case without payment of any termination fee.

 

(d)           Seller shall not employ sub-servicers to service the Purchased Assets without the prior written approval of Buyer.  If the Purchased Assets are serviced by a sub-servicer, Seller shall, irrevocably assign all rights, title and interest (if any) in the Servicing Agreements in the Purchased Assets to Buyer.

 

(e)           Seller shall cause all servicers (other than Servicer) and sub-servicers engaged by Seller to execute a Servicer Notice with Buyer acknowledging Buyer’s security interest and agreeing that each servicer and/or sub-servicer shall immediately transfer all Income with respect to the Purchased Assets to Servicer for deposit into the Depository Account, and so long as a Purchased Asset is subject to a Transaction, following notice from Buyer to Seller of an Event of Default under this Agreement, each such servicer or sub-servicer shall take no action under this Agreement with regard to such Purchased Asset other than as specifically directed by Buyer.

 

(f)           The payment of servicing fees shall be subordinate to payment of amounts outstanding under any Transaction and this Agreement.

 

(g)           For the avoidance of doubt, Seller retains no economic rights to the servicing, other than Seller’s rights under the Servicing Agreement or any other servicing agreement related to the Purchased Assets.  As such, Seller expressly acknowledges that the Purchased Assets are sold to Buyer on a “servicing released” basis with such servicing retained by the Servicer.

 

(h)           Seller shall provide prior written notice to Buyer of any proposed servicing-related decision with regard to the Purchased Asset.

  

  

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ARTICLE 27

 

TERMS OF OTHER REPURCHASE OR CREDIT FACILITIES

 

In the event that Seller or any Affiliate thereof has amended a repurchase agreement, warehouse facility, credit facility or other similar arrangement after the date hereof with any Person with terms more favorable to Buyer (as determined by Buyer in its sole discretion) with respect to any financial covenant, including without limitation a covenant covering the same or similar subject matter set forth in the Guarantee Agreement or any of the other Transaction Documents, the applicable terms of the Transaction Documents shall be deemed automatically to include such more favorable terms, other than with regard to pricing.

 

ARTICLE 28

 

MISCELLANEOUS

 

(a)           All rights, remedies and powers of Buyer 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 Buyer 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, Buyer 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)           Without limiting the rights and remedies of Buyer under the Transaction Documents, Seller shall pay Buyer’s reasonable actual out-of-pocket costs and expenses, including reasonable fees and expenses of accountants, attorneys and advisors, incurred in connection with the preparation, negotiation, execution and consummation of, and any amendment, supplement or modification to, the Transaction Documents and the Transactions thereunder, whether or not such Transaction Document (or amendment thereto) or Transaction is ultimately consummated.  Seller agrees to pay Buyer on demand all costs and expenses (including reasonable expenses for legal services of every kind) of any subsequent enforcement of any of the provisions hereof, or of the performance by Buyer of any obligations of Seller in respect of the Purchased Assets, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement in respect of any of the Collateral or Purchased Items and for the custody, care or preservation of the Collateral or Purchased Items (including insurance costs) and defending or asserting rights and claims of Buyer in respect thereof, by litigation or otherwise.  In addition, Seller agrees to pay Buyer on demand all reasonable costs and expenses (including reasonable expenses for legal services) incurred in connection with the maintenance of the  Depository Account and registering the Collateral and Purchased Items in the name of Buyer or its nominee.  All such expenses shall be recourse obligations of Seller to Buyer under this Agreement.

 

  

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(e)           In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of such rights, Seller hereby grants to Buyer and its Affiliates a right of offset, to secure repayment of all amounts owing to Buyer or its Affiliates by Seller under the Transaction Documents, upon any and all monies, securities, collateral or other property of Seller and the proceeds therefrom, now or hereafter held or received by Buyer or its Affiliates or any entity under the control of Buyer or its Affiliates and its respective successors and assigns (including, without limitation, branches and agencies of Buyer, wherever located), for the account of Seller, whether for safekeeping, custody, pledge, transmission, collection, or otherwise, and also upon any and all deposits (general or specified) and credits of Seller at any time existing.  Buyer 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 offset, appropriate, apply and enforce such right of offset against any and all items hereinabove referred to against any amounts owing to Buyer or its Affiliates by Seller under the Transaction Documents, irrespective of whether Buyer 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.  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 Transaction Documents, and Buyer and its Affiliates shall be entitled to exercise the rights of offset provided for above.  ANY AND ALL RIGHTS TO REQUIRE BUYER OR ITS AFFILIATES TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL OR PURCHASED ITEMS THAT SECURE THE AMOUNTS OWING TO BUYER OR ITS AFFILIATES BY SELLER UNDER THE TRANSACTION DOCUMENTS, PRIOR TO EXERCISING THEIR RIGHT OF OFFSET WITH RESPECT TO SUCH MONIES, SECURITIES, COLLATERAL, DEPOSITS, CREDITS OR OTHER PROPERTY OF SELLER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER.

 

(f)           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.

 

(g)           This Agreement 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.

 

(h)           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.

  

  

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(i)           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.

 

(j)           Wherever pursuant to this Agreement, Buyer 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, Buyer in its sole discretion, Buyer 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 Buyer shall be final and conclusive.

 

(k)           Each Affiliated Hedge Counterparty is an intended third party beneficiary of this Agreement and the parties hereto agree that this Agreement shall not be amended or otherwise modified without the written consent of each Affiliated Hedge Counterparty, such consent not to be unreasonably withheld.

 

[REMAINDER OF PAGE LEFT BLANK]

 

  

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

 

 

	 	

BUYER:

CITIGROUP FINANCIAL PRODUCTS INC., a Delaware corporation

	 
	 	 	 	 	 
	 	 	 	 	 
	
 

	
By:  

	/s/ Richard B. Schlenger	 
	 	 	Name:  	Richard B. Schlenger	 
	 	 	Title: 	Authorized Signatory	 

 

 

	 	

CITIGROUP GLOBAL MARKETS INC., a Delaware corporation

	 
	 	 	 	 	 
	 	 	 	 	 
	
 

	
By:  

	/s/ Richard B. Schlenger	 
	 	 	Name:  	Richard B. Schlenger	 
	 	 	Title: 	Authorized Signatory	 

 

  

  

  

 

	 	

SELLER:

 

CT LEGACY CITI SPV, LLC, a Delaware limited liability

	 
	 	 	 	 	 
	 	 	 	 	 
	
 

	
By:  

	/s/ Geoffrey G. Jervis	 
	 	 	Name:  	Geoffrey G. Jervis	 
	 	 	Title: 	Chief Financial Officer	 

 

 

 

 

  

  

  

 

	 	

ACKNOWLEDGED AND AGREED:

 

CT LEGACY ASSET, LLC, a Delaware limited liability company, as Guarantor

	 
	 	 	 	 	 
	 	 	 	 	 
	
 

	
By:  

	/s/ Geoffrey G. Jervis	 
	 	 	Name:  	Geoffrey G. Jervis	 
	 	 	Title: 	Chief Financial Officer	 

 

 

  

  

  

 

ANNEXES, EXHIBITS AND SCHEDULES

	
ANNEX I

	
Names and Addresses for Communications between Parties

	 	 
	
ANNEX II

	
Scheduled Assets

	 	 
	
EXHIBIT I

	
Form of Confirmation

	 	 
	
EXHIBIT II

	
Authorized Representatives of Seller

	 	 
	
EXHIBIT III-A

	
Monthly Reporting Package

	 	 
	
EXHIBIT III-B

	
Quarterly Reporting Package

	 	 
	
EXHIBIT III-C

	
Annual Reporting Package

	 	 
	
EXHIBIT IV

	
Form of Custodial Delivery

	 	 
	
EXHIBIT V

	
Form of Power of Attorney

	 	 
	
EXHIBIT VI

	
Representations and Warranties Regarding Individual Purchased Assets

	 	 
	
EXHIBIT VII

	
Asset Information

	 	 
	
EXHIBIT VIII

	
Advance Procedures

	 	 
	
EXHIBIT IX

	
Form of Bailee Letter

	 	 
	
EXHIBIT X

	
UCC Filing Jurisdictions

	 	 
	
EXHIBIT XI

	
Form of Servicer Notice

	 	 
	
EXHIBIT XII

	
Form of Release Letter

	 	 
	
EXHIBIT XIII

	
Covenant Compliance Certificate

	 	 
	
EXHIBIT XIV

	
Form of Re-Direction Letter

 

  

  

  

 

ANNEX I

NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES

 

Buyer:

Citigroup Financial Products Inc.

388 Greenwich Street

New York, New York  10013

Attention:  Richard Schlenger

Telephone: (212) 816-7806

Telecopy: (212) 816-8307

 

With copies to:

 

Sidley Austin LLP

787 Seventh Avenue

New York, New York  10019

Attention:  Brian Krisberg, Esq.

Telephone: (212) 839-8735

Telecopy: (212) 839-5599

 

Seller:

CT LEGACY CITI SPV, LLC

c/o Capital Trust, Inc.

410 Park Avenue

New York, New York  10022

Attention: Geoffrey G. Jervis

Telephone: (212) 655-0247

Telecopy: (212) 655-0044

With copies to:

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York  10022

Attention: Michael Zuppone, Esq.

Telephone: (212) 318-6906

Telecopy: (212) 230-7752

 

  

  

  

 

ANNEX II

 

SCHEDULED ASSETS

 

	
Buyer

	
Seller

	
Purchased Asset

	
Principal Amount

	
Purchase Price

	
Pricing Rate

	
Purchase Date

	
Repurchase Date

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	
one month LIBOR plus Applicable Spread

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	
one month LIBOR plus Applicable Spread

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	
one month LIBOR plus Applicable Spread

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	
one month LIBOR plus Applicable Spread

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	

[***]  

	
one month LIBOR plus Applicable Spread

	

[***]  

	

[***]  

 

 

	
[***]  

	
Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  

  

  

  

 

EXHIBIT I

 

CONFIRMATION STATEMENT

 

CITIGROUP FINANCIAL PRODUCTS INC. AND CITIGROUP GLOBAL MARKETS INC.

 

Ladies and Gentlemen:

 

Seller is pleased to deliver our written CONFIRMATION of our agreement to enter into the Transaction pursuant to which CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. shall purchase from us the Purchased Assets identified on the attached Schedule 1 pursuant to the Amended and Restated Master Repurchase Agreement, dated as of March 31, 2011 (the “Agreement”), between CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. (“Buyer”) and CT LEGACY CITI SPV, LLC (“Seller”) on the following terms.  Capitalized terms used herein without definition have the meanings given in the Agreement.

 

	
Purchase Date:

	
__________, 200_

	
Purchased Assets:

	
[____Name]: As identified on attached Schedule 1

	
Aggregate Principal Amount of Purchased Assets:

	
 

[$    ]

	
Repurchase Date:

	  
	
Purchase Price:

	
[$    ]

	
Change in Purchase Price

	
[$    ]

	
Pricing Rate:

	
one month LIBOR plus ______%

	
Governing Agreements:

	
As identified on attached Schedule 1

	
Requested Wire Amount:

	  
	
Requested Fund Date:

	  
	
Type of Funding:

	
[Table/Non-table]

	
Wiring Instructions:

	  
	
Name and address for communications:

	
Buyer:

	
Citigroup Financial Products Inc.

388 Greenwich Street

New York, New York  10013

Attention:  Richard Schlenger

Telephone: (212) 816-7806

Telecopy: (212) 816-8307

 

	  	
Seller:

	
CT LEGACY CITI SPV, LLC

	  	  	
c/o Capital Trust, Inc.

410 Park Avenue

New York, New York  10022

Attention: Geoffrey G. Jervis

Telephone: (212) 655-0247

Telecopy: (212) 655-0044

 

 

  

  

  

 

	  	
With copies to:

	
Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York  10022

Attention: Michael Zuppone, Esq.

Telephone: (212) 318-6906

Telecopy: (212) 230-7752

 

 

 

	 	

CT LEGACY CITI SPV, LLC

	 
	 	 	 	 	 
	 	 	 	 	 
	
 

	
By:  

	 	 
	 	 	Name:  	 	 
	 	 	Title: 	 	 

 

 

	

AGREED AND ACKNOWLEDGED:

 

CITIGROUP FINANCIAL PRODUCTS INC.

	 
	 	 	 	 
	 	 	 	 
	
By:   

	 	 
	 	Name:  	 	 
	 	Title: 	 	 

 

  

  

  

Schedule 1 to Confirmation Statement

 

Purchased Assets:

 

Aggregate Principal Amount:

 

 

  

  

  

 

EXHIBIT II

 

AUTHORIZED REPRESENTATIVES OF SELLER

 

 

 

 

  

  

  

 

EXHIBIT III-A

 

MONTHLY REPORTING PACKAGE

 

The Monthly Reporting Package shall include, inter alia, the following:

 

	
  

	
·

	
Any and all financial statements, rent rolls or other material information received from the borrowers related to each Purchased Asset.  To the extent that Seller fails, after diligent efforts, to obtain on a monthly basis such financial statements, rent rolls and other material information from the borrowers, Seller shall provide such information to Buyer on a quarterly basis.

 

	
  

	
·

	
A remittance report containing servicing information, including without limitation, the amount of each periodic payment due, the amount of each periodic payment received, the date of receipt, the date due, and whether there has been any material adverse change to the real property, on a loan by loan basis and in the aggregate, with respect to the Purchased Assets serviced by any servicer (such remittance report, a “Servicing Tape”), or to the extent any servicer does not provide any such Servicing Tape, a remittance report containing the servicing information that would otherwise be set forth in the Servicing Tape.

 

	
  

	
·

	
A listing of all Purchased Assets reflecting the payment status of each Purchased Asset and any material changes in the financial or other condition of each Purchased Asset.

 

	
  

	
·

	
With respect to a Purchased Asset that is CMBS, B-Note or Participation Interest, the related securitization report.

 

	
  

	
·

	
A listing of any existing Potential Events of Default.

 

	
  

	
·

	
Trustee remittance reports.

 

	
  

	
·

	
All other information as Buyer, from time to time, may reasonably request with respect to Seller or any Purchased Asset, obligor or Underlying Mortgaged Property.

 

	
  

	
·

	
A certificate substantially in the form attached hereto as Exhibit XIII to this Agreement (the “Covenant Compliance Certificate”), from a Responsible Officer of Seller.

 

  

  

  

 

EXHIBIT III-B

 

QUARTERLY REPORTING PACKAGE

 

The Quarterly Reporting Package shall include, inter alia, the following:

 

	
  

	
·

	
Consolidated unaudited financial statements of Guarantor presented fairly in accordance with GAAP (except that such financial statements may be consolidated to the extent consolidation is required under GAAP) or, if such financial statements being delivered have been filed with the SEC pursuant to the requirements of the 1934 Act, or similar state securities laws, presented in accordance with applicable statutory and/or regulatory requirements and delivered to Buyer within the same time frame as are required to be filed in accordance with such applicable statutory or regulatory requirements, in either case accompanied by a Covenant Compliance Certificate, including a statement of operations and a statement of changes in cash flows for such quarter and statement of net assets as of the end of such quarter, and certified as being true and correct by a Covenant Compliance Certificate.

 

  

  

  

 

EXHIBIT III-C

 

ANNUAL REPORTING PACKAGE

 

The Annual Reporting Package shall include, inter alia, the following:

 

	
  

	
·

	
Guarantor’s consolidated audited financial statements, prepared by a nationally recognized independent certified public accounting firm and presented fairly in accordance with GAAP (except that such financial statements may be consolidated to the extent consolidation is required under GAAP) or, if such financial statements being delivered have been filed with the SEC pursuant to the requirements of the 1934 Act, or similar state securities laws, presented in accordance with applicable statutory and/or regulatory requirements and delivered to Buyer within the same time frame as are required to be filed in accordance with such applicable statutory and/or regulatory requirements, in either case accompanied by a Covenant Compliance Certificate, including a statement of operations and a statement of changes in cash flows for such quarter and statement of net assets as of the end of such quarter accompanied by an unqualified report of the nationally recognized independent certified public accounting firm that prepared them.

 

  

  

  

 

EXHIBIT IV

 

FORM OF CUSTODIAL DELIVERY

 

On this ______ of ________, 200__, CT LEGACY CITI SPV, LLC, a Delaware limited liability company (“Seller”) under that certain Amended and Restated Master Repurchase Agreement, dated as of March 31, 2011 (the “Repurchase Agreement”) between CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. (collectively, “Buyer”) and Seller, does hereby deliver to Deutsche Bank Trust Company Americas (“Custodian”), as custodian under that certain Amended and Restated Custodial Agreement, dated as of March 31, 2011 (the “Custodial Agreement”), among Buyer, Custodian and Seller, the Purchased Asset Files with respect to the Purchased Assets to be purchased by Buyer pursuant to the Repurchase Agreement, which Purchased Assets are listed on the Purchased Asset Schedule attached hereto and which Purchased Assets shall be subject to the terms of the Custodial Agreement on the date hereof.

 

With respect to the Purchased Asset Files delivered hereby, for the purposes of issuing the Trust Receipt, the Custodian shall review the Purchased Asset Files to ascertain delivery of the documents listed in Section 3 to the Custodial Agreement.

 

Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Custodial Agreement.

 

IN WITNESS WHEREOF, Seller has caused its name to be signed hereto by its officer thereunto duly authorized as of the day and year first above written.

 

	 	

CT LEGACY CITI SPV, LLC

	 
	 	 	 	 	 
	 	 	 	 	 
	
 

	
By:  

	 	 
	 	 	Name:  	 	 
	 	 	Title: 	 	 

 

  

  

  

 

Purchased Asset Schedule to Custodial Delivery

 

Purchased Assets

 

 

 

  

  

  

 

EXHIBIT V

 

FORM OF POWER OF ATTORNEY

 

Know All Men by These Presents, that CT LEGACY CITI SPV, LLC, a Delaware limited liability company (“Seller”), does hereby appoint CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. (collectively, “Buyer”), its attorney-in-fact to act in Seller’s name, place and stead in any way that Seller could do with respect to (i) the completion of the endorsements of the Purchased Assets, including without limitation the Mortgage Notes, Mezzanine Notes and Assignments of Mortgages and any transfer documents related thereto, (ii) the recordation of the Assignments of Mortgages, (iii) the preparation and filing, in form and substance satisfactory to Buyer, of such financing statements, continuation statements, and other uniform commercial code forms, as Buyer may from time to time, reasonably consider necessary to create, perfect, and preserve Buyer's security interest in the Purchased Assets and (iv) the enforcement of Seller’s rights under the Purchased Assets purchased by Buyer pursuant to the Amended and Restated Master Repurchase Agreement, dated as of March 31, 2011 (the “Repurchase Agreement”), between Buyer and Seller, and to take such other steps as may be necessary or desirable to enforce Buyer’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.

 

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.

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be executed as a deed this 31st day of March, 2011.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

  

  

  

 

 

	 	

CT LEGACY CITI SPV, LLC

	 
	 	 	 	 	 
	 	 	 	 	 
	
 

	
By:  

	 	 
	 	 	Name:  	 	 
	 	 	Title: 	 	 

 

  

  

  

EXHIBIT VI

 

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET THAT IS A

SENIOR MORTGAGE LOAN

 

(a)           As applicable, each Purchased Asset is either a whole loan and not a participation interest in a whole loan or an A-Note interest in a whole loan.  The sale of the Purchased Assets to Buyer or its designee does not require Seller to obtain any governmental or regulatory approval or consent that has not been obtained.

 

(b)           No Purchased Asset is 30 days or more delinquent in payment of principal and interest (without giving effect to any applicable grace period) and no Purchased Asset has been 30 days or more (without giving effect to any applicable grace period in the related Mortgage Note) past due.

 

(c)           Except with respect to the ARD Loans, which provide that the rate at which interest accrues thereon increases after the Anticipated Repayment Date, the Purchased Assets (exclusive of any default interest, late charges or prepayment premiums) are fixed rate mortgage loans or floating rate mortgage loans with terms to maturity, at origination or as of the most recent modification, as set forth in the Purchased Asset Schedule.

 

(d)           The information pertaining to each Purchased Asset set forth on the Purchased Asset Schedule is true and correct in all material respects as of the Purchase Date.

 

(e)           At the time of the assignment of the Purchased Assets to Buyer, Seller had good and marketable title to and was the sole owner and holder of, each Purchased Asset, free and clear of any pledge, lien, encumbrance or security interest and such assignment validly and effectively transfers and conveys all legal and beneficial ownership of the Purchased Assets to Buyer free and clear of any pledge, lien, encumbrance or security interest, subject to the rights and obligations of Seller pursuant to the Agreement.

 

(f)           In respect of each Purchased Asset, (A) the related Mortgagor is an entity organized under the laws of a state of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico and (B) the Mortgagor is not a debtor in any bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or similar proceeding.

 

  

  

  

 

(g)           Each Purchased Asset is secured by (or in the case of a Participation, the Underlying Mortgage Loan is secured by) a Mortgage that establishes and creates a valid and subsisting first priority lien on the related underlying real estate directly or indirectly securing or supporting such Purchased Asset, or leasehold interest therein, comprising real estate (the “Mortgaged Property”), free and clear of any liens, claims, encumbrances, participation interests, pledges, charges or security interests subject only to Permitted Encumbrances.  Such Mortgage, together with any separate security agreement, UCC financing statement or similar agreement, if any, establishes and creates a first priority security interest in favor of Seller in all personal property owned by the Mortgagor that is used in, and is reasonably necessary to, the operation of the related Mortgaged Property and, to the extent a security interest may be created therein and perfected by the filing of a UCC financing statement under the Uniform Commercial Code as in effect in the relevant jurisdiction, the proceeds arising from the Mortgaged Property and other collateral securing such Purchased Asset, subject only to Permitted Encumbrances.  There exists with respect to such Mortgaged Property an assignment of leases and rents provision, either as part of the related Mortgage or as a separate document or instrument, which establishes and creates a first priority security interest in and to leases and rents arising in respect of the related Mortgaged Property subject only to Permitted Encumbrances.  No person other than the related Mortgagor and the mortgagee owns any interest in any payments due under the related leases.  The related Mortgage or such assignment of leases and rents provision provides for the appointment of a receiver for rents or allows the holder of the related Mortgage to enter into possession of the related Mortgaged Property to collect rent or provides for rents to be paid directly to the holder of the related Mortgage in the event of a default beyond applicable notice and grace periods, if any, under the related Purchased Asset Documents.  As of the origination date, there are no mechanics’ or other similar liens or claims that have been filed for work, labor or materials affecting the related Mortgaged Property that are or may be prior or equal to the lien of the Mortgage, except those that are insured against pursuant to the applicable Title Insurance Policy (as defined below). As of the Purchase Date, there are no mechanics’ or other similar liens or claims that have been filed for work, labor or materials affecting the related Mortgaged Property that are or may be prior or equal in priority to the lien of the Mortgage, except those that are insured against pursuant to the applicable Title Policy (as defined below).  No (a) Mortgaged Property secures any mortgage loan not represented on the Purchased Asset Schedule, (b) Purchased Asset is cross-defaulted with any other mortgage loan, other than a Mortgage Loan listed on the Purchased Asset Schedule, or (c) Purchased Asset is secured by property that is not a Mortgaged Property.

 

(h)           The related Mortgagor under each Purchased Asset has good and indefeasible fee simple or, with respect to those Purchased Assets described in clause (cc) hereof, leasehold title to the related Mortgaged Property comprising real estate subject to any Permitted Encumbrances.

 

(i)           Seller has received an American Land Title Association (ALTA) lender’s title insurance policy or a comparable form of lender’s title insurance policy (or escrow instructions binding on the Title Insurer (as defined below) and irrevocably obligating the Title Insurer to issue such title insurance policy, a title policy commitment or pro-forma “marked up” at the closing of the related Purchased Asset and countersigned by the Title Insurer or its authorized agent) as adopted in the applicable jurisdiction (the “Title Policy”), which was issued by a nationally recognized title insurance company (the “Title Insurer”) qualified to do business in the jurisdiction where the applicable Mortgaged Property is located, covering the portion of each Mortgaged Property comprised of real estate and insuring that the related Mortgage is a valid first lien in the original principal amount of the related Purchased Asset on the Mortgagor’s fee simple interest (or, if applicable, leasehold interest) in such Mortgaged Property comprised of real estate subject only to Permitted Encumbrances.  Such Title Policy was issued in connection with the origination of the related Purchased Asset. No claims have been made under such Title Policy.  Such Title Policy is in full force and effect and all premiums thereon have been paid and will provide that the insured includes the owner of the Purchased Asset and its successors and/or assigns. No holder of the related Mortgage has done, by act or omission, anything that would, and Seller has no actual knowledge of any other circumstance that would, impair the coverage under such Title Policy.

 

  

  

  

 

(j)           The related Assignment of Mortgage and the related assignment of the Assignment of Leases and Rents executed in connection with each Mortgage, if any, have been recorded in the applicable jurisdiction (or, if not recorded, have been submitted for recording or are in recordable form) and constitute the legal, valid and binding assignment of such Mortgage and the related assignment of leases and rents from Seller to Buyer.  The endorsement of the related Mortgage Note by Seller constitutes the legal, valid, binding and enforceable (except as such enforcement may be limited by anti-deficiency laws or bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law)) assignment of such Mortgage Note, and together with such Assignment of Mortgage and the related assignment of assignment of leases and rents, legally and validly conveys all right, title and interest in such Purchased Asset and (except in the case of an A Note or a Participation) the Purchased Asset Documents to Buyer.

 

(k)           The Purchased Asset Documents for each Purchased Asset (or in the case of a Participation, the Underlying Mortgage Loan) provide that such Purchased Asset (or Underlying Mortgage Loan) is non-recourse except that the related Mortgagor and at least one individual or entity shall be fully liable for actual losses, liabilities, costs and damages arising from at least the following acts of the related Mortgagor and/or its principals: (i) fraud or material misrepresentation, (ii) misapplication or misappropriation of rents, insurance proceeds or condemnation awards, (iii) any act of actual waste, and (iv) any breach of the environmental covenants contained in the related Purchased Asset Documents.

 

(l)           The Purchased Asset Documents for each Purchased Asset contain enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the practical realization against the Mortgaged Property of the principal benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, non judicial foreclosure, and there is no exemption available to the related Mortgagor that would interfere with such right of foreclosure except (i) any statutory right of redemption or (ii) any limitation arising under anti deficiency laws or by bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

(m)           Each of the related Mortgage Notes and Mortgages are the legal, valid and binding obligations of the related Mortgagor named on the Purchased Asset Schedule and each of the other related Purchased Asset Documents is the legal, valid and binding obligation of the parties thereto (subject to any non recourse provisions therein), enforceable in accordance with its terms, except as such enforcement may be limited by anti deficiency laws or bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law), and except that certain provisions of such Purchased Asset Documents are or may be unenforceable in whole or in part under applicable state or federal laws, but the inclusion of such provisions does not render any of the Purchased Asset Documents invalid as a whole, and such Purchased Asset Documents taken as a whole are enforceable to the extent necessary and customary for the practical realization of the principal rights and benefits afforded thereby.

 

  

  

  

 

(n)           The terms of the Purchased Assets or the related Purchased Asset Documents, (including, in the case of a Participation, the documents evidencing the Underlying Mortgage Loan) have not been altered, impaired, modified or waived in any material respect, except prior to the Purchase Date by written instrument duly submitted for recordation, to the extent required, and as specifically set forth by a document in the related Purchased Asset File.

 

(o)           With respect to each Mortgage that is a deed of trust, a trustee, duly qualified under applicable law to serve as such, currently so serves and is named in the deed of trust or has been substituted in accordance with applicable law, and no fees or expenses are or will become payable to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Mortgagor other than de minimis fees paid in connection with the release of the related Mortgaged Property or related security for such Purchased Asset following payment of such Purchased Asset in full.

 

(p)           No Purchased Asset has been satisfied, canceled, subordinated, released or rescinded, in whole or in part, and the related Mortgagor has not been released, in whole or in part, from its obligations under any related Purchased Asset Document.

 

(q)           Except with respect to the enforceability of any provisions requiring the payment of default interest, late fees, additional interest, prepayment premiums or yield maintenance charges, neither the Purchased Asset nor any of the related Purchased Asset Documents is subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of any such Purchased Asset Documents, or the exercise (in compliance with procedures permitted under applicable law) of any right thereunder, render any Purchased Asset Documents subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defense, including the defense of usury (subject to anti-deficiency or one form of action laws and to bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law)), and no such right of rescission, set-off, abatement, diminution, valid counterclaim or defense has been asserted with respect thereto.  None of the Purchased Asset Documents provides for a release of a portion of the Mortgaged Property from the lien of the Mortgage except upon payment or defeasance in full of all obligations under the Mortgage, provided that, notwithstanding the foregoing, certain of the Purchased Assets may allow partial release (a) upon payment or defeasance of an allocated loan amount which may be formula based, but in no event less than 125% of the allocated loan amount, or (b) in the event the portion of the Mortgaged Property being released was not given any material value in connection with the underwriting or appraisal of the related Purchased Asset.

 

  

  

  

 

(r)           As of the Purchase Date, there is no payment default, giving effect to any applicable notice and/or grace period, and there is no other material default under any of the related Purchased Asset Documents, giving effect to any applicable notice and/or grace period; no such material default or breach has been waived by Seller or on its behalf or, by Seller’s predecessors in interest with respect to the Purchased Assets; and no event has occurred that, with the passing of time or giving of notice would constitute a material default or breach under the related Purchased Asset Documents.  No Purchased Asset has been accelerated and no foreclosure or power of sale proceeding has been initiated in respect of the related Mortgage.  Seller has not waived any material claims against the related Mortgagor under any non-recourse exceptions contained in the Mortgage Note.

 

(s)           The principal amount of the Purchased Asset stated on the Purchased Asset Schedule has been fully disbursed as of the Purchase Date (except for certain amounts that were fully disbursed by the mortgagee, but escrowed pursuant to the terms of the related Purchased Asset Documents) and there are no future advances required to be made by the mortgagee under any of the related Purchased Asset Documents.  Any requirements under the related Purchased Asset Documents regarding the completion of any on-site or off-site improvements and to disbursements of any escrow funds therefor have been or are being complied with or such escrow funds are still being held.  The value of the Mortgaged Property relative to the value reflected in the most recent appraisal thereof is not materially impaired by any improvements that have not been completed.  Seller has not, nor, have any of its agents or predecessors in interest with respect to the Purchased Assets, in respect of such Purchased Asset, directly or indirectly, advanced funds or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor other than (a) interest accruing on such Purchased Asset from the date of such disbursement of such Purchased Asset to the date which preceded by thirty (30) days the first payment date under the related Mortgage Note and (b) application and commitment fees, escrow funds, points and reimbursements for fees and expenses, incurred in connection with the origination and funding of the Purchased Asset.

 

(t)           No Purchased Asset has capitalized interest included in its principal balance, or provides for any shared appreciation rights or other equity participation therein and no contingent or additional interest contingent on cash flow or, except for ARD Loans, negative amortization accrues or is due thereon.

 

(u)           Each Purchased Asset identified in the Purchased Asset Schedule as an ARD Loan substantially fully amortizes over its stated term, which term is at least 60 months after the related Anticipated Repayment Date.  Each ARD Loan has an Anticipated Repayment Date not less than seven years following the origination of such Purchased Asset.  If the related Mortgagor elects not to prepay its ARD Loan in full on or prior to the Anticipated Repayment Date pursuant to the existing terms of the Purchased Asset or a unilateral option (as defined in Treasury Regulations under Article 1001 of the Code) in the Purchased Asset exercisable during the term of the Mortgage Loan, (i) the Purchased Asset’s interest rate will step up to an interest rate per annum as specified in the related Purchased Asset Documents; provided, however, that payment of such Excess Interest shall be deferred until the principal of such ARD Loan has been paid in full; (ii) all or a substantial portion of the Excess Cash Flow collected after the Anticipated Repayment Date shall be applied towards the prepayment of such ARD Loan and once the principal balance of an ARD Loan has been reduced to zero all Excess Cash Flow will be applied to the payment of accrued Excess Interest; and (iii) if the property manager for the related Mortgaged Property can be removed by or at the direction of the mortgagee on the basis of a debt service coverage test, the subject debt service coverage ratio shall be calculated without taking account of any increase in the related Mortgage Interest Rate on such Purchased Asset’s Anticipated Repayment Date.  No ARD Loan provides that the property manager for the related Mortgaged Property can be removed by or at the direction of the mortgagee solely because of the passage of the related Anticipated Repayment Date.

 

  

  

  

 

(v)           Each Purchased Asset identified in the Purchased Asset Schedule as an ARD Loan with a hard lockbox requires that tenants at the related Mortgaged Property shall (and each Purchased Asset identified in the Purchased Asset Schedule as an ARD Loan with a springing lockbox requires that tenants at the related Mortgaged Property shall, upon the occurrence of a specified trigger event, including, but not limited to, the occurrence of the related Anticipated Repayment Date) make rent payments into a lockbox controlled by the holder of the Purchased Asset and to which the holder of the Purchased Asset has a first perfected security interest; provided however, with respect to each ARD Loan that is secured by a multi-family property with a hard lockbox, or with respect to each ARD Loan that is secured by a multi-family property with a springing lockbox, upon the occurrence of a specified trigger event, including, but not limited to, the occurrence of the related Anticipated Repayment Date, tenants either pay rents to a lockbox controlled by the holder of the Mortgage Loan or deposit rents with the property manager who will then deposit the rents into a lockbox controlled by the holder of the Purchased Asset.

 

(w)           The terms of the Purchased Asset Documents evidencing such Purchased Asset comply in all material respects with all applicable local, state and federal laws, and regulations and Seller has complied with all material requirements pertaining to the origination, funding and servicing of the Purchased Assets, including but not limited to, usury and any and all other material requirements of any federal, state or local law to the extent non-compliance would have a Material Adverse Effect on the Purchased Asset.

 

(x)           The related Mortgaged Property is, in all material respects, in compliance with, and is used and occupied in accordance with, all restrictive covenants of record applicable to such Mortgaged Property and applicable zoning laws and all inspections, licenses, permits and certificates of occupancy required by law, ordinance or regulation to be made or issued with regard to the Mortgaged Property have been obtained and are in full force and effect, except to the extent (a) any material non-compliance with applicable zoning laws is insured by an ALTA lender’s title insurance policy (or binding commitment therefor), or the equivalent as adopted in the applicable jurisdiction, or a law and ordinance insurance policy, or (b) the failure to obtain or maintain such inspections, licenses, permits or certificates of occupancy does not materially impair or materially and adversely affect the use and/or operation of the Mortgaged Property as it was used and operated as of the date of origination of the Purchased Asset or the rights of a holder of the related Purchased Asset.

 

(y)           All (a) taxes, water charges, sewer rents, assessments or other similar outstanding governmental charges and governmental assessments that became due and owing prior to the Purchase Date in respect of the related Mortgaged Property (excluding any related personal property), and that if left unpaid, would be, or might become, a lien on such Mortgaged Property having priority over the related Mortgage and (b) insurance premiums or ground rents that became due and owing prior to the Purchase Date in respect of the related Mortgaged Property (excluding any related personal property), have been paid, or if any such items are disputed, an escrow of funds in an amount sufficient (together with escrow payments required to be made prior to delinquency) to cover such taxes and assessments and any late charges due in connection therewith has been established.  As of the date of origination, the related Mortgaged Property consisted of one or more separate and complete tax parcels.  For purposes of this representation and warranty, the items identified herein shall not be considered due and owing until the date on which interest or penalties would be first payable thereon.

 

  

  

  

 

(z)           None of the improvements that were included for the purpose of determining the appraised value of the related Mortgaged Property at the time of the origination of such Purchased Asset lies outside the boundaries and building restriction lines of such Mortgaged Property, except to the extent that they are legally nonconforming as contemplated by the representation in clause (48) below, and no improvements on adjoining properties encroach upon such Mortgaged Property, with the exception in each case of (a) immaterial encroachments that do not materially adversely affect the security intended to be provided by the related Mortgage or the use, enjoyment, value or marketability of such Mortgaged Property or (b) encroachments affirmatively covered by the related Title Policy.  With respect to each Purchased Asset, the property legally described in the survey, if any, obtained for the related Mortgaged Property for purposes of the origination thereof is the same as the property legally described in the Mortgage.

 

(aa)           As of the date of the applicable engineering report (which was performed within 12 months prior to the Purchase Date) related to the Mortgaged Property and, as of the Purchase Date, the related Mortgaged Property is either (i) in good repair, free and clear of any damage that would materially adversely affect the value of such Mortgaged Property as security for such Purchased Asset or the use and operation of the Mortgaged Property as it was being used or operated as of the origination date or (ii) escrows in an amount consistent with the standard utilized by Seller with respect to similar loans it holds for its own account have been established, which escrows will in all events be not less than 100% of the estimated cost of the required repairs.  The Mortgaged Property has not been damaged by fire, wind or other casualty or physical condition (including, without limitation, any soil erosion or subsidence or geological condition), which damage has not either been fully repaired or fully insured, or for which escrows in an amount consistent with the standard utilized by Seller with respect to loans it holds for its own account have not been established.

 

(bb)           There are no proceedings pending or threatened, for the partial or total condemnation of the relevant Mortgaged Property.

 

(cc)           The Purchased Assets that are identified as being secured in whole or in part by a leasehold estate (a “Ground Lease”) (except with respect to any Purchased Asset also secured by the related fee interest in the Mortgaged Property), satisfy the following conditions:

 

(I)           such Ground Lease or a memorandum thereof has been or will be duly recorded; such Ground Lease, or other agreement received by the originator of the Purchased Asset from the ground lessor, provides that the interest of the lessee thereunder may be encumbered by the related Mortgage and does not restrict the use of the related Mortgaged Property by such lessee, its successors or assigns, in a manner that would materially and adversely affect the security provided by the Mortgage; as of the date of origination of the Purchased Asset (or in the case of a Participation, the Underlying Mortgage Loan), there was no material change of record in the terms of such Ground Lease with the exception of written instruments that are part of the related Purchased Asset File and there has been no material change in the terms of such Ground Lease since the recordation of the related Purchased Asset, with the exception of written instruments that are part of the related Purchased Asset File;

 

  

  

  

 

(II)           such Ground Lease is not subject to any liens or encumbrances superior to, or of equal priority with, the related Mortgage, other than the related fee interest and Permitted Encumbrances and such Ground Lease is, and shall remain, prior to any mortgage or other lien upon the related fee interest unless a nondisturbance agreement is obtained from the holder of any mortgage on the fee interest that is assignable to or for the benefit of the related lessee and the related mortgagee;

 

(III)           such Ground Lease provides that upon foreclosure of the related Mortgage or assignment of the Mortgagor’s interest in such Ground Lease in lieu thereof, the mortgagee under such Mortgage is entitled to become the owner of such interest upon notice to, but without the consent of, the lessor thereunder and, in the event that such mortgagee becomes the owner of such interest, such interest is further assignable by such mortgagee and its successors and assigns upon notice to such lessor, but without a need to obtain the consent of such lessor;

 

(IV)           such Ground Lease is in full force and effect and no default of tenant or ground lessor was in existence at origination, or is currently in existence under such Ground Lease, nor at origination was, or is there any condition that, but for the passage of time or the giving of notice, would result in a default under the terms of such Ground Lease; either such Ground Lease or a separate agreement contains the ground lessor’s covenant that it shall not amend, modify, cancel or terminate such Ground Lease without the prior written consent of the mortgagee under such Mortgage and any amendment, modification, cancellation or termination of the Ground Lease without the prior written consent of the related mortgagee, or its successors or assigns is not binding on such mortgagee, or its successor or assigns;

 

(V)           such Ground Lease or other agreement requires the lessor thereunder to give written notice of any material default by the lessee to the mortgagee under the related Mortgage, provided that such mortgagee has provided the lessor with notice of its lien in accordance with the provisions of such Ground Lease; and such Ground Lease or other agreement provides that no such notice of default and no termination of the Ground Lease in connection with such notice of default shall be effective against such mortgagee unless such notice of default has been given to such mortgagee and any related Ground Lease contains the ground lessor’s covenant that it will give to the related mortgagee, or its successors or assigns, any notices it sends to the Mortgagor;

 

(VI)           either (i) the related ground lessor has subordinated its interest in the related Mortgaged Property to the interest of the holder of the Purchased Asset (or in the case of a Participation, the Underlying Mortgage Loan) or (ii) such Ground Lease or other agreement provides that (A) the mortgagee under the related Mortgage is permitted a reasonable opportunity to cure any default under such Ground Lease that is curable, including reasonable time to gain possession of the interest of the lessee under the Ground Lease, after the receipt of notice of any such default before the lessor thereunder may terminate such Ground Lease; (B) in the case of any such default that is not curable by such mortgagee, or in the event of the bankruptcy or insolvency of the lessee under such Ground Lease, such mortgagee has the right, following termination of the existing Ground Lease or rejection thereof by a bankruptcy trustee or similar party, to enter into a new ground lease with the lessor on substantially the same terms as the existing Ground Lease; and (C) all rights of the Mortgagor under such Ground Lease may be exercised by or on behalf of such mortgagee under the related Mortgage upon foreclosure or assignment in lieu of foreclosure;

 

  

  

  

 

(VII)           such Ground Lease has an original term (or an original term plus one or more optional renewal terms that under all circumstances may be exercised, and will be enforceable, by the mortgagee or its assignee) that extends not less than 20 years beyond the stated maturity date of the related Purchased Asset (or in the case of a Participation, of the Underlying Mortgage Loan);

 

(VIII)           under the terms of such Ground Lease and the related Mortgage, taken together, any related insurance proceeds will be applied either to the repair or restoration of all or part of the related Mortgaged Property, with the mortgagee under such Mortgage or a financially responsible institution acting as trustee appointed by it, or consented to by it, or by the lessor having the right to hold and disburse such proceeds as the repair or restoration progresses (except in such cases where a provision entitling another party to hold and disburse such proceeds would not be viewed as commercially unreasonable by a prudent institutional lender), or to the payment in whole or in part of the outstanding principal balance of such Purchased Asset together with any accrued and unpaid interest thereon; and

 

(IX)           such Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by Seller; such Ground Lease contains a covenant (or applicable laws provide) that the lessor thereunder is not permitted, in the absence of an uncured default, to disturb the possession, interest or quiet enjoyment of any lessee in the relevant portion of such Mortgaged Property subject to such Ground Lease for any reason, or in any manner, which would materially adversely affect the security provided by the related Mortgage.

 

(dd)           An Environmental Site Assessment relating to each Mortgaged Property and prepared no earlier than 12 months prior to the Purchase Date was obtained and reviewed by Seller in connection with the origination of such Purchased Asset and a copy is included in the Purchased Asset File.

 

  

  

  

 

(ee)           There are no adverse circumstances or conditions with respect to or affecting the Mortgaged Property that would constitute or result in a material violation of any applicable federal, state or local environmental laws, rules and regulations (collectively, “Environmental Laws”), other than with respect to a Mortgaged Property (i) for which environmental insurance is maintained, or (ii) that would require (x) any expenditure less than or equal to 5% of  the outstanding principal balance of the Mortgage Loan to achieve or maintain compliance in all material respects with any Environmental Laws or (y) any expenditure greater than 5% of the outstanding principal balance of such Purchased Asset to achieve or maintain compliance in all material respects with any Environmental Laws for which, in connection with this clause (y), adequate sums, but in no event less than 125% of the estimated cost as set forth in the Environmental Site Assessment, were reserved in connection with the origination of the Purchased Asset and for which the related Mortgagor has covenanted to perform, or (iii) as to which the related Mortgagor or one of its affiliates is currently taking or required to take such actions, if any, with respect to such conditions or circumstances as have been recommended by the Environmental Site Assessment or required by the applicable Governmental Authority, or (iv) as to which another responsible party not related to the Mortgagor with assets reasonably estimated by Seller at the time of origination to be sufficient to effect all necessary or required remediation identified in a notice or other action from the applicable Governmental Authority is currently taking or required to take such actions, if any, with respect to such regulatory authority’s order or directive, or (v) as to which the conditions or circumstances identified in the Environmental Site Assessment were investigated further and based upon such additional investigation, an environmental consultant recommended no further investigation or remediation, or (vi) as to which a party with financial resources reasonably estimated to be adequate to cure the condition or circumstance that would give rise to such material violation provided a guarantee or indemnity to the related Mortgagor or to the mortgagee to cover the costs of any required investigation, testing, monitoring or remediation, or (vii) as to which the related Mortgagor or other responsible party obtained a “No Further Action” letter or other evidence reasonably acceptable to a prudent commercial mortgage lender that applicable federal, state, or local Governmental Authorities had no current intention of taking any action, and are not requiring any action, in respect of such condition or circumstance, or (viii) that would not require substantial cleanup, remedial action or other extraordinary response under any Environmental Laws reasonably estimated to cost in excess of 5% of the outstanding principal balance of such Purchased Asset;

 

(ff)           Except for any hazardous materials being handled in accordance with applicable Environmental Laws, (A) there exists either (i) environmental insurance with respect to such Mortgaged Property or (ii) an amount in an escrow account pledged as security for such Purchased Asset under the relevant Purchased Asset Documents equal to no less than 125% of the amount estimated in such Environmental Site Assessment as sufficient to pay the cost of such remediation or other action in accordance with such Environmental Site Assessment or (B) one of the statements set forth in clause (A)(ii) above is true, (i) such Mortgaged Property is not being used for the treatment or disposal of hazardous materials; (ii) no hazardous materials are being used or stored or generated for off-site disposal or otherwise present at such Mortgaged Property other than hazardous materials of such types and in such quantities as are customarily used or stored or generated for off-site disposal or otherwise present in or at properties of the relevant property type; and (iii) such Mortgaged Property is not subject to any environmental hazard (including, without limitation, any situation involving hazardous materials) that under the Environmental Laws would have to be eliminated before the sale of, or that could otherwise reasonably be expected to adversely affect in more than a de minimis manner the value or marketability of, such Mortgaged Property.

 

(gg)           The related Mortgage or other Purchased Asset Documents contain covenants on the part of the related Mortgagor requiring its compliance with any present or future federal, state and local Environmental Laws and regulations in connection with the Mortgaged Property.  The related Mortgagor (or an affiliate thereof) has agreed to indemnify, defend and hold Seller, and its successors and assigns (or in the case of a Participation, the lender of record), harmless from and against any and all losses, liabilities, damages, penalties, fines, expenses and claims of whatever kind or nature (including attorneys’ fees and costs) imposed upon or incurred by or asserted against any such party resulting from a breach of the environmental representations, warranties or covenants given by the related Mortgagor in connection with such Purchased Asset.

 

  

  

  

 

(hh)           For each of the Purchased Assets that is covered by environmental insurance, each environmental insurance policy is in an amount equal to 125% of the outstanding principal balance of the related Purchased Asset and has a term ending no sooner than the date that is five years after the maturity date (or, in the case of an ARD Loan, the final maturity date) of the related Purchased Asset.  All environmental assessments or updates that were in the possession of Seller and that relate to a Mortgaged Property as being insured by an environmental insurance policy have been delivered to or disclosed to the environmental insurance carrier issuing such policy prior to the issuance of such policy.

 

(ii)           As of the date of origination of the related Purchased Asset, and, as of the Purchase Date, the Mortgaged Property is covered by insurance policies providing the coverage described below and the Purchased Asset Documents permit the mortgagee to require the coverage described below.  All premiums with respect to the insurance policies insuring each Mortgaged Property have been paid in a timely manner or escrowed to the extent required by the Purchased Asset Documents, and Seller has not received any notice of cancellation or termination.  The relevant Purchased Asset File contains the insurance policy required for such Purchased Asset or a certificate of insurance for such insurance policy.  Each Mortgage requires that the related Mortgaged Property and all improvements thereon be covered by insurance policies providing (a) coverage in the amount of the lesser of full replacement cost of such Mortgaged Property and the outstanding principal balance of the related Purchased Asset (subject to customary deductibles) for fire and extended perils included within the classification “All Risk of Physical Loss” in an amount sufficient to prevent the Mortgagor from being deemed a co-insurer and to provide coverage on a full replacement cost basis of such Mortgaged Property (in some cases exclusive of foundations and footings) with an agreed amount endorsement to avoid application of any coinsurance provision; such policies contain a standard mortgagee clause naming mortgagee and its successor in interest as additional insureds or loss payee, as applicable; (b) business interruption or rental loss insurance in an amount at least equal to (i) 12 months of operations or (ii) in some cases all rents and other amounts customarily insured under this type of insurance of the Mortgaged Property; (c) flood insurance (if any portion of the improvements on the Mortgaged Property is located in an area identified by the Federal Emergency Management Agency (“FEMA”), with respect to certain Purchased Assets and the Secretary of Housing and Urban Development with respect to other Mortgage Loans, as having special flood hazards) in an amount not less than amounts prescribed by FEMA; (d) workers’ compensation, if required by law; (e) comprehensive general liability insurance in an amount equal to not less than $1,000,000; all such insurance policies contain clauses providing they are not terminable and may not be terminated without thirty (30) days prior written notice to the mortgagee (except where applicable law requires a shorter period or except for nonpayment of premiums, in which case not less than ten (10) days prior written notice to the mortgagee is required).  In addition, each Mortgage permits the related mortgagee to make premium payments to prevent the cancellation thereof and shall entitle such mortgagee to reimbursement therefor.  Any insurance proceeds in respect of a casualty, loss or taking will be applied either to the repair or restoration of all or part of the related Mortgaged Property or the payment of the outstanding principal balance of the related Purchased Asset together with any accrued interest thereon.  The related Mortgaged Property is insured by an insurance policy, issued by an insurer meeting the requirements of such Purchased Asset (or in the case of a Participation, of the Underlying Mortgage Loan) and having a claims-paying or financial strength rating of at least A:X from A.M. Best Company or “A” (or the equivalent) from S&P, Fitch or Moody’s.  An architectural or engineering consultant has performed an analysis of each of the Mortgaged Properties located in seismic zones 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing the probable maximum loss (“PML”) for the Mortgaged Property in the event of an earthquake.  In such instance, the PML was based on a return period of not less than 100 years, an exposure period of 50 years and a 10% probability of exceedence.  If the resulting report concluded that the PML would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Mortgaged Property was obtained by an insurer rated at least A:X by A.M. Best Company or “A” (or the equivalent) from S&P, Fitch or Moody’s.  The insurer issuing each of the foregoing insurance policies is qualified to write insurance in the jurisdiction where the related Mortgaged Property is located.

 

  

  

  

 

(jj)           All amounts required to be deposited by each Mortgagor at origination under the related Purchased Asset Documents have been deposited at origination and there are no deficiencies with regard thereto.

 

(kk)           Whether or not a Purchased Asset was originated by Seller, with respect to each Purchased Asset originated by Seller and each Purchased Asset originated by any Person other than Seller, as of the date of origination of the related Purchased Asset, and, with respect to each Purchased Asset originated by Seller and any subsequent holder of the Purchased Asset, as of the Purchase Date, there are no actions, suits, arbitrations or governmental investigations or proceedings by or before any court or other Governmental Authority or agency now pending against or affecting the Mortgagor under any Purchased Asset or any of the Mortgaged Properties that, if determined against such Mortgagor or such Mortgaged Property, would materially and adversely affect the value of such Mortgaged Property, the security intended to be provided with respect to the related Purchased Asset, or the ability of such Mortgagor and/or the current use of such Mortgaged Property to generate net cash flow to pay principal, interest and other amounts due under the related Purchased Asset; and there are no such actions, suits or proceedings threatened against such Mortgagor.

 

(ll)           Each Purchased Asset complied at origination, in all material respects, with all of the terms, conditions and requirements of Seller’s underwriting standards applicable to such Purchased Asset and since origination, the Purchased Asset has been serviced in all material respects in a legal manner in conformance with Seller’s servicing standards.

 

(mm)           The originator of the Purchased Asset or Seller has inspected or caused to be inspected each related Mortgaged Property within the 12 months prior to the Purchase Date.

 

(nn)           The Purchased Asset Documents require the Mortgagor to provide the holder of the Purchased Asset with at least annual operating statements, financial statements and except for Purchased Assets for which the related Mortgaged Property is leased to a single tenant, rent rolls.

 

(oo)           All escrow deposits and payments required by the terms of each Purchased Asset are in the possession, or under the control of Seller (or in the case of a Participation, the servicer of the related Mortgage Loan), and all amounts required to be deposited by the applicable Mortgagor under the related Purchased Asset Documents have been deposited, and there are no deficiencies with regard thereto (subject to any applicable notice and cure period).  All of Seller’s interest in such escrows and deposits will be conveyed by Seller to Buyer hereunder.

 

  

  

  

 

(pp)           Each Mortgagor with respect to a Purchased Asset (and, for each Accommodation Loan, each Mortgagee thereunder) is an entity whose organizational documents or related Purchased Asset Documents provide that it is, and at least so long as the Purchased Asset is outstanding will continue to be, a Single Purpose Entity.  For this purpose, “Single Purpose Entity” shall mean a Person, other than an individual, whose organizational documents provide that it shall engage solely in the business of owning and operating the Mortgaged Property and that does not engage in any business unrelated to such property and the financing thereof, does not have any assets other than those related to its interest in the Mortgaged Property or the financing thereof or any indebtedness other than as permitted by the related Mortgage or other Purchased Asset Documents, and the organizational documents of which require that it have its own separate books and records and its own accounts, in each case that are separate and apart from the books and records and accounts of any other Person, except as permitted by the related Mortgage or other Purchased Asset Documents.

 

(qq)           Each of the Purchased Assets contain a “due on sale” clause, which provides for the acceleration of the payment of the unpaid principal balance of the Purchased Asset (or in the case of an A Note or a Participation, of the related Mortgage Loan) if, without the prior written consent of the holder of the Purchased Asset (or in the case of an A Note or a Participation, of the holder of title to the Underlying Mortgage Loan), the property subject to the Mortgage, or any controlling interest therein, is directly or indirectly transferred or sold (except that it may provide for transfers by devise, descent or operation of law upon the death of a member, manager, general partner or shareholder of a Mortgagor and that it may provide for assignments subject to the Purchased Asset holder’s approval of transferee, transfers to affiliates, transfers to family members for estate planning purposes, transfers among existing members, partners or shareholders in Mortgagors or transfers of passive interests so long as the key principals or general partner retains control).  The Purchased Asset Documents contain a “due on encumbrance” clause, which provides for the acceleration of the payment of the unpaid principal balance of the Purchased Asset if the property subject to the Mortgage or any controlling interest in the Mortgagor is further pledged or encumbered, unless the prior written consent of the holder of the Purchased Asset is obtained (except that it may provide for assignments subject to the Purchased Asset holder’s approval of transferee, transfers to affiliates or transfers of passive interests so long as the key principals or general partner retains control).  The Mortgage requires the Mortgagor to pay all reasonable fees and expenses associated with securing the consent or approval of the holder of the Mortgage for a waiver of a “due on sale” or “due on encumbrance” clause or a defeasance provision.  As of the Purchase Date, Seller holds no preferred equity interest in any Mortgagor and Seller holds no mezzanine debt related to such Mortgaged Property.

 

  

  

  

 

(rr)           Each Purchased Asset containing provisions for defeasance of mortgage collateral requires either (a) the prior written consent of, and compliance with the conditions set by, the holder of the Purchased Asset to any defeasance, or (b)(i) the replacement collateral consist of U.S. “government securities,” within the meaning of Treasury Regulations Article 1.860 G-2(a)(8)(i), in an amount sufficient to make all scheduled payments under the Mortgage Note when due (up to the maturity date for the related Purchased Asset, the Anticipated Repayment Date for ARD Loans or the date on which the Mortgagor may prepay the related Purchased Asset without payment of any prepayment penalty); (ii) the loan may be assumed by a Single Purpose Entity approved by the holder of the Purchased Asset; (iii) counsel provide an opinion that the trustee has a perfected security interest in such collateral prior to any other claim or interest; and (iv) such other documents and certifications as the mortgagee may reasonably require, which may include, without limitation, (A) a certification that the purpose of the defeasance is to facilitate the disposition of the mortgaged real property or any other customary commercial transaction and not to be part of an arrangement to collateralize a REMIC offering with obligations that are not real estate mortgages and (B) a certification from an independent certified public accountant that the collateral is sufficient to make all scheduled payments under the Mortgage Note when due.  Each Purchased Asset containing provisions for defeasance provides that, in addition to any cost associated with defeasance, the related Mortgagor shall pay, as of the date the mortgage collateral is defeased, all scheduled and accrued interest and principal due as well as an amount sufficient to defease in full the Purchased Asset.  In addition, if the related Purchased Asset permits defeasance, then the Mortgage Loan documents provide that the related Mortgagor shall (x) pay all reasonable fees associated with the defeasance of the Purchased Asset and all other reasonable expenses associated with the defeasance, or (y) provide all opinions required under the related Purchased Asset Documents, including a REMIC opinion, and any applicable rating agency letters confirming that no downgrade or qualification shall occur as a result of the defeasance.

 

(ss)           In the event that a Purchased Asset is secured by more than one Mortgaged Property, then, in connection with a release of less than all of such Mortgaged Properties, a Mortgaged Property may not be released as collateral for the related Purchased Asset unless, in connection with such release, an amount equal to not less than 125% of the Allocated Loan Amount for such Mortgaged Property is prepaid or, in the case of a defeasance, an amount equal to 125% of the Allocated Loan Amount is defeased through the deposit of replacement collateral (as contemplated in clause (34) hereof) sufficient to make all scheduled payments with respect to such defeased amount, or such release is otherwise in accordance with the terms of the Purchased Asset Documents.

 

(tt)           Each Mortgaged Property is owned in fee by the related Mortgagor, with the exception of (i) Mortgaged Properties that are secured in whole or in a part by a Ground Lease and (ii) out-parcels, and is used and occupied for commercial or multifamily residential purposes in accordance with applicable law.

 

(uu)           Any material non-conformity with applicable zoning laws constitutes a legal non-conforming use or structure that, in the event of casualty or destruction, may be restored or repaired to the full extent of the use or structure at the time of such casualty, or for which law and ordinance insurance coverage has been obtained in amounts consistent with the standards utilized by Seller.

 

(vv)           Neither Seller nor any affiliate thereof has any obligation to make any capital contributions to the related Mortgagor under the Purchased Asset.  The Purchased Asset was not originated for the sole purpose of financing the construction of incomplete improvements on the related Mortgaged Property.

 

  

  

  

 

(ww)           The following statements are true with respect to the related Mortgaged Property: (a) the Mortgaged Property is located on or adjacent to a dedicated road or has access to an irrevocable easement permitting ingress and egress and (b) the Mortgaged Property is served by public or private utilities, water and sewer (or septic facilities) and otherwise appropriate for the use in which the Mortgaged Property is currently being utilized.

 

(xx)           None of the Purchased Asset Documents contain any provision that expressly excuses the related borrower from obtaining and maintaining insurance coverage for acts of terrorism and, in circumstances where terrorism insurance is not expressly required, the mortgagee is not prohibited from requesting that the related borrower maintain such insurance, in each case, to the extent such insurance coverage is generally available for like properties in such jurisdictions at commercially reasonable rates. Each Mortgaged Property is insured by an “all-risk” casualty insurance policy that does not contain an express exclusion for (or, alternatively, is covered by a separate policy that insures against property damage resulting from) acts of terrorism.

 

(yy)           An appraisal of the related Mortgaged Property was conducted in connection with the origination of such Purchased Asset (or in the case of a Participation, the date of origination of the Underlying Mortgage Loan), and such appraisal satisfied the guidelines in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, in either case as in effect on the date such Purchased Asset (or in the case of a Participation, the Underlying Mortgage Loan) was originated.

 

Defined Terms

 

As used in this Exhibit:

 

The term “Allocated Loan Amount” shall mean, for each Mortgaged Property, the portion of principal of the related Purchased Asset allocated to such Mortgaged Property for certain purposes (including determining the release prices of properties, if permitted) under such Purchased Asset as set forth in the related loan documents.  There can be no assurance, and it is unlikely, that the Allocated Loan Amounts represent the current values of individual Mortgaged Properties, the price at which an individual Mortgaged Property could be sold in the future to a willing buyer or the replacement cost of the Mortgaged Properties.

 

The term “Anticipated Repayment Date” shall mean, with respect to any Purchased Asset that is indicated on the Purchased Asset Schedule as having a Revised Rate, the date upon which such Purchased Asset commences accruing interest at such Revised Rate.

 

The term “Assignment of Leases” shall have the meaning specified in paragraph 10 of this Exhibit VI.

 

The term “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 of the jurisdiction wherein the related property is located to reflect the assignment and pledge of the Mortgage, subject to the terms, covenants and provisions of this Agreement.

 

  

  

  

 

The term “ARD Loan” shall mean any Purchased Asset that provides that if the unamortized principal balance thereof is not repaid on its Anticipated Repayment Date, such Purchased Asset will accrue Excess Interest at the rate specified in the related Mortgage Note and the Mortgagor is required to apply excess monthly cash flow generated by the related Mortgaged Property to the repayment of the outstanding principal balance on such Purchased Asset.

 

The term “Due Date” shall mean the day of the month set forth in the related Mortgage Note on which each monthly payment of interest and/or principal thereon is scheduled to be first due.

 

The term “Environmental Site Assessment” shall mean a Phase I environmental report meeting the requirements of the American Society for Testing and Materials, and, if in accordance with customary industry standards a reasonable lender would require it, a Phase II environmental report, each prepared by a licensed third party professional experienced in environmental matters.

 

The term “Excess Cash Flow” shall mean the cash flow from the Mortgaged Property securing an ARD Loan after payments of interest (at the Mortgage Interest Rate) and principal (based on the amortization schedule), and (a) required payments for the tax and insurance fund and ground lease escrows fund, (b) required payments for the monthly debt service escrows, if any, (c) payments to any other required escrow funds and (d) payment of operating expenses pursuant to the terms of an annual budget approved by the servicer and discretionary (lender approved) capital expenditures.

 

The term “Excess Interest” shall mean any accrued and deferred interest on an ARD Loan in accordance with the following terms.  Commencing on the respective Anticipated Repayment Date each ARD Loan (pursuant to its existing terms or a unilateral option, as defined in Treasury Regulations under Article 1001 of the Code, in the Purchased Assets exercisable during the term of the Purchased Asset) generally will bear interest at a fixed rate (the “Revised Rate”) per annum equal to the Mortgage Interest Rate plus a percentage specified in the related Mortgage Loan Documents.  Until the principal balance of each such Purchased Asset has been reduced to zero (pursuant to its existing terms or a unilateral option, as defined in Treasury Regulations under Article 1001 of the Code, in the Purchased Assets exercisable during the term of the Mortgage Loan), such Purchased Asset will only be required to pay interest at the Mortgage Interest Rate and the interest accrued at the excess of the related Revised Rate over the related Mortgage Interest Rate will be deferred (such accrued and deferred interest and interest thereon, if any, is “Excess Interest”).

 

The term “Mortgage Interest Rate” shall mean the fixed rate, or the formula applicable to determine the floating rate, of interest per annum that each Purchased Asset bears as of the Purchase Date.

 

The term “Permitted Encumbrances” shall mean:

 

	
  

	
(I)

	
the lien of current real property taxes, water charges, sewer rents and assessments not yet delinquent or accruing interest or penalties;

 

  

  

  

 

	
  

	
(II)

	
covenants, conditions and restrictions, rights of way, easements and other matters of public record acceptable to mortgage lending institutions generally and referred to in the related mortgagee’s title insurance policy;

 

	
  

	
(III)

	
other matters to which like properties are commonly subject and which are acceptable to mortgage lending institutions generally, and

 

	
  

	
(IV)

	
the rights of tenants, as tenants only, whether under ground leases or space leases at the Mortgaged Property

 

that together do not materially and adversely affect the related Mortgagor’s ability to timely make payments on the related Purchased Asset, which do not materially interfere with the benefits of the security intended to be provided by the related Mortgage or the use, for the use currently being made, the operation as currently being operated, enjoyment, value or marketability of such Mortgaged Property, provided, however, that, for the avoidance of doubt, Permitted Encumbrances shall exclude all pari passu, second, junior and subordinated mortgages but shall not exclude mortgages that secure Purchased Assets that are cross-collateralized with other Purchased Assets.

 

The term “Revised Rate” shall mean, with respect to those Purchased Assets on the Purchased Asset Schedule indicated as having a revised rate, the increased interest rate after the Anticipated Repayment Date (in the absence of a default) for each applicable Purchased Asset, as calculated and as set forth in the related Purchased Asset.

 

  

  

  

 

 

  

  

  

 

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A B-NOTE OR PARTICIPATION INTEREST

IN A PERFORMING COMMERCIAL

MORTGAGE LOAN SECURED BY A FIRST LIEN ON

A MULTIFAMILY OR COMMERCIAL PROPERTY

 

(a)           The representations and warranties set forth in this Exhibit VI regarding the senior mortgage loan from which the Purchased Asset is derived shall be deemed incorporated herein in respect of such senior mortgage loan, provided, however, that, in the event that such senior mortgage loan was not originated by Seller or an Affiliate of Seller, Seller shall be deemed to be making the representations set forth in this Exhibit VI with respect to such senior mortgage loan to the best of Seller’s knowledge.

 

(b)           The information set forth in the Purchased Asset Schedule is complete, true and correct in all material respects.

 

(c)           There exists no material default, breach, violation or event of acceleration (and no event that, with the passage of time or the giving of notice, or both, would constitute any of the foregoing) under the documents evidencing or securing the Purchased Asset, in any such case to the extent the same materially and adversely affects the value of the Purchased Asset and the related underlying real property.

 

(d)           Except with respect to the enforceability of any provisions requiring the payment of default interest, late fees, additional interest, prepayment premiums or yield maintenance charges, neither the Purchased Asset nor any of the related Purchased Asset Documents is subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of any such Purchased Asset Documents, or the exercise (in compliance with procedures permitted under applicable law) of any right thereunder, render any Purchased Asset Documents subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defense, including the defense of usury (subject to anti-deficiency or one form of action laws and to bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law)), and no such right of rescission, set-off, abatement, diminution, valid counterclaim or defense has been asserted with respect thereto.

 

(e)           The Purchased Asset Documents have been duly and properly executed by the originator of the Purchased Asset, and each is the legal, valid and binding obligation of the parties thereto, enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).  The Purchased Asset is not usurious.

 

  

  

  

 

(f)           The terms of the related Purchased Asset Documents have not been impaired, waived, altered or modified in any material respect (other than by a written instrument that is included in the related Purchased Asset File).

 

(g)           The assignment of the Purchased Asset constitutes the legal, valid and binding assignment of such Purchased Asset from Seller to or for the benefit of Buyer enforceable in accordance  with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

(h)           All representations and warranties in the Purchased Asset Documents and in the underlying documents for the performing commercial mortgage loan secured by a first lien on a multifamily or commercial property to which such Purchased Asset relates are true and correct in all material respects.

 

(i)           The servicing and collection practices used by Seller for the Purchased Asset have complied with applicable law in all material respects and are consistent with those employed by prudent servicers of comparable Purchased Assets.

 

(j)           Seller is not a debtor in any state or federal bankruptcy or insolvency proceeding.

 

(k)           As of the Purchase Date, there is no payment default, giving effect to any applicable notice and/or grace period, and there is no other material default under any of the related Purchased Asset Documents, giving effect to any applicable notice and/or grace period; no such material default or breach has been waived by Seller or on its behalf or by Seller’s predecessors in interest with respect to the Purchased Assets; and no event has occurred that, with the passing of time or giving of notice would constitute a material default or breach; provided, however, that the representations and warranties set forth in this sentence do not cover any default, breach, violation or event of acceleration that specifically pertains to or arises out of any subject matter otherwise covered by any other representation or warranty made by Seller in this Exhibit VI.  No Purchased Asset has been accelerated and no foreclosure or power of sale proceeding has been initiated in respect of the related Mortgage.  Seller has not waived any material claims against the related Mortgagor under any non-recourse exceptions contained in the Mortgage Note.

 

(l)           No Purchased Asset has been satisfied, canceled, subordinated (except to the senior mortgage loan from which the Purchased Asset is derived), released or rescinded, in whole or in part, and the related Mortgagor has not been released, in whole or in part, from its obligations under any related Purchased Asset Document.

 

  

  

  

 

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A CMBS

 

(a)           The CMBS consists of pass-through certificates representing beneficial ownership interests in one or more REMICs consisting of one or more first lien mortgage loans secured by commercial and/or multifamily properties.

 

(b)           Immediately prior to the sale, transfer and assignment to Buyer thereof, Seller had good and marketable title to, and was the sole owner and holder of, such CMBS, and Seller is transferring such CMBS free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering such CMBS.

 

(c)           Seller has full right, power and authority to sell and assign such CMBS and such CMBS has not been cancelled, satisfied or rescinded in whole or part nor has any instrument been executed that would effect a cancellation, satisfaction or rescission thereof.

 

(d)           Other than consents and approvals obtained as of the related Purchase Date or those already granted in the related documents governing such CMBS, no consent or approval by any Person is required in connection with Buyer’s acquisition of such CMBS, for Buyer’s exercise of any rights or remedies in respect of such CMBS or for Buyer’s sale or other disposition of such CMBS.  No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

 

(e)           Upon consummation of the purchase contemplated to occur in respect of such CMBS on the Purchase Date therefor, Seller will have validly and effectively conveyed to Buyer all legal and beneficial interest in and to such CMBS free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature.

 

(f)           The CMBS is a physical security in registered form, or is in book-entry form and held through the facilities of (a) The Depository Trust Corporation in New York, New York, or (b) another clearing organization or book-entry system reasonably acceptable to Buyer.

 

(g)           With respect to any CMBS that is a physical security, Seller has delivered to Buyer or its designee such physical security, along with any and all certificates and assignments necessary to transfer such security under the issuing documents of such CMBS.

 

(h)           With respect to any CMBS registered with DTC or another clearing organization, Seller has delivered to Buyer or its designee evidence of re-registration to the securities intermediary in Buyer’s name on behalf of Buyer.

 

(i)           All information contained in the related Purchased Asset File (or as otherwise provided to Buyer) in respect of such CMBS is accurate and complete in all material respects.

 

  

  

  

 

(j)           As of the date of its issuance, such CMBS complied in all material respects with, or was exempt from, all requirements of federal, state or local law relating to the issuance thereof including, without limitation, any registration requirements of the Securities Act of 1933, as amended.

 

(k)           Except as included in the Purchased Asset File, there is no document that by its terms modifies or affects the rights and obligations of the holder of such CMBS, the terms of the related pooling and servicing agreement or any other agreement relating to the CMBS, and, since issuance, there has been no material change or waiver to any term or provision of any such document, instrument or agreement.

 

(l)           There is no (i) monetary default, breach or violation of any pooling and servicing agreement or other document governing or pertaining to such CMBS, (ii) material non-monetary default, breach or violation of any such agreement or other document or other document governing or pertaining to such CMBS, or (iii) event that, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration under such documents and agreements.

 

(m)           No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over Seller is required for any transfer or assignment of such CMBS.

 

(n)           Except as included in the Purchased Asset File, (i) no interest shortfalls have occurred and no realized losses have been applied to any CMBS or otherwise incurred with respect to any mortgage loan related to such CMBS nor any class of CMBS issued under the same governing documents as any CMBS, and (ii) Seller has no knowledge of any circumstances that could have a Material Adverse Effect on the CMBS.

 

(o)           With respect to CMBS backed by a single mortgaged asset, there are no circumstances or conditions with respect to the CMBS, the Underlying Mortgaged Property or the related Mortgagor’s credit standing that can reasonably be expected to have a Material Adverse Effect on the CMBS.

 

(p)           Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such CMBS is or may become obligated.

 

(q)           There is no material inaccuracy in any servicer report or trustee report delivered to it (and, in turn, delivered pursuant to the terms of this Agreement) in connection with such CMBS.

 

(r)           No servicer of the CMBS has made any advances, directly or indirectly, with respect to the CMBS or to any mortgage loan relating to such CMBS.

 

  

  

  

 

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A CRE CDO

 

(a)           Immediately prior to the sale, transfer and assignment to Buyer thereof, Seller had good and marketable title to, and was the sole owner and holder of, such CRE CDO, and Seller is transferring such CRE CDO free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering such CRE CDO.

 

(b)           Seller has full right, power and authority to sell and assign such CRE CDO and such CRE CDO has not been cancelled, satisfied or rescinded in whole or part nor has any instrument been executed that would effect a cancellation, satisfaction or rescission thereof.

 

(c)           Other than consents and approvals obtained as of the related Purchase Date or those already granted in the related documents governing such CRE CDO, no consent or approval by any Person is required in connection with Buyer’s acquisition of such CRE CDO, for Buyer’s exercise of any rights or remedies in respect of such CRE CDO or for Buyer’s sale or other disposition of such CRE CDO.  No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

 

(d)           Upon consummation of the purchase contemplated to occur in respect of such CRE CDO on the Purchase Date therefor, Seller will have validly and effectively conveyed to Buyer all legal and beneficial interest in and to such CRE CDO free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature.

 

(e)           The CRE CDO is a physical security in registered form, or is in book-entry form and held through the facilities of (a) The Depository Trust Corporation in New York, New York, or (b) another clearing organization or book-entry system reasonably acceptable to Buyer.

 

(f)           With respect to any CRE CDO that is a physical security, Seller has delivered to Buyer or its designee such physical security, along with any and all certificates and assignments necessary to transfer such security under the issuing documents of such CRE CDO.

 

(g)           With respect to any CRE CDO registered with DTC or another clearing organization, Seller has delivered to Buyer or its designee evidence of re-registration to the securities intermediary in Buyer’s name on behalf of Buyer.

 

(h)           All information contained in the related Purchased Asset File (or as otherwise provided to Buyer) in respect of such CRE CDO is accurate and complete in all material respects.

 

(i)           To the knowledge of Seller, as of the date of its issuance, such CRE CDO complied in all material respects with, or was exempt from, all requirements of federal, state or local law relating to the issuance thereof including, without limitation, any registration requirements of the Securities Act of 1933, as amended.

 

  

  

  

 

(j)           Except as included in the Purchased Asset File, there is no document that by its terms modifies or affects the rights and obligations of the holder of such CRE CDO, the terms of the related pooling and servicing agreement or any other agreement relating to the CRE CDO, and, since issuance, there has been no material change or waiver to any term or provision of any such document, instrument or agreement.

 

(k)           There is no (i) monetary default, breach or violation exists with respect to any pooling and servicing agreement, indenture, or other document governing or pertaining to such CRE CDO, (ii) material non-monetary default, breach or violation exists with respect to any such agreement, indenture, or other document governing or pertaining to such CRE CDO, or (iii) event that, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration under such documents and agreements.

 

(l)           No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over Seller is required for any transfer or assignment of such CRE CDO.

 

(m)           Except as included in the Purchased Asset File, (i) no interest shortfalls have occurred and no realized losses have been applied to any CRE CDO or otherwise incurred with respect to any mortgage loan related to such CRE CDO nor any class of CRE CDO issued under the same governing documents as any CRE CDO, and (ii) Seller has no knowledge of any circumstances that could have a Material Adverse Effect on the CRE CDO.

 

(n)           Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such CRE CDO is or may become obligated.

 

(o)           There is no material inaccuracy in any servicer report or trustee report delivered to it (and, in turn, delivered pursuant to the terms of this Agreement) in connection with such CRE CDO.

 

(p)           No fraudulent acts were committed by Seller in connection with its acquisition of such CRE CDO.

 

(q)           No servicer of the CRE CDO has made any advances, directly or indirectly, with respect to the CRE CDO or to any mortgage loan relating to such CRE CDO.

 

  

  

  

 

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A MEZZANINE LOAN

 

(a)           The Mezzanine Loan is a performing mezzanine loan secured by a pledge of all of the Capital Stock of a Mortgagor that owns income producing commercial real estate.

 

(b)           As of the Purchase Date, such Mezzanine Loan complies in all material respects with, or is exempt from, all requirements of federal, state or local law relating to such Mezzanine Loan.

 

(c)           Immediately prior to the sale, transfer and assignment to Buyer thereof, Seller had good and marketable title to, and was the sole owner and holder of, such Mezzanine Loan, and Seller is transferring such Mezzanine Loan free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering such Mezzanine Loan.  Upon consummation of the purchase contemplated to occur in respect of such Mezzanine Loan on the Purchase Date therefor, Seller will have validly and effectively conveyed to Buyer all legal and beneficial interest in and to such Mezzanine Loan free and clear of any pledge, lien, encumbrance or security interest.

 

(d)           No fraudulent acts were committed by Seller in connection with its acquisition or origination of such Mezzanine Loan nor were any fraudulent acts committed by any Person in connection with the origination of such Mezzanine Loan.

 

(e)           All information contained in the related Underwriting Package (or as otherwise provided to Buyer) in respect of such Mezzanine Loan is accurate and complete in all material respects.

 

(f)           Except as included in the Underwriting Package, Seller is not a party to any document, instrument or agreement, and there is no document, that by its terms modifies or affects the rights and obligations of any holder of such Mezzanine Loan and Seller has not consented to any material change or waiver to any term or provision of any such document, instrument or agreement and no such change or waiver exists.

 

(g)           Such Mezzanine Loan is presently outstanding, the proceeds thereof have been fully and properly disbursed and, except for amounts held in escrow by Seller, there is no requirement for any future advances thereunder.

 

(h)           Seller has full right, power and authority to sell and assign such Mezzanine Loan and such Mezzanine Loan or any related Mezzanine Note has not been cancelled, satisfied or rescinded in whole or part nor has any instrument been executed that would effect a cancellation, satisfaction or rescission thereof.

 

(i)           Other than consents and approvals obtained as of the related Purchase Date or those already granted in the documentation governing such Mezzanine Loan (the “Mezzanine Loan Documents”), no consent or approval by any Person is required in connection with Seller’s sale and/or Buyer’s acquisition of such Mezzanine Loan, for Buyer’s exercise of any rights or remedies in respect of such Mezzanine Loan or for Buyer’s sale, pledge or other disposition of such Mezzanine Loan.  No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

 

  

  

  

 

(j)           The Mezzanine Collateral is secured by a pledge of equity ownership interests in the related borrower under the Underlying Mortgage Loan or a direct or indirect owner of the related borrower and the security interest created thereby has been fully perfected in favor of Seller as Mezzanine Lender.

 

(k)           The Underlying Property Owner has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, with requisite power and authority to own its assets and to transact the business in which it is now engaged, the sole purpose of the Underlying Property Owner under its organizational documents is to own, finance, sell or otherwise manage the Properties and to engage in any and all activities related or incidental thereto, and the Mortgaged Properties constitute the sole assets of the Underlying Property Owner.

 

(l)           The Underlying Property Owner has good and marketable title to the Underlying Mortgaged Property, no claims under the title policies insuring the Underlying Property Owner’s title to the Properties have been made, and the Underlying Property Owner has not received any written notice regarding any material violation of any easement, restrictive covenant or similar instrument affecting the Underlying Mortgaged Property.

 

(m)           The representations and warranties made by the borrower (the “Mezzanine Borrower”) in the Mezzanine Loan Documents were true and correct in all material respects as of the date such representations and warranties were stated to be true therein, and there has been no adverse change with respect to the Mezzanine Loan, the Mezzanine Borrower, the Underlying Mortgaged Property or the Underlying Property Owner that would render any such representation or warranty not true or correct in any material respect as of the Purchase Date.

 

(n)           The Mezzanine Loan Documents provide for the acceleration of the payment of the unpaid principal balance of the Mezzanine Loan if (i) the related borrower voluntarily transfers or encumbers all or any portion of any related Mezzanine Collateral, or (ii) any direct or indirect interest in the related borrower is voluntarily transferred or assigned, other than, in each case, as permitted under the terms and conditions of the related loan documents.

 

(o)           Pursuant to the terms of the Mezzanine Loan Documents: (a) no material terms of any related Mortgage may be waived, canceled, subordinated or modified in any material respect and no material portion of such Mortgage or the Underlying Mortgaged Property may be released without the consent of the holder of the Mezzanine Loan; (b) no material action may be taken by the Underlying Property Owner with respect to the Underlying Mortgaged Property without the consent of the holder of the Mezzanine Loan; (c) the holder of the Mezzanine Loan is entitled to approve the budget of the Underlying Property Owner as it relates to the Underlying Mortgaged Property; and (d) the holder of the Mezzanine Loan's consent is required prior to the Underlying Property Owner incurring any additional indebtedness.

 

  

  

  

 

(p)           There is no (i) monetary default, breach or violation with respect to such Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the owner of the Underlying Mortgaged Property (the “Underlying Property Owner”), (ii) material non-monetary default, breach or violation with respect to such Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the Underlying Property Owner or (iii) event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration.

 

(q)           No default or event of default has occurred under any agreement pertaining to any lien or other interest that ranks pari passu with or senior to the interests of the holder of such Mezzanine Loan or with respect to any Underlying Mortgage Loan or other indebtedness in respect of the related Underlying Mortgaged Property and there is no provision in any agreement related to any such lien, interest or loan which would provide for any increase in the principal amount of any such lien, other interest or loan.

 

(r)           Seller’s security interest in the Mezzanine Loan is covered by a UCC-9 insurance policy (the “UCC-9 Policy”) in the maximum principal amount of the Mezzanine Loan insuring that the related pledge is a valid first priority lien on the collateral pledged in respect of such Mezzanine Loan (the “Mezzanine Collateral”), subject only to the exceptions stated therein (or a pro forma title policy or marked up title insurance commitment on which the required premium has been paid exists which evidences that such UCC-9 Policy will be issued), such UCC-9 Policy (or, if it has yet to be issued, the coverage to be provided thereby) is in full force and effect, no material claims have been made thereunder and no claims have been paid thereunder, Seller has not done, by act or omission, anything that would materially impair the coverage under the UCC-9 Policy and as of the Purchase Date, the UCC-9 Policy (or, if it has yet to be issued, the coverage to be provided thereby) will inure to the benefit of Buyer without the consent of or notice to the insurer.

 

(s)           The Mezzanine Loan, and each party involved in the origination of the Mezzanine Loan, complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.

 

(t)           Seller has delivered to Buyer or its designee the original promissory note made in respect of such Mezzanine Loan, together with an original assignment thereof executed by Seller in blank.

 

(u)           Seller has not received any written notice that the Mezzanine Loan may be subject to reduction or disallowance for any reason, including without limitation, any setoff, right of recoupment, defense, counterclaim or impairment of any kind.

 

(v)           Seller has no obligation to make loans to, make guarantees on behalf of, or otherwise extend credit to, or make any of the foregoing for the benefit of, the Mezzanine Borrower or any other person under or in connection with the Mezzanine Loan.

 

(w)           The servicing and collection practices used by the servicer of the Mezzanine Loan, and the origination practices of the related originator, have been in all respects legal, proper and prudent and have met customary industry standards by prudent institutional commercial mezzanine lenders and mezzanine loan servicers except to the extent that, in connection with its origination, such standards were modified as reflected in the documentation delivered to Buyer.

 

  

  

  

 

(x)           If applicable, the ground lessor consented to and acknowledged that (i) the Mezzanine Loan is permitted / approved, (ii) any foreclosure of the Mezzanine Loan and related change in ownership of the ground lessee will not require the consent of the ground lessor or constitute a default under the ground lease, (iii) copies of default notices would be sent to Mezzanine Lender and (iv) it would accept cure from Mezzanine Lender on behalf of the ground lessee.

 

(y)           To the extent the Buyer was granted a security interest with respect to the Mezzanine Loan, such interest (i) was given for due consideration, (ii) has attached, (iii) is perfected, (iv) is a first priority Lien, and (v) has been appropriately assigned to the Buyer by the Underlying Property Owner.

 

(z)           No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority is required for any transfer or assignment by the holder of such Mezzanine Loan.

 

(aa)           Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such Mezzanine Loan is or may become obligated.

 

(bb)           Seller has not advanced funds, or knowingly received any advance of funds from a party other than the borrower relating to such Mezzanine Loan, directly or indirectly, for the payment of any amount required by such Mezzanine Loan.

 

(cc)           All real estate taxes and governmental assessments, or installments thereof, which would be a lien on any related Underlying Mortgaged Property and that prior to the Purchase Date for the related Purchased Asset have become delinquent in respect of such Underlying Mortgaged Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established.  For purposes of this representation and warranty, real estate taxes and governmental assessments and installments thereof shall not be considered delinquent until the earlier of (a) the date on which interest and/or penalties would first be payable thereon and (b) the date on which enforcement action is entitled to be taken by the related taxing authority.

 

(dd)           As of the Purchase Date for the related Purchased Asset, each related Underlying Mortgaged Property was free and clear of any material damage (other than deferred maintenance for which escrows were established at origination) that would affect materially and adversely the value of such Underlying Mortgaged Property as security for the related Underlying Mortgage Loan and there was no proceeding pending or, based solely upon the delivery of written notice thereof from the appropriate condemning authority, threatened for the total or partial condemnation of such Underlying Mortgaged Property.

 

  

  

  

 

(ee)           As of the Purchase Date of the Mezzanine Loan, all insurance coverage required under the Mezzanine Loan Documents and/or any Mortgage Loan related to the Underlying Mortgaged Property, which insurance covered such risks as were customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located, and with respect to a fire and extended perils insurance policy, is in an amount (subject to a customary deductible) at least equal to the lesser of (i) the replacement cost of improvements located on such Underlying Mortgaged Property, or (ii) the outstanding principal balance of the Underlying Mortgage Loan, and in any event, the amount necessary to prevent operation of any co-insurance provisions; and, except if such Underlying Mortgaged Property is operated as a mobile home park, is also covered by business interruption or rental loss insurance, in an amount at least equal to 12 months of operations of the related Underlying Mortgaged Property, all of which was in full force and effect with respect to each related Underlying Mortgaged Property; and, as of the Purchase Date for the related Purchased Asset, all insurance coverage required under the Mezzanine Loan Documents and/or any Underlying Mortgage Loan related to the Underlying Mortgaged Property, which insurance covers such risks and is in such amounts as are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located, is in full force and effect with respect to each related Underlying Mortgaged Property; all premiums due and payable through the Purchase Date for the related Purchased Asset have been paid; and no notice of termination or cancellation with respect to any such insurance policy has been received by Seller; and except for certain amounts not greater than amounts which would be considered prudent by an institutional commercial and/or multifamily mortgage lender with respect to a similar mortgage loan and which are set forth in the Mezzanine Loan Documents and/or any Underlying Mortgage Loan related to the Underlying Mortgaged Property, any insurance proceeds in respect of a casualty loss, will be applied either (i) to the repair or restoration of all or part of the related Underlying Mortgaged Property or (ii) the reduction of the outstanding principal balance of the Underlying Mortgage Loan, subject in either case to requirements with respect to leases at the related Underlying Mortgaged Property and to other exceptions customarily provided for by prudent institutional lenders for similar loans.  The Underlying Mortgaged Property is also covered by comprehensive general liability insurance against claims for personal and bodily injury, death or property damage occurring on, in or about the related Underlying Mortgaged Property, in an amount customarily required by prudent institutional lenders.  An architectural or engineering consultant has performed an analysis of the Underlying Mortgaged Properties located in seismic zone 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing the probable maximum loss (“PML”) for the Underlying Mortgaged Property in the event of an earthquake.  In such instance, the PML was based on a 475 year lookback with a 10% probability of exceedance in a 50 year period.  If the resulting report concluded that the PML would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Underlying Mortgaged Property was obtained by an insurer rated at least A-:V by A.M. Best Company or “BBB-” (or the equivalent) from S&P and Fitch or “Baa3” (or the equivalent) from Moody’s.  If the Underlying Mortgaged Property is located in Florida or within 25 miles of the coast of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina or South Carolina such Underlying Mortgaged Property is insured by windstorm insurance in an amount at least equal to the lesser of (i) the outstanding principal balance of such Underlying Mortgage Loan and (ii) 100% of the full insurable value, or 100% of the replacement cost, of the improvements located on the related Underlying Mortgaged Property.

 

  

  

  

 

(ff)           The insurance policies contain a standard Mortgagee clause naming the Mortgagee, its successors and assigns as loss payee, in the case of a property insurance policy, and additional insured in the case of a liability insurance policy and provide that they are not terminable without 30 days prior written notice to the Mortgagee (or, with respect to non-payment, 10 days prior written notice to the Mortgagee) or such lesser period as prescribed by applicable law.  Each Mortgage requires that the Mortgagor maintain insurance as described above or permits the Mortgagee to require insurance as described above, and permits the Mortgagee to purchase such insurance at the Mortgagor’s expense if Mortgagor fails to do so.

 

(gg)           There is no material and adverse environmental condition or circumstance affecting the Underlying Mortgaged Property; there is no material violation of any applicable Environmental Law with respect to the Underlying Mortgaged Property; neither Seller nor the Underlying Property Owner has taken any actions which would cause the Underlying Mortgaged Property not to be in compliance with all applicable Environmental Laws; the Underlying Mortgage Loan documents require the borrower to comply with all Environmental Laws; and each Mortgagor has agreed to indemnify the Mortgagee for any losses resulting from any material, adverse environmental condition or failure of the Mortgagor to abide by such Environmental Laws or has provided environmental insurance.

 

(hh)           No borrower under the Mezzanine Loan nor any Mortgagor under any Underlying Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency proceeding.

 

(ii)           Each related Underlying Mortgaged Property was inspected by or on behalf of the related originator or an affiliate during the 12 month period prior to the related origination date.

 

(jj)           There are no material violations of any applicable zoning ordinances, building codes and land laws applicable to the Underlying Mortgaged Property or the use and occupancy thereof which (i) are not insured by an ALTA lender’s title insurance policy (or a binding commitment therefor), or its equivalent as adopted in the applicable jurisdiction, or a law and ordinance insurance policy or (ii) would have a material adverse effect on the value, operation or net operating income of the Underlying Mortgaged Property.  The Mezzanine Loan Documents and the Underlying Mortgage Loan documents require the Underlying Mortgaged Property to comply with all applicable laws and ordinances.

 

(kk)           None of the material improvements which were included for the purposes of determining the appraised value of any related Underlying Mortgaged Property at the time of the origination of the Mezzanine Loan or any related Underlying Mortgage Loan lies outside of the boundaries and building restriction lines of such property (except Underlying Mortgaged Properties which are legal non-conforming uses), to an extent which would have a material adverse affect on the value of the Underlying Mortgaged Property or the related Mortgagor’s use and operation of such Underlying Mortgaged Property (unless affirmatively covered by title insurance) and no improvements on adjoining properties encroached upon such Underlying Mortgaged Property to any material and adverse extent (unless affirmatively covered by title insurance).

 

  

  

  

 

(ll)           As of the Purchase Date for the related Purchased Asset, there was no pending action, suit or proceeding, or governmental investigation of which Seller, the Mezzanine Borrower or the Underlying Property Owner has received notice, against the Mortgagor or the related Underlying Mortgaged Property the adverse outcome of which could reasonably be expected to materially and adversely affect the Mezzanine Loan or the Underlying Mortgage Loan.

 

(mm)           The improvements located on the Underlying Mortgaged Property are either not located in a federally designated special flood hazard area or, if so located, the Mortgagor is required to maintain or the Mortgagee maintains, flood insurance with respect to such improvements and such policy is in full force and effect in an amount no less than the lesser of (i) the original principal balance of the Underlying Mortgage Loan, (ii) the value of such improvements on the related Underlying Mortgaged Property located in such flood hazard area or (iii) the maximum allowed under the related federal flood insurance program.

 

(nn)           Except for Mortgagors under Underlying Mortgage Loans the Underlying Mortgaged Property with respect to which includes a Ground Lease, the related Mortgagor (or its affiliate) has title in the fee simple interest in each related Underlying Mortgaged Property.

 

(oo)           The related Underlying Mortgaged Property is not encumbered, and none of the Mezzanine Loan Documents or any Underlying Mortgage Loan documents permits the related Underlying Mortgaged Property to be encumbered subsequent to the Purchase Date of the related Purchased Asset without the prior written consent of the holder thereof, by any lien securing the payment of money junior to or of equal priority with, or superior to, the lien of the related Mortgage (other than Title Exceptions, taxes, assessments and contested mechanics and materialmens liens that become payable after such Purchase Date).

 

(pp)           Each related Underlying Mortgaged Property constitutes one or more complete separate tax lots (or the related Mortgagor has covenanted to obtain separate tax lots and a Person has indemnified the Mortgagee for any loss suffered in connection therewith or an escrow of funds in an amount sufficient to pay taxes resulting from a breach thereof has been established) or is subject to an endorsement under the related title insurance policy.

 

(qq)           An appraisal of the related Underlying Mortgaged Property was conducted in connection with the origination of the Underlying Mortgage Loan; and such appraisal satisfied either (A) the requirements of the “Uniform Standards of Professional Appraisal Practice” as adopted by the Appraisal Standards Board of the Appraisal Foundation, or (B) the guidelines in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act or 1989, in either case as in effect on the date such Underlying Mortgage Loan was originated.

 

(rr)           The related Underlying Mortgaged Property is served by public utilities, water and sewer (or septic facilities) and otherwise appropriate for the use in which the Underlying Mortgaged Property is currently being utilized.

 

(ss)           With respect to each related Underlying Mortgaged Property consisting of a Ground Lease, Seller represents and warrants the following with respect to the related Ground Lease:

 

  

  

  

 

Such Ground Lease or a memorandum thereof has been or will be duly recorded no later than 30 days after the Purchase Date of the related Purchased Asset and such Ground Lease permits the interest of the lessee thereunder to be encumbered by the related Mortgage or, if consent of the lessor thereunder is required, it has been obtained prior to the Purchase Date.

 

Upon the foreclosure of the Underlying Mortgage Loan (or acceptance of a deed in lieu thereof), the Mortgagor’s interest in such Ground Lease is assignable to the Mortgagee under the leasehold estate and its assigns without the consent of the lessor thereunder (or, if any such consent is required, it has been obtained prior to the Purchase Date).

 

Such Ground Lease may not be amended, modified, canceled or terminated without the prior written consent of the Mortgagee and any such action without such consent is not binding on the Mortgagee, its successors or assigns, except termination or cancellation if (i) an event of default occurs under the Ground Lease, (ii) notice thereof is provided to the Mortgagee and (iii) such default is curable by the Mortgagee as provided in the Ground Lease but remains uncured beyond the applicable cure period.

 

Such Ground Lease is in full force and effect, there is no material default under such Ground Lease, and there is no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default under such Ground Lease.

 

The Ground Lease or ancillary agreement between the lessor and the lessee requires the lessor to give notice of any default by the lessee to the Mortgagee.  The Ground Lease or ancillary agreement further provides that no notice given is effective against the Mortgagee unless a copy has been given to the Mortgagee in a manner described in the Ground Lease or ancillary agreement.

 

The Ground Lease (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the Mortgage, subject, however, to only the Title Exceptions or (ii) is subject to a subordination, non-disturbance and attornment agreement to which the Mortgagee on the lessor’s fee interest in the Underlying Mortgaged Property is subject.

 

A Mortgagee is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the Ground Lease) to cure any curable default under such Ground Lease before the lessor thereunder may terminate such Ground Lease.

 

Such Ground Lease has an original term (together with  any extension options, whether or not currently exercised, set forth therein all of which can be exercised by the Mortgagee if the Mortgagee acquires the lessee’s rights under the Ground Lease) that extends not less than 20 years beyond the stated maturity date.

 

  

  

  

 

Under the terms of such Ground Lease, any estoppel or consent letter received by the Mortgagee from the lessor, and the related Mortgage, taken together, any related insurance proceeds or condemnation award (other than in respect of a total or substantially total loss or taking) will be applied either to the repair or restoration of all or part of the related Underlying Mortgaged Property, with the Mortgagee or a trustee appointed by it having the right to hold and disburse such proceeds as repair or restoration progresses, or to the payment or defeasance of the outstanding principal balance of the Underlying Mortgage Loan, together with any accrued interest (except in cases where a different allocation would not be viewed as commercially unreasonable by any commercial mortgage lender, taking into account the relative duration of the Ground Lease and the related Mortgage and the ratio of the market value of the related Underlying Mortgaged Property to the outstanding principal balance of such Underlying Mortgage Loan).

 

The Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial lender.

 

The ground lessor under such Ground Lease is required to enter into a new lease upon termination of the Ground Lease for any reason, including the rejection of the Ground Lease in bankruptcy.

 

  

  

  

 

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A PARTICIPATION INTEREST IN A MEZZANINE LOAN

 

 

(a)           The Purchased Asset is a senior participation interest in a Mezzanine Loan (a “Mezzanine Participation”).

 

(b)           As of the Purchase Date, the Mezzanine Participation complies in all material respects with, or is exempt from, all requirements of federal, state or local law relating to the Mezzanine Participation.

 

(c)           Immediately prior to the sale, transfer and assignment to Buyer thereof, Seller had good and marketable title to, and was the sole owner and holder of, the Mezzanine Participation, and Seller is transferring the Mezzanine Participation free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering the Mezzanine Participation.  Upon consummation of the purchase contemplated to occur in respect of the Mezzanine Participation on the Purchase Date therefor, Seller will have validly and effectively conveyed to Buyer all legal and beneficial interest in and to the Mezzanine Participation free and clear of any pledge, lien, encumbrance or security interest.

 

(d)           No fraudulent acts were committed by Seller in connection with its acquisition or origination of the Mezzanine Participation nor were any fraudulent acts committed by any Person in connection with the origination of the Mezzanine Participation.

 

(e)           All information contained in the related Underwriting Package (or as otherwise provided to Buyer) in respect of the Mezzanine Participation is accurate and complete in all material respects.

 

(f)           Seller has full right, power and authority to sell and assign the Mezzanine Participation and the Mezzanine Participation has not been cancelled, satisfied or rescinded in whole or part nor has any instrument been executed that would effect a cancellation, satisfaction or rescission thereof.

 

(g)           Other than consents and approvals obtained as of the related Purchase Date, no consent or approval by any Person is required in connection with Seller’s sale and/or Buyer’s acquisition of the Mezzanine Participation, for Buyer’s exercise of any rights or remedies in respect of the Mezzanine Participation or for Buyer’s sale, pledge or other disposition of the Mezzanine Participation.  No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

 

(h)           No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority is required for any transfer or assignment by the holder of the Mezzanine Participation.

 

  

  

  

 

(i)           Seller has delivered to Buyer or its designee the original promissory note, certificate or other similar indicia of ownership of the Mezzanine Participation, however denominated, together with an original assignment thereof, executed by Seller in blank, or, with respect to a participation interest, reissued in Buyer’s name (or such other name as designated by the Buyer).

 

(j)           No (i) monetary default, breach or violation exists with respect to any agreement or other document governing or pertaining to the Mezzanine Participation, (ii) material non-monetary default, breach or violation exists with respect to the Mezzanine Participation, or (iii) event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration.

 

(k)           The Mezzanine Participation has not been and shall not be deemed to be a Security within the meaning of the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.

 

(l)           Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of the Mezzanine Participation is or may become obligated.

 

(m)           No issuer of the Mezzanine Participation is a debtor in any state or federal bankruptcy or insolvency proceeding.

 

(n)           With respect to the Mezzanine Participation, except as set forth in the related documents delivered to Buyer, the terms of the related documents have not been waived, modified, altered, satisfied, impaired, canceled, subordinated or rescinded in any manner which materially interferes with the security intended to be provided by such documents and no such waiver, modification, alteration, satisfaction, impairment, cancellation, subordination or recission has occurred since the date upon which the due diligence file related to the Mezzanine Participation was delivered to Buyer or its designee.

 

(o)           With respect to the related Mezzanine Loan, the related Mezzanine Loan documents require the Mezzanine Borrower to provide the Mezzanine Lender with certain financial information at the times required under the related Mezzanine Loan documents.

 

(p)           The Mezzanine Loan is secured by a pledge of equity ownership interests in the related borrower under the Underlying Mortgage Loan or a direct or indirect owner of the related borrower.

 

(q)           As of the Purchase Date, the related Mezzanine Loan complies in all material respects with, or is exempt from, all requirements of federal, state or local law relating to the related Mezzanine Loan.

 

(r)           All information contained in the related Underwriting Package (or as otherwise provided to Buyer) in respect of the related Mezzanine Loan is accurate and complete in all material respects.

 

  

  

  

 

(s)           Except as included in the Underwriting Package, Seller is not a party to any document, instrument or agreement, and there is no document, that by its terms modifies or affects the rights and obligations of any holder of the Mezzanine Participation or the related Mezzanine Loan and Seller has not consented to any material change or waiver to any term or provision of any such document, instrument or agreement and no such change or waiver exists.

 

(t)           The related Mezzanine Loan is presently outstanding, the proceeds thereof have been fully and properly disbursed and, except for amounts held in escrow, there is no requirement for any future advances thereunder.

 

(u)           The Underlying Property Owner has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, with requisite power and authority to own its assets and to transact the business in which it is now engaged, the sole purpose of the Underlying Property Owner under its organizational documents is to own, finance, sell or otherwise manage the Properties and to engage in any and all activities related or incidental thereto, and the Mortgaged Properties constitute the sole assets of the Underlying Property Owner.

 

(v)           The Underlying Property Owner has good and marketable title to the Underlying Mortgaged Property, no claims under the title policies insuring the Underlying Property Owner’s title to the Properties have been made, and the Underlying Property Owner has not received any written notice regarding any material violation of any easement, restrictive covenant or similar instrument affecting the Underlying Mortgaged Property.

 

(w)           The representations and warranties made by the borrower (the “Mezzanine Borrower”) in the Mezzanine Loan Documents were true and correct in all material respects as of the date such representations and warranties were stated to be true therein, and there has been no adverse change with respect to the Mezzanine Loan, the Mezzanine Borrower, the Underlying Mortgaged Property or the Underlying Property Owner that would render any such representation or warranty not true or correct in any material respect as of the Purchase Date.

 

(x)           The Mezzanine Loan Documents provide for the acceleration of the payment of the unpaid principal balance of the Mezzanine Loan if (i) the related borrower voluntarily transfers or encumbers all or any portion of any related Mezzanine Collateral, or (ii) any direct or indirect interest in the related borrower is voluntarily transferred or assigned, other than, in each case, as permitted under the terms and conditions of the related loan documents.

 

(y)           Pursuant to the terms of the Mezzanine Loan Documents: (a) no material terms of any related Mortgage may be waived, canceled, subordinated or modified in any material respect and no material portion of such Mortgage or the Underlying Mortgaged Property may be released without the consent of the holder of the Mezzanine Loan; (b) no material action may be taken by the Underlying Property Owner with respect to the Underlying Mortgaged Property without the consent of the holder of the Mezzanine Loan; (c) the holder of the Mezzanine Loan is entitled to approve the budget of the Underlying Property Owner as it relates to the Underlying Mortgaged Property; and (d) the holder of the Mezzanine Loan's consent is required prior to the Underlying Property Owner incurring any additional indebtedness.

 

  

  

  

 

(z)           There is no (i) monetary default, breach or violation with respect to such Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the owner of the Underlying Mortgaged Property (the “Underlying Property Owner”), (ii) material non-monetary default, breach or violation with respect to such Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the Underlying Property Owner or (iii) event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration.

 

(aa)           No default or event of default has occurred under any agreement pertaining to any lien or other interest that ranks pari passu with or senior to the interests of the Mezzanine Participation or the holder of the related Mezzanine Loan or with respect to any Underlying Mortgage Loan or other indebtedness in respect of the related Underlying Mortgaged Property and there is no provision in any agreement related to any such lien, interest or loan which would provide for any increase in the principal amount of any such lien, other interest or loan.

 

(bb)           Seller’s security interest in the Mezzanine Loan is covered by a UCC-9 insurance policy (the “UCC-9 Policy”) in the maximum principal amount of the Mezzanine Loan insuring that the related pledge is a valid first priority lien on the collateral pledged in respect of such Mezzanine Loan (the “Mezzanine Collateral”), subject only to the exceptions stated therein (or a pro forma title policy or marked up title insurance commitment on which the required premium has been paid exists which evidences that such UCC-9 Policy will be issued), such UCC-9 Policy (or, if it has yet to be issued, the coverage to be provided thereby) is in full force and effect, no material claims have been made thereunder and no claims have been paid thereunder, Seller has not done, by act or omission, anything that would materially impair the coverage under the UCC-9 Policy and as of the Purchase Date, the UCC-9 Policy (or, if it has yet to be issued, the coverage to be provided thereby) will inure to the benefit of Buyer without the consent of or notice to the insurer.

 

(cc)           The Mezzanine Loan, and each party involved in the origination of the Mezzanine Loan, complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.

 

(dd)           Seller has not received any written notice that the Mezzanine Loan may be subject to reduction or disallowance for any reason, including without limitation, any setoff, right of recoupment, defense, counterclaim or impairment of any kind.

 

(ee)           Seller has no obligation to make loans to, make guarantees on behalf of, or otherwise extend credit to, or make any of the foregoing for the benefit of, the Mezzanine Borrower or any other person under or in connection with the Mezzanine Loan.

 

(ff)           The servicing and collection practices used by the servicer of the Mezzanine Loan, and the origination practices of the related originator, have been in all respects legal, proper and prudent and have met customary industry standards by prudent institutional commercial mezzanine lenders and mezzanine loan servicers except to the extent that, in connection with its origination, such standards were modified as reflected in the documentation delivered to Buyer.

 

  

  

  

 

(gg)           If applicable, the ground lessor consented to and acknowledged that (i) the Mezzanine Loan is permitted / approved, (ii) any foreclosure of the Mezzanine Loan and related change in ownership of the ground lessee will not require the consent of the ground lessor or constitute a default under the ground lease, (iii) copies of default notices would be sent to Mezzanine Lender and (iv) it would accept cure from Mezzanine Lender on behalf of the ground lessee.

 

(hh)           To the extent the Buyer was granted a security interest with respect to the Mezzanine Loan, such interest (i) was given for due consideration, (ii) has attached, (iii) is perfected, (iv) is a first priority Lien, and (v) has been appropriately assigned to the Buyer by the Underlying Property Owner.

 

(ii)           Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such Mezzanine Loan is or may become obligated.

 

(jj)           Seller has not advanced funds, or knowingly received any advance of funds from a party other than the borrower relating to such Mezzanine Loan, directly or indirectly, for the payment of any amount required by such Mezzanine Loan.

 

(kk)           All real estate taxes and governmental assessments, or installments thereof, which would be a lien on any related Underlying Mortgaged Property and that prior to the Purchase Date for the related Purchased Asset have become delinquent in respect of such Underlying Mortgaged Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established.  For purposes of this representation and warranty, real estate taxes and governmental assessments and installments thereof shall not be considered delinquent until the earlier of (a) the date on which interest and/or penalties would first be payable thereon and (b) the date on which enforcement action is entitled to be taken by the related taxing authority.

 

(ll)           As of the Purchase Date for the related Purchased Asset, each related Underlying Mortgaged Property was free and clear of any material damage (other than deferred maintenance for which escrows were established at origination) that would affect materially and adversely the value of such Underlying Mortgaged Property as security for the related Underlying Mortgage Loan and there was no proceeding pending or, based solely upon the delivery of written notice thereof from the appropriate condemning authority, threatened for the total or partial condemnation of such Underlying Mortgaged Property.

 

  

  

  

 

(mm)           As of the date of origination of the Mezzanine Loan, all insurance coverage required under the Mezzanine Loan Documents and/or any Mortgage Loan related to the Underlying Mortgaged Property, which insurance covered such risks as were customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located, and with respect to a fire and extended perils insurance policy, is in an amount (subject to a customary deductible) at least equal to the lesser of (i) the replacement cost of improvements located on such Underlying Mortgaged Property, or (ii) the outstanding principal balance of the Underlying Mortgage Loan, and in any event, the amount necessary to prevent operation of any co-insurance provisions; and, except if such Underlying Mortgaged Property is operated as a mobile home park, is also covered by business interruption or rental loss insurance, in an amount at least equal to 12 months of operations of the related Underlying Mortgaged Property, all of which was in full force and effect with respect to each related Underlying Mortgaged Property; and, as of the Purchase Date for the related Purchased Asset, all insurance coverage required under the Mezzanine Loan Documents and/or any Underlying Mortgage Loan related to the Underlying Mortgaged Property, which insurance covers such risks and is in such amounts as are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located, is in full force and effect with respect to each related Underlying Mortgaged Property; all premiums due and payable through the Purchase Date for the related Purchased Asset have been paid; and no notice of termination or cancellation with respect to any such insurance policy has been received by Seller; and except for certain amounts not greater than amounts which would be considered prudent by an institutional commercial and/or multifamily mortgage lender with respect to a similar mortgage loan and which are set forth in the Mezzanine Loan Documents and/or any Underlying Mortgage Loan related to the Underlying Mortgaged Property, any insurance proceeds in respect of a casualty loss, will be applied either (i) to the repair or restoration of all or part of the related Underlying Mortgaged Property or (ii) the reduction of the outstanding principal balance of the Underlying Mortgage Loan, subject in either case to requirements with respect to leases at the related Underlying Mortgaged Property and to other exceptions customarily provided for by prudent institutional lenders for similar loans.  The Underlying Mortgaged Property is also covered by comprehensive general liability insurance against claims for personal and bodily injury, death or property damage occurring on, in or about the related Underlying Mortgaged Property, in an amount customarily required by prudent institutional lenders.  An architectural or engineering consultant has performed an analysis of the Underlying Mortgaged Properties located in seismic zone 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing the probable maximum loss (“PML”) for the Underlying Mortgaged Property in the event of an earthquake.  In such instance, the PML was based on a 475 year lookback with a 10% probability of exceedance in a 50 year period.  If the resulting report concluded that the PML would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Underlying Mortgaged Property was obtained by an insurer rated at least A-:V by A.M. Best Company or “BBB-” (or the equivalent) from S&P and Fitch or “Baa3” (or the equivalent) from Moody’s.  If the Underlying Mortgaged Property is located in Florida or within 25 miles of the coast of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina or South Carolina such Underlying Mortgaged Property is insured by windstorm insurance in an amount at least equal to the lesser of (i) the outstanding principal balance of such Underlying Mortgage Loan and (ii) 100% of the full insurable value, or 100% of the replacement cost, of the improvements located on the related Underlying Mortgaged Property.

 

  

  

  

 

(nn)           The insurance policies contain a standard Mortgagee clause naming the Mortgagee, its successors and assigns as loss payee, in the case of a property insurance policy, and additional insured in the case of a liability insurance policy and provide that they are not terminable without 30 days prior written notice to the Mortgagee (or, with respect to non-payment, 10 days prior written notice to the Mortgagee) or such lesser period as prescribed by applicable law.  Each Mortgage requires that the Mortgagor maintain insurance as described above or permits the Mortgagee to require insurance as described above, and permits the Mortgagee to purchase such insurance at the Mortgagor’s expense if Mortgagor fails to do so.

 

(oo)           There is no material and adverse environmental condition or circumstance affecting the Underlying Mortgaged Property; there is no material violation of any applicable Environmental Law with respect to the Underlying Mortgaged Property; neither Seller nor the Underlying Property Owner has taken any actions which would cause the Underlying Mortgaged Property not to be in compliance with all applicable Environmental Laws; the Underlying Mortgage Loan documents require the borrower to comply with all Environmental Laws; and each Mortgagor has agreed to indemnify the Mortgagee for any losses resulting from any material, adverse environmental condition or failure of the Mortgagor to abide by such Environmental Laws or has provided environmental insurance.

 

(pp)           No borrower under the Mezzanine Loan nor any Mortgagor under any Underlying Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency proceeding.

 

(qq)           Each related Underlying Mortgaged Property was inspected by or on behalf of the related originator or an affiliate during the 12 month period prior to the related origination date.

 

(rr)           There are no material violations of any applicable zoning ordinances, building codes and land laws applicable to the Underlying Mortgaged Property or the use and occupancy thereof which (i) are not insured by an ALTA lender’s title insurance policy (or a binding commitment therefor), or its equivalent as adopted in the applicable jurisdiction, or a law and ordinance insurance policy or (ii) would have a material adverse effect on the value, operation or net operating income of the Underlying Mortgaged Property.  The Mezzanine Loan Documents and the Underlying Mortgage Loan documents require the Underlying Mortgaged Property to comply with all applicable laws and ordinances.

 

(ss)           None of the material improvements which were included for the purposes of determining the appraised value of any related Underlying Mortgaged Property at the time of the origination of the Mezzanine Loan or any related Underlying Mortgage Loan lies outside of the boundaries and building restriction lines of such property (except Underlying Mortgaged Properties which are legal non-conforming uses), to an extent which would have a material adverse affect on the value of the Underlying Mortgaged Property or the related Mortgagor’s use and operation of such Underlying Mortgaged Property (unless affirmatively covered by title insurance) and no improvements on adjoining properties encroached upon such Underlying Mortgaged Property to any material and adverse extent (unless affirmatively covered by title insurance).

 

(tt)           As of the Purchase Date for the related Purchased Asset, there was no pending action, suit or proceeding, or governmental investigation of which Seller, the Mezzanine Borrower or the Underlying Property Owner has received notice, against the Mortgagor or the related Underlying Mortgaged Property the adverse outcome of which could reasonably be expected to materially and adversely affect the Mezzanine Loan or the Underlying Mortgage Loan.

 

  

  

  

 

(uu)           The improvements located on the Underlying Mortgaged Property are either not located in a federally designated special flood hazard area or, if so located, the Mortgagor is required to maintain or the Mortgagee maintains, flood insurance with respect to such improvements and such policy is in full force and effect in an amount no less than the lesser of (i) the original principal balance of the Underlying Mortgage Loan, (ii) the value of such improvements on the related Underlying Mortgaged Property located in such flood hazard area or (iii) the maximum allowed under the related federal flood insurance program.

 

(vv)           With respect to each related Underlying Mortgage Loan, except for Mortgagors under Underlying Mortgage Loans, the Underlying Mortgaged Property with respect to which includes a Ground Lease, the related lessor (or its affiliate) has title in the fee simple interest in each related Underlying Mortgaged Property.

 

(ww)           The related Underlying Mortgaged Property is not encumbered, and none of the Mezzanine Loan Documents or any Underlying Mortgage Loan documents permits the related Underlying Mortgaged Property to be encumbered subsequent to the Purchase Date of the related Purchased Asset without the prior written consent of the holder thereof, by any lien securing the payment of money junior to or of equal priority with, or superior to, the lien of the related Mortgage (other than Title Exceptions, taxes, assessments and contested mechanics and materialmens liens that become payable after such Purchase Date).

 

(xx)           Each related Underlying Mortgaged Property constitutes one or more complete separate tax lots (or the related Mortgagor has covenanted to obtain separate tax lots and a Person has indemnified the Mortgagee for any loss suffered in connection therewith or an escrow of funds in an amount sufficient to pay taxes resulting from a breach thereof has been established) or is subject to an endorsement under the related title insurance policy.

 

(yy)           An appraisal of the related Underlying Mortgaged Property was conducted in connection with the origination of the Underlying Mortgage Loan; and such appraisal satisfied either (A) the requirements of the “Uniform Standards of Professional Appraisal Practice” as adopted by the Appraisal Standards Board of the Appraisal Foundation, or (B) the guidelines in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act or 1989, in either case as in effect on the date such Underlying Mortgage Loan was originated.

 

(zz)           The related Underlying Mortgaged Property is served by public utilities, water and sewer (or septic facilities) and otherwise appropriate for the use in which the Underlying Mortgaged Property is currently being utilized.

 

(aaa)           With respect to each related Underlying Mortgaged Property consisting of a Ground Lease, Seller represents and warrants the following with respect to the related Ground Lease:

 

  

  

  

 

(I)       Such Ground Lease or a memorandum thereof has been or will be duly recorded no later than 30 days after the Purchase Date of the related Purchased Asset and such Ground Lease permits the interest of the lessee thereunder to be encumbered by the related Mortgage or, if consent of the lessor thereunder is required, it has been obtained prior to the Purchase Date.

 

(II)       Upon the foreclosure of the Underlying Mortgage Loan (or acceptance of a deed in lieu thereof), the Mortgagor’s interest in such Ground Lease is assignable to the Mortgagee under the leasehold estate and its assigns without the consent of the lessor thereunder (or, if any such consent is required, it has been obtained prior to the Purchase Date).

 

(III)       Such Ground Lease may not be amended, modified, canceled or terminated without the prior written consent of the Mortgagee and any such action without such consent is not binding on the Mortgagee, its successors or assigns, except termination or cancellation if (i) an event of default occurs under the Ground Lease, (ii) notice thereof is provided to the Mortgagee and (iii) such default is curable by the Mortgagee as provided in the Ground Lease but remains uncured beyond the applicable cure period.

 

(IV)       Such Ground Lease is in full force and effect, there is no material default under such Ground Lease, and there is no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default under such Ground Lease.

 

(V)       The Ground Lease or ancillary agreement between the lessor and the lessee requires the lessor to give notice of any default by the lessee to the Mortgagee.  The Ground Lease or ancillary agreement further provides that no notice given is effective against the Mortgagee unless a copy has been given to the Mortgagee in a manner described in the Ground Lease or ancillary agreement.

 

(VI)       The Ground Lease (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the Mortgage, subject, however, to only the Title Exceptions or (ii) is subject to a subordination, non-disturbance and attornment agreement to which the Mortgagee on the lessor’s fee interest in the Underlying Mortgaged Property is subject.

 

(VII)                  A Mortgagee is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the Ground Lease) to cure any curable default under such Ground Lease before the lessor thereunder may terminate such Ground Lease.

 

(VIII)                  Such Ground Lease has an original term (together with  any extension options, whether or not currently exercised, set forth therein all of which can be exercised by the Mortgagee if the Mortgagee acquires the lessee’s rights under the Ground Lease) that extends not less than 20 years beyond the stated maturity date.

 

(IX)       Under the terms of such Ground Lease, any estoppel or consent letter received by the Mortgagee from the lessor, and the related Mortgage, taken together, any related insurance proceeds or condemnation award (other than in respect of a total or substantially total loss or taking) will be applied either to the repair or restoration of all or part of the related Underlying Mortgaged Property, with the Mortgagee or a trustee appointed by it having the right to hold and disburse such proceeds as repair or restoration progresses, or to the payment or defeasance of the outstanding principal balance of the Underlying Mortgage Loan, together with any accrued interest (except in cases where a different allocation would not be viewed as commercially unreasonable by any commercial mortgage lender, taking into account the relative duration of the Ground Lease and the related Mortgage and the ratio of the market value of the related Underlying Mortgaged Property to the outstanding principal balance of such Underlying Mortgage Loan).

 

  

  

  

 

(X)       The Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial lender

 

(XI)       The ground lessor under such Ground Lease is required to enter into a new lease upon termination of the Ground Lease for any reason, including the rejection of the Ground Lease in bankruptcy.

 

  

  

  

 

EXHIBIT VII

 

 

ASSET INFORMATION

 

Loan ID #:

Borrower Name:

Borrower Address:

Borrower City:

Borrower State:

Borrower Zip Code:

Recourse?

Guaranteed?

Related Borrower Name(s):

Original Principal Balance:

Note Date:

Loan Date:

Loan Type (e.g. fixed/arm):

Current Principal Balance:

Current Interest Rate (per annum):

Paid to date:

Annual P&I:

Next Payment due date:

Index (complete whether fixed or arm):

Gross Spread/Margin (complete whether fixed or arm):

Life Cap:

Life Floor:

Periodic Cap:

Periodic Floor:

Rounding Factor:

Lookback (in days):

Interest Calculation Method (e.g., Actual/360):

Interest rate adjustment frequency:

P&I payment frequency:

First P&I payment due:

First interest rate adjustment date:

First payment adjustment date:

Next interest rate adjustment date:

Next payment adjustment date:

Conversion Date:

Converted Interest Rate Index:

Converted Interest Rate Spread:

Maturity date:

Loan term:

Amortization term:

 

  

  

  

 

ASSET INFORMATION (continued)

Hyper-Amortization Flag:

Hyper-Amortization Term:

Hyper-Amortization Rate Increase:

Balloon Amount:

Balloon LTV:

Prepayment Penalty Flag:

Prepayment Penalty Text:

Lockout Period:

Lien Position:

Fee/Leasehold:

Ground Lease Expiration Date:

CTL (Yes/No):

CTL Rating (Moody’s):

CTL Rating (Duff):

CTL Rating (S&P):

CTL Rating (Fitch):

Lease Guarantor:

CTL Lease Type (NNN, NN, Bondable):

Property Name:

Property Address:

Property City:

Property Zip Code:

Property Type (General):

Property Type (Specific):

Cross-collateralized (Yes/No)*:

Property Size:

Year built:

Year renovated:

Actual Average Occupancy:

Occupancy Rent Roll Date:

Underwritten Average Occupancy:

Largest Tenant:

Largest Tenant SF:

Largest Tenant Lease Expiration:

2nd Largest Tenant:

2nd Largest Tenant SF:

2nd Largest Tenant Lease Expiration:

3rd Largest Tenant:

3rd Largest Tenant SF:

3rd Largest Tenant Lease Expiration:

Underwritten Average Rental Rate/ADR:

 

* If yes, give property information on each property covered and in aggregate as appropriate. Loan ID’s should be denoted with a suffix letter to signify loans/collateral.

 

  

  

  

 

ASSET INFORMATION (continued)

Underwritten Vacancy/Credit Loss:

Underwritten Other Income:

Underwritten Total Revenues:

Underwritten Replacement Reserves:

Underwritten Management Fees:

Underwritten Franchise Fees:

Underwritten Total Expenses:

Underwritten Leasing Commissions:

Underwritten Tenant Improvement Costs:

Underwritten NOI:

Underwritten NCF:

Underwritten Debt Service Constant:

Underwritten DSCR at NOI:

Underwritten DSCR at NCF:

Underwritten NOI Period End Date:

Hotel Franchise:

Hotel Franchise Expiration Date:

Appraiser Name:

Appraised Value:

Appraisal Date:

Appraisal Cap Rate:

Appraisal Discount Rate:

Underwritten LTV:

Environmental Report Preparer:

Environmental Report Date:

Environmental Report Issues:

Architectural and Engineering Report Preparer:

Architectural and Engineering Report Date:

Deferred Maintenance Amount:

Ongoing Replacement Reserve Requirement per A&E Report:

Immediate Repairs Escrow % (e.g. [___]%):

Replacement Reserve Annual Deposit:

Replacement Reserve Balance:

Tenant Improvement/Leasing Commission Annual Deposits:

Tenant Improvement/Leasing Commission Balance:

Taxes paid through date:

Monthly Tax Escrow:

Tax Escrow Balance:

Insurance paid through date:

Monthly Insurance Escrow:

Insurance Escrow Balance:

Reserve/Escrow Balance as of Date:

Probable Maximum Loss %:

Covered by Earthquake Insurance (Yes/No):

Number of times 30 days late in last 12 months:

 

  

  

  

 

ASSET INFORMATION (continued)

Number of times 60 days late in last 12 months:

Number of times 90 days late in last 12 months:

Servicing Fee:

Notes:

 

  

  

  

 

EXHIBIT VIII

 

ADVANCE PROCEDURES

 

(a)           Submission of Due Diligence Package.  With respect to any Asset other than a Scheduled Asset, no less than fifteen (15) Business Days prior to the proposed Purchase Date, Seller shall deliver to Buyer a due diligence package for Buyer’s review and approval, which shall contain the following items (the “Due Diligence Package”):

 

	
  

	
1.

	
Delivery of Purchased Asset Documents.  With respect to a New Asset that is a Pre-Existing Asset, each of the Purchased Asset Documents.

 

	
  

	
2.

	
Transaction-Specific Due Diligence Materials.  With respect to any New Asset, a summary memorandum outlining the proposed transaction, including potential transaction benefits and all material underwriting risks, all Underwriting Issues and all other characteristics of the proposed transaction that a reasonable buyer would consider material, together with the following due diligence information relating to the New Asset:

	
  

	
A.

	
With respect to each Eligible Asset that is an Eligible Loan,

 

(i)       the Asset Information and, if available, maps and photos;

 

(ii)       a current rent roll and roll over schedule, if applicable;

 

(iii)       a cash flow pro-forma, plus historical information, if available;

 

(iv)       copies of appraisal, environmental, engineering and any other third-party reports; provided, that, if same are not available to Seller at the time of Seller’s submission of the Due Diligence Package to Buyer, Seller shall deliver such items to Buyer promptly upon Seller’s receipt of such items;

 

(v)       a description of the underlying real estate directly or indirectly securing or supporting such Purchased Asset and the ownership structure of the borrower and the sponsor (including, without limitation, the board of directors, if applicable) and, to the extent that real property does not secure such Eligible Loan, the related collateral securing such Eligible Loan, if any;

 

(vi)       indicative debt service coverage ratios;

 

(vii)       indicative loan-to-value ratios;

 

(viii)      a term sheet outlining the transaction generally;

 

(ix)       a description of the Mortgagor, including experience with other projects (real estate owned), its ownership structure and financial statements;

 

(x)       a description of Seller’s relationship with the Mortgagor, if any;

 

  

  

  

 

(xi)       copies of documents evidencing such New Asset, or current drafts thereof, including, without limitation, underlying debt and security documents, guaranties, the underlying borrower’s and guarantor’s organizational documents, warrant agreements, and loan and collateral pledge agreements, as applicable, provided that, if same are not available to Seller at the time of Seller’s submission of the Due Diligence Package to Buyer, Seller shall deliver such items to Buyer promptly upon Seller’s receipt of such items;

 

(xii)       in the case of Subordinate Eligible Assets, all information described in this section 2(A) that would otherwise be provided for the Underlying Mortgage Loan if it were an Eligible Asset, and in addition, all documentation evidencing such Subordinate Eligible Asset; and

 

(xiii)      any exceptions to the representations and warranties set forth in Exhibit VI to this Agreement.

 

	
  

	
B.

	
With respect to each Eligible Asset that is CMBS,

 

(i)       the related prospectus or offering circular;

 

(ii)       all structural and collateral term sheets and all other computational or other similar materials provided to Seller in connection with its acquisition of such CMBS;

 

(iii)       all distribution date statements issued in respect thereof during the immediately preceding 12 months (or, if less, since the date such CMBS was issued);

 

(iv)       all monthly CMSA reporting packages issued in respect of such CMBS during the immediately preceding 12 months (or, if less, since the date such CMBS was issued);

 

(v)       all Rating Agency pre-sale reports;

 

(vi)       all asset summaries and any other due diligence materials, including, without limitation, reports prepared by third parties, provided to Seller in connection with its acquisition of such CMBS; and

 

(vii)       the related pooling and servicing agreement.

 

	
  

	
3.

	
Environmental and Engineering.  A “Phase 1” (and, if requested by Buyer, “Phase 2”) environmental report, an asbestos survey, if applicable, and an engineering report, each in form reasonably satisfactory to Buyer, by an engineer or environmental consultant reasonably approved by Buyer.

 

	
  

	
4.

	
Credit Memorandum.  A credit memorandum, asset summary or other similar document that details cash flow underwriting, historical operating numbers, underwriting footnotes, rent roll and lease rollover schedule.

 

  

  

  

 

	
  

	
5.

	
Appraisal.  Either an appraisal approved by Buyer or a Draft Appraisal, each by an MAI appraiser, if applicable.  If Buyer receives only a Draft Appraisal prior to entering into a Transaction, Seller shall deliver an appraisal approved by Buyer by an MAI appraiser on or before ten (10) calendar days after the Purchase Date.  The related appraisal shall (i) be dated less than twelve (12) months prior to the proposed financing date and (ii) not be ordered by the related borrower or an Affiliate of the related borrower.

 

	
  

	
6.

	
Opinions of Counsel.  An opinion to Seller and its successors and assigns from counsel to the underlying obligor on the underlying loan transaction, as applicable, as to enforceability of the loan documents governing such transaction and such other matters as Buyer shall require (including, without limitation, opinions as to due formation, authority, choice of law and perfection of security interests).

 

	
  

	
7.

	
Additional Real Estate Matters.  To the extent obtained by Seller from the Mortgagor or the underlying obligor relating to any Eligible Asset at the origination of the Eligible Asset, such other real estate related certificates and documentation as may have been requested by Buyer, such as abstracts of all leases in effect at the real property relating to such Eligible Asset.

 

	
  

	
8.

	
Other Documents.  Any other documents as Buyer or its counsel shall reasonably deem necessary.

 

(b)           Submission of Legal Documents.  With respect to a New Asset that is an Originated Asset, no less than seven (7) calendar days prior to the proposed Purchase Date, Seller shall deliver, or cause to be delivered, to counsel for Buyer the following items, where applicable:

 

	
  

	
1.

	
Copies of all draft Purchased Asset Documents in substantially final form, blacklined against the approved form Purchased Asset Documents.

 

	
  

	
2.

	
Certificates or other evidence of insurance demonstrating insurance coverage in respect of the underlying real estate directly or indirectly securing or supporting such Purchased Asset of types, in amounts, with insurers and otherwise in compliance with the terms, provisions and conditions set forth in the Purchased Asset Documents.  Such certificates or other evidence shall indicate that Seller (or, as to Subordinate Eligible Assets, the lead lender on the whole loan in which Seller is a participant or holder of a note or has an equity interest in the Mortgagor, as applicable), will be named as an additional insured as its interest may appear and shall contain a loss payee endorsement in favor of such additional insured with respect to the policies required to be maintained under the Purchased Asset Documents.

 

	
  

	
3.

	
All surveys of the underlying real estate directly or indirectly securing or supporting such Purchased Asset that are in Seller’s possession.

 

  

  

  

 

	
  

	
4.

	
As reasonably requested by Buyer, satisfactory reports of UCC, tax lien, judgment and litigation searches and title updates conducted by search firms and/or title companies reasonably acceptable to Buyer with respect to the Eligible Loan, underlying real estate directly or indirectly securing or supporting such Eligible Loan, Seller and Mortgagor, such searches to be conducted in each location Buyer shall reasonably designate.

 

	
  

	
5.

	
An unconditional commitment to issue a Title Policy in favor of Buyer and Buyer’s successors and/or assigns with respect to Buyer’s interest in the related real property and insuring the assignment of the Eligible Asset to Buyer, with an amount of insurance that shall be not less than the maximum principal amount of the Eligible Asset (taking into account the proposed Advance), or an endorsement or confirmatory letter from the title insurance company that issued the existing title insurance policy, in favor of Buyer and Buyer’s successors and/or assigns, that amends the existing title insurance policy by stating that the amount of the insurance is not less than the maximum principal amount of the Eligible Asset (taking into account the proposed Advance).

 

	
  

	
6.

	
Certificates of occupancy and letters certifying that the property is in compliance with all applicable zoning laws, each issued by the appropriate Governmental Authority.

 

(c)           Approval of Eligible Asset.  Conditioned upon the timely and satisfactory completion of Seller’s requirements in clauses (a) through (c) above, Buyer shall, no less than five (5) calendar days prior to the proposed Purchase Date (1) notify Seller in writing (which may take the form of electronic mail format) that Buyer has not approved the proposed Eligible Asset as a Purchased Asset or (2) notify Seller in writing (which may take the form of electronic mail format) that Buyer has approved the proposed Eligible Asset as a Purchased Asset.  Buyer’s failure to respond to Seller on or prior to five (5) calendar days prior to the proposed Purchase Date, shall be deemed to be a denial of Seller’s request that Buyer approve the proposed Eligible Loan, unless Buyer and Seller has agreed otherwise in writing.

 

(d)               Assignment Documents.  No less than two (2) business days prior to the proposed Purchase Date, Seller shall have executed and delivered to Buyer, in form and substance reasonably satisfactory to Buyer and its counsel, all applicable assignment documents assigning to Buyer the proposed Eligible Asset (and in any Hedging Transactions held by Seller with respect thereto) that shall be subject to no liens except as expressly permitted by Buyer.  Each of the assignment documents shall contain such representations and warranties in writing concerning the proposed Eligible Asset and such other terms as shall be satisfactory to Buyer in its sole discretion.

 

  

  

  

 

EXHIBIT IX

 

FORM OF BAILEE LETTER

 

_______________ __, 20__

 

____________________

____________________

____________________

 

	
  

	
Re:

	
Bailee Agreement (the “Bailee Agreement”) in connection with the pledge by CT Legacy Citi SPV, LLC (“Seller”) to CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. (collectively, “Buyer”)

 

Ladies and Gentlemen:

 

In consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, Buyer and Paul, Hastings, Janofsky & Walker LLP (the “Bailee”) hereby agree as follows:

 

(a)           Seller shall deliver to the Bailee in connection with any Purchased Assets delivered to the Bailee hereunder an Identification Certificate in the form of Attachment 1 attached hereto to which shall be attached a Purchased Asset Schedule identifying which Purchased Assets are being delivered to the Bailee hereunder.  Such Purchased Asset Schedule shall contain the following fields of information:  (a) the loan identifying number; (b) the Purchased Asset obligor’s name; (c) the street address, city, state and zip code for the applicable real property; (d) the original balance; and (e) the current principal balance if different from the original balance.

 

(b)           On or prior to the date indicated on the Custodial Identification Certificate delivered by Seller (the “Funding Date”), Seller shall have delivered to the Bailee, as bailee for hire, the original documents set forth on Schedule A attached hereto (collectively, the “Purchased Asset File”) for each of the Purchased Assets (each a “Purchased Asset” and collectively, the “Purchased Assets”) listed in Exhibit A to Attachment 1 attached hereto (the “Purchased Asset Schedule”).

 

(c)           The Bailee shall issue and deliver to Buyer and Deutsche Bank Trust Company Americas (the “Custodian”) on or prior to the Funding Date by facsimile (a) in the name of Buyer, an initial trust receipt and certification in the form of Attachment 2 attached hereto (the “Bailee’s Trust Receipt and Certification”) which Bailee’s Trust Receipt and Certification shall state that the Bailee has received the documents comprising the Purchased Asset File as set forth in the Custodial Identification Certificate (as defined in that certain Amended and Restated Custodial Agreement, dated as of March 31, 2011, among Seller, Buyer and Custodian, in addition to such other documents required to be delivered to Buyer and/or Custodian pursuant to the Amended and Restated Master Repurchase Agreement, dated as of March 31, 2011, between Seller and Buyer (the “Repurchase Agreement”).

 

  

  

  

 

(d)           On the applicable Funding Date, in the event that Buyer fails to purchase from Seller the Purchased Assets identified in the related Custodial Identification Certificate, Buyer shall deliver by facsimile to the Bailee at (212) 230-7752 to the attention of Michael Zuppone, Esq., an authorization (the “Facsimile Authorization”) to release the Purchased Asset Files with respect to the Purchased Assets identified therein to Seller.  Upon receipt of such Facsimile Authorization, the Bailee shall release the Purchased Asset Files to Seller in accordance with Seller’s instructions.

 

(e)           Following the Funding Date, the Bailee shall forward the Purchased Asset Files to the Custodian at 1761 St. Andrew Place, Santa Ana, California 92705, Attention: Mortgage Custody-QT071C, by insured overnight courier for receipt by the Custodian no later than 1:00 p.m. on the third Business Day following the applicable Funding Date (the “Delivery Date”).

 

(f)           From and after the applicable Funding Date until the time of receipt of the Facsimile Authorization or the applicable Delivery Date, as applicable, the Bailee (a) shall maintain continuous custody and control of the related Purchased Asset Files as bailee for Buyer and (b) is holding the related Purchased Assets as sole and exclusive bailee for Buyer unless and until otherwise instructed in writing by Buyer.

 

(g)           Seller agrees to indemnify and hold the Bailee and its partners, directors, officers, agents and employees harmless against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including reasonable attorneys’ fees, that may be imposed on, incurred by, or asserted against it or them in any way relating to or arising out of this Bailee Agreement or any action taken or not taken by it or them hereunder unless such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (other than special, indirect, punitive or consequential damages, which shall in no event be paid by the Bailee) were imposed on, incurred by or asserted against the Bailee because of the breach by the Bailee of its obligations hereunder, which breach was caused by negligence, lack of good faith or willful misconduct on the part of the Bailee or any of its partners, directors, officers, agents or employees.  The foregoing indemnification shall survive any resignation or removal of the Bailee or the termination or assignment of this Bailee Agreement.

 

(h)           In the event that the Bailee fails to produce a Mortgage Note, assignment of collateral or any other document related to a Purchased Asset that was in its possession within ten (10) business days after required or requested by Seller or Buyer (a “Delivery Failure”), the Bailee shall indemnify Seller or Buyer in accordance with paragraph (g) above.

 

  

  

  

 

(i)           Seller agrees to indemnify and hold Buyer and its respective affiliates and designees harmless against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including reasonable attorneys’ fees, that may be imposed on, incurred by, or asserted against it or them in any way relating to or arising out of a Custodial Delivery Failure or the Bailee’s negligence, lack of good faith or willful misconduct.  The foregoing indemnification shall survive any termination or assignment of this Bailee Agreement.

 

(j)           Seller hereby represents, warrants and covenants that the Bailee is not an affiliate of or otherwise controlled by Seller.  Notwithstanding the foregoing, the parties hereby acknowledge that the Bailee hereunder may act as Counsel to Seller in connection with a proposed transaction and Paul, Hastings, Janofsky & Walker LLP, if acting as Bailee, has represented Seller in connection with negotiation, execution and delivery of the Repurchase Agreement.

 

(k)           In connection with a pledge of the Purchased Assets as collateral for an obligation of Buyer, Buyer may pledge its interest in the corresponding Purchased Asset Files held by the Bailee for the benefit of Buyer from time to time by delivering written notice to the Bailee that Buyer has pledged its interest in the identified Purchased Assets and Purchased Asset Files, together with the identity of the party to whom the Purchased Assets have been pledged (such party, the “Pledgee”).  Upon receipt of such notice from Buyer, the Bailee shall mark its records to reflect the pledge of the Purchased Assets by Buyer to the Pledgee.  The Bailee’s records shall reflect the pledge of the Purchased Assets by Buyer to the Pledgee until such time as the Bailee receives written instructions from Buyer that the Purchased Assets are no longer pledged by Buyer to the Pledgee, at which time the Bailee shall change its records to reflect the release of the pledge of the Purchased Assets and that the Bailee is holding the Purchased Assets as custodian for, and for the benefit of, Buyer.

 

(l)           The agreement set forth in this Bailee Agreement may not be modified, amended or altered, except by written instrument, executed by all of the parties hereto.

 

(m)           This Bailee Agreement may not be assigned by Seller or the Bailee without the prior written consent of Buyer.

 

(n)           For the purpose of facilitating the execution of this Bailee Agreement as herein provided and for other purposes, this Bailee Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute and be one and the same instrument.

 

(o)           This Bailee 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.

 

  

  

  

 

(p)           Capitalized terms used herein and defined herein shall have the meanings ascribed to them in the Repurchase Agreement.

 

  

  

  

 

	 	

Very truly yours,

 

CT LEGACY CITI SPV, LLC, as Seller

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	

Name:

Title:

	 
	 	 	 	 

 

 

ACCEPTED AND AGREED:

PAUL, HASTINGS, JANOFSKY & WALKER LLP,

as Bailee

	 	 	 
	
By: 

	 	 
	
Name: 

Title:

	
 

	 
	 	 	 

 

ACCEPTED AND AGREED:

 

CITIGROUP FINANCIAL PRODUCTS INC.,

as Buyer

 

	 	 	 
	
By: 

	 	 
	
Name: 

Title:

	
 

	 
	 	 	 

 

  

  

  

 

Schedule A

 

[List of Purchased Asset Documents]

 

  

  

  

 

Attachment 1

 

IDENTIFICATION CERTIFICATE

 

On this ____ day of ____________, 200_, CT LEGACY CITI SPV, LLC (“Seller”), under that certain Bailee Agreement of even date herewith (the “Bailee Agreement”), among Seller, Paul, Hastings, Janofsky & Walker LLP (the “Bailee”), and CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC., collectively, as Buyer, does hereby instruct the Bailee to hold, in its capacity as Bailee, the Purchased Asset Files with respect to the Purchased Assets listed on Exhibit A hereto, which Purchased Assets shall be subject to the terms of the Bailee Agreement as of the date hereof.

 

Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Bailee Agreement.

 

IN WITNESS WHEREOF, Seller has caused this Identification Certificate to be executed and delivered by its duly authorized officer as of the day and year first above written.

 

 

	 	

CT LEGACY CITI SPV, LLC

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	

Name:

Title:

	 
	 	 	 	 

 

  

  

  

 

Exhibit A to Attachment 1

 

PURCHASED ASSET SCHEDULE

 

  

  

  

 

Attachment 2

 

FORM OF BAILEE’S TRUST RECEIPT AND CERTIFICATION

 

____________, 200_

 

CITIGROUP FINANCIAL PRODUCTS INC.

388 Greenwich Street

New York, New York 10013

Attention:  Richard Schlenger

Telephone: (212) 816-7806

Telecopy: (212) 816-8307

 

	
  

	
Re:

	
Bailee Agreement, dated as of ____________ __, 200_ (the “Bailee Agreement”) among CT Legacy Citi SPV, LLC (“Seller”), CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. (collectively, the “Buyer”) and Paul, Hastings, Janofsky & Walker LLP (the “Bailee”)

 

Ladies and Gentlemen:

 

In accordance with the provisions of Paragraph 3 of the above-referenced Bailee Agreement, the undersigned, as the Bailee, hereby certifies that as to each Purchased Asset described in the Purchased Asset Schedule (Exhibit A to Attachment 1), a copy of which is attached hereto, it has reviewed the Purchased Asset File and has determined that (i) all documents listed in Schedule A attached to the Bailee Agreement are in its possession and (ii) such documents have been reviewed by it and appear regular on their face and relate to such Purchased Asset and (iii) based on its examination, the foregoing documents on their face satisfy the requirements set forth in Paragraph 2 of the Bailee Agreement.

 

The Bailee hereby confirms that it is holding each such Purchased Asset File as agent and bailee for the exclusive use and benefit of Buyer pursuant to the terms of the Bailee Agreement.

 

All initially capitalized terms used herein shall have the meanings ascribed to them in the above-referenced Bailee Agreement.

 

 

	 	

PAUL, HASTINGS, JANOFSKY & WALKER LLP, as Bailee

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	

Name:

Title:

	 
	 	 	 	 

 

  

  

  

 

EXHIBIT X

 

UCC FILING JURISDICTIONS

Delaware

 

  

  

  

 

EXHIBIT XI

 

FORM OF SERVICER NOTICE

 

[DATE]

 

[SERVICER]

[ADDRESS]

Attention:  ___________

 

	
  

	
Re:

	
Amended and Restated Master Repurchase Agreement, dated as of March 31, 2011 by and between CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. (collectively, “Buyer”), CT Legacy Citi SPV, LLC (“Seller”) (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Master Repurchase Agreement”); (capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Master Repurchase Agreement).

 

Ladies and Gentlemen:

 

[SERVICER] (the “Servicer”) is servicing certain mortgage assets for Seller pursuant to one or more Servicing Agreements between Servicer and Seller (the “Purchased Assets”).  Pursuant to the Master Repurchase Agreement, Servicer is hereby notified that Seller has granted a security interest to Buyer in the Purchased Assets which are serviced by Servicer.

 

Servicer shall segregate all amounts collected on account of the Purchased Assets sold to Buyer under the Master Repurchase Agreement, hold them in trust for the sole and exclusive benefit of Buyer, and, within one (1) Business Day following the receipt thereof by Servicer, remit such collections to Midland Loan Services, Inc. for deposit into the Depository Account which has been established at PNC Bank, National Association, Account No. [***].  Servicer acknowledges that the Depository Account is held for the benefit of Buyer, pursuant to the Depository Agreement, dated as of March 31, 2011, by and between Seller, Buyer and PNC Bank, National Association.  Upon receipt of a notice of Event of Default from Buyer, Servicer shall follow the instructions of Buyer with respect to the Purchased Assets, and shall deliver to Buyer any information with respect to the Purchased Assets reasonably requested by Buyer.

 

Servicer hereby agrees that, notwithstanding any provision to the contrary in any Servicing Agreement which exists between Servicer and Seller in respect of any Purchased Asset, (i) Servicer is servicing the Purchased Assets for the joint benefit of Seller and Buyer, (ii)  Buyer is expressly intended to be a third-party beneficiary under each Servicing Agreement and (iii) Buyer may, at any time, terminate any such Servicing Agreement immediately upon the delivery of written notice thereof to Servicer and/or in any event transfer servicing to Buyer’s designee, at no cost or expense to Buyer, it being agreed that Seller will pay any and all fees required to terminate any Servicing Agreement and to effectuate the transfer of servicing to the designee of Buyer.

 

  

  

  

 

Notwithstanding any contrary information or direction which may be delivered to Servicer by Seller, Servicer may conclusively rely on any information, direction or notice of an Event of Default delivered by Buyer, and Seller shall indemnify and hold Servicer harmless for any and all claims asserted against Servicer for any actions taken in good faith by Servicer in connection with the delivery of such information or notice of Event of Default.

 

No provision of this letter may be amended, countermanded or otherwise modified without the prior written consent of Buyer.  Buyer is an intended third party beneficiary of this letter.

 

Please acknowledge receipt and your agreement to the terms of this instruction letter by signing in the signature block below and forwarding an executed copy to Buyer promptly upon receipt.  Any notices to Buyer should be delivered to the following address: 388 Greenwich Street, New York, New York 10013, Attn: Richard Schlenger, Telephone: (212) 816-7806, Fax:  (212) 816-8307.

 

 

	 	

Very truly yours,

 

[SERVICER]

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	

Name:

Title:

	 
	 	 	 	 

 

 

[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

 

  

  

  

 

	

ACKNOWLEDGED AND AGREED TO:

 

CT LEGACY CITI SPV, LLC

	 	 	 
	 	 	 
	
By: 

	 	 
	 	

Name:

Title:

	 
	 	 	 

 

  

  

  

 

EXHIBIT XII

 

FORM OF RELEASE LETTER

 

[Date]

 

CITIGROUP FINANCIAL PRODUCTS INC.

388 Greenwich Street

New York, New York 10013

Attention:  Richard Schlenger

 

	
  

	
Re:

	
Amended and Restated Master Repurchase Agreement, dated as of March 31, 2011 by and between CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. (collectively, “Buyer”) and CT Legacy Citi SPV, LLC (“Seller”) (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Master Repurchase Agreement”); (capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Master Repurchase Agreement).

 

Ladies and Gentlemen:

 

With respect to the Purchased Assets described in the attached Schedule A (the “Purchased Assets”) (a) we hereby certify to you that the Purchased Assets are not subject to a lien of any third party, and (b) we hereby release all right, interest or claim of any kind other than any rights under the Master Repurchase Agreement with respect to such Purchased Assets, such release to be effective automatically without further action by any party upon payment by Buyer of the amount of the Purchase Price contemplated under the Master Repurchase Agreement (calculated in accordance with the terms thereof) in accordance with the wiring instructions set forth in the Master Repurchase Agreement.

 

 

	 	

Very truly yours,

 

CT LEGACY CITI SPV, LLC

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	

Name:

Title:

	 
	 	 	 	 

 

  

  

  

 

Schedule A

 

[List of Purchased Asset Documents]

 

  

  

  

 

EXHIBIT XIII

 

FORM OF COVENANT COMPLIANCE CERTIFICATE

 

[    ] [  ], 20[  ]

 

CITIGROUP FINANCIAL PRODUCTS INC.

388 Greenwich Street

New York, New York 10013

Attention:  Richard Schlenger

 

This Covenant Compliance Certificate is furnished pursuant to that certain Amended and Restated Master Repurchase Agreement, dated as of March 31, 2011 by and between CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. (collectively, “Buyer”), CT LEGACY CITI SPV, LLC (collectively, “Seller”) (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Master Repurchase Agreement”).  Unless otherwise defined herein, capitalized terms used in this Covenant Compliance Certificate have the respective meanings ascribed thereto in the Master Repurchase Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

	
  

	
1.

	
I am a duly elected Responsible Officer of Seller.

 

	
  

	
2.

	
All of the financial statements, calculations and other information set forth in this Covenant Compliance Certificate, including, without limitation, in any exhibit or other attachment hereto, are true, complete and correct as of the date hereof.

 

	
  

	
3.

	
I have reviewed the terms of the Master Repurchase Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and financial condition of Seller during the accounting period covered by the financial statements attached (or most recently delivered to Buyer if none are attached).

 

	
  

	
4.

	
As of the date hereof, and since the date of the certificate most recently delivered pursuant to Article 10(j) of the Master Repurchase Agreement, Seller has observed or performed all of its covenants and other agreements in all material respects, and satisfied in all material respects, every condition, contained in the Master Repurchase Agreement and the related documents to be observed, performed or satisfied by it.

 

	
  

	
5.

	
The examinations described in Paragraph 3 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Covenant Compliance Certificate (including after giving effect to any pending Transactions requested to be entered into), except as set forth below.

 

  

  

  

 

	
  

	
6.

	
As of the date hereof, each of the representations and warranties made by Seller in the Master Repurchase Agreement are true, correct and complete in all material respects with the same force and effect as if made on and as of the date hereof, except as to the extent of any exceptions contained in any Requested Exceptions Report.

 

	
  

	
7.

	
No condition or event that constitutes a “Termination Event”, “Event of Default”, “Potential Event of Default” or any similar event by Seller, however denominated, has occurred or is continuing under any Hedging Transaction.

 

	
  

	
8.

	
Attached as Exhibit 1 hereto is a description of all interests of Affiliates of Seller in any Underlying Mortgaged Property (including without limitation, any lien, encumbrance or other debt or equity position or other interest in the Underlying Mortgaged Property that is senior or junior to, or pari passu with, a Mortgage Asset in right of payment or priority).

 

	
  

	
9.

	
Attached as Exhibit 2 hereto are the financial statements required to be delivered pursuant to Article 10 of the Master Repurchase Agreement (or, if none are required to be delivered as of the date of this Covenant Compliance Certificate, the financial statements most recently delivered pursuant to Article 10 of the Master Repurchase Agreement), which financial statements, to the best of my knowledge after due inquiry, fairly and accurately present in all material respects, the financial condition and operations of Seller as of the date or with respect to the period therein specified, determined in accordance with the requirements set forth in Article 10.

 

	
  

	
10.

	
Attached as Exhibit 3 hereto are the calculations demonstrating compliance with the financial covenants set forth in Article 9 of the Guarantee Agreement.

 

To the best of my knowledge, Seller has, during the period since the delivery of the immediately preceding Covenant Compliance Certificate, observed or performed all of its covenants and other agreements in all material respects, and satisfied in all material respects every condition, contained in the Master Repurchase Agreement and the related documents to be observed, performed or satisfied by it, and I have no knowledge of the occurrence during such period, or present existence, of any condition or event which constitutes an Event of Default or Default (including after giving effect to any pending Transactions requested to be entered into), except as set forth below.

 

Described below are the exceptions, if any, to paragraph 10, listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Guarantor or Seller has taken, is taking, or proposes to take with respect to each such condition or event:

 

 

  

  

  

 

The foregoing certifications, together with the financial statements, updates, reports, materials, calculations and other information set forth in any exhibit or other attachment hereto, or otherwise covered by this Covenant Compliance Certificate, are made and delivered this [  ] day of [    ], 20[  ].

 

 

	

CT LEGACY CITI SPV, LLC,

a Delaware limited liability company

	 	 	 
	 	 	 
	
By: 

	 	 
	 	

Name:

Title:

	 
	 	 	 

 

  

  

  

 

EXHIBIT XIV

FORM OF RE-DIRECTION LETTER

 

[SELLER LETTERHEAD]

 

RE-DIRECTION LETTER

 

AS OF [          ] [  ], 20[  ]

 

Ladies and Gentlemen:

 

Please refer to: (a) that certain [Loan Agreement], dated [    ] [  ], 20[  ], by and between [        ] (the “Borrower”), as borrower, and [     ] (the “Lender”), as lender; and (b) all documents securing or relating to that certain $[         ] loan made by the Lender to the Borrower on [    ] [  ], 20[  ] (the “Loan”).

 

You are advised as follows, effective as of the date of this letter.

 

Assignment of the Loan.  The Lender has entered into an Amended and Restated Master Repurchase Agreement, dated as of March 31, 2011 (as the same may be amended and/or restated from time to time, the “Repurchase Agreement”), with CITIGROUP FINANCIAL PRODUCTS INC. and CITIGROUP GLOBAL MARKETS INC. (“Citigroup”), 388 Greenwich Street, New York, New York 10013, and has assigned its rights and interests in the Loan (and all of its rights and remedies in respect of the Loan) to Citigroup, subject to the terms of the Repurchase Agreement.  This assignment shall remain in effect unless and until Citigroup has notified Borrower otherwise in writing.

 

Direction of Funds.  In connection with Lender’s obligations under the Repurchase Agreement, Lender hereby directs Borrower to disburse, by wire transfer, any and all payments to be made under or in respect of the Loan to the following account at [Bank] for the benefit of JPMorgan:

 

[BANK]

ABA # [   ]

Account # [                       ]

FFC: [                      ]

Attn: JPMorgan – Buyer’s Repurchase Account

Attn: [                                ]

 

This direction shall remain in effect unless and until Citigroup has notified Borrower otherwise in writing.

 

Modifications, Waivers, Etc.  No modification, waiver, deferral, or release (in whole or in part) of any party’s obligations in respect of the Loan, or of any collateral for any obligations in respect of the Loan, shall be effective without the prior written consent of Citigroup.  Notwithstanding the foregoing, neither Seller nor Servicer shall take any material action or effect any modification or amendment to any Purchased Asset without first having given prior notice thereof to Buyer in each such instance and receiving the prior written consent of Buyer.

 

  

  

  

 

Please acknowledge your acceptance of the terms and directions contained in this correspondence by executing a counterpart of this correspondence and returning it to the undersigned.

 

 

	 	

Very truly yours,

CT LEGACY CITI SPV, LLC,

a Delaware limited liability company

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	
Name: 

	 	 
	 	
Title:

	 	 
	 	
Date: [               ], 20[ ]

	 
	 	 	 	 

 

  

Agreed and accepted this [  ]

 

day of [                      ], 20[ ]

 

[                                              ]

 

	
By: 

	 	 
	
Name: 

	 	 
	
Title:Unassociated Document

  

 

Exhibit 10.13

 

Confidential Treatment Requested by Capital Trust, Inc.

 

Execution Version

 

This EXCHANGE AGREEMENT (this “Agreement”), dated as of March 31, 2011, is entered into by and among Capital Trust, Inc., a Maryland corporation (“CT”), CT Legacy Holdings, LLC, a Delaware limited liability company (“CT Legacy Holdings”), CT Legacy Series 1 Note Issuer, LLC, a Delaware limited liability company (“CT Series 1 Note Issuer”), CT Legacy REIT Holdings, LLC, a Delaware limited liability company (“CT Legacy REIT Holdings” and, together with CT, CT Legacy Holdings and CT Series 1 Note Issuer, the “CT Entities” or individually, a “CT Entity”), WestLB AG, New York Branch, as administrative agent (the “Administrative Agent”) and each of WestLB AG, New York Branch, BNP Paribas, Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A., Deutsche Bank Trust Company Americas and Wells Fargo Bank, N.A.,  (collectively, the “WestLB Lenders” and together with the Administrative Agent and the CT Entities, collectively, the “Parties” and each, individually, a “Party”).

 

WHEREAS:

 

A.           Reference is made to that certain Amended and Restated Credit Agreement, dated as of March 16, 2009 (as the same may have been amended, modified or supplemented from time to time, the “Credit Agreement”), among CT, the lenders party thereto and the Administrative Agent.

 

B.           Concurrently with the execution hereof, CT is consummating a Restructuring (as defined in Exhibit A and Exhibit B hereto) of all of its recourse debt liabilities as described in further detail in Exhibit A hereto consisting of the Legacy Asset Contribution Transaction, the CTLRMB Legacy Asset Downstream Contribution Transaction, the CTLA Legacy Asset Downstream Contribution Transactions, the Mezzanine Loan Contribution Transaction, the REIT Stock Contribution Transaction, the Note Exchange Transactions, the Repurchase Financing Assumption Transactions, the WestLB Loan Termination Transaction, the Old JSN Discharge Transaction, the Non-EOD Restructure 1 Contribution Transaction, the EOD CDO Redemption Transaction, the Old JSN 2 Discharge Transaction and the JSN Opt-Out Exchange Transaction.

 

C.           As of the date hereof, the aggregate principal amount outstanding under the Credit Agreement is $98,123,658.88, and the amount owed to each WestLB Lender under the Credit Agreement is as set forth next to such WestLB Lender’s name on Exhibit C hereto (the outstanding aggregate principal amount and any interest accrued thereon to the Closing Date shall be referred to as the “Credit Agreement Obligations”), which amounts are secured by all of CT’s right, title and interest in the property described in Section 2.1 (the “Collateral”) of that certain Pledge and Security Agreement, dated as of March 16, 2009, by and between CT, as Pledgor thereunder, for the benefit of WestLB AG, New York Branch, as collateral agent on behalf of the WestLB Lenders (as the same may have been amended, modified or supplemented from time to time, the “WestLB Pledge Agreement”).

 

D.           In furtherance of the Restructuring, CT has formed CT Legacy Manager, LLC (“CT Legacy Manager”), CT Legacy Holdings, CT Series 1 Note Issuer, CT Series 2 Note Issuer, CT Legacy REIT Holdings, CT Legacy REIT Mezz Borrower, CT Legacy Asset, CT Legacy MS and CT Legacy Citi and CT will cause an existing wholly owned corporation to be converted and renamed into CT Legacy JPM.

 

  

  

  

 

E.           In furtherance of the Restructuring, the Parties desire to consummate the WestLB Loan Termination Transaction, whereby the CT Entities shall make certain payments of cash, deliver Class A-2 Units of CT Legacy REIT Holdings and deliver notes of CT Series 1 Note Issuer to the WestLB Lenders (as listed in Exhibit C hereto) in exchange for and in full satisfaction of the Credit Agreement Obligations and the release of the Collateral and Liens and the termination and discharge of the Credit Agreement and the Security Agreements.

 

NOW, THEREFORE, in consideration of the mutual agreements and subject to the terms and conditions herein set forth, the parties hereto agree as follows:

 

1.            Definitions.           This Agreement, the Units, the Series 1 LLC Interest Secured Notes, the Pledge Agreements and the Control Agreements are collectively referred to herein as the “Operative Documents.”  All other capitalized terms used but not defined in this Agreement shall have the respective meanings ascribed thereto in Exhibit A hereto.  The following terms shall have the following meanings:

 

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

 

“Affiliates” means, as applied to any person, any other person directly or indirectly controlling, controlled by, or under common control with, that person.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any person, means the possession, directly or indirectly, of the power (i) to vote 10% or more of the any securities having ordinary voting power for the election of directors of such person or (ii) to direct or cause the direction of the management and policies of that person, whether through the ownership of voting securities or by contract or otherwise.

 

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

 

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

 

“CERCLA” has the meaning set forth in Section 4(y).

 

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

 

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

 

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

 

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

 

“Collateral Agent” shall mean U.S. Bank, National Association.

 

“Commission” has the meaning set forth in Section 4(bb).

 

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

 

  

2

  

 

“Control Agreements” shall mean the Dividends Account Control Agreement and Sale Proceeds Account Control Agreement (as such terms are defined in the Pledge Agreements).

 

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

 

“Credit Agreement Obligations” has the meaning set forth in the Recitals.

 

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

 

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

 

“CT Legacy Holdings” has the meaning set forth in the introductory paragraph hereof.

 

“CT Legacy Manager” has the meaning set forth in the Recitals.

 

“CT Legacy REIT Holdings” has the meaning set forth in the introductory paragraph hereof.

 

“CT Series 1 Note Issuer” has the meaning set forth in the introductory paragraph hereof.

 

“Environmental Law” has the meaning set forth in Section 4(y).

 

“Equity Interests” means with respect to any person (a) if such a person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such person is a limited liability company, the membership interests in a limited liability company and (c) if such person is a corporation, the shares or stock interests (both common stock and preferred stock) in a corporation.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

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

 

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

 

“Exchange Act Reports” means the documents of CT filed with or submitted to the Commission in accordance with the Exchange Act, from and including the commencement of the fiscal year covered by CT’s most recent Annual Report on Form 10-K.

 

“Financial Statements” has the meaning set forth in Section 4(cc).

 

“GAAP” has the meaning set forth in Section 4(u).

 

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

 

“Governmental Licenses” has the meaning set forth in Section 4(o).

 

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

 

  

3

  

 

“Indemnified Parties” has the meaning set forth in Section 8(a).

 

“Interim Financial Statements” has the meaning set forth in Section 4(cc).

 

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

 

“Lien” has the meaning set forth in Section 2(b)(vii).

 

“Material Adverse Effect” means a material adverse effect on the condition (financial or otherwise), earnings, business, liabilities or assets of the entity or any of its subsidiaries taken as a whole.

 

“Mezzanine Loan Agreement” has the meaning set forth in Section 4(p).

 

“Mezzanine Loan Lender” shall mean Five Mile Capital II CT Mezz SPE LLC, a Delaware limited liability company.

 

 “New LLC Interests” has the meaning set forth in Section 2(a).

 

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

 

“Pledge Agreement” has the meaning set forth in Section 2(b)(iii).

 

“Properties” has the meaning set forth in Section 4(y).

 

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

 

“REIT” has the meaning set forth in Section 4(gg).

 

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

 

“Securities Act” means the Securities Act of 1933, 15 U.S.C. §§77a et seq., as amended, and the rules and regulations promulgated thereunder.

 

“Securities Account Control Agreement” means that certain Securities Account Control Agreement, dated as of March 16, 2009, by and among CT, the Administrative Agent and Bank of America, National Association, as the same may have been amended, modified or supplemented from time to time.

 

“Security Agreements” means the Securities Account Control Agreement and the WestLB Pledge Agreement and all Liens thereunder, including, without limitation, in the Collateral.

 

“Series 1 LLC Interest Secured Notes” has the meaning set forth in Section 2(a).

 

“Series 2 Notes” has the meaning set forth in Section 7(a).

 

“Significant Subsidiary” has the meaning set forth in Commission Regulation S-X.

 

  

4

  

 

“Tax” has the meaning set forth in Section 4(t).

 

“Tax Returns” has the meaning set forth in Section 4(t).

 

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

 

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

 

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

 

“WestLB Pledge Agreement” has the meaning set forth in the Recitals.

 

2.            Exchange and Closing.

 

(a)           Subject to the terms and conditions contained herein, on the Closing Date, CT, CT Legacy Holdings and CT Series 1 Note Issuer, as applicable, agree to issue and/or deliver, as applicable, to the WestLB Lenders or, upon request, any of their respective Affiliates, an aggregate of (1) $22,932,203.89 in cash in immediately available funds (the “Cash”), (2) 2,415,625 Class A-2 Units of CT Legacy REIT Holdings (the “Units”) and (3) $2,777,777.75 principal amount of 8.19% series 1 secured notes due 2016 of CT Series 1 Note Issuer in the form attached as Exhibit D hereto (the “Series 1 LLC Interest Secured Notes”), secured by an aggregate of 1,287,946 Class A-1 Units and 437,500 Class A-2 Units of CT Legacy REIT Holdings (the “New LLC Interests”), in each case, in the amounts set forth next to each WestLB Lender’s name on Exhibit C attached hereto and have requested that the WestLB Lenders accept such Cash, Units and Series 1 LLC Interest Secured Notes in exchange for and in full satisfaction of the Credit Agreement Obligations and the release of the Collateral and Liens and the termination and discharge of the Credit Agreement and the Security Agreements, and the WestLB Lenders agree to accept such Cash, Units and Series 1 LLC Interest Secured Notes in exchange for and in full satisfaction of the Credit Agreement Obligations and to release the Collateral and Liens and terminate and discharge the Credit Agreement and the Security Agreements (the “Exchange”).

 

(b)           The closing of the Exchange and the other transactions between the Parties hereto contemplated herein shall occur at the offices of Company Counsel in New York, New York (the “Closing”), or such other place as the Parties hereto shall agree, at 11:00 a.m. New York time, on March 31, 2011 or such later date as the Parties may agree (such date and time of delivery the “Closing Date”). The CT Entities and the Administrative Agent and WestLB Lenders hereby agree that prior to or at the Closing of the Exchange the following transactions will occur and items will be delivered:

 

(i)           The LLC Agreement of each of CT Series 1 Note Issuer and CT Legacy REIT Holdings, in the form attached as Exhibits E-1 and E-2 hereto, shall become effective, and each WestLB Lender, upon delivery of the Units, shall execute and deliver a counterpart signature page to the LLC Agreement of CT Legacy REIT Holdings as contemplated therein.

 

  

5

  

 

(ii)           CT will pay the Cash to each WestLB Lender in the amounts set forth next to each WestLB Lender’s name on Exhibit C attached hereto in accordance with the wire transfer instructions on Exhibit F hereto.

 

(iii)           CT Series 1 Note Issuer, each WestLB Lender and the Collateral Agent shall enter into a pledge and security agreement, in the form attached as Exhibit G hereto (the “Pledge Agreement”), relating to the pledge by CT Series 1 Note Issuer of the New LLC Interests securing the Series 1 LLC Interest Secured Notes, with each WestLB Lender being the secured party under the terms of the Pledge Agreement for the number of New LLC Interests as set forth next to each WestLB Lender’s name on Exhibit C attached hereto.

 

(iv)           CT Legacy Holdings shall deliver certificates for the Units to each WestLB Lender or its Affiliates for the number of interests set forth next to each WestLB Lender’s name on Exhibit C attached hereto.

 

(v)           CT Legacy Holdings shall deliver the Series 1 LLC Interest Secured Notes to each WestLB Lender in the aggregate principal amounts set forth next to each WestLB Lender’s name on Exhibit C attached hereto.

 

(vi)           CT shall pay to (A) the Administrative Agent all of its reasonable legal fees for Sidley Austin LLP, costs and other expenses in connection with the Exchange and (B) the WestLB Lenders all reasonable out of pocket expenses incurred by such WestLB Lenders, including reasonable fees, charges and disbursements of counsel for the WestLB Lenders, in connection with the Exchange.

 

(vii)           Effective at Closing and upon satisfaction of the conditions precedent in Section 3 hereof, each WestLB Lender irrevocably and without further action releases CT, together with its predecessors, successors, assigns, subsidiaries, affiliates and agents and all of their respective past, present and future officers, directors, shareholders, employees, contractors and attorneys and their respective predecessors, heirs, successors and assigns, from any and all claims, actions and liabilities with respect to the Credit Agreement Obligations and the Security Agreements and in the case of officers, directors, employees and agents with respect to any other agreement, relationship or matter in connection with the Credit Agreement Obligations and the Security Agreements and the related transactions arising prior to the date hereof; provided, however, that none of the foregoing shall be released of claims, actions and liabilities arising from fraud, mutual mistake, misrepresentation, misappropriation or omission of any material fact or other similar claims.  In connection with the Exchange, the Administrative Agent shall deliver to CT a pay-off letter in the form attached as Exhibit H hereto.  CT irrevocably and without further action releases the Administrative Agent and each WestLB Lender, together with each of their respective predecessors, successors, assigns, subsidiaries, affiliates and agents and all of their respective past, present and future officers, directors, shareholders, employees, contractors and attorneys and their respective predecessors, heirs, successors and assigns, from any and all claims, actions and liabilities with respect to the Credit Agreement and all transactions related thereto arising prior to the date hereof.  The Administrative Agent shall release all of the Collateral pursuant to a collective release under the Credit Agreement and the Security Agreements and shall cancel all security interests, pledges, liens, claims, encumbrances and interests (each, a “Lien”) with respect thereto.

 

  

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(viii)           Prior to or simultaneously with the occurrence of the events described in subsections (i) through (vii) above in connection with the Exchange and the WestLB Loan Termination Transaction, the other transactions in connection with the Restructuring, including, without limitation, the Legacy Asset Contribution Transaction, the CTLRMB Legacy Asset Downstream Contribution Transaction, the CTLA Legacy Asset Downstream Contribution Transactions, the Mezzanine Loan Contribution Transaction, the REIT Stock Contribution Transaction, the Note Exchange Transactions, the Repurchase Financing Assumption Transactions, the Old JSN Discharge Transaction and the Non-EOD CDO Restructure 1 Contribution Transaction, the EOD CDO Redemption Transaction, the Old JSN 2 Discharge Transaction and the JSN Opt-Out Exchange Transaction, shall occur.

 

3.            Conditions Precedent.  The obligations of the Parties under this Agreement are subject to the following conditions precedent:

 

(a)           The representations and warranties contained herein shall be accurate as of the Closing Date.

 

(b)           Paul, Hastings, Janofsky & Walker LLP, counsel for the CT Entities (the “Company Counsel”), shall have delivered an opinion, dated the Closing Date, addressed to the Administrative Agent and each WestLB Lender, in substantially the form set out in Annex A-I hereto, Venable LLP, Maryland counsel for CT (“Venable”), shall have delivered an opinion, dated the Closing Date, addressed to the Administrative Agent, in substantially the form set out in Annex A-II hereto, and Richards, Layton & Finger, P.A., counsel to CT Legacy Holdings, CT Legacy REIT Holdings and CT Series 1 Note Issuer (“RLF”), shall have delivered an opinion, dated the Closing Date, addressed to the Administrative Agent, in substantially the form set out in Annex A-III hereto.  In rendering its opinion, the Company Counsel, RLF and Venable may rely as to factual matters upon certificates or other documents furnished by officers, directors and trustees of CT Entities and by government officials, and by and upon such other documents as such counsel may, in their reasonable opinion, deem appropriate as a basis for the Company Counsel, RLF  and Venable opinions.  The Company Counsel, RLF and Venable may specify the jurisdictions in which they are admitted to practice and that they are not admitted to practice in any other jurisdiction and are not experts in the law of any other jurisdiction.

 

(c)           Each of the other transactions in connection with the Restructuring, including, without limitation, the Legacy Asset Contribution Transaction, the CTLRMB Legacy Asset Downstream Contribution Transaction, the CTLA Legacy Asset Downstream Contribution Transactions, the Mezzanine Loan Contribution Transaction, the REIT Stock Contribution Transaction, the Note Exchange Transactions, the Repurchase Financing Assumption Transactions, the Old JSN Discharge Transaction, the Non-EOD CDO Restructure 1 Contribution Transaction, the EOD CDO Redemption Transaction, the Old JSN 2 Discharge Transaction and the JSN Opt-Out Exchange Transaction, shall occur prior to or substantially concurrently with the Closing, and in the order contemplated hereby and described in and pursuant to the documents described in, and by Exhibit A hereto.

 

  

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(d)           The CT Entities shall each have furnished a certificate of such CT Entity to the Administrative Agent, executed by the secretary or a person performing a similar function of such CT Entity, in his or her capacity as such, dated as of the Closing Date, as to (i) and (ii) below, certifying:

 

(i)           as to the incumbency, signature and authority of the officers of such CT Entity authorized to execute, deliver and perform, as applicable, the Operative Documents to which such CT Entity is a party and all other documents, instruments or agreements related thereto to be executed by such CT Entity; and

 

(ii)           that the certificate of incorporation and bylaws or certificate of formation and limited liability company agreement, as applicable, of such CT Entity, including, in each case, all amendments thereto, attached to the certificate are true, correct and complete, in effect on the Closing Date and were duly adopted.

 

(e)           Each of the CT Entities shall have furnished to the Administrative Agent a certificate of such CT Entity, signed by the Chief Executive Officer, President or an Executive Vice President, and the Chief Financial Officer, Treasurer or Assistant Treasurer of each CT Entity, in their capacities as such, dated as of the Closing Date, to the effect that the representations and warranties in this Agreement are true and correct on and as of the Closing Date, and each CT Entity has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date.

 

(f)           Simultaneously with the Closing, each of the documents listed in Section 2(b) shall be executed and delivered and each of the items in Section 2(b)(i)-(vii) shall have occurred, in each case as provided in Section 2(b).

 

Each certificate signed by any officer of the CT Entities and delivered to the holders of the Units or Series 1 LLC Interest Secured Notes or their counsel in connection with the Operative Documents and the transactions contemplated hereby and thereby shall be deemed to be a representation and warranty of the CT Entities, and not by such officer in any individual capacity.

 

4.            Representations and Warranties of CT, CT Legacy Holdings, CT Series 1 Note Issuer and CT Legacy REIT Holdings.  Each of CT, CT Legacy Holdings, CT Series 1 Note Issuer and CT Legacy REIT Holdings represents, warrants and covenants to the WestLB Lenders as follows:

 

(a)           It (i) is duly organized and validly existing under the laws of its jurisdiction of organization or incorporation, and (ii) has full power and authority to execute, deliver and perform its obligations under this Agreement and the other Operative Documents to which it is a party.

 

(b)           It has not engaged any broker, finder or other entity acting under the authority of it or any of its affiliates that is entitled to any broker’s commission or other fee in connection with the transaction for which the WestLB Lenders or any of their Affiliates could be responsible.

 

  

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(c)           None of the CT Entities nor any of their “Affiliates” (as defined in Rule 501(b) of Regulation D (“Regulation D”) under the Securities Act), nor any person acting on their behalf, has, directly or indirectly, made offers or sales of any security of CT Series 1 Note Issuer or CT Legacy REIT Holdings, or solicited offers to buy any security of CT Series 1 Note Issuer or CT Legacy REIT Holdings, under any circumstances that would require the registration of any of the Units or Series 1 LLC Interest Secured Notes under the Securities Act.

 

(d)           None of the CT Entities nor any of their Affiliates, nor any person acting on their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Units or Series 1 LLC Interest Secured Notes.

 

(e)           The Units and the Series 1 LLC Interest Secured Notes (a) are not and have not been listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or quoted on a U.S. automated inter-dealer quotation system and (b) are not of an open-end investment company, unit investment trust or face-amount certificate company that are, or are required to be, registered under Section 8 of the Investment Company Act, and the Units and the Series 1 LLC Interest Secured Notes otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act.

 

(f)           Neither it nor any of its Affiliates, nor any person acting on its or their behalf, has engaged, or will engage, in any “directed selling efforts” within the meaning of Regulation S under the Securities Act with respect to the Units or the Series 1 LLC Interest Secured Notes.

 

(g)           Neither CT Series 1 Note Issuer nor CT Legacy REIT Holdings is, and immediately following consummation of the transactions contemplated hereby, will be, an “investment company” or an entity “controlled” by an “investment company,” in each case within the meaning of Section 3(a) of the Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(h)           This Agreement and the consummation of the transactions contemplated herein have been duly authorized, executed and delivered by the CT Entities and, assuming due authorization, execution and delivery by the Administrative Agent and the WestLB Lenders, constitutes a legal, valid and binding obligation of the applicable CT Entities enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.

 

(i)           It is the owner of the Units, the Series 1 LLC Interest Secured Notes and the New LLC Interests, as applicable, and shall deliver the Units, the Series 1 LLC Interest Secured Notes and the New LLC Interests pursuant to this Agreement free and clear of any Lien.

 

  

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(j)           The Units have been duly authorized by CT Legacy REIT Holdings, and upon the issuance and delivery of the Units to the WestLB Lenders in exchange and in full satisfaction of the Credit Agreement Obligations and the release of the Collateral and Liens and the termination and discharge of the Credit Agreement and the Security Agreements and the other transactions contemplated herein, on the Closing Date, will be validly issued, fully paid and non-assessable.  The New LLC Interests have been duly authorized by CT Legacy REIT Holdings and are validly issued, fully paid and non-assessable.  The Series 1 LLC Interest Secured Notes have been duly authorized by CT Series 1 Note Issuer and, on the Closing Date, when delivered to the WestLB Lenders in exchange for and in full satisfaction of the Credit Agreement Obligations and the release of the Collateral and Liens and the termination and discharge of the Credit Agreement and the Security Agreements and the other transactions contemplated herein, will constitute legal, valid and binding obligations of CT Series 1 Note Issuer, enforceable against CT Series 1 Note Issuer in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.

 

(k)           The Pledge Agreement has been duly authorized, executed and delivered by CT Series 1 Note Issuer and, assuming due authorization, execution and delivery by the Collateral Agent and the WestLB Lender party thereto, constitutes a legal, valid and binding obligation of CT Series 1 Note Issuer enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.

 

(l)           Neither the issuance of the Units nor Series 1 LLC Interest Secured Notes and exchange of the Units and Series 1 LLC Interest Secured Notes for and in full satisfaction of the Credit Agreement Obligations and the release of the Collateral and Liens and the termination and discharge of the Credit Agreement and the Security Agreements, nor the execution and delivery of and compliance with the Operative Documents by the CT Entities, as applicable, nor the consummation of the transactions contemplated herein or therein, (i) will conflict with or constitute a violation or breach of (x) the charter or by-laws or similar organizational documents of the CT Entities, as applicable, or any subsidiary of the CT Entities, or any other Operative Document or (y) any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, governmental authority, agency or instrumentality or court, domestic or foreign, having jurisdiction over the CT Entities or any of their subsidiaries or their respective properties or assets (collectively, the “Governmental Entities”), (ii) will conflict with or constitute a violation or breach of, or a default under, or result in the creation or imposition of any Lien upon any property or assets of the CT Entities or any of their subsidiaries pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which (A) the CT Entities or any of their subsidiaries is a party or by which it or any of them may be bound, or (B) to which any of the property or assets of any of them is subject, or any judgment, order or decree of any court, Governmental Entity or arbitrator, except, in the case of clause (i)(y) or this clause (ii), for such conflicts, breaches, violations, defaults, or Liens which (X) would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents and (Y) would not, singly or in the aggregate, have a Material Adverse Effect on the CT Entities or (iii) will require the consent, approval, authorization or order of any court or Governmental Entity.

 

  

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(m)           Each CT Entity has all requisite power and authority to own, lease and operate its properties and assets and conduct the business it transacts and proposes to transact, and is duly qualified to transact business and is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure of such CT Entity to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.

 

(n)           Each of CT Legacy Holdings and CT Legacy REIT Holdings has no subsidiaries that are material to its business, financial condition or earnings, other than those Significant Subsidiaries listed in Schedule A attached hereto (which Schedule A includes each such Significant Subsidiaries).  Each Significant Subsidiary is a corporation, partnership or limited liability company duly and properly incorporated or organized or formed, as the case may be, validly existing and in good standing under the laws of the jurisdiction in which it is chartered or organized or formed, with all requisite corporate power and authority to own, lease and operate its properties and conduct the business it transacts.  Each Significant Subsidiary is duly qualified to transact business as a foreign corporation, partnership or limited liability company, as applicable, and is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.

 

(o)           Each CT Entity holds all necessary approvals, authorizations, orders, licenses, consents, registrations, qualifications, certificates and permits (collectively, the “Governmental Licenses”) of and from Governmental Entities necessary to conduct its respective businesses as now being conducted, and such CT Entity has not received any notice of proceedings relating to the revocation or modification of any such Governmental License, except where the failure to be so licensed or approved or the receipt of an unfavorable decision, ruling or finding, would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity or the failure of such Governmental Licenses to be in full force and effect, would not, singly or in the aggregate, have a Material Adverse Effect; and such CT Entity is in compliance with all applicable laws, rules, regulations, judgments, orders, decrees and consents, except where the failure to be in compliance would not, singly or in the aggregate, have a Material Adverse Effect.

 

(p)           All of the issued and outstanding Equity Interests of CT Legacy Holdings and CT Legacy REIT Holdings and each of their subsidiaries are validly issued, fully paid and non-assessable; all of the issued and outstanding Equity Interests owned by each consolidated subsidiary of CT Legacy Holdings and CT Legacy REIT Holdings is owned by CT Legacy Holdings or CT Legacy REIT Holdings, as applicable, directly or through subsidiaries, free and clear of any Lien, claim, or equitable right (in each case, other than preferred equity interests issued by CDO subsidiaries and the Equity Interests of CT Legacy Asset, which are pledged pursuant to that loan agreement, entered into as of the date hereof, between the Mezzanine Loan Lender and CT Legacy REIT Mezz Borrower (the “Mezzanine Loan Agreement”); and none of the issued and outstanding Equity Interests of CT Legacy Holdings or CT Legacy REIT Holdings or any subsidiary thereof was issued in violation of any preemptive or similar rights arising by operation of law, under the charter or by-laws, or similar organizational documents of such entity or under any agreement to which CT Legacy Holdings or CT Legacy REIT Holdings or any of their subsidiaries is a party.

 

  

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(q)           No CT Entity nor any of its subsidiaries is (i) in violation of its respective charter or by-laws or similar organizational documents or (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which any CT Entity or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of any of them is subject, except, in the case of clause (ii), where such violation or default would not, singly or in the aggregate, have a Material Adverse Effect.

 

(r)           No labor dispute with the employees of any CT Entity or any of its subsidiaries exists or, to the knowledge of any CT Entity, is imminent, except those which would not, singly or in the aggregate, have a Material Adverse Effect.

 

(s)           Each CT Entity and each of its subsidiaries has good and marketable title to all of its respective real and personal property, in each case free and clear of all Liens and defects, except for the Equity Interests of CT Legacy Asset, which are pledged pursuant to the Mezzanine Loan Agreement and those that would not, singly or in the aggregate, have a Material Adverse Effect; and all of the leases and subleases under which any CT Entity or any of its subsidiaries holds properties are in full force and effect, except where the failure of such leases and subleases to be in full force and effect would not, singly or in the aggregate, have a Material Adverse Effect, and neither any CT Entity nor any of its subsidiaries has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of any CT Entity or any subsidiary of any CT Entity under any such leases or subleases, or affecting or questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease, except for such claims that would not, singly or in the aggregate, have a Material Adverse Effect.

 

(t)           Each CT Entity and Significant Subsidiary, as applicable, has timely and duly filed (or filed extensions thereof (and which extensions are presently in effect)) all Tax Returns required to be filed by them, except where such would not, singly or in the aggregate, have a Material Adverse Effect, and all such Tax Returns are true, correct and complete in all material respects.  Each CT Entity and Significant Subsidiary, as applicable, has timely and duly paid in full all Taxes required to be paid by them (whether or not such amounts are shown as due on any Tax Return), except for any Taxes that are being disputed in good faith and for which adequate reserves are held.  There are no federal, state, or other Tax audits or deficiency assessments proposed or pending with respect any CT Entity or any of the Significant Subsidiaries, and no such audits or assessments have been threatened in a writing received by it or them.  As used herein, the terms “Tax” or “Taxes” mean (i) all federal, state, local, and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto, imposed by any Governmental Entity, and (ii) all liabilities in respect of such amounts arising as a result of being a member of any affiliated, consolidated, combined, unitary or similar group, as a successor to another person or by contract.  As used herein, the term “Tax Returns” means all federal, state, local, and foreign Tax returns, declarations, statements, reports, schedules, forms, and information returns and any amendments thereto filed or required to be filed with any Governmental Entity.

 

  

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(u)           The books, records and accounts of each CT Entity and its subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, each CT Entity and its subsidiaries.  Each CT Entity and each of its subsidiaries maintains a system of internal accounting controls to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(v)           No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity, other than those that have been made or obtained, is necessary or required for the performance by the CT Entities of their obligations under the Operative Documents, as applicable, or the consummation by the CT Entities of the transactions contemplated by the Operative Documents.

 

(w)           Each CT Entity and the Significant Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts in all material respects as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions contemplated hereby including but not limited to, real or personal property owned or leased against theft, damage, destruction, act of vandalism and all other risks customarily insured against.  All policies of insurance and fidelity or surety bonds insuring such CT Entity or any of the Significant Subsidiaries or its or their respective businesses, assets, employees, officers and directors are in full force and effect.  Each of the CT Entities and the Significant Subsidiaries are in compliance with the terms of such policies and instruments in all material respects. Neither CT nor any Significant Subsidiary has reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.  Within the past twelve months, neither CT nor any Significant Subsidiary has been denied any insurance coverage it has sought or for which it has applied.

 

(x)           Each CT Entity and its subsidiaries or any person acting on behalf of each CT Entity and its subsidiaries including, without limitation, any director, officer, agent or employee of each CT Entity or its subsidiaries has not, directly or indirectly, while acting on behalf of each CT Entity and its subsidiaries (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds, (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iv) made any other unlawful payment.

 

  

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(y)           Except as would not, individually or in the aggregate, result in a Material Adverse Effect, (i) to each CT Entity’s actual knowledge, each CT Entity and its subsidiaries have been and are in compliance with applicable Environmental Laws, (ii) to each CT Entity’s actual knowledge neither any CT Entity, nor any of its subsidiaries has at any time released (as such term is defined in CERCLA) or otherwise disposed of Hazardous Materials on, to, in, under or from any of the real properties currently or previously owned, leased or operated by any CT Entity or any of its subsidiaries (collectively, the “Properties”) other than in compliance with all Environmental Laws, (iii) to each CT Entity’s actual knowledge, neither any CT Entity nor any of its subsidiaries has used the Properties, other than in compliance with applicable Environmental Laws, (iv) neither any CT Entity nor any of its subsidiaries has received any written notice of, or has any actual knowledge of any occurrence or circumstance which, with notice or passage of time or both, is reasonably likely to give rise to a claim under or pursuant to any Environmental Law with respect to the Properties, or their respective assets or arising out of the conduct of each CT Entity or its subsidiaries, (v) to each CT Entity’s actual knowledge, none of the Properties are included or proposed for inclusion on the National Priorities List issued pursuant to CERCLA by the United States Environmental Protection Agency or proposed for inclusion on any similar list or inventory issued pursuant to any other Environmental Law or issued by any other Governmental Entity, (vi) to each CT Entity’s actual knowledge, none of any CT Entity, any of its subsidiaries or agents or any other person or entity for whose conduct any of them is reasonably likely to be held responsible, has generated, manufactured, refined, transported, treated, stored, handled, disposed, transferred, produced or processed any Hazardous Material at any of the Properties, except in compliance with all applicable Environmental Laws, (vii) to each CT Entity’s knowledge, no Lien has been imposed on the Properties by any Governmental Entity in connection with the presence on or off such Property of any Hazardous Material, and (viii) none of any CT Entity, any of its subsidiaries or, to each CT Entity’s actual knowledge, any other person or entity for whose conduct any of them is reasonably likely to be held responsible, has entered into or been subject to any consent decree, compliance order, or administrative order with respect to the Properties or any facilities or improvements or any operations or activities thereon.

 

As used herein, “Hazardous Materials” shall include, without limitation, any flammable materials, explosives, radioactive materials, hazardous materials, hazardous substances, hazardous wastes, toxic substances or related materials, asbestos, petroleum, petroleum products and any hazardous material as defined by any federal, state or local environmental law, statute, ordinance, rule or regulation, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675 (“CERCLA”), the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 5101-5127, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001-11050, the Toxic Substances Control Act, 15 U.S.C. §§ 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678, and any analogous state laws, as any of the above may be amended from time to time and in the regulations promulgated pursuant to each of the foregoing (including environmental statutes and laws not specifically defined herein) (individually, an “Environmental Law” and collectively, the “Environmental Laws”) or by any Governmental Entity.

 

  

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(z)           CT (i) is a sophisticated entity with respect to the Exchange, (ii) has such knowledge and experience, and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the Exchange and (iii) has independently and without reliance upon the Administrative Agent, the WestLB Lenders or any of their Affiliates, and based on such information as it has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that it has relied upon the Administrative Agent’s and the WestLB Lenders’ express representations, warranties, covenants and agreements in this Agreement.  It acknowledges that neither the Administrative Agent nor the WestLB Lenders or any of their Affiliates has given it any investment advice, credit information or opinion on whether the Exchange is prudent.

 

(aa)           There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to the knowledge of it after due inquiry, threatened against or affecting it or any of its subsidiaries, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by this Agreement or have a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which it or any of its subsidiaries is a party or of which any of their respective properties or assets is subject, including ordinary routine litigation incidental to the business, are not expected to result in a Material Adverse Effect.

 

(bb)           The accountants of CT who certified the Financial Statements are independent public accountants of CT and its subsidiaries within the meaning of the Securities Act, and the rules and regulations of the Securities and Exchange Commission (the “Commission”) thereunder.

 

(cc)           The audited consolidated financial statements (including the notes thereto) and schedules of CT and its consolidated subsidiaries for the fiscal year ended December 31, 2009, filed with the Commission in CT’s Annual Report on Form 10-K for the year ended December 31, 2009 (the “Financial Statements”) and the interim unaudited consolidated financial statements of CT and its consolidated subsidiaries for the quarter ended September 30, 2010 (the “Interim Financial Statements”) are the most recent publicly available audited and unaudited consolidated financial statements of CT and its consolidated subsidiaries, respectively, and fairly present in all material respects, in accordance with GAAP, the financial position of CT and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the dates and for the periods therein specified, subject in the case of Interim Financial Statements, to year-end adjustments.  Such consolidated financial statements and schedules have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein and subject to normal recurring adjustments in the ordinary course).

 

(dd)           Neither CT nor any of its subsidiaries has any material liability, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes (and there is no past or present fact, situation, circumstance, condition or other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim or demand against CT or any of its subsidiaries that could give rise to any such liability), except for (i) liabilities set forth in the Financial Statements or the Interim Financial Statements and (ii) normal fluctuations in the amount of the liabilities referred to in clause (i) above occurring in the ordinary course of business of CT and all of its subsidiaries since the date of the most recent balance sheet included in such Financial Statements and Interim Financial Statements and (iii) as described in the Exchange Act Reports.

 

  

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(ee)           Since the respective dates of the Interim Financial Statements, there has not been (A) any Material Adverse Effect or (B) any dividend or distribution of any kind declared, paid or made by CT on any class of its Equity Interests, other than regular quarterly dividends on CT’s common stock.

 

(ff)           The documents of CT filed with the Commission in accordance with the Exchange Act, from and including the commencement of the fiscal year covered by CT’s most recent Annual Report on Form 10-K, at the time they were or hereafter are filed by CT with the Commission, complied and will comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder, and, at the date of this Agreement and on the Closing Date, do not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and other than such instruments, agreements, contracts and other documents as are filed as exhibits to CT’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments, agreements, contracts or documents of a character described in Item 601 of Regulation S-K promulgated by the Commission to which CT or any of its subsidiaries is a party that are required to be so filed.  To the actual knowledge of the Chief Financial Officer of CT, CT is in compliance with all currently applicable requirements of the Exchange Act that were added by the Sarbanes-Oxley Act of 2002.

 

(gg)           Commencing with its taxable year ending December 31, 2003, CT has been, and upon the completion of the transactions contemplated hereby, CT will continue to be (for as long as the board of directors of CT believes it is in CT’s best interest to qualify as a REIT), organized and operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “REIT”) under Sections 856 through 860 of the Code, and CT’s organizational structure and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code, and no actions have been taken (or not taken which are required to be taken) which would cause such qualification to be lost.  As long as the board of directors of CT believes it is in CT’s best interests to qualify as a REIT, CT expects to continue to be organized and to operate in a manner so as to qualify as a REIT in the taxable year ending December 31, 2011 and succeeding taxable years.

 

(hh)           The information regarding the transactions contemplated by this Agreement provided by CT to the Administrative Agent and the WestLB Lenders does not, as of the date hereof, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

5.            Representations and Warranties of the WestLB Lenders.  Each of the WestLB Lenders, for itself and its Affiliates to which any Units or Series 1 LLC Interest Secured Notes may be delivered, if applicable, represents and warrants to each of the CT Entities as follows:

 

  

16

  

 

(a)           It is a company duly formed, validly existing and in good standing under the laws of the jurisdiction in which it is organized with all requisite power and authority (i) to execute, deliver and perform its obligations under the Operative Documents to which it is a party, (ii) to make the representations and warranties specified herein and therein and (iii) to consummate the transactions contemplated in the Operative Documents.

 

(b)           This Agreement has been duly authorized, executed and delivered by it and, on the Closing Date, assuming due authorization, execution and delivery by the CT Entities, as applicable, constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.

 

(c)           No filing with, or authorization, approval, consent, license, order registration, qualification or decree of, any Governmental Entity or any other person, other than those that have been made or obtained, is necessary or required for the performance by such Party of its obligations under this Agreement or to consummate the transactions contemplated herein.

 

(d)           It is a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment Company Act.  It is an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the Securities Act.

 

(e)           It is the beneficial owner of the aggregate amount Credit Agreement Obligations as set forth next to its name on Exhibit C hereto.

 

(f)           It is aware that the Units and Series 1 LLC Interest Secured Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to “U.S. persons” (as defined in Regulation S under the Securities Act) except in accordance with Rule 903 of Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.

 

(g)           It understands and acknowledges that (i) no public market exists for any of the Units or Series 1 LLC Interest Secured Notes and that it is unlikely that a public market will ever exist for the Units or Series 1 LLC Interest Secured Notes, (ii) it is receiving the Units and Series 1 LLC Interest Secured Notes for its own account, for investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or other applicable securities laws, and it agrees to the legends and transfer restrictions applicable to the Units and Series 1 LLC Interest Secured Notes, and (iii) it has had the opportunity to ask questions of, and receive answers and request additional information from, the CT Entities and is aware that it may be required to bear the economic risk of an investment in the Units and Series 1 LLC Interest Secured Notes forever.

 

(h)           It is aware that the Units and Series 1 LLC Interest Secured Notes may not be transferred if such transfer results in the assets being deemed “plan assets” for purposes of ERISA or Section 4975 of the Code.

 

(i)           It has not engaged any broker, finder or other entity acting under its authority that is entitled to any broker’s commission or other fee in connection with this Agreement and the consummation of transactions contemplated in this Agreement for which the CT Entities could be responsible.

 

  

17

  

 

(j)           It (i) is a sophisticated entity with respect to the Exchange and the transactions contemplated hereby, (ii) has such knowledge and experience so as to be aware of the risks and uncertainties inherent in the Exchange and the transactions contemplated hereby and (iii) has independently based on such information as it has deemed appropriate, made its own analysis and decision to acquire the Units and Series 1 LLC Interest Secured Notes, and acknowledges that it has relied upon the CT Entities’ express representations, warranties, covenants and agreements in the Operative Documents and the other documents delivered by the CT Entities in connection therewith.

 

6.           Financing Covenant.  To the extent permitted under the Mezzanine Loan Agreement and the agreements entered into in connection with the Repurchase Finance Assumption Transactions, CT Legacy REIT Mezz Borrower may finance or refinance Legacy Assets.  CT Legacy REIT Mezz Borrower covenants and agrees that, in pursuing any such financing or refinancing, whether before or after the satisfaction of the Mezzanine Loan Agreement, CT Legacy REIT Mezz Borrower will in good faith undertake to obtain any such financing or refinancing of the Legacy Assets or any other new debt on the most favorable prevailing market-based terms available under the circumstances, including with respect to any financing obtained from any stockholder of CT REIT Mezz Borrower, CT, or any Affiliate thereof, and CT Legacy REIT Mezz Borrower will enter into such financings, refinancings or any other debt only to the extent that it maximizes the return on the Legacy Assets to all of its shareholders and is not intended to unfairly delay the distribution of dividends to its shareholders.

 

7.            Prepayment Restrictions; Continuing Reporting Obligations.

 

(a)           Except for prepayments pursuant to the payment of dividends or distributions on the New LLC Interests and the Class A-1 Units of CT Legacy REIT Holdings securing those certain 8.19% series 2 secured notes due 2016 issued by CT Legacy Series 2 Note Issuer, LLC (the “Series 2 Notes”), neither CT Legacy Holdings nor any of its subsidiaries shall prepay either the Series 1 LLC Interest Secured Notes or the Series 2 Notes unless any prepayment is made pro rata among both the Series 1 LLC Interest Secured Notes and the Series 2 Notes based on the outstanding principal amount thereof, including any payment in kind interest accrued thereon and added thereto.

 

(b)           For so long as any WestLB Lender or any of its Affiliates is the holder of the Units, CT Legacy REIT Holdings shall provide such holders thereof (and any beneficial owner previously notified to CT Legacy REIT Holdings in writing so long as such beneficial owner agrees to be bound by the provisions of Section 19 hereof) with copies of the monthly, quarterly and annual financial reports required to be provided to the Mezzanine Loan Lender under the Mezzanine Loan Agreement, as in effect on the date hereof as and when required to be provided hereunder, regardless of whether such mezzanine loan is then outstanding or the Mezzanine Loan Lender actually requests or receives such reports.

 

  

18

  

 

8.            Payment of Expenses.  On the Closing Date, in addition to the obligations agreed to by CT under Section 2(b)(vi) herein, the CT Entities shall pay all reasonable costs and expenses incurred by the Administrative Agent and the WestLB Lenders in connection with the authorization, execution and delivery of this Agreement and the transactions contemplated hereby, including the reasonable fees of Sidley Austin LLP for the Administrative Agent and the WestLB Lenders.  The CT Entities shall pay the fees and all reasonable expenses of the Collateral Agent appointed under the Pledge Agreements and the Control Agreements, including the fees and disbursements of one counsel for the Collateral Agent until these agreements are terminated in accordance with their terms.

 

9.            Indemnification.

 

(a)  The CT Entities agrees to indemnify and hold harmless the Administrative Agent and the WestLB Lenders, and their respective directors, officers, employees and agents and each person, if any, who controls them within the meaning of the Securities Act or the Exchange Act (collectively, the “Indemnified Parties”) against any and all losses, claims, damages or liabilities, joint or several, to which the Indemnified Parties may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on (i) any untrue statement or alleged untrue statement of a material fact or any omission or alleged omission to state a material fact required to be stated or necessary to make the statements contained in any information provided by the CT Entities, in light of the circumstances under which they were made, not misleading, (ii) the breach or alleged breach of any representation, warranty, or agreement of the CT Entities contained herein, or (iii) the execution and delivery by the CT Entities of the Operative Documents and the consummation of the transactions contemplated herein and therein, and agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by the Indemnified Parties in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability that the CT Entities may otherwise have.

 

(b)           Promptly after receipt by an Indemnified Party under this Section 9 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 9, promptly notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve the indemnifying party from liability under paragraph (a) above unless and to the extent that such failure results in the forfeiture by the indemnifying party of material rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any Indemnified Party other than the indemnification obligation provided in paragraph (a) above.  The Indemnified Parties shall be entitled to appoint counsel to represent the Indemnified Parties in any action for which indemnification is sought.  An indemnifying party may participate at its own expense in the defense of any such action.  In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, unless an Indemnified Party elects to engage separate counsel because such Indemnified Party believes that its interests are not aligned with the interests of another Indemnified Party or that a conflict of interest might result.  An indemnifying party will not, without the prior written consent of the Indemnified Parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not the Indemnified Parties are actual or potential parties to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, suit or proceeding.

 

  

19

  

 

10.            Representations and Indemnities to Survive.  The respective agreements, representations, warranties and other statements of the Parties and/or their officers set forth in or made pursuant to this Agreement will remain in full force and effect and will survive the Exchange.  The provisions of Sections 6 through 20 shall survive the termination or cancellation of this Agreement.

 

11.            Amendments.  This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement by each of the Parties hereto.

 

12.            Notices.  All communications hereunder will be in writing and effective only on receipt, and will be mailed, delivered by hand or courier or sent by facsimile and confirmed or by any other reasonable means of communication, including by electronic mail, to the relevant Party at its address specified in Exhibit F.

 

13.            Successors and Assigns.  This Agreement will inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns.  Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person other than the Parties hereto and the Affiliates, directors, officers, employees, agents and controlling persons and their successors, assigns, heirs and legal representatives, any right or obligation hereunder.  None of the rights or obligations of the CT Entities under this Agreement may be assigned, whether by operation of law or otherwise, without the prior written consent of the WestLB Lenders.

 

14.            Applicable Law.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

15.            Submission to Jurisdiction.  ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

  

20

  

 

16.            Waiver of Jury Trial  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY OPERATIVE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO OTHER PARTY AND NO RELATED PERSON OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 16.

 

17.            Counterparts and Facsimile.  This Agreement may be executed by any one or more of the Parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.  This Agreement may be executed by any one or more of the Parties hereto by facsimile.

 

18.           Transactions Steps.  The Parties hereby acknowledge that the transactions contemplated by this Agreement involve a series of steps as more fully described in the Recitals to this Agreement and as set forth in Exhibit A hereto, and represent that it is their intention that the various steps set forth in such Recitals be consummated in the sequence set forth therein.

 

19.           Confidentiality. Each of the Parties shall not disclose the terms of this Agreement hereof without the prior written consent of the other Parties; provided, however, that each Party may disclose such terms to (i) their respective affiliates, directors, officers, employees, attorneys, accountants, partners, members and financial and other advisors, prospective transferees and transferees (ii) pursuant to a subpoena or order issued by a court, arbitrator or governmental body or agency, or as otherwise required by law or regulation or stock exchange requirements, (iii) in connection with the exercise of any remedies hereunder or under any other Operative Document or any suit, action or proceeding relating to this Agreement or any other Operative Document or the enforcement of rights hereunder or under any other Operative Document, or (iv) to the extent such terms or information (x) becomes publicly available other than as a result of a breach of this Section 19 or (y) becomes available to any Party on a non-confidential basis from a source other than another Party hereto.  Notwithstanding any other provision herein to the contrary, each of the Parties hereto (and each employee, representative or other agent of each such Party) may disclose to any and all persons, without limitation of any kind, any information with respect to the United States, federal, state and local “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereto and all materials of any kind (including opinions or other tax analyses) that are provided to such party or its representatives relating to such tax treatment and tax structure; provided that no person may disclose any pricing terms or other nonpublic business or financial information that is unrelated to the United States federal, state and local tax treatment of the transaction and is not relevant to understanding the United States federal, state and local tax treatment of the transaction, without complying with the provisions of this Section 19; provided, further, that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the United States federal, state and local tax treatment or tax structure of the transactions contemplated hereby.

 

  

21

  

 

20.           Entire Agreement.  This Agreement constitutes the entire agreement of the Parties to this Agreement and supercedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.

 

[Signature Pages Follows]

 

  

22

  

 

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

 

 

	 	

CAPITAL TRUST, INC.

	 	 	 	 
	
 

	
By: 

	/s/ Geoffrey G. Jervis	 
	 	 	

Name: Geoffrey G. Jervis

Title: Chief Financial Officer

	 
	 	 	 	 
	 	 	 	 
	 	
CT LEGACY HOLDINGS, LLC

	 	 	 	 
	 	
By: 

	/s/ Geoffrey G. Jervis	 
	 	 	
Name: Geoffrey G. Jervis

Title: Chief Financial Officer

	 
	 	 	 	 
	 	 	 	 
	 	
CT LEGACY SERIES 1 NOTE ISSUER, LLC

	 	 	 	 
	 	
By: 

	/s/ Geoffrey G. Jervis	 
	 	 	
Name: Geoffrey G. Jervis

Title: Chief Financial Officer

	 
	 	 	 	 
	 	 	 	 
	 	
CT LEGACY REIT HOLDINGS, LLC

	 	 	 	 
	 	
By: 

	/s/ Geoffrey G. Jervis	 
	 	 	
Name: Geoffrey G. Jervis

Title: Chief Financial Officer

	 

 

 

(Signatures continue on the next page)

 

  

23

  

 

	 	

WESTLB AG, NEW YORK BRANCH, as 

Administrative Agent

	 	 	 	 
	
 

	
By: 

	/s/ Christian Grane	 
	 	 	

Name: Christian Grane

Title: Executive Director

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Peter J. Pasqua	 
	 	 	
Name: Peter J. Pasqua

Title: Director

	 

 

 

(Signatures continue on the next page)

 

  

24

  

 

	 	

WESTLB AG, NEW YORK BRANCH

	 	 	 	 
	
 

	
By: 

	/s/ Christian Grane	 
	 	 	

Name: Christian Grane

Title: Executive Director

	 
	 	 	 	 
	 	
By: 

	/s/ Peter J. Pasqua	 
	 	 	
Name: Peter J. Pasqua

Title: Director

	 
	 	 	 	 
	 	 	 	 
	 	
BNP PARIBAS

	 	 	 	 
	 	
By: 

	/s/ Albert A. Young	 
	 	 	
Name: Albert A. Young

Title: Managing Director

	 
	 	 	 	 
	 	
By: 

	/s/ Brock Harris	 
	 	 	
Name: Brock Harris

Title: Managing Director

	 
	 	 	 	 
	 	 	 	 
	 	
MORGAN STANLEY SENIOR FUNDING, INC.

	 	 	 	 
	 	
By: 

	/s/ Su Yeo	 
	 	 	
Name: Su Yeo

Title: Executive Director

	 
	 	 	 	 
	 	 	 	 
	 	
JPMORGAN CHASE BANK, N.A.

	 	 	 	 
	 	
By: 

	/s/ Susan E. Atkins	 
	 	 	
Name: Susan E. Atkins

Title: Managing Director

	 

 

(Signatures continue on the next page)

 

  

25

  

 

	 	

DEUTSCHE BANK TRUST COMPANY AMERICAS

	 	 	 	 
	
 

	
By: 

	/s/ James Rolison	 
	 	 	

Name: James Rolison

Title: Managing Director

	 
	 	 	 	 
	 	
By: 

	/s/ Perry Forman	 
	 	 	

Name: Perry Forman

Title: Director

	 
	 	 	 	 
	 	 	 	 
	 	

WELLS FARGO BANK, N.A

	 	 	 	 
	 	
By: 

	/s/ Sam Supple	 
	 	 	

Name: Sam Supple

Title: Senior Vice President

	 

 

  

26

  

 

EXHIBIT A

Secured and Unsecured Obligations

Set forth below is a list of certain secured and unsecured debt obligations (the “Legacy Debt Obligations”) of Capital Trust, Inc., a Maryland corporation (“CT”):

	
  

	
1.

	
$42,369,695 due and payable under that certain master repurchase agreement, dated as of July 30, 2007, by and among CT, as seller (“Citi Seller”) and Citigroup Global Markets Inc., as securities buyer (“Citi Securities Buyer”) and Citigroup Financial Products Inc., as loan buyer (“Citi Loan Buyer”, together with Citi Securities Buyer, “Citi Buyers”), as amended by that certain amendment No. 2 to master repurchase agreement, dated as of July 24, 2008, by and between Citi Seller and Citi Buyers, as further amended by that certain amendment No. 3 to master repurchase agreement, dated as of March 16, 2009, by and between Citi Seller and Citi Buyers, as further amended by that certain amendment No. 4 to master repurchase agreement, dated as of October 1, 2009, by and between Citi Seller and Citi Buyers.

	
  

	
2.

	
$131,939,582 due and payable under that certain master repurchase agreement, dated as of October 24, 2008, by and among CT and CT BSI Funding Corp., as sellers (collectively, “JPM 1 Sellers”) and JPMorgan Chase Bank, N.A., as buyer (“JPM 1 Buyer”), as amended by that certain amendment No. 1 to master repurchase agreement, dated as of March 16, 2009, by and among JPM 1 Sellers, JPM 1 Buyer and JPMorgan Chase Bank, N.A., as affiliated hedge counterparty.

	
  

	
3.

	
$61,833,585 due and payable under that certain master repurchase agreement, dated as of November 21, 2008, by and among CT and CT BSI Funding Corp., as sellers (collectively, “JPM 2 Sellers”) and JPMorgan Chase Funding Inc., as buyer (“JPM 2 Buyer”), as amended by that certain amendment No. 1 to master repurchase agreement, dated as of March 16, 2009, by and among JPM 2 Sellers, JPM 2 Buyer and JPMorgan Chase Bank., N.A., as affiliated counter party.

 

  

A-1

  

 

	
  

	
4.

	
$104,106,223 due and payable under that certain master repurchase agreement, dated as of July 29, 2005, by and among CT, CT RE CDO 2004-1 Sub, LLC, and CT RE CDO 2005-1 Sub, LLC, as sellers (collectively, “MS Sellers”) and Morgan Stanley Bank, N.A., as buyer (“MS Buyer”), as amended by that certain amendment No. 1 to master repurchase agreement, dated as of November 4, 2005, by and among MS Sellers and MS Buyer, as further amended by that certain amendment No. 2 to master repurchase agreement, dated as of November 16, 2005, by and among MS Sellers and MS Buyer, as further amended by that certain amendment No. 3 to master repurchase agreement, dated as of April 6, 2006, by and among MS Sellers and MS Buyer, as further amended by that certain amendment No. 4 to master repurchase agreement, dated as of April 26, 2006, by and among MS Sellers and MS Buyer, as further amended by that certain letter agreement, dated June 23, 2006, from CT to Morgan Stanley, as further amended by that certain amendment No. 5 to master repurchase agreement, dated as of February 14, 2007, by and among MS Sellers and MS Buyer, as further amended by that certain joinder and amendment, dated as of June 5, 2007, by and among, CT Investment Management Co., LLC (“CT Investment”), MS Sellers, MS Buyer, Deutsche Bank National Trust Company (“Custodian”) and Midland Loan Services, Inc. (“Servicer”), as further amended by that certain amendment No. 6 to master repurchase agreement, dated as of December 14, 2007, by and among MS Sellers and MS Buyer, as further amended by that certain amendment No. 7 to master repurchase agreement, dated as of June 30, 2008, by  and among MS Sellers, CT Investment (together with MS Sellers, “New MS Sellers”) and MS Buyer, as further amended by that certain amendment No. 8 to master repurchase agreement, dated as of July 28, 2008, by and among New MS Sellers and MS Buyer, as further amended by that certain joinder No. 2 and amendment No. 9 to master repurchase agreement, dated as of February 13, 2009, by and among CT XLC Holding, LLC (“XLC”), New MS Sellers, MS Buyer, Custodian and Servicer, as further amended by that certain amendment No. 10 to master repurchase agreement, dated as of March 16, 2009, by and among MS Sellers, XLC and MS Buyer, as further amended by that certain amendment No. 11 to master repurchase agreement, dated as of October 1, 2009, by and among MS Sellers, XLC and MS Buyer, as further amended by that certain joinder No. 3 and amendment No. 12 to master repurchase agreement, dated as of February 3, 2011, by and among MS Sellers, XLC, and Bellevue CT Holdings, LLC, as sellers (collectively, “New MS Sellers II”), MS Buyer, as buyer, Custodian, and Servicer, as further amended by that certain joinder No. 4 and amendment No. 13 to master repurchase agreement, dated as of February 3, 2011, by and among New MS Sellers II and CNL Hotel JV, LLC, as sellers (collectively, “New MS Sellers III”), MS Buyer, as buyer, Custodian, and Servicer.

	
  

	
5.

	
$99,338,851 due and payable under that certain amended and restated credit agreement, dated as of March 16, 2009, among CT, WestLB, AG, New York Brach, BNP Paribas, Morgan Stanley Bank N.A., JPMorgan Chase Bank, N.A., Deutsche Bank Trust Company Americas and Wells Fargo Bank, N.A. and WestLB AG, New York Branch, as administrative agent for the lenders.

	
  

	
6.

	
$143,752,750 due and payable under that certain junior subordinated indenture, dated as of March 16, 2009, between CT and The Bank of New York Mellon Trust Company, National Association (“BNYM”), as trustee, and that certain junior subordinated indenture, dated as of May 14, 2009, by and between CT and BNYM, as trustee.

Legacy Assets

Set forth on Exhibit B to the Agreement to which this Exhibit A is attached is a list of certain assets owned by CT or its subsidiaries to be contributed to CT Legacy REIT Mezz Borrower (as defined below) in connection with the Restructuring (as defined below) (the “Legacy Assets”).

Restructuring

CT has undertaken to restructure and/or settle the Legacy Debt Obligations pursuant to a plan (the “Restructuring”) that contemplates the following steps and transactions:

 

  

A-2

  

 

	
1.

	
The transfer of the Legacy Assets to CT Legacy REIT Mezz Borrower, Inc., a Maryland corporation (“CT Legacy REIT Mezz Borrower”) in exchange for cash and the issuance to CT Legacy Holdings, LLC, a Delaware limited liability company (“CT Legacy Holdings”), of shares of Class A-1 Common Stock, Class A-2 Common Stock, Class B Common Stock of CT Legacy REIT Mezz Borrower and the issuance to CT of Class A Preferred Stock (each of the foregoing as defined herein) of CT Legacy REIT Mezz Borrower pursuant to that certain contribution agreement, dated as of the date hereof, by and among CT, CT Legacy REIT Mezz Borrower and CT Legacy Holdings (the “Legacy Asset Contribution Transaction”);

 

	
2.

	
The transfer of the Legacy Assets by CT Legacy REIT Mezz Borrower as a contribution to CT Legacy Asset, LLC, a Delaware limited liability company (“CT Legacy Asset”), pursuant to that certain contribution agreement, dated as of the date hereof, by and between CT Legacy REIT Mezz Borrower and CT Legacy Asset (the “CTLRMB Legacy Asset Downstream Contribution Transaction”);

 

	
3.

	
The transfer of certain of the Legacy Assets by CT Legacy Asset as a contribution to CT Legacy MS SPV, LLC, a Delaware limited liability company (“CT Legacy MS”), CT Legacy Citi SPV, LLC, a Delaware limited liability company (“CT Legacy Citi”) and CT Legacy JPM SPV, LLC, a Delaware limited liability company (“CT Legacy JPM”), pursuant to that certain contribution agreement, dated as of the date hereof, by and among CT Legacy Asset, on the one hand, and each of CT Legacy MS, CT Legacy Citi and CT Legacy JPM, on the other hand (the “CTLA Legacy Asset Downstream Contribution Transactions”);

 

	
4.

	
The funding of cash to CT Legacy REIT Mezz Borrower pursuant to that certain mezzanine loan agreement, dated as of the date hereof, by and between CT Legacy REIT Mezz Borrower, as borrower, and Five Mile Capital II CT Mezz SPE LLC (“Five Mile Lender”), as lender (the “Mezzanine Loan Agreement”), the pledge by CT Legacy REIT Mezz Borrower of 100% of its membership interests in CT Legacy Asset, and certain other assets of CT Legacy REIT Mezz Borrower, all pursuant to a pledge and security agreement, dated as of the date hereof, by CT Legacy REIT Mezz Borrower, as security for CT Legacy REIT Mezz Borrower’s obligations under the Mezzanine Loan Agreement and related mezzanine loan promissory note (the “Mezzanine Pledge”), and the non-recourse carve-out guaranty thereof by CT pursuant to that certain guaranty, dated as of the date hereof, pursuant to that certain contribution agreement, dated as of the date hereof, by and among Five Mile Lender, Five Mile Capital II CT Equity SPE LLC (“Five Mile Shareholder”) and CT Legacy REIT Mezz Borrower, in exchange for the issuance by CT Legacy REIT Mezz Borrower to Five Mile Lender of the related mezzanine loan promissory note and Five Mile Shareholder of shares of Class A-2 Common Stock of CT Legacy REIT Mezz Borrower (the “Mezzanine Loan Contribution Transaction”);

 

	
5.

	
The contribution to CT Legacy REIT Holdings, LLC, a Delaware limited liability company (“CT Legacy REIT Holdings”) of Class A-1 Common Stock and Class A-2 Common Stock held by CT Legacy Holdings and Five Mile Shareholder in exchange for the issuance to CT Legacy Holdings and Five Mile Shareholder of Class A-1 Units and/or Class A-2 Units of CT Legacy REIT Holdings pursuant to that certain contribution agreement, dated as of the date hereof, by and among CT Legacy REIT Holdings, CT Legacy Holdings and Five Mile Shareholder (the “REIT Stock Contribution Transaction”);

 

  

A-3

  

 

	
6.

	
The transfer by CT Legacy Holdings of Class A-1 Units and/or Class A-2 Units of CT Legacy REIT Holdings to each of CT Legacy Series 1 Note Issuer, LLC, a Delaware limited liability company (“CT Series 1 Note Issuer”) and CT Legacy Series 2 Note Issuer, LLC, a Delaware limited liability company (“CT Series 2 Note Issuer”) in exchange for the issuance to CT Legacy Holdings by CT Series 1 Note Issuer of those certain series 1 secured notes, dated as of the date hereof, secured by Class A-1 Units and Class A-2 Units of CT Legacy REIT Holdings (the “Series 1 Notes”), pursuant to that certain exchange agreement, dated as of the date hereof, by and between CT Legacy Holdings and CT Series 1 Note Issuer (the “Series 1 Note Exchange Transaction”), and the issuance to CT Legacy Holdings by CT Series 2 Note Issuer of those certain series 2 secured notes, dated as of the date hereof, secured by Class A-1 Units of CT Legacy REIT Holdings (the “Series 2 Notes”), pursuant to that certain exchange agreement, dated as of the date hereof, by and between CT Legacy Holdings and CT Series 2 Note Issuer (the “Series 2 Note Exchange Transaction” and together with the Series 1 Note Exchange Transaction, the “Note Exchange Transactions”);

 

	
7.

	
The assumption of certain Legacy Debt Obligations by newly acquired and converted or formed subsidiaries of CT Legacy Asset pursuant to:

 

	
  

	
(a)

	
that certain amended and restated master repurchase agreement, dated as of the date hereof, by and between CT Legacy JPM and JPMorgan Chase Bank, N.A.;

 

	
  

	
(b)

	
that certain amended and restated master repurchase agreement, dated as of the date hereof, by and between CT Legacy JPM and JPMorgan Chase Funding Inc.;

 

	
  

	
(c)

	
that certain amended and restated master repurchase agreement, dated as of the date hereof, by and among CT Legacy MS, CT XLC Holding, LLC, Bellevue C2 Holding, LLC, CNL Hotel JV, LLC and Morgan Stanley Asset Funding Inc.; and

 

	
  

	
(d)

	
that certain amended and restated master repurchase agreement, dated as of the date hereof,  by and between CT Legacy Citi and Citigroup Financial Products, Inc. and Citigroup Global Markets, Inc. ((a), (b), (c) and (d) together, the “Repurchase Financing Assumption Transactions”);

 

	
8.

	
The satisfaction and discharge of certain Legacy Debt Obligations pursuant to that certain exchange agreement, dated as of the date hereof, by and among CT, CT Legacy Holdings, CT Legacy REIT Holdings, CT Series 1 Note Issuer and WestLB AG, New York Branch, BNP Paribas, Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Deutsche Bank Trust Company Americas (collectively, the “WestLB Lenders”) that provides for the delivery to the WestLB Lenders by CT and CT Legacy Holdings of cash, Class A-2 Units of CT Legacy REIT Holdings and the Series 1 Notes (the “WestLB Loan Termination Transaction”);

 

  

A-4

  

 

	
9.

	
The discharge of certain Legacy Debt Obligations upon the delivery of Class B Common Stock by CT Legacy Holdings and the issuance by JSN Restructure Vehicle 1 Ltd., a newly formed exempted company incorporated under the laws of the Caymans Islands and owned by a third party (“Restructure 1”), of new notes pursuant to that certain indenture, dated as of the date hereof, by and between Restructure 1 and BNYM, as trustee, in exchange for such Legacy Debt Obligations held by the holders thereof and the simultaneous delivery of such obligations to CT for cancellation by the trustee (the “Old JSN Discharge Transaction”) and immediately thereafter the contribution by CT and CT Legacy Holdings of cash, shares of Class B Common Stock and certain Series 2 Notes to Restructure 1, pursuant to that certain contribution and exchange agreement, dated as of the date hereof, by and among CT, CT Legacy Holdings, CT Series 2 Note Issuer, CT Legacy REIT Mezz Borrower, Restructure 1 and the holders of such Legacy Debt Obligations named therein (the “Non-EOD CDO Restructure 1 Contribution Transaction”);

 

	
10.

	
The discharge of certain Legacy Debt Obligations held by certain holders thereof upon the redemption of such obligations in exchange for cash and certain Series 2 Notes, upon the exercise by CT of redemption rights contained in that certain supplemental indenture, dated as of the date hereof, between CT and BNYM, as trustee, to the junior subordinated indenture, dated as of March 16, 2009, between CT and BNYM, as trustee, (the “EOD CDO Redemption Transaction”), whereby such Legacy Debt Obligations shall be cancelled by the trustee, and in connection therewith, the execution of those certain redemption agreements, dated as of the date hereof, among CT, CT Legacy Holdings, CT Series 2 Note Issuer, CT Legacy REIT Mezz Borrower and the holders of such Legacy Debt Obligations (the “Old JSN 2 Discharge Transaction”);

 

	
11.

	
The discharge of certain Legacy Debt Obligations upon the exchange of such obligations by the holders thereof for cash, shares of Class B Common Stock and certain Series 2 Notes, pursuant to that certain exchange agreement, dated as of the date hereof, by and among CT, CT Legacy Holdings, CT Series 2 Note Issuer, CT Legacy REIT Mezz Borrower and the holders of the foregoing Legacy Debt Obligations (the “JSN Opt-Out Exchange Transaction”).

 

For purposes of the foregoing, the term “Class A-1 Common Stock” means the shares of class A-1 common stock, par value $0.001 per share, of CT Legacy REIT Mezz Borrower, the term “Class A-2 Common Stock” means the shares of class A-2 common stock, par value $0.001 per share, of CT Legacy REIT Mezz Borrower, the term “Class B Common Stock” means the shares of class B common stock, par value $0.001 per share, of CT Legacy REIT Mezz Borrower, the term “Class A Preferred Stock” means the shares of class A preferred stock, par value $0.001 per share, of CT Legacy REIT Mezz Borrower and the term “Stock” means each of the Class A-1 Common Stock, the Class A-2 Common Stock, the Class B Common Stock and the Class A Preferred Stock.

 

  

A-5

  

 

EXHIBIT B

LEGACY ASSETS

	
I.

	
UNENCUMBERED ASSETS

 

	  	
ASSET

	
INTEREST

	 	 	 
	
1.

	

[***]  

	

[***]  

	 	 	 
	
2.

	

[***]  

	

[***]  

	 	 	 
	
3.

	

[***]  

	

[***]  

	 	 	 
	
4.

	

[***]  

	

[***]  

	 	 	 
	
5.

	

[***]  

	

[***]  

	 	 	 
	
6.

	

[***]  

	

[***]  

	 	 	 
	
7.

	

[***]  

	

[***]  

	 	 	 
	
8.

	

[***]  

	

[***]  

	
II.

	
ASSETS TO BE PLEDGED TO JPMORGAN CHASE BANK, N.A.

 

 

	  	
ASSET

	
INTEREST

	 	 	 
	
1.

	

[***]  

	

[***]  

	 	 	 
	
2.

	

[***]  

	

[***]  

	 	 	 

 

 

	
[***]  

	
Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

  

B-1

  

 

	
3.

	

[***]  

	

[***]  

	 	 	 
	
4.

	

[***]  

	

[***]  

	 	 	 
	
5.

	

[***]  

	

[***]  

	 	 	 
	
6.

	

[***]  

	

[***]  

	 	 	 
	
7.

	

[***]  

	

[***]  

	 	 	 
	
8.

	

[***]  

	

[***]  

	 	 	 
	
9.

	

[***]  

	

[***]  

	 	 	 
	
10.

	

[***]  

	

[***]  

	 	 	 

 

 

	
[***]  

	
Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

  

B-2

  

 

	
11.

	

[***]  

	

[***]  

	 	 	 
	
12.

	

[***]  

	

[***]  

	
III.

	
ASSETS TO BE PLEDGED TO JPMORGAN CHASE FUNDING INC.

 

	  	
ASSET

	
INTEREST

	 	 	 
	
13.

	

[***]  

	

[***]  

	 	 	 
	
14.

	

[***]  

	

[***]  

	 	 	 
	
15.

	

[***]  

	

[***]  

	 	 	 
	
16.

	

[***]  

	

[***]  

	 	 	 

 

 

	
[***]  

	
Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

  

B-3

  

 

	
17.

	

[***]  

	

[***]  

	 	 	 
	
18.

	

[***]  

	

[***]  

	 	 	 
	
19.

	

[***]  

	

[***]  

	 	 	 
	
20.

	

[***]  

	

[***]  

	 	 	 
	
21.

	

[***]  

	

[***]  

	 	 	 
	
22.

	

[***]  

	

[***]  

	 	 	 
	
23.

	

[***]  

	

[***]  

	 	 	 
	
24.

	

[***]  

	

[***]  

 

	
IV.

	
ASSETS TO BE HELD BY CT LEGACY MS SPV, LLC

 

	  	
ASSET

	
INTEREST

	 	 	 
	
1.

	

[***]  

	

[***]  

	 	 	 
	
2.

	

[***]  

	

[***]  

	 	 	 

 

 

	
[***]  

	
Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

  

B-4

  

 

	
3.

	

[***]  

	

[***]  

	 	 	 
	
4.

	

[***]  

	

[***]  

	
V.

	
EQUITY MEMBERSHIP INTERESTS TO BE HELD BY CT LEGACY MS SPV, LLC

 

	  	
COMPANY

	
INTEREST HELD BY COMPANY

	 	 	 
	
5.

	

[***]  

	

[***]  

	 	 	 
	
6.

	

[***]  

	

[***]  

	 	 	 
	
7.

	

[***]  

	

[***]  

	
VI.

	
ASSETS TO BE HELD BY CT LEGACY CITI SPV, LLC

 

	  	
ASSET

	
INTEREST

	 	 	 
	
1.

	

[***]  

	

[***]  

	 	 	 

 

 

	
[***]  

	
Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

  

B-5

  

 

	
2.

	

[***]  

	

[***]  

	 	 	 
	
3.

	

[***]  

	

[***]  

	 	 	 
	
4.

	

[***]  

	

[***]  

	 	 	 
	
5.

	

[***]  

	

[***]  

 

 

	
[***]  

	
Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

  

B-6

  

 

EXHIBIT C

 

	
Entity

	
Principal Amount Outstanding under the Credit Agreement

	
Cash

	
Number of Class A-2 Units of CT Legacy REIT Holdings

	
Amount of Series 1 Secured Note

	
Number of Class A-1 Units of CT Legacy REIT Holdings Pledged as Collateral to Series 1 Secured Note

	
Number of Class A-2 Units of CT Legacy REIT Holdings Pledged as Collateral to Series 1 Secured Note

	
WestLB AG, New York Branch

 

	
$24,530,914.72

	
$5,733,050.97

	
603,906

	
$694,444.44

 

	
321,987

 

	
109,375

 

	
BNP Paribas

 

	
$24,530,914.72

	
$5,733,050.97

	
603,906

	
$694,444.44

 

	
321,987

 

	
109,375

 

	
Morgan Stanley Senior Funding, Inc.

 

	
$12,265,457.36

	
$2,866,525.49

	
301,953

	
$347,222.22

 

	
160,993

 

	
54,687

 

	
JPMorgan Chase Bank, N.A.

 

	
$12,265,457.36

	
$2,866,525.49

	
301,953

	
$347,222.22

 

	
160,993

 

	
54,687

 

	
Deutsche Bank Trust Company Americas

 

	
$9,812,365.89

	
$2,293,220.39

	
241,563

	
$277,777.77

 

	
128,794

 

	
43,750

 

	
Wells Fargo Bank, N.A.

	
$14,718,548.83

	
$3,439,830.58

	
362,344

	
$416,666.66

 

	
193,192

 

	
65,626

 

 

  

C-1

  

 

EXHIBIT D

 

FORM OF SERIES 1 LLC INTEREST SECURED NOTE DUE 2016

 

THIS SECURED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”).  THIS SECURED NOTE MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

 

NO TRANSFER OF THIS SECURED NOTE MAY BE MADE TO THE EXTENT THAT SUCH TRANSFER WOULD (IN EACH CASE, AS REASONABLY DETERMINED BY THE ISSUER): (I) BE MADE TO A PROPOSED TRANSFEREE WHO IS NOT AN “ACCREDITED INVESTOR” AS THAT TERM IS DEFINED UNDER RULE 501(A) PROMULGATED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED;  (II) BE MADE TO A PROPOSED TRANSFEREE WHO IS NOT A “QUALIFIED PURCHASER” WITHIN THE MEANING OF SECTION 3(C)(7) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”), AND AS SUCH TERM IS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT; (III) BE MADE TO A PROPOSED TRANSFEREE WHO IS A “BENEFIT PLAN INVESTOR” AS DEFINED IN SECTION 3(42) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”); (IV) RESULT IN THE ASSETS OF CT LEGACY SERIES 1 NOTE ISSUER, LLC (“CT SERIES 1 NOTE ISSUER”), CT LEGACY HOLDINGS, LLC (“CT LEGACY HOLDINGS”), CT LEGACY REIT HOLDINGS, LLC (“CT LEGACY REIT HOLDINGS”), OR CT LEGACY REIT MEZZ BORROWER, INC. (“CT LEGACY REIT MEZZ BORROWER”) BEING DEEMED “PLAN ASSETS” FOR PURPOSES OF ERISA OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”); (V) RESULT IN THE DISQUALIFICATION OF CT LEGACY REIT MEZZ BORROWER, AS A REAL ESTATE INVESTMENT TRUST FOR PURPOSES OF THE CODE OR OTHERWISE VIOLATE THE CHARTER OF CT LEGACY REIT MEZZ BORROWER; OR (VI) CAUSE THE LEGACY ASSET CONTRIBUTION TRANSACTION (AS DEFINED IN THAT CERTAIN EXCHANGE AGREEMENT, DATED AS OF MARCH [●], 2011, BY AND AMONG  CAPITAL TRUST, INC., CT LEGACY HOLDINGS, CT SERIES 1 NOTE ISSUER, CT LEGACY REIT HOLDINGS, WESTLB AG, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT, AND EACH OF WESTLB AG, NEW YORK BRANCH, BNP PARIBAS, MORGAN STANLEY SENIOR FUNDING, INC., JPMORGAN CHASE BANK, N.A., DEUTSCHE BANK TRUST COMPANY AMERICAS AND WELLS FARGO BANK, N.A.) TO FAIL TO QUALIFY FOR NON-RECOGNITION TREATMENT UNDER SECTION 351 OF THE CODE.  THIS SECURED NOTE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS HEREIN AND IN WHOLE AND NOT IN PART.

 

  

D-1

  

 

SERIES 1 SECURED NOTE

 

	
$[●] 

No. [●]

	 	 	
March [●], 2011

FOR VALUE RECEIVED, CT Legacy Series 1 Note Issuer, LLC, a Delaware limited liability company (the “Issuer”), hereby promises to pay to [●] (the “Holder”), the principal amount of [●] United States Dollars ($[●]) (the “Initial Principal Amount”), as represented by this Secured Note (this “Note”), in accordance with the terms herein.

 

	
1)

	
Definitions. The following terms as used in this Note shall have the following meanings:

 

	
  

	
a)

	
The term “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

 

	
  

	
b)

	
The term “Banking Holiday” shall mean any day on which banking institutions in New York, New York are authorized or required by law to close.

 

	
  

	
c)

	
The term “Business Day” shall mean a day other than a Saturday, Sunday or Banking Holiday.

 

	
  

	
d)

	
The term “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated under it.

 

	
  

	
e)

	
The term “Collateral” shall have the meaning ascribed to such term in Section 6 of this Note.

 

	
  

	
f)

	
The term “Collateral Agent” shall mean U.S. Bank, National Association.

 

	
  

	
g)

	
The term “Control Agreements” shall mean the Dividend Account Control Agreement and Sales Proceeds Account Control Agreement (as such terms are defined in the Pledge Agreement).

 

	
  

	
h)

	
The term “CT” shall mean Capital Trust, Inc.

 

	
  

	
i)

	
The term “CT Legacy Holdings” shall mean CT Legacy Holdings, LLC.

 

	
  

	
j)

	
The term “CT Legacy REIT Holdings” shall mean CT Legacy REIT Holdings, LLC.

 

	
  

	
k)

	
The term “CT Legacy REIT Mezz Borrower” shall mean CT Legacy REIT Mezz Borrower, Inc.

 

  

D-2

  

 

	
  

	
l)

	
The term “Cure Period” shall have the meaning ascribed to such term in Section 5(a)(ii) of this Note.

 

	
  

	
m)

	
The term “Date of Issuance” shall have the meaning ascribed to such term in Section 2(a) of this Note.

 

	
  

	
n)

	
The term “Date of Maturity” shall have the meaning ascribed to such term in Section 2(b) of this Note.

 

	
  

	
o)

	
The term “ERISA” shall have the meaning ascribed to such term in Section 9(l)(ii) of this Note.

 

	
  

	
p)

	
The term “Event of Default” shall have the meaning ascribed to such term in Section 5(a) of this Note.

 

	
  

	
q)

	
The term “Exchange Agreement” shall mean that certain Exchange Agreement dated as of the date hereof, entered into by and among CT, CT Legacy Holdings, the Issuer, CT Legacy REIT Holdings, WestLB AG, New York Branch, as administrative agent, and each of WestLB AG, New York Branch, BNP Paribas, Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A., Deutsche Bank Trust Company Americas and Wells Fargo Bank, N.A.

 

	
  

	
r)

	
The term “Foreign Holder” shall mean a Person that is organized under the laws of a jurisdiction other than that in which the Issuer is located.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

	
  

	
s)

	
The term “Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any arbitration panel, any court, any commission, any agency or any instrumentality of the foregoing.

 

	
  

	
t)

	
The term “Holder” shall have the meaning ascribed to such term in the introductory paragraph of this Note.

 

	
  

	
u)

	
The term “Initial Principal Amount” shall have the meaning ascribed to such term in the introductory paragraph of this Note.

 

	
  

	
v)

	
The term “Investment Company Act” means the Investment Company Act of 1940, as amended.

 

	
  

	
w)

	
The term “Issuer” shall have the meaning ascribed to such term in the introductory paragraph of this Note.

 

	
  

	
x)

	
The term “Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof).

 

  

D-3

  

 

	
  

	
y)

	
The term “Mezzanine Loan Lender” shall mean Five Mile Capital II CT Mezz SPE LLC, a Delaware limited liability company.

 

	
  

	
z)

	
The term “Note” shall have the meaning ascribed to such term in the introductory paragraph of this Note.

 

	
  

	
aa)

	
The term “Obligations” shall mean all loans, advances, debts, liabilities and obligations, for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by the Issuer to the Holder, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not arising under this Note, the Pledge Agreement or any other related documents.  This term includes all principal (including the Prepayment Amount, if applicable), interest (including PIK Interest and all interest which accrues after the commencement of any case or proceeding in bankruptcy after the insolvency of, or for the reorganization of the Issuer, whether or not allowed in such proceeding) and all other amounts due and owing by the Issuer under this Note or the Pledge Agreement whether on account of fees, expenses, indemnification or otherwise.

 

	
  

	
bb)

	
The term “Offer Notice” shall have the meaning ascribed to such term in Section 9(l) of this Note.

 

	
  

	
cc)

	
The term “OID” shall have the meaning ascribed to such term in Section 8(a) of this Note.

 

	
  

	
dd)

	
The term “Operative Documents” means, collectively, this Note, the Control Agreements and the Pledge Agreement.

 

	
  

	
ee)

	
The term “Patriot Act” shall have the meaning ascribed to such term in Section 9(o) of this Note.

 

	
  

	
ff)

	
The term “Person” shall mean a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, company, limited liability company, trust, unincorporated association, or government, or any agency or political subdivision thereof, or any other entity of whatever nature.

 

	
  

	
gg)

	
The term “PIK Interest” shall have the meaning ascribed to such term in Section 2(a) of this Note.

 

	
  

	
hh)

	
The term “PIK Interest Accrual Date” shall have the meaning ascribed to such term in Section 2(a) of this Note.

 

	
  

	
ii)

	
The term “Pledge Agreement” shall mean that certain Pledge and Security Agreement, dated as of the date hereof, entered into by and among the Issuer, the Holder and the Collateral Agent, relating to the pledge by the Issuer of [●] Class A-1 Units and [●] Class A-2 Units, it holds in CT Legacy REIT Holdings.

 

  

D-4

  

 

	
  

	
jj)

	
The term “Prepayment Amount” shall have the meaning ascribed to such term in Section 3 of this Note.

 

	
  

	
kk)

	
The term “Principal Amount” shall mean the Initial Principal Amount, as increased from time to time pursuant to Section 2(a) or decreased from time to time pursuant to Section 3.

 

	
  

	
ll)

	
The term “Taxes” shall have the meaning ascribed to such term in Section 2(e) of this Note.

 

	
2)

	
Payment Terms of the Note.

 

	
  

	
a)

	
Interest Rates and Payments.  The Issuer covenants and agrees that the Principal Amount shall bear interest at a rate equal to 8.19% per annum (the “PIK Interest”), which shall accrue beginning on the date of this Note (the “Date of Issuance”), and shall accrue quarterly in arrears on the last day of each quarter (the “PIK Interest Accrual Date”) during the term hereof and on the Date of Maturity, and without any action on the part of the Issuer and the Holder shall be payable on and added to the Principal Amount, with the first such PIK Interest Accrual Date where the PIK Interest accruing from the Date of Issuance shall be added to the Principal Amount being June 30, 2011.

 

	
  

	
b)

	
Repayment of the Notes.  The Issuer covenants and agrees to repay to the Holder the unpaid Principal Amount, in full, on March 31, 2016 (the “Date of Maturity”), to the extent such amount has not previously been repaid.

 

	
  

	
c)

	
Maximum Lawful Rate.  In no event, whether by reason of acceleration of the maturity of the amounts due hereunder or otherwise, shall interest and fees contracted for, charged, received, paid or agreed to be paid to the Holder exceed the maximum amount permissible under applicable law.  If, from any circumstance whatsoever, interest and fees would otherwise be payable to the Holder in excess of the maximum amount permissible under applicable law, the interest and fees shall be reduced to the maximum amount permitted under applicable law.  If from any circumstance, the Holder shall have received anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excess of interest shall be applied to the reduction of the Principal Amount, in such manner as may be determined by the Holder, or if such excessive interest exceeds the unpaid balance of the Principal Amount, such excess shall be refunded to the Issuer.

 

	
  

	
d)

	
Application of Payments.  Any payments or any prepayments hereunder shall generally be applied to the outstanding Principal Amount.

 

  

D-5

  

 

	
  

	
e)

	
Withholding.  Except as required by law, any and all payments made by the Issuer in accordance with the terms of this Note to the Holder shall be made free and clear of and without deduction or withholding for any taxes (including interest and penalties thereon or additions thereto) (“Taxes”).  To the extent the Issuer is required by law to deduct and withhold in respect of any Taxes with respect to this Note, the amount withheld shall be treated as a payment under this Note in the amount of the withholding and the Issuer shall not be responsible for nor have an obligation hereunder to pay to the Holder any additional amounts as would be necessary to restore the amount received and retained by the Holder to an amount equal to the amount it would have received and retained had no such deduction, withholding or Taxes been imposed.  Holder agrees that, prior to the first date on which any payment is due hereunder, it will deliver to Issuer two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI or W-9 or successor applicable form, as the case may be, certifying in each case that such Holder is entitled to receive payments under the Note, without deduction or withholding of any United States federal income taxes.  To the extent the Holder is a Foreign Holder that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Issuer is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Note, the W-8BEN it delivers (or such other properly completed and executed documentation prescribed by applicable law or reasonably requested by the Issuer) may be completed so as to establish eligibility for such treaty benefits as to permit such payments to be made without withholding or at a reduced rate.  In addition, in the case of a Foreign Holder that is claiming exemption from the withholding of U.S. federal income tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest,” such Foreign Holder agrees that, prior to the first date on which any payment is due hereunder, it will deliver to Issuer a certificate to the effect that such Foreign Holder is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Issuer within the meaning of Section 881(c)(3)(B) of the Code (which, in the case of a Foreign Holder that is a partnership for U.S. federal income tax purposes, shall be determined at the partner level in accordance with Treasury Regulations Section 1.871-14(g)), or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code.  Each Holder that delivers to Issuer any certificate, a Form W-8BEN or W-8ECI or W-9 pursuant to the preceding sentences further undertakes to deliver to Issuer two further copies of such forms, or successor applicable forms, or other manner of certification, as the case may be, on or before the date that any such form expires (which, in the case of a Form W-8ECI or W-8BEN, is generally the last day of the third succeeding calendar year ending on or after the date such form is signed) or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to Issuer, and such other extensions or renewals thereof as may reasonably be requested by Issuer, certifying in the case of Form W-9 that such Holder is exempt from United States backup withholding and in the case of a Form W-8BEN or W-8ECI that such Holder is entitled to receive payments under the Note without deduction or withholding of any United States federal income taxes, unless in any such case an event (including, without limitation, any change in treaty, applicable law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Holder from duly completing and delivering any such form with respect to it and such Holder advises Issuer that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.

 

	
3)

	
Prepayments.  The Issuer shall have the right to prepay all or any portion of this Note at the option of the Issuer at any time at a price (adjusted to be pro rata for partial prepayments) equal to the greater of: (i) the outstanding Principal Amount plus all accrued interest incurred since the last PIK Interest Accrual Date up to and including the date of such prepayment, and (ii) 150% of the Principal Amount on the Date of Issuance (as the same may be reduced by any prepayments made in accordance with this Section 3) (such amount in (ii) hereof, the “Prepayment Amount”).

 

  

D-6

  

 

	
4)

	
Affirmative Covenants.  So long as all or any of the Principal Amount shall remain outstanding, the Issuer covenants as follows:

 

	
  

	
a)

	
The Issuer shall promptly pay when due all payment obligations of the Issuer to the Holder under this Note and shall promptly perform all other terms, covenants, conditions and obligations of the Issuer to the Holder under this Note.

 

	
  

	
b)

	
To the extent the Issuer receives any cash on the Collateral pledged pursuant to the Pledge Agreement, the Issuer, in accordance with the terms of Section 3 hereof, shall apply such amount of cash to the outstanding Principal Amount on the date thereof.

 

	
  

	
c)

	
The Issuer shall provide the Holder (and any beneficial owner previously notified to the Issuer in writing so long as such beneficial owner agrees to be bound by the provisions hereof, including, without limitation, Section 9(m)) with copies of the quarterly and annual financial reports required to be provided to the Mezzanine Loan Lender under its loan agreement with CT Legacy REIT Mezz Borrower regardless of whether such mezzanine loan is then outstanding or the Mezzanine Loan Lender actually requests or receives such reports.

 

	
  

	
d)

	
The Issuer will not merge into or consolidate with any other company unless (i) the Issuer is the surviving company or (ii) if the Issuer is not the surviving company, the surviving company assumes the obligations of the Issuer hereunder and under the Pledge Agreement, and, in the case of (i) or (ii), the Issuer receives the prior written consent of the Holder, not to be unreasonably withheld.

 

	
  

	
e)

	
The Issuer shall not amend its limited liability company operating agreement.

 

	
5)

	
Events of Default.

 

	
  

	
a)

	
Events of Default.  An Event of Default shall mean the occurrence of one or more of the following events:

 

	
  

	
i)

	
the Issuer shall fail to pay the interest or the Principal Amount in accordance with Sections 2(a) and 2(b) of this Note within fifteen (15) days after the date on which such payment is due and payable;

 

	
  

	
ii)

	
the Issuer shall fail to perform or cause to be performed any obligation or observe any condition, covenant, term, agreement or provision required to be performed or observed by the Issuer under this Note or the Pledge Agreement; provided, however, that if such failure by its nature can be cured and the value of the Issuer or the Issuer’s assets is not impaired, threatened or jeopardized, then the Issuer shall have a period (the “Cure Period”) of fifteen (15) days of the earlier of (x) after the Issuer obtains knowledge of such failure and (y) receives written notice of such failure to cure the same and an Event of Default shall not be deemed to exist during the Cure Period;

 

  

D-7

  

 

	
  

	
iii)

	
any representation or warranty made in this Note, the Pledge Agreement or the Exchange Agreement shall prove to be false or misleading in any material respect when made or deemed to be made;

 

	
  

	
iv)

	
the Issuer (i) files a voluntary petition in bankruptcy or is adjudicated bankrupt or insolvent or files any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under present or any future federal, state or other statute or law; (ii) seeks or consents to or acquiesces in the appointment of any trustee, receiver or similar officer of the Issuer or of all or any substantial part of the property of the Issuer, or all or a substantial part of the assets of the Issuer are attached, seized, subjected to a writ or distress warrant or are levied upon; (iii) discontinues its business or operations, dissolves, merges or sells substantially all of its assets, other than a disposition permitted by this Note, or consented to by the Holder in writing; (iv) admits in writing to its inability to pay its debts as they mature; (v) makes a general assignment for the benefit of creditors; (vi) is adjudicated bankrupt or insolvent; or (vii) the taking of any corporate or other similar action in respect of any of the foregoing;

 

	
  

	
v)

	
the filing or commencement of any involuntary petition in bankruptcy against the Issuer of any reorganization, arrangement, composition, readjustment, dissolution, liquidation or similar proceedings under any present or future federal, state or other statute or law, or the appointment of a receiver, trustee or similar officer for all or any substantial part of the property of the Issuer, which shall remain undismissed or undischarged for a period of sixty (60) days; or

 

	
  

	
vi)

	
the Pledge Agreement or any Control Agreement at any time for any reason ceases to be in full force and effect in all material respects or the Pledge Agreement or any Control Agreement ceases to give the Collateral Agent the Liens, rights, powers and privileges purported to be created thereby.

 

	
  

	
b)

	
Consequences of Event of Default- Remedies Conferred upon Holder.  Upon the occurrence and during the continuation of any Event of Default, the greater of (i) the entire unpaid Principal Amount of this Note and (ii) the Prepayment Amount in each case, together with all Obligations may be declared by the Holder to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Issuer; and in the case of any event described in Section 5(a)(iv) and 5(a)(v), the greater of (i) the entire unpaid Principal Amount of this Note and (ii) the Prepayment Amount in each case, together with all Obligations, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Issuer.  The rights and remedies hereunder and under the other Operative Documents are cumulative and not exclusive of any rights or remedies the Holder would otherwise have.

 

  

D-8

  

 

	
6)

	
Secured Obligations.

 

This Note and the amounts payable hereunder, including principal and accrued interest, shall be secured obligations of the Issuer, and shall be secured by those certain limited liability company interests in CT Legacy REIT Holdings (the “Collateral”), in accordance with the terms of the Pledge Agreement and the Control Agreements.  The Issuer agrees that it shall cause all cash dividends and other cash distributions received by it on or with respect to the Collateral to be remitted to an account designated by the Holder on the signature page hereto or any other account subsequently designated by the Holder by providing notice to the Issuer in accordance with Section 9(j) hereto.

 

	
7)

	
Voting of Collateral.

 

The Issuer shall be entitled to vote the Collateral unless there is an Event of Default that has occurred and is continuing in accordance with the terms of the Pledge Agreement.

 

	
8)

	
Tax Treatment of the Note.

 

	
  

	
a)

	
Original Issue Discount.  This Note is issued with original issue discount (“OID”), within the meaning of Section 1273 of the Code.  Beginning no later than 10 days after the Date of Issuance, Douglas Armer, whose address is c/o Capital Trust, Inc., 410 Park Avenue, New York, NY  10022, will promptly make available to the Holder, upon request, information regarding the issue price, the amount of OID, the issue date and the yield to maturity of the Note.  Additionally, the Issuer and the Holder agree that for U.S. federal income tax purposes, Treasury Regulations Section 1.1275-4(c) applies to the Note.

 

	
  

	
b)

	
Note to be Treated as Debt.  The Issuer and the Holder agree that this Note is intended to be debt for U.S. federal, state and local income and franchise tax purposes and agree to treat the Note accordingly for all such purposes, unless otherwise required by a taxing authority.

 

	
9)

	
Miscellaneous.

 

	
  

	
a)

	
Payments.  Except as provided in Section 2(e), all payments required to be made hereunder shall be made by the Issuer without setoff or counterclaim of any kind or nature by wire transfer of immediately available funds in accordance with the instructions received from the Holder to be provided upon the request of the Issuer.

 

	
  

	
b)

	
Payments Due on Non-business Days.  If any payment on this Note becomes due and payable on a Saturday, Sunday or Banking Holiday, then the date for payment thereof shall be extended to the next Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in United States Dollars.

 

	
  

	
c)

	
No Notice of Presentment Required.  All payments made hereunder shall be payable without notice and without presentment, demand or any other notice of any kind, all of which are hereby expressly waived by the Issuer.

 

	
  

	
d)

	
Lost, Stolen, Mutilated or Destroyed Note.  If this Note shall be mutilated, lost, stolen, or destroyed, the Issuer shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen, or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen, or destroyed but only upon receipt of evidence (which may consist of a signed affidavit of the Holder), of such loss, theft, or destruction of such Note, and of the ownership thereof, and indemnity, if requested, all reasonably satisfactory to the Issuer.

 

  

D-9

  

 

	
  

	
e)

	
Entire Agreement; Amendments.  This Note and the Pledge Agreement constitute the entire agreement with respect to the subject matters hereof and supersede any and all prior negotiations and agreements (other than the Exchange Agreement).  No modification, change, waiver or amendment of this Note shall be deemed to be effective and enforceable unless such modification, change, waiver or amendment is evidenced by a writing signed by the Issuer and the Holder, and each such modification, change, waiver or amendment, if any, shall apply only with respect to the specific instance or instances involved.

 

	
  

	
f)

	
Captions.  The captions to the various sections and subsections of this Note have been included for convenience of reference only and shall not be deemed to modify, explain, enlarge or restrict any of the provisions hereof.

 

	
  

	
g)

	
Governing Law.  THIS NOTE AND ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR RELATING TO THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

	
  

	
h)

	
Jurisdiction, Consent to Service of Process. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED ON OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS NOTE SHALL AFFECT ANY RIGHT THE HOLDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS NOTE AGAINST THE ISSUER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE IN ANY STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. EACH PARTY TO THIS NOTE IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES HEREIN. NOTHING IN THIS NOTE WILL AFFECT THE RIGHT OF ANY PARTY TO THIS NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

  

D-10

  

 

	
  

	
i)

	
Jury Trial Waiver. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH THIS NOTE, OR (II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS NOTE AND AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

	
  

	
j)

	
Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Note shall be in writing and shall be deemed to have been given (i) when personally delivered or sent by facsimile or electronic transmission (with hard copy to follow), (ii) one day after being sent by reputable overnight express courier (charges prepaid) or (iii) five days following mailing by certified or registered mail, postage prepaid and return receipt requested.  Unless another address is specified in writing, notices, demands and communications to the Holders and Issuers shall be sent to the addresses indicated below:

 

	
If to the Issuer or CT:

	
CT Legacy Series 1 Note Issuer, LLC

410 Park Avenue

14th Floor

New York, New York  10022

Attention: Geoffrey G. Jervis

Telephone No.:  212-655-0220

Facsimile No.:  212-655-0044

 

	
with a copy to:

	
Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York  10022

Attention:  Michael L. Zuppone, Esq.

Telephone No.:  212-696-6000

Facsimile No.:   212-319-4090

 

	
If to the Holder:

	
[●]

Attention:  [●]

Telephone No.:  [●]

Facsimile No.:  [●]

 

  

D-11

  

 

	
  

	
k)

	
Successors and Assigns.  This Note shall be binding upon and inure the benefit of the parties hereto and their respective permitted successors and assigns, except that the Holder may not assign or transfer this Note except as set forth herein.  In the event the Holder assigns or transfers this Note in accordance with the provisions hereof, the Holder must surrender this Note to the Issuer with written notice to cancel this Note and to re-issue a note in the name of the assignee or transferee, as applicable, on the same terms and conditions as this Note.  The Issuer may not assign this Note without the consent of the Holder.

 

	
  

	
l)

	
Transfers.

 

	
  

	
i)

	
So long as no Event of Default shall have occurred and be continuing, except as provided in Section 9(l)(ii), no transfer of this Note or an interest herein may be made without CT’s prior written consent, which shall not be unreasonably withheld.  Any transfer made with CT’s prior written consent shall be viewed, to the knowledge of CT, to be made in full compliance with Section 9(l)(ii)(e) and (f).

 

	
  

	
ii)

	
No transfer of this Note or an interest herein may be made if such transfer would (a) be made to a proposed transferee who is not a “Qualified Purchaser” within the meaning of Section 3(c)(7) of the Investment Company Act, and as such term is defined in Section 2(a)(51) thereof; (b) result in the Issuer, CT Legacy Holdings, CT Legacy REIT Holdings or CT REIT Mezz Borrower being subject to regulation under the Investment Company Act; (c) be made to a proposed transferee who is a “benefit plan investor” as defined in Section 3(42) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); (d) result in the assets of Issuer, CT Legacy Holdings, CT Legacy REIT Holdings or CT Legacy REIT Mezz Borrower being deemed “plan assets” for purposes of ERISA or Section 4975 of the Code; (e) result in the disqualification of CT Legacy REIT Mezz Borrower as a real estate investment trust for purposes of the Code or otherwise violate the charter of CT Legacy REIT Mezz Borrower; or (f) cause the Legacy Asset Contribution Transaction (as defined in the Contribution and Exchange Agreement) to fail to qualify for non-recognition treatment under Section 351 of the Code.

 

	
  

	
iii)

	
This Note may only be transferred in accordance with the provisions herein and in whole and not in part.  Within five (5) Business Days of any transfer of this Note, the transferee shall provide the Issuer with its name and contact information in accordance with Section 9(j) hereof.

 

	
  

	
iv)

	
No transfer of this Note or an interest herein may be made unless the Holder shall have complied with the terms of this Section 9(l)(iv).  The Holder shall give written notice to CT (the “Offer Notice”), which notice shall specify (i) the price at which the Holder is willing to sell this Note or any interest herein and (ii) to the fullest extent permitted by law, irrevocably offer to sell this Note or the interest herein at such price to CT or its Affiliates.  CT or its Affiliates shall provide written notice within five (5) Business Days of receipt of the Offer Notice to state that CT or its Affiliates agree to purchase this Note or the interest herein on the terms set forth in the Offer Notice which shall be binding on CT or its Affiliates. In the event CT or one of its Affiliates fails to deliver such notice within the foregoing time period, the Holder may sell this Note or the interest herein to a third party at the same or a higher price offered in the Offer Notice subject to the other provisions of Section 9(l).  To the extent that this Note or interest herein offered for sale pursuant to this Section 9(l)(iv) remains unsold after the date 180 days after expiration of the foregoing time period or the Holder offers to sell this Note or any interest herein at a lower price, the transfer of this Note or interest herein shall again become subject to the procedures required under this Section 9(l)(iv).  The foregoing transfer restrictions of this Section 9(l)(iv) shall not apply to any transfers to Affiliates of the Holder.

 

  

D-12

  

 

	
  

	
m)

	
Confidentiality.  The Holder shall not disclose the terms of this Note or any information provided under Section 4(c) hereof without the written consent of the Issuer; provided, however, that the Holder may disclose such terms (i) to its respective Affiliates, directors, officers, employees, attorneys, accountants, partners, members, financial and other advisors, investors, prospective investors, lenders, prospective lenders, transferees, prospective transferees and representatives, (ii) pursuant to a subpoena or order issued by a court, arbitrator or governmental body or agency, or as otherwise required by law or regulation, (iii) in connection with the exercise of any remedies hereunder or under any other Operative Document or any suit, action or proceeding relating to this Note or any other Operative Document or the enforcement of rights hereunder or under any other Operative Document, or (iv) to the extent such terms or information (x) becomes publicly available other than as a result of a breach of this Section 9(m) or (y) becomes available to the Holder on a non-confidential basis from a source other than the Issuer.  Notwithstanding any other provision herein to the contrary, each of the parties hereto (and each employee, representative or other agent of each such party) may disclose to any and all persons, without limitation of any kind, any information with respect to the United States, federal, state and local “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereto and all materials of any kind (including opinions or other tax analyses) that are provided to such party or its representatives relating to such tax treatment and tax structure; provided that no person may disclose any pricing terms or other nonpublic business or financial information that is unrelated to the United States federal, state and local tax treatment of the transaction and is not relevant to understanding the United States federal, state and local tax treatment of the transaction, without complying with the provisions of this Section 9(m); provided further, that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the United States federal, state and local tax treatment or tax structure of the transactions contemplated hereby.

 

	
  

	
n)

	
Severability.  In the event that any provision of this Note is held to be invalid, illegal or unenforceable in any respect or to any extent, such provision shall nevertheless remain valid, legal and enforceable in all such other respects and to such extent as may be permissible. Any such invalidity, illegality or unenforceability shall not affect any other provisions of this Note, but this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

  

D-13

  

 

	
  

	
o)

	
USA PATRIOT Act.  To the extent the Holder is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), the Holder hereby notifies the Issuer that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies the Issuer, which information includes the name and address of the Issuer and other information that will allow such Holder to identify the Issuer in accordance with the Patriot Act.

 

 

[SIGNATURE PAGE FOLLOWS]

 

  

D-14

  

 

IN WITNESS WHEREOF, the undersigned has caused this Note to be executed and delivered on the date first written above.

 

 

	 	
CT LEGACY SERIES 1 NOTE ISSUER, LLC

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name: Geoffrey G. Jervis

Title: Chief Financial Officer

	 
	 	 	 	 

 

 

 [SIGNATURE PAGE TO SERIES 1 SECURED NOTE]

  

  

  

 

	

AGREED TO:

	 
	 	 
	

[●]

	
  

	 
	 	 	 
	 	 	 
	
By: 

	 	 
	 	

Name:

Title:

	 
	 	 	 
	 	 	 
	
By: 

	 	 
	 	

Name:

Title:

	 

 

Account Information:

 

  

  

  

 

EXHIBIT E-1

 

FORM OF LLC AGREEMENT OF CT LEGACY REIT HOLDINGS

 

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

 

 

OF

 

 

CT LEGACY REIT HOLDINGS, LLC

 

 

 

 

 

Dated as of March [     ], 2011

 

  

E-I-1

  

 

AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

CT LEGACY REIT HOLDINGS, LLC

 

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF CT LEGACY REIT HOLDINGS, LLC, a Delaware limited liability company (the “Company”), dated as of March [    ], 2011 (this “Agreement”), is entered into by and among CT Legacy Manager, LLC, as the initial member of the Company and as the manager of the Company (the “Manager”), the members of the Company admitted to the Company as members of the Company on the date hereof, as identified on Schedule 1 hereto (the “Effective Date Members”) and each Person (as defined in Article X hereof) as may from time to time hereafter acquire any Units (as defined in Article X hereof), be admitted to the Company as a member of the Company in accordance with the terms of this Agreement and become bound by this Agreement (each such Person, together with the Effective Date Members, in their capacities as members of the Company, are referred to herein individually as a “Member” and collectively as the “Members”).

 

RECITALS:

 

WHEREAS, the Company was formed as a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act (6 Del.C. § 18-101, et seq.), as amended from time to time (the “Act”), upon the filing and acceptance of a Certificate of Formation of the Company (the “Certificate”) with the Secretary of State of the State of Delaware on March 3, 2011 and the entering into of a Limited Liability Company Operating Agreement of the Company, dated as of March 3, 2011 (the “Initial Operating Agreement”), by CT Legacy Manager, LLC, in its capacity as the initial member of the Company.

 

WHEREAS, the Company was formed in furtherance of the Restructuring that Capital Trust, Inc. (“Capital Trust”) has proposed to restructure and settle certain of its previously incurred and outstanding secured and unsecured debt obligations.

 

WHEREAS, the Manager and each of the Effective Date Members desire to amend and restate the Initial Operating Agreement in its entirety in order to: (a) reflect the withdrawal of the Manager as a member of the Company; (b) admit each of the Effective Date Members as members of the Company; and (c) enter into certain agreements with regard to the management, operation and ownership of the Company and certain other matters, in each case upon and subject to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the agreements and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto do hereby amend and restate the Initial Operating Agreement in its entirety as follows:

 

  

E-I-2

  

 

ARTICLE I

 

THE COMPANY

 

SECTION 1.01                                Formation; Company Name.

 

(a)                The Company has been formed as a Delaware limited liability company under the Act by the filing of the Certificate of Formation on March 3, 2011 with the Secretary of State of the State of Delaware.  All actions previously taken by any authorized person, representative or agent of the Company, in the name of or on behalf of the Company are hereby adopted, ratified, confirmed and approved by the Members and the Manager in all respects as the act and deed of the Company.  The Manager and each officer of the Company is hereby designated as an “authorized person” of the Company within the meaning of the Act and shall continue as a designated “authorized person” of the Company within the meaning of the Act.  The parties hereto hereby agree to continue the Company as a limited liability company under and pursuant to the provisions of the Act and agree that the rights and duties and liabilities of the Members shall be as provided in the Act, except as otherwise provided herein.  Immediately following the admission of the Effective Date Members as members of the Company on the date hereof, the Manager shall cease to be a member of the Company (but shall remain as Manager), and upon such cessation as a member of the Company, the Manager’s $100 capital contribution to the Company shall be returned to the Manager without any interest or deduction and the Manager shall thereafter have no right, power, or interest in the Company as a member of the Company.  The name of the Company is CT Legacy REIT Holdings, LLC.  All business of the Company shall be conducted under such name and such name shall be used at all times in connection with the Company’s business and affairs.  However, the business of the Company may be conducted under any other name designated by the Manager from time to time.  After the execution of this Agreement, to the extent necessary, the Manager shall promptly execute, file and record with the proper offices in the State of Delaware such certificates, and shall cause to be made such publications, as shall be required by the Act.

 

(b)                Notwithstanding any provision of this Agreement and without the consent of the Manager, any Member or other Person, on the date hereof, upon their execution of a counterpart or joinder to this Agreement, (i) each of the Effective Date Members is hereby admitted to the Company as a member of the Company, and (ii) each of the Effective Date Members is issued and/or otherwise  deemed to own the Units set forth opposite such Person's name on Schedule 1 hereto, which Units shall be deemed fully paid and non-assessable limited liability company interests in the Company.

 

SECTION 1.02                                Place of Business.  The principal place of business of the Company shall be at c/o Capital Trust, Inc., 410 Park Avenue, 14th Floor, New York, NY 10022, or such other place or places as the Manager may designate.

 

SECTION 1.03                                Purposes and Powers of the Company.

 

(a)                The sole and exclusive business and purpose of the Company shall be to hold, sell, dispose of, exchange, transfer, pledge, vote or otherwise deal in and exercise all rights, powers, privileges and other incidents of ownership or possession with respect to the Common Stock, and no other business or purpose may be conducted and promoted by the Company unless all Members consent in writing to such other business or purpose.

 

  

E-I-3

  

 

(b)                In all circumstances subject to and as limited by Section 1.03(a), the Company:

 

(i)           shall have full power to transfer, pledge, sell or otherwise deal with its property and exercise all rights, powers, privileges and other incidents of ownership or possession with respect thereto; and

 

(ii)           may enter into, make and perform contracts, agreements and undertakings of all kinds as may be necessary, advisable or incidental to the carrying out of its purposes.

 

(c)                In addition to the powers specified above, but in all circumstances subject to and as limited by Sections 1.03(a) and 3.01(c) hereof, the Company shall have the power to do all and everything necessary, suitable or proper for the accomplishment of or in furtherance of any of the purposes set forth herein, and to do every other act or acts, thing or things, incidental or appurtenant to or arising from or connected with any of such purposes; provided, however, that nothing set forth herein shall be construed as authorizing the Company to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the Act.

 

(d)                The Company, and the Manager or any officer of the Company on behalf of the Company, may enter into and perform (i) the Contribution Agreement, (ii) the Exchange Agreement, (iii) the Side Letter and (iv) any documents contemplated by or related to any of the foregoing and any amendments thereto, without any further act, vote or approval of any Person, including any Member, notwithstanding any other provision of this Agreement (including, without limitation, Section 1.03(e) and Section 3.01(c)).  The foregoing authorization shall not be deemed a restriction on the powers of the Manager or any officer of the Company to enter into other agreements on behalf of the Company.

 

(e)                Notwithstanding anything to the contrary contained in this Section 1.03, or in any other provision of this Agreement, the Company shall not (i) incur any indebtedness, (ii) earn any income other than dividends in respect of the Common Stock, capital gains from the sale of the Common Stock, or interest income in respect of a bank account or other low-risk short term investments (e.g., certificates of deposit or treasury bills), held in the name of the Company or (iii) without the unanimous consent of the Members, sell, dispose, exchange, transfer, pledge any Common Stock.

 

SECTION 1.04                                Registered Office and Agent.  The registered office of the Company in the State of Delaware shall be c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, New Castle County, Wilmington, Delaware 19801, or such other address within the State of Delaware as may be designated from time to time by the Manager.  The name and address of the registered agent for service of process on the Company in the State of Delaware shall be The Corporation Trust Company at the above address, or such other agent and address as may be designated from time to time by the Manager.

 

  

E-I-4

  

 

SECTION 1.05                                Qualification in Other Jurisdictions.  The Company, and the Manager or any officer of the Company on behalf of the Company, shall execute, deliver and file any certificates (and any amendments and/or restatements thereof) necessary for the Company to continue to be qualified to do business in the State of New York and in order to qualify in any other jurisdiction in which the Company may wish to conduct business.

 

SECTION 1.06                                Term.  The Company shall continue indefinitely until the earlier of: (a) the date upon which all of the outstanding Common Stock is disposed by the Company or is otherwise liquidated as a result of action taken by CT Legacy REIT Mezz Borrower; and (b) the date upon which shall occur any other circumstance that, by the Act or this Agreement, would require that the Company be dissolved.

 

ARTICLE II

 

LIMITATION OF LIABILITY; UNITS;

CONTRIBUTIONS; certificates

 

SECTION 2.01                                Limitation of Liability.  The liability of the Members to the Company shall be limited to the amount of their respective Capital Contributions.  Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and neither the Members nor the Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or Manager of the Company.

 

SECTION 2.02                                Units.  The Members’ respective units of limited liability company interests in the Company shall be expressed as “Class A-1 Units” or “Class A-2 Units” (collectively, “Units”), in each case possessing the rights, interests and obligations set forth herein.  Each Member who holds any Class A-1 Units is referred to herein as a “Class A-1 Unitholder” and each Member who holds any Class A-2 Units is referred to herein as a “Class A-2 Unitholder.”  The Company shall keep a current schedule of the number of outstanding Class A-1 Units and Class A-2 Units (the “Schedule of Outstanding Units”) with the books and records of the Company.  Attached as Schedule 1 hereto is the Schedule of Outstanding Units as of the date hereof, evidencing the Units that have been issued and/or transferred to the Members as of the date hereof in accordance with the terms of the Restructuring and this Agreement.  Attached as Schedule 2 hereto is a schedule setting forth the Capital Accounts of such Members with respect to such Units, as of the date hereof.  Each Unit issued to a Member in accordance with this Agreement shall be a fully paid and non-assessable limited liability company interest in the Company.

 

SECTION 2.03                                Contributions.

 

(a)                Except as otherwise provided herein, no Member shall be obligated to or have the right to, make any contribution to the capital of the Company (a “Capital Contribution”) or make any loan to the Company without the written approval of all of the Members.  Notwithstanding any provision to the contrary herein, no Member shall be obligated to make any Capital Contribution or make any loan to the Company.

 

  

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(b)                As of the date of this Agreement, the Members agree that: (i) CT Legacy Holdings is contributing to the Company 4,393,750 shares of Class A-1 Common Stock and 3,190,625 shares of Class A-2 Common Stock and (ii) Five Mile is contributing to the Company 2,415,625 shares of Class A-2 Common Stock pursuant to the Contribution Agreement.  Manager and all Members agree that the adjusted tax basis in the Common Stock contributed by the Members equals fair market value as of the date of this Agreement.

 

(c)                The provisions of this Section 2.03 are not intended to be for the benefit of any creditor or other Person to whom any debts, liabilities or obligations are owed by, or who otherwise has any claim against, the Company or any of the Members; and, to the fullest extent permitted by law, no such creditor or other Person shall obtain any right under any such provision or by reason of any such liability, obligation or otherwise against the Company or any of the Members.

 

SECTION 2.04                                Withdrawal of Capital; Redemption of Units.  No Member shall have the right to withdraw its capital in the Company or require that the Company redeem such Member’s Units, in whole or in part, prior to the dissolution and winding up of the affairs of the Company without the prior written consent of the Manager.

 

SECTION 2.05                                Certificates.  The issued and outstanding Units shall be represented by certificates substantially in the form of Annex A attached hereto, which certificates shall bear the following legend:

 

THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES UNDER THE ACT OR (II) OR ANY AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO DISPOSITION OF SECURITIES.

 

THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON OWNERSHIP AND TRANSFER SET FORTH IN ARTICLE V OF THE OPERATING AGREEMENT (AS DEFINED BELOW).  ANY PURPORTED TRANSFER OF SHARES OF UNITS THAT, IF EFFECTIVE, WOULD (I) RESULT IN UNITS BEING HELD BY PERSONS THAT ARE NOT “QUALIFIED PURCHASERS” WITHIN THE MEANING OF SECTION 3(C)(7) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”), AND AS SUCH TERM IS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT (II) BE MADE TO A PROPOSED TRANSFEREE WHO IS A “BENEFIT PLAN INVESTOR” AS DEFINED IN SECTION 3(42) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), (III) RESULT IN THE COMPANY’S OR CT LEGACY REIT MEZZ BORROWER, INC’S ASSETS BEING DEEMED “PLAN ASSETS” FOR PURPOSES OF ERISA OR SECTION 4975 OF THE CODE (AS DEFINED IN THE OPERATING AGREEMENT), (IV) RESULT IN THE DISQUALIFICATION OF CT LEGACY REIT MEZZ BORROWER, INC. AS A REAL ESTATE INVESTMENT TRUST FOR PURPOSES OF THE CODE (AS DEFINED IN THE OPERATING AGREEMENT) OR OTHERWISE VIOLATE THE CHARTER OF CT LEGACY REIT MEZZ BORROWER, INC. OR (V) CAUSE THE LEGACY ASSET CONTRIBUTION TRANSACTION (AS DEFINED IN THE OPERATING AGREEMENT) TO FAIL TO QUALIFY FOR NON-RECOGNITION TREATMENT UNDER SECTION 351 OF THE CODE (AS DEFINED IN THE OPERATING AGREEMENT), SHALL, TO THE FULLEST EXTENT PERMITTED BY LAW, BE VOID AB INITIO AND THE INTENDED TRANSFEREE SHALL ACQUIRE NO RIGHTS IN SUCH UNITS.

 

  

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THE UNITS REPRESENTED BY THIS CERTIFICATE AND THE SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS AND AGREEMENTS CONTAINED IN THAT CERTAIN UNIT RIGHT OF FIRST OFFER AGREEMENT, BY AND AMONG CAPITAL TRUST, INC. AND CERTAIN OF THE MEMBERS OF THE COMPANY. A COPY OF SUCH AGREEMENT WILL BE FURNISHED BY THE COMPANY TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.

 

Each such certificate shall be executed by manual or facsimile signature of the Manager or an officer of the Company on behalf of the Company.  The Company shall maintain books for the purpose of registering the transfer of Units.  In connection with a transfer in accordance with this Agreement of any Units, the certificate(s) evidencing the Units shall be delivered to the Company for cancellation, and the Company shall thereupon issue a new certificate to the transferee evidencing the Units that were transferred and, if applicable, the Company shall issue a new certificate to the transferor evidencing any Units registered in the name of the transferor that were not transferred.

 

Each Unit shall constitute a “security” within the meaning of, and governed by, (a) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware and (b) the corresponding provisions of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.

 

ARTICLE III

 

MANAGEMENT

 

SECTION 3.01                                Management.

 

(a)                The business and the affairs of the Company shall be conducted and managed in accordance with the provisions of this Article.  Except as otherwise provided in this Agreement, the Members hereby delegate to and vest with the Manager, in its capacity as the manager of the Company, the full, exclusive and complete right, power and discretion to manage the Company.  Except as otherwise provided herein, the business and affairs of the Company shall be conducted and managed solely by the Manager, whose written approval shall be required to constitute Company action, and the Manager has the authority to bind the Company.  The Manager may only be removed and replaced by Members (excluding for such purposes, Affiliates of the Manager) holding 82% or more of the issued and outstanding Units following a For Cause Removal Event.

 

  

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(b)                Notwithstanding any other provision of this Agreement, in the event a matter is presented for action by the stockholders of CT Legacy REIT Mezz Borrower at any annual or special meeting of stockholders, or pursuant to the written consent of stockholders, the Manager shall provide written notice to each Member ten (10) Business Days prior to the date it plans to exercise the voting and consent rights associated with the Common Stock on behalf of the Company as the holder of record of the Common Stock and shall offer to pass through the right to vote or provide consent at the direction of each such Member.  In the event a Member has not provided its voting or consent instructions to the Manager on or before the second (2nd) Business Day prior to the date the Manager plans to exercise such voting and consent rights, the Manager shall deliver a duplicate written notice to each applicable Member by both email and overnight delivery service (or by hand (with written confirmation of receipt) on such date to each such Member.  Each Member shall provide its voting or consent instructions to the Manager whereupon the Manager shall as so instructed  vote or provide consent for the number of votes associated with the Common Stock as set forth opposite the name of each such Member on Schedule 1. Schedule 1 shall be updated from time to time by the Manager to reflect the transfer of pass through voting rights upon any Transfer of Units pursuant to this Agreement on pro rata basis in relation to the number of Units Transferred.  The Manager may, in its sole discretion, exercise such voting and consent rights with respect to any Member who fails to provide the Manager with direction with regard thereto within such ten (10) Business Day period.

 

(c)                Notwithstanding any other provision of this Agreement to the contrary, without the prior unanimous written consent of the Members, the Company shall not do any of the following (except to the extent otherwise contemplated or permitted herein):

 

(i)           issue any additional Units or admit any additional members of the Company other than pursuant to Article V;

 

(ii)           accept any Capital Contribution from any Member or deliver a capital call notice to any Member requiring such Member to make a Capital Contribution;

 

(iii)           create any mortgage, charge, lien, encumbrance or other third party right over any of the Company’s assets or give any guarantee or indemnity to or become surety for any third party with respect to Company assets;

 

(iv)           make any loan or create, renew or extend any borrowing by the Company;

 

(v)           acquire, construct or lease items of tangible or intangible property;

 

(vi)           enter into any obligation requiring the payment of cash or property;

 

(vii)           register securities of the Company or any of its subsidiaries under any securities laws;

 

  

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(viii)           merge with another Person, recapitalize, consolidate, reorganize, or offer itself for sale;

 

(ix)           dissolve or terminate the Company, except only as expressly set forth in Section 1.06 and Article VII;

 

(x)           take any action, or fail to take any action, in contravention of the express terms of this Agreement; or

 

(xi)           approve or take any action other than as permitted by Section 1.03 and in furtherance of the business of the Company as described in Section 1.03.

 

SECTION 3.02                                Officers.

 

(a)                The Manager may, in its sole discretion, from time to time appoint officers of the Company and assign any titles to such officers, each of which shall have such rights, powers and authority to act on behalf of the Company as the Manager may, in its sole discretion, from time to time delegate in writing (by written consent or otherwise) to any such officer; provided that no officer of the Company will have any authority to bind the Company unless such officer has been authorized to do so by the Manager.  The initial officers of the Company designated by the Manager are listed on Schedule 3 hereto.

 

(b)                Each officer of the Company may be appointed for an indefinite term; provided, however, that each officer will be deemed removed upon such officer’s death and; provided, further, that the Manager may, in its sole discretion, at any time remove and replace any officer with or without cause.  Each such officer will be designated a “manager” within the meaning of the Act.  The Manager may, in its sole discretion, appoint a replacement upon the removal, death, retirement or any other circumstance necessitating the replacement of such officer.

 

SECTION 3.03                                Members.  No Member, as such, shall participate in the control of the business or operations of the Company.  No Member shall have any right or power to sign for or to bind the Company in any manner or for any purpose whatsoever, or have any rights or powers with respect to the Company, except those expressly granted to such Member by the terms of this Agreement or those conferred upon such Member by law.  No prior consent or approval of the Members shall be required in respect of any act or transaction to be taken by the Manager or any authorized officer on behalf of the Company unless otherwise provided in this Agreement.

 

SECTION 3.04                                 Compensation; Reimbursement.  None of the Members, the Manager or any officer of the Company shall be entitled to receive any salary or other remuneration from the Company in exchange for such Person’s provision of any services to the Company pursuant to this Agreement.

 

  

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SECTION 3.05                                Outside Interests; Duties.  The Manager shall devote such time and attention to the business and affairs of the Company as is reasonably necessary to perform its obligations hereunder, but it is understood that the Manager has other business interests and therefore shall not be obligated to devote their time exclusively to the business of the Company.  Notwithstanding any duty (fiduciary or otherwise) existing at law or in equity, the Manager and each Member may engage, invest, participate in or otherwise enter into other business ventures of any kind, nature and description, individually and with others, and the Company shall not have any rights in or to such ventures.  To the fullest extent permitted by law and notwithstanding any other provision of this Agreement or in any agreement contemplated herein or applicable provisions of law or equity or otherwise, whenever in this Agreement a Person is permitted or required to make a decision (a) in its “sole discretion” or “discretion” or under a grant of similar authority or latitude, such Person shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting the Company, any Member, or any other Person, or (b) in its “good faith” or under another express standard, such Person shall act under such express standard and shall not be subject to any other or different standard; provided that nothing in this Section shall be construed as limiting the implied contractual covenant of good faith and fair dealing.  To the extent that, at law or in equity, a Person has duties (including fiduciary or statutory duties) and liabilities relating thereto to the Company or to any Member, such Person acting under this Agreement shall not be liable to the Company or any Member for its good faith reliance on the provisions of this Agreement.  The provisions of this Agreement, to the extent that they restrict or eliminate the duties and liabilities of a Person otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Person.

 

SECTION 3.06                                Conflicts of Interest.  Notwithstanding any duty (fiduciary or otherwise) existing at law or in equity, any Person retained by the Company in connection with the operation and management of the business of the Company may also be employed or retained by the Manager or any Member in connection with other business ventures of the Manager or such Member, as the case may be.  Notwithstanding any duty (fiduciary or otherwise) existing at law or in equity, the Manager, any Member and any Affiliate of the Manager or any Member may be directly or indirectly interested in or connected with any Person so employed by the Company or from whom the Company may buy merchandise, services or other property.

 

SECTION 3.07                                Meetings of Members; Voting.  The Company shall not be required to hold annual or other meetings of Members. With respect to any matter presented to the Members for approval or consent of the Members, the Members shall vote or provide consent as a single class of Units with each Unit representing one (1) vote on the matter presented for Member action.

 

SECTION 3.08                                Consent Dividends.  In the event that CT Legacy REIT Mezz Borrower requests that its holders of consent stock (as determined for purposes of Section 565 of the Code) agree to consent dividends (within the meaning of Section 565 of the Code), and the Manager determines that such consent dividends with respect to a taxable year are necessary or appropriate to ensure or maintain the status of CT Legacy REIT Mezz Borrower as a real estate investment trust for federal income tax purposes and/or avoid the imposition of any federal income or excise tax, the Members (individually and as Members) hereby authorize the Manager to take any and all actions necessary or appropriate under (a) the Code, (b) any regulations promulgated thereunder and (c) any court decision or any administrative positions of the United States Department of Treasury (including any Internal Revenue Service (“IRS”) forms or other forms), in each case to result in consent dividends sufficient to maintain CT Legacy REIT Mezz Borrower’s status as a real estate investment trust status and/or avoid federal income or excise tax for such taxable year.  In furtherance of such authorization, each Member shall, on or before the time such Person becomes a Member, provide the Manager with a duly executed power of attorney on IRS Form 2848 completed consistently with such authorization, and will, upon the expiration of such IRS Form 2848 (and any subsequent form) complete and provide to the Manager a duly executed replacement IRS Form 2848.

 

  

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SECTION 3.09                                Tax Efficiency.

 

(a)                The Manager shall in good faith use commercially reasonable efforts to maximize the amount of funds that are available to the Company net of taxes for the benefit of the Company and all of the Members in respect of their ownership interests in the Units of the Company (or in the equity ownership interests in any successor to the Company).

 

(b)                Subject to Section 3.09(a), the Company shall in good faith use commercially reasonable efforts to avoid causing the Members, in respect of their ownership interests in the Units of the Company (or in the equity ownership interests of any successor to the Company), to derive (i) “effectively connected income” within the meaning of Section 864(c) of the Code or (ii) “unrelated trade or business taxable income” within the meaning of Section 511 through 514 of the Code (“UBTI”) (without regard to any actions taken by the Members in connection with their ownership of their Units).

 

ARTICLE IV

 

ACCOUNTING AND REPORTING PROVISIONS

 

SECTION 4.01                                Fiscal Year.  The fiscal year of the Company shall be the calendar year.

 

SECTION 4.02                                Books and Accounts.

 

(a)                Complete and accurate books and accounts shall be kept and maintained for the Company at the principal place of business of the Company on such basis as is determined by the Manager.  Such books and records shall include such separate accounts for each Member as shall be necessary to reflect accurately the rights and interests of the respective Members.  Each Member or such Member’s duly authorized representative, for a purpose reasonably related to such Member’s interest in the Company and at such Member’s own expense, shall at all reasonable times have access to, and may inspect and copy, such books and accounts and other records of the Company.

 

(b)                All funds received by the Company shall be deposited in the name of the Company in such bank account or accounts as the Manager may designate from time to time and withdrawals therefrom shall be made upon such signature or signatures on behalf of the Company as the Manager may designate from time to time.  No funds of the Company shall be deposited in any other account and no funds of other Persons shall be deposited in any Company account.

 

  

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SECTION 4.03                                Reports.  As soon as reasonably practicable after they have been made available to the Company, the Manager shall cause to be furnished to each Member the quarterly and annual financial statements of CT Legacy REIT Mezz Borrower.

 

SECTION 4.04                                Tax Reports.  The Manager, at the Company’s expense, shall cause the Company to prepare and file, in a timely manner, all tax returns of the Company for each taxable year of the Company.  The Company shall transmit to each Member information necessary for the preparation of each Member’s federal, state and local tax returns, including a Schedule K-1 or other applicable form showing each Member’s pro rata share of income, credit and deductions for the prior taxable year, which information shall be transmitted to each Member by 90 days following the last day of the prior taxable year.

 

SECTION 4.05                                Tax Elections.  At the election of CT Legacy Holdings, the Manager shall cause the Company to make an election pursuant to the provisions of Section 754 of the Internal Revenue Code of 1986, as amended (the “Code”).  The Company shall not elect to be treated as a corporation for U.S. federal income tax purposes or any applicable state tax purposes.  The Company may make any other applicable tax elections permitted by the Code that Manager reasonably approves.

 

SECTION 4.06                                Tax Matters Partner.  CT Legacy Holdings shall serve as the “tax matters partner” of the Company, as such term is defined in Section 6231(a)(7) of the Code.  CT Legacy Holdings, in its capacity as “tax matters partner” of the Company, shall promptly furnish the Internal Revenue Service with information, if any, sufficient to cause each Member to be treated as a “notice partner” as defined in Section 6231(a)(8) of the Code.

 

ARTICLE V

 

TRANSFERS; RESIGNATION; OTHER

 

SECTION 5.01                                General Restriction on Transfer.

 

(a)                 Except as otherwise set forth in this Agreement, no Member shall, directly or indirectly, sell, exchange, pledge, give, transfer, assign or in any other way whatsoever encumber or dispose of (collectively, “Transfer”) any Units now or hereafter owned by such Member, or any interest therein, or the right to receive the same, or any certificates representing the same, unless such Member has complied with the provisions set forth in this Article V.  To the fullest extent permitted by law, any purported Transfer of any Units in violation of the provisions of this Agreement shall be null and void ab initio and no distributions shall be made with respect to, nor voting or other rights accorded to, any Units so purportedly Transferred.  Notwithstanding the foregoing and any other provision of this Agreement and without the consent of the Manager, any Member or any other Person, the Transfer of Units by CT Legacy Holdings to the WestLB Lenders or their Affiliates pursuant to the Exchange Agreement, the Transfer of Units by CT Legacy Holdings to CT Legacy Series 1 Note Issuer, LLC and CT Legacy Series 2 Note Issuer, LLC (the “Secured Note Issuers”) pursuant to  Series 1 Note Issuer Exchange Agreement and Series 2 Note Issuer Exchange Agreement, and the pledges by the Secured Note Issuers of Units pursuant to the Pledge and Security Agreements are hereby authorized, permitted, ratified and confirmed.  The Company acknowledges that each of the Pledges shall be a pledge not only of profits and losses of the Company allocable to the Members that hold of such Units, but also a pledge of all rights and obligations of such Members.  Notwithstanding anything to the contrary in this Agreement but subject to Section 5.01(b) hereof, upon a foreclosure, sale or other transfer of the Units subject to a Pledge, each holder of such Units shall, upon the execution of a counterpart to this Agreement, automatically be admitted as a member of the Company, with all of the rights and obligations of the Member that had made such a Pledge.

 

  

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(b)                No Transfer of all or any portion of a Member’s Units may be made to the extent that such Transfer would (in each case, as reasonably determined by the Manager): (i) be made other than as permitted under the Securities Act of 1933, as amended, and applicable state securities laws, pursuant to a registration thereunder or a valid exemption therefrom; (ii) be made to a proposed transferee who is not a “qualified purchaser” within the meaning of Section 3(c)(7) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), and as such that term is defined in Section 2(a)(51) of the Investment Company Act; (iii) be made to a proposed transferee who is a “benefit plan investor” as defined in Section 3(42) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); (iv) result in the Company’s or CT Legacy REIT Mezz Borrower’s assets being deemed “plan assets” for purposes of ERISA or Section 4975 of the Code; (v) result in the disqualification of CT Legacy REIT Mezz Borrower as a real estate investment trust for purposes of the Code or otherwise violate the charter of CT Legacy REIT Mezz Borrower; or (vi) cause the Legacy Asset Contribution Transaction to fail to qualify for non-recognition treatment under Section 351 of the Code.

 

SECTION 5.02                                Expenses of Transfer; Indemnification. All expenses, including reasonable attorneys’ fees and expenses, incurred by the Company in connection with any Transfer of any Units shall be fully borne, in a manner reasonably satisfactory to the Manager, by the transferring Member and/or such Member’s transferee.  In addition, to the fullest extent permitted by law, the transferring Member and such transferee shall, in a manner reasonably satisfactory to the Manager, indemnify the Company against any losses, claims, damages, liabilities or expenses to which the Company may become subject arising out of or based upon any false representation or warranty made by, or breach or failure to comply with any covenant or agreement of, such transferring Member or such transferee in connection with such Transfer.

 

SECTION 5.03                                Recognition of Transfer.

 

(a)                The Company shall not recognize for any purpose any purported Transfer of any Units (including some or all of a Member’s rights or obligations hereunder) unless:

 

(i)           the applicable provisions of this Agreement shall have been complied with;

 

  

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(ii)           the Company shall have been furnished with the documents effecting such Transfer, in form and substance satisfactory to the Manager, in its sole (but reasonable) discretion, executed and acknowledged by both transferor and the transferee;

 

(iii)           such Transfer shall have been made in accordance with all applicable laws and regulations and all necessary governmental consents shall have been obtained and requirements satisfied; and

 

(iv)           the books and records of the Company shall have been changed by the Manager (which change the Company shall cause to be made as promptly as practicable) to reflect the Transfer to, and admission of, such transferee as a Member.

 

(b)                Each transferee, as a condition of the Company’s recognition of such Transfer, shall execute and acknowledge such instruments, in form and substance reasonably satisfactory to the Manager, as the Manager deems necessary or desirable in its sole reasonable discretion, to effectuate such Transfer and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to any rights and/or obligations represented by the Units acquired by such transferee.

 

SECTION 5.04                                Effect of Transfer.  Upon the Transfer by a Member of all or any portion of such Member’s Units in accordance with the provisions of this Agreement, the related transferee shall be deemed to be admitted as a Member hereunder and under the Act and shall succeed to the rights and obligations of the transferor under this Agreement and the Act (to the extent of the Units so transferred). The transferring Member shall cease to be a Member upon the occurrence of both the Transfer of all of all of such Member’ Units and the admission of the transferee as a member of the Company in accordance with the provisions of this Agreement.

 

SECTION 5.05                                Resignation. No Member shall have the right to resign as a member of the Company without the prior written consent of the Manager and, if such consent is given, may resign only on such terms as may be determined by the Manager. Effective on the date of a permitted resignation, such resigning Member shall no longer be a member of the Company for purposes of this Agreement and the Act.  From and after the effective date of such resignation, the resigning Member shall have no rights of a member of the Company under this Agreement or the Act.

 

SECTION 5.06                                Other. If the Company shall distribute to the Members in kind the Common Stock, the Members agree that they shall enter into an agreement with Capital Trust effective as of the date of the distribution substantially in the form of the Unit Right of First Offer Agreement to apply the transfer restrictions prescribed therein to the Common Stock distributed to the Members.

 

ARTICLE VI

 

DISTRIBUTIONS AND ALLOCATIONS

 

SECTION 6.01                                Distributions.

 

  

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(a)                Class A-1 Distributable Cash.  Promptly following the Company’s receipt of any dividends, distributions or other cash proceeds in respect of the Class A-1 Common Stock, the Company shall distribute the related Class A-1 Distributable Cash to the Class A-1 Unitholders, pro rata (based upon the number of Class A-1 Units held by each Class A-1 Unitholder).

 

(b)                Class A-2 Distributable Cash.  Promptly following the Company’s receipt of any dividends, distributions or other cash proceeds in respect of the Class A-2 Common Stock, the Company shall distribute the related Class A-2 Distributable Cash to the Class A-2 Unitholders, pro rata (based upon the number of Class A-2 Units held by each Class A-2 Unitholder).

 

SECTION 6.02                                Allocations of Class A-1 Net Losses.  Class A-1 Net Losses shall be allocated among the Class A-1 Unitholders as follows:

 

(a)                First, in proportion to their positive Class A-1 Capital Accounts until the Class A-1 Capital Account of each Class A-1 Unitholder has been reduced to zero, and

 

(b)                Second, to each Class A-1 Unitholder, pro rata (based upon the number of Class A-1 Units held by each Class A-1 Unitholder).

 

SECTION 6.03                                Allocations of Class A-1 Net Income.  Class A-1 Net Income shall be allocated among the Class A-1 Unitholders as follows:

 

(a)                First, to each Class A-1 Unitholder in an amount equal to the Class A-1 Net Losses previously allocated to such Class A-1 Unitholder Member, and

 

(b)                Second, to each Class A-1 Unitholder, pro rata (based upon the number of Class A-1 Units held by each Class A-1 Unitholder).

 

SECTION 6.04                                Allocations of Class A-2 Net Losses.  Class A-2 Net Losses shall be allocated among the Class A-2 Unitholders as follows:

 

(a)                First, in proportion to their positive Class A-2 Capital Accounts until the Class A-2 Capital Account of each Class A-2 Unitholder has been reduced to zero, and

 

(b)                Second, to each Class A-2 Unitholder, pro rata (based upon the number of Class A-2 Units held by each Class A-2 Unitholder).

 

SECTION 6.05                                Allocations of Class A-2 Net Income.  Class A-2 Net Income shall be allocated among the Class A-2 Unitholders as follows:

 

(a)                First, to each Class A-2 Unitholder in an amount equal to the Class A-2 Net Losses previously allocated to such Class A-2 Unitholder Member, and

 

(b)                Second, to each Class A-2 Unitholder, pro rata (based upon the number of Class A-2 Units held by each Class A-2 Unitholder).

 

  

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SECTION 6.06                                Other Allocations.  Any other items of income, gain, loss or deduction that are not Class A-1 Net Income, Class A-1 Net Losses, Class A-2 Net Income, or Class A-2 Net Losses shall be allocated amongst the Members in any reasonable manner that reflects the economic arrangement among the Members

 

SECTION 6.07                                No Right to Receive Property.  No Member shall have the right to demand and receive property from the Company other than cash pursuant to Section 6.01 or Article VII.

 

SECTION 6.08                                No Distribution which would Violate Applicable Law.  Notwithstanding any provision of this Agreement to the contrary, the Company shall not make any distribution to any Member if such distribution would violate the Act or other applicable law.

 

SECTION 6.09                                Set-Off; Withholding.

 

(a)                Notwithstanding anything to the contrary contained in this Agreement, the Company may, in the Manager’s sole discretion, set-off against, or withhold from, any distribution to any Member pursuant to this Agreement, any amounts due from such Member to the Company pursuant to this Agreement, to the extent not otherwise paid.  Any amounts so set-off or withheld pursuant to this Section shall be applied by the Company to discharge the obligation in respect of which such amounts were withheld.  All amounts set-off or withheld pursuant to this Section with respect to any Member shall be treated as amounts distributed to such Member for all purposes under this Agreement.  The Company shall give written notice of any such set-off or withholding to each Member subject thereto within ten (10) days after the occurrence of such set-off or withholding.

 

(b)                The Company shall comply with withholding requirements under U.S. federal, state, and local law and shall remit amounts withheld to and file required forms with the applicable jurisdictions.  To the extent the Company is required to withhold and pay over any amount to any authority with respect to distributions or allocations to any Member, the amount withheld shall be deemed to be a distribution by the Company to such Member in the amount of the withholding.

 

(c)                If any amount is withheld on income received by the Company and the amount of the withholding was calculated, under applicable law, with respect to income allocable to some (but not all) of the Members, such withholding (and any related tax or book income or deduction item) shall be allocated, in a manner reasonably determined by the Manager, to the Members with respect to whom the withholding was calculated, and distributions shall be adjusted accordingly.  In the event that the Company is required to withhold in respect of any Member, to the extent such withholding is in an amount greater than the amount that is distributable to such Member at that time or the Company previously distributed to the Member amounts that are subsequently determined to be subject to withholding, such Member shall reimburse the Company for the excess of the withholding tax paid on its behalf.  If such Member fails to so reimburse the Company, such excess will be treated as an advance repayable out of the first available amounts that would otherwise be payable to such Member.

 

  

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ARTICLE VII

 

DISSOLUTION AND WINDING UP OF THE AFFAIRS OF THE COMPANY

 

SECTION 7.01                                General.

 

(a)                Upon the dissolution of the Company in accordance with the terms hereof, the Company shall be dissolved and its affairs wound up in accordance with this Article and the Act.  The Company shall be dissolved upon the earliest to occur of the following events:

 

(i)           upon the expiration of the term of the Company pursuant to Section 1.06 hereof;

 

(ii)           at any time there are no members of the Company, unless the Company is continued in accordance with the Act; or

 

(iii)           when required by a decree of judicial dissolution of the Company entered under Section 18-802 of the Act.

 

(b)                The dissolution and winding up of the affairs of the Company shall be conducted and supervised by the Manager or such Person who is designated by the Manager for such purpose (the “Wind Up Agent”).  The Wind Up Agent shall be the “liquidating trustee” of the Company within the meaning of the Act and shall have all of the rights and powers with respect to the assets and liabilities of the Company in connection with the dissolution and winding up of the affairs of the Company as provided in the Act and that the Manager would have with respect to the assets and liabilities of the Company during the term of the Company, and the Wind Up Agent is hereby expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the dissolution and winding up of the affairs of the Company and the transfer of any assets or liabilities of the Company.

 

SECTION 7.02                                Statements on Dissolution.  Each Member shall be furnished with a statement prepared by the Company’s independent outside accountant which shall set forth the assets and liabilities of the Company as at the date of dissolution, and each Member’s share thereof.  Once all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company shall have been distributed to the Members in the manner provided for in this Agreement, the Wind Up Agent shall execute, acknowledge and cause to be filed a Certificate of Cancellation of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware and other documents, instruments and certificates as may be required in connection with such filing or otherwise by the Act.

 

SECTION 7.03                                Priority on Winding Up; Distribution of Non-Liquid Assets.  Subject to the Act, to the extent the proceeds are sufficient therefor, as the Wind Up Agent shall deem appropriate, the proceeds of such winding up shall be applied in the following order of priority:

 

  

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(a)                first, to the creditors of the Company in satisfaction (whether by payment or the reasonable provision for payment) of debts and liabilities of the Company, to the fullest extent permitted by law, including the establishment of any reserves that the Wind Up Agent may deem reasonably necessary to satisfy any contingent, conditional or unmatured liabilities of the Company, and the satisfaction of the costs and expenses of the dissolution, liquidation and winding up of the Company; and

 

(b)                the balance, if any, shall be distributed to the Members in accordance with Section 6.01 hereof.

 

SECTION 7.04                                Orderly Wind Up.  A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities so as to minimize the losses normally attendant upon a dissolution and winding up.

 

SECTION 7.05                                Source of Distributions.  No Member shall be personally liable for the return of another Member’s Capital Contributions, or any portion thereof, it being expressly understood that any such return shall be made solely from Company assets.

 

SECTION 7.06                                Deficit in Capital Account.  During the term of the Company and upon the dissolution of the Company, no Member shall be liable to the Company or the other Members for any deficit in such Member’s Capital Account, and no such deficit shall be deemed an asset of the Company.

 

SECTION 7.07                                Bankruptcy of Member.  Notwithstanding any provision in this Agreement, the bankruptcy (as defined in the Act) of a Member shall not cause such Member to cease to be a member of the Company and upon the occurrence of such an event, the Company shall continue without dissolution.

 

ARTICLE VIII

 

INDEMNIFICATION; EXCULPATION

 

SECTION 8.01                                Exculpation.  To the fullest extent permitted by applicable law, none of the Company’s officers, Affiliates and other agents (including, without limitation, the Wind Up Agent) or the Manager, its members, directors, officers, employees, Affiliates and other agents (collectively, the “Covered Persons”) shall be liable to the Company or any of the Members for monetary damages for any losses, claims, damages or liabilities (“Damages”) arising from any act or omission performed or omitted by such Covered Persons arising out of or in connection with this Agreement or the Company’s business or affairs, except to the extent that any such Damages are established by a court order of final adjudication to be attributable to the gross negligence, willful misconduct or bad faith of such Covered Person.

 

  

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SECTION 8.02                                Indemnification.

 

(a)                The Company shall, to the fullest extent permitted by applicable law, indemnify, defend and hold harmless each Covered Person against any Damages to which such Covered Person may become subject in connection with any matter arising out of or in connection with this Agreement or the Company’s business or affairs, except to the extent that any such Damages are established by a court order of final adjudication to be attributable to the gross negligence, willful misconduct or bad faith of such Covered Person.  If a Covered Person becomes involved in any capacity in any action, proceeding or investigation in connection with any matter arising out of or in connection with this Agreement or the Company’s business or affairs, the Company shall reimburse such Covered Person for its reasonable legal and other expenses (including the cost of any investigation and preparation) as they are incurred in connection therewith.  If for any reason (other than by reason of the exclusions from indemnification set forth above) the foregoing indemnification is unavailable to such Covered Person, or insufficient to hold it harmless, then the Company shall, to the fullest extent permitted by law, contribute to the amount paid or payable by such Covered Person as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and such Covered Person on the other hand or, if such allocation is not permitted by applicable law, to reflect not only the relative benefits referred to above but also any other relevant equitable considerations.

 

(b)                Notwithstanding anything else contained in this Agreement, the obligations of the Company under this Section shall (i) be in addition to any other liability which the Company may otherwise have and (ii) inure to the benefit of the Covered Persons, and any successors, assigns, heirs and personal representatives of such Covered Persons.

 

(c)                The provisions of this Section shall survive for a period of three years from the date of dissolution of the Company; provided that if at the end of such period there are any actions, proceedings or investigations then pending, the provisions of this Section shall survive with respect to each such action, proceeding or investigation (or any related action, proceeding or investigation based upon the same or similar claim) until such date that such action, proceeding or investigation is finally resolved; and provided, further, that the obligations of the Company under this Section shall be satisfied solely out of Company assets, subject to the right of the Wind Up Agent to establish reserves for contingent, conditional, or unmature obligations under this Section.

 

ARTICLE IX

 

NOTICES

 

SECTION 9.01                                Notices.  All notices required to be delivered hereunder shall be in writing and must be delivered either by hand in person, by facsimile transmission, by electronic mail, by U.S. certified mail, return receipt requested, or by nationally recognized overnight delivery service (receipt request) and shall be deemed given when so delivered by hand (with written confirmation of receipt), sent by facsimile transmission or electronic mail (with confirmation of receipt of transmission from sender’s equipment) or, if mailed by U.S. certified mail, three (3) days after the date of deposit in the U.S. mail, or if delivered by overnight delivery service when received by the addressee, in each case at the appropriate addresses set forth below (or to such other addresses as a party may designate for that purpose upon fifteen (15) days prior written notice to the other parties).

 

  

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If to the Company (or the Manager), at:

 

c/o Capital Trust, Inc.

410 Park Avenue

14th Floor

New York, NY 10022

Attn:  Geoffrey G. Jervis

Facsimile Number:  212-655-0044

Email:  gjervis@capitaltrust.com

with copies to:

Paul, Hastings, Janofsky &Walker LLP

75 East 55th Street

New York, New York 10022

Attention:  Michael L. Zuppone, Esq.

Facsimile Number:  212-230-7752

Email:  michaelzuppone@paulhastings.com

 

If to a Member, to such Member at such Member’s address as set forth on the Schedule of Outstanding Units.

 

SECTION 9.02                                Routine Communications.  Notwithstanding the provisions of Section 9.01 hereof, routine communications such as distribution checks or financial statements of the Company may be sent by first-class mail, postage prepaid.  The Company shall cause distributions to be made by means of wire transfer to any Member who requests the same and who provides the Company with wire transfer instructions or by such other electronic means as are agreed to by the Company and such Member.

 

ARTICLE X

 

DEFINITIONS

 

SECTION 10.01                                Definitions.  For the purposes of this Agreement, the following terms shall have the following meanings:

 

“Act” shall have the meaning given to such term in the Recitals hereof.

 

“Affiliate” shall mean, with respect to any Person, any Person Controlling, Controlled by, or under common Control with, such Person.

 

“Agreement” shall have the meaning given to such term in the introductory paragraph hereof.

 

“Authorized Representative” shall have the meaning given to such term in Section 11.13 hereof.

 

  

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“Business Day” shall mean any day except a Saturday, Sunday or other day on which commercial banks in New York City, New York are authorized by law to be closed.

 

“Capital Account” shall mean, with respect to each Member, such Member’s Class A-1 Capital Account and/or Class A-2 Capital Account, as applicable.

 

“Capital Contribution” shall have the meaning given to such term in Section 2.03(a) hereof.

 

“Capital Trust” shall have the meaning given to such term in the Recitals hereof.

 

“Certificate” shall have the meaning given to such term in the Recitals hereof.

 

“Class A-1 Capital Account” shall mean, with respect to each Member, the sum of the Capital Contributions, if any, made by such Member in exchange for Class A-1 Units and the Gross Asset Value of property contributed by such Member in exchange for Class A-1 Units (or, in each case, to which a transferee Member has succeeded), increased by the aggregate amount of Class A-1 Net Income allocated to such Member pursuant to this Agreement and decreased by (a) the aggregate amount of Class A-1 Net Losses allocated to such Member pursuant to this Agreement and (b) all amounts paid or distributed to such Member pursuant to this Agreement in respect of such Member’s Class A-1 Units.

 

“Class A-1 Common Stock” shall mean shares of class A-1 common stock, par value $0.001 per share, of CT Legacy REIT Mezz Borrower.

 

 “Class A-1 Costs” shall mean the Company’s costs and expenses paid or created and reserves established by the Manager, and in each case, which are ratably allocated among and attributed to the Company’s interest in the Class A-1 Common Stock.

 

“Class A-1 Distributable Cash” shall mean the amount by which the Company’s cash receipts from dividends, distributions and other proceeds in respect of the Class A-1 Common Stock exceed the Class A-1 Costs.

 

“Class A-1 Net Income” or “Class A-1 Net Loss” shall mean the Net Income or Net Loss of the Company attributable to the dividends, distributions and proceeds received by the Company in respect of the Class A-1 Common Stock and the Class A-1 Costs.

 

“Class A-1 Unit” shall have the meaning given to such term in Section 2.02 hereof.

 

“Class A-1 Unitholder” shall have the meaning given to such term in Section 2.02 hereof.

 

“Class A-2 Capital Account” shall mean, with respect to each Member, the sum of the Capital Contributions, if any, made by such Member in exchange for Class A-2 Units and the Gross Asset Value of property contributed by such Member in exchange for Class A-2 Units (or, in each case, to which a transferee Member has succeeded), increased by the aggregate amount of Class A-2 Net Income allocated to such Member pursuant to this Agreement and decreased by (a) the aggregate amount of Class A-2 Net Losses allocated to such Member pursuant to this Agreement and (b) all amounts paid or distributed to such Member pursuant to this Agreement in respect of such Member’s Class A-2 Units.

 

  

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“Class A-2 Common Stock” shall mean shares of class A-2 common stock, par value $0.001 per share, of CT Legacy REIT Mezz Borrower.

 

“Class A-2 Costs” shall mean the Company’s costs and expenses paid or created and reserves established by the Manager, and in each case, which are ratably allocated among and attributed to the Company’s interest in the Class A-2 Common Stock.

 

 “Class A-2 Distributable Cash” shall mean the amount by which the Company’s cash receipts from dividends, distributions and other proceeds in respect of the Class A-2 Common Stock exceed the Class A-2 Costs.

 

 “Class A-2 Net Income” or “Class A-2 Net Loss” shall mean the Net Income or Net Loss of the Company attributable to the dividends, distributions and proceeds received by the Company in respect of the Class A-2 Common Stock and the Class A-2 Costs.

 

 “Class A-2 Unit” shall have the meaning given to such term in Section 2.02 hereof.

 

 “Class A-2 Unitholder” shall have the meaning given to such term in Section 2.02 hereof.

 

 “Code” shall have the meaning given to such term in Section 4.05 hereof.

 

“Common Stock” shall mean the Class A-1 Common Stock and the Class A-2 Common Stock.

 

“Company” shall have the meaning given to such term in the introductory paragraph hereof.

 

“Contribution Agreement” means that certain contribution agreement, dated as of March [    ], 2011, by and among CT Legacy Holdings, Five Mile and the Company, with respect to the contribution of Common Stock to the Company.

 

 “Control” shall mean, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of another Person.

 

“Covered Person” shall have the meaning given to such term in Section 8.01 hereof.

 

“CT Legacy Holdings” shall mean CT Legacy Holdings, LLC, a Delaware limited liability company.

 

“CT Legacy REIT Mezz Borrower” shall mean CT Legacy REIT Mezz Borrower, Inc., a Maryland corporation.

 

“Damages” shall have the meaning given to such term in Section 8.01 hereof.

 

  

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“Depreciation” shall mean, for each taxable year, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such taxable year, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such taxable year, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such taxable year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such taxable year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Manager.

 

“Effective Date Members” shall have the meaning given to such term in the introductory paragraph hereof and shall include CT Legacy Holdings, Five Mile, the Secured Note Issuers, WestLB CapTrust Holding LLC, BNP Paribas VPG CT Holdings, LLC, Morgan Stanley & Co. Incorporated, JPMorgan Chase Bank, N.A., Deutsche Bank Trust Company Americas and ATC Realty One, LLC.

 

“ERISA” shall have the meaning given to such term in Section 5.01(b) hereof.

 

“Exchange Agreement” means that certain exchange agreement, dated as of March [    ], 2011, by and among the Capital Trust, CT Legacy Holdings, LLC, CT Legacy Series 1 Note Issuer, LLC, the Company, WestLB AG, New York Branch, as administrative agent, and each of WestLB AG, New York Branch, BNP Paribas, Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A., Deutsche Bank Trust Company Americas and Wells Fargo Bank, N.A.

 

“Five Mile” means Five Mile Capital II CT Equity SPE LLC, a Delaware limited liability company.

 

“For Cause Removal Event” shall mean a final, non-appealable judgment of a court of competent jurisdiction that the Manager has misappropriated funds from, or perpetrated a fraud upon, the Company.

 

“Gross Asset Value” shall mean, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

 

(a)                  The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the fair market value of such asset as determined by the Manager at the time that such assets is accepted by the Company, unreduced by any liability secured by such asset, as determined by the Manager.

 

(b)                The Gross Asset Values of all Company assets may be adjusted in the discretion of the Manager to equal their respective fair market values, unreduced by any liabilities secured by such assets, as determined by the Manager as of the following times: (i) the acquisition of additional Units by any new or existing Member in exchange for a Capital Contribution; (ii) the distribution by the Company to a Member of an amount of cash or property as consideration for Units; (iii) the grant of Units as consideration for the provision of services to or for the benefit of the Company by an existing or new Member; and (iv) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g).

 

  

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(c)               The Gross Asset Value of any asset of the Company distributed to any Member shall be adjusted to equal the fair market value of such asset, unreduced by any liability secured by such asset, on the date of distribution as determined by the Manager.

 

(d)              The Gross Asset Value of the Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) or 743(b) of the Code but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m).

 

If the Gross Asset Value of an asset has been determined or adjusted pursuant to paragraph (a), (b) or (d) of this definition, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses.

 

“Initial Operating Agreement” shall have the meaning given to such term in the Recitals hereof.

 

“Investment Company Act” shall have the meaning given to such term in Section 5.01(b) hereof.

 

“IRS” shall have the meaning given to such term in Section 3.08 hereof.

 

“Legacy Asset Contribution Transaction” shall have the meaning given to such term in the Contribution Agreement.

 

“Manager” shall have the meaning given to such term in the introductory paragraph hereof.

 

“Member” shall have the meaning given to such term in the introductory paragraph hereof.  The Members constitute a single group or class of members for purposes of the Act.

 

“Net Income” or “Net Loss” shall mean, for any period, taxable income or loss, as determined for federal income tax purposes, with the following adjustments:

 

(a)           any income of the Company which is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss hereunder will be added to such taxable income or loss; and

 

(b)           any expenditures of the Company which are described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to applicable Regulations under Code Section 704 and not otherwise taken into account in computing Net Income or Net Loss hereunder will be subtracted from such taxable income or loss.

 

“OFAC” shall have the meaning given to such term in Section 11.14 hereof.

 

  

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“Person” shall mean a natural person, company, joint venture, corporation, limited liability company, partnership, trust or other entity.

 

“Pledge” shall mean any pledge made pursuant to and governed by any Pledge and Security Agreement.

 

“Pledge and Security Agreements” shall mean (a) each of the Pledge and Security Agreements, by CT Legacy Series 1 Note Issuer, LLC, as pledgor, for the benefit of U.S. Bank National Association, as collateral agent on behalf of certain holders of certain Series 1 Secured Notes to be issued on the date hereof by CT Legacy Series 1 Note Issuer, LLC and (b) each of the Pledge and Security Agreements, by CT Legacy Series 2 Note Issuer, LLC, as pledgor, for the benefit of U.S. Bank National Association, as collateral agent on behalf of certain holders of Series 2 Secured Notes to be issued on the date hereof by CT Legacy Series 2 Note Issuer, LLC, in connection with the Restructuring.

 

“Regulations” shall mean the applicable Treasury Regulations under the Code.  Any and all references herein to specific provisions of the Regulations will be deemed to refer to any corresponding successor provision.

 

“Restructuring” shall have the meaning ascribed to such term in the Contribution Agreement.

 

“Schedule of Outstanding Units” shall have the meaning given to such term in Section 2.02 hereof.

 

“SDN” shall have the meaning given to such term in Section11.14 hereof.

 

“SDN List” shall have the meaning given to such term in Section11.14 hereof.

 

“Secured Note Issuers” shall have the meaning given to such term in Section 5.01(a) hereof.

 

“Series 1 Note Issuer Exchange Agreement” shall mean that certain exchange agreement, to be entered into by and between CT Legacy Holdings, LLC and CT Legacy Series 1 Note Issuer, LLC.

 

“Series 2 Note Issuer Exchange Agreement” shall mean that certain exchange agreement, to be entered into by and between CT Legacy Holdings, LLC and CT Legacy Series 2 Note Issuer, LLC.

 

“Side Letter” shall mean that certain side letter, dated as of March [    ], 2011, by and between the Company and the beneficiaries party thereto.

 

“Transfer” shall have the meaning given to such term in Section 5.01 hereof.

 

“WestLB Lenders” shall have the meaning ascribed to such term in the Exchange Agreement.

 

“Wind Up Agent” shall have the meaning given to such term in Section 7.01(b) hereof.

 

“Units” shall have the meaning given to such term in Section 2.02 hereof.

 

  

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“Unit Right of First Offer Agreement” shall mean that certain unit right of first offer agreement, to be entered into by and between Capital Trust and certain Members with respect to certain prescribed restrictions of Transfer of the Units.

 

ARTICLE XI

 

GENERAL PROVISIONS

 

SECTION 11.01                                Entire Agreement.  This Agreement constitutes the entire understanding among the Members and the Manager with respect to the subject matter hereof.

 

SECTION 11.02                                Amendment and Consents.  This Agreement (including any provisions incorporated herein by reference) may be amended, and any provision hereof may be waived, by written instrument executed by Members holding 88% or more of the issued and outstanding Units and the Manager (based upon the aggregate number of Units then issued and outstanding, and not the voting rights associated with such Units); provided that Section 2.05 hereof may not be amended so long as the obligations secured by the Pledge and Security Agreements are outstanding without the written consent of all Members; provided, further, that no such amendment or waiver that materially adversely affects the rights of any Member disproportionately to other Members shall be permitted without the consent of the Member so disproportionately affected.

 

SECTION 11.03                                Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws and decisions of the State of Delaware, without regard to the conflicts of law provisions thereof.

 

SECTION 11.04                                Jurisdiction.  Any legal action or proceeding with respect to this Agreement may be brought in any court of competent jurisdiction in the State of New York or the State of Delaware and, by execution and delivery of this Agreement, each Member to the fullest extent permitted by law, (a) accepts, generally and unconditionally, the non-exclusive jurisdiction of the state and federal courts of the State of New York and the State of Delaware, and irrevocably agrees to be bound by any judgment or order rendered thereby in connection with this Agreement, (b) irrevocably waives any objection it may now or hereafter have as to the venue of any such proceeding brought in such a court or that such a court is an inconvenient forum, and (c) agrees that service of process may be made upon it by mail in the manner set forth in Section 9.01.

 

SECTION 11.05                                Captions.  The captions used herein are intended for convenience of reference only, shall not constitute part of this Agreement and shall not modify or affect in any manner the meaning or interpretation of any of the provisions of this Agreement.

 

SECTION 11.06                                Successors.  Except as otherwise provided herein, this Agreement shall be binding upon and shall inure to the benefit of the respective heirs, executors, administrators, legal representatives, and permitted successors and assigns of the parties hereto.

 

SECTION 11.07                                Construction.  None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company, any of the Members or the Manager.

 

  

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SECTION 11.08                                Severability.  In case any one or more of the provisions contained in this Agreement or any application thereof shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and other application thereof shall not in an way be affected or impaired thereof.

 

SECTION 11.09                                Further Assurances.  The parties hereto shall execute and deliver such further instruments and do such further acts and things as may be required to carry out the intent and purposes of this Agreement.

 

SECTION 11.10                                Gender and Number.  Whenever required by the context hereof, the singular shall include the plural and the plural shall include the singular.  The masculine gender shall include the feminine and neuter genders.

 

SECTION 11.11                                No Third-Party Rights.  Nothing in this Agreement shall be deemed to create any right in any Person not a party hereto (other than the Covered Persons and the permitted successors and assigns of a party hereto) and this Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third party (except as aforesaid).

 

SECTION 11.12                                Counterparts.  This Agreement may be executed and delivered in counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute one and the same instrument.

 

SECTION 11.13                                Confidentiality.  Unless otherwise approved in writing by the Manager, each Member agrees to keep confidential, and not to make any use of (other than for purposes reasonably related to its interest as a Member or for purposes of filing such Member’s tax returns or for other routine matters required by law) nor to disclose to any Person, any information or matter relating to the Company and its business and affairs, including information contained in financial statements furnished pursuant to Section 4.03 (other than disclosure to such Member’s owners, employees, agents, advisors investors, prospective investors, lenders, prospective lenders, transferees, prospective transferees or representatives (each such Person being hereinafter referred to as an “Authorized Representative”), except that a Person who is not subject to the direction or control of such Member will not constitute an Authorized Representative unless such Person shall agree for the benefit of the Company and the Manager to be bound by a confidentiality undertaking on substantially the same terms as set forth in this Section); provided that such Member and its Authorized Representatives may make such disclosure to the extent that: (a) the information being disclosed is publicly known at the time of any proposed disclosure by such Member or Authorized Representative; (b) the information subsequently becomes publicly known through no act or omission of such Member or Authorized Representative; (c) the information otherwise is or becomes legally known to such Member other than through disclosure by the Company or the Manager; or (d) such disclosure, in the opinion of legal counsel of such Member or Authorized Representative, is required by law or regulation or to any regulatory or other governmental agency or body exercising jurisdiction over a Member.  Prior to making any disclosure required by law and unless otherwise restricted by applicable law, the applicable Member shall notify the Manager of such disclosure and advise the Manager as to the opinion referred to above.  Prior to any disclosure to any Authorized Representative, the applicable Member shall advise such Authorized Representative of the obligations set forth in this Section, inform such Authorized Representative of the confidential nature of such information and direct such Authorized Representative to keep all such information in the strictest confidence and to use such information only for purposes relating to such Member’s Units.  The provisions of this Section will survive for a period of three years from the date of termination of the Company.  The provisions of this Section were negotiated in good faith by the parties hereto and the parties hereto agree that such provisions are reasonable and are not more restrictive than is necessary to protect the legitimate interests of the Members, the Manager and the Company.

 

  

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SECTION 11.14                                OFAC.  Each Member represents and warrants, to its knowledge, that: (i) it is not on an SDN List (defined below), nor is it directly or indirectly owned or controlled by an SDN (defined below); and (ii) such Member’s execution of this Agreement and its ownership of Units, and the consummation of any other transaction with respect to such Member contemplated by this Agreement, will not violate any country sanctions program administered and enforced by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury. For the purposes hereof, an “SDN List” is defined as one of the lists published by OFAC of individuals and companies owned or controlled by, or acting for or on behalf of, OFAC targeted countries, as well as individuals, groups, and entities, such as terrorists and narcotics traffickers, designated under OFAC programs that are not country-specific, and an “SDN” is one of the individuals or companies listed on an SDN List.

 

 

[SIGNATURE PAGES FOLLOW]

 

  

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IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement as of the date first written above.

 

 

	 	
THE INITIAL MEMBER AND THE MANAGER:

 

 

CT LEGACY MANAGER, LLC

	 	 	 	 	 	 
	 	 	
By: 

	
CAPITAL TRUST, INC., as member

	 
	 	 	 	 	 	 
	 	 	 	
By: 

	 	 
	 	 	 	 	
Name:

Title:

	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	
THE MEMBERS:

 

 

CT LEGACY HOLDINGS, LLC

	 	 	 	 	 	 
	 	
By: 

	 	 
	 	 	Name: 

Title:

	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	
FIVE MILE CAPITAL II CT EQUITY SPE LLC

	 	 	 	 	 	 
	 	

By: Five Mile Capital II Equity Pooling LLC, a Delaware limited liability company, its sole member

By: Five Mile Capital Partners LLC, a Delaware limited liability company, its manager

	 	 	 	 	 	 
	 	
By: 

	 	 
	 	 	Name: 

Title:

	 
	 	 	 	 	 	 

 

  

  

  

 

JOINDER

In connection with the transfer (as contemplated in Section 5.01(a) of the Agreement (as defined below)) to the undersigned of the Units representing limited liability company interests in CT Legacy REIT Holdings, LLC (the “Company”) originally issued to, and owned by, CT Legacy Holdings, LLC, each of the undersigned hereby joins the Amended and Restated Limited Liability Company Operating  Agreement of the Company, dated as March [   ] (the “Agreement”), as a Member, and agrees to be bound by the terms of the Agreement.

IN WITNESS WHEREOF, the undersigned have executed and delivered this Joinder on and effective as of the [     ] day of March, 2011.

 

	 	
THE MEMBERS:

 

CT LEGACY SERIES 1 NOTE ISSUER, LLC

	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: 

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
CT LEGACY SERIES 2 NOTE ISSUER, LLC

	 	 
	 	
By: 

	 	 
	 	 	Name: 

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
WESTLB CAPTRUST HOLDING LLC

	 	 
	 	
By: 

	 	 
	 	 	Name: 

Title:

	 

 

  

  

  

 

	 	

THE MEMBERS (continued):

 

 

BNP PARIBAS VPG CT HOLDINGS, LLC

	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: 

Title:

	 
	 	 	 	 
	 	 	 	 
	 	

MORGAN STANLEY & CO. INCORPORATED

	 	 
	 	
By: 

	 	 
	 	 	Name: 

Title:

	 
	 	 	 	 
	 	 	 	 
	 	

JPMORGAN CHASE BANK, N.A.

	 	 
	 	
By: 

	 	 
	 	 	Name: 

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
DEUTSCHE BANK TRUST COMPANY AMERICAS

	 	 	 	 
	 	
By: 

	 	 
	 	 	Name: 

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
ATC REALTY ONE, LLC

	 	 	 	 
	 	
By: 

	 	 
	 	 	Name: 

Title:

	 

 

  

  

  

 

Schedule 1

 

Schedule of Outstanding Units

 

(as of March [    ], 2011)

 

 

	
Member

	
Class A-1 Units

	
Class A-2 Units

	
Pass Though Votes for Underlying Class A-1 Common Stock

	
Pass Though Votes for Underlying Class A-2 Common Stock

	
CT Legacy Holdings, LLC

Address:

c/o Capital Trust, Inc.

410 Park Avenue

14th Floor

New York, NY 10022

	
4,393,750

	
3,190,625

	
26,362,500

	
3,190,625

	
Five Mile Capital II CT Equity SPE LLC

Address:

c/o Five Mile Capital Partners LLC

Three Stamford Plaza

301 Tresser Blvd, 12th Floor

Stamford, CT 06901

 

	
0

	
2,415,625

	
0

	
2,415,625

 

 

  

  

  

 

Schedule 1

 

Schedule of Outstanding Units

 

(following transfer of Units to Members executing Joinders to the Agreement as of March [   ], 2011)

 

	
Member

	
Class A-1Units

	
Class A-2 Units

	
Pass Though Votes for Underlying Class A-1 Common Stock

	
Pass Though Votes for Underlying Class A-2 Common Stock

	
CT Legacy Holdings, LLC

Address:

c/o Capital Trust, Inc.

410 Park Avenue

14th Floor

New York, NY 10022

	
0

	
337,500

	
0

	
337,500

	
Five Mile Capital II CT Equity SPE LLC

Address:

c/o Five Mile Capital Partners LLC

Three Stamford Plaza

301 Tresser Blvd, 12th Floor

Stamford, CT 06901

	
0

	
2,415,625

	
0

	
2,415,625

 

	
CT Legacy Series 1 Note Issuer, LLC

Address:

c/o Capital Trust, Inc.

410 Park Avenue

14th Floor

New York, NY 10022

	
1,287,946

	
437,500

	
7,727,676

	
437,500

	
CT Legacy Series 2 Note Issuer, LLC

Address: c/o Capital Trust, Inc.

410 Park Avenue

14th Floor

New York, NY 10022

	
3,105,804

	
0

	
18,634,824

	
0

 

  

  

  

 

	
Member

	
Class A-1Units

	
Class A-2 Units

	
Pass Though Votes for Underlying Class A-1 Common Stock

	
Pass Though Votes for Underlying Class A-2 Common Stock

	
WestLB CapTrust Holding LLC

Address:

c/o Peter J. Pasqua

Director

WestLB AG

FU PEG

7 World Trade Center

New York, NY 10007

Phone: (212)-597-1449

Peter_Pasqua@westlb.com

 

	
0

	
603,906

	
0

	
603,906

	
BNP Paribas VPG CT Holdings, LLC

Address:

Nancy Faingar

BNP Paribas

Private Equity Portfolio Management

520 Madison Avenue, 2nd Floor

New York, NY 10022

Phone: (212) 471-6691

Fax: (212) 841-2144

nancy.faingar@us.bnpparibas.com

 

	
0

	
603,906

	
0

	
603,906

	
ATC Realty One, LLC

Address:

Jeannette DeLaGarza

Wells Fargo REMAG

Commercial ORE

333 Market Street, 17th Floor

San Francisco, CA 94105

Phone:  415.371.3438

Fax:  415.371.3210

Jeannette.V.Delagarza@wellsfargo.com

 

	
0

	
362,344

	
0

	
362,344

	
JPMorgan Chase Bank, N.A.

Address:

JPMorgan Chase Bank, N.A.

ATTN: Douglas A. Kravitz

383 Madison Avenue, 23rd Floor

New York, NY 10179

Phone: (212) 270-1262

Fax: (212) 622-4557

Douglas.A.Kravitz@jpmorgan.com

	
0

	
301,953

	
0

	
301,953

 

  

  

  

 

	
Member

	
Class A-1Units

	
Class A-2 Units

	
Pass Though Votes for Underlying Class A-1 Common Stock

	
Pass Though Votes for Underlying Class A-2 Common Stock

	
Morgan Stanley & Co. Incorporated

Address:

Deborah Mullin

1300 Thames St.

Thames Street Wharf

Baltimore, MD 21231

 

	
0

	
301,953

	
0

	
301,953

	
Deutsche Bank Trust Company Americas

Address:

Gerry Dupont

Deutsche Bank Securities, Inc.

200 Crescent Court, Suite 550

Dallas, Texas 75201

Phone: (214) 740-7913

Fax: (214) 740-7910

gerard.k.dupont@db.com

 

	
0

	
241,563

	
0

	
241,563

	
Totals:

	
4,393,750

	
5,606,250

	
26,362,500

	
5,606,250

 

  

  

  

 

Schedule 2

 

Schedule of Initial Capital Account Balances

 

(as of March [   ], 2011)

 

	
 

Member

	
Class A-1

Capital Account Balance

	
Class A-2

Capital Account Balance

	
CT Legacy Holdings, LLC

	
$[    ]

	
$[     ]

	
Five Mile Capital II CT Equity SPE LLC

	
$[    ]

	
$[    ]

	
Totals:

	
$[    ]

	
$[    ]

 

  

  

  

 

Schedule of Initial Capital Account Balances

 

 (following transfer of Units to Members executing Joinders to the Agreement as of March [    ], 2011)

 

	
 

Member

	
Class A-1

Capital Account Balance

	
Class A-2

Capital Account Balance

	
CT Legacy Holdings, LLC

	
$[    ]

	
$[    ]

	
Five Mile Capital II CT Equity SPE LLC

	
$[    ]

	
$[    ]

	
CT Legacy Series 1 Note Issuer, LLC

	
$[    ]

	
$[    ]

	
CT Legacy Series 2 Note Issuer, LLC

	
$[    ]

	
$[    ]

	
WestLB CapTrust Holding LLC

	
$[    ]

	
$[    ]

	
BNP Paribas VPG CT HOLDINGS, LLC

	
$[    ]

	
$[    ]

	
ATC Realty One, LLC

	
$[    ]

	
$[    ]

	
JPMorgan Chase Bank, N.A.

	
$[    ]

	
$[    ]

	
Morgan Stanley & Co. Incorporated

	
$[    ]

	
$[    ]

	
Deutsche Bank Trust Company Americas

	
$[    ]

	
$[    ]

	
Totals:

	
$[    ]

	
$[    ]

 

  

  

  

 

Schedule 3

 

Initial Officers

	
Name

	
Office

	
Stephen D. Plavin

	
President and Chief Executive Officer

	
Geoffrey G. Jervis

	
Chief Financial Officer, Treasurer and Secretary

	
Thomas C. Ruffing

	
Chief Credit Officer and Head of Asset Management

	
Douglas Armer

	
Director

	
Ryan Totaro

	
Director

	
Jai Agarwal

	
Director

	
Peter Smith

	
Director

	
Robert Brennan

	
Vice President

	
Deborah Ginsberg

	
Vice President

	
Kevin Wachter

	
Vice President

	
Brendan Thorpe

	
Vice President

	
Anthony Marone, Jr.

	
Vice President and Controller

	
Taylor Collison

	
Vice President

 

  

  

  

 

Annex A

 

UNIT CERTIFICATE FOR

UNITS OF CT LEGACY REIT HOLDINGS, LLC

 

THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES UNDER THE ACT OR (II) OR ANY AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO DISPOSITION OF SECURITIES.

 

THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON OWNERSHIP AND TRANSFER SET FORTH IN ARTICLE V OF THE OPERATING AGREEMENT (AS DEFINED BELOW).  ANY PURPORTED TRANSFER OF SHARES OF UNITS THAT, IF EFFECTIVE, WOULD (I) RESULT IN UNITS BEING HELD BY PERSONS THAT ARE NOT “QUALIFIED PURCHASERS” WITHIN THE MEANING OF SECTION 3(C)(7) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”), AND AS SUCH TERM IS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY ACT, (II) BE MADE TO A PROPOSED TRANSFEREE WHO IS A “BENEFIT PLAN INVESTOR” AS DEFINED IN SECTION 3(42) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), (III) RESULT IN THE COMPANY’S OR CT LEGACY REIT MEZZ BORROWER, INC’S ASSETS BEING DEEMED “PLAN ASSETS” FOR PURPOSES OF ERISA OR SECTION 4975 OF THE CODE (AS DEFINED IN THE OPERATING AGREEMENT), (IV) RESULT IN THE DISQUALIFICATION OF CT LEGACY REIT MEZZ BORROWER, INC. AS A REAL ESTATE INVESTMENT TRUST FOR PURPOSES OF THE CODE (AS DEFINED IN THE OPERATING AGREEMENT) OR OTHERWISE VIOLATE THE CHARTER OF CT LEGACY REIT MEZZ BORROWER, INC. OR (V) CAUSE THE LEGACY ASSET CONTRIBUTION TRANSACTION (AS DEFINED IN THE OPERATING AGREEMENT) TO FAIL TO QUALIFY FOR NON-RECOGNITION TREATMENT UNDER SECTION 351 OF THE CODE (AS DEFINED IN THE OPERATING AGREEMENT), SHALL, TO THE FULLEST EXTENT PERMITTED BY LAW, BE VOID AB INITIO AND THE INTENDED TRANSFEREE SHALL ACQUIRE NO RIGHTS IN SUCH UNITS.

 

THE UNITS REPRESENTED BY THIS CERTIFICATE AND THE SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS AND AGREEMENTS CONTAINED IN THAT CERTAIN UNIT RIGHT OF FIRST OFFER AGREEMENT, BY AND AMONG CAPITAL TRUST, INC. AND CERTAIN OF THE MEMBERS OF THE COMPANY. A COPY OF SUCH AGREEMENT WILL BE FURNISHED BY THE COMPANY TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.

 

	
Certificate Number _____ 

	 	 	
_____ Class __ Units

 

CT LEGACY REIT HOLDINGS, LLC, a Delaware limited liability company (the “Company”), hereby certifies that ______________________ (together with any permitted assignee of this Certificate, the “Holder”) is the registered owner of ______ Class __ Units in the Company (the “Units”).  The rights, powers, preferences, restrictions and limitations of the Units are set forth in, and this Unit Certificate and the Units represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Limited Liability Company Operating Agreement of the Company dated as of March __, 2011, as the same may be amended or restated from time to time (the “Operating Agreement”).  By acceptance of this Unit Certificate, and as a condition to being entitled to any rights and/or benefits with respect to the Units evidenced hereby, the Holder is deemed to have agreed to comply with and be bound by all the terms and conditions of the Operating Agreement and to be admitted to the Company as a member of the Company, as of the date hereof.  The Company will furnish a copy of the Operating Agreement to the Holder without charge upon written request to the Company at its principal place of business.  The Company maintains books for the purpose of registering the transfer of Units.

 

  

  

  

 

Each Unit shall constitute a “security” within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware, and (ii) Article 8 of the Uniform Commercial Code of any other applicable jurisdiction that now or hereafter substantially includes the 1994 revisions to Article 8 thereof as adopted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws and approved by the American Bar Association on February 14, 1995.

 

This Unit Certificate shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws.

 

  

  

  

 

IN WITNESS WHEREOF, the Company has caused this Certificate to be executed as of the date set forth below.

 

 

	 	
CT LEGACY REIT HOLDINGS, LLC

 

By: CT Legacy Manager, LLC, its manager

	 	 	 	 
	 	 	 	 
	
Dated: 

	 	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

  

  

 

 (REVERSE SIDE OF UNIT CERTIFICATE

FOR UNITS OF CT LEGACY REIT HOLDINGS, LLC)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _____________________________________________________ (print or typewrite name of Transferee), __________________ (insert Social Security or other taxpayer identification number of Transferee), the following specified number of Units: _____ Class __ Units (identify the number and class of Units being Transferred) effective as of the date specified below, and irrevocably constitutes and appoints __________________________ and its authorized officers, as attorney-in-fact, to transfer the same on the books and records of the Company, with full power of substitution in the premises.

 

	
Dated: 

	 	
 

	

Signature: 

	 	 
	 	 	 	 	 	 
	 	 	 	
(Transferor)

	 
	 	 	 	
Address: 

	 	 
	 	 	 	 	 	 

 

  

  

  

 

EXHIBIT E-2

 

FORM OF LLC AGREEMENT OF CT SERIES 1 NOTE ISSUER

 

LIMITED LIABILITY COMPANY AGREEMENT

OF

CT LEGACY SERIES 1 NOTE ISSUER, LLC

This Limited Liability Company Agreement (together with the schedules attached hereto, this “Agreement”) of CT Legacy Series 1 Note Issuer, LLC (the “Company”), is entered into by CT Legacy Holdings, LLC, as the sole equity member (the “Member”), and Kathryn A. Widdoes (“Springing Member 1”), as Independent Manager and as a Springing Member, and Geoffrey G. Jervis (“Springing Member 2”), as a Springing Member (each as defined on Schedule A hereto).  Capitalized terms used and not otherwise defined herein have the meanings set forth on Schedule A hereto.

The Member, by execution of this Agreement, hereby forms the Company as a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act (6 Del. C. §18-101 et seq.), as amended from time to time (the “Act”), and this Agreement, and the Member, the Independent Manager and Springing Member 1 and Springing Member 2 hereby agree as follows:

Section 1.                      Name.

The name of the limited liability company formed hereby is CT Legacy Series 1 Note Issuer, LLC.

Section 2.                      Principal Business Office.

The principal business office of the Company shall be located at c/o Capital Trust, Inc., 410 Park Avenue, New York, NY 10022 or such other location as may hereafter be determined by the Member.

Section 3.                      Registered Office.

The address of the registered office of the Company in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, New Castle County, Wilmington, Delaware 19801.  At any time, the Member may designate another registered office for the Company.

Section 4.                      Registered Agent.

The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, New Castle County, Wilmington, Delaware 19801.  At any time, the Member may designate another registered agent for the Company.

 

  

E-II-1

  

 

Section 5.                      Members.

(a)           The mailing address of the Member is set forth on Schedule B attached hereto.  The Member was admitted to the Company as a member of the Company upon its execution of a counterpart signature page to this Agreement.

(b)           Subject to Section 9(j), the Member may act by written consent.

(c)           Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon (i) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to Sections 20 and 22, or (ii) the resignation of the Member and the admission of an additional member of the Company pursuant to Sections 21 and 22) (a “Member Cessation Event”), Springing Member 1 shall, without any action of any Person and simultaneously with the Member Cessation Event, automatically be admitted to the Company as a Special Member and shall continue the Company without dissolution.  If, however, at the time of a Member Cessation Event, Springing Member 1 has died or is otherwise no longer able to step into the role of Special Member, then in such event, Springing Member 2 shall, concurrently with the Member Cessation Event, and without any action of any Person and simultaneously with the Member Cessation Event, automatically be admitted to the Company as Special Member and shall continue the Company without dissolution.  It is the intent of these provisions that the Company never have more than one Special Member at any particular point in time.  No Special Member may resign from the Company or transfer its rights as Special Member unless a successor Special Member has been admitted to the Company as Special Member by executing a counterpart to this Agreement.  The Special Member shall automatically cease to be a member of the Company upon the admission to the Company of a substitute Member.  The Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of Company assets.  Pursuant to Section 18-301 of the Act, a Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company.  A Special Member, in its capacity as Special Member, may not bind the Company.  Except as required by any mandatory provision of the Act, a Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including, without limitation, the merger, consolidation or conversion of the Company.  In order to implement the admission to the Company of the Special Member, each of Springing Member 1 and Springing Member 2 shall execute a counterpart to this Agreement.  Prior to its admission to the Company as Special Member, each person acting as a Springing Member 1 or Springing Member 2 shall not be a member of the Company.

 

  

E-II-2

  

 

(d)           The Company shall at all times have a Springing Member 1 and a Springing Member 2.  No resignation or removal of a Springing Member, and no appointment of a successor Springing Member, shall be effective unless and until such successor shall have executed a counterpart to this Agreement and, should the resigning or removed Springing Member also serve as the Independent Manager, accepted its appointment as Independent Manager pursuant to Section 10.  In the event of a vacancy in the position of Springing Member 1 or Springing Member 2, the Member shall, as soon as practicable, appoint a successor Springing Member to fill such vacancy.  By signing this Agreement, a Springing Member agrees that, should such Springing Member become a Special Member, such Springing Member will be subject to and bound by the provisions of this Agreement applicable to a Special Member.

Section 6.                      Certificates.

Keith M. Wixson is hereby designated as an “authorized person” within the meaning of the Act, and has executed, delivered and filed the Certificate of Formation of the Company with the Secretary of State of the State of Delaware, which filing is hereby ratified and approved.  The Member and each Officer is hereby designated as an “authorized person” of the Company within the meaning of the Act and shall continue as a designated “authorized person” of the Company within the meaning of the Act.  The Member or an Officer shall execute, deliver and file, or cause to be executed, delivered, and filed, any other certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in any jurisdiction in which the Company may wish to conduct business.

The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation as provided in the Act.

Section 7.                      Purposes.

(a)           Notwithstanding anything to the contrary in this Agreement or in any other document governing the formation, management or operation of the Company, the sole purpose to be conducted or promoted by the Company is to engage in the following activities:

	
  

	
(i)

	
to, acquire, own, hold, lease, operate, manage, maintain, develop, improve, sell, transfer, service, convey, dispose of, pledge, assign, borrow money against, finance, refinance or otherwise deal with the assets described on Schedule C hereto (the “Assets”); and

	
  

	
(ii)

	
to enter into and perform its obligations under the Basic Documents; and

	
  

	
(iii)

	
to engage in any lawful act or activity and to exercise any powers permitted to limited liability companies organized under the laws of the State of Delaware that are related or incidental to and necessary, convenient or advisable for the accomplishment of the above-mentioned purposes.

(b)           The Company, and the Member, or any Manager or Officer on behalf of the Company, may enter into and perform their obligations under the Basic Documents and all documents, agreements, certificates, or financing statements contemplated thereby or related thereto and any amendments thereto, all without any further act, vote or approval of any Member, Manager, Officer or other Person notwithstanding any other provision of this Agreement (including, without limitation, Sections 9(j)(iv) and 9(j)(v)), the Act or applicable law, rule or regulation.  The foregoing authorization shall not be deemed a restriction on the powers of the Member or any Manager or Officer to enter into other agreements on behalf of the Company.

 

  

E-II-3

  

 

Section 8.                      Powers.

Subject to Section 9(j), the Company, and the Board of Managers and the Officers of the Company on behalf of the Company, (i) shall have and exercise all powers necessary, convenient or incidental to accomplish its purposes as set forth in Section 7 and (ii) shall have and exercise all of the powers and rights conferred upon limited liability companies formed pursuant to the Act.

Section 9.                      Management.

(a)           Board of Managers.  Subject to Section 9(j), the business and affairs of the Company shall be managed by or under the direction of a Board of Managers designated by the Member.  Subject to Section 10, the Member may determine at any time in its sole and absolute discretion the number of Managers to constitute the Board.  The authorized number of Managers may be increased or decreased by the Member at any time in its sole and absolute discretion, upon notice to all Managers, and subject in all cases to Section 10.  The initial number of Managers shall be four, one of which shall be an Independent Manager pursuant to Section 10.  Each Manager elected, designated or appointed by the Member shall hold office until a successor is elected and qualified or until such Manager’s earlier death, resignation, expulsion or removal.  Each Manager shall execute and deliver the Management Agreement.  Managers need not be a Member.  The initial Managers designated by the Member are listed on Schedule E hereto.

(b)           Powers.  Subject to Section 9(j), the Board of Managers shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes described herein, including all powers, statutory or otherwise.  Subject to Sections 7 and 9, the Board of Managers has the authority to bind the Company.

(c)           Meeting of the Board of Managers.  The Board of Managers of the Company may hold meetings, both regular and special, within or outside the State of Delaware.  Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.  Special meetings of the Board may be called by the President on not less than one day’s notice to each Manager by telephone, facsimile, mail, telegram or any other means of communication, and special meetings shall be called by the President or Secretary in like manner and with like notice upon the written request of any one or more of the Managers.

(d)           Quorum:  Acts of the Board.  At all meetings of the Board, a majority of the Managers shall constitute a quorum for the transaction of business and, except as otherwise provided in any other provision of this Agreement, the act of a majority of the Managers present at any meeting at which there is a quorum shall be the act of the Board.  If a quorum shall not be present at any meeting of the Board, the Managers present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.  Except as otherwise provided in any other provision of this Agreement, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if a majority of the Managers or committee members, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee, as the case may be.

 

  

E-II-4

  

 

(e)           Electronic Communications.  Members of the Board, or any committee designated by the Board, may participate in meetings of the Board, or any committee, by means of telephone conference or similar communications equipment that allows all Persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in Person at the meeting.  If all the participants are participating by telephone conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company.

(f)           Committees of Managers.

	
  

	
(i)

	
The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the Managers of the Company.  The Board may designate one or more Managers as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

	
  

	
(ii)

	
In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member.

	
  

	
(iii)

	
Any such committee, to the extent provided in the resolution of the Board, and subject to, in all cases, Sections 9(j) and 10, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company.  Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board.  Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

(g)           Compensation of Managers; Expenses.  Except as specifically provided for herein, none of the Managers shall be entitled to receive any salary or other compensation from the Company in exchange for such Person’s provision of any services to the Company pursuant to this Agreement; provided that the Managers may be paid their expenses, if any, of attendance at meetings of the Board.  Notwithstanding the foregoing, the Independent Manager may be paid certain compensation by the Company as provided for in a separate agreement with C T Corporation Staffing, Inc., a Delaware corporation.

 

  

E-II-5

  

 

(h)           Removal of Managers.  Unless otherwise restricted by law and subject to Section 10, any Manager or the entire Board of Managers may be removed or expelled, with or without cause, at any time by the Member, and, subject to Section 10, any vacancy caused by any such removal or expulsion may be filled by action of the Member.

(i)           Managers as Agents.  To the extent of their powers set forth in this Agreement and subject to Section 9(j), the Managers are agents of the Company for the purpose of the Company's business, and the actions of the Managers taken in accordance with such powers set forth in this Agreement shall bind the Company.  Notwithstanding the last sentence of Section 18-402 of the Act, except as provided in this Agreement or in a resolution of the Managers, a Manager may not bind the Company.

	
  

	
(j)

	
Limitations on the Company’s Activities.

	
  

	
(i)

	
This Section 9(j) is being adopted to comply with certain provisions necessary to qualify the Company as a Special Purpose Entity.

	
  

	
(ii)

	
Notwithstanding anything to the contrary in this Agreement or in any other document governing the formation, management or operation of the Company, for so long as any Obligation is outstanding, neither the Member nor the Company shall amend, alter, change any of Sections 1, 5(b), 5(c), 5(d), 6, 7, 8, 9, 10, 11, 12, 14, 16, 19(b), 19(f), 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31 or 32 or Schedule A of this Agreement (to the extent that the terms defined in Schedule A are used in any of the foregoing sections) (collectively, the “Special Purpose Provisions”), or any other provision of this or any other document governing the formation, management or operation of the Company in a manner that is inconsistent with any of the Special Purpose Provisions, unless each of the Holders consent in writing.  Subject to this Section 9(j), the Member reserves the right to amend, alter, change or repeal any provisions contained in this Agreement in accordance with Section 31.  In the event of any conflict between any of the Special Purpose Provisions and any other provision of this or any other document governing the formation, management or operation of the Company, the Special Purpose Provisions shall control.

	
  

	
(iii)

	
Notwithstanding any other provision of this Agreement or any other document governing the formation, management or operation of the Company, and notwithstanding any provision of law that otherwise so empowers the Company the Member, the Board, any Officer or any other Person, so long as any Obligation is outstanding, neither the Member nor the Board nor any Officer nor any other Person shall be authorized or empowered, nor shall they authorize or permit the Company to, and the Company shall not, without the prior unanimous written consent of the Member and the Board (including the Independent Manager), take any Material Action, provided, further, that, so long as any Obligation is outstanding, the Board may not vote on, or authorize the taking of, any Material Action unless there is at least one Independent Manager then serving in such capacity and the Independent Manager consents thereto.

 

  

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(iv)

	
The Board and the Member shall cause the Company to do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises.  Notwithstanding anything to the contrary in this Agreement or in any other document governing the formation, management or operation of the Company, the Board also shall cause the Company to and the Company shall:

	
  

	
(A)

	
maintain its books, records and bank accounts separate from those of any other Person;

	
  

	
(B)

	
at all times hold itself out to the public and all other Persons as a legal entity separate from the Member and from any other Person;

	
  

	
(C)

	
have its own Board of Managers;

	
  

	
(D)

	
file its own tax returns separate from those of any other Person, except to the extent that the Company is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law, and pay any taxes required to be paid under applicable law; provided that the Company shall be permitted to file a consolidated tax return;

	
  

	
(E)

	
hold its assets in its own name and not commingle its assets with the assets of any other Person;

	
  

	
(F)

	
conduct its business only in its own name and comply with all organizational formalities necessary to maintain its separate existence;

	
  

	
(G)

	
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 Company’s assets may be included in a consolidated financial statement of its Affiliate provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Company from such Affiliate and to indicate that the Company’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person and (ii) such assets shall also be listed on the Company’s own separate balance sheet;

 

  

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(H)

	
pay its own liabilities and expenses only out of its own funds; provided, however, the foregoing shall not require the Member to make any additional capital contributions to the Company;

	
  

	
(I)

	
except for capital contributions or capital distributions permitted under the terms and conditions of this Agreement and properly reflected on the books and records of the Company, not enter into any transaction with an Affiliate of the Company except on terms that are commercially reasonable and substantially similar to those that would be available to unaffiliated parties in an arm’s-length transaction;

	
  

	
(J)

	
maintain a sufficient number of employees in light of its contemplated business purpose and pay the salaries of its own employees, if any, only from its own funds; provided however, the foregoing shall not require the Member to make any additional capital contributions to the Company;

	
  

	
(K)

	
not hold out its credit or assets as being available to satisfy the obligations of any other Person, except as otherwise provided by the Transaction Documents;

	
  

	
(L)

	
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;

	
  

	
(M)

	
use separate stationery, invoices and checks bearing its own name;

	
  

	
(N)

	
correct any known misunderstanding regarding its separate identity and not identify itself as a department or division of any other Person;

	
  

	
(O)

	
conduct its business in its own name so as not to mislead others as to its identity;

	
  

	
(P)

	
maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; provided, however, that the foregoing shall not require the Member to make additional capital contributions to the Company;

	
  

	
(Q)

	
cause its Board of Managers to meet at least annually or act pursuant to written consent and keep minutes of such meetings and actions and observe all other Delaware limited liability company formalities;

 

  

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(R)

	
except for the Assets, not acquire any obligation or securities of the Member or of any Affiliate of the Company;

	
  

	
(S)

	
maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;

	
  

	
(T)

	
maintain its existence in good standing under the applicable jurisdiction of its formation;

	
  

	
(U)

	
enter into any contract or agreement with any general partner, member, shareholder, principal, guarantor of the obligations of the Company, or any Affiliate of the foregoing, as the case may be, except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties; and

	
  

	
(V)

	
cause the Managers, Officers, agents and other representatives of the Company to act at all times with respect to the Company consistently and in furtherance of the foregoing and in the best interests of the Company.

Failure of the Company, or the Member or Board on behalf of the Company, to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of the Company as a separate legal entity or the limited liability of the Member or the Managers.

 

	
  

	
(v)

	
Notwithstanding anything to the contrary in this Agreement or in any other document governing the formation, management or operation of the Company, the Board shall not cause or permit the Company to and the Company shall not:

	
  

	
(A)

	
guarantee any obligation of any Person, including any Affiliate or become obligated for the debts of any other Person or hold out its credit as being available to pay the obligations of any other Person, other than pursuant to the Transaction Documents;

	
  

	
(B)

	
engage, directly or indirectly, in any business other than as required or permitted to be performed under Section 7, the Basic Documents or this Section 9(j);

	
  

	
(C)

	
incur, create or assume any indebtedness or liabilities other than indebtedness and liabilities incurred in the ordinary course of its business that are related to the ownership and operation of the Assets and are expressly permitted under the Transaction Documents;

 

  

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(D)

	
make or permit to remain outstanding any loan or advance to, or own or acquire any stock or securities of, any Person, except that the Company may own and acquire the Assets and invest in those investments permitted under the Transaction Documents;

	
  

	
(E)

	
to the fullest extent permitted by law, engage in any dissolution, liquidation, consolidation, merger, sale or other transfer of any of its assets outside the ordinary course of the Company’s business other than such activities as are expressly permitted pursuant to the Transaction Documents;

	
  

	
(F) 

	
buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities or as otherwise permitted under the Transaction Documents);

	
  

	
(G)

	
except for REIT Holdings (as defined in Schedule C) form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any entity other than REIT Holdings; or

 

	
  

	
(H)

	
except as permitted under the Transaction Documents, own any asset or property other than the Assets, cash generated from the repayment or other disposition of the Assets, and incidental personal property necessary for the ownership or operation of the Assets.

Section 10.                      Independent Manager.

(a)           Duties.  As long as any Obligation is outstanding, the Member shall cause the Company at all times to have at least one Independent Manager who will be appointed by the Member.  To the fullest extent permitted by law, including Section 18-1101(c) of the Act, and notwithstanding any duty otherwise existing at law or in equity, the Independent Manager shall consider only the interests of the Company, including its respective creditors, in acting or otherwise voting on the matters referred to in Section 9(j)(iii).  Except for duties to the Company as set forth in the immediately preceding sentence (including duties to the Member and the Company’s creditors solely to the extent of their respective economic interests in the Company but excluding (i) all other interests of the Member, (ii) the interests of other Affiliates of the Company, and (iii) the interests of any group of Affiliates of which the Company is a part), the Independent Manager shall not have any fiduciary duties to the Member, any Officer or any other Person bound by this Agreement; provided, however, the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing.  To the fullest extent permitted by law, including Section 18-1101(e) of the Act, the Independent Manager shall not be liable to the Company, the Member or any other Person bound by this Agreement for breach of contract or breach of duties (including fiduciary duties), unless the Independent Manager acted in bad faith or engaged in willful misconduct.  All right, power and authority of the Independent Manager shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this Agreement.  Notwithstanding any other provision of this Agreement to the contrary, the Independent Manager, in its capacity as Independent Manager, may only act, vote or otherwise participate in those matters referred to in Section 9(j)(iii) or as otherwise specifically required by this Agreement.  The Independent Manager shall not at any time serve as trustee in bankruptcy of any Affiliate of the Company.

 

  

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(b)           Removal.  Subject to the other provisions of this Section 10, the Independent Manager may be removed by the Member only for Cause.  No resignation or removal of the Independent Manager permitted by the preceding sentence shall be effective until (1) the Company has provided the Holders with five (5) business days’ prior written notice of such resignation or removal, and (2) a successor Independent Manager is appointed and such successor shall have accepted his or her appointment as an Independent Manager by a written instrument, which may be a counterpart signature page to the Management Agreement.  In the event of a vacancy in the position of Independent Manager, the Member shall, as soon as practicable, appoint a successor Independent Manager.

Section 11.                      Officers.

 

(a)           Officers.  The initial Officers of the Company shall be designated by the Member.  The additional or successor Officers of the Company shall be chosen by the Board and shall consist of at least a President, a Secretary and a Treasurer.  The Board of Managers may also choose one or more Vice Presidents, Directors, Assistant Secretaries and Assistant Treasurers.  Any number of offices may be held by the same person.  The Board may appoint such other Officers and agents and assign any titles to such Officers and agents as it shall deem necessary or advisable who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.  The salaries of all Officers and agents of the Company shall be fixed by or in the manner prescribed by the Board.  The Officers of the Company shall hold office until their successors are chosen and qualified.  Any Officer may be removed at any time, with or without cause, by the affirmative vote of a majority of the Board.  Any vacancy occurring in any office of the Company shall be filled by the Board.  The initial Officers of the Company designated by the Member are listed on Schedule F hereto.

(b)           President.  The President shall be the chief executive officer of the Company, shall preside at all meetings of the Board, shall be responsible for the general and active management of the business of the Company at the direction of the Board and shall see that all orders and resolutions of the Board are carried into effect.  The President or any other Officer authorized by the President or the Board shall execute all bonds, mortgages and other contracts approved by the Board, except:  (i) where required or permitted by law or this Agreement to be otherwise signed and executed, including Section 7(b); (ii) where signing and execution thereof shall be expressly delegated by the Board to some other Officer or agent of the Company, and (iii) as otherwise permitted in Section 11(c).

 

  

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(c)           Vice President.  In the absence of the President or in the event of the President's inability to act, the Vice President, if any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Managers, or in the absence of any designation, then in the order of their election), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President.  The Vice Presidents, if any, shall perform such other duties and have such other powers as the Board may from time to time prescribe.

(d)           Secretary and Assistant Secretary.  The Secretary shall be responsible for filing legal documents and maintaining records for the Company.  The Secretary shall attend all meetings of the Board and record all the proceedings of the meetings of the Company and of the Board in a book to be kept for that purpose and shall perform like duties for the standing committees when required.  The Secretary shall give, or shall cause to be given, notice of all meetings of the Member, if any, and special meetings of the Board, and shall perform such other duties as may be prescribed by the Board or the President, under whose supervision the Secretary shall serve.  The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board (or if there be no such determination, then in order of their election), shall, in the absence of the Secretary or in the event of the Secretary's inability to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board may from time to time prescribe.

(e)           Treasurer and Assistant Treasurer.  The Treasurer shall have the custody of the Company funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board.  The Treasurer shall disburse the funds of the Company as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President and to the Board, at its regular meetings or when the Board so requires, an account of all of the Treasurer's transactions and of the financial condition of the Company.  The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of the Treasurer's inability to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board may from time to time prescribe.

(f)           Officers as Agents.  The Officers, to the extent of their powers set forth in this Agreement or otherwise vested in them by action of the Board not inconsistent with this Agreement, are agents of the Company for the purpose of the Company’s business and, subject to Section 9(j) and this Section 11, the actions of the Officers taken in accordance with such powers shall bind the Company.

(g)           Duties of Board and Officers.  Except to the extent otherwise modified herein (including, without limitation, in Section 10), each Manager and Officer shall have fiduciary duties identical to those of directors and officers of business corporations organized under the General Corporation Law of the State of Delaware.

 

  

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Section 12.                      Limited Liability.

Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and neither the Member nor the Special Member nor any Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member, Special Member or Manager of the Company.

Section 13.                      Capital Contributions.

The Member has contributed to the Company the Assets.  In accordance with Section 5(c), the Special Member shall not be required to make any capital contributions to the Company.

Section 14.                      Additional Contributions.

The Member is not required to make any additional capital contribution to the Company. However, the Member may make additional capital contributions to the Company at any time upon the written consent of such Member.  To the extent that the Member makes an additional capital contribution to the Company, the Member shall revise Schedule B of this Agreement.  The Member and the Special Member shall not have any duty or obligation to any creditor of the Company to make any contribution to the Company or to issue any call for capital pursuant to this Agreement.

Section 15.                      Allocation of Profits and Losses.

The Company’s profits and losses shall be allocated to the Member.

Section 16.                      Distributions.

Distributions shall be made to the Member at the times and in the aggregate amounts determined by the Board.  Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to the Member on account of its interest in the Company if such distribution would violate Section 18-607 of the Act or any other applicable law or the terms of any Basic Document or would constitute a default under the Transaction Documents.

Section 17.                      Books and Records.

The Board shall keep or cause to be kept complete and accurate books of account and records with respect to the Company’s business.  The books of the Company shall at all times be maintained by the Board.  The Member and its duly authorized representatives shall have the right to examine the Company books, records and documents during normal business hours.  The Company, and the Board on behalf of the Company, shall not have the right to keep confidential from the Member any information that the Board would otherwise be permitted to keep confidential from the Member pursuant to Section 18-305(c) of the Act.  The Company’s books of account shall be kept using the method of accounting determined by the Member.  The Company’s independent auditor, if any, shall be an independent public accounting firm selected by the Member.

 

  

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Section 18.                      Other Business.

The Member, the Special Member, the Managers, the Officers and any Affiliate of the foregoing may engage in or possess an interest in other business ventures (unconnected with the Company) of every kind and description, independently or with others notwithstanding any duty otherwise existing at law or at equity.  The Company shall not have any rights in or to such independent ventures or the income or profits therefrom by virtue of this Agreement.  The foregoing rights of the Member and its Affiliates shall be subject to any restrictions thereon set forth in the Transaction Documents.

Section 19.                      Exculpation and Indemnification.

(a)           None of the Member, the Special Member or the Independent Manager nor any Officer, Manager, employee or agent of the Company nor any employee, representative, agent or Affiliate of the Member, the Special Member or the Independent Manager (collectively, the “Covered Persons”) shall, to the fullest extent permitted by law, be liable to the Company or any other Person that is a party to or is otherwise bound by this Agreement, for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person’s bad faith or willful misconduct.

(b)           To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement, except that no Covered Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Covered Person by reason of such Covered Person’s bad faith or willful misconduct with respect to such acts or omissions; provided, however, that any indemnity under this Section 19 by the Company shall be provided out of and to the extent of Company assets only, and the Member, the Special Member and the Springing Members shall not have personal liability on account thereof; and provided further, that so long as any Obligation is outstanding, no indemnity payment from funds of the Company (as distinct from funds from other sources, such as insurance) of any indemnity under this Section 19 shall be payable from amounts allocable to any other Person pursuant to the Basic Documents.

(c)           To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Covered Person defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in this Section 19.

 

  

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(d)           A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts pertinent to the existence and amount of assets from which distributions to the Member might properly be paid.

(e)           To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any other Covered Person, a Covered Person acting under this Agreement shall not be liable to the Company or to any other Covered Person for its good faith reliance on the provisions of this Agreement or any approval or authorization granted by the Company or any other Covered Person.  The provisions of this Agreement, to the extent that they restrict or eliminate the duties and liabilities of a Covered Person to the Company or its members otherwise existing at law or in equity, are agreed by the Member, the Managers, the Springing Members and the Special Member to replace such other duties and liabilities of such Covered Person.

(f)           Notwithstanding the foregoing provisions, any indemnification set forth herein shall be fully subordinate to the Obligations and, to the fullest extent permitted by law, shall not constitute a claim against the Company in the event that the Company’s cash flow is insufficient to pay its Obligations.

(g)           The foregoing provisions of this Section 19 shall survive any termination of this Agreement.

Section 20.                      Assignments.

 

(a)           Subject to Section 22 and, so long as any Obligation is outstanding, any transfer restrictions contained in the Transaction Documents, the Member may assign in whole or part its limited liability company interest in the Company.  Subject to Section 22, the transferee of a limited liability company interest in the Company shall be admitted to the Company as a member of the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement.  If the Member transfers all of its limited liability company interest in the Company pursuant to this Section 20, such admission shall be deemed effective immediately prior to the transfer and, immediately following such admission, the transferor Member shall cease to be a member of the Company.  Notwithstanding anything in this Agreement to the contrary, any successor to a Member by merger or consolidation in compliance with the Basic Documents shall, without further act, be the Member hereunder, and such merger or consolidation shall not constitute an assignment for purposes of this Agreement and the Company shall continue without dissolution.

 

  

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(b)           Notwithstanding anything to the contrary contained in this Agreement for so long as any Obligation remains outstanding, the Company shall always have one and only one Member.

Section 21.                      Resignation.

So long as any Obligation is outstanding, the Member may not resign, except as permitted under the Basic Documents and with the consent in writing of each Holder and if an additional Member is admitted to the Company pursuant to Section 22.  If the Member is permitted to resign pursuant to this Section 21, an additional member of the Company shall be admitted to the Company, subject to Section 22, upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement.  Such admission shall be deemed effective immediately prior to the resignation and, immediately following such admission, the resigning Member shall cease to be a member of the Company.

Section 22.                      Admission of Additional Members.

One or more additional Members of the Company may be admitted to the Company with the written consent of the Member; provided, however, that, for so long as the Obligations remain outstanding, notwithstanding the foregoing, no additional Member may be admitted to the Company pursuant to Sections 20, 21 or 22, other than pursuant to Section 23(a) or Section 5(c), except as may be expressly provided otherwise in the Transaction Documents.

Section 23.                      Dissolution.

(a)           The Company shall be dissolved, and its affairs shall be wound up upon the first to occur of the following: (i) the termination of the legal existence of the last remaining member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining member of the Company in the Company unless the Company is continued without dissolution in a manner required under Section 5(c) or this Section 23(a) or otherwise permitted by this Agreement or the Act or (ii) the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act.  Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company or that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon (i) an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to Sections 20 and 22, or (ii) the resignation of the Member and the admission of an additional member of the Company pursuant to Sections 21 and 22), to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within 90 days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining member of the Company or the Member in the Company.

 

  

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(b)           Notwithstanding any other provision of this Agreement, the Bankruptcy of the Member or a Special Member or any additional member shall not cause the Member or Special Member or additional member, respectively, to cease to be a member of the Company and upon the occurrence of such an event, the Company shall continue without dissolution.

(c)           Notwithstanding any other provision of this Agreement, each of the Member, the Special Member and any additional member waive any right it might have to agree in writing to dissolve the Company upon the Bankruptcy of the Member, Special Member or additional member, or the occurrence of an event that causes the Member, Special Member or additional member to cease to be a member of the Company.

(d)           In the event of dissolution, the Company shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of the Company in an orderly manner), and the assets of the Company shall be applied in the manner, and in the order of priority, set forth in Section 18-804 of the Act.

(e)           The Company shall terminate when (i) all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company shall have been distributed to the Member in the manner provided for in this Agreement and (ii) the Certificate of Formation shall have been canceled in the manner required by the Act.

Section 24.                      Waiver of Partition; Nature of Interest.

 

Except as otherwise expressly provided in this Agreement, to the fullest extent permitted by law, each of the Member, the Special Member, the Springing Members, and any additional member admitted to the Company hereby irrevocably waives any right or power that such Person might have (a) to cause the Company or any of its assets to be partitioned, and (b) except as expressly provided otherwise in Section 9(j)(iii) of this Agreement, to cause the appointment of a receiver for all or any portion of the assets of the Company, to compel any sale of all or any portion of the assets of the Company pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of the Company.  The Member shall not have any interest in any specific assets of the Company, and the Member shall not have the status of a creditor with respect to any distribution pursuant to Section 16 hereof.  The interest of the Member in the Company is personal property.

Section 25.                      Tax Status.

It is intended that the Company shall be a disregarded entity for federal, state, and local income tax purposes.

 

  

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Section 26.                      Benefits of Agreement; No Third-Party Rights.

Except for the Holders, their successors or assigns with respect to the Special Purpose Provisions (for so long as any Obligation is outstanding), (1) none of the provisions of this Agreement shall be for the benefit of or enforceable by any creditor of the Company or by any creditor of the Member or a Special Member, and (2) nothing in this Agreement shall be deemed to create any right in any Person (other than Covered Persons) not a party hereto, and this Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third Person (other than Covered Persons), except as provided in Section 29.  So long as any Obligation is outstanding, the Holders and their successors or assigns are intended third-party beneficiaries of this Agreement and may enforce the Special Purpose Provisions.

Section 27.                      Severability of Provisions.

Each provision of this Agreement shall be considered severable and if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality shall not impair the operation of or affect those portions of this Agreement which are valid, enforceable and legal.

Section 28.                      Entire Agreement.

This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof.

Section 29.                      Binding Agreement.

The Member agrees that this Agreement, including, without limitation, the Special Purpose Provisions, constitutes a legal, valid and binding agreement of the Member, and is enforceable against the Member by the Independent Manager, in accordance with its terms.  In addition, the Independent Manager shall be intended beneficiaries of this Agreement.

Section 30.                      Governing Law.

This Agreement shall be governed by and construed under the laws of the State of Delaware (without regard to conflict of laws principles), all rights and remedies being governed by said laws.

Section 31.                      Amendments.

Subject to Section 9(j), this Agreement may be modified, altered, supplemented or amended pursuant to a written agreement executed and delivered by the Member.  Notwithstanding anything to the contrary in this Agreement, so long as any Obligation is outstanding, this Agreement may not be modified, altered, supplemented or amended unless the Holders consent in writing except:  (i) to cure any ambiguity or (ii) to convert or supplement any provision in a manner consistent with the intent of this Agreement and the other Basic Documents.

 

  

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Section 32.                      Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Agreement and all of which together shall constitute one and the same instrument.

Section 33.                      Notices.

Any notices required to be delivered hereunder shall be in writing and personally delivered, mailed or sent by telecopy, electronic mail or other similar form of rapid transmission, and shall be deemed to have been duly given upon receipt (a) in the case of the Company, to the Company at its address in Section 2, (b) in the case of the Member, to the Member at its address as listed on Schedule B attached hereto and (c) in the case of either of the foregoing, at such other address as may be designated by written notice to the other party.

Section 34.                      Effectiveness.

Pursuant to Section 18-201 (d) of the Act, this Agreement shall be effective as of the time of the filing of the Certificate of Formation with the Office of the Delaware Secretary of State on March 11, 2011.

[SIGNATURE PAGE FOLLOWS]

 

  

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Limited Liability Company Agreement as of the ___ day of March, 2011.

	 	
MEMBER:

 

CT Legacy Holdings, LLC

 

By: Capital Trust, Inc., as member

	 	 	 	 
	
 

	

By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
SPRINGING MEMBERS/INDEPENDENT MANAGER:

	 	 	 	 
	 	 	 	 
	 	 	 
	 	
Name: Kathryn A. Widdoes

Springing Member 1/Independent Manager

	 
	 	 	 	 
	 	 	 	 
	 	 	 
	 	
Name: Geoffrey J. Jervis

Springing Member 2

	 
	 	 	 	 

 

 

 [Signature Page to Limited Liability Company Operating Agreement of CT Legacy Series 1 Note Issuer, LLC]

 

  

  

  

 

SCHEDULE A

Definitions

A.           Definitions

When used in this Agreement, the following terms not otherwise defined herein have the following meanings:

“Act” has the meaning set forth in the preamble to this Agreement.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such Person or any Person who has a direct familial relationship, by blood, marriage or otherwise with the Company or any Affiliate of the Company.

“Agreement” means this Limited Liability Company Agreement of the Company, together with the schedules attached hereto, as amended, restated or supplemented or otherwise modified from time to time.

“Assets” shall have the meaning given thereto in Section 7(a) of this Agreement.

“Bankruptcy” means, with respect to any Person, (A) if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, or (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (B) if 120 days after the commencement of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, if the proceeding has not been dismissed, or if within 90 days after the appointment without such Person's consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated.  The foregoing definition of "Bankruptcy" is intended to replace and shall supersede and replace the definition of "Bankruptcy" set forth in Sections 18-101(1) and 18-304 of the Act.

“Basic Documents” means the Transaction Documents, the REIT Holdings LLC Agreement (as defined in Schedule C hereto), that certain exchange agreement, by and between the Member and the Company, and all documents and certificates contemplated thereby or delivered in connection therewith.

“Board” or “Board of Managers” means the Board of Managers of the Company.

 

  

  

  

 

“Cause” means, with respect to the Independent Manager, (i) acts or omissions by the Independent Manager that constitute willful disregard of, or bad faith or gross negligence with respect to, the Independent Manager’s duties under this Agreement, (ii) that the Independent Manager has engaged in or has been charged with, or has been convicted of, fraud or other acts constituting a felony under any law applicable to the Independent Manager, (iii) that the Independent Manager is unable to perform his or her duties as Independent Manager due to death, disability or incapacity, or (iv) that the Independent Manager no longer meets the definition of Independent Manager.

“Certificate of Formation” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware on March 11, 2011, as amended or amended and restated from time to time.

“Company” shall have the meaning set forth in the preamble to this Agreement.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities or general partnership or managing member interests, by contract or otherwise. “Controlling” and “Controlled” shall have correlative meanings.  Without limiting the generality of the foregoing, a Person shall be deemed to Control any other Person in which it owns, directly or indirectly, 49% or more of the ownership interests.

“Covered Persons” has the meaning set forth in Section 19(a).

“Holder” means each of the holders of the Notes.

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

 

(a)           a member (other than a special member or a springing member), partner, equity holder, manager, director, officer or employee of the Company, the Member, or any of their respective equity holders or Affiliates (other than as an Independent Manager of the Company or the Member, or an Independent Manager of an Affiliate of the Company that is not in the direct chain of ownership of the Company and that is required by a creditor to be a single purpose bankruptcy remote entity; provided that such Independent Manager is employed by a company that routinely provides professional independent managers or directors in the ordinary course of its business);

 

  

  

  

 

(b)           a creditor, supplier or service provider (including provider of professional services) to the Company, the Member or any of their respective equity holders or Affiliates (other than an Independent Manager provided by a nationally-recognized company that routinely provides professional independent managers and other corporate services to the Company, the Member or any of its Affiliates in the ordinary course of its 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 that Controls any of (a), (b) or (c) above.

 

A natural person who otherwise satisfies the foregoing definition other than subparagraph (a) by reason of being the independent manager of a “special purpose entity” affiliated with the Company shall be qualified to serve as an Independent Manager of the Company, provided that the fees that such individual earns from serving as independent manager of Affiliates of the Company in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year.

 

For purposes of this paragraph, a “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities and impose requirements intended to preserve such entity’s separateness that are substantially similar to the Special Purpose Provisions of this Agreement.

 

“Management Agreement” means the agreement of the Managers in the form attached hereto as Schedule D.  The Management Agreement shall be deemed incorporated into, and a part of, this Agreement.

“Managers” means the Persons elected to the Board of Managers from time to time by the Member, including the Independent Manager, in their capacity as managers of the Company.  A Manager is hereby designated as a “manager” of the Company within the meaning of Section 18-101(10) of the Act.

“Material Action” means to file any insolvency or reorganization case or proceeding, to institute proceedings to have the Company be adjudicated bankrupt or insolvent, to institute proceedings under any applicable insolvency law against the Company, to seek any relief for the Company under any law relating to relief from debts or the protection of debtors, to consent to the filing or institution of bankruptcy or insolvency proceedings against the Company, to file a voluntary bankruptcy petition or any other petition seeking, or consent to, reorganization or relief with respect to the Company under any applicable federal or state law relating to bankruptcy or insolvency, to seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for the Company or a substantial part of its property, to make any assignment for the benefit of creditors of the Company, to admit in writing the Company’s inability to pay its debts generally as they become due, or to take action in furtherance of any of the foregoing.

“Member” means CT Legacy Holdings, LLC, as the initial member of the Company, and includes any Person admitted as an additional member of the Company or a substitute member of the Company pursuant to the provisions of this Agreement, each in its capacity as a member of the Company; provided, however, the term “Member” shall not include the Special Member or the Springing Members.

 

  

  

  

 

“Member Cessation Event” shall have the meaning given thereto in Section 5(c) of this Agreement.

“Note” means each of those certain Series 1 Secured Notes, between the Company, as issuer, and the holder thereof, as amended from time to time.

“Obligations” shall mean the indebtedness, liabilities and obligations of the Company under or in connection with the Transaction Documents.

“Officer” means an officer of the Company described in Section 11.

“Person” means any individual, corporation, partnership, joint venture, limited liability company, limited liability partnership, association, joint stock company, trust, unincorporated organization, or other organization, whether or not a legal entity, and any governmental authority.

“Pledge Agreement” shall mean each of those certain Pledge and Security Agreements, among the Company, U.S. Bank, National Association, as collateral agent, and the Holder named therein, as amended from time to time.

“Special Member” means, upon such person’s admission to the Company as a member of the Company pursuant to Section 5(c), a person acting as either Springing Member 1 or Springing Member 2, in such person’s capacity as a member of the Company.  A Special Member shall only have the rights and duties expressly set forth in this Agreement.

“Special Purpose Entity” means an entity, whose organizational documents contain restrictions on its purpose and activities and impose requirements intended to preserve the separateness that are substantially similar to the Special Purpose Provisions of this Agreement.

“Special Purpose Provisions” shall have the meaning given thereto in Section 9(j) of this Agreement.

“Springing Member” means a Person who is not a member of the Company but who has signed this Agreement in order that, upon the conditions described in Section 5(c), such Person can become the Special Member without any delay in order that at all times the Company shall have at least one member.

“Springing Member 1” shall have the meaning set forth in the preamble to this Agreement.

“Springing Member 2” shall have the meaning set forth in the preamble to this Agreement.

 

  

  

  

 

“Transaction Documents” means (i) the Notes and any documents contemplated therein, each as amended from time to time, (ii) each of the Pledge Agreements and any documents contemplated therein, each as amended from time to time, (iii) that certain Exchange Agreement, between CT Legacy Holdings, LLC and the Company, as amended from time to time, (iv) that certain Exchange Agreement, among Capital Trust, Inc., CT Legacy Holdings, LLC, CT Legacy REIT Holdings, LLC, the Company, WestLB AG New York Branch, BNP Paribas, Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and Deutsche Bank Trust Company Americas, as amended from time to time, (v) any Unit Powers or similar documents to be entered into by the Company or any officer thereof for purposes of transferring Units (as defined in the REIT Holdings LLC Agreement), as amended from time to time, (vi) that certain Security and Control Agreement relating to the Dividends Account (as defined in the Pledge Agreement) among the Company, U.S. Bank, National Association, as deposit account bank, and U.S. Bank, National Association, as collateral agent, as amended from time to time, and (vii) that certain Security and Control Agreement relating to the Sales Proceeds Account (as defined in the Pledge Agreement) among the Company, U.S. Bank, National Association, as deposit account bank, and U.S. Bank, National Association, as collateral agent, as amended from time to time.

B.           Rules of Construction

Definitions in this Agreement apply equally to both the singular and plural forms of the defined terms.  The words “include” and “including” shall be deemed to be followed by the phrase “without limitation.”  The terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section, paragraph or subdivision.  The Section titles appear as a matter of convenience only and shall not affect the interpretation of this Agreement.  All Section, paragraph, clause, Exhibit or Schedule references not attributed to a particular document shall be references to such parts of this Agreement.

 

  

  

  

 

SCHEDULE B

Member

	
Name

	
Mailing Address

	
Capital Contribution

	
Limited Liability Company

Interest

	
CT Legacy Holdings, LLC

	
c/o Capital Trust, Inc., 410 Park Avenue, New York, NY 10022

	
Assets described on Schedule C

	
100%

 

  

  

  

 

SCHEDULE C

Assets

The 1,287,946 Class A-1 Units and the 437,500 Class A-2 Units (each as defined in the amended and restated limited liability company operating agreement of CT Legacy REIT Holdings, LLC, a Delaware limited liability company (“REIT Holdings”), as amended from time to time (the “REIT Holdings LLC Agreement”)), owned by the Company.

 

  

  

  

 

SCHEDULE D

Management Agreement

March 31, 2011

CT Legacy Series 1 Note Issuer, LLC

c/o Capital Trust, Inc.

410 Park Avenue

New York, NY 10022

Re:  Management Agreement -- CT Legacy Series 1 Note Issuer, LLC

Ladies and Gentlemen:

For good and valuable consideration, each of the undersigned Persons, who have been designated as managers of CT Legacy Series 1 Note Issuer, LLC, a Delaware limited liability company (the “Company”), in accordance with the Limited Liability Company Agreement of the Company, dated as of the date hereof, as it may be amended or restated from time to time (the “LLC Agreement”), hereby agree as follows:

1.           Each of the undersigned accepts such Person’s rights and authority as a Manager under the LLC Agreement and agrees to perform and discharge such Person’s duties and obligations as a Manager under the LLC Agreement, and further agrees that such rights, authorities, duties and obligations under the LLC Agreement shall continue until such Person’s successor as a Manager is designated or until such Person’s resignation or removal as a Manager in accordance with the LLC Agreement.  Each of the undersigned agrees and acknowledges that it has been designated as a “manager” of the Company within the meaning of the Delaware Limited Liability Company Act.

2.           So long as any Obligation is outstanding, each of the undersigned agrees, solely in its capacity as a creditor of the Company on account of any indemnification or other payment owing to the undersigned by the Company, not to acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or governmental authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company.

3.           THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

  

  

  

 

Initially capitalized terms used and not otherwise defined herein have the meanings set forth in the LLC Agreement.

This Management Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Management Agreement and all of which together shall constitute one and the same instrument.

 

  

  

  

 

IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as of the day and year first above written.

 

 

	
 

	
 

	 	 
	 	 	
Stephen D. Plavin

	 
	 	 	 	 
	 	 	 	 
	 	 	
Geoffrey G. Jervis

	 
	 	 	 	 
	 	 	 	 
	 	 	
Thomas C. Ruffing

	 
	 	 	 	 
	 	 	 	 
	 	 	
Kathryn A. Widdoes

	 

 

 

 

[Signature Page to Management Agreement of CT Legacy Series 1 Note Issuer, LLC]

 

  

  

  

 

SCHEDULE E

MANAGERS

1.  Stephen D. Plavin

2.  Geoffrey G. Jervis

3.  Thomas C. Ruffing

4.  Kathryn A. Widdoes

 

 

  

  

  

 

SCHEDULE F

Initial Officers

	
Name

	
Office

	 	 
	
Stephen D. Plavin

	
President and Chief Executive Officer

	 	 
	
Geoffrey G. Jervis

	
Chief Financial Officer, Treasurer and Secretary

	 	 
	
Thomas C. Ruffing

	
Chief Credit Officer and Head of Asset Management

	 	 
	
Douglas Armer

	
Director

	 	 
	
Ryan Totaro

	
Director

	 	 
	
Jai Agarwal

	
Director

	 	 
	
Peter Smith

	
Director

	 	 
	
Robert Brennan

	
Vice President

	 	 
	
Deborah Ginsberg

	
Vice President

	 	 
	
Kevin Wachter

	
Vice President

	 	 
	
Brendan Thorpe

	
Vice President

	 	 
	
Anthony Marone, Jr.

	
Vice President and Controller

	 	 
	
Taylor Collison

	
Vice President

 

  

  

  

 

EXHIBIT F

 

NOTICE INFORMATION

 

	
Party to the Credit Agreement

 

	
Tax Residency and TIN of Entity

 

	
Entity to Hold Class A-2 Units of CT Legacy REIT Holdings

 

	
Contact Information of Entity to Hold Class A-2 Units of CT Legacy REIT Holdings

	
Entity to Hold Series 1 LLC Interest Secured Note

 

	
Contact Information of Entity to Hold Series 1 LLC Interest Secured Note

	
WestLB AG, New York Branch

 

	
W8-BEN

TIN:  45-0818701

	
WestLB CapTrust Holding LLC

	
Peter J. Pasqua

Director

WestLB AG

FU PEG

7 World Trade Center

New York, NY 10007

Phone: (212)-597-1449

Peter_Pasqua@westlb.com

	
WestLB CapTrust Holding LLC

	
Peter J. Pasqua

Director

WestLB AG

FU PEG

7 World Trade Center

New York, NY 10007

Phone: (212)-597-1449

Peter_Pasqua@westlb.com

 

	
BNP Paribas

 

	
W-8ECI

TIN:  94-1677765

	
BNP Paribas VPG CT Holdings, LLC

	
Nancy Faingar

BNP Paribas

Private Equity Portfolio Management

520 Madison Avenue, 2nd Floor

New York, NY 10022

Phone: (212) 471-6691

Fax: (212) 841-2144

nancy.faingar@us.bnpparibas.com

 

	
BNP Paribas

	
Robert Melendez

BNP Paribas RCC Inc.

Loan Servicing

525 Washington Blvd, 8th Floor

Jersey City, NJ 07310

Phone: (201) 850-8186

Fax: (201) 850-4014

robert.melendez@americas.bnpparibas.com

	
Morgan Stanley Senior Funding, Inc.

 

	
W-9

TIN:  13-2655998

	
Morgan Stanley & Co. Incorporated

	
Deborah Mullin

1300 Thames St.

Thames Street Wharf

Baltimore, MD 21231

	
Morgan Stanley & Co. Incorporated

	
Deborah Mullin

1300 Thames St.

Thames Street Wharf

Baltimore, MD 21231

	
JPMorgan Chase Bank, N.A.

 

	
W-9 (Columbus, Ohio)

TIN:  13-4994650

	
JPMorgan Chase Bank, N.A.

 

	
Douglas A. Kravitz

383 Madison Avenue, 23rd Floor

New York, NY 10179

Phone: (212) 270-1262

Fax: (212) 622-4557

Douglas.A.Kravitz@jpmorgan.com

	
JPMorgan Chase Bank, N.A.

 

	
Douglas A. Kravitz

383 Madison Avenue, 23rd Floor

New York, NY 10179

Phone: (212) 270-1262

Fax: (212) 622-4557

Douglas.A.Kravitz@jpmorgan.com

 

 

  

F-1

  

 

	
Deutsche Bank Trust Company Americas

 

	
W-9 (New York)

TIN:  13-4941247

	
Deutsche Bank Trust Company Americas

 

	
Gerry Dupont

Deutsche Bank Securities, Inc.

200 Crescent Court, Suite 550

Dallas, Texas 75201

Phone: (214) 740-7913

Fax: (214) 740-7910

gerard.k.dupont@db.com

 

	
Deutsche Bank Trust Company Americas

 

	
Gerry Dupont

Deutsche Bank Securities, Inc.

200 Crescent Court, Suite 550

Dallas, Texas 75201

Phone: (214) 740-7913

Fax: (214) 740-7910

gerard.k.dupont@db.com

 

	
Wells Fargo Bank, N.A.

	
W-9

TIN:  94-1347393

	
ATC Realty One, LLC

	
Jeannette DeLaGarza

Wells Fargo REMAG

Commercial ORE

333 Market Street, 17th Floor

San Francisco, CA 94105

Phone:  415.371.3438

Fax:  415.371.3210

Jeannette.V.Delagarza@wellsfargo.com

 

	
Wells Fargo Bank, N.A.

	
Sam Supple

Wells Fargo Bank, N.A.

Real Estate Managed Assets

8601 N. Scottsdale Rd. - Suite 200

Scottsdale, AZ 85253

Phone: 480-348-5317

Fax: 866-394-8642

Sam.Supple@wellsfargo.com

	
The CT Entities

	
N/A

	
N/A

	
N/A

	
N/A

	
N/A

 

  

F-2

  

 

EXHIBIT G

 

FORM OF PLEDGE AND SECURITY AGREEMENT

 

PLEDGE AND SECURITY AGREEMENT

 

This PLEDGE AND SECURITY AGREEMENT (this “Agreement”), dated as of March [___], 2011, among CT Legacy Series 1 Note Issuer, LLC, a Delaware limited liability company (the “Pledgor”), U.S. Bank, National Association, as collateral agent (in such capacity, together with its successors in such capacity, the “Collateral Agent”) for the benefit of the Holder (as herein after defined, and together with the Collateral Agent, the “Secured Parties”), and the Holder.

 

RECITALS

 

A.           The Pledgor, as issuer, issued that certain Series 1 Secured Note, dated as of the date hereof (the “Note”), to CT Legacy Holdings, LLC, as the initial holder of the Note.

 

B.           Pursuant to that certain Bond Power dated the date hereof, CT Legacy Holdings, LLC has transferred the Note to [___], as the holder of the Note (the “Holder”).

 

C.           For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Pledgor has agreed to pledge and grant, and, pursuant to this Agreement, does hereby pledge and grant, a first priority security interest in the Collateral (as defined below) as security for the Obligations (as defined below).

 

Accordingly, the parties hereto agree as follows:

 

Section 1.                      Definitions.

 

“Account Control Agreements” shall mean the Dividends Account Control Agreement and the Sales Proceeds Account Control Agreement.

 

“Agreement” shall have the meaning ascribed thereto in the Preamble.

 

“Business Day” shall mean any day except Saturday, Sunday or any day on which the principal places of business, operation or administration of the Collateral Agent are not open for business.

 

“Collateral” shall have the meaning ascribed thereto in Section 2.1 hereof.

 

“Collateral Agent” shall have the meaning ascribed thereto in the Preamble.

 

“Collateral Agent Expenses” shall mean any and all amounts due or accrued and owing to the Collateral Agent in connection with its taking any action in respect of its rights, powers, duties or obligations under this Agreement or under the Account Control Agreements, including, without limitation, any and all fees, expenses (including legal fees and expenses) and indemnities.

 

  

G-1

  

 

“Debt” shall have the meaning ascribed thereto in Section 2.1 hereof.

 

“Deposit Account Bank” shall mean U.S. Bank, National Association, as deposit account bank pursuant to the Dividends Account Control Agreement and the Sales Proceeds Account Control Agreement.

 

“Dividends Account” shall have the meaning ascribed thereto in Section 4.6 hereof.

 

“Dividends Account Control Agreement” shall have the meaning ascribed thereto in Section 4.6 hereof.

 

“Electing Holder” shall have the meaning ascribed thereto in Section 7.2 hereof.

 

“Election Notice” shall have the meaning ascribed thereto in Section 7.2 hereof.

 

“Entity Agreement” means the limited liability company operating agreement of the Pledged Entity.

 

“Event of Default” shall have the meaning ascribed thereto in the Note.

 

“Fee and Indemnification Agreement” shall mean that certain Fee and Indemnification Agreement dated as of March 31, 2011 between CT Legacy Holdings, LLC and U.S. Bank, National Association, as Collateral Agent and Deposit Account Bank.

 

“Holder” shall have the meaning ascribed thereto in Recital B.

 

“Interested Holder” shall mean any holder of any Series 1 Secured Note issued by the Pledgor on the date hereof with respect to which the Collateral Agent acts as a collateral agent pursuant to a Pledge and Security Agreement, dated as of the date here of, by and among the Pledgor, the Collateral Agent and such holder.

 

“Indemnitee” shall have the meaning ascribed thereto in Section 13.6 hereof.

 

“Lien” means with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code.

 

“Membership Interests” shall have the meaning ascribed thereto in Section 7.2 hereof.

 

  

G-2

  

 

“No-Action Letters” shall mean any of those letters issued by the U.S. Securities and Exchange Commission staff indicating that it would not recommend that the U.S. Securities and Exchange Commission take enforcement action against the requester based on the facts and representations described in the individual’s or entity’s original letter.

 

“Note” shall have the meaning ascribed thereto in Recital A.

 

“Obligations” shall have the meaning ascribed thereto in the Note.

 

“Officer’s Payoff Certificate” shall have the meaning ascribed thereto in Section 9 hereof.

 

“Person” shall mean a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, company, limited liability company, trust, unincorporated association, or government, or any agency or political subdivision thereof, or any other entity of whatever nature.

 

“PIK Interest” shall have the meaning ascribed thereto in the Note.

 

“Pledged Entity” shall mean CT Legacy REIT Holdings, LLC, a Delaware limited liability company.

 

“Pledged Securities” shall mean the limited liability company membership interests of Pledgor in the Pledged Entity as described on Schedule 1, together with all limited liability company membership interest certificates evidencing such foregoing membership interests, and options or rights of any nature whatsoever which may be issued or granted by the Pledged Entity to Pledgor while this Agreement is in effect.

 

“Pledgor” shall have the meaning ascribed thereto in the Preamble.

 

“Proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the Uniform Commercial Code in effect on the date hereof and, in any event, shall include all dividends or other income from the Pledged Securities, collections thereon or distributions with respect thereto.

 

“Sale Date” shall have the meaning ascribed thereto in Section 7.2 hereof.

 

“Sale Date Notice” shall have the meaning ascribed thereto in Section 7.2 hereof.

 

“Sale Notice” shall have the meaning ascribed thereto in Section 7.2 hereof.

 

“Sales Proceeds Account” shall have the meaning ascribed thereto in Section 4.7 hereof.

 

“Sales Proceeds Account Control Agreement” shall have the meaning ascribed thereto in Section 4.7 hereof.

 

“Secured Parties” shall have the meaning ascribed thereto in the Preamble.

 

  

G-3

  

 

“Securities Rights” means all voting and other rights and remedies in respect of any of the Pledged Securities, and all securities, interest or other distributions and any other right or property which the Pledgor shall receive or shall become entitled to receive for any reason whatsoever with respect to, in replacement for, in substitution for or in exchange for any of the Pledged Securities, in which the Pledgor now has or hereafter acquires any right.

 

“Series 1 Secured Note” means any Series 1 Secured Note issued by the Pledgor on the date hereof.

 

“UCC-1 Financing Statements” shall mean the UCC-1 Financing Statements filed by the Pledgor to perfect the security interests in the Collateral granted herein.

 

“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

 

“Unit Power” shall have the meaning ascribed thereto in Section 2.2 hereof.

 

Capitalized terms used but not defined herein have the meanings assigned to such terms in the Note.

 

Section 2.                      Pledge and Delivery of Collateral.

 

2.1           The Pledge.  Pledgor hereby pledges and grants to the Collateral Agent, for the benefit of the Secured Parties, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, including without limitation, the payment of the outstanding Principal Amount  (including the Prepayment Amount (as defined in the Note)) of the Note, together with all interest (including PIK Interest) accrued and unpaid thereon and any and all other amounts due and payable under the Note (collectively, the “Debt”), a first priority security interest in all of Pledgor’s right, title and interest to the following property whether now owned or existing or hereafter acquired or arising wherever located (all being referred to collectively herein as “Collateral”):

 

(i)           all Pledged Securities and all Securities Rights;

 

(ii)           all readily-marketable securities substituted for the Pledged Securities pursuant to Section 12 hereof;

 

(iii)           all securities, moneys or property representing dividends or interest on any of the Pledged Securities, or representing a distribution in respect of the Pledged Securities, or resulting from a split up, revision, reclassification or other like change of the Pledged Securities or otherwise received in exchange therefor, and any subscription warrants, rights or options issued to the holders of, or otherwise in respect of, the Pledged Securities;

 

(iv)           all right, title and interest of Pledgor in, to and under any policy of insurance payable by reason of loss or damage to the Pledged Securities and any other Collateral;

 

  

G-4

  

 

(v)           the capital of Pledgor in the Pledged Entity and any and all profits, losses, distributions and allocations attributable thereto as well as the proceeds of any distribution thereof, whether arising under the terms of any of the following documents: the Entity Agreement, the Pledged Entity’s certificate of formation, any certificates of limited liability company membership interests of the Pledged Entity, and all amendments or modifications of any of the foregoing;

 

(vi)           all other payments, if any, due or to become due to Pledgor in respect of the Collateral, whether as contractual obligations, damages, insurance proceeds, condemnation awards or otherwise;

 

(vii)           all equity interests or other property now owned or hereafter acquired by Pledgor as a result of exchange offers, recapitalizations of any type, contributions to capital, options or other rights relating to the Collateral;

 

(viii)           all “Investment Property”, “Accounts”, “Document of Title”, “General Intangibles” and “Instruments” (as each such item is defined in the Uniform Commercial Code) constituting or relating to any of the Collateral described in clauses (i) through (vii) above;

 

(ix)           all Proceeds of any of the foregoing (including any proceeds of insurance thereon); and

 

in each case whether now owned or hereafter acquired, now existing or hereafter created and wherever located.

 

2.2           Delivery of the Collateral.  All certificates representing or evidencing the Pledged Securities shall be delivered to the Collateral Agent, for the benefit of the Secured Parties, pursuant hereto and shall be accompanied by duly executed instruments of transfer in blank.  Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent, at the written direction of the Holder, shall have the right, at any time, in the Holder’s discretion, upon notice to Pledgor and otherwise in accordance with applicable law, to transfer to or to register in the name of the Collateral Agent, for the benefit of the Secured Parties, any or all of the Pledged Securities.  Concurrently with the execution and delivery of this Agreement, Pledgor is delivering to the Collateral Agent a unit power related to the limited liability company interest endorsed by the Pledgor in blank (a “Unit Power”), in the form set forth on Exhibit A hereto, for the Pledged Securities, transferring all of such Pledged Securities in blank, duly executed by Pledgor and undated.  The Holder shall have the right, at any time in its discretion upon the occurrence and during the continuance of an Event of Default and without notice to Pledgor, to direct the Collateral Agent in writing to transfer to, and to designate on the Pledgor’s Unit Power, the Collateral Agent, for the benefit of the Secured Parties, or any Person to whom the Pledged Securities are sold in accordance with the provisions hereof.

 

Section 3.                      Representations and Warranties.  The Pledgor represents and warrants as of the date hereof that:

 

  

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(a)           the execution and delivery of this Agreement and the performance of the obligations hereunder (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any Person, except such as have been obtained or made and are in full force and effect or the filing of UCC-1 Financing Statements, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Pledgor or any order of any Governmental Authority, and (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Pledgor or its assets, or give rise to a right thereunder to require any payment to be made by the Pledgor.

 

(b)           Schedule 1 sets forth an accurate description of the Pledged Securities.  The Pledgor has not assigned, pledged or otherwise conveyed or encumbered the Collateral to any other Person other than the Collateral Agent under this Agreement, and the Pledgor is the record and beneficial owner of, and has good and marketable title to, the Collateral free and clear of any and all Liens or options in favor of, or claims of, any other Person, except the Lien created by this Agreement;

 

(c)           the provisions of this Agreement are effective to create in favor of the Collateral Agent a valid security interest in all right, title and interest of the Pledgor in, to and under the Collateral;

 

(d)           upon receipt by the Collateral Agent of the Pledged Securities pursuant to Section 2.2 of this Agreement, by virtue of this Agreement, the Lien granted pursuant to this Agreement will constitute a valid, perfected first-priority Lien on the Collateral, enforceable as such against all creditors of the Pledgor and any persons purporting to purchase any of such Collateral;

 

(e)           the principal place of business and chief executive office of the Pledgor is 410 Park Avenue, 14th Floor, New York, New York 10022-9442;

 

(f)           the exact legal name of the Pledgor is CT Legacy Series 1 Note Issuer, LLC; and

 

(g)           the Pledgor has delivered to the Holder a true, correct and complete copy of the Entity Agreement.

 

Section 4.                      Covenants.  In furtherance of the grant of the pledge and security interest pursuant to Section 2 hereof, the Pledgor hereby agrees with the Collateral Agent, for the benefit of the Holder, as follows:

 

4.1           Delivery and Other Perfection.  The Pledgor shall, and hereby authorizes the Collateral Agent to, give, execute, deliver, file and/or record any financing statement, notice, instrument, document, agreement or other papers as may be necessary or advisable (or as the Collateral Agent may reasonably request) to create, preserve or perfect the security interest granted pursuant hereto or, upon the occurrence and during the continuance of an Event of Default, to enable the Collateral Agent to exercise and enforce its rights hereunder with respect to such pledge and security interest, including, without limitation, causing any or all of the Collateral to be transferred of record into the name of the Collateral Agent or its nominee.

 

  

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4.2           Sale of Collateral; Liens.  Without the prior written consent of the Holder, the Pledgor shall not, directly or indirectly, except as otherwise expressly permitted by this Agreement (i) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Collateral,  (ii) create, incur, authorize or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral, or any interest therein, except for the Lien provided for the benefit of the Secured Parties by this Agreement, or (iii) impair the Collateral in any manner including, without limitation, taking any action, or omitting to take any action, that would dilute the relative ownership, rights and participation interest in the Pledged Entity or the dividends or distributions payable in respect of the Collateral (it being agreed that a Permitted Change in Form of Organization (as defined below) shall be deemed to not constitute any such impairment).

 

4.3           Pledged Securities.

 

(a)           Unless an Event of Default shall have occurred and be continuing, the Pledgor shall be permitted to exercise all voting and regular limited liability company membership interests or rights with respect to the Pledged Securities, provided that no vote shall be cast or right exercised or other action taken, or omitted to be taken, which would impair the Collateral or which would be inconsistent with or result in any violation of any provision of the Note or this Agreement; provided further, that the foregoing proviso shall not prevent the Pledgor from exercising its rights to vote on or to provide consent with respect to any matter presented for a vote or consent of the stockholders of CT Legacy REIT Mezz Borrower, Inc. (“Mezz Borrower”) by the board of directors of Mezz Borrower with respect to a change in the form of organization of Mezz Borrower consistent with Section 5.9 of the charter of Mezz Borrower that does not otherwise change relative ownership, rights and participation interests in Mezz Borrower (a “Permitted Change in Form of Organization”).

 

(b)           The Pledgor agrees that it shall cause all cash dividends and other cash distributions received by it on or with respect to the Collateral to be remitted to the Dividends Account.

 

(c)           The Pledgor will not make or agree to make any discount, credit or other reduction in the original amount owing to any Pledged Securities or accept in satisfaction of any Pledged Securities less than the original amount thereof.

 

(d)           Except as otherwise provided in this Agreement, the Pledgor will collect and enforce, at the Pledgor’s sole expense, all amounts due or hereafter due to the Pledgor under the Pledged Securities.

 

(e)           If to the knowledge of the Pledgor, any dispute, setoff, claim, counterclaim or defense exists or has been asserted or threatened with respect to any Pledged Securities, the Pledgor will promptly disclose such fact to the Collateral Agent and the Holder in writing, electronic or otherwise.

 

(f)           Except as otherwise permitted under the terms hereof, the Pledgor shall not, directly or indirectly, without the prior written consent of the Holder, attempt to or otherwise waive, alter, amend, modify, supplement or change in any way, or release, subordinate, terminate or cancel in whole or in part, or give any consent under, any of the instruments, documents, policies or agreements constituting or governing the Collateral (including, without limitation, the Entity Agreement or any other organizational document of the Pledged Entity) or any of the rights or interests of the Pledgor thereunder.

 

  

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(g)           The Pledgor represents and warrants that the Pledged Securities constitute “securities” (as defined in Section 8-102(a)(15) of the Uniform Commercial Code), and the Pledgor represents, warrants, covenants and agrees that (i) the Pledged Securities are not and will not be dealt in or traded on securities exchanges or securities markets, (ii) the terms of the Entity Agreement and the terms of the Pledged Securities provide and shall continue to provide that the Pledged Securities constitute “certificated securities” within the meaning of, and governed by, Article 8 of the Uniform Commercial Code, and (iii) the Pledged Securities are and shall continue to be evidenced by a certificate, which certificate shall be delivered to and held by the Collateral Agent, for the benefit of the Holder, as additional security for the repayment of the Obligations.

 

4.4           Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name.  The Pledgor will:

 

(a)           preserve its existence and limited liability company structure as in effect on the date hereof;

 

(b)           not change its jurisdiction or type of organization from that in effect on the date hereof;

 

(c)           not maintain its place of business (if it has only one) or its chief executive office (if it has more than one place of business) at a location other than the location specified in the Note; and

 

(d)           not change its name or its mailing address;

 

unless, in each such case, the Pledgor shall have given the Collateral Agent and the Holder not less than thirty (30) days prior written notice of such event or occurrence and shall have represented to the Collateral Agent and the Holder in writing that (x) such event or occurrence will not adversely affect the validity, perfection or priority of the Collateral Agent’s security interest in the Collateral, or (y) the Pledgor has taken such steps as are necessary or advisable to properly maintain the validity, perfection and priority of the Collateral Agent’s security interest in the Collateral owned by the Pledgor.

 

  

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4.5           Rights of Holder.  Subject to the terms of the Note, the Holder shall have the right to receive any and all income, cash dividends, distributions, proceeds or other property received or paid in respect of the Pledged Securities and make application thereof to the Debt, in accordance with this Agreement and the Note.  If an Event of Default shall have occurred and be continuing, then all such Pledged Securities at the Holder’s written election, shall be registered in the name of the Collateral Agent, for the benefit of the Holder, and the Collateral Agent, at the written direction of the Holder, may thereafter exercise (i) all voting, and all regular limited liability company membership and other rights pertaining to the Pledged Securities and/or the other Collateral and (ii) any and all rights of conversion, exchange, and subscription and any other rights, privileges or options pertaining to such Pledged Securities as if it were the absolute owner thereof (including the right to exchange at the written direction of the Holder any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the organizational structure of the Pledged Entity or upon the exercise by Pledgor or the Holder of any right, privilege or option pertaining to such Pledged Securities, and in connection therewith, the right to deposit and deliver any and all of the Pledged Securities with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Holder may direct in writing), all without liability except to account for property actually received by it, but the Holder shall have no duty to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.

 

4.6           Dividends Account.  The Pledgor shall establish and maintain a deposit account with the Deposit Account Bank into which all income, cash dividends, distributions, Proceeds or other property received or paid in respect of the limited liability membership interests of the Pledged Entity (other than with respect to any income, dividends, distributions, Proceeds or other property received or paid with respect to the sale by the Collateral Agent of the limited liability membership interests of the Pledged Entity) are to be paid or deposited (the “Dividends Account”).  The Dividends Account shall be subject to an agreement, in form and substance reasonably satisfactory to the Collateral Agent and the Holder, among the Collateral Agent, the Deposit Account Bank, and the Pledgor, effective to grant a security interest in and “control” (as defined under the Uniform Commercial Code) over the Dividends Account to the Collateral Agent (the “Dividends Account Control Agreement”).  All amounts received in the Dividends Account related to the Pledged Securities shall be remitted, or caused to be remitted, by the Collateral Agent to the Holder in accordance with the percentage set forth on Schedule 1 to the Dividends Account Control Agreement at the account designated by the Holder on Schedule 2 hereto, or any other account subsequently designated by the Holder by providing written notice to the Pledgor in accordance with Section 9(j) of the Note and to the Collateral Agent in accordance with Section 13.3 hereof; provided, however, that prior to making any such remittance to the Holder, the Collateral Agent shall have the right, without notice to the Pledgor or the Holder, to pay or cause to be paid to itself any and all Collateral Agent Expenses, to the extent such amounts have not been previously paid to it in accordance with the terms of the Fee and Indemnification Agreement.

 

4.7           Sales Proceeds Account.  The Pledgor shall establish and maintain a deposit account with the Deposit Account Bank into which all income, dividends, distributions, Proceeds or other property received or paid in respect of a sale of any limited liability membership interests of the Pledged Entity by the Collateral Agent pursuant to the terms hereof or any other agreement relating to the pledge to the Collateral Agent of limited liability membership interests of the Pledged Entity are to be paid or deposited (the “Sales Proceeds Account”).  The Sales Proceeds Account shall be subject to an agreement, in form and substance reasonably satisfactory to the Collateral Agent and the Holder, among the Collateral Agent, the Deposit Account Bank, and the Pledgor, effective to grant a security interest in and “control” (as defined under the Uniform Commercial Code) over the Sales Proceeds Account to the Collateral Agent (the “Sales Proceeds Account Control Agreement”).  Any amounts received in the Sales Proceeds Account with respect to the Pledged Securities shall be remitted by the Collateral Agent to the Holder at the account designated by the Holder on Schedule 2 hereto, or any other account subsequently designated by the Holder by providing written notice to the Pledgor in accordance with Section 9(j) of the Note and to the Collateral Agent in accordance with Section 13.3 hereof; provided, however, that prior to making any such remittance to the Holder, the Collateral Agent shall have the right, without notice to the Pledgor or the Holder, to pay or cause to be paid to itself any and all Collateral Agent Expenses, to the extent such amounts have not been previously paid to it in accordance with the terms of the Fee and Indemnification Agreement.

 

  

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4.8           Tax.           Coincident with the delivery of the Pledged Collateral, the Pledgor will provide the Collateral Agent and the Deposit Account Bank with a duly completed original IRS Form W-9.  In addition, at any time reasonably requested by the Collateral Agent or the Deposit Account Bank, each Holder shall provide a duly completed original IRS Form W-8BEN, W-8ECI, W-8IMY or W-9 or successor applicable form, as appropriate.  Each person required to deliver any such IRS form further undertakes to deliver to the Collateral Agent and the Deposit Account Bank two further copies of such IRS forms, or successor applicable IRS forms, on or before the date that any such IRS form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it.

 

Section 5.                      Events of Default, Remedies, etc.   At any time when the Pledgor or the Holder shall discover or receive notice that (i) an Event of Default has occurred and is continuing or (ii) the Obligations under the Note have been declared by the Holder to be immediately due and payable, the Pledgor or the Holder, as applicable, shall promptly notify the Collateral Agent and the Deposit Account Bank in writing thereof.  For the avoidance of doubt, it is expressly understood and agreed by the parties hereto that neither the Collateral Agent nor the Deposit Account Bank will have any knowledge of an Event of Default absent receipt of written notice thereof from the Pledgor or the Holder. During the period in which an Event of Default shall have occurred and be continuing, in addition to the rights and remedies set forth in the Note:

 

(a)           The Collateral Agent, at the written direction and in the sole discretion of the Holder, for the benefit of the Secured Parties, in addition to the rights and remedies set forth herein, shall have all of the rights and remedies with respect to the Collateral of a secured party under the Uniform Commercial Code (whether or not said Uniform Commercial Code is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted, including, without limitation, the right, to the maximum extent permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if the Collateral Agent, for the benefit of the Secured Parties, were the sole and absolute owner thereof (and the Pledgor agrees to take all such action as may be appropriate to give effect to such right);

 

(b)           The Collateral Agent, at the written direction and in the sole discretion of the Holder, may make any reasonable compromise or settlement deemed desirable by the Holder with respect to any of the Collateral and may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, any of the Collateral;

 

(c)           The Collateral Agent, at the written direction and in the sole discretion of the Holder, in its name or in the name of the Pledgor or otherwise, may demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so;

 

  

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(d)           The Collateral Agent may, at the written direction and in the sole discretion of the Holder, upon ten (10) days prior written notice to the Pledgor of the time and place (which notice the Pledgor acknowledges as reasonable and sufficient), with respect to the Collateral or any part thereof which shall then be or shall thereafter come into the possession, custody or control of the Collateral Agent or any of its agents, sell, assign or otherwise dispose of all or any part of such Collateral, at such place or places as the Collateral Agent shall determine, and for cash or on credit or for future delivery, at public or private sale, without demand of performance or notice of intention to effect any such disposition or of time or place thereof (except such notice as is required above or by applicable statute and cannot be waived) and the Collateral Agent or anyone else may be the purchaser, assignee or recipient of any or all of the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any private sale), and thereafter hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise), of the Pledgor, any such demand, notice or right and equity being hereby expressly waived and released.  Unless prohibited by applicable law, the Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned;

 

(e)           The Collateral Agent may exercise all rights, powers and privileges to the same extent as the Pledgor is entitled to exercise such rights, powers and privileges with respect to the Pledged Securities;

 

(f)           The Collateral Agent shall not be required to take steps necessary or advisable to preserve any rights against prior parties to any of the Collateral;

 

(g)           In enforcing any rights hereunder, the Collateral Agent shall not be required to resort to any particular security, right or remedy through foreclosure or otherwise or to proceed in any particular order of priority, or otherwise act or refrain from acting, and, to the extent permitted by law, the Pledgor hereby waives and releases any right to a marshaling of assets or a sale in inverse order of alienation;

 

(h)           The Collateral Agent may register any or all of the Pledged Securities in the name of the Collateral Agent or its nominee without any further consent of the Pledgor;

 

(i)           The Collateral Agent or its nominee at any time, without notice, may exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Collateral owned by the Pledgor or any part thereof, and to receive all interest and distributions in respect of such Collateral;

 

(j)           The Pledgor shall assemble and make available to the Collateral Agent the Collateral and all records relating thereto at any place or places specified by the Collateral Agent; and

 

  

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(k)           The Collateral Agent, on behalf of the Holder, may be required to comply with any applicable state or federal law requirements in connection with a disposition of the Collateral, and such compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

 

The proceeds of each collection, sale or other disposition under this Section 5 shall be applied by the Collateral Agent to the Obligations pursuant to Section 6 hereof.

 

Section 6.                      Application of Proceeds.  During any period in which an Event of Default shall have occurred and be continuing, the Proceeds of any collection, sale or other realization of all or any part of the Collateral pursuant hereto, and any other cash at the time held by the Collateral Agent under this Agreement, shall be applied (or caused to be applied) by the Collateral Agent:

 

(a)           First, to the extent not otherwise paid in accordance with the terms of the Fee and Indemnification Agreement, to the payment of any and all Collateral Agent Expenses and any other Obligations owing to the Collateral Agent in respect of costs and expenses of such collection, sale or other realization or the preservation of the security interest granted pursuant to this Agreement, including, without limitation, costs and expenses of the Collateral Agent and the fees and expenses of its agents and counsel, and all expenses incurred by the Collateral Agent in connection therewith, until paid in full;

 

(b)           Second, to the payment in full of the Obligations; and

 

(c)           Third, to the payment to the Pledgor, or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

 

As used in this Section 6, “proceeds” of Collateral shall include cash, securities and other property realized in respect of, and distributions in kind of, the Collateral.

 

Section 7.                      Sale of Collateral.

 

7.1           Private Sales.

 

(a)           Each of the Pledgor and the Holder recognizes that the Collateral Agent, for the benefit of the Secured Parties, may be unable to effect a public sale of any or all of the Pledged Securities, by reason of certain prohibitions contained in the Securities Act of 1933, as amended, and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof.  Each of the Pledgor and the Holder acknowledges and agrees that any private sale may result in prices and other terms less favorable to the Pledgor and the Holder than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner solely by virtue of being a private sale. Neither the Holder nor the Collateral Agent shall be under any obligation to delay a sale of any of the Pledged Securities for the period of time necessary to permit the Pledged Entity or Pledgor to register such securities for public sale under the Securities Act of 1933, as amended, or under applicable state securities laws, even if the Pledged Entity or Pledgor would agree to do so.

 

  

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(b)           The Collateral Agent, at the direction and in the sole discretion of the Holder, for the benefit of the Secured Parties, shall have the right to conduct any foreclosure sale of any part of the Collateral.  If an Event of Default shall have occurred and be continuing, the Holder may, in its sole and absolute discretion but only to the extent permitted by applicable law, direct the Collateral Agent in writing to retain and acquire for the Holder and/or its designees or nominees, the Collateral by instructing the Pledgor and/or the Pledged Entity to register on its ledgers and books the Collateral Agent’s acquisition of the Collateral and each certificate which embodies the Pledged Securities, subject to any rights of the Pledgor to object in accordance with the Uniform Commercial Code, if the Pledgor has not renounced or waived such rights in accordance with the Uniform Commercial Code. In connection therewith, the Collateral Agent, at the written direction of the Holder, shall have the right to complete any Unit Power in its favor.

 

(c)           The Pledgor further shall use its commercially reasonable efforts to do or cause to be done all such other acts as may be reasonably necessary to make any sale or sales of all or any portion of the Pledged Securities pursuant to this Section 7.1 valid and binding and in compliance with any and all other requirements of applicable law. The Pledgor further agrees that a breach of any of the covenants contained in this Section 7.1 will cause irreparable injury to the Secured Parties, that the Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 7.1 shall be specifically enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Note.

 

(d)           The Collateral Agent and the Holder shall not incur any liability as a result of the sale of any Collateral, or any part thereof, at any private sale conducted in a commercially reasonable manner, it being agreed that some or all of the Collateral is or may be of one or more types that threaten to decline speedily in value and that are not customarily sold in a recognized market. Each of the Pledgor and the Holder hereby waives any claims against the Collateral Agent and the Holder arising by reason of the fact that the price at which any of the Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Debt, even if the Collateral Agent, for the benefit of the Secured Parties, accepts the first offer received and does not offer any Collateral to more than one offeree.

 

(e)           The Pledgor acknowledges that Securities and Exchange Commission staff personnel have issued various No-Action Letters describing procedures which, in the view of the Securities and Exchange Commission staff, permit a foreclosure sale of securities to occur in a manner that is public for purposes of Article 9 of the Uniform Commercial Code, yet not public for purposes of Section 4(2) of the Securities Act of 1933.  The Uniform Commercial Code permits the Pledgor to agree on the standards for determining whether the Collateral Agent, for the benefit of the Secured Parties, has complied with its obligations under Article 9 of the Uniform Commercial Code.  Pursuant to the Uniform Commercial Code, the Pledgor specifically agrees (x) that it shall not raise any objection to the Collateral Agent’s or the Holder’s purchase of the Pledged Securities (through bidding on the obligations or otherwise) and (y) that a foreclosure sale conducted in conformity with the principles set forth in the No-Action Letters (i) shall be considered to be a “public” sale for purposes of the Uniform Commercial Code; (ii) will be considered commercially reasonable notwithstanding that the Collateral Agent has not registered or sought to register the Pledged Securities under the applicable securities laws, even if the Pledgor or any Pledged Entity agrees to pay all costs of the registration process; and (iii) shall be considered to be commercially reasonable notwithstanding that the Collateral Agent or the Holder purchases the Pledged Securities at such a sale.

 

  

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(f)           Each of the Pledgor and the Holder agrees that the Collateral Agent shall not have any general duty or obligation to make any effort to obtain or pay any particular price for any Pledged Securities sold by the Collateral Agent pursuant to the terms of this Agreement.

 

(g)           To the extent that provisions of the Uniform Commercial Code or other applicable law impose duties on the Collateral Agent to exercise remedies in a commercially reasonable manner, it is hereby agreed by all the parties hereto that it is commercially reasonable for the Collateral Agent to do any of the following:

 

(i)           not incur significant costs, expenses or other liabilities reasonably deemed as such by the Collateral Agent to prepare any Collateral for disposition;

 

(ii)           not obtain consents for the collection or disposition of any Collateral (other than a Sale Notice or an Election Notice, as the case may be);

 

(iii)           to the extent any sale of the Collateral is conducted through a public sale, to advertise dispositions of any Collateral through publications or media of general circulation, whether or not such Collateral is of a specialized nature or to contact other persons for expressions of interest in acquiring any such Collateral;

 

(iv)           to the extent any sale of the Collateral is conducted through an auction, to appoint one or more other qualified auctioneers as directed by the Interested Holder delivering a Sale Notice to the Collateral Agent to act as auction agent to assist in the disposition of all or any portion of the Collateral, whether or not such Collateral is of a specialized nature or, to the extent deemed appropriate by the Collateral Agent, obtain the services of other brokers, investment bankers, consultants, legal advisors, agents and other professionals to assist the Collateral Agent in the collection or disposition of any Collateral (the reasonable fees and expenses of such service providers to constitute Collateral Agent Expenses hereunder), utilize Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets to dispose of any Collateral, or solicit bids wanted in competition to effect a disposition of all or any portion of the Collateral;

 

(v)           dispose of the Collateral in wholesale rather than retail markets;

 

(vi)           disclaim disposition warranties, such as title, possession or quiet enjoyment; or

 

  

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(vii)           sell Collateral at a price that may be less than the market price quoted by any valuation service provider or market-maker; provided, that the Collateral Agent has used commercially reasonable efforts to sell at such market price.

 

Each of the Pledgor and the Holder acknowledges that the purpose of this Section 7.1(g) is to provide a non-exhaustive list of actions or omissions that are commercially reasonable when exercising remedies against any Collateral and that other actions or omissions by the Collateral Agent shall not be deemed commercially unreasonable solely on account of not being listed in this Section 7.1(g).  Without limitation upon the foregoing, nothing contained in this Section 7.1(g) shall be construed to grant any rights to the Pledgor or the Holder or to impose any duties on the Collateral Agent that would not have been granted or imposed by provisions of this Agreement, the Uniform Commercial Code or other applicable law in the absence of this Section 7.1(g).  It is expressly understood and agreed by the parties hereto that the Collateral Agent shall not under any circumstances be deemed to be a broker, dealer or investment advisor in connection with any disposition or any Collateral pursuant to the terms of this Agreement or applicable law.

 

7.2           Procedures for Sale of Collateral.

 

(a)           If the Collateral Agent shall be notified in writing by an Interested Holder that such Interested Holder wishes to exercise its remedies by directing the Collateral Agent to sell or cause the sale of limited liability membership interests of the Pledged Entity (“Membership Interests”) pledged to such Interested Holder on a sale date at least ten (10) Business Days after the date of such notice (a “Sale Date”, and such notice, a “Sale Notice”) in the manner set forth with specificity in such Sale Notice, the Collateral Agent shall, within two (2) Business Days of its receipt of any such Sale Notice, provide notice of such Sale Date (a “Sale Date Notice”) to each other Interested Holder.  Each Interested Holder receiving a Sale Date Notice shall have the right to elect and direct the Collateral Agent, by written notice to the Collateral Agent at least two (2) Business Days prior to the Sale Date (an “Election Notice”), to sell or cause the sale of the Membership Interests pledged to it in the same manner (each an “Electing Holder”).  The delivery of a Sale Notice or an Election Notice by an Interested Holder in respect of a Sale Date shall constitute an irrevocable and binding election and direction to the Collateral Agent from such Interested Holder and its successors and assigns to sell or cause the sale of its Membership Interests on such Sale Date.  Notwithstanding anything contained herein to the contrary, in no event shall the Collateral Agent be required to conduct more than one sale of Membership Interests within a fourteen (14) Business Day period, nor shall it conduct any sale of the Collateral or any Membership Interest if it shall receive a Sale Notice from an Interested Holder less than ten (10) days prior to any Sale Date.  If less than all the Membership Interests to be offered for sale in any sale are sold, the Proceeds of the sale of such Membership Interests that are actually sold shall be allocated pro rata among the Interested Holders whose Membership Interests were the original subject of such proposed sale.

 

(b)           The Sale Date may be postponed at any time by the Collateral Agent.  In the case of any such postponement, the Sale Date shall be rescheduled to a date as shall be mutually agreed upon in writing by the Collateral Agent and each Interested Holder who delivered a Sale Notice for such Sale Date.  The Collateral Agent shall thereafter provide notice to each Electing Holder of the rescheduled Sale Date and each Electing Holder shall have the right to withdraw its Election Notice so long as such Electing Holder provides the Collateral Agent with written notice of its election to withdraw at least two (2) Business Days prior to any such rescheduled Sale Date.

 

  

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(c)           By its acceptance of the Note, the Holder hereby waives any right, remedy or claim it may have, whether at law or in equity, against the Collateral Agent in connection with any sale of the Collateral pursuant to the terms of this Agreement, including, without limitation, in connection with any price accepted by the Collateral Agent or any timing of any sale (other than its right to select a Sale Date if it is sending the Collateral Agent a Sale Notice) and hereby releases the Collateral Agent from any and all liability arising under or in connection with any such sale.

 

Section 8.                      Attorney in Fact.  Without limiting any rights or powers granted by this Agreement to the Collateral Agent, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall be deemed appointed, which appointment as attorney-in-fact is irrevocable and coupled with an interest, the attorney-in-fact of the Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof.  Without limiting the generality of the foregoing, so long as the Collateral Agent shall be entitled under this Section 8 to make collections in respect of the Collateral, the Collateral Agent shall have the right and power to receive, endorse and collect all checks made payable to the order of the Pledgor representing any payment in respect of the Collateral or any part thereof and to give full discharge for the same.

 

Section 9.                      Termination and Release.  When the Obligations hereunder and under the Note shall have been paid in full in cash, and the Note has been cancelled, the Collateral Agent shall, upon receipt of written confirmation from the Holder that the Obligations hereunder and under the Note have been paid in full in cash and the Note has been cancelled, forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever any remaining Collateral and money received in respect thereof, to or on the order of the Pledgor.  Subject to the confirmation from the Holder described in the immediately preceding sentence, upon the payment in full of the Obligations, the Lien granted hereunder shall automatically terminate and the Collateral Agent shall promptly take any actions, as requested in writing by the Pledgor, to terminate and release the security interest in the Collateral granted to the Collateral Agent hereunder and any financing statements filed in connection herewith, and to cause the Pledged Collateral and any instrument of transfer previously delivered to the Collateral Agent to be delivered to the Pledgor, all at the cost and expense of the Pledgor.  If the Holder does not notify the Collateral Agent of the cancellation of the Note within five Business Days of payment in full of the Obligations hereunder and under the Note, the Pledgor may notify the Collateral Agent of such payment in full by sending a certificate of an officer of the Pledgor certifying that the Obligations under the Note have been paid in full (the “Officer’s Payoff Certificate”).  The Officer’s Payoff Certificate shall be delivered to the Collateral Agent by overnight courier, with a copy to the Holder (and to any additional party designated in writing by the Holder, including the party set forth on Exhibit B hereto) by overnight courier.  So long as the Holder does not notify the Collateral Agent in writing that it disagrees with the Officer’s Payoff Certificate within seven Business Days of the Holder’s receipt thereof, the Collateral Agent shall be entitled to rely on the Officer’s Payoff Certificate as conclusive evidence that the Obligations hereunder and under the Note have been paid in full.

 

  

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Section 10.                      Further Assurances.  The Pledgor agrees that, from time to time upon the written request of the Collateral Agent, the Pledgor will execute and deliver such further documents and do such other acts and things as the Collateral Agent may reasonably request in order fully to effect the purposes of this Agreement.

 

Section 11.                      Additional Agreements Concerning UCCs.  The Pledgor hereby agrees to file UCC-1 Financing Statements describing the Collateral and as may be necessary or desirable for purposes of perfecting the security interest in the Collateral granted by the Pledgor to the Collateral Agent pursuant to this Agreement.

 

Section 12.                      Substitution of Collateral.  At any time while this Agreement is in force and effect, unless an Event of Default shall have occurred and be continuing, the Pledgor may on ten Business Days prior written notice to the Collateral Agent and the Holder substitute for the Pledged Securities in whole, but not in part, (a) any readily-marketable securities (i) issued by, or directly, unconditionally and fully guaranteed or insured by the United States federal government or (ii) issued by any agency of the United States federal government the obligations of which are fully backed by the full faith and credit of the United States federal government or (b) any readily-marketable direct obligations issued by any other agency of the United States federal government, any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case having a rating of at least “A-1” from S&P or at least “P-1” from Moody’s; provided that (x) the fair market value of the substituted Collateral referred to in this Section 12(a) and (b) at all times shall be at least equal to the amount of the outstanding Prepayment Amount under the Note, as determined by the Pledgor pursuant to the terms thereof, and shall pay interest, dividends or other distributions no more than 12 times annually, (y) the Pledgor shall have taken all such necessary or desirable action to ensure that the Collateral Agent shall have a perfected first priority security interest in the substituted Collateral prior to directing the Collateral Agent to (A) release its Liens on the existing Collateral and (B) return the existing Collateral to the Pledgor, and (z) the Collateral Agent, at the Pledgor’s request and expense, and the Pledgor shall enter into appropriate documentation to grant the Collateral Agent a first priority security interest in the substituted Collateral, in form reasonably acceptable to Collateral Agent, which documentation shall include, without limitation, a customary opinion from counsel to the Pledgor related to the grant and perfection of the security interest in the substituted Collateral.  The Pledgor hereby agrees that any direct or indirect increase in the administrative costs or expenses of the Collateral Agent or the Deposit Account Bank due to any substitution of Collateral pursuant this Section 12 shall be paid by the Pledgor.

 

Section 13.                      Miscellaneous.

 

13.1           No Waiver.  No failure or delay by the Collateral Agent or the Holder in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Collateral Agent and the Holder hereunder and in the case of the Holder, under the Note, are cumulative and are not exclusive of any rights or remedies that they would otherwise have.

 

  

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13.2           Governing Law; Jurisdiction; Consent to Service of Process.  THIS AGREEMENT SHALL BE BINDING UPON PLEDGOR AND ITS SUCCESSORS AND PERMITTED ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF PLEDGOR), AND SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, THE COLLATERAL AGENT AND ITS SUCCESSORS AND ASSIGNS, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, AND NONE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT IN WRITING DULY SIGNED FOR AND ON BEHALF OF THE COLLATERAL AGENT AND PLEDGOR. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED ON OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THE PLEDGOR MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE COLLATERAL AGENT OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. EACH PARTY TO THIS NOTE IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES HEREIN. NOTHING IN THIS NOTE WILL AFFECT THE RIGHT OF ANY PARTY TO THIS NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

  

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13.3           Notices.  Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties desires to give or serve upon any other a communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and either shall be delivered in person or sent by registered or certified mail, return receipt requested, with proper postage prepaid, or by facsimile transmission and confirmed by delivery of a copy by personal delivery or United States Mail as otherwise provided herein:

 

	
If to the Pledgor:

	
CT Legacy Holdings, LLC

410 Park Avenue

14th Floor

New York, New York  10022

Attention: Geoffrey G. Jervis

Telephone No.:  212-655-0220

Facsimile No.:  212-655-0044

 

	
with a copy to:

	
Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York  10022

Attention:  Michael L. Zuppone, Esq.

Telephone No.:  212-696-6000

Facsimile No.:   212-319-4090

 

	
If to the Collateral Agent:

	
U.S. Bank Corporate Trust Services

214 North Tryon Street, 26th Floor

Charlotte, North Carolina 28202

Attention: Brand Hosford

Telephone No.:  704-335-4600

Facsimile No.:  704-335-4678

 

	
If to the Holder:

	
[●]

Attention:  [●]

Telephone No.:  [●]

Facsimile No.:  [●]

	 	 
	
with a copy to:

	
[●]

Attention:  [●]

Telephone No.:  [●]

Facsimile No.:  [●]

 

  

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or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice.  Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly served, given or delivered (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by delivery of a copy by personal delivery or United States Mail as otherwise provided in this Section 13.3, (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid, or (d) when delivered, if hand-delivered by messenger.  Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the persons designated above to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication.  The Collateral Agent shall receive any amendments or other modifications to the Note within five (5) Business Days of the effectiveness thereof.

13.4           Waivers, etc.  No waiver of any provision of this Agreement or consent to any departure by the Pledgor therefrom shall in any event be effective unless the same shall be permitted in writing by the Holder and the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, no action or inaction by the Holder or the Collateral Agent shall be construed as a waiver of any Event of Default, regardless of whether the Collateral Agent or the Holder may have had notice or knowledge of such Event of Default at the time.

 

13.5           Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Pledgor may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Holder and the Collateral Agent (and any attempted assignment or transfer by the Pledgor without such consent shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement.  Simultaneously with any sale, transfer or assignment of the Note, (i) the Holder shall promptly deliver to the Collateral Agent evidence of assignment of this Agreement by the Holder to the Person to which such Note is being sold, transferred or assigned and (ii) the Person to which the Note has been sold, transferred or assigned (x) shall thereafter be bound by this Agreement as if it were an original party hereto and agrees that each reference in this Agreement to the “Holder” shall mean and be a reference to such Person, without the execution or filing of any paper or any further action by any party hereto and (y) shall promptly provide the Collateral Agent with any and all relevant tax information, including the applicable items referenced in Section 4.8, and any other contact or identifying information that the Collateral Agent reasonably requests.

 

13.6           Indemnification.  The Pledgor shall indemnify each of the Secured Parties (each such Person, including its respective officers, directors, employees, affiliates and agents being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all actual losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder, (ii) relating to or arising out of the acts or omissions of the Pledgor under this Agreement, (iii) resulting from the ownership of or lien on any Collateral, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by final and nonappealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee. The obligations of the Pledgor under this Section 13.6 shall survive the termination of this Agreement and the earlier resignation or removal of the Collateral Agent.

 

  

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13.7           Taxes and Expenses.  Any taxes (including income taxes) payable or ruled payable by a federal or state authority in respect of this Agreement shall be paid by the Pledgor, together with interest and penalties, if any, subject to Pledgor’s right to contest such taxes. For the avoidance of doubt, in no event shall the Holder or the Collateral Agent be responsible for the preparation or filing of any tax-related items or the payment of any taxes in connection with this Agreement, the Pledgor or the Collateral. The Pledgor shall reimburse the Holder and the Collateral Agent for any and all reasonable expenses (including reasonable attorneys’, auditors’ and accountants’ fees) paid or incurred by the Holder and the Collateral Agent in connection with the preparation, execution, delivery, administration, collection and enforcement of this Agreement and in the administration, collection, preservation or sale of the Collateral.  Any and all costs and expenses incurred by the Pledgor in the performance of actions required pursuant to the terms hereof shall be borne solely by the Pledgor.  The obligations of the Pledgor under this Section 13.7 shall survive the termination of this Agreement and the earlier resignation or removal of the Collateral Agent

 

13.8           Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

13.9           Counterparts; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement shall become effective when it shall have been executed by the Collateral Agent and when the Collateral Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

 

13.10           Trial by Jury.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

  

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13.11           Headings.  Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

13.12           Collateral Agent Performance of Pledgor’s Obligations.  Without having any obligation to do so, the Collateral Agent may perform or pay any obligation which the Pledgor has agreed to perform or pay in this Agreement and the Pledgor shall reimburse the Collateral Agent for any reasonable amounts paid by the Collateral Agent pursuant to this Section 13.12.  The Pledgor’s obligation to reimburse the Collateral Agent pursuant to the preceding sentence shall be an Obligation payable on demand.

 

Section 14.                      Collateral Agent.

 

14.1         (a)           Appointment of Collateral Agent.  The Holder hereby appoints U.S. Bank, National Association (together with any successor pursuant to Section 14.8) as the Collateral Agent hereunder, and U.S. Bank, National Association hereby accepts such appointment by the Holder as the Collateral Agent hereunder.  The Holder hereby authorizes the Collateral Agent to (i) execute and deliver documents related hereto and accept delivery thereof on its behalf from the Pledgor, (ii) take such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly delegated to the Collateral Agent hereunder and (iii) exercise such powers as are reasonably incidental thereto.

 

(b)           Duties as Collateral and Disbursing Agent.  Without limiting the generality of clause (a) above, the Holder agrees that the Collateral Agent and the Deposit Account Bank, as applicable, shall have the right and authority, and are hereby authorized, to (i) act as the disbursing and collecting agents for the Holder with respect to all income, cash dividends, distributions, Proceeds or other property received in respect of the Pledged Securities, and each Person making any such payment is hereby authorized to make such payment to the Collateral Agent or the Deposit Account Bank, as applicable, (ii) file and prove claims and file other documents necessary or desirable to allow the claims of the Holder with respect to any Obligation in any bankruptcy, insolvency or similar proceeding (but not to vote, consent or otherwise act on behalf of such the Holder), (iii) act as collateral agent for the benefit of the Secured Parties for purposes of the perfection of all Liens created by this Agreement and all other purposes stated herein, (iv) manage, supervise and otherwise deal with the Collateral, (v) take such other action as is necessary or desirable to maintain the perfection and priority of the Liens created or purported to be created by this Agreement, (vi) except as may be otherwise specified herein, exercise all remedies given to the Collateral Agent and the Holder with respect to the Collateral and (vii) execute any amendment, consent or waiver related hereto for the benefit of the Secured Parties, so long as the Holder has consented in writing to such amendment, consent or waiver.

 

  

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14.2           Binding Effect.  The Holder agrees that (i) any action taken by the Collateral Agent in accordance with the provisions hereof, (ii) any action taken by the Collateral Agent in reliance upon the instructions of the Holder and (iii) the exercise by the Collateral Agent of the powers set forth herein, together with such other powers as are reasonably incidental thereto, shall be authorized by and binding upon the Holder.

 

14.3           Use of Discretion.  (a)           No Action without Instructions.  The Collateral Agent shall not be required to exercise any discretion or take, or omit to take, any action, including with respect to enforcement or collection, except any action it is required to take or omit to take (i) under the express terms hereof or (ii) pursuant to written instructions from the Holder, as the case may be.

 

(b)           Right Not to Follow Certain Instructions.  Notwithstanding clause (a) above, the Collateral Agent shall not be required to take, or omit to take, any action (i) unless, upon demand, the Collateral Agent receives an indemnification satisfactory to it from the Holder against all liabilities that, by reason of such action or omission, may be imposed on, incurred by or asserted against the Collateral Agent or (ii) that is, in the opinion of the Collateral Agent or its counsel, contrary to the terms hereof or applicable requirements of law.

 

14.4           Delegation of Rights and Duties.  The Collateral Agent may, upon any term or condition it specifies, delegate or exercise any of its rights, powers and remedies under, and delegate or perform any of its duties or any other action by or through any trustee, co-agent, employee, attorney-in-fact, custodian or nominee and any other Person and the Collateral Agent shall not be responsible for any negligence or misconduct of ay such Person appointed with due care by it hereunder.  Any such Person shall benefit from this Section 14 to the extent provided by the Collateral Agent.

 

14.5           Reliance and Liability. The Collateral Agent shall not be liable for any action lawfully taken or omitted to be taken by it under or in connection with this Agreement, and the Holder hereby waives and shall not assert any right, claim or cause of action based thereon, except to the extent of liabilities resulting from the gross negligence or willful misconduct of the Collateral Agent in connection with the duties expressly set forth herein.  Without limiting the foregoing, the Collateral Agent:

 

(i)           shall not be responsible or otherwise incur liability to the Holder for any action or omission taken in reliance upon the instructions of the Holder; and

 

(ii)           shall not be responsible to the Holder for the due execution, legality, validity, enforceability, effectiveness, genuineness, sufficiency or value of, or the attachment, perfection or priority of any Lien created or purported to be created under or in connection with, this Agreement;

 

and, for each of the items set forth in clauses (i) through (ii) above, the Holder hereby waives and agrees not to assert any right, claim or cause of action it might have against the Collateral Agent based thereon.

 

  

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14.6           Collateral Agency.  (a)           The Collateral Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Collateral Agent.

 

(b)           The Collateral Agent may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

 

(c)           The Collateral Agent may consult with counsel (which counsel may be counsel to the Collateral Agent, the Pledgor or any of its affiliates, and may include any of its employees) and the advice of such counsel or any opinion of counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(d)           The Collateral Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Collateral Agent in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Collateral Agent shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Pledgor, personally or by agent or attorney.

 

(e)           Whenever in the administration of this Agreement the Collateral Agent shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Collateral Agent (i) may request instructions from the Holder, (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions.

 

(f)           Without prejudice to any other rights available to the Collateral Agent under applicable law, when the Collateral Agent incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally.

 

(g)           The Collateral Agent shall not be charged with knowledge of any Event of Default unless a responsible officer of the Collateral Agent shall have actual knowledge thereof.

 

(h)           No provision of this Agreement shall require the Collateral Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.

 

  

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(i)           In no event shall the Collateral Agent be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Collateral Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

(j)           In no event shall the Collateral Agent be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Agreement.

 

(k)           Any Person into which the Collateral Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Collateral Agent shall be a party, or any Person succeeding to all or substantially all of the collateral agency business of the Collateral Agent, shall be the successor of the Collateral Agent hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto.

 

(l)           The recitals contained herein and in the Note shall be taken as the statements of the Pledgor, and the Collateral Agent assumes no responsibility for their correctness.  The Collateral Agent makes no representations as to the validity or sufficiency of this Agreement or of the Note.  The Collateral Agent shall not be accountable for the use or application by the Pledgor of the Collateral or the proceeds thereof.  The Collateral Agent shall not be responsible for or in respect of and makes no representations as to the form, character, collectability, genuineness, sufficiency, value or validity of any of the Collateral.

 

(m)           None of the provisions contained in this Agreement shall in any event require the Collateral Agent to perform, or be responsible or liable for the manner of performance of, any obligations of the Pledgor hereunder.  The Collateral Agent shall have no duty to (i) file any financing or continuation statements, or amendments thereto, under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby or (ii) monitor the effectiveness or perfection of any security interest in any Collateral or the performance of the Pledgor hereunder, any service provider or any other party to this Agreement, nor shall it have any liability in connection with the appointment of any service provider, or the malfeasance or nonfeasance by such parties.  The Collateral Agent shall not make or be deemed to have made any representations or warranties with respect to the Collateral or the validity or sufficiency of any assignment or other disposition of the Collateral.

 

(n)           The Collateral Agent shall have no obligations or duties in connection with the Note.  It is expressly understood by the parties hereto that the Collateral Agent shall not be responsible for or in respect of, has no knowledge of and makes no representations as to the form, character, collectability, genuineness, sufficiency, value or validity of the Note.  By its acceptance of the Note, the Holder hereby waives any right, remedy or claim it may have, whether at law or in equity, against the Collateral Agent under or pursuant to the express or implied terms of the Note.

 

  

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14.7           Expenses; Indemnities.  To the extent not reimbursed by the Pledgor or CT Legacy Holdings, LLC, the Holder agrees to indemnify the Collateral Agent  from and against any and all liabilities (including taxes, interests and penalties imposed for not properly withholding or backup withholding on payments made to on or for the account of the Holder) and related expenses (including the fees, charges and disbursements of counsel to the Collateral Agent) that may be imposed on, incurred by or asserted against the Collateral Agent related to any action taken or omitted to be taken by the Collateral Agent at the direction of the Holder under or with respect to this Agreement; provided, however, that the Holder shall not be liable to the Collateral Agent to the extent such liability has resulted from the gross negligence or willful misconduct of the Collateral Agent.  The obligations of the Holder under this Section 14.7 shall survive the termination of this Agreement and the earlier resignation or removal of the Collateral Agent.

 

14.8           Resignation of Collateral Agent.  (a) The Collateral Agent may resign at any time by delivering thirty (30) days prior written notice of such resignation to the Holder and the Pledgor, effective on the date set forth in such notice or, if no such date is set forth therein, upon the date such notice shall be effective in accordance with the terms of Section 13.3 hereof.  If the Collateral Agent delivers any such notice, the Holder shall have the right to appoint a successor Collateral Agent. Each appointment under this clause (a) shall be subject to the prior consent of the Pledgor, which may not be unreasonably withheld but shall not be required during the continuance of an Event of Default.  The Collateral Agent acknowledges and agrees that if it resigns as Collateral Agent hereunder it shall return to the Pledgor any portion of the fees prepaid by the Pledgor that are required to be returned to the Pledgor pursuant to the terms of the Fee and Indemnification Agreement.

 

(b)           Effective immediately upon its resignation, (i) the retiring Collateral Agent shall be discharged from its duties and obligations under this Agreement, (ii) the Holder shall assume and perform all of the duties of the Collateral Agent until a successor Collateral Agent shall have accepted a valid appointment hereunder, (iii) the retiring Collateral Agent shall no longer have the benefit of any provision of this Agreement (except any provisions which survive the termination of this Agreement and resignation or removal of the Collateral Agent) other than with respect to any actions taken or omitted to be taken while such retiring Collateral Agent was, or because such Collateral Agent had been, validly acting as Collateral Agent hereunder and (iv) the retiring Collateral Agent shall take such action as may be reasonably requested in writing by the Holder to assign to the successor Collateral Agent its rights as Collateral Agent hereunder.  Effective immediately upon its acceptance of a valid appointment as Collateral Agent, a successor Collateral Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Collateral Agent hereunder.

 

14.9           Collateral Agent Fees, Etc.  All fees and expenses and indemnities of the Collateral Agent shall be paid by the Pledgor or CT Legacy Holdings, LLC in accordance with the terms of the Fee and Indemnification Agreement.  For the avoidance of doubt, except to the extent specifically provided under Section 14.7, the Holder shall not be liable to the Collateral Agent for any fees, expenses, indemnities or other amounts due to Collateral Agent hereunder or with respect to the subject matter hereof.

 

[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]

 

  

G-26

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

 

	 	
PLEDGOR

 

CT LEGACY SERIES 1 NOTE ISSUER, LLC

a Delaware limited liability company

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

G-27

  

 

	 	

HOLDER

 

[_____]

a [_______]

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
Account Information:

 

[________________]

[________________]

	 
	 	 	 	 

 

  

G-28

  

 

	 	

COLLATERAL AGENT

 

U.S. Bank, National Association, as Collateral Agent

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

G-29

  

 

SCHEDULE 1

 

(LLC Membership Interests)

 

  

G-30

  

 

SCHEDULE 2

(Account Information)

 

  

G-31

  

 

Exhibit A

Form of Unit Power

 

  

G-32

  

 

Unit Power

 

FOR VALUE RECEIVED, the undersigned does hereby irrevocably sell, assign and transfer to ______________________, [●] ([●]) CLASS [●] UNITS of CT Legacy REIT Holdings, LLC (the “Company”), standing in the name of the undersigned on the books of the Company and represented by Certificate No. [●], and does hereby irrevocably constitute and appoint _______________________ as attorney to transfer said units on the books of the Company with full power of substitution in the premises.

Dated:  ____________________

	 	 	
CT Legacy Series 2 Note Issuer, LLC

	 	 	 
	 	 	 	 
	
 

	
 

	 	 
	 	 	
Name: Geoffrey G. Jervis

Title: Chief Financial Officer

	 
	 	 	 	 

 

  

G-33

  

 

Exhibit B

[additional parties]

 

  

G-34

  

 

EXHIBIT H

 

FORM OF PAY-OFF LETTER

 

 

[WESTLB AG, NEW YORK BRANCH]

 

 

March [  ], 2011

 

Re:           Payoff Letter

 

Dear Ladies and Gentlemen:

 

Reference hereby is made to the Amended and Restated Credit Agreement (heretofore amended, restated, supplemented or otherwise modified, the “Credit Agreement”), dated as of March 16, 2009, among CAPITAL TRUST, INC., a Maryland corporation (the “Borrower”), the banks and financial institutions listed on the signature pages hereto (each as a “Lender” and collectively, the “Lenders”), and WESTLB AG, NEW YORK BRANCH, for itself as a Lender, and as agent for the Lenders (in such capacity, the “Administrative Agent”).  Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Credit Agreement.

 

The Borrower has informed the Lenders and the Administrative Agent that Borrower expects to pay, issue and/or deliver, as applicable, to the Lenders an aggregate of (i) $22,932,203.89 in cash in immediately available funds (the “Cash”), (ii) 2,415,625 Class A-2 Units of CT Legacy REIT Holdings, LLC (the “Units”), and (iii) $2,777,775.75 principal amount of 8.19% series 1 secured notes due 2016 of CT Legacy Series 1 Note Issuer, LLC (the “Series 1 LLC Interest Secured Notes,” together with the Cash and Units, the “Payoff Amount”), which Payoff Amount the Lenders and Administrative Agent have agreed to accept in exchange for and in full satisfaction of the Obligations under the Credit Agreement.

 

1.           This letter (this “Payoff Letter”) will confirm that upon:

 

	
  

	
(a)

	
receipt by the Lenders of immediately available funds constituting the Cash amount, paid in accordance with the wire instructions set forth in Exhibit A hereto;

 

	 	
(b)

	
receipt by the Lenders of the Units;

 

	
  

	
(c)

	
receipt by the Lenders of the Series 1 LLC Interest Secured Notes; and

 

  

H-1

  

 

	
  

	
(d)

	
receipt by the Administrative Agent of a fully executed counterpart of this Payoff Letter signed by the Borrower,

 

(the date on which all of the foregoing conditions shall first be satisfied herein called the “Payoff Date”), all of the Obligations (other than the Obligations of the Borrower described in Section 4 of this Payoff Letter) shall be paid and satisfied in full.

 

2.           The Borrower:

 

(a)           acknowledges and agrees that:

 

(i)           the amounts referred to in Section 1 above are enforceable obligations of such Borrower, payable to the Lenders and Administrative Agent pursuant to the provisions of the Credit Agreement and the other Loan Documents without any deduction, offset, defense or counterclaim;

 

(ii)           prior to the Payoff Date, nothing contained herein shall constitute a waiver of any Default or Event of Default or of the Lenders’ and Administrative Agent’s rights and remedies under the Credit Agreement or any other Loan Documents;

 

(iii)           as of the Payoff Date, the Lenders and Administrative Agent shall have no further (A) commitment to provide Loans or other financial accommodations under the Credit Agreement or the other Loan Documents and (B) obligation, duty or responsibility under the Credit Agreement, any other Loan Documents or any other document or agreement executed and/or delivered in connection therewith, except as expressly set forth in Sections 3(c) and 3(d) below; and

 

(b)           upon satisfaction of the conditions to the Payoff Date set forth in Section 1 hereof, irrevocably and without further action releases each of the Lenders and the Administrative Agent, together with each of their respective predecessors, successors, assigns, subsidiaries, affiliates and agents and all of their respective past, present and future officers, directors, shareholders, employees, contractors and attorneys and their respective predecessors, heirs, successors and assigns, from any and all claims, actions and liabilities with respect to the Credit Agreement and all transactions related thereto arising prior to the date hereof.

 

3.           Upon satisfaction of the conditions to the Payoff Date set forth in Section 1 hereof, each of the Lenders and the Administrative Agent acknowledges and agrees, on and with effect from the Payoff Date:

 

(a)           that all of the Lenders’ and Administrative Agent’s security interests in and other Liens on any and all properties and assets of the Borrower whether personal, real or mixed, tangible or intangible granted by or arising under the Credit Agreement or any other Loan Documents shall be, without further action, terminated, released and discharged, and shall be automatically reassigned to the Borrower, as applicable;

 

  

H-2

  

 

(b)           that the Credit Agreement and the other Loan Documents (including, without limitation, any rights of any Lender or the Administrative Agent under any control agreement, in each case entered into in connection with the Credit Agreement) shall, without further action, terminate and be of no further force or effect, except for those provisions of the Credit Agreement and the other Loan Documents that by their terms survive such termination and except as expressly provided herein;

 

(c)           the Administrative Agent shall promptly deliver to the Borrower an executed notice of termination of the Securities Account Control Agreement, dated as of March 16, 2009, among Borrower, the Administrative Agent and Bank of America, National Association (the “Control Agreement”), substantially in the form attached hereto as Exhibit B; and

 

(d)           at the reasonable request of the Borrower (such request to be reasonable in all respects, including, without limitation, with respect to the form and substance of such additional instruments or writings), to execute such additional instruments and other writings, and take such other action, as the Borrower may reasonably request to effect or evidence the satisfaction of the Obligations, the termination of the effectiveness of the Credit Agreement, the other Loan Documents or any instruments executed pursuant thereto (other than those provisions that by their terms survive such termination), or the release of any Liens in favor of the Administrative Agent described in paragraph 3(a) above or that now or hereafter arise under the Credit Agreement or the other Loan Documents, but, in each case, without recourse to the Lenders or Administrative Agent, and without any representation or warranty of any kind, express or implied, and at the sole cost and expense of the Borrower; and

 

(e)           that each of the Lenders irrevocably and without further action releases the Borrower, together with its predecessors, successors, assigns, subsidiaries, affiliates and agents and all of their respective past, present and future officers, directors, shareholders, employees, contractors and attorneys and their respective predecessors, heirs, successors and assigns, from any and all claims, actions and liabilities with respect to the Credit Agreement Obligations, the Control Agreement, and that certain Pledge and Security Agreement, dated as of March 16, 2009 between the Borrower and the Administrative Agent, arising prior to the date hereof; provided, however, that none of the foregoing shall be released of claims, actions and liabilities arising from fraud, mutual mistake, misrepresentation, misappropriation or omission of any material fact.

 

4.           Notwithstanding anything to the contrary contained herein, nothing in this Payoff Letter shall terminate or otherwise impair any provision of any Loan Documents that survives termination thereof or payment of the Obligations.  Without limiting the preceding sentence, nothing in this Payoff Letter shall terminate or otherwise impair the Obligations with respect to the indemnification provisions and expense reimbursement provisions of the Loan Documents that survive the termination thereof and the payment of all amounts owing thereunder (including, without limitation, the expenses, indemnity and damage waiver provisions set forth in Section 9.03 of the Credit Agreement).

 

  

H-3

  

 

5.           The Borrower shall pay on demand all of the fees, costs and expenses incurred by the Administrative Agent (including, without limitation, the fees, costs and expenses of counsel to the Administrative Agent) in connection with the preparation, execution, delivery and performance of this Payoff Letter and the documents and instruments referred to in Sections 3(c) and 3(d) hereof.

 

6.           If any payment, issuance and/or delivery of the Payoff Amount as contemplated herein (or any portion thereof) to any Lender or the Administrative Agent shall be subsequently invalidated, declared to be fraudulent or a fraudulent conveyance or preferential, avoided, rescinded, set aside or otherwise required to be returned or repaid, whether in bankruptcy, reorganization, insolvency or similar proceedings involving the Borrower or otherwise, then the Obligations shall immediately be reinstated, without need for any action by any Person, and shall be enforceable against the Borrower and its successors and assigns as if such payment had never been made (in which case this Payoff Letter shall in no way impair the claims of the Lenders and Administrative Agent with respect to such payment or transfer).

 

7.           The Borrower confirms its agreement to the terms and provisions of this Payoff Letter by returning to the Administrative Agent a signed counterpart of this Payoff Letter.  This Payoff Letter may be amended, modified or waived only in a writing signed by each of the parties hereto.  This Payoff Letter may be executed by each party hereto on a separate counterpart, each of which when so executed and delivered shall be an original, but all of which together shall constitute one agreement.  Delivery of an executed counterpart by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart.

 

8.           This Payoff Letter shall be binding on and shall inure solely to the benefit of the Lenders, Administrative Agent, Borrower and their respective successors and assigns, and no other Person shall have any rights herein as a third party beneficiary or otherwise.

 

9.           If the Payoff Date does not occur on or before 5:00 pm (New York City time) on [     , 2011], this Payoff Letter shall automatically terminate and shall have no further force or effect.

 

10.          Section headings used herein are for convenience of reference only, are not part of this Payoff Letter and shall not affect the construction of, or be taken into consideration in interpreting, this Payoff Letter.

 

11.          This Payoff Letter may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

 

12.          THIS PAYOFF LETTER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS PAYOFF LETTER OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

 

  

H-4

  

 

[Signatures appear on following pages]

 

  

H-5

  

 

	 	
Very truly yours,

 

ADMINISTRATIVE AGENT:

WESTLB AG, NEW YORK BRANCH

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

H-6

  

 

	 	

LENDERS:

WESTLB AG, NEW YORK BRANCH

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

H-7

  

 

	 	

BNP PARIBAS

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

  

  

H-8

  

 

	 	

MORGAN STANLEY SENIOR FUNDING, INC.

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

H-9

  

 

	 	

JPMORGAN CHASE BANK, N.A., successor to

BEAR STEARNS CORPORATE LENDING, INC.

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

H-10

  

 

	 	

DEUTSCHE BANK TRUST COMPANY AMERICAS

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

H-11

  

 

	 	

WELLS FARGO BANK, NATIONAL ASSOCIATION

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

H-12

  

 

	 	

BORROWER

 

CAPITAL TRUST, INC., a Maryland corporation

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	

Name: Geoffrey G. Jervis

Title: Chief Financial Officer

	 
	 	 	 	 

 

  

H-13

  

 

EXHIBIT A

 

[WIRE INSTRUCTIONS]

 

  

H-14

  

 

[WIRE INSTRUCTIONS CONT.]

 

  

H-15

  

 

EXHIBIT B

FORM OF NOTICE OF TERMINATION

 

WestLB AG, New York Branch

7 World Trade Center

250 Greenwich Street

New York, NY 10007

 

March __, 2011

 

Bank of America, National Association,

as Securities Intermediary

135 South LaSalle Street, Suite 1625

Chicago, IL 60603

Attention: Kristen Packwood

 

	
  

	
Re:

	
Termination of Securities Account Control Agreement

 

You are hereby notified that the Securities Account Control Agreement dated as of March 16, 2009 among you, Capital Trust, Inc., a Maryland corporation (the “Debtor”), and the undersigned (a copy of which is attached) is terminated and you have no further obligations to the undersigned pursuant to such agreement.  Notwithstanding any previous instructions to you, you are hereby instructed to accept all future directions with respect to account number [***] the “Securities Account”) from the Debtor.  This notice terminates any obligations you may have to the undersigned with respect to such Securities Account however nothing contained in this notice shall alter any obligations which you may otherwise owe to the Debtor pursuant to any other agreement.

 

You are instructed to deliver a copy of this notice by facsimile transmission to the Debtor.

 

 

	 	

Very truly yours,

 

WESTLB AG, New York Branch, as Collateral Agent

	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	
Name:

Title:

	 
	 	 	 	 

 

  

H-16

  

 

SCHEDULE A

 

Significant Subsidiaries of CT Legacy Holdings and CT Legacy REIT Holdings

 

 

CT Legacy REIT Mezz Borrower, Inc.

CT Legacy Asset, LLC

CT Legacy JPM SPV, LLC

CT Legacy MS SPV, LLC

CT Legacy Citi SPV, LLC

 

 

 

Sch. A

 

  

  

  

 

ANNEX A-I

 

Form of Paul, Hastings, Janofsky & Walker LLP Opinion

 

[opinion paragraphs]

 

1.           Each CT Entity has duly delivered the Transaction Documents to which it is a party under New York Law.

 

2.           The Exchange Agreement constitutes a valid and binding obligation of each CT Entity under New York law enforceable against each CT Entity in accordance with its terms. The Pledge Agreements and the Security and Control Agreements constitute valid and binding obligations under New York law of CT Series 1 Note Issuer, enforceable against CT Series 1 Note Issuer in accordance with their terms.

 

3.           The Series 1 LLC Interest Secured Notes, when duly authorized, executed and delivered by CT Series 1 Note Issuer and issued in exchange for and in full satisfaction of the Credit Agreement Obligations and the release of the Collateral and Liens and the termination and discharge of the Credit Agreement and the Security Agreements in accordance with the terms of the Exchange Agreement, will constitute valid and binding obligations of CT Series 1 Note Issuer under New York law,  enforceable against CT Series 1 Note Issuer in accordance with their terms.

 

4.           No registration under the Securities Act of 1933, as amended (the “Securities Act”), of the Series 1 LLC Interest Secured Notes or the Units is required in connection with the issuance of the Series 1 LLC Interest Secured Notes or the Units to the WestLB Lenders, all as contemplated by the Exchange Agreement, in each case assuming (i) that the WestLB Lenders are “accredited investors” as defined in Rule 501 promulgated under the Securities Act, (ii) the accuracy of the WestLB Lenders’ representations and warranties made in Section 5 of the Exchange Agreement and those of the CT Entities contained in the Exchange Agreement regarding the absence of a general solicitation in connection with the delivery of such Units and Series 1 LLC Interest Secured Notes to the WestLB Lenders pursuant to the Exchange Agreement and (iii) the due performance by the WestLB Lenders of the agreements of the WestLB Lenders set forth in the Exchange Agreement.

 

5.           The performance by each CT Entity of its obligations under the Transaction Documents to which it is a party does not cause such CT Entity to violate any United States federal or New York State law, regulation or rule applicable to such CT Entity.

 

6.           No consent, approval, authorization or order of, or filing or registration with, any United States federal or State of New York court or governmental agency or body is required for the performance of the Transaction Documents or for the consummation of the transactions contemplated thereby by each of the CT Entities which are parties thereto, except such as may be required under or by the Securities Act.

 

7.           Neither CT nor CT Legacy REIT Holdings is and, immediately after the closing of the transaction contemplated by the Exchange Agreement, neither CT nor CT Legacy REIT Holdings will be, an “investment company,” as defined in the Investment Company Act of 1940, as amended.

 

  

Annex A-1-1

  

 

8.             (a)           The Pledge Agreements create in favor of the Collateral Agent, for the benefit of the respective Holder (as defined in the Pledge Agreements) party thereto, valid security interests the Uniform Commercial Code as in effect in the State of New York (the “New York UCC”) in the rights of CT Series 1 Note Issuer in such of the Series 1 Collateral in which security interests can be created under Article 9 of the New York UCC.

 

(b)           The Pledge Agreements, together with the delivery to the Collateral Agent in the State of New York of all security certificates representing the Pledged Units accompanied by unit powers in blank and duly executed by or on behalf of the appropriate persons, will create in favor of the Collateral Agent, for the benefit of the respective Holder party thereto, a perfected security interest under Article 9 of the New York UCC in the Pledged Units.

 

(c)           Assuming (i) the “Bank” as defined in both of the Security and Control Agreements is a “bank” within the meaning of Section 9-102(a)(8) of the New York UCC, (ii) each “Account” as defined in the Security and Control Agreements constitutes a “deposit account” within the meaning of Section 9-102(a)(29) of the New York UCC and is in the name of CT Series 1 Note Issuer, as the Bank’s sole “customer” (within the meaning of Section 4-104 of the New York UCC) with respect to such Account, and (iii) the State of New York is the “bank’s jurisdiction” (within the meaning of Section 9-304 of the New York UCC) with respect to the Account, then (i) the Security and Control Agreements are effective to perfect the security interest of the Series 1 LLC Interest Secured Note Collateral Agent in each Account under the New York UCC and (ii) assuming no other person has “control” (within the meaning of Section 9-104 of the New York UCC) with respect to such Account, then except with respect to the security interest of the Bank, such perfected security interest has priority over all other security interests created in such Account under the New York UCC.

 

  

Annex A-1-2

  

 

ANNEX A-II

 

 

Form of Venable Opinion

 

[opinion paragraphs]

 

1.           The Company is a corporation duly incorporated and validly existing under the laws of the State of Maryland and is in good standing with the SDAT.  The Company has the corporate power to (a) carry on its business and to own or lease and operate its properties in all material respects as described in the 10-K under the under the caption “Item 1. Business” and (b) enter into and perform its obligations under the Agreement.

 

2.           The execution and delivery by the Company of the Agreement have been duly authorized by all necessary corporate action on the part of the Company.

 

3.           The Company has duly executed and, so far as known to us, delivered the Agreement.

 

4.           The execution and delivery by the Company of the Agreement, and the performance of its obligations thereunder, do not conflict with or violate (i) the Charter or the Bylaws or (ii) the Maryland General Corporation Law (the “MCGL”).

 

  

Annex A-II-1

  

 

ANNEX A-III

 

 

Form of RLF Opinion

 

[opinion paragraphs]

 

Authority to File Voluntary Bankruptcy Petition

CT LEGACY SERIES 1 NOTE ISSUER, LLC

Based upon the foregoing, and upon our examination of such questions of law and statutes as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that a federal bankruptcy court would hold that Delaware law, and not federal law, governs the determination of what persons or entities have authority to file a voluntary bankruptcy petition on behalf of the Company.  Our opinion is based on the assumption that in any case in which this question is considered, the question will be competently briefed and argued.  Our opinion is reasoned and also presumes that any decision rendered will be based on existing legal precedents, including those discussed below.

 

  

Annex A-III-1

  

 

State Law Opinion

CT LEGACY SERIES 1 NOTE ISSUER, LLC

1.           The Company has been duly formed and is validly existing in good standing as a limited liability company under the laws of the State of Delaware.

 

2.           Under the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, etseq. (the “LLC Act”), and the LLC Agreement, the Company has all necessary limited liability company power and authority to execute and deliver the Transaction Documents, and to perform its obligations thereunder.

 

3.           Under the LLC Act and the LLC Agreement, the execution and delivery by the Company of the Transaction Documents, and the performance by the Company of its obligations thereunder, have been duly authorized by all necessary limited liability company action on the part of the Company.

 

4.           No authorization, consent, approval or order of any Delaware court or any Delaware governmental or administrative body is required to be obtained by the Company solely in connection with the execution and delivery by the Company of the Transaction Documents, or the performance by the Company of its obligations thereunder.

 

5.           The execution and delivery by the Company of the Transaction Documents, and the performance by the Company of its obligations thereunder, do not violate (i) any Delaware law, rule or regulation, or (ii) the LLC Certificate or the LLC Agreement.

 

6.           The LLC Agreement constitutes a legal, valid and binding agreement of the Member, and is enforceable against the Member, in accordance with its terms.

 

7.           If properly presented to a Delaware court, a Delaware court applying Delaware law would conclude that (i) so long as any Obligation is outstanding, in order for a Person to file a voluntary bankruptcy petition on behalf of the Company, the prior written consent of the Independent Manager, as provided for in Section 9(j)(iii) of the LLC Agreement, is required, and (ii) such provision, contained in Section 9(j)(iii) of the LLC Agreement, that requires, so long as any Obligation is outstanding, the prior written consent of the Independent Manager in order for a Person to file a voluntary bankruptcy petition on behalf of the Company, constitutes a legal, valid and binding agreement of the Member, and is enforceable against the Member, in accordance with its terms. 

 

8.           While under the LLC Act, on application to a court of competent jurisdiction, a judgment creditor of the Member may be able to charge the Member’s share of any profits and losses of the Company and the Member's right to receive distributions of the Company's assets (the “Member's Interest”), to the extent so charged, the judgment creditor has only the right to receive any distribution or distributions to which the Member would otherwise have been entitled in respect of such Member's Interest.  Under the LLC Act, no creditor of the Member shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the Company.  Thus, under the LLC Act, a judgment creditor of the Member may not satisfy its claims against the Member by asserting a claim against the assets of the Company.

 

  

Annex A-III-2

  

 

9.           Under the LLC Act (i) the Company is a separate legal entity, and (ii) the existence of the Company as a separate legal entity shall continue until the cancellation of the LLC Certificate.

 

10.           Under the LLC Act and the LLC Agreement, the Bankruptcy or dissolution of the Member will not, by itself, cause the Company to be dissolved or its affairs to be wound up.

 

  

Annex A-III-3

  

 

Form of UCC Opinion

1.           The Financing Statement is in an appropriate form for filing with the Division.

 

2.           Insofar as Article 9 of the Uniform Commercial Code as in effect in the State of Delaware on the date hereof (the “Delaware UCC”) is applicable (without regard to conflict of laws principles), upon the filing of the Financing Statement with the Division, the Collateral Agent will have a perfected security interest in the Company's rights in that portion of the Collateral described in the Financing Statement in which a security interest may be perfected by the filing of a UCC financing statement with the Division (the “Filing Collateral”) and the proceeds (as defined in Section 9-102(a)(64) of the Delaware UCC) thereof.

 

  

Annex A-III-4

  

 

State Law Opinion

CT LEGACY HOLDINGS, LLC

CT LEGACY REIT HOLDINGS, LLC

 

1.           Each Company has been duly formed and is validly existing in good standing as a limited liability company under the laws of the State of Delaware.

 

2.           Under the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, etseq. (the “LLC Act”), the Legacy Holdings Consent and the Legacy Holdings LLC Agreement, Legacy Holdings has the requisite limited liability company power and authority to execute and deliver the Transaction Documents to which it is a party, and to perform its obligations thereunder.  Under the LLC Act and the REIT Holdings LLC Agreement, REIT Holdings has the requisite limited liability company power and authority to execute and deliver the Transaction Documents to which it is a party, and to perform its obligations thereunder.

 

3.           Under the LLC Act, the Legacy Holdings Consent and the Legacy Holdings LLC Agreement, the execution and delivery by Legacy Holdings of the Transaction Documents to which it is a party, and the performance by Legacy Holdings of its obligations thereunder, have been duly authorized by the requisite limited liability company action on the part of Legacy Holdings.  Under the LLC Act and the REIT Holdings LLC Agreement, the execution and delivery by REIT Holdings of the Transaction Documents to which it is a party, and the performance by REIT Holdings of its obligations thereunder, have been duly authorized by the requisite limited liability company action on the part of REIT Holdings.

 

4.           No authorization, consent, approval or order of any Delaware court or any Delaware governmental or administrative body is required to be obtained by a Company solely in connection with the execution and delivery by such Company of the Transaction Documents to which it is a party, or the performance by such Company of its obligations thereunder.

 

5.           The execution and delivery by a Company of the Transaction Documents to which it is a party, and the performance by such Company of its obligations thereunder, do not violate (i) any Delaware law, rule or regulation, or (ii) the applicable LLC Certificate or the applicable LLC Agreement. 

 

Annex A-III-5

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