Document:

Unassociated Document

  

 

Exhibit 10.20

 

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 2 Note Issuer, LLC, a Delaware limited liability company (“CT Series 2 Note Issuer”), CT Legacy REIT Mezz Borrower, Inc., a Maryland corporation (“CT Legacy REIT Mezz Borrower” and, together with CT, CT Legacy Holdings and CT Series 2 Note Issuer, the “CT Entities” or individually, a “CT Entity”), and each of Kodiak CDO II, Ltd. (“Kodiak”), Talon Total Return QP Partners LP (“Talon Total Return QP”),  Talon Total Return Partners LP (“Talon Total Return”), GPC 69, LLC (“GPC”), HFR RVA Opal Master Trust (“HFR”) and Paul Strebel (“Strebel” and together with Kodiak, Talon Total Return QP, Talon Total Return, GPC, and HFR, the “Opt-Out Entities” or individually, an “Opt-Out Entity” and, together with the CT Entities, collectively, the “Parties” and each, individually, a “Party”).

 

WHEREAS:

 

A.           Reference is made to that certain Junior Subordinated Indenture, dated as of May 14, 2009 (as the same may have been amended, modified or supplemented from time to time, the “Existing Indenture”), by and between CT and The Bank of New York Mellon Trust Company, National Association (the “Existing Indenture Trustee” or “BNYM”).

 

B.           Kodiak is the holder of $13,513,000 aggregate principal amount of Junior Subordinated Notes due 2036 issued by CT pursuant to the Existing Indenture (“Existing Notes”), Talon Total Return QP is the holder of $6,860,000 aggregate principal amount of Existing Notes, Talon Total Return is the holder of $1,965,000 aggregate principal amount of Existing Notes, GPC is the holder of $1,676,000 aggregate principal amount of Existing Notes, HFR is the holder of $1,001,000 aggregate principal amount of Existing Notes and Strebel is the holder of $144,000 aggregate principal amount of Existing Notes.

 

C.           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.

 

D.           In furtherance of the Restructuring, CT has formed CT Legacy Manager, LLC, 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 JSN Opt-Out Exchange Transaction, pursuant to which CT and CT Legacy Holdings will deliver cash, shares of Class B Common Stock of CT Legacy REIT Mezz Borrower and notes of CT Series 2 Note Issuer to the Opt-Out Entities in exchange for the Existing Notes and the Existing Noteholders Transferred Rights whereby the Existing Notes and the Existing Noteholders Transferred Rights shall be satisfied in full, terminated and discharged.

 

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 Stock, the Series 2 LLC Interest Secured Notes and the Pledge 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:

 

“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.

 

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

 

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

 

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

 

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

 

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

 

“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 REIT Mezz Borrower” has the meaning set forth in the introductory paragraph hereof.

 

“CT Series 2 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(b).

 

“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.

 

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

 

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

 

“Existing Noteholders Transferred Rights” means any and all of the Opt-Out Entities’ right, title, obligations and interest in, to and under the Existing Notes and the Existing Indenture, including, without limitation, the following:

 

(i)           all amounts outstanding or payable to the Opt-Out Entities under the Existing Notes and/or the Existing Indenture;

 

(ii)           all claims (including “claims” as defined in Section §101(5) of the Bankruptcy Code), suits, causes of action, and any other right of the Opt-Out Entities, whether known or unknown, against CT or any of its affiliates, agents, representatives, contractors, advisors, or any other entity that in any way is based upon, arises out of or is related to any of the foregoing, including all claims (including contract claims, tort claims, malpractice claims, and claims under any law governing the exchange of, purchase and sale of, or indentures for, securities), suits, causes of action, and any other right of the Opt-Out Entities against any attorney, accountant, financial advisor, or other entity arising under or in connection with the Existing Notes, the Existing Indenture or the transactions related thereto or contemplated thereby, except in each case for claims of fraud by CT or any of its Affiliates party thereto;

 

  

  

  

 

(iii)           all guarantees and all collateral and Liens of any kind for or in respect of the foregoing;

 

(iv)           all cash, securities, or other property, and all setoffs and recoupments, to be received, applied, or effected by or for the account of the Opt-Out Entities under the Existing Notes and the Existing Indenture; and

 

(v)           all proceeds of the foregoing.

 

“Existing Notes” has the meaning set forth in the Recitals.

 

“Financial Statements” has the meaning set forth in Section 4(cc).

 

“GAAP” has the meaning set forth in Section 4(u).

 

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

 

“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).

 

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

 

“Indemnified Parties” has the meaning set forth in Section 9(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).

 

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

 

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

 

“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).

 

  

  

  

 

“Opt-Out Entities” has the meaning set forth in the introductory paragraph hereof.

 

“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.

 

“Series 1 Notes” has the meaning set forth in Section 7(a).

 

“Series 2 LLC Interest Secured Note Collateral Agent” shall mean U.S. Bank, National Association.

 

“Series 2 LLC Interest Secured Notes” has the meaning set forth in Section 2(a).

 

“Significant Subsidiary” has the meaning set forth in Commission Regulation S-X.

 

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

 

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

 

“Talon Total Return” has the meaning set forth in the introductory paragraph hereof.

 

“Talon Total Return QP” has the meaning set forth in the introductory paragraph hereof.

 

“Tax” has the meaning set forth in Section 4(t).

 

“Tax Returns” has the meaning set forth in Section 4(t).

 

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

 

	
  

	
2.

	
Exchange and Closing.

 

(a)           Subject to the terms and conditions contained herein, on the Closing Date, CT, CT Legacy Holdings and CT Series 2 Note Issuer, as applicable, agree to issue and/or deliver, as applicable, to the Opt-Out Entities an aggregate of (1) $812,137.94 in cash in immediately available funds (the “Cash”), (2) 256,324 shares of class B common stock, par value $0.001 per share, of CT Legacy REIT Mezz Borrower (the “Stock”) and (3) $875,078.91 principal amount of 8.19% series 2 secured notes due 2016 of CT Series 2 Note Issuer in the form attached as Exhibit C hereto (the “Series 2 LLC Interest Secured Notes”), secured by an aggregate of 543,565 Class A-1 Units of CT Legacy REIT Holdings (the “New LLC Interests”), in each case, in the amounts set forth next to each Opt-Out Entity’s name on Exhibit D attached hereto and have requested that the Opt-Out Entities accept such Cash, Stock and Series 2 LLC Interest Secured Notes in exchange for the Existing Notes and the Existing Noteholders Transferred Rights, and the Opt-Out Entities agree to accept such Cash, Stock and Series 2 LLC Interest Secured Notes in exchange for the Existing Notes and Existing Noteholders Transferred Rights (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 Opt-Out Entities hereby agree that prior to or at the Closing of the exchange (the “Exchange”) the following transactions will occur and items will be delivered:

 

(i)           CT will pay the Cash to each Opt-Out Entity in the amounts set forth next to each Opt-Out Entity’s name on Exhibit D attached hereto in accordance with the wire transfer instructions on Exhibit E hereto.

 

(ii)           CT Series 2 Note Issuer, each Opt-Out Entity and the Series 2 LLC Interest Secured Note Collateral Agent shall enter into a pledge and security agreement, in the form attached as Exhibit F hereto (the “Pledge Agreement”), relating to the pledge by CT Series 2 Note Issuer of the New LLC Interests securing the Series 2 LLC Interest Secured Notes, with each Opt-Out Entity being the secured party under the terms of the Pledge Agreement for the number of New LLC Interests as set forth next to each Opt-Out Entity’s name on Exhibit D attached hereto.

 

(iii)           CT Legacy Holdings shall deliver certificates for the Stock to each Opt-Out Entity for the number of shares set forth next to each Opt-Out Entity’s name on Exhibit D attached hereto.

 

(iv)           CT Legacy Holdings shall deliver the Series 2 LLC Interest Secured Notes to each Opt-Out Entity in the aggregate principal amounts set forth next to each Opt-Out Entity’s name on Exhibit D attached hereto.

 

(v)           Kodiak CDO Management, LLC (the “Collateral Manager”) shall, in connection with the delivery of an issuer order, request the delivery of the Existing Notes held by or on behalf of Kodiak to BNYM, and the Existing Notes held by or on behalf of Talon Total Return QP, Talon Total Return, GPC, HFR and Strebel shall be delivered to BNYM by Talon Total Return QP, Talon Total Return, GPC, HFR and Strebel, respectively.

 

  

  

  

 

(vi)           Effective at the Closing, each Opt-Out Entity shall irrevocably and without further action transfer, assign, grant and convey the Existing Notes and Existing Noteholders Transferred Rights to CT and shall release 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 Existing Notes, the Existing Indenture and the Existing Noteholders Transferred Rights.  Effective at the Closing, the CT Entities shall release each Opt-Out Entity, 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 Existing Notes, the Existing Indenture and the Existing Noteholders Transferred Rights.

 

(vii)           The Existing Notes shall be cancelled and the Existing Indenture shall be terminated and discharged by the Existing Indenture Trustee at the request of CT.

 

(viii)           CT shall pay to BNYM all of such party’s reasonable legal fees for one counsel, costs and other expenses in connection with the satisfaction, termination and discharge of the Existing Notes and Existing Indenture.

 

(ix)           CT shall pay to Kodiak all of its reasonable legal fees for one counsel, costs and other expenses in connection with the Exchange.

 

(x)           Prior to or simultaneously with the occurrence of the events described in subsections (i) through (ix) above in connection with the JSN Opt-Out Exchange 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 WestLB Loan Termination Transaction, the Old JSN Discharge Transaction, the Non-EOD CDO Restructure 1 Contribution Transaction, the EOD CDO Redemption Transaction and the Old JSN 2 Discharge 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 each Opt-Out Entity, in substantially the form set out in Annex A-I hereto, Venable LLP, Maryland counsel for CT and CT Legacy REIT Mezz Borrower (“Venable”), shall have delivered an opinion, dated the Closing Date, addressed to each Opt-Out Entity, in substantially the form set out in Annex A-II hereto, and Richards, Layton & Finger, P.A., counsel to CT Legacy Holdings and CT Series 2 Note Issuer (“RLF”), shall have delivered an opinion, dated the Closing Date, addressed to each Opt-Out Entity, in substantially the form set out in Annex A-III hereto.  In rendering their opinions, the Company Counsel, Venable and RLF may rely as to factual matters upon certificates or other documents furnished by officers, directors and trustees of the 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, Venable and RLF opinions.  Company Counsel, Venable and RLF 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 WestLB Loan Termination Transaction, the Old JSN Discharge Transaction, the Non-EOD CDO Restructure 1 Contribution Transaction, the EOD CDO Redemption Transaction and the Old JSN 2 Discharge 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.

 

(d)             The CT Entities shall each have furnished a certificate of such CT Entity to the Opt-Out Entities, 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 Opt-Out Entities 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)(i)-(ix) shall be executed and delivered and each of the items in Section 2(b)(i)-(ix) 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 Opt-Out Entities 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 2 Note Issuer and CT Legacy REIT Mezz Borrower.  Each of CT, CT Legacy Holdings, CT Series 2 Note Issuer and CT Legacy REIT Mezz Borrower represents, warrants and covenants to each of the Opt-Out Entities 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 Opt-Out Entities or any of their Affiliates could be responsible.

 

(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 2 Note Issuer or CT Legacy REIT Mezz Borrower, or solicited offers to buy any security of CT Series 2 Note Issuer or CT Legacy REIT Mezz Borrower, under any circumstances that would require the registration of any of the Stock or Series 2 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 Stock or Series 2 LLC Interest Secured Notes.

 

(e)           The Stock and the Series 2 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 Stock and the Series 2 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 Stock or the Series 2 LLC Interest Secured Notes.

 

  

  

  

 

(g)           Neither CT Series 2 Note Issuer nor CT Legacy REIT Mezz Borrower 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 Opt-Out Entities, 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 Stock, the Series 2 LLC Interest Secured Notes and the New LLC Interests, as applicable, and shall deliver the Stock, the Series 2 LLC Interest Secured Notes and the New LLC Interests pursuant to this Agreement free and clear of any Lien.

 

(j)           The Stock has been duly authorized by CT Legacy REIT Mezz Borrower and, upon the issuance and delivery of the Stock to the Opt-Out Entities in exchange for the Existing Notes and Existing Noteholders Transferred Rights, 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 2 LLC Interest Secured Notes have been duly authorized by CT Series 2 Note Issuer and, on the Closing Date, when delivered to the Opt-Out Entities in exchange for the Existing Notes and the Existing Noteholders Transferred Rights, will constitute legal, valid and binding obligations of CT Series 2 Note Issuer, enforceable against CT Series 2 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 2 Note Issuer and, assuming due authorization, execution and delivery by each Opt-Out Entity party thereto and the Series 2 LLC Interest Secured Note Collateral Agent, constitutes a legal, valid and binding obligation of CT Series 2 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 Stock nor the Series 2 LLC Interest Secured Notes, 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 (collectively, the “Governmental Entities”) having jurisdiction over the CT Entities or any of their subsidiaries or their respective properties or assets, (ii) will conflict with or constitute a violation or breach of, or a default under, or result in the creation or imposition of any security interests, pledges, liens, claims, encumbrances and interests (each, a “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.

 

  

  

  

 

(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 Mezz Borrower 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 Mezz Borrower and each of their subsidiaries are validly issued, fully paid and non-assessable; all of the issued and outstanding Equity Interests of each consolidated subsidiary of CT Legacy Holdings and CT Legacy REIT Mezz Borrower is owned by CT Legacy Holdings or CT Legacy REIT Mezz Borrower, 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 Mezz Borrower 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 Mezz Borrower or any of their subsidiaries is a party.

 

(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.

 

(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.

 

(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.

 

  

  

  

 

(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 Collateral Manager, the Opt-Out Entities 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 Opt-Out Entities’ express representations, warranties, covenants and agreements in this Agreement.  It acknowledges that neither the Collateral Manager nor the Opt-Out Entities 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.

 

(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 Collateral Manager and the Opt-Out Entities 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 Opt-Out Entities.  Each Opt-Out Entity, for itself, represents, warrants and covenants to each of the CT Entities as follows:

 

(a)           It is a company duly formed, validly existing and in good standing under the laws of the jurisdiction in which it is organized with all requisite (i) power and authority to execute, deliver and perform its obligations under the Operative Documents to which it is a party, (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 each Opt-Out Entity, 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 the Opt-Out Entity of its obligations under this Agreement or to consummate the transactions contemplated herein.

 

(d)           It is a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment Company Act.  It is an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the Securities Act.

 

(e)           The Opt-Out Entities are the sole holders of the Existing Notes and the Existing Noteholders Transferred Rights and shall deliver the Existing Notes and the Existing Noteholders Transferred Rights on the Closing Date to the CT Entities pursuant to this Agreement free and clear of any Lien.

 

(f)           Each Opt-Out Entity is the sole beneficial owner of the aggregate principal amount of Existing Notes as set forth next to its name on Exhibit D hereto.

 

(g)           It is aware that the Stock, Series 2 LLC Interest Secured Notes and New LLC Interests 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.

 

  

  

  

 

(h)           It understands and acknowledges that (i) no public market exists for any of the Stock, Series 2 LLC Interest Secured Notes or New LLC Interests and that it is unlikely that a public market will ever exist for the Stock, Series 2 LLC Interest Secured Notes or New LLC Interests, (ii) such Opt-Out Entity is purchasing the Stock, Series 2 LLC Interest Secured Notes and New LLC Interests 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 Stock, Series 2 LLC Interest Secured Notes and New LLC Interests, 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 Stock, Series 2 LLC Interest Secured Notes and New LLC Interests forever.

 

(i)           It is aware that the Stock, Series 2 LLC Interest Secured Notes and New LLC Interests 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.

 

(j)           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.

 

(k)           It (i) is a sophisticated entity with respect to the Exchange and the transactions contemplated hereby, (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 the transactions contemplated hereby and (iii) has independently and without reliance upon the CT Entities or the other Opt-Out Entities 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 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 Legacy 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 Class A-1 Units and Class A-2 Units of CT Legacy REIT Holdings securing those certain 8.19% series 1 secured notes due 2016 issued by CT Legacy Series 1 Note Issuer, LLC (the “Series 1 Notes”), and the New LLC Interests, neither CT Legacy Holdings nor any of its subsidiaries shall prepay either the Series 1 Notes or the Series 2 LLC Interest Secured Notes unless any prepayment is made pro rata among both the Series 1 Notes and the Series 2 LLC Interest Secured Notes based on the outstanding principal amount thereof, including any payment in kind interest accrued thereon and added thereto.

 

(b)           For so long as Kodiak is the holder of any Stock, CT Legacy Holdings shall provide Kodiak (and any beneficial owner previously notified to CT Legacy Holdings in writing so long as such beneficial owner agrees to be bound by the provisions of Section 19 hereof) with copies of the quarterly and annual financial reports required to be provided to the Mezzanine Loan Lender under the Mezzanine Loan Agreement regardless of whether such mezzanine loan is then outstanding or the Mezzanine Loan Lender actually requests or receives such reports.

 

8.           Payment of Expenses.  On the Closing Date, in addition to the obligations agreed to by CT under Section 2(b)(vii) and (viii) herein, the CT Entities shall pay all reasonable costs and expenses incurred by the Opt-Out Entities in connection with the authorization, execution and delivery of this Agreement and the transactions contemplated hereby, including the reasonable fees of one counsel for Kodiak.  The CT Entities shall pay the fees and all reasonable expenses, including the fees and disbursements of one counsel, for the Series 2 LLC Interest Secured Note Collateral Agent, in its capacity as such.

 

	
  

	
9.

	
Indemnification.

 

(a)  The CT Entities agrees to indemnify and hold harmless BNYM and the Opt-Out Entities (collectively, the “Indemnified Parties”), the Indemnified Parties’ respective directors, officers, employees and agents and each person, if any, who controls the Indemnified Parties within the meaning of the Securities Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which the Indemnified Parties may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on (i) any untrue statement or alleged untrue statement of a material fact 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, covenant or agreement of the CT Entities contained herein or in the Pledge Agreement, 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.

 

10.           Representations, Covenants and Indemnities to Survive.  The respective agreements, representations, covenants, 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 21 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 E.

 

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 Opt-Out Entities.

 

  

  

  

 

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.

 

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, (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 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 become publicly available other than as a result of a breach of this Section 19.  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.

 

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.

 

21.           Recourse to Kodiak.   Recourse hereunder solely with respect to Kodiak shall be limited solely to the assets of Kodiak. To the extent the assets of Kodiak or the proceeds of such assets are insufficient to meet the obligations of Kodiak hereunder in full, Kodiak shall have no further liability in respect of such outstanding obligations. The CT Entities hereby agree not to institute any bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings or other proceedings under U.S. federal or state bankruptcy or similar laws against Kodiak until at least one year and one day or the then applicable preference period under the Bankruptcy Code or, where the context requires, the applicable insolvency provisions of the laws of the Cayman Islands plus ten (10) days after the payment in full of all the securities issued by Kodiak; provided, that nothing in this Section 21 shall preclude the CT Entities from taking any action against Kodiak prior to the expiration of the aforementioned period in (x) any case or proceeding voluntarily filed or commenced by Kodiak or (y) any involuntary insolvency proceeding filed or commenced against Kodiak by a person other than the CT Entities.

 

[Signature Pages Follows]

 

  

  

  

 

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 2 NOTE ISSUER, LLC

	 
	 	 	 	 	 
	
 

	
By: 

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

 

 

	 	

CT LEGACY REIT MEZZ BORROWER, INC.

	 
	 	 	 	 	 
	
 

	
By: 

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

 

(Signatures continue on the next page)

  

  

  

  

 

	 	

KODIAK CDO II, LTD.

	 
	 	 	 	 	 
	 	By:  	Kodiak CDO Management, LLC, as 

Collateral Manager

	 
	 	 	 	 
	 	By: 	Kodiak Funding, LP	 
	 	Its:	Sole Member	 
	 	 	 	 
	 	By: 	Kodiak Funding Company, Inc.	 
	 	Its:	General Partner	 
	 	 	 	 
	 	 	 	 
	
 

	
By:  

	/s/ Robert M. Hurley	 
	 	 	Name:  	Robert M. Hurley	 
	 	 	Title: 	Chief Financial Officer	 
	 	 	 	 	 

 

 

 

(Signatures continue on the next page)

 

  

  

  

 

	 	

TALON TOTAL RETURN QP PARTNERS LP

	 
	 	 	 	 	 
	
 

	
By: 

	/s/ Evan Dreyfuss	 
	 	 	Name:  	Evan Dreyfuss	 
	 	 	Title: 	Portfolio Manager	 
	 	 	 	 	 

 

 

	 	

TALON TOTAL RETURN PARTNERS LP

	 
	 	 	 	 	 
	
 

	
By: 

	/s/ Evan Dreyfuss	 
	 	 	Name:  	Evan Dreyfuss	 
	 	 	Title: 	Portfolio Manager	 
	 	 	 	 	 

 

 

	 	
GPC 69, LLC

	 
	 	 	 	 	 
	
 

	
By: 

	/s/ Evan Dreyfuss	 
	 	 	Name:  	Evan Dreyfuss	 
	 	 	Title: 	Portfolio Manager	 
	 	 	 	 	 

 

 

	 	

HFR RVA OPAL MASTER TRUST

	 
	 	 	 	 	 
	
 

	
By: 

	/s/ Evan Dreyfuss	 
	 	 	Name:  	Evan Dreyfuss	 
	 	 	Title: 	Portfolio Manager	 
	 	 	 	 	 

 

 

(Signatures continue on the next page)

 

  

  

  

 

 

	 	

PAUL STREBEL

	 
	 	 	 	 
	
 

	/s/ Paul Strebel	 
	 	
Paul Strebel

	 

 

 

 

  

  

  

                                                                      

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.

	

[***]  

	

[***]  

	 	 	 
	
11.

	

[***]  

	

[***]  

 

 

	
[***]  

	
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

  

 

	 	 	 
	
12.

	

[***]  

	

[***]  

 

 

	
III.

	
ASSETS TO BE PLEDGED TO JPMORGAN CHASE FUNDING INC.

 

	  	
ASSET

	
INTEREST

	 	 	 
	
13.

	

[***]  

	

[***]  

	 	 	 
	
14.

	

[***]  

	

[***]  

	 	 	 
	
15.

	

[***]  

	

[***]  

	 	 	 
	
16.

	

[***]  

	

[***]  

	 	 	 
	
17.

	

[***]  

	

[***]  

 

 

	
[***]  

	
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

  

 

	 	 	 
	
18.

	

[***]  

	

[***]  

	 	 	 
	
19.

	

[***]  

	

[***]  

	 	 	 
	
20.

	

[***]  

	

[***]  

	 	 	 
	
21.

	

[***]  

	

[***]  

	 	 	 
	
22.

	

[***]  

	

[***]  

	 	 	 
	
23.

	

[***]  

	

[***]  

	 	 	 
	
24.

	

[***]  

	

[***]  

 

 

	
IV.

	
ASSETS TO BE HELD BY CT LEGACY MS SPV, LLC

 

	  	
ASSET

	
INTEREST

	 	 	 
	
1.

	

[***]  

	

[***]  

	 	 	 
	
2.

	

[***]  

	

[***]  

	 	 	 
	
3.

	

[***]  

	

[***]  

 

 

	
[***]  

	
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

  

 

	 	 	 
	
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.

	

[***]  

	

[***]  

	 	 	 
	
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-5

  

 

	 	 	 
	
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

 

FORM OF SERIES 2 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 2 NOTE ISSUER, LLC (“CT SERIES 2 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 2 NOTE ISSUER, CT LEGACY REIT MEZZ BORROWER, KODIAK CDO II, LTD., TALON TOTAL RETURN QP PARTNERS LP, TALON TOTAL RETURN PARTNERS LP, GPC 69, LLC, HFR RVA OPAL MASTER TRUST AND PAUL STREBEL) 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.

SERIES 2 SECURED NOTE

               

	
[●] 

No. [●]

	March [●], 2011

 

FOR VALUE RECEIVED, CT Legacy Series 2 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.

 

  

C-1

  

	
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.

 

	
  

	
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.

 

  

C-2

  

 

	
  

	
o)

	
The term “Eligible Transferee” shall mean each of Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd., Taberna Preferred Funding VIII, Ltd., Taberna Preferred Funding IX, Ltd., Talon Total Return QP Partners LP, Talon Total Return Partners LP, GPC 69, LLC, HFR RVA Opal Master Trust, Kodiak CDO II, Ltd. and Paul F. Strebel.

 

	
  

	
p)

	
The term “ERISA” shall have the meaning ascribed to such term in Section 9(l)(ii) of this Note.

 

	
  

	
q)

	
The term “Exchange Agreement” shall mean that certain Exchange Agreement dated as of March 31, 2011, entered into by and among CT, CT Legacy Holdings, the Issuer, CT Legacy REIT Mezz Borrower, Kodiak CDO II, Ltd., Talon Total Return QP Partners LP, Talon Total Return Partners LP, GPC 69, LLC, HFR RVA Opal Master Trust and Paul F. Strebel.

 

	
  

	
r)

	
The term “Event of Default” shall have the meaning ascribed to such term in Section 5(a) of this Note.

 

	
  

	
s)

	
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.

 

	
  

	
t)

	
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.

 

	
  

	
u)

	
The term “Holder” shall have the meaning ascribed to such term in the introductory paragraph of this Note.

 

	
  

	
v)

	
The term “Initial Principal Amount” shall have the meaning ascribed to such term in the introductory paragraph of this Note.

 

	
  

	
w)

	
The term “Investment Company Act” means the Investment Company Act of 1940, as amended.

 

	
  

	
x)

	
The term “Issuer” shall have the meaning ascribed to such term in the introductory paragraph of this Note.

 

	
  

	
y)

	
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).

 

	
  

	
z)

	
The term “Mezzanine Loan Lender” shall mean Five Mile Capital II CT Mezz SPE LLC, a Delaware limited liability company.

 

	
  

	
aa)

	
The term “Note” shall have the meaning ascribed to such term in the introductory paragraph of this Note.

 

  

C-3

  

 

	
  

	
bb)

	
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.

 

	
  

	
cc)

	
The term “Offer Notice” shall have the meaning ascribed to such term in Section 9(l)(iv) of this Note.

 

	
  

	
dd)

	
The term “OID” shall have the meaning ascribed to such term in Section 8(a) of this Note.

 

	
  

	
ee)

	
The term “Operative Documents” means, collectively, this Note, the Control Agreements and the Pledge Agreement.

 

	
  

	
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, it holds in CT Legacy REIT Holdings.

 

	
  

	
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.

 

  

C-4

  

 

	
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.

 

  

C-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 the case of Form W-8BEN or successor applicable form that such Holder is not a U.S. person and (i) that payments under the Note are not effectively connected with the conduct of a trade or business in the United States and (ii) in the case of a Holder that is claiming treaty benefits, that such Holder is entitled to receive payments under the Note without withholding, or at a reduced rate; or in the case of Form W-8ECI or W-9 or successor applicable form, that such Holder is entitled to receive payments under the Note without deduction or withholding of any United States federal income taxes; 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,” 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 required to deliver to Issuer any certificate, a Form W-8BEN or W-8ECI or W-9 pursuant to the preceding sentence 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 the Form W-8ECI, is the last day of each U.S. taxable year of the Foreign Holder) 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-8BEN that such Holder is not a U.S. person and (i) that payments under the Note are not effectively connected with the conduct of a trade or business in the United States and (ii) in the case of a Holder that is claiming treaty benefits, that such Holder is entitled to receive payments under the Note without withholding, or at a reduced rate; or in the case of Form 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 and in the case of a Form W-9, establishing an exemption from United States backup withholding.

 

	
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”).

 

	
4)

	
Affirmative Covenants.  So long as all or any of the Principal Amount shall remain outstanding, the Issuer covenants as follows:

 

  

C-6

  

 

	
  

	
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;

 

	
  

	
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;

 

  

C-7

  

 

	
  

	
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, together with any other Obligations hereunder 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, together with any other 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.

 

	
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.

 

  

C-8

  

 

	
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.

 

  

C-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.

 

  

C-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 2 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.:  [●]

 

 

	
  

	
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.

 

  

C-11

  

 

	
  

	
l)

	
Transfers.

 

	
  

	
i)

	
No transfer of this Note or an interest herein may be made without CT’s prior written consent, which shall not be unreasonably withheld; provided, however, that transfers to Eligible Transferee shall not require the prior written consent of CT pursuant to this Section 9(l)(i), but shall remain subject to Section 9(l)(ii) below.  Any transfer made with CT’s prior written consent, including any transfer to an Eligible Transferee, shall be viewed in the absence of any misstatement of material fact concerning the transfer relied upon by CT in consenting to the transfer to be made in full compliance with Section 9(l)(ii)(d) and (e).

 

	
  

	
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) 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”); (c) 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; (d) 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 (e) cause the Legacy Asset Contribution Transaction (as defined in the 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 to any Person other than the Eligible Transferees 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.

 

  

C-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 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 become publicly available other than as a result of a breach of this Section 9(m).  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.

 

[SIGNATURE PAGE FOLLOWS]

 

  

C-13

  

 

IN WITNESS WHEREOF, the undersigned has caused this Note to be executed and delivered on the date first written above.

 

	 	

CT LEGACY SERIES 2 NOTE ISSUER, LLC

	 
	 	 	 	 	 
	
 

	
By:  

	 	 
	 	 	Name:  	Geoffrey G. Jervis	 
	 	 	Title: 	Chief Financial Officer	 

 

 

 

[SIGNATURE PAGE TO SERIES 2 SECURED NOTE]

 

  

  

  

 

 

	

AGREED TO:

 

[___]

	 
	 	 	 	 
	 	 	 	 
	
By:   

	 	 
	 	Name:  	 	 
	 	Title: 	 	 

 

Account Information:

 

 

 

  

  

  

 

EXHIBIT D

 

	
Entity

	
Aggregate Principal Amount of Existing Notes Outstanding

	
Cash

	
Number of Shares of Class B Common Stock of CT Legacy REIT Mezz Borrower

	
Amount of Series 2 Secured Note

	
Number of Class A-1 Units of CT Legacy REIT Holdings Pledged as Collateral to Series 2 Secured Note

	
Kodiak CDO II, Ltd.

 

	
$13,513,000

	
$436,202.56

	
137,673

	
$470,008.40

 

	
291,951

 

	
Talon Total Return QP Partners LP

 

	
$6,860,000

	
$221,442.28

	
69,891

	
$238,604.13

 

	
148,212

 

	
Talon Total Return Partners LP

 

	
$1,965,000

	
$63,430.62

	
20,020

	
$68,346.52

 

	
42,454

 

	
GPC 69, LLC

 

	
$1,676,000

	
$54,101.64

	
17,075

	
$58,294.54

 

	
36,210

 

	
HFR Opal Master Trust

 

	
$1,001,000

	
$32,312.50

	
10,198

	
$34,816.73

 

	
21,627

 

	
Paul Strebel

	
$144,000

	
$4,648.34

	
1,467

	
$5,008.59

 

	
3,111

 

 

  

D-1

  

 

EXHIBIT E

 

NOTICE INFORMATION

 

	
Opt-Out Entity

	
Entity to Hold Class B Common Stock of CT Legacy REIT Mezz Borrower

	
Entity to Hold Series 2 LLC Interest Secured Note

	
Wire Instructions

	
Contact Information

	
Kodiak CDO II, Ltd.

 

	
The Bank of New York Mellon, as CDO Trustee

 

	
Hare & Co.

 

	
[***]

	
c/o Kodiak Funding CDO II, Ltd.

2107 Wilson Blvd. Ste 400

Arlington, VA 22201

Attn:  Robert Hurley, CFO

Telephone No: (703) 875-7622

Email: rhurley@ejfcap.com

 

	
Talon Total Return QP Partners LP

 

	
Talon Total Return QP Partners LP

 

	
Talon Total Return QP Partners LP

 

	
 
[***]

	
c/o Talon Asset Management

One North Franklin, Suite 900

Chicago, IL  60606

Attention: Evan Dreyfuss

Telephone No: (312) 422-5421

Email: edreyfuss@talonmanagement.com

 

	
Talon Total Return Partners LP

 

	
Talon Total Return Partners LP

 

	
Talon Total Return Partners LP

 

	
 
[***]

	
c/o Talon Asset Management

One North Franklin, Suite 900

Chicago, IL  60606

Attention: Evan Dreyfuss

Telephone No: (312) 422-5421

Email: edreyfuss@talonmanagement.com

 

	
GPC 69, LLC

 

	
GPC 69, LLC

 

	
GPC 69, LLC

 

	
 
[***]

	
c/o Talon Asset Management

One North Franklin, Suite 900

Chicago, IL  60606

Attention: Evan Dreyfuss

Telephone No: (312) 422-5421

Email: edreyfuss@talonmanagement.com

 

 

  

E-1

  

 

	
HFR RVA Opal Master Trust

 

	
HFR RVA Opal Master Trust

 

	
HFR RVA Opal Master Trust

 

	
 
[***]

	
c/o Talon Asset Management

One North Franklin, Suite 900

Chicago, IL  60606

Attention: Evan Dreyfuss

Telephone No: (312) 422-5421

Email: edreyfuss@talonmanagement.com

 

	
Paul Strebel

	
Stifel Nicolaus as custodian for Paul F. Strebel IRA

	
Stifel Nicolaus as custodian for Paul F. Strebel IRA

	
 
[***]

	
c/o Stifel Nicolaus

Mailing address:

One Financial Plaza

501 N. Broadway

St. Louis, MO 63102

Attention: Samuel Everett

Telephone No: (314) 342-8509

	
The CT Entities

	
N/A

	
N/A

	
N/A

	
c/o Capital Trust, Inc.

410 Park Avenue

14th Floor

New York, NY 10022

Attention: Geoffrey Jervis

Telephone No: (212) 655-0220

Email: gjervis@capitaltrust.com

 

  

E-2

  

EXHIBIT F

 

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 2 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 2 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.

 

  

F-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 2 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.

 

  

F-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.

 

  

F-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 2 Secured Note” means any Series 2 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;

 

  

F-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:

 

  

F-5

  

 

(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 2 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.

 

  

F-6

  

 

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).  The Pledgor shall defend the right, title and interest of the Collateral Agent in and to the Collateral against the claims and demands of all persons whomsoever.

 

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-7

  

 

(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.

 

(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.

 

  

F-8

  

 

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 are to be paid or deposited (the “Dividends Account”); provided that 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 shall be paid or deposited in the Sales Proceeds 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.

 

  

F-9

  

 

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;

 

  

F-10

  

 

(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;

 

(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;

 

  

F-11

  

 

(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

 

(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.

 

  

F-12

  

 

(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.

 

  

F-13

  

 

(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.

 

(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;

 

  

F-14

  

 

(v)           dispose of the Collateral in wholesale rather than retail markets;

 

(vi)           disclaim disposition warranties, such as title, possession or quiet enjoyment; or

 

(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 be required to 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.

 

  

F-15

  

 

(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.

 

(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 parties 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.

 

  

F-16

  

 

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 (I) at least equal to the Prepayment Amount under the Note if the maturities of such obligations are less than 90 days from the issuance thereof (provided that if the Note is not paid off in full or the Pledged Securities are not returned as Collateral within 6 months of such substitution of Collateral, the Pledgor shall provide additional substitute Collateral so that the total fair market value of all substituted Collateral shall be at least equal to 110% of the Prepayment Amount under the Note), or (II) at least equal to 125% of the amount of the Prepayment Amount under the Note if the maturities of such obligations exceed 90 days from the issuance thereof, in each case as determined by the Holder as of the date of such substitution 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 and the Pledgor, at the Holder’s or Pledgor’s request and at the Pledgor’s expense, 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.

  

F-17

  

 

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.

 

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.

 

  

F-18

  

 

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.:  [●]

 

  

F-19

  

 

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.

 

  

F-20

  

 

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.

 

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.

 

  

F-21

  

 

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.

 

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.

 

  

F-22

  

 

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, (A) upon demand, the Collateral Agent receives assurance of indemnification satisfactory to it from CT Legacy Holdings, LLC or (B) in connection with a direction from the Holder to exercise remedies, the Collateral Agent determines, in its sole discretion, that 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 sufficient 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

 

  

F-23

  

 

(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.

 

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.

 

  

F-24

  

 

(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.

 

(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.

 

  

F-25

  

 

(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.

 

14.7           Intentionally Omitted.

 

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.  All fees and expenses 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, the Holder shall not be liable to the Collateral Agent for any fees, expenses or other amounts due to Collateral Agent hereunder or with respect to the subject matter hereof.

 

  

F-26

  

 

[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]

 

 

 

 

  

F-27

  

 

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 2 NOTE ISSUER, LLC

a Delaware limited liability company

	 
	 	 	 	 	 
	
 

	
By:  

	 	 
	 	 	Name:  	 	 
	 	 	Title: 	 	 

 

 

  

  

  

 

	 	

HOLDER

 

[_____]

a [_______]

	 
	 	 	 	 	 
	
 

	
By:  

	 	 
	 	 	Name:  	 	 
	 	 	Title: 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
Account Information:

 

[________________]

[________________]

	 

 

 

 

  

  

  

 

	 	

COLLATERAL AGENT

 

U.S. Bank, National Association, as Collateral Agent

	 
	 	 	 	 	 
	
 

	
By:  

	 	 
	 	 	Name:  	 	 
	 

 

  

  

  

 

SCHEDULE 1

 

(LLC Membership Interests)

 

 

 

  

  

  

 

SCHEDULE 2

 

(account information)

 

 

 

  

  

  

 

Exhibit A

Form of Unit Power

 

 

 

  

  

  

 

Unit Power

FOR VALUE RECEIVED, the undersigned does hereby irrevocably sell, assign and transfer to ______________________, [●] ([●]) CLASS A-1 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	 

 

  

  

  

Exhibit B

[additional parties]

 

 

  

  

  

 

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. 1-1

  

 

ANNEX A-I

 

Form of Paul, Hastings, Janofsky & Walker LLP Opinion

 

[opinion paragraphs]

 

1.           Each of the CT Entities 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 that is a party thereto under New York law enforceable against each CT Entity that is a party thereto in accordance with its terms. The Security Documents constitute valid and binding obligations of CT Series 2 Note Issuer under New York law, enforceable against CT Series 2 Note Issuer in accordance with their terms.

 

3.           The Series 2 LLC Interest Secured Notes, when duly authorized, executed and delivered by CT Series 2 Note Issuer and issued in exchange for the Existing Notes and the Existing Noteholders Transferred Rights in accordance with the terms of the Exchange Agreement, will constitute valid and binding obligations of CT Series 2 Note Issuer under New York law, enforceable against CT Series 2 Note Issuer in accordance with their terms.

 

4.           No registration under the Securities Act of 1933, as amended (the “Securities Act”), of the Stock or the Series 2 LLC Interest Secured Notes is required in connection with the delivery of the Stock or the Series 2 LLC Interest Secured Notes to the Opt-Out Entities pursuant to the Exchange Agreement, in each case assuming (i) that the Opt-Out Entities are “accredited investors” as defined in Rule 501 promulgated under the Securities Act, (ii) the accuracy of the Opt-Out Entities’ 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 issuance of the Stock and the Series 2 LLC Interest Secured Notes to the Opt-Out Entities and (iii) the due performance by the Opt-Out Entities of the agreements of the Opt-Out Entities 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 (a) cause such CT Entity to violate any United States federal or New York State law, regulation or rule applicable to such CT Entity, or, to our knowledge, any order or decree of any United States federal or State of New York court, or governmental authority to which such CT Entity is a named party, or (b) to our knowledge, constitute a breach by CT of, or constitute a default by CT under, any of the Reviewed Agreements.

 

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 or such filings or recordings as may be necessary to perfect liens.

 

  

Annex A-I-1

  

 

7.           None of CT, CT Legacy REIT Holdings, CT Series 2 Note Issuer or CT Legacy REIT Mezz Borrower is and, immediately after the closing of the transaction contemplated by the Exchange Agreement, none of CT, CT Legacy REIT Holdings, CT Series 2 Note Issuer or CT Legacy REIT Mezz Borrower will be, an “investment company,” as defined in the Investment Company Act of 1940, as amended.

 

8.           (a)           The Pledge Agreements create in favor of the Series 2 LLC Interest Secured Note Collateral Agent, for the benefit of the each Holder (as defined in the Pledge Agreements), valid security interests under the Uniform Commercial Code as in effect in the State of New York (the “New York UCC”) in the rights of CT Series 2 Note Issuer in such of the Series 2 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 Series 2 LLC Interest Secured Note 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 Series 2 LLC Interest Secured Note Collateral Agent, for the benefit of each Holder, 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 2 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 2 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-I-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 Mezz Borrower 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 Mezz Borrower has the corporate power to (a) own or lease and operate the “Company Assets” (as defined in the Mezz Charter) in all material respects subject to the limitations set forth in Section 3.3 of the Mezz Charter and (b) enter into and perform its obligations under the Agreement.

 

3.           The sale and issuance of the Shares have been duly authorized and, when issued, delivered and paid for in accordance with the terms of the Contribution Agreement and the Mezz Resolutions, the Shares will be validly issued, fully paid and nonassessable.

 

4.           The execution and delivery by each of the Company and the Mezz Borrower of the Agreement have been duly authorized by all necessary corporate action on the part of the Company and the Mezz Borrower.

 

5.           Each of the Company and the Mezz Borrower has duly executed and delivered the Agreement.

 

6.           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”).

 

7.           The execution and delivery by the Mezz Borrower of the Agreement, and the performance of its obligations thereunder, do not conflict with or violate (i) the Mezz Charter or the Mezz Bylaws or (ii) the MGCL.

 

  

Annex A-II-1

  

 

ANNEX A-III

 

Form of RLF Opinion

 

[opinion paragraphs]

 

Authority to File Voluntary Bankruptcy Petition

CT LEGACY SERIES 2 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 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 Document, 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 Document, 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.

 

4.           No authorization, consent, approval or order of any Delaware court or any Delaware governmental or administrative body is required to be obtained by Legacy Holdings solely in connection with the execution and delivery by Legacy Holdings of the Transaction Document, or the performance by Legacy Holdings of its obligations thereunder.

 

5.           The execution and delivery by Legacy Holdings of the Transaction Document, and the performance by Legacy Holdings of its obligations thereunder, do not violate (i) any Delaware law, rule or regulation, or (ii) the Legacy Holdings LLC Certificate or the Legacy Holdings LLC Agreement.

 

  

Annex A-III-2

  

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-3

  

 

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-4

  

 

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-5exhibit10-1.htm

Exhibit 10.1

 

PURCHASE AND ASSUMPTION AGREEMENT

 

WHOLE BANK 

 

ALL DEPOSITS 

 

AMONG 

 

FEDERAL DEPOSIT INSURANCE CORPORATION,

RECEIVER OF LEGACY BANK,

SCOTTSDALE, ARIZONA 

 

FEDERAL DEPOSIT INSURANCE CORPORATION

 

and

 

ENTERPRISE BANK & TRUST

 

 

 

DATED AS OF 

 

JANUARY 7, 2011 

 

 

 

 

 

 

 

 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

TABLE OF CONTENTS 

 

	ARTICLE I	            	DEFINITIONS	2
	 	 
	ARTICLE II	 	ASSUMPTION OF LIABILITIES	9
	   	 
	 	2.1	    	 	Liabilities Assumed by Assuming Institution	9
	 	2.2	 	 	Interest on Deposit Liabilities	10
	 	2.3	 	 	Unclaimed Deposits	11
	 	2.4	 	 	Employee Plans	11
	 	 
	ARTICLE III	 	PURCHASE OF ASSETS	11
	 	 
	 	3.1	 	 	Assets Purchased by Assuming Institution	11
	 	3.2	 	 	Asset Purchase Price	12
	 	3.3	 	 	Manner of Conveyance; Limited Warranty; Nonrecourse; Etc.	12
	 	3.4	 	 	Puts of Assets to the Receiver	13
	 	3.5	 	 	Assets Not Purchased by Assuming Institution	15
	 	3.6	 	 	Retention or Repurchase of Assets Essential to Receiver	16
	 	3.7	 	 	Receiver’s Offer to Sell Withheld Loans	17
	 	 
	ARTICLE IV	 	ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS	18
	 	 
	 	4.1	 	 	Continuation of Banking Business	18
	 	4.2	 	 	Agreement with Respect to Credit Card Business	18
	 	4.3	 	 	Agreement with Respect to Safe Deposit Business	18
	 	4.4	 	 	Agreement with Respect to Safekeeping Business	18
	 	4.5	 	 	Agreement with Respect to Trust Business	19
	 	4.6	 	 	Agreement with Respect to Bank Premises	19
	 	4.7	 	 	Agreement with Respect to Data Processing Equipment and Leases	23
	 	4.8	 	 	Agreement with Respect to Certain Existing Agreements	24
	 	4.9	 	 	Informational Tax Reporting	25
	 	4.10	 	 	Insurance	25
	 	4.11	 	 	Office Space for Receiver and Corporation	25
	 	4.12	 	 	Agreement with Respect to Continuation of Group Health Plan Coverage for Former Employees	26
	 	4.13	 	 	Agreement with Respect to Interim Asset Servicing	27
	 	4.14	 	 	Reserved	27
	 	4.15	 	 	Agreement with Respect to Loss Sharing	27

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

ii

 

 

 

	ARTICLE V	            	DUTIES WITH RESPECT TO DEPOSITORS OF THE FAILED BANK	27
	            	 
	 	5.1	    	 	Payment of Checks, Drafts and Orders	27
	 	5.2	 	 	Certain Agreements Related to Deposits	28
	 	5.3	 	 	Notice to Depositors	28
	 	 
	ARTICLE VI	 	RECORDS	28
	 	 
	 	6.1	 	 	Transfer of Records	28
	 	6.2	 	 	Delivery of Assigned Records	28
	 	6.3	 	 	Preservation of Records	29
	 	6.4	 	 	Access to Records; Copies	29
	 	 
	ARTICLE VII	 	BID; INITIAL PAYMENT	29
	 	 
	ARTICLE VIII	 	ADJUSTMENTS	30
	 	 
	 	8.1	 	 	Pro Forma Statement	30
	 	8.2	 	 	Correction of Errors and Omissions; Other Liabilities	30
	 	8.3	 	 	Payments	31
	 	8.4	 	 	Interest	31
	 	8.5	 	 	Subsequent Adjustments	31
	 	 
	ARTICLE IX	 	CONTINUING COOPERATION	31
	 	 
	 	9.1	 	 	General Matters	31
	 	9.2	 	 	Additional Title Documents	31
	 	9.3	 	 	Claims and Suits	32
	 	9.4	 	 	Payment of Deposits	32
	 	9.5	 	 	Withheld Payments	32
	 	9.6	 	 	Proceedings with Respect to Certain Assets and Liabilities	33
	 	9.7	 	 	Information	33
	 	 
	ARTICLE X	 	CONDITION PRECEDENT	33
	 	 
	ARTICLE XI	 	REPRESENTATIONS AND WARRANTIES OF THE ASSUMING INSTITUTION	34
	 	 
	ARTICLE XII	 	INDEMNIFICATION	35
	 	 
	 	12.1	 	 	Indemnification of Indemnitees	35
	 	12.2	 	 	Conditions Precedent to Indemnification	38
	 	12.3	 	 	No Additional Warranty	39
	 	12.4	 	 	Indemnification of Receiver and Corporation	39
	 	12.5	 	 	Obligations Supplemental	40
	 	12.6	 	 	Criminal Claims	40
	 	12.7	 	 	Limited Guaranty of the Corporation	40
	 	12.8	 	 	Subrogation	40

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

iii

 

 

 

	ARTICLE XIII	             	MISCELLANEOUS	41
	            	 
	 	13.1	    	 	Entire Agreement	41
	 	13.2	 	 	Headings	41
	 	13.3	 	 	Counterparts	41
	 	13.4	 	 	Governing Law	41
	 	13.5	 	 	Successors	41
	 	13.6	 	 	Modification; Assignment	41
	 	13.7	 	 	Notice	41
	 	13.8	 	 	Manner of Payment	42
	 	13.9	 	 	Costs, Fees and Expenses	43
	 	13.10	 	 	Waiver	43
	 	13.11	 	 	Severability	43
	 	13.12	 	 	Term of Agreement	43
	 	13.13	 	 	Survival of Covenants, Etc.	43
	 	 
	SCHEDULES	 	 	 
	 	 
	 	2.1(a)	 	 	Excluded Deposit Liability Accounts	 
	 	3.2	 	 	Purchase Price of Assets or assets	 
	 	3.5(l)	 	 	Excluded Securities	 
	 	3.5(p)	 	 	Excluded Loans	 
	 	4.15A	 	 	Single Family Shared-Loss Loans	 
	 	4.15B	 	 	Commercial Shared-Loss Loans	 
	 	4.15C	 	 	Shared-Loss Securities	 
	 	4.15D	 	 	Shared-Loss Subsidiaries	 
	 	6.3	 	 	Data Retention Catalog	 
	 	7	 	 	Calculation of Deposit Premium	 
	 	 
	EXHIBITS	 	 	 
	 	 
	 	2.3A	 	 	Final Notice Letter	 
	 	2.3B	 	 	Affidavit of Mailing	 
	 	3.2(c)	 	 	Valuation of Certain Qualified Financial Contracts	 
	 	4.13	 	 	Interim Asset Servicing Arrangement	 
	 	4.15A	 	 	Single Family Shared-Loss Agreement	 
	 	4.15B	 	 	Commercial Shared-Loss Agreement	 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

iv

 

 

 

PURCHASE AND ASSUMPTION AGREEMENT 

 

WHOLE BANK 

 

ALL DEPOSITS 

 

     THIS AGREEMENT, made and entered into as of the 7th day of January, 2011, by and among the FEDERAL DEPOSIT INSURANCE CORPORATION, RECEIVER of LEGACY BANK, SCOTTSDALE, ARIZONA (the "Receiver"), ENTERPRISE BANK & TRUST, organized under the laws of the State of Missouri, and having its principal place of business in CLAYTON, MISSOURI (the "Assuming Institution"), and the FEDERAL DEPOSIT INSURANCE CORPORATION, organized under the laws of the United States of America and having its principal office in Washington, D.C., acting in its corporate capacity (the "Corporation").

 

WITNESSETH: 

 

     WHEREAS, on Bank Closing, the Chartering Authority closed LEGACY BANK (the "Failed Bank") pursuant to applicable law and the Corporation was appointed Receiver thereof; and 

 

     WHEREAS, the Assuming Institution desires to purchase certain assets and assume certain deposit and other liabilities of the Failed Bank on the terms and conditions set forth in this Agreement; and 

 

     WHEREAS, pursuant to 12 U.S.C. Section 1823(c)(2)(A), the Corporation may provide assistance to the Assuming Institution to facilitate the transactions contemplated by this Agreement, which assistance may include indemnification pursuant to Article XII; and 

 

     WHEREAS, the Board of Directors of the Corporation (the "Board") has determined to provide assistance to the Assuming Institution on the terms and subject to the conditions set forth in this Agreement; and 

 

     WHEREAS, the Board has determined pursuant to 12 U.S.C. Section 1823(c)(4)(A) that such assistance is necessary to meet the obligation of the Corporation to provide insurance coverage for the insured deposits in the Failed Bank. 

 

     NOW THEREFORE, in consideration of the mutual promises herein set forth and other valuable consideration, the parties hereto agree as follows: 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

1

 

 

 

ARTICLE I

DEFINITIONS 

 

     Capitalized terms used in this Agreement shall have the meanings set forth in this Article I, or elsewhere in this Agreement. As used herein, words imparting the singular include the plural and vice versa. 

 

          "Accounting Records" means the general ledger and subsidiary ledgers and supporting schedules which support the general ledger balances. 

 

          "Acquired Subsidiaries" means Subsidiaries of the Failed Bank acquired pursuant to Section 3.1. 

 

          "Affiliate" of any Person means any director, officer, or employee of that Person and any other Person (i) who is directly or indirectly controlling, or controlled by, or under direct or indirect common control with, such Person, or (ii) who is an affiliate of such Person as the term "affiliate" is defined in Section 2 of the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Section 1841. 

 

          "Agreement" means this Purchase and Assumption Agreement by and among the Assuming Institution, the Corporation and the Receiver, as amended or otherwise modified from time to time. 

 

          "Assets" means all assets of the Failed Bank purchased pursuant to Section 3.1. Assets owned by Subsidiaries of the Failed Bank are not "Assets" within the meaning of this definition. 

 

          "Assumed Deposits" means Deposits. 

 

          "Bank Closing" means the close of business of the Failed Bank on the date on which the Chartering Authority closed such institution. 

 

          "Bank Premises" means the banking houses, drive-in banking facilities, and teller facilities (staffed or automated) together with adjacent parking, storage and service facilities and structures connecting remote facilities to banking houses, and land on which the foregoing are located, and unimproved land that are owned or leased by the Failed Bank and that have formerly been utilized, are currently utilized, or are intended to be utilized in the future by the Failed Bank as shown on the Accounting Record of the Failed Bank as of Bank Closing. 

 

          "Bid Amount" has the meaning provided in Article VII.

 

          "Bid Valuation Date" means October 29, 2010. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

2

 

 

 

          "Book Value" means, with respect to any Asset and any Liability Assumed, the dollar amount thereof stated on the Accounting Records of the Failed Bank. The Book Value of any item shall be determined as of Bank Closing after adjustments made by the Receiver for differences in accounts, suspense items, unposted debits and credits, and other similar adjustments or corrections and for setoffs, whether voluntary or involuntary. The Book Value of a Subsidiary of the Failed Bank acquired by the Assuming Institution shall be determined from the investment in subsidiary and related accounts on the "bank only" (unconsolidated) balance sheet of the Failed Bank based on the equity method of accounting. Without limiting the generality of the foregoing, (i) the Book Value of a Liability Assumed shall include all accrued and unpaid interest thereon as of Bank Closing, and (ii) the Book Value of a Loan shall reflect adjustments for earned interest, or unearned interest (as it relates to the "rule of 78s" or add-on-interest loans, as applicable), if any, as of Bank Closing, adjustments for the portion of earned or unearned loan-related credit life and/or disability insurance premiums, if any, attributable to the Failed Bank as of Bank Closing, and adjustments for Failed Bank Advances, if any, in each case as determined for financial reporting purposes. The Book Value of an Asset shall not include any adjustment for loan premiums, discounts or any related deferred income, fees or expenses, or general or specific reserves on the Accounting Records of the Failed Bank. For Shared-Loss Securities, Book Value means the value of the security provided in the Information Package. 

 

          "Business Day" means a day other than a Saturday, Sunday, Federal legal holiday or legal holiday under the laws of the State where the Failed Bank is located, or a day on which the principal office of the Corporation is closed. 

 

          "Chartering Authority" means (i) with respect to a national bank, the Office of the Comptroller of the Currency, (ii) with respect to a Federal savings association or savings bank, the Office of Thrift Supervision, (iii) with respect to a bank or savings institution chartered by a State, the agency of such State charged with primary responsibility for regulating and/or closing banks or savings institutions, as the case may be, (iv) the Corporation in accordance with 12 U.S.C. Section 1821(c), with regard to self appointment, or (v) the appropriate Federal banking agency in accordance with 12 U.S.C. 1821(c)(9). 

 

          "Commitment" means the unfunded portion of a line of credit or other commitment reflected on the books and records of the Failed Bank to make an extension of credit (or additional advances with respect to a Loan) that was legally binding on the Failed Bank as of Bank Closing, other than extensions of credit pursuant to the credit card business and overdraft protection plans of the Failed Bank, if any. 

 

          "Credit Documents" mean the agreements, instruments, certificates or other documents at any time evidencing or otherwise relating to, governing or executed in connection with or as security for, a Loan, including without limitation notes, bonds, loan agreements, letter of credit applications, lease financing contracts, banker's acceptances, drafts, interest protection agreements, currency exchange agreements, repurchase agreements, reverse repurchase agreements, guarantees, deeds of trust, mortgages, assignments, security agreements, pledges, subordination or priority agreements, lien priority agreements, undertakings, security instruments, certificates, documents, legal opinions, participation agreements and intercreditor agreements, and all amendments, modifications, renewals, extensions, rearrangements, and substitutions with respect to any of the foregoing. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

3

 

 

 

          "Credit File" means all Credit Documents and all other credit, collateral, or insurance documents in the possession or custody of the Assuming Institution, or any of its Subsidiaries or Affiliates, relating to an Asset or a Loan included in a Put Notice, or copies of any thereof. 

 

          “Data Processing Equipment” means any equipment, computer hardware, or computer software (and the lease or licensing agreements related thereto) other than Personal Computers, owned or leased by the Failed Bank at Bank Closing, which is, was, or could have been used by the Failed Bank in connection with data processing activities. 

 

          "Deposit" means a deposit as defined in 12 U.S.C. Section 1813(l), including without limitation, outstanding cashier's checks and other official checks and all uncollected items included in the depositors' balances and credited on the books and records of the Failed Bank; provided, that the term "Deposit" shall not include all or any portion of those deposit balances which, in the discretion of the Receiver or the Corporation, (i) may be required to satisfy it for any liquidated or contingent liability of any depositor arising from an unauthorized or unlawful transaction, or (ii) may be needed to provide payment of any liability of any depositor to the Failed Bank or the Receiver, including the liability of any depositor as a director or officer of the Failed Bank, whether or not the amount of the liability is or can be determined as of Bank Closing. 

 

          "Deposit Secured Loan" means a loan in which the only collateral securing the loan is Assumed Deposits or deposits at other insured depository institutions. 

 

          “Electronically Stored Information” means any system backup tapes, any electronic mail (whether on an exchange or other similar system), any data on personal computers and any data on server hard drives. 

 

          "Failed Bank Advances" means the total sums paid by the Failed Bank to (i) protect its lien position, (ii) pay ad valorem taxes and hazard insurance, and (iii) pay credit life insurance, accident and health insurance, and vendor's single interest insurance. 

 

          "Fair Market Value" means (i)(a) “Market Value” as defined in the regulation prescribing the standards for real estate appraisals used in federally related transactions, 12 C.F.R. § 323.2(g), and accordingly shall mean the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

 

(1) Buyer and seller are typically motivated;

(2) Both parties are well informed or well advised, and acting in what they consider their own best interests;

(3) A reasonable time is allowed for exposure in the open market;

(4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

(5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale;

 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

4

 

 

 

as determined as of Bank Closing by an appraiser chosen by the Assuming Institution from a list of acceptable appraisers provided by the Receiver; any costs and fees associated with such determination shall be shared equally by the Receiver and the Assuming Institution, and (b) which, with respect to Bank Premises (to the extent, if any, that Bank Premises are purchased utilizing this valuation method), shall be determined not later than sixty (60) days after Bank Closing by an appraiser selected by the Receiver and the Assuming Institution within seven (7) days after Bank Closing; or (ii) with respect to property other than Bank Premises purchased utilizing this valuation method, the price therefore as established by the Receiver and agreed to by the Assuming Institution, or in the absence of such agreement, as determined in accordance with clause (i)(a) above. 

 

          "Fixtures" means those leasehold improvements, additions, alterations and installations constituting all or a part of Bank Premises and which were acquired, added, built, installed or purchased at the expense of the Failed Bank, regardless of the holder of legal title thereto as of Bank Closing. 

 

          "Furniture and Equipment" means the furniture and equipment (other than Safe Deposit Boxes, motor vehicles, Personal Computers, and Data Processing Equipment), leased or owned by the Failed Bank and reflected on the books of the Failed Bank as of Bank Closing and located on or at Bank Premises, including without limitation automated teller machines, carpeting, furniture, office machinery, shelving, office supplies, telephone, surveillance and security systems, ancillary equipment, and artwork. Furniture and equipment located at a storage facility not adjacent to a Bank Premises are excluded from this definition.

 

          "Indemnitees" means, except as provided in paragraph (11) of Section 12.1(b), (i) the Assuming Institution, (ii) the Subsidiaries and Affiliates of the Assuming Institution other than any Subsidiaries or Affiliates of the Failed Bank that are or become Subsidiaries or Affiliates of the Assuming Institution, and (iii) the directors, officers, employees and agents of the Assuming Institution and its Subsidiaries and Affiliates who are not also present or former directors, officers, employees or agents of the Failed Bank or of any Subsidiary or Affiliate of the Failed Bank. 

 

          "Information Package" means the most recent compilation of financial and other data with respect to the Failed Bank, including any amendments or supplements thereto, provided to the Assuming Institution by the Corporation on the web site used by the Corporation to market the Failed Bank to potential acquirers. 

 

          "Initial Payment" means the payment made pursuant to Article VII (based on the best information available as of the Bank Closing Date), the amount of which shall be either (i) if the Bid Amount is positive, the aggregate Book Value of the Liabilities Assumed minus the sum of the aggregate purchase price of the Assets and assets purchased and the positive Bid Amount, or (ii) if the Bid Amount is negative, the sum of the aggregate Book Value of the Liabilities Assumed and the negative Bid Amount minus the aggregate purchase price of the Assets and assets purchased. The Initial Payment shall be payable by the Corporation to the Assuming Institution if (i) the Liabilities Assumed are greater than the sum of the positive Bid Amount and the Assets and assets purchased, or if (ii) the sum of the Liabilities Assumed and the negative Bid Amount are greater than the Assets and assets purchased. The Initial Payment shall be payable by the Assuming Institution to the Corporation if (i) the Liabilities Assumed are less than the sum of the positive Bid Amount and the Assets and assets purchased, or if (ii) the sum of the Liabilities Assumed and the negative Bid Amount is less than the Assets and assets purchased. Such Initial Payment shall be subject to adjustment as provided in Article VIII. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

5

 

 

 

          "Legal Balance" means the amount of indebtedness legally owed by an Obligor with respect to a Loan, including principal and accrued and unpaid interest, late fees, attorneys' fees and expenses, taxes, insurance premiums, and similar charges, if any. 

 

          "Liabilities Assumed" has the meaning provided in Section 2.1. 

 

          "Lien" means any mortgage, lien, pledge, charge, assignment for security purposes, security interest, or encumbrance of any kind with respect to an Asset, including any conditional sale agreement or capital lease or other title retention agreement relating to such Asset. 

 

          "Loans" means all of the following owed to or held by the Failed Bank as of Bank Closing: 

 

          (i) loans (including loans which have been charged off the Accounting Records of the Failed Bank in whole or in part prior to and including the Bid Valuation Date), participation agreements, interests in participations, overdrafts of customers (including but not limited to overdrafts made pursuant to an overdraft protection plan or similar extensions of credit in connection with a deposit account), revolving commercial lines of credit, home equity lines of credit, Commitments, United States and/or State-guaranteed student loans, and lease financing contracts; 

 

          (ii) all Liens, rights (including rights of set-off), remedies, powers, privileges, demands, claims, priorities, equities and benefits owned or held by, or accruing or to accrue to or for the benefit of, the holder of the obligations or instruments referred to in clause (i) above, including but not limited to those arising under or based upon Credit Documents, casualty insurance policies and binders, standby letters of credit, mortgagee title insurance policies and binders, payment bonds and performance bonds at any time and from time to time existing with respect to any of the obligations or instruments referred to in clause (i) above; and 

 

          (iii) all amendments, modifications, renewals, extensions, refinancings, and refundings of or for any of the foregoing. 

 

          "Obligor" means each Person liable for the full or partial payment or performance of any Loan, whether such Person is obligated directly, indirectly, primarily, secondarily, jointly, or severally. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

6

 

 

 

          "Other Real Estate" means all interests in real estate (other than Bank Premises and Fixtures), including but not limited to mineral rights, leasehold rights, condominium and cooperative interests, air rights and development rights that are owned by the Failed Bank. 

 

          "Payment Date" means the first Business Day after the Bank Closing Date.

 

          "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof, excluding the Corporation. 

 

          “Personal Computer(s)” means computers based on a microprocessor generally designed to be used by one person at a time and which usually store informational data on that computer’s internal hard drive or attached peripheral. A personal computer can be found in various configurations such as laptops, net books, and desktops. 

 

          "Primary Indemnitor" means any Person (other than the Assuming Institution or any of its Affiliates) who is obligated to indemnify or insure, or otherwise make payments (including payments on account of claims made against) to or on behalf of any Person in connection with the claims covered under Article XII, including without limitation any insurer issuing any directors and officers liability policy or any Person issuing a financial institution bond or banker's blanket bond. 

 

          “Pro forma” means producing a balance sheet that reflects a reasonably accurate financial statement of the Failed bank through the date of closing. The pro forma financial statements serve as a basis for the opening entries of both the Assuming Institution and the Receiver. 

 

          "Put Date" has the meaning provided in Section 3.4. 

 

          "Put Notice" has the meaning provided in Section 3.4. 

 

          "Qualified Financial Contract" means a qualified financial contract as defined in 12 U.S.C. Section 1821(e)(8)(D). 

 

          "Record" means any document, microfiche, microfilm and Electronically Stored Information (including but not limited to magnetic tape, disc storage, card forms and printed copy) of the Failed Bank generated or maintained by the Failed Bank that is owned by or in the possession of the Receiver at Bank Closing. 

 

          "Related Liability" with respect to any Asset means any liability existing and reflected on the Accounting Records of the Failed Bank as of Bank Closing for (i) indebtedness secured by mortgages, deeds of trust, chattel mortgages, security interests or other liens on or affecting such Asset, (ii) ad valorem taxes applicable to such Asset, and (iii) any other obligation determined by the Receiver to be directly related to such Asset. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

7

 

 

 

          "Related Liability Amount" with respect to any Related Liability on the books of the Assuming Institution, means the amount of such Related Liability as stated on the Accounting Records of the Assuming Institution (as maintained in accordance with generally accepted accounting principles) as of the date as of which the Related Liability Amount is being determined. With respect to a liability that relates to more than one asset, the amount of such Related Liability shall be allocated among such assets for the purpose of determining the Related Liability Amount with respect to any one of such assets. Such allocation shall be made by specific allocation, where determinable, and otherwise shall be pro rata based upon the dollar amount of such assets stated on the Accounting Records of the entity that owns such asset. 

 

          "Repurchase Price" means, with respect to any Loan, first taking the Book Value of the Asset at Bank Closing and either subtracting the Asset discount or adding the Asset premium, and subsequently adjusting that total by (i) adding any advances and interest on such Loan after Bank Closing, (ii) subtracting the total amount received by the Assuming Institution for such Loan after Bank Closing, regardless of how applied, and (iii) adding total disbursements of principal made by Receiver not otherwise included in the Book Value. 

 

          "Safe Deposit Boxes" means the safe deposit boxes of the Failed Bank, if any, including the removable safe deposit boxes and safe deposit stacks in the Failed Bank's vault(s), all rights and benefits under rental agreements with respect to such safe deposit boxes, and all keys and combinations thereto. 

 

          "Settlement Date" means the first Business Day immediately prior to the day which is three hundred sixty-five (365) days after Bank Closing, or such other date prior thereto as may be agreed upon by the Receiver and the Assuming Institution. The Receiver, in its discretion, may extend the Settlement Date. 

 

          "Settlement Interest Rate" means, for the first calendar quarter or portion thereof during which interest accrues, the rate determined by the Receiver to be equal to the Investment Rate on twenty-six (26)-week United States Treasury Bills as published the week of Bank Closing by the United States Treasury on the TreasuryDirect.gov website; provided, that if no such Investment Rate is published the week of Bank Closing, the Investment Rate for such Treasury Bills most recently published by the United States Treasury on TreasuryDirect.gov prior to Bank Closing shall be used. Thereafter, the rate shall be adjusted to the rate determined by the Receiver to be equal to the Investment Rate on such Treasury Bills in effect as of the first day of each succeeding calendar quarter during which interest accrues as published by The United States Treasury on the TreasuryDirect.gov website. 

 

          "Shared-Loss Securities" means those securities and other assets listed on Schedule 4.15C. 

 

          "Subsidiary" has the meaning set forth in Section 3(w)(4) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1813(w)(4), as amended. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	Legacy Bank
	Version 2.11B	Scottsdale, Arizona
	October 8, 2010	 

 

8

 

 

 

ARTICLE II

ASSUMPTION OF LIABILITIES

 

     2.1 Liabilities Assumed by Assuming Institution. The Assuming Institution expressly assumes at Book Value (subject to adjustment pursuant to Article VIII) and agrees to pay, perform, and discharge all of the following liabilities of the Failed Bank as of Bank Closing, except as otherwise provided in this Agreement (such liabilities referred to as "Liabilities Assumed"):

 

(a) Assumed Deposits, except those Deposits specifically listed on Schedule 2.1(a); provided, that as to any Deposits of public money which are Assumed Deposits, the Assuming Institution agrees to properly secure such Deposits with such Assets as appropriate which, prior to Bank Closing, were pledged as security by the Failed Bank, or with assets of the Assuming Institution, if such securing Assets, if any, are insufficient to properly secure such Deposits; 

 

(b) liabilities for indebtedness secured by mortgages, deeds of trust, chattel mortgages, security interests or other liens on or affecting any Assets, if any; provided, that the assumption of any liability pursuant to this paragraph shall be limited to the market value of the Assets securing such liability as determined by the Receiver;

 

(c) all borrowings from, and obligations and indebtedness to, Federal Reserve Banks and Federal Home Loan Banks, if any, whether currently owed, or conditional or not yet matured, including but not limited to, if applicable, (i) advances, including principal, interest, and any prepayment fees, costs and expenses; (ii) letters of credit, including any reimbursement obligations; (iii) acquired member assets programs, including representations, warranties, credit enhancement obligations and servicing obligations; (iv) affordable housing programs, including retention agreements and other contracts and monitoring obligations; (v) swaps and other derivatives; and (vi) safekeeping and custody agreements, provided, that the assumption of any liability pursuant to this paragraph shall be limited to the market value of the assets securing such liability as determined by the Receiver; and overdrafts, debit balances, service charges, reclamations and adjustments to accounts with the Federal Reserve Banks as reflected on the books and records of any such Federal Reserve Bank within ninety (90) days after the Bank Closing Date, if any;

 

(d) ad valorem taxes applicable to any Asset, if any; provided, that the assumption of any ad valorem taxes pursuant to this paragraph shall be limited to an amount equal to the market value of the Asset to which such taxes apply as determined by the Receiver;

 

(e) liabilities, if any, for federal funds purchased, repurchase agreements and overdrafts in accounts maintained with other depository institutions (including any accrued and unpaid interest thereon computed to and including Bank Closing); provided, that the assumption of any liability pursuant to this paragraph shall be limited to the market value of the Assets securing such liability as determined by the Receiver;

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

9

 

 

 

(f) United States Treasury tax and loan note option accounts, if any;

 

(g) liabilities for any acceptance or commercial letter of credit provided, that the assumption of any liability pursuant to this paragraph shall be limited to the market value of the Assets securing such liability as determined by the Receiver;

 

(h) liabilities for any "standby letters of credit" as defined in 12 C.F.R. Section 337.2(a) issued on the behalf of any Obligor of a Loan acquired hereunder by the Assuming Institution, but excluding any other standby letters of credit;

 

(i) duties and obligations assumed pursuant to this Agreement including without limitation those relating to the Failed Bank's Records, credit card business, debit card business, stored value and gift card business, overdraft protection plans, safe deposit business, safekeeping business, or trust business, if any; and

 

(j) liabilities, if any, for Commitments;

 

(k) liabilities, if any, for amounts owed to any Subsidiary of the Failed Bank acquired under Section 3.1;

 

(l) liabilities, if any, with respect to Qualified Financial Contracts;

 

(m) liabilities, if any, under any contract pursuant to which mortgage servicing is provided to the Failed Bank by others; and

 

(n) all asset-related offensive litigation liabilities and all asset-related defensive litigation liabilities, but only to the extent such liabilities relate to assets subject to a shared-loss agreement, and provided that all other defensive litigation and any class actions with respect to credit card business are retained by the Receiver.

 

     2.2 Interest on Deposit Liabilities. The Assuming Institution agrees that, from and after Bank Closing, it will accrue and pay interest on Deposit liabilities assumed pursuant to Section 2.1 at a rate(s) it shall determine; provided, that for non-transaction Deposit liabilities such rate(s) shall not be less than the lowest rate offered by the Assuming Institution to its depositors for non-transaction deposit accounts. The Assuming Institution shall permit each depositor to withdraw, without penalty for early withdrawal, all or any portion of such depositor's Deposit, whether or not the Assuming Institution elects to pay interest in accordance with any deposit agreement formerly existing between the Failed Bank and such depositor; and further provided, that if such Deposit has been pledged to secure an obligation of the depositor or other party, any withdrawal thereof shall be subject to the terms of the agreement governing such pledge. The Assuming Institution shall give notice to such depositors as provided in Section 5.3 of the rate(s) of interest which it has determined to pay and of such withdrawal rights.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

10

 

 

     2.3 Unclaimed Deposits. Fifteen (15) months following the Bank Closing Date, the Assuming Institution will provide the Receiver a listing of all deposit accounts, including the type of account, not claimed by the depositor. The Receiver will review the list and authorize the Assuming Institution to act on behalf of the Receiver to send a “Final Legal Notice” in a form substantially similar to Exhibit 2.3A to the owner(s) of the unclaimed deposits reminding them of the need to claim or arrange to continue their account(s) with the Assuming Institution. The Assuming Institution will send the “Final Legal Notice” to the depositors within thirty (30) days following notification of the Receiver’s authorization. The Assuming Institution will prepare an Affidavit of Mailing and will forward the Affidavit of Mailing to the Receiver after mailing out the “Final Legal Notice” in a form substantially similar to Exhibit 2.3B to the owner(s) of unclaimed deposit accounts.

 

     If, within eighteen (18) months after Bank Closing, any depositor of the Failed Bank does not claim or arrange to continue such depositor’s Deposit assumed pursuant to Section 2.1 at the Assuming Institution, the Assuming Institution shall, within fifteen (15) Business Days after the end of such eighteen (18) month period, (i) refund to the Receiver the full amount of each such deposit (without reduction for service charges), (ii) provide to the Receiver a schedule of all such refunded Deposits in such form as may be prescribed by the Receiver, and (iii) assign, transfer, convey, and deliver to the Receiver, all right, title, and interest of the Assuming Institution in and to the Records previously transferred to the Assuming Institution and other records generated or maintained by the Assuming Institution pertaining to such Deposits. During such eighteen (18) month period, at the request of the Receiver, the Assuming Institution promptly shall provide to the Receiver schedules of unclaimed deposits in such form as may be prescribed by the Receiver.

 

     2.4 Employee Plans. Except as provided in Section 4.12, the Assuming Institution shall have no liabilities, obligations or responsibilities under the Failed Bank's health care, bonus, vacation, pension, profit sharing, deferred compensation, 401K or stock purchase plans or similar plans, if any, unless the Receiver and the Assuming Institution agree otherwise subsequent to the date of this Agreement.

 

ARTICLE III

PURCHASE OF ASSETS

 

     3.1 Assets Purchased by Assuming Institution. With the exception of certain assets expressly excluded in Sections 3.5 and 3.6, the Assuming Institution hereby purchases from the Receiver, and the Receiver hereby sells, assigns, transfers, conveys, and delivers to the Assuming Institution, all right, title, and interest of the Receiver in and to all of the assets (real, personal and mixed, wherever located and however acquired) including all subsidiaries, joint ventures, partnerships, and any and all other business combinations or arrangements, whether active, inactive, dissolved or terminated, of the Failed Bank whether or not reflected on the books of the Failed Bank as of Bank Closing. Assets are purchased hereunder by the Assuming Institution subject to all liabilities for indebtedness collateralized by Liens affecting such Assets to the extent provided in Section 2.1.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

11

 

 

 

     3.2 Asset Purchase Price.

 

     (a) All Assets and assets of the Failed Bank subject to an option to purchase by the Assuming Institution shall be purchased for the amount, or the amount resulting from the method specified for determining the amount, as specified on Schedule 3.2, except as otherwise may be provided herein. Any Asset, asset of the Failed Bank subject to an option to purchase or other asset purchased for which no purchase price is specified on Schedule 3.2 or otherwise herein shall be purchased at its Book Value. Loans or other assets charged off the Accounting Records of the Failed Bank before the Bid Valuation Date shall be purchased at a price of zero.

 

     (b) The purchase price for securities (other than the capital stock of any Acquired Subsidiary, Shared-Loss Securities, and FHLB stock) purchased under Section 3.1 by the Assuming Institution shall be the market value thereof as of Bank Closing, which market value shall be (i) the market price for each such security quoted at the close of the trading day effective on Bank Closing as published electronically by Bloomberg, L.P., or alternatively, at the discretion of the Receiver, IDC/Financial Times (FT) Interactive Data; (ii) provided, that if such market price is not available for any such security, the Assuming Institution will submit a bid for each such security within three days of notification/bid request by the Receiver (unless a different time period is agreed to by the Assuming Institution and the Receiver) and the Receiver, in its sole discretion will accept or reject each such bid; and (iii) further provided in the absence of an acceptable bid from the Assuming Institution, each such security shall not pass to the Assuming Institution and shall be deemed to be an excluded asset hereunder.

 

     (c) Qualified Financial Contracts shall be purchased at market value determined in accordance with the terms of Exhibit 3.2(c). Any costs associated with such valuation shall be shared equally by the Receiver and the Assuming Institution.

 

     3.3 Manner of Conveyance; Limited Warranty; Nonrecourse; Etc. THE CONVEYANCE OF ALL ASSETS, INCLUDING REAL AND PERSONAL PROPERTY INTERESTS, PURCHASED BY THE ASSUMING INSTITUTION UNDER THIS AGREEMENT SHALL BE MADE, AS NECESSARY, BY RECEIVER'S DEED OR RECEIVER'S BILL OF SALE, "AS IS", "WHERE IS", WITHOUT RECOURSE AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, WITHOUT ANY WARRANTIES WHATSOEVER WITH RESPECT TO SUCH ASSETS, EXPRESS OR IMPLIED, WITH RESPECT TO TITLE, ENFORCEABILITY, COLLECTIBILITY, DOCUMENTATION OR FREEDOM FROM LIENS OR ENCUMBRANCES (IN WHOLE OR IN PART), OR ANY OTHER MATTERS.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

12

 

 

 

     3.4 Puts of Assets to the Receiver.

 

     (a) Puts Within 30 Days After Bank Closing. During the thirty (30)-day period following Bank Closing and only during such period (which thirty (30)-day period may be extended in writing in the sole absolute discretion of the Receiver for any Loan), in accordance with this Section 3.4, the Assuming Institution shall be entitled to require the Receiver to purchase any Deposit Secured Loan transferred to the Assuming Institution pursuant to Section 3.1 which is not fully secured by Assumed Deposits or deposits at other insured depository institutions due to either insufficient Assumed Deposit or deposit collateral or deficient documentation regarding such collateral; provided with regard to any Deposit Secured Loan secured by an Assumed Deposit, no such purchase may be required until any Deposit setoff determination, whether voluntary or involuntary, has been made; and, at the end of the thirty (30)-day period following Bank Closing and at that time only, in accordance with this Section 3.4, the Assuming Institution shall be entitled to require the Receiver to purchase any remaining overdraft transferred to the Assuming Institution pursuant to 3.1 which both was made after the Bid Valuation Date and was not made pursuant to an overdraft protection plan or similar extension of credit. 

 

Notwithstanding the foregoing, the Assuming Institution shall not have the right to require the Receiver to purchase any Loan if (i) the Obligor with respect to such Loan is an Acquired Subsidiary, or (ii) the Assuming Institution has:

 

	 	(A)	 	made any advance in accordance with the terms of a Commitment or otherwise with respect to such Loan;
	 	 
	 	(B)	 	taken any action that increased the amount of a Related Liability with respect to such Loan over the amount of such liability immediately prior to the time of such action;
	 	 
	 	(C)	 	created or permitted to be created any Lien on such Loan which secures indebtedness for money borrowed or which constitutes a conditional sales agreement, capital lease or other title retention agreement;
	 	  
	 	(D)	 	entered into, agreed to make, grant or permit, or made, granted or permitted any modification or amendment to, any waiver or extension with respect to, or any renewal, refinancing or refunding of, such Loan or related Credit Documents or collateral, including, without limitation, any act or omission which diminished such collateral; or
	 	  
	          	(E)	     	sold, assigned or transferred all or a portion of such Loan to a third party (whether with or without recourse).

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

13

 

 

 

The Assuming Institution shall transfer all such Assets to the Receiver without recourse, and shall indemnify the Receiver against any and all claims of any Person claiming by, through or under the Assuming Institution with respect to any such Asset, as provided in Section 12.4.

 

     (b) Puts Prior to the Settlement Date. During the period from the Bank Closing Date to and including the Business Day immediately preceding the Settlement Date, the Assuming Institution shall be entitled to require the Receiver to purchase any Asset which the Assuming Institution can establish is evidenced by forged or stolen instruments as of the Bank Closing Date; provided, that, the Assuming Institution shall not have the right to require the Receiver to purchase any such Asset with respect to which the Assuming Institution has taken any action referred to in Section 3.4(a)(ii) with respect to such Asset. The Assuming Institution shall transfer all such Assets to the Receiver without recourse, and shall indemnify the Receiver against any and all claims of any Person claiming by, through or under the Assuming Institution with respect to any such Asset, as provided in Section 12.4.

 

     (c) Notices to the Receiver. In the event that the Assuming Institution elects to require the Receiver to purchase one or more Assets, the Assuming Institution shall deliver to the Receiver a notice (a "Put Notice") which shall include:

 

	 	(i)	 	a list of all Assets that the Assuming Institution requires the Receiver to purchase;
	 	 
	 	(ii)	 	a list of all Related Liabilities with respect to the Assets identified pursuant to (i) above; and
	 	 
	          	(iii)	     	a statement of the estimated Repurchase Price of each Asset identified pursuant to (i) above as of the applicable Put Date.

 

Such notice shall be in the form prescribed by the Receiver or such other form to which the Receiver shall consent. As provided in Section 9.6, the Assuming Institution shall deliver to the Receiver such documents, Credit Files and such additional information relating to the subject matter of the Put Notice as the Receiver may request and shall provide to the Receiver full access to all other relevant books and records.

 

     (d) Purchase by Receiver. The Receiver shall purchase Assets that are specified in the Put Notice and shall assume Related Liabilities with respect to such Assets, and the transfer of such Assets and Related Liabilities shall be effective as of a date determined by the Receiver which date shall not be later than thirty (30) days after receipt by the Receiver of the Put Notice (the "Put Date").

 

     (e) Purchase Price and Payment Date. Each Asset purchased by the Receiver pursuant to this Section 3.4 shall be purchased at a price equal to the Repurchase Price of such Asset less the Related Liability Amount applicable to such Asset, in each case determined as of the applicable Put Date. If the difference between such Repurchase Price and such Related Liability Amount is positive, then the Receiver shall pay to the Assuming Institution the amount of such difference; if the difference between such amounts is negative, then the Assuming Institution shall pay to the Receiver the amount of such difference. The Assuming Institution or the Receiver, as the case may be, shall pay the purchase price determined pursuant to this Section 3.4(d) not later than the twentieth (20th) Business Day following the applicable Put Date, together with interest on such amount at the Settlement Interest Rate for the period from and including such Put Date to and including the day preceding the date upon which payment is made.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

14

 

 

 

     (f) Servicing. The Assuming Institution shall administer and manage any Asset subject to purchase by the Receiver in accordance with usual and prudent banking standards and business practices until such time as such Asset is purchased by the Receiver.

 

     (g) Reversals. In the event that the Receiver purchases an Asset (and assumes the Related Liability) that it is not required to purchase pursuant to this Section 3.4, the Assuming Institution shall repurchase such Asset (and assume such Related Liability) from the Receiver at a price computed so as to achieve the same economic result as would apply if the Receiver had never purchased such Asset pursuant to this Section 3.4.

 

     3.5 Assets Not Purchased by Assuming Institution. The Assuming Institution does not purchase, acquire or assume, or (except as otherwise expressly provided in this Agreement) obtain an option to purchase, acquire or assume under this Agreement:

 

     (a) any financial institution bonds, banker's blanket bonds, or public liability, fire, extended coverage insurance policy, bank owned life insurance or any other insurance policy of the Failed Bank, or premium refund, unearned premium derived from cancellation, or any proceeds payable with respect to any of the foregoing;

 

     (b) any interest, right, action, claim, or judgment against (i) any officer, director, employee, accountant, attorney, or any other Person employed or retained by the Failed Bank or any Subsidiary of the Failed Bank on or prior to Bank Closing arising out of any act or omission of such Person in such capacity, (ii) any underwriter of financial institution bonds, banker's blanket bonds or any other insurance policy of the Failed Bank, (iii) any shareholder or holding company of the Failed Bank, or (iv) any other Person whose action or inaction may be related to any loss (exclusive of any loss resulting from such Person's failure to pay on a Loan made by the Failed Bank) incurred by the Failed Bank; provided, that for the purposes hereof, the acts, omissions or other events giving rise to any such claim shall have occurred on or before Bank Closing, regardless of when any such claim is discovered and regardless of whether any such claim is made with respect to a financial institution bond, banker's blanket bond, or any other insurance policy of the Failed Bank in force as of Bank Closing;

 

     (c) prepaid regulatory assessments of the Failed Bank, if any;

 

     (d) legal or equitable interests in tax receivables of the Failed Bank, if any, including any claims arising as a result of the Failed Bank having entered into any agreement or otherwise being joined with another Person with respect to the filing of tax returns or the payment of taxes;

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

15

 

 

 

     (e) amounts reflected on the Accounting Records of the Failed Bank as of Bank Closing as a general or specific loss reserve or contingency account, if any;

 

     (f) leased or owned Bank Premises and leased or owned Furniture and Equipment and Fixtures and Data Processing Equipment located on leased or owned Bank Premises, if any; provided, that the Assuming Institution does obtain an option under Section 4.6, Section 4.7 or Section 4.8, as the case may be, with respect thereto;

 

     (g) owned Bank Premises which the Receiver, in its discretion, determines may contain environmentally hazardous substances;

 

     (h) any "goodwill," as such term is defined in the instructions to the report of condition prepared by banks examined by the Corporation in accordance with 12 C.F.R. Section 304.3, and other intangibles (other than intellectual property);

 

     (i) any criminal restitution or forfeiture orders issued in favor of the Failed Bank;

 

     (j) reserved;

 

     (k) assets essential to the Receiver in accordance with Section 3.6;

 

     (l) the securities listed on the attached Schedule 3.5(l);

 

     (m) reserved;

 

     (n) prepaid accounts associated with any contract or agreement that the Assuming Institution either does not directly assume pursuant to the terms of this Agreement nor has an option to assume under Section 4.8;

 

     (o) except with respect to any Federal Home Loan Bank, any contract pursuant to which the Failed Bank provides mortgage servicing for others; and

 

     (p) loans described on Schedule 3.5(p).

 

     3.6 Retention or Repurchase of Assets Essential to Receiver.

 

     (a) The Receiver may refuse to sell to the Assuming Institution, or the Assuming Institution agrees, at the request of the Receiver set forth in a written notice to the Assuming Institution, to assign, transfer, convey, and deliver to the Receiver all of the Assuming Institution's right, title and interest in and to, any Asset or asset essential to the Receiver as determined by the Receiver in its discretion (together with all Credit Documents evidencing or pertaining thereto), which may include any Asset or asset that the Receiver determines to be:

 

	              	(i)	     	made to an officer, director, or other Person engaging in the affairs of the Failed Bank, its Subsidiaries or Affiliates or any related entities of any of the foregoing;

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

16

 

 

	 	(ii)	 	the subject of any investigation relating to any claim with respect to any item described in Section 3.5(a) or (b), or the subject of, or potentially the subject of, any legal proceedings;
	 	 
	 	(iii)	 	made to a Person who is an Obligor on a loan owned by the Receiver or the Corporation in its corporate capacity or its capacity as receiver of any institution;
	 	 
	 	(iv)	 	secured by collateral which also secures any asset owned by the Receiver; or
	 	 
	              	(v)	     	related to any asset of the Failed Bank not purchased by the Assuming Institution under this Article III or any liability of the Failed Bank not assumed by the Assuming Institution under Article II.

 

     (b) Each such Asset or asset purchased by the Receiver shall be purchased at a price equal to the Repurchase Price thereof less the Related Liability Amount with respect to any Related Liabilities related to such Asset or asset, in each case determined as of the date of the notice provided by the Receiver pursuant to Section 3.6(a). The Receiver shall pay the Assuming Institution not later than the twentieth (20th) Business Day following receipt of related Credit Documents and Credit Files together with interest on such amount at the Settlement Interest Rate for the period from and including the date of receipt of such documents to and including the day preceding the day on which payment is made. The Assuming Institution agrees to administer and manage each such Asset or asset in accordance with usual and prudent banking standards and business practices until each such Asset or asset is purchased by the Receiver. All transfers with respect to Asset or assets under this Section 3.6 shall be made as provided in Section 9.6. The Assuming Institution shall transfer all such Asset or assets and Related Liabilities to the Receiver without recourse, and shall indemnify the Receiver against any and all claims of any Person claiming by, through or under the Assuming Institution with respect to any such Asset or asset, as provided in Section 12.4.

 

     3.7 Receiver’s Offer to Sell Withheld Loans. For the period of 30 days commencing the day after the Bank Closing Date, the Receiver may sell, in its sole discretion, and the Assuming Institution, may purchase, in its sole discretion, at Book Value as of the Bank Closing Date, any Loans initially withheld from sale to the Assuming Institution pursuant to Sections 3.5 or 3.6 of this Agreement. Except for the sales price, Loans sold under this section will be treated as if initially sold under Section 3.1 of this Agreement, and will be subject to all relevant terms of this Agreement as similarly situated Loans sold and transferred pursuant to this Agreement, provided that, no Loan shall be a Shared Loss Loan pursuant to the Shared Loss Agreements as defined in Section 4.15 hereof if it does not meet the definition of Shared Loss Loan in the applicable Shared Loss Agreement. Payment for Loans sold under this section will be handled through the Settlement process.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

17

 

 

 

ARTICLE IV

ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS

 

     The Assuming Institution agrees with the Receiver and the Corporation as follows:

 

     4.1 Continuation of Banking Business. For the period commencing the first banking Business Day after Bank Closing and ending no earlier than the first anniversary of Bank Closing, the Assuming Institution will provide full service banking in the trade area of the Failed Bank. Thereafter, the Assuming Institution may cease providing such banking services in the trade area of the Failed Bank, provided the Assuming Institution has received all necessary regulatory approvals. At the option of the Assuming Institution, such banking services may be provided at any or all of the Bank Premises, or at other premises within such trade area. The trade area shall be determined by the Receiver. For the avoidance of doubt, the foregoing shall not restrict the Assuming Institution from opening, closing or selling branches upon receipt of the necessary regulatory approvals, if the Assuming Institution or its successors continue to provide banking services in the trade area. Assuming Institution will pay to the Receiver, upon the sale of a branch or branches within the year following the date of this agreement, fifty percent (50%) of any franchise premium in excess of the franchise premium paid by the Assuming Institution with respect to such branch or branches.

 

     4.2 Agreement with Respect to Credit Card Business. The Assuming Institution agrees to honor and perform, from and after Bank Closing, all duties and obligations with respect to the Failed Bank's credit card business (including issuer or merchant acquirer) debit card business, stored value and gift card business, and/or processing related to credit cards, if any, and assumes all outstanding extensions of credit or balances with respect to these lines of business.

 

     4.3 Agreement with Respect to Safe Deposit Business. The Assuming Institution assumes and agrees to discharge, from and after Bank Closing, in the usual course of conducting a banking business, the duties and obligations of the Failed Bank with respect to all Safe Deposit Boxes, if any, of the Failed Bank and to maintain all of the necessary facilities for the use of such boxes by the renters thereof during the period for which such boxes have been rented and the rent therefore paid to the Failed Bank, subject to the provisions of the rental agreements between the Failed Bank and the respective renters of such boxes; provided, that the Assuming Institution may relocate the Safe Deposit Boxes of the Failed Bank to any office of the Assuming Institution located in the trade area of the Failed Bank. The Safe Deposit Boxes shall be located and maintained in the trade area of the Failed Bank for a minimum of one year from Bank Closing. The trade area shall be determined by the Receiver. Fees related to the safe deposit business earned prior to the Bank Closing Date shall be for the benefit of the Receiver and fees earned after the Bank Closing Date shall be for the benefit of the Assuming Institution.

 

     4.4 Agreement with Respect to Safekeeping Business. The Receiver transfers, conveys and delivers to the Assuming Institution and the Assuming Institution accepts all securities and other items, if any, held by the Failed Bank in safekeeping for its customers as of Bank Closing. The Assuming Institution assumes and agrees to honor and discharge, from and after Bank Closing, the duties and obligations of the Failed Bank with respect to such securities and items held in safekeeping. The Assuming Institution shall be entitled to all rights and benefits heretofore accrued or hereafter accruing with respect thereto. The Assuming Institution shall provide to the Receiver written verification of all assets held by the Failed Bank for safekeeping within sixty (60) days after Bank Closing. The assets held for safekeeping by the Failed Bank shall be held and maintained by the Assuming Institution in the trade area of the Failed Bank for a minimum of one year from Bank Closing. At the option of the Assuming Institution, the safekeeping business may be provided at any or all of the Bank Premises, or at other premises within such trade area. The trade area shall be determined by the Receiver. Fees related to the safekeeping business earned prior to the Bank Closing Date shall be for the benefit of the Receiver and fees earned after the Bank Closing Date shall be for the benefit of the Assuming Institution.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

18

 

 

 

     4.5 Agreement with Respect to Trust Business.

 

     (a) The Assuming Institution shall, without further transfer, substitution, act or deed, to the full extent permitted by law, succeed to the rights, obligations, properties, assets, investments, deposits, agreements, and trusts of the Failed Bank under trusts, executorships, administrations, guardianships, and agencies, and other fiduciary or representative capacities, all to the same extent as though the Assuming Institution had assumed the same from the Failed Bank prior to Bank Closing; provided, that any liability based on the misfeasance, malfeasance or nonfeasance of the Failed Bank, its directors, officers, employees or agents with respect to the trust business is not assumed hereunder.

 

     (b) The Assuming Institution shall, to the full extent permitted by law, succeed to, and be entitled to take and execute, the appointment to all executorships, trusteeships, guardianships and other fiduciary or representative capacities to which the Failed Bank is or may be named in wills, whenever probated, or to which the Failed Bank is or may be named or appointed by any other instrument.

 

     (c) In the event additional proceedings of any kind are necessary to accomplish the transfer of such trust business, the Assuming Institution agrees that, at its own expense, it will take whatever action is necessary to accomplish such transfer. The Receiver agrees to use reasonable efforts to assist the Assuming Institution in accomplishing such transfer.

 

     (d) The Assuming Institution shall provide to the Receiver written verification of the assets held in connection with the Failed Bank's trust business within sixty (60) days after Bank Closing.

 

     4.6 Agreement with Respect to Bank Premises.

 

     (a) Option to Purchase. Subject to Section 3.5, the Receiver hereby grants to the Assuming Institution an exclusive option for the period of ninety (90) days commencing the day after Bank Closing to purchase any or all owned Bank Premises, including all Fixtures, Furniture and Equipment located on the Bank Premises. The Assuming Institution shall give written notice to the Receiver within the option period of its election to purchase or not to purchase any of the owned Bank Premises. Any purchase of such premises shall be effective as of the date of Bank Closing and such purchase shall be consummated as soon as practicable thereafter, and in no event later than the Settlement Date. If the Assuming Institution gives notice of its election not to purchase one or more of the owned Bank Premises within seven (7) days of Bank Closing, then, not withstanding any other provision of this Agreement to the contrary, the Assuming Institution shall not be liable for any of the costs or fees associated with appraisals for such Bank Premises and associated Fixtures, Furniture and Equipment.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

19

 

 

 

     (b) Option to Lease. The Receiver hereby grants to the Assuming Institution an exclusive option for the period of ninety (90) days commencing the day after Bank Closing to cause the Receiver to assign to the Assuming Institution any or all leases for leased Bank Premises, if any, which have been continuously occupied by the Assuming Institution from Bank Closing to the date it elects to accept an assignment of the leases with respect thereto to the extent such leases can be assigned; provided, that the exercise of this option with respect to any lease must be as to all premises or other property subject to the lease. If an assignment cannot be made of any such leases, the Receiver may, in its discretion, enter into subleases with the Assuming Institution containing the same terms and conditions provided under such existing leases for such leased Bank Premises or other property. The Assuming Institution shall give notice to the Receiver within the option period of its election to accept or not to accept an assignment of any or all leases (or enter into subleases or new leases in lieu thereof). The Assuming Institution agrees to assume all leases assigned (or enter into subleases or new leases in lieu thereof) pursuant to this Section 4.6. If the Assuming Institution gives notice of its election not to accept an assignment of a lease for one or more of the leased Bank Premises within seven (7) days of Bank Closing, then, not withstanding any other provision of this Agreement to the contrary, the Assuming Institution shall not be liable for any of the costs or fees associated with appraisals for the Fixtures, Furniture and Equipment located on such leased Bank Premises.

 

     (c) Facilitation. The Receiver agrees to facilitate the assumption, assignment or sublease of leases or the negotiation of new leases by the Assuming Institution; provided, that neither the Receiver nor the Corporation shall be obligated to engage in litigation, make payments to the Assuming Institution or to any third party in connection with facilitating any such assumption, assignment, sublease or negotiation or commit to any other obligations to third parties.

 

     (d) Occupancy. The Assuming Institution shall give the Receiver fifteen (15) days prior written notice of its intention to vacate prior to vacating any leased Bank Premises with respect to which the Assuming Institution has not exercised the option provided in Section 4.6(b). Any such notice shall be deemed to terminate the Assuming Institution's option with respect to such leased Bank Premises.

 

     (e) Occupancy Costs.

 

     (i) The Assuming Institution agrees to pay to the Receiver, or to appropriate third parties at the direction of the Receiver, during and for the period of any occupancy by it of (x) owned Bank Premises the market rental value, as determined by the appraiser selected in accordance with the definition of Fair Market Value, and all operating costs, and (y) leased Bank Premises, all operating costs with respect thereto and to comply with all relevant terms of applicable leases entered into by the Failed Bank, including without limitation the timely payment of all rent. Operating costs include, without limitation all taxes, fees, charges, utilities, insurance and assessments, to the extent not included in the rental value or rent. If the Assuming Institution elects to purchase any owned Bank Premises in accordance with Section 4.6(a), the amount of any rent paid (and taxes paid to the Receiver which have not been paid to the taxing authority and for which the Assuming Institution assumes liability) by the Assuming Institution with respect thereto shall be applied as an offset against the purchase price thereof.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

20

 

 

 

          (ii) The Assuming Institution agrees during the period of occupancy by it of owned or leased Bank Premises, to pay to the Receiver rent for the use of all owned or leased Furniture and Equipment and all owned or leased Fixtures located on such Bank Premises for the period of such occupancy. Rent for such property owned by the Failed Bank shall be the market rental value thereof, as determined by the Receiver within sixty (60) days after Bank Closing. Rent for such leased property shall be an amount equal to any and all rent and other amounts which the Receiver incurs or accrues as an obligation or is obligated to pay for such period of occupancy pursuant to all leases and contracts with respect to such property. If the Assuming Institution purchases any owned Furniture and Equipment or owned Fixtures in accordance with Section 4.6(f) or 4.6(h), the amount of any rents paid by the Assuming Institution with respect thereto shall be applied as an offset against the purchase price thereof. 

 

     (f) Certain Requirements as to Fixtures, Furniture and Equipment. If the Assuming Institution purchases owned Bank Premises or accepts an assignment of the lease (or enters into a sublease or a new lease in lieu thereof) for leased Bank Premises as provided in Section 4.6(a) or 4.6(b), or if the Assuming Institution does not exercise such option but within twelve (12) months following Bank Closing obtains the right to occupy such premises (whether by assignment, lease, sublease, purchase or otherwise), other than in accordance with Section 4.6(a) or (b), the Assuming Institution shall (i) effective as of the date of Bank Closing, purchase from the Receiver all Fixtures, Furniture and Equipment owned by the Failed Bank at Fair Market Value and located thereon as of Bank Closing, (ii) accept an assignment or a sublease of the leases or negotiate new leases for all Fixtures, Furniture and Equipment leased by the Failed Bank and located thereon, and (iii) if applicable, accept an assignment or a sublease of any ground lease or negotiate a new ground lease with respect to any land on which such Bank Premises are located; provided, that the Receiver shall not have disposed of such Fixtures, Furniture and Equipment or repudiated the leases specified in clause (ii) or (iii). 

 

     (g) Vacating Premises.

 

          (i) If the Assuming Institution elects not to purchase any owned Bank Premises, the notice of such election in accordance with Section 4.6(a) shall specify the date upon which the Assuming Institution's occupancy of such premises shall terminate, which date shall not be later than ninety (90) days after the date of the Assuming Institution's notice not to exercise such option. The Assuming Institution shall promptly be responsible for relinquishing and releasing to the Receiver such premises and the Fixtures, Furniture and Equipment located thereon which existed at the time of Bank Closing, in the same condition as at Bank Closing and at the premises where it was inventoried at Bank Closing, normal wear and tear excepted. Any of the aforementioned which is missing will be charged to the Assuming Institution at the item’s Fair Market Value as set out in accordance with this Agreement. By occupying any such premises after the expiration of such ninety (90)-day period, the Assuming Institution shall, at the Receiver's option, (x) be deemed to have agreed to purchase such Bank Premises, and to assume all leases, obligations and liabilities with respect to leased Furniture and Equipment and leased Fixtures located thereon and any ground lease with respect to the land on which such premises are located, and (y) be required to purchase all Fixtures, Furniture and Equipment owned by the Failed Bank and located on such premises as of Bank Closing. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	21

 

          (ii) If the Assuming Institution elects not to accept an assignment of the lease or sublease any leased Bank Premises, the notice of such election in accordance with Section 4.6(b) shall specify the date upon which the Assuming Institution's occupancy of such leased Bank Premises shall terminate, which date shall not be later than ninety (90) days after the date of the Assuming Institution's notice not to exercise such option. Upon vacating such premises, the Assuming Institution shall be liable for relinquishing and releasing to the Receiver such premises and the Fixtures, Furniture and Equipment located thereon which existed at the time of Bank Closing, in the same condition as at Bank Closing, and at the premises where it was inventoried at Bank closing, normal wear and tear excepted. Any of the aforementioned which is missing will be charged to the Assuming Institution at the item’s Fair Market Value as set out in accordance with this Agreement. By failing to provide notice of its intention to vacate such premises prior to the expiration of the option period specified in Section 4.6(b), or by occupying such premises after the one hundred eighty (180)-day period specified above in this paragraph (ii), the Assuming Institution shall, at the Receiver's option, (x) be deemed to have assumed all leases, obligations and liabilities with respect to such premises (including any ground lease with respect to the land on which premises are located), and leased Furniture and Equipment and leased Fixtures located thereon in accordance with this Section 4.6 (unless the Receiver previously repudiated any such lease), and (y) be required to purchase all Fixtures, Furniture and Equipment owned by the Failed Bank at Fair Market Value and located on such premises as of Bank Closing. 

 

     (h) Furniture and Equipment and Certain Other Equipment. The Receiver hereby grants to the Assuming Institution an option to purchase all Furniture and Equipment and/or all telecommunications and check processing equipment owned by the Failed Bank at Fair Market Value and located at any leased Bank Premises that the Assuming Institution elects to vacate or which it could have, but did not occupy, pursuant to this Section 4.6; provided, that, the Assuming Institution shall give the Receiver notice of its election to purchase such property at the time it gives notice of its intention to vacate such Bank Premises or within ten (10) days after Bank Closing for Bank Premises it could have, but did not, occupy. 

 

     (i) Option to Put Bank Premises and Related Fixtures, Furniture and Equipment. 

 

          (i) For a period of ninety (90) days following Bank Closing, the Assuming Institution shall be entitled to require the Receiver to purchase any Bank Premises that is owned, directly or indirectly, by an Acquired Subsidiary and the purchase price paid by the Receiver shall be the Fair Market Value of the Bank Premises.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	22

 

          (ii) If the Assuming Institution elects to require the Receiver to purchase any Bank Premises that is owned, directly or indirectly, by an Acquired Subsidiary, the Assuming Institution shall also have the option, exercisable within the same ninety (90) day time period, to require the Receiver to purchase any Fixtures, Furniture and Equipment that is owned, directly or indirectly, by an Acquired Subsidiary and which is located on such Bank Premises. The purchase price paid by the Receiver shall be the Fair Market Value of the Fixtures, Furniture and Equipment.

 

          (iii) In the event the Assuming Institution elects to exercise its option under this subparagraph, the Assuming Institution shall pay to the Receiver occupancy costs in accordance with Section 4.6(e) and shall vacate the Bank Premises in accordance with Section 4.6(g)(i). 

 

          (iv) Regardless of whether the Assuming Institution exercises any of its option under this subparagraph, the purchase price for the Acquired Subsidiary shall be adjusted by the difference between the Fair Market Value of the Bank Premises and Fixtures, Furniture and Equipment and their respective Book Value as reflected of the books and records of the Acquired Subsidiary. Such adjustment shall be made in accordance with Article VIII of this Agreement. 

 

     4.7 Agreement with Respect to Data Processing Equipment and Leases. 

 

     (a) The Receiver hereby grants to the Assuming Institution an exclusive option for the period of ninety (90) days commencing the day after Bank Closing to: (i) accept an assignment from the Receiver of all leased Data Processing Equipment and (ii) purchase at Fair Market Value from the Receiver all owned Data Processing Equipment. The Assuming Institution’s election under this option applies to both owned and leased Data Processing Equipment.

 

     (b) The Assuming Institution shall (i) give written notice to the Receiver within the option period specified in Section 4.7(a) of its intent to accept or decline an assignment or sublease of all leased Data Processing Equipment and promptly accept an assignment or sublease of such Data Processing Equipment, (ii) give written notice to the appropriate lessor(s) that it has accepted an assignment or sublease of any such Data Processing Equipment that is subject to a lease, and (iii) give written notice to the Receiver within the option period specified in Section 4.7(a) of its intent to purchase all owned Data Processing Equipment and promptly pay the Receiver for the purchase of such Data Processing Equipment. 

 

     (c) The Receiver agrees to facilitate the assignment or sublease of Data Processing Leases or the negotiation of new leases or license agreements by the Assuming Institution; provided, that neither the Receiver nor the Corporation shall be obligated to engage in litigation or make payments to the Assuming Institution or to any third party in connection with facilitating any such assumption, assignment, sublease or negotiation. 

 

     (d) The Assuming Institution agrees, during its period of use of any Data Processing Equipment, to pay to the Receiver or to appropriate third parties at the direction of the Receiver all operating costs with respect thereto and to comply with all relevant terms of any existing data processing leases entered into by the Failed Bank, including without limitation the timely payment of all rent, taxes, fees, charges, utilities, insurance and assessments. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	23

 

     (e) The Assuming Institution shall, not later than fifty (50) days after giving the notice provided in Section 4.7(b), (i) relinquish and release to the Receiver all Data Processing Equipment, in the same condition as at Bank Closing, normal wear and tear excepted, or (ii) accept an assignment or a sublease of any existing data processing lease or negotiate a new lease or license agreement under this Section 4.7 with respect to leased Data Processing Equipment, and (iii) accept ownership of all Data Processing Equipment purchased from the Receiver. 

 

     4.8 Agreement with Respect to Certain Existing Agreements. 

 

     (a) Subject to the provisions of Section 4.8(b), with respect to agreements existing as of Bank Closing which provide for the rendering of services by or to the Failed Bank, within thirty (30) days after Bank Closing, the Assuming Institution shall give the Receiver written notice specifying whether it elects to assume or not to assume each such agreement. Except as may be otherwise provided in this Article IV, the Assuming Institution agrees to comply with the terms of each such agreement for a period commencing on the day after Bank Closing and ending on: (i) in the case of an agreement that provides for the rendering of services by the Failed Bank, the date which is ninety (90) days after Bank Closing, and (ii) in the case of an agreement that provides for the rendering of services to the Failed Bank, the date which is thirty (30) days after the Assuming Institution has given notice to the Receiver of its election not to assume such agreement; provided, that the Receiver can reasonably make such service agreements available to the Assuming Institution. The Assuming Institution shall be deemed by the Receiver to have assumed agreements for which no notification is timely given. The Receiver agrees to assign, transfer, convey, and deliver to the Assuming Institution all right, title and interest of the Receiver, if any, in and to agreements the Assuming Institution assumes hereunder. In the event the Assuming Institution elects not to accept an assignment of any lease (or sublease) or negotiate a new lease for leased Bank Premises under Section 4.6 and does not otherwise occupy such premises, the provisions of this Section 4.8(a) shall not apply to service agreements related to such premises. The Assuming Institution agrees, during the period it has the use or benefit of any such agreement, promptly to pay to the Receiver or to appropriate third parties at the direction of the Receiver all operating costs with respect thereto and to comply with all relevant terms of such agreement. 

 

     (b) The provisions of Section 4.8(a) regarding the Assuming Institution’s election to assume or not assume certain agreements shall not apply to (i) agreements pursuant to which the Failed Bank provides mortgage servicing for others or mortgage servicing is provided to the Failed Bank by others, (ii) agreements that are subject to Sections 4.1 through 4.7 and any insurance policy or bond referred to in Section 3.5(a) or other agreement specified in Section 3.5, and (iii) consulting, management or employment agreements, if any, between the Failed Bank and its employees or other Persons. Except as otherwise expressly set forth elsewhere in this Agreement, the Assuming Institution does not assume any liabilities or acquire any rights under any of the agreements described in this Section 4.8(b). 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	24

 

     4.9 Informational Tax Reporting. The Assuming Institution agrees to perform all obligations of the Failed Bank with respect to Federal and State income tax informational reporting related to (i) the Assets and the Liabilities Assumed, (ii) deposit accounts that were closed and loans that were paid off or collateral obtained with respect thereto prior to Bank Closing, (iii) miscellaneous payments made to vendors of the Failed Bank, and (iv) any other asset or liability of the Failed Bank, including, without limitation, loans not purchased and Deposits not assumed by the Assuming Institution, as may be required by the Receiver. 

 

     4.10 Insurance. The Assuming Institution agrees to obtain insurance coverage effective from and after Bank Closing, including public liability, fire and extended coverage insurance acceptable to the Receiver with respect to owned or leased Bank Premises that it occupies, and all owned or leased Furniture and Equipment and Fixtures and leased data processing equipment (including hardware and software) located thereon, in the event such insurance coverage is not already in force and effect with respect to the Assuming Institution as the insured as of Bank Closing. All such insurance shall, where appropriate (as determined by the Receiver), name the Receiver as an additional insured. 

 

     4.11 Office Space for Receiver and Corporation.

 

     (a) Office Space for Receiver and Corporation. 

 

          (i) For the period commencing on the day following Bank Closing and ending on the one hundred eightieth (180th) day following Bank Closing, the Assuming Institution will provide to the Receiver and the Corporation, without charge, adequate and suitable office space (including parking facilities and vault space), furniture, equipment (including photocopying and telecopying machines), email accounts, network access and technology resources (such as shared drive), and utilities (including local telephone service and fax machines) (collectively, “FDIC Office Space”) at the Bank Premises occupied by the Assuming Institution for the Receiver use in the discharge of their respective functions with respect to the Failed Bank. 

 

          (ii) Upon written notice by the Receiver or the Corporation, for the period commencing on the one hundred eighty first (181st) day following Bank Closing and ending no later than the three hundred and sixty-fifth (365th) day following Bank Closing, the Assuming Institution will continue to provide to the Receiver and the Corporation FDIC Office Space at the Bank Premises. During the period from the 181st day following Bank Closing until the day the FDIC and the Corporation vacate FDIC Office Space, the Receiver and the Corporation will pay to the Assuming Institution their respective pro rata share (based on square footage occupied) of (A) the market rental value for the applicable owned Bank Premises or (B) actual rent paid for applicable leased Bank Premises. 

 

          (iii) If the Receiver or the Corporation determine that the space provided by the Assuming Institution is inadequate or unsuitable, the Receiver and the Corporation may relocate to other quarters having adequate and suitable FDIC Office Space and the costs of relocation and any rental and utility costs for the balance of the period of occupancy by the Receiver and the Corporation shall be borne by the Assuming Institution. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	25

 

     (b) Certain Payments on behalf of Receiver and Corporation. The Assuming Institution will pay such bills and invoices on behalf of the Receiver and the Corporation as the Receiver or the Corporation may direct for the period beginning on the date of Bank Closing and ending on Settlement Date. The Assuming Institution shall submit its requests for reimbursement of such expenditures pursuant to Article VIII of this Agreement. 

 

     4.12 Agreement with Respect to Continuation of Group Health Plan Coverage for Former Employees of the Failed Bank. 

 

     (a) The Assuming Institution agrees to assist the Receiver, as provided in this Section 4.12, in offering individuals who were employees or former employees of the Failed Bank, or any of its Subsidiaries, and who, immediately prior to Bank Closing, were receiving, or were eligible to receive, health insurance coverage or health insurance continuation coverage from the Failed Bank ("Eligible Individuals"), the opportunity to obtain health insurance coverage in the Corporation's FIA Continuation Coverage Plan which provides for health insurance continuation coverage to such Eligible Individuals who are qualified beneficiaries of the Failed Bank as defined in Section 607 of the Employee Retirement Income Security Act of 1974, as amended (respectively, "qualified beneficiaries" and "ERISA"). The Assuming Institution shall consult with the Receiver and not later than five (5) Business Days after Bank Closing shall provide written notice to the Receiver of the number (if available), identity (if available) and addresses (if available) of the Eligible Individuals who are qualified beneficiaries of the Failed Bank and for whom a "qualifying event" (as defined in Section 603 of ERISA) has occurred and with respect to whom the Failed Bank's obligations under Part 6 of Subtitle B of Title I of ERISA have not been satisfied in full, and such other information as the Receiver may reasonably require. The Receiver shall cooperate with the Assuming Institution in order to permit it to prepare such notice and shall provide to the Assuming Institution such data in its possession as may be reasonably required for purposes of preparing such notice. 

 

     (b) The Assuming Institution shall take such further action to assist the Receiver in offering the Eligible Individuals who are qualified beneficiaries of the Failed Bank the opportunity to obtain health insurance coverage in the Corporation's FIA Continuation Coverage Plan as the Receiver may direct. All expenses incurred and paid by the Assuming Institution (i) in connection with the obligations of the Assuming Institution under this Section 4.12, and (ii) in providing health insurance continuation coverage to any Eligible Individuals who are hired by the Assuming Institution and such employees' qualified beneficiaries shall be borne by the Assuming Institution. 

 

     (c) No later than five (5) Business Days after Bank Closing, the Assuming Institution shall provide the Receiver with a list of all Failed Bank employees the Assuming Institution will not hire. Unless otherwise agreed, the Assuming Institution pays all salaries and payroll costs for all Failed Bank Employees until the list is provided to the Receiver. The Assuming Institution shall be responsible for all costs and expenses (i.e. salary, benefits, etc.) associated with all other employees not on that list from and after the date of delivery of the list to the Receiver. The Assuming Institution shall offer to the Failed Bank employees it retains employment benefits comparable to those the Assuming Institution offers its current employees. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	26

 

     (d) This Section 4.12 is for the sole and exclusive benefit of the parties to this Agreement, and for the benefit of no other Person (including any former employee of the Failed Bank or any Subsidiary thereof or qualified beneficiary of such former employee). Nothing in this Section 4.12 is intended by the parties, or shall be construed, to give any Person (including any former employee of the Failed Bank or any Subsidiary thereof or qualified beneficiary of such former employee) other than the Corporation, the Receiver and the Assuming Institution any legal or equitable right, remedy or claim under or with respect to the provisions of this Section. 

 

     4.13 Agreement with Respect to Interim Asset Servicing. At any time after Bank Closing, the Receiver may establish on its books an asset pool(s) and may transfer to such asset pool(s) (by means of accounting entries on the books of the Receiver) all or any assets and liabilities of the Failed Bank which are not acquired by the Assuming Institution, including, without limitation, wholly unfunded Commitments and assets and liabilities which may be acquired, funded or originated by the Receiver subsequent to Bank Closing. The Receiver may remove assets (and liabilities) from or add assets (and liabilities) to such pool(s) at any time in its discretion. At the option of the Receiver, the Assuming Institution agrees to service, administer, and collect such pool assets in accordance with and for the term set forth in Exhibit 4.13 "Interim Asset Servicing Arrangement". 

 

     4.14 Reserved. 

 

     4.15 Agreement with Respect to Loss Sharing. The Assuming Institution shall be entitled to require reimbursement from the Receiver for loss sharing on certain loans in accordance with the Single Family Shared-Loss Agreement attached hereto as Exhibit 4.15A and the Commercial Shared-Loss Agreement attached hereto as Exhibit 4.15B, collectively, the “Shared-Loss Agreements.” The assets that shall be subject to the Shared-Loss Agreements are identified on the Schedules 4.15A through 4.15D, attached hereto. 

 

ARTICLE V

DUTIES WITH RESPECT TO DEPOSITORS OF THE FAILED BANK 

 

     5.1 Payment of Checks, Drafts and Orders. Subject to Section 9.5, the Assuming Institution agrees to pay all properly drawn checks, drafts and withdrawal orders of depositors of the Failed Bank presented for payment, whether drawn on the check or draft forms provided by the Failed Bank or by the Assuming Institution, to the extent that the Deposit balances to the credit of the respective makers or drawers assumed by the Assuming Institution under this Agreement are sufficient to permit the payment thereof, and in all other respects to discharge, in the usual course of conducting a banking business, the duties and obligations of the Failed Bank with respect to the Deposit balances due and owing to the depositors of the Failed Bank assumed by the Assuming Institution under this Agreement. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	27

 

     5.2 Certain Agreements Related to Deposits. Subject to Section 2.2, the Assuming Institution agrees to honor the terms and conditions of any written escrow or mortgage servicing agreement or other similar agreement relating to a Deposit liability assumed by the Assuming Institution pursuant to this Agreement. 

 

     5.3 Notice to Depositors. 

 

     (a) Within seven (7) days after Bank Closing, the Assuming Institution shall give notice by mail to each depositor of the Failed Bank of (i) the assumption of the Deposit liabilities of the Failed Bank, and (ii) the procedures to claim Deposits (the Receiver shall provide item (ii) to Assuming Institution). The Assuming Institution shall also publish notice of its assumption of the Deposit liabilities of the Failed Bank in a newspaper of general circulation in the county or counties in which the Failed Bank was located.

 

     (b) Within seven (7) days after Bank Closing, the Assuming Institution shall give notices by mail to each depositor of the Failed Bank, as required under Section 2.2. 

 

     (c) If the Assuming Institution proposes to charge fees different from those fees formerly charged by the Failed Bank, the Assuming Institution shall include its fee schedule in its mailed notice. 

 

     (d) The Assuming Institution shall obtain approval of all notices and publications required by this Section 5.3 from counsel for the Receiver prior to mailing or publication. 

 

ARTICLE VI

RECORDS 

 

     6.1 Transfer of Records. In accordance with Sections 2.1 and 3.1, the Receiver assigns, transfers, conveys and delivers to the Assuming Institution, whether located on Bank Premises occupied or not occupied by the Assuming Institution or at any other location, any and all Records of the Failed Bank, other than the following: 

 

     (a) Records pertaining to former employees of the Failed Bank who were no longer employed by the Failed Bank as of Bank Closing and Records pertaining to employees of the Failed Bank who were employed by the Failed Bank as of Bank Closing and for whom the Receiver is unable to obtain a waiver to release such Records to the Assuming Institution; 

 

     (b) Records pertaining to (i) any asset or liability of the Failed Bank retained by the Receiver, or (ii) any asset of the Failed Bank acquired by the Receiver pursuant to this Agreement; and 

 

     (c) Any other Records as determined by the Receiver. 

 

     6.2 Delivery of Assigned Records. The Receiver shall deliver to the Assuming Institution all Records described in Section 6.1 as soon as practicable on or after the date of this Agreement. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	28

 

     6.3 Preservation of Records.

 

     (a) The Assuming Institution agrees that it will preserve and maintain for the joint benefit of the Receiver, the Corporation and the Assuming Institution, all Records of which it has custody. The Assuming Institution shall have the primary responsibility to respond to subpoenas, discovery requests, and other similar official inquiries and customer requests for lien releases with respect to the Records of which it has custody. With respect to its obligations under this Section regarding Electronically Stored Information, the Assuming Institution will complete the Data Retention Catalog attached hereto as Schedule 6.3 and submit it to the Receiver for the Receiver’s approval of the Assuming Institution’s data retention plan. 

 

     (b) With regard to all Records of which it has custody which are ten (10) years old as of the date of the appointment of the Receiver, the Assuming Institution agrees to request written permission to destroy such records by submitting a written request to destroy, specifying precisely which records are included in the request, to DRR– Records Manager, CServiceFDICDAL@FDIC.gov; and 

 

     (c) With regard to all Records of which it has custody which have been maintained in the custody of the Assuming Institution after six (6) years from the date of the appointment of the Receiver, the Assuming Institution agrees to request written permission to destroy such records by submitting a written request to destroy, specifying precisely which records are included in the request, to DRR– Records Manager, CServiceFDICDAL@FDIC.gov. 

 

     6.4 Access to Records; Copies. The Assuming Institution agrees to permit the Receiver and the Corporation access to all Records of which the Assuming Institution has custody, and to use, inspect, make extracts from or request copies of any such Records in the manner and to the extent requested, and to duplicate, in the discretion of the Receiver or the Corporation, any Record in the form of microfilm or microfiche pertaining to Deposit account relationships; provided, that in the event that the Failed Bank maintained one or more duplicate copies of such microfilm or microfiche Records, the Assuming Institution hereby assigns, transfers, and conveys to the Corporation one such duplicate copy of each such Record without cost to the Corporation, and agrees to deliver to the Corporation all Records assigned and transferred to the Corporation under this Article VI as soon as practicable on or after the date of this Agreement. The party requesting a copy of any Record shall bear the cost (based on standard accepted industry charges to the extent applicable, as determined by the Receiver) for providing such duplicate Records. A copy of each Record requested shall be provided as soon as practicable by the party having custody thereof.

 

ARTICLE VII

BID; INITIAL PAYMENT 

 

          The Assuming Institution has submitted to the Receiver a Deposit premium bid of 1.0% and an Asset premium (discount) bid of ($9,995,000.00), plus a value appreciation instrument. The Deposit premium bid will be applied to the total of all Assumed Deposits except for brokered, CDARS, and any market place or similar subscription services Deposits. On the Payment Date, the Assuming Institution will pay to the Corporation, or the Corporation will pay to the Assuming Institution, as the case may be, the Initial Payment, together with interest on such amount (if the Payment Date is not the day following the day of the Bank Closing Date) from and including the day following the Bank Closing Date to and including the day preceding the Payment Date at the Settlement Interest Rate. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	29

 

ARTICLE VIII

ADJUSTMENTS

 

     8.1 Pro Forma Statement. The Receiver, as soon as practicable after Bank Closing, in accordance with the best information then available, shall provide to the Assuming Institution a pro forma statement reflecting any adjustments of such liabilities and assets as may be necessary. Such pro forma statement shall take into account, to the extent possible, (i) liabilities and assets of a nature similar to those contemplated by Section 2.1 or Section 3.1, respectively, which at Bank Closing were carried in the Failed Bank's suspense accounts, (ii) accruals as of Bank Closing for all income related to the assets and business of the Failed Bank acquired by the Assuming Institution hereunder, whether or not such accruals were reflected on the Accounting Records of the Failed Bank in the normal course of its operations, and (iii) adjustments to determine the Book Value of any investment in an Acquired Subsidiary and related accounts on the "bank only" (unconsolidated) balance sheet of the Failed Bank based on the equity method of accounting, whether or not the Failed Bank used the equity method of accounting for investments in subsidiaries, except that the resulting amount cannot be less than the Acquired Subsidiary's recorded equity as of Bank Closing as reflected on the Accounting Records of the Acquired Subsidiary. Any Loan purchased by the Assuming Institution pursuant to Section 3.1 which the Failed Bank charged off during the period beginning the day after the Bid Valuation Date to the date of Bank Closing shall be deemed not to be charged off for the purposes of the pro forma statement, and the purchase price shall be determined pursuant to Section 3.2.

 

     8.2 Correction of Errors and Omissions; Other Liabilities. 

 

     (a) In the event any bookkeeping omissions or errors are discovered in preparing any pro forma statement or in completing the transfers and assumptions contemplated hereby, the parties hereto agree to correct such errors and omissions, it being understood that, as far as practicable, all adjustments will be made consistent with the judgments, methods, policies or accounting principles utilized by the Failed Bank in preparing and maintaining Accounting Records, except that adjustments made pursuant to this Section 8.2(a) are not intended to bring the Accounting Records of the Failed Bank into accordance with generally accepted accounting principles. 

 

     (b) If the Receiver discovers at any time subsequent to the date of this Agreement that any claim exists against the Failed Bank which is of such a nature that it would have been included in the liabilities assumed under Article II had the existence of such claim or the facts giving rise thereto been known as of Bank Closing, the Receiver may, in its discretion, at any time, require that such claim be assumed by the Assuming Institution in a manner consistent with the intent of this Agreement. The Receiver will make appropriate adjustments to the pro forma statement provided by the Receiver to the Assuming Institution pursuant to Section 8.1 as may be necessary. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	30

 

     8.3 Payments. The Receiver agrees to cause to be paid to the Assuming Institution, or the Assuming Institution agrees to pay to the Receiver, as the case may be, on the Settlement Date, a payment in an amount which reflects net adjustments (including any costs, expenses and fees associated with determinations of value as provided in this Agreement) made pursuant to Section 8.1 or Section 8.2, plus interest as provided in Section 8.4. The Receiver and the Assuming Institution agree to effect on the Settlement Date any further transfer of assets to or assumption of liabilities or claims by the Assuming Institution as may be necessary in accordance with Section 8.1 or Section 8.2.

 

     8.4 Interest. Any amounts paid under Section 8.3 or Section 8.5, shall bear interest for the period from and including the day following Bank Closing to and including the day preceding the payment at the Settlement Interest Rate. 

 

     8.5 Subsequent Adjustments. In the event that the Assuming Institution or the Receiver discovers any errors or omissions as contemplated by Section 8.2 or any error with respect to the payment made under Section 8.3 after the Settlement Date, the Assuming Institution and the Receiver agree to promptly correct any such errors or omissions, make any payments and effect any transfers or assumptions as may be necessary to reflect any such correction plus interest as provided in Section 8.4. 

 

ARTICLE IX

CONTINUING COOPERATION

 

     9.1 General Matters. The parties hereto agree that they will, in good faith and with their best efforts, cooperate with each other to carry out the transactions contemplated by this Agreement and to effect the purposes hereof. 

 

     9.2 Additional Title Documents. The Receiver, the Corporation and the Assuming Institution each agree, at any time, and from time to time, upon the request of any party hereto, to execute and deliver such additional instruments and documents of conveyance as shall be reasonably necessary to vest in the appropriate party its full legal or equitable title in and to the property transferred pursuant to this Agreement or to be transferred in accordance herewith. The Assuming Institution shall prepare such instruments and documents of conveyance (in form and substance satisfactory to the Receiver) as shall be necessary to vest title to the Assets in the Assuming Institution. The Assuming Institution shall be responsible for recording such instruments and documents of conveyance at its own expense. 

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	31

 

     9.3 Claims and Suits. 

 

     (a) The Receiver shall have the right, in its discretion, to (i) defend or settle any claim or suit against the Assuming Institution with respect to which the Receiver has indemnified the Assuming Institution in the same manner and to the same extent as provided in Article XII, and (ii) defend or settle any claim or suit against the Assuming Institution with respect to any Liability Assumed, which claim or suit may result in a loss to the Receiver arising out of or related to this Agreement, or which existed against the Failed Bank on or before Bank Closing. The exercise by the Receiver of any rights under this Section 9.3(a) shall not release the Assuming Institution with respect to any of its obligations under this Agreement. 

 

     (b) In the event any action at law or in equity shall be instituted by any Person against the Receiver and the Corporation as codefendants with respect to any asset of the Failed Bank retained or acquired pursuant to this Agreement by the Receiver, the Receiver agrees, at the request of the Corporation, to join with the Corporation in a petition to remove the action to the United States District Court for the proper district. The Receiver agrees to institute, with or without joinder of the Corporation as coplaintiff, any action with respect to any such retained or acquired asset or any matter connected therewith whenever notice requiring such action shall be given by the Corporation to the Receiver. 

 

     9.4 Payment of Deposits. In the event any depositor does not accept the obligation of the Assuming Institution to pay any Deposit liability of the Failed Bank assumed by the Assuming Institution pursuant to this Agreement and asserts a claim against the Receiver for all or any portion of any such Deposit liability, the Assuming Institution agrees on demand to provide to the Receiver funds sufficient to pay such claim in an amount not in excess of the Deposit liability reflected on the books of the Assuming Institution at the time such claim is made. Upon payment by the Assuming Institution to the Receiver of such amount, the Assuming Institution shall be discharged from any further obligation under this Agreement to pay to any such depositor the amount of such Deposit liability paid to the Receiver. 

 

     9.5 Withheld Payments. At any time, the Receiver or the Corporation may, in its discretion, determine that all or any portion of any deposit balance assumed by the Assuming Institution pursuant to this Agreement does not constitute a "Deposit" (or otherwise, in its discretion, determine that it is the best interest of the Receiver or Corporation to withhold all or any portion of any deposit), and may direct the Assuming Institution to withhold payment of all or any portion of any such deposit balance. Upon such direction, the Assuming Institution agrees to hold such deposit and not to make any payment of such deposit balance to or on behalf of the depositor, or to itself, whether by way of transfer, set-off, or otherwise. The Assuming Institution agrees to maintain the "withheld payment" status of any such deposit balance until directed in writing by the Receiver or the Corporation as to its disposition. At the direction of the Receiver or the Corporation, the Assuming Institution shall return all or any portion of such deposit balance to the Receiver or the Corporation, as appropriate, and thereupon the Assuming Institution shall be discharged from any further liability to such depositor with respect to such returned deposit balance. If such deposit balance has been paid to the depositor prior to a demand for return by the Corporation or the Receiver, and payment of such deposit balance had not been previously withheld pursuant to this Section, the Assuming Institution shall not be obligated to return such deposit balance to the Receiver or the Corporation. The Assuming Institution shall be obligated to reimburse the Corporation or the Receiver, as the case may be, for the amount of any deposit balance or portion thereof paid by the Assuming Institution in contravention of any previous direction to withhold payment of such deposit balance or return such deposit balance the payment of which was withheld pursuant to this Section.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 
	 	 	 
	32

 

     9.6 Proceedings with Respect to Certain Assets and Liabilities.

 

     (a) In connection with any investigation, proceeding or other matter with respect to any asset or liability of the Failed Bank retained by the Receiver, or any asset of the Failed Bank acquired by the Receiver pursuant to this Agreement, the Assuming Institution shall cooperate to the extent reasonably required by the Receiver.

 

     (b) In addition to its obligations under Section 6.4, the Assuming Institution shall provide representatives of the Receiver access at reasonable times and locations without other limitation or qualification to (i) its directors, officers, employees and agents and those of the Subsidiaries acquired by the Assuming Institution, and (ii) its books and records, the books and records of such Subsidiaries and all Credit Files, and copies thereof. Copies of books, records and Credit Files shall be provided by the Assuming Institution as requested by the Receiver and the costs of duplication thereof shall be borne by the Receiver.

 

     (c) Not later than ten (10) days after the Put Notice pursuant to Section 3.4 or the date of the notice of transfer of any Loan by the Assuming Institution to the Receiver pursuant to Section 3.6, the Assuming Institution shall deliver to the Receiver such documents with respect to such Loan as the Receiver may request, including without limitation the following: (i) all related Credit Documents (other than certificates, notices and other ancillary documents), (ii) a certificate setting forth the principal amount on the date of the transfer and the amount of interest, fees and other charges then accrued and unpaid thereon, and any restrictions on transfer to which any such Loan is subject, and (iii) all Credit Files, and all documents, microfiche, microfilm and computer records (including but not limited to magnetic tape, disc storage, card forms and printed copy) maintained by, owned by, or in the possession of the Assuming Institution or any Affiliate of the Assuming Institution relating to the transferred Loan.

 

     9.7 Information. The Assuming Institution promptly shall provide to the Corporation such other information, including financial statements and computations, relating to the performance of the provisions of this Agreement as the Corporation or the Receiver may request from time to time, and, at the request of the Receiver, make available employees of the Failed Bank employed or retained by the Assuming Institution to assist in preparation of the pro forma statement pursuant to Section 8.1.

 

ARTICLE X

CONDITION PRECEDENT

 

     The obligations of the parties to this Agreement are subject to the Receiver and the Corporation having received at or before Bank Closing evidence reasonably satisfactory to each of any necessary approval, waiver, or other action by any governmental authority, the board of directors of the Assuming Institution, or other third party, with respect to this Agreement and the transactions contemplated hereby, the closing of the Failed Bank and the appointment of the Receiver, the chartering of the Assuming Institution, and any agreements, documents, matters or proceedings contemplated hereby or thereby.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

33

 

 

 

ARTICLE XI

REPRESENTATIONS AND WARRANTIES OF THE ASSUMING INSTITUTION

 

     The Assuming Institution represents and warrants to the Corporation and the Receiver as follows:

 

     (a) Corporate Existence and Authority. The Assuming Institution (i) is duly organized, validly existing and in good standing under the laws of its Chartering Authority and has full power and authority to own and operate its properties and to conduct its business as now conducted by it, and (ii) has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The Assuming Institution has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and the performance of the transactions contemplated hereby.

 

     (b) Third Party Consents. No governmental authority or other third party consents (including but not limited to approvals, licenses, registrations or declarations) are required in connection with the execution, delivery or performance by the Assuming Institution of this Agreement, other than such consents as have been duly obtained and are in full force and effect.

 

     (c) Execution and Enforceability. This Agreement has been duly executed and delivered by the Assuming Institution and when this Agreement has been duly authorized, executed and delivered by the Corporation and the Receiver, this Agreement will constitute the legal, valid and binding obligation of the Assuming Institution, enforceable in accordance with its terms.

 

     (d) Compliance with Law.

 

          (i) Neither the Assuming Institution nor any of its Subsidiaries is in violation of any statute, regulation, order, decision, judgment or decree of, or any restriction imposed by, the United States of America, any State, municipality or other political subdivision or any agency of any of the foregoing, or any court or other tribunal having jurisdiction over the Assuming Institution or any of its Subsidiaries or any assets of any such Person, or any foreign government or agency thereof having such jurisdiction, with respect to the conduct of the business of the Assuming Institution or of any of its Subsidiaries, or the ownership of the properties of the Assuming Institution or any of its Subsidiaries, which, either individually or in the aggregate with all other such violations, would materially and adversely affect the business, operations or condition (financial or otherwise) of the Assuming Institution or the ability of the Assuming Institution to perform, satisfy or observe any obligation or condition under this Agreement.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

34

 

 

 

          (ii) Neither the execution and delivery nor the performance by the Assuming Institution of this Agreement will result in any violation by the Assuming Institution of, or be in conflict with, any provision of any applicable law or regulation, or any order, writ or decree of any court or governmental authority.

 

     (e) Insured or Guaranteed Loans. If any Loans being transferred pursuant to this Agreement, including the Shared-Loss Agreements, are insured or guaranteed by any department or agency of any governmental unit, federal, state or local, Assuming Institution represents that Assuming Institution has been approved by such agency and is an approved lender or mortgagee, as appropriate, if such approval is required. Assuming Institution further assumes full responsibility for determining whether or not such insurance or guarantees are in full force and effect on the date of this Agreement and with respect to those Loans whose insurance or guaranty is in full force and effect on the date of this Agreement, Assuming Institution assumes full responsibility for doing all things necessary to insure such insurance or guarantees remain in full force and effect. Assuming Institution agrees to assume all of the obligations under the contract(s) of insurance or guaranty, agrees to cooperate with the Receiver where necessary to complete forms required by the insuring or guaranteeing department or agency to effect or complete the transfer to Assuming Institution.

 

     (f) Representations Remain True. The Assuming Institution represents and warrants that it has executed and delivered to the Corporation a Purchaser Eligibility Certification and Confidentiality Agreement and that all information provided and representations made by or on behalf of the Assuming Institution in connection with this Agreement and the transactions contemplated hereby, including, but not limited to, the Purchaser Eligibility Certification and Confidentiality Agreement (which are affirmed and ratified hereby) are and remain true and correct in all material respects and do not fail to state any fact required to make the information contained therein not misleading.

 

ARTICLE XII

INDEMNIFICATION

 

     12.1 Indemnification of Indemnitees. From and after Bank Closing and subject to the limitations set forth in this Section and Section 12.6 and compliance by the Indemnitees with Section 12.2, the Receiver agrees to indemnify and hold harmless the Indemnitees against any and all costs, losses, liabilities, expenses (including attorneys' fees) incurred prior to the assumption of defense by the Receiver pursuant to paragraph (d) of Section 12.2, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with claims against any Indemnitee based on liabilities of the Failed Bank that are not assumed by the Assuming Institution pursuant to this Agreement or subsequent to the execution hereof by the Assuming Institution or any Subsidiary or Affiliate of the Assuming Institution for which indemnification is provided hereunder in (a) of this Section 12.1, subject to certain exclusions as provided in (b) of this Section 12.1:

 

     (a)

 

          (1) claims based on the rights of any shareholder or former shareholder as such of (x) the Failed Bank, or (y) any Subsidiary or Affiliate of the Failed Bank;

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

35

 

 

 

          (2) claims based on the rights of any creditor as such of the Failed Bank, or any creditor as such of any director, officer, employee or agent of the Failed Bank, with respect to any indebtedness or other obligation of the Failed Bank arising prior to Bank Closing;

 

          (3) claims based on the rights of any present or former director, officer, employee or agent as such of the Failed Bank or of any Subsidiary or Affiliate of the Failed Bank;

 

          (4) claims based on any action or inaction prior to Bank Closing of the Failed Bank, its directors, officers, employees or agents as such, or any Subsidiary or Affiliate of the Failed Bank, or the directors, officers, employees or agents as such of such Subsidiary or Affiliate;

 

          (5) claims based on any malfeasance, misfeasance or nonfeasance of the Failed Bank, its directors, officers, employees or agents with respect to the trust business of the Failed Bank, if any;

 

          (6) claims based on any failure or alleged failure (not in violation of law) by the Assuming Institution to continue to perform any service or activity previously performed by the Failed Bank which the Assuming Institution is not required to perform pursuant to this Agreement or which arise under any contract to which the Failed Bank was a party which the Assuming Institution elected not to assume in accordance with this Agreement and which neither the Assuming Institution nor any Subsidiary or Affiliate of the Assuming Institution has assumed subsequent to the execution hereof;

 

          (7) claims arising from any action or inaction of any Indemnitee, including for purposes of this Section 12.1(a)(7) the former officers or employees of the Failed Bank or of any Subsidiary or Affiliate of the Failed Bank that is taken upon the specific written direction of the Corporation or the Receiver, other than any action or inaction taken in a manner constituting bad faith, gross negligence or willful misconduct; and

 

          (8) claims based on the rights of any depositor of the Failed Bank whose deposit has been accorded "withheld payment" status and/or returned to the Receiver or Corporation in accordance with Section 9.5 and/or has become an "unclaimed deposit" or has been returned to the Corporation or the Receiver in accordance with Section 2.3;

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

36

 

 

 

     (b) provided, that, with respect to this Agreement, except for paragraphs (7) and (8) of Section 12.1(a), no indemnification will be provided under this Agreement for any:

 

          (1) judgment or fine against, or any amount paid in settlement (without the written approval of the Receiver) by, any Indemnitee in connection with any action that seeks damages against any Indemnitee (a "counterclaim") arising with respect to any Asset and based on any action or inaction of either the Failed Bank, its directors, officers, employees or agents as such prior to Bank Closing, unless any such judgment, fine or amount paid in settlement exceeds the greater of (i) the Repurchase Price of such Asset, or (ii) the monetary recovery sought on such Asset by the Assuming Institution in the cause of action from which the counterclaim arises; and in such event the Receiver will provide indemnification only in the amount of such excess; and no indemnification will be provided for any costs or expenses other than any costs or expenses (including attorneys' fees) which, in the determination of the Receiver, have been actually and reasonably incurred by such Indemnitee in connection with the defense of any such counterclaim; and it is expressly agreed that the Receiver reserves the right to intervene, in its discretion, on its behalf and/or on behalf of the Receiver, in the defense of any such counterclaim;

 

          (2) claims with respect to any liability or obligation of the Failed Bank that is expressly assumed by the Assuming Institution pursuant to this Agreement or subsequent to the execution hereof by the Assuming Institution or any Subsidiary or Affiliate of the Assuming Institution;

 

          (3) claims with respect to any liability of the Failed Bank to any present or former employee as such of the Failed Bank or of any Subsidiary or Affiliate of the Failed Bank, which liability is expressly assumed by the Assuming Institution pursuant to this Agreement or subsequent to the execution hereof by the Assuming Institution or any Subsidiary or Affiliate of the Assuming Institution;

 

          (4) claims based on the failure of any Indemnitee to seek recovery of damages from the Receiver for any claims based upon any action or inaction of the Failed Bank, its directors, officers, employees or agents as fiduciary, agent or custodian prior to Bank Closing;

 

          (5) claims based on any violation or alleged violation by any Indemnitee of the antitrust, branching, banking or bank holding company or securities laws of the United States of America or any State thereof;

 

          (6) claims based on the rights of any present or former creditor, customer, or supplier as such of the Assuming Institution or any Subsidiary or Affiliate of the Assuming Institution;

 

          (7) claims based on the rights of any present or former shareholder as such of the Assuming Institution or any Subsidiary or Affiliate of the Assuming Institution regardless of whether any such present or former shareholder is also a present or former shareholder of the Failed Bank;

 

          (8) claims, if the Receiver determines that the effect of providing such indemnification would be to (i) expand or alter the provisions of any warranty or disclaimer thereof provided in Section 3.3 or any other provision of this Agreement, or (ii) create any warranty not expressly provided under this Agreement;

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

37

 

 

 

          (9) claims which could have been enforced against any Indemnitee had the Assuming Institution not entered into this Agreement;

 

          (10) claims based on any liability for taxes or fees assessed with respect to the consummation of the transactions contemplated by this Agreement, including without limitation any subsequent transfer of any Assets or Liabilities Assumed to any Subsidiary or Affiliate of the Assuming Institution;

 

          (11) except as expressly provided in this Article XII, claims based on any action or inaction of any Indemnitee, and nothing in this Agreement shall be construed to provide indemnification for (i) the Failed Bank, (ii) any Subsidiary or Affiliate of the Failed Bank, or (iii) any present or former director, officer, employee or agent of the Failed Bank or its Subsidiaries or Affiliates; provided, that the Receiver, in its discretion, may provide indemnification hereunder for any present or former director, officer, employee or agent of the Failed Bank or its Subsidiaries or Affiliates who is also or becomes a director, officer, employee or agent of the Assuming Institution or its Subsidiaries or Affiliates;

 

          (12) claims or actions which constitute a breach by the Assuming Institution of the representations and warranties contained in Article XI;

 

          (13) claims arising out of or relating to the condition of or generated by an Asset arising from or relating to the presence, storage or release of any hazardous or toxic substance, or any pollutant or contaminant, or condition of such Asset which violate any applicable Federal, State or local law or regulation concerning environmental protection; and

 

          (14) claims based on, related to or arising from any asset, including a loan, acquired or liability assumed by the Assuming Institution, other than pursuant to this Agreement.

 

     12.2 Conditions Precedent to Indemnification. It shall be a condition precedent to the obligation of the Receiver to indemnify any Person pursuant to this Article XII that such Person shall, with respect to any claim made or threatened against such Person for which such Person is or may be entitled to indemnification hereunder:

 

     (a) give written notice to the Managing Counsel of the Corporation in the manner and at the address provided in Section 13.7 of such claim as soon as practicable after such claim is made or threatened; provided, that notice must be given on or before the date which is six (6) years from the date of this Agreement;

 

     (b) provide to the Receiver such information and cooperation with respect to such claim as the Receiver may reasonably require;

 

     (c) cooperate and take all steps, as the Receiver may reasonably require, to preserve and protect any defense to such claim;

 

     (d) in the event suit is brought with respect to such claim, upon reasonable prior notice, afford to the Receiver the right, which the Receiver may exercise in its sole discretion, to conduct the investigation, control the defense and effect settlement of such claim, including without limitation the right to designate counsel and to control all negotiations, litigation, arbitration, settlements, compromises and appeals of any such claim, all of which shall be at the expense of the Receiver; provided, that the Receiver shall have notified the Person claiming indemnification in writing that such claim is a claim with respect to which the Person claiming indemnification is entitled to indemnification under this Article XII;

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

38

 

 

 

     (e) not incur any costs or expenses in connection with any response or suit with respect to such claim, unless such costs or expenses were incurred upon the written direction of the Receiver; provided, that the Receiver shall not be obligated to reimburse the amount of any such costs or expenses unless such costs or expenses were incurred upon the written direction of the Receiver;

 

     (f) not release or settle such claim or make any payment or admission with respect thereto, unless the Receiver consents in writing thereto, which consent shall not be unreasonably withheld; provided, that the Receiver shall not be obligated to reimburse the amount of any such settlement or payment unless such settlement or payment was effected upon the written direction of the Receiver; and

 

     (g) take reasonable action as the Receiver may request in writing as necessary to preserve, protect or enforce the rights of the indemnified Person against any Primary Indemnitor.

 

     12.3 No Additional Warranty. Nothing in this Article XII shall be construed or deemed to (i) expand or otherwise alter any warranty or disclaimer thereof provided under Section 3.3 or any other provision of this Agreement with respect to, among other matters, the title, value, collectability, genuineness, enforceability or condition of any (x) Asset, or (y) asset of the Failed Bank purchased by the Assuming Institution subsequent to the execution of this Agreement by the Assuming Institution or any Subsidiary or Affiliate of the Assuming Institution, or (ii) create any warranty not expressly provided under this Agreement with respect thereto.

 

     12.4 Indemnification of Receiver and Corporation. From and after Bank Closing, the Assuming Institution agrees to indemnify and hold harmless the Corporation and the Receiver and their respective directors, officers, employees and agents from and against any and all costs, losses, liabilities, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any of the following:

 

     (a) claims based on any and all liabilities or obligations of the Failed Bank assumed by the Assuming Institution pursuant to this Agreement or subsequent to the execution hereof by the Assuming Institution or any Subsidiary or Affiliate of the Assuming Institution, whether or not any such liabilities subsequently are sold and/or transferred, other than any claim based upon any action or inaction of any Indemnitee as provided in paragraph (7) or (8) of Section 12.1(a); and

 

     (b) claims based on any act or omission of any Indemnitee (including but not limited to claims of any Person claiming any right or title by or through the Assuming Institution with respect to Assets transferred to the Receiver pursuant to Section 3.4 or 3.6), other than any action or inaction of any Indemnitee as provided in paragraph (7) or (8) of Section 12.1(a); and

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

39

 

 

 

     (c) claims based on any failure to preserve, maintain or provide reasonable access to Records transferred to the Assuming Institution pursuant to Article VI.

 

     12.5 Obligations Supplemental. The obligations of the Receiver, and the Corporation as guarantor in accordance with Section 12.7, to provide indemnification under this Article XII are to supplement any amount payable by any Primary Indemnitor to the Person indemnified under this Article XII. Consistent with that intent, the Receiver agrees only to make payments pursuant to such indemnification to the extent not payable by a Primary Indemnitor. If the aggregate amount of payments by the Receiver, or the Corporation as guarantor in accordance with Section 12.7, and all Primary Indemnitors with respect to any item of indemnification under this Article XII exceeds the amount payable with respect to such item, such Person being indemnified shall notify the Receiver thereof and, upon the request of the Receiver, shall promptly pay to the Receiver, or the Corporation as appropriate, the amount of the Receiver's (or Corporation's) payments to the extent of such excess.

 

     12.6 Criminal Claims. Notwithstanding any provision of this Article XII to the contrary, in the event that any Person being indemnified under this Article XII shall become involved in any criminal action, suit or proceeding, whether judicial, administrative or investigative, the Receiver shall have no obligation hereunder to indemnify such Person for liability with respect to any criminal act or to the extent any costs or expenses are attributable to the defense against the allegation of any criminal act, unless (i) the Person is successful on the merits or otherwise in the defense against any such action, suit or proceeding, or (ii) such action, suit or proceeding is terminated without the imposition of liability on such Person. 

 

     12.7 Limited Guaranty of the Corporation. The Corporation hereby guarantees performance of the Receiver's obligation to indemnify the Assuming Institution as set forth in this Article XII. It is a condition to the Corporation's obligation hereunder that the Assuming Institution shall comply in all respects with the applicable provisions of this Article XII. The Corporation shall be liable hereunder only for such amounts, if any, as the Receiver is obligated to pay under the terms of this Article XII but shall fail to pay. Except as otherwise provided above in this Section 12.7, nothing in this Article XII is intended or shall be construed to create any liability or obligation on the part of the Corporation, the United States of America or any department or agency thereof under or with respect to this Article XII, or any provision hereof, it being the intention of the parties hereto that the obligations undertaken by the Receiver under this Article XII are the sole and exclusive responsibility of the Receiver and no other Person or entity.

 

     12.8 Subrogation. Upon payment by the Receiver, or the Corporation as guarantor in accordance with Section 12.7, to any Indemnitee for any claims indemnified by the Receiver under this Article XII, the Receiver, or the Corporation as appropriate, shall become subrogated to all rights of the Indemnitee against any other Person to the extent of such payment.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

40

 

 

 

ARTICLE XIII

MISCELLANEOUS

 

     13.1 Entire Agreement. This Agreement, the Single Family Shared-Loss Agreement, and the Commercial Shared-Loss Agreement, including the Schedules and Exhibits thereto, embodies the entire agreement of the parties hereto in relation to the subject matter herein and supersedes all prior understandings or agreements, oral or written, between the parties.

 

     13.2 Headings. The headings and subheadings of the Table of Contents, Articles and Sections contained in this Agreement, except the terms identified for definition in Article I and elsewhere in this Agreement, are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provision hereof.

 

     13.3 Counterparts. This Agreement may be executed in any number of counterparts and by the duly authorized representative of a different party hereto on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement.

 

     13.4 GOVERNING LAW. THIS AGREEMENT, THE SINGLE FAMILY SHARED-LOSS AGREEMENT, AND THE COMMERCIAL SHARED-LOSS AGREEMENT AND THE RIGHTS AND OBLIGATIONS HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE FEDERAL LAW OF THE UNITED STATES OF AMERICA, AND IN THE ABSENCE OF CONTROLLING FEDERAL LAW, IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE MAIN OFFICE OF THE FAILED BANK IS LOCATED.

 

     13.5 Successors. All terms and conditions of this Agreement shall be binding on the successors and assigns of the Receiver, the Corporation and the Assuming Institution. Except as otherwise specifically provided in this Agreement, nothing expressed or referred to in this Agreement is intended or shall be construed to give any Person other than the Receiver, the Corporation and the Assuming Institution any legal or equitable right, remedy or claim under or with respect to this Agreement or any provisions contained herein, it being the intention of the parties hereto that this Agreement, the obligations and statements of responsibilities hereunder, and all other conditions and provisions hereof are for the sole and exclusive benefit of the Receiver, the Corporation and the Assuming Institution and for the benefit of no other Person.

 

     13.6 Modification; Assignment. No amendment or other modification, rescission, release, or assignment of any part of this Agreement, the Single Family Shared-Loss Agreement, and the Commercial Shared-Loss Agreement shall be effective except pursuant to a written agreement subscribed by the duly authorized representatives of the parties hereto.

 

     13.7 Notice. Any notice, request, demand, consent, approval or other communication to any party hereto shall be effective when received and shall be given in writing, and delivered in person against receipt therefore, or sent by certified mail, postage prepaid, courier service, telex, facsimile transmission or email to such party (with copies as indicated below) at its address set forth below or at such other address as it shall hereafter furnish in writing to the other parties. All such notices and other communications shall be deemed given on the date received by the addressee.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

41

 

 

 

Assuming Institution 

 

Enterprise Bank & Trust

150 North Meramec, Suite 300

Clayton, MO 63105-3753

 

	Attention:   	Frank H. Sanfilippo,
	 	Executive Vice President and Chief Financial Officer

	with a copy to:   	Deborah N. Barstow,
	 	Senior Vice President and Controller

Receiver and Corporation

 

Federal Deposit Insurance Corporation,

Receiver of Legacy Bank

40 Pacifica

Irvine, CA 92618

Attention: Settlement Agent

 

	In addition, with respect to notices under Article 4.6:
	cc:   	Federal Deposit Insurance Corporation, Receiver of Legacy Bank
	 	1601 Bryan Street, Suite 1700
	 	Dallas, TX 75201
	 	Attention: Resolutions and Closings Manager, ORE Department

	In addition, with respect to notice under Article XII:
	cc:   	Federal Deposit Insurance Corporation, Receiver of Legacy Bank
	 	40 Pacifica
	 	Irvine, CA 92618
	 	Attention: Managing Counsel

     13.8 Manner of Payment. All payments due under this Agreement shall be in lawful money of the United States of America in immediately available funds as each party hereto may specify to the other parties; provided, that in the event the Receiver or the Corporation is obligated to make any payment hereunder in the amount of $25,000.00 or less, such payment may be made by check.

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

42

 

 

 

     13.9 Costs, Fees and Expenses. Except as otherwise specifically provided herein, each party hereto agrees to pay all costs, fees and expenses which it has incurred in connection with or incidental to the matters contained in this Agreement, including without limitation any fees and disbursements to its accountants and counsel; provided, that the Assuming Institution shall pay all fees, costs and expenses (other than attorneys' fees incurred by the Receiver) incurred in connection with the transfer to it of any Assets or Liabilities Assumed hereunder or in accordance herewith.

 

     13.10 Waiver. Each of the Receiver, the Corporation and the Assuming Institution may waive its respective rights, powers or privileges under this Agreement; provided, that such waiver shall be in writing; and further provided, that no failure or delay on the part of the Receiver, the Corporation or the Assuming Institution to exercise any right, power or privilege under this Agreement shall operate as a waiver thereof, nor will any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege by the Receiver, the Corporation, or the Assuming Institution under this Agreement, nor will any such waiver operate or be construed as a future waiver of such right, power or privilege under this Agreement.

 

     13.11 Severability. If any provision of this Agreement is declared invalid or unenforceable, then, to the extent possible, all of the remaining provisions of this Agreement shall remain in full force and effect and shall be binding upon the parties hereto.

 

     13.12 Term of Agreement. This Agreement shall continue in full force and effect until the tenth (10th) anniversary of Bank Closing; provided, that the provisions of Section 6.3 and 6.4 shall survive the expiration of the term of this Agreement; and provided further, that the receivership of the Failed Bank may be terminated prior to the expiration of the term of this Agreement, and in such event, the guaranty of the Corporation, as provided in and in accordance with the provisions of Section 12.7 shall be in effect for the remainder of the term of this Agreement. Expiration of the term of this Agreement shall not affect any claim or liability of any party with respect to any (i) amount which is owing at the time of such expiration, regardless of when such amount becomes payable, and (ii) breach of this Agreement occurring prior to such expiration, regardless of when such breach is discovered.

 

     13.13 Survival of Covenants, Etc. The covenants, representations, and warranties in this Agreement shall survive the execution of this Agreement and the consummation of the transactions contemplated hereunder.

 

[Signature Page Follows]

 

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

43

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be Executed by their duly authorized representatives as of the date first above written.

 

	FEDERAL DEPOSIT INSURANCE CORPORATION,
	RECEIVER OF LEGACY BANK,
	SCOTTSDALE, ARIZONA
	 	 
	 	 
	BY:   	/s/ Christina Sarrade
	NAME:   	Christina Sarrade
	TITLE:	Receiver-in-Charge

	Attest:
	 
	/s/ Michael Wick

	FEDERAL DEPOSIT INSURANCE CORPORATION,
	  
	 
	BY:	/s/ Christina Sarrade
	NAME:   	Christina Sarrade
	TITLE:	Attorney-in-Fact

	Attest:
	 
	/s/ Michael Wick

	ENTERPRISE BANK & TRUST
	 	   
	BY:	/s/ John G. Barry
	NAME:   	John G. Barry
	TITLE:	Executive Vice President

	Attest:
	 
	/s/ Deborah N. Barstow

	Module 1 – Whole Bank w/ Loss Share – P&A	 	Legacy Bank
	Version 2.11B	 	Scottsdale, Arizona
	October 8, 2010	 	 

 

44

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}]]