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EXHIBIT 10.1
EXECUTION VERSION
REPURCHASE AGREEMENT
Among:
BEAR, ▇▇▇▇▇▇▇ INTERNATIONAL LIMITED, as Buyer
CRIIMI NEWCO, LLC, as a Seller
And
CBO REIT II, INC., as a Seller
Dated as of January 14, 2003
TABLE OF CONTENTS
Page
Section 1. APPLICABILITY..................................................1
Section 2. DEFINITIONS....................................................1
Section 3. INITIATION; TERMINATION.......................................13
Section 4. MARGIN AMOUNT MAINTENANCE.....................................20
Section 5. Payments; proceeds............................................21
Section 6. REQUIREMENTS OF LAW...........................................22
Section 7. TAXES.........................................................23
Section 8. SECURITY INTEREST; BUYER's appointment as Attorney-in-fact....25
Section 9. PAYMENT, TRANSFER AND CUSTODY.................................30
Section 10. COMMITMENT Fee................................................30
Section 11. REPRESENTATIONS...............................................31
Section 12. COVENANTS.....................................................36
Section 13. EVENTS OF DEFAULT.............................................42
Section 14. REMEDIES......................................................45
Section 15. INDEMNIFICATION AND EXPENSES; RECOURSE........................48
Section 16. DUE DILIGENCE.................................................50
Section 17. ASSIGNABILITY.................................................51
Section 18. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS...................52
Section 19. Establishment of ESCROW.......................................53
Section 20. TAX TREATMENT.................................................53
Section 21. Set-off.......................................................53
Section 22. TERMINABILITY.................................................54
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Section 23. NOTICES AND OTHER COMMUNICATIONS..............................54
Section 24. ENTIRE AGREEMENT; SEVERABILITY; Single Agreement..............54
Section 25. GOVERNING LAW.................................................55
Section 26. Submission To Jurisdiction; Waivers...........................55
Section 27. NO WAIVERS, ETC...............................................56
Section 28. NETTING.......................................................56
Section 29. CONFIDENTIALITY...............................................56
Section 30. Intent........................................................57
Section 31. Disclosure Relating to Certain Federal Protections............57
Section 32. AUTHORIZATIONS................................................58
Section 33. MISCELLANEOUS.................................................58
Section 34. Joint and Several OBLIGATIONS.................................59
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EXHIBITS
SCHEDULE 1 Representations and Warranties re: Subject Securities
underlying Equity Interests
SCHEDULE 2 RESERVED
SCHEDULE 3 RESERVED
SCHEDULE 4 Responsible Officers of the Sellers
SCHEDULE 5 Subject Securities
SCHEDULE 6 Asset Schedule
SCHEDULE 7 Existing Indebtedness
SCHEDULE 8 Major Broker Dealers
EXHIBIT A Form of Opinion Letter
EXHIBIT B Form of Control Agreement
EXHIBIT C RESERVED
EXHIBIT D Form of Direction Letter
EXHIBIT E Form of Transaction Request
EXHIBIT F Form of Asset Report
EXHIBIT G Sellers' Letter
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REPURCHASE AGREEMENT
This is a REPURCHASE AGREEMENT, dated as of January 14, 2003, between
CRIIMI NEWCO, LLC, a Delaware limited liability company (a "Seller"), CBO REIT
II, INC., a Maryland corporation (a "Seller") and BEAR, ▇▇▇▇▇▇▇ INTERNATIONAL
LIMITED, a United Kingdom corporation (the "Buyer").
Section 1.
APPLICABILITY
The parties hereto shall enter into a transaction in which each Seller
agrees to transfer to Buyer certain Purchased Assets against the transfer of
funds by Buyer, with a simultaneous agreement by Buyer to transfer to Sellers
such Purchased Assets at a date certain after the Purchase Date, against the
transfer of funds by the Sellers. The transaction shall be referred to herein as
the "Transaction" and shall be governed by this Repurchase Agreement, unless
otherwise agreed in writing.
Section 2.
DEFINITIONS
As used herein, the following terms shall have the following meanings (all terms
defined in this Section 2 or in other provisions of this Repurchase Agreement in
the singular to have the same meanings when used in the plural and vice versa):
"Additional Assets" shall mean additional Subject Securities owned by
either Seller or Cash Equivalents provided by either Seller to Buyer in
satisfaction of the Seller's obligations under Section 4 of this Repurchase
Agreement.
"Affiliate" shall mean with respect to any Person, any "affiliate" of such
Person, as such term is defined in the Bankruptcy Code.
"Amortization Payment" shall have the meaning set forth in Section 5(b).
"Authorized Representative" shall mean, for the purposes of this Repurchase
Agreement only, an agent or Responsible Officer of each Seller listed on
Schedule 4 hereto, as such Schedule 4 may be amended from time to time.
"Asset Schedule" shall mean with respect to the Transaction, the Asset
Schedule attached as Schedule 6 hereto, which reflects the Purchased Assets
transferred to Buyer from the Sellers in the Transaction hereunder, which
schedule may be supplemented from time to time pursuant to Section 4 hereof.
"Bank" shall mean SunTrust Banks, Inc., in its capacity as bank with
respect to each Control Agreement.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.
"Brascan Investor" shall mean Brascan Real Estate Financial Investments
LLC.
"Brascan Lender" shall mean Brascan Real Estate Finance Fund, LP.
"Brascan Loan Documents" shall mean loan and security documents for that
certain subordinated lending arrangement by and between the Guarantor as
borrower and Brascan Lender as lender.
"Business Day" shall mean each day on which commercial banks in New York
City and the New York Stock Exchange are open for business.
"Buyer" shall mean Bear, ▇▇▇▇▇▇▇ International Limited, its successors in
interest and assigns.
"Capital Lease Obligations" shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Repurchase Agreement, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
"Cash Equivalents" shall mean (a) securities with maturities of 90 days or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of Buyer or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of Buyer or of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than seven days with respect to
securities issued or fully guaranteed or insured by the United States
Government, or (d) securities with maturities of 90 days or less from the date
of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, by any political subdivision or taxing authority
of any such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by ▇▇▇▇▇'▇.
"CBO REIT II" shall mean CBO REIT II, Inc., a Maryland corporation.
"CBO REIT II Purchased Stock" shall mean the shares of capital stock listed
on the Asset Schedule, together with all stock certificates, options or rights
arising out of such capital stock which may be issued or granted by CBO REIT II,
as the issuer of the CBO REIT II Purchased Stock, to Newco or any successor
corporation.
"CDO" shall mean a collateralized debt obligation to be issued by a Seller
(or an Affiliate) and structured and sold by the Buyer (or an Affiliate),
collateralized with the
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Transaction Assets or Subject Securities and generally without recourse to
either Seller or any Affiliate thereof.
"CDO Engagement Letter" shall mean that letter agreement referred to in
Section 3(a)(i)(E), entered into among Sellers and Buyer (or an Affiliate) with
respect to the CDO.
"CDO Trigger Event" shall mean the date that is ten (10) Business Days
after the date the Buyer (or an Affiliate) notifies the Guarantor that Buyer has
obtained an investment grade rating (i) from one or more Rating Agencies for CDO
classes aggregating at least 95% of $300 million and (ii) for at least 95% of
$150 million of the same CDO class(es) from at least two Rating Agencies. For
purposes hereof "obtains a rating" shall mean the receipt by the Buyer of final
rating levels from the applicable Rating Agencies, even if such final rating
levels are communicated verbally (and not in writing) by an authorized agent of
such Rating Agencies, and even if such final rating levels are subject to
standard conditions such as documentation acceptable to such Rating Agencies,
opinions and the like. If the Repurchase Date for all Purchased Assets shall
have occurred on or prior to the date listed above (including, without
limitation, as a result of the closing of a CDO), then no CDO Trigger Event
shall be deemed to have occurred.
"Change in Control" shall mean:
(A) any transaction or event as a result of which any Person or "group"
(within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended) (other than Brascan Investor) shall have acquired beneficial
ownership of 35% or more of any outstanding class of control stock having
ordinary voting power in the election of the directors of the Guarantor;
(B) any transaction or event as a result of which Newco ceases to own
(other than pursuant to this Repurchase Agreement), beneficially or of record,
at least 100% of the common stock and 80% of the preferred stock of CBO REIT II;
(C) any transaction or event as a result of which CBO REIT II ceases to own
(other than pursuant to this Repurchase Agreement), beneficially or of record,
100% of the voting power and economic interest of CRIIMI CMBS;
(D) any transaction or event as a result of which CBO REIT II ceases to own
(other than pursuant to this Repurchase Agreement) beneficially or of record,
100% of the voting power and economic interest of CRIIMI QRS1;
(E) any transaction or event as a result of which Guarantor ceases to own
(other than Brascan Lender pursuant to its exercise of remedies under the
Brascan Loan Documents and subject to the Intercreditor Agreement), beneficially
or of record, 100% of the voting power and economic interest of Newco Member;
(F) any transaction or event as a result of which Newco Member ceases to
own (other than Brascan Lender pursuant to its exercise of remedies under the
Brascan Loan Documents and subject to the Intercreditor Agreement), beneficially
or of record, 100% of the voting power and economic interest of Newco;
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(G) the sale, transfer, or other disposition of all or substantially all of
either Seller's or either REIT Subsidiary's assets (excluding any such action
taken in connection with any securitization transaction); or
(H) the consummation of a merger or consolidation of Guarantor or Newco
with or into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity's stock
outstanding immediately after such merger, consolidation or such other
reorganization is owned by persons who were not stockholders of Guarantor or
Newco immediately prior to such merger, consolidation or other reorganization.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collection Account" shall mean each account established by the Bank
subject to a Control Agreement, into which, collectively, all Proceeds shall be
deposited.
"Contribution Agreement" shall mean a contribution agreement between the
Sellers, as the same may be further amended, supplemented or otherwise modified
in accordance with the terms thereof.
"Control Agreement" shall mean a letter agreement among the related Seller
or the related REIT Subsidiary, the Buyer, and the Bank substantially in the
form of Exhibit B attached hereto, as the same may be further amended,
supplemented or otherwise modified in accordance with the terms thereof.
"Costs" shall have the meaning set forth in Section 15(a).
"CRIIMI CMBS" shall mean CRIIMI MAE CMBS Corp., a Delaware corporation.
"CRIIMI CMBS Purchased Stock" shall mean the shares of capital stock listed
on Schedule 6 hereto, together with all stock certificates, options or rights
arising out of such capital stock which may be issued or granted by CRIIMI CMBS,
as the issuer of the CRIIMI CMBS Purchased Stock, to CBO REIT II or any
successor corporation.
"CRIIMI QRS1" shall mean CRIIMI MAE QRS1, Inc., a Delaware corporation.
"CRIIMI QRS1 Purchased Stock" shall mean the shares of capital stock listed
on Schedule 6 hereto, together with all stock certificates, options or rights
arising out of such capital stock which may be issued or granted by ▇▇▇▇▇▇ ▇▇▇▇,
as the issuer of the CRIIMI QRS1 Purchased Stock, to CBO REIT II or any
successor corporation.
"Custodial Agreement" shall mean that certain Custodial Agreement, dated as
of the date hereof, among the Buyer, the Custodian and the REIT Subsidiaries, as
the same may be further amended, supplemented or otherwise modified in
accordance with the terms thereof.
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"Custodian" shall mean LaSalle Bank National Association, or any successor
thereto.
"Default" shall mean an event that with notice or lapse of time or both
would become an Event of Default.
"Direction Letter" shall mean an irrevocable direction letter to (i) CBO
REIT II, executed by Newco, (ii) each REIT Subsidiary, executed by CBO REIT II,
or (ii) the issuers or trustees, as the case may be, of the Subject Securities,
executed by the related REIT Subsidiary or CBO REIT II, as applicable,
substantially in the form of Exhibit D hereto.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Due Diligence Review" shall mean the performance by Buyer of any or all of
the reviews permitted under Section 16 hereof with respect to any or all of the
Equity Interests or the related Subject Securities, as desired by the Buyer from
time to time.
"Equity Interest" shall mean, collectively, (a) the CBO REIT II Purchased
Stock, (b) the CRIIMI CMBS Purchased Stock and (c) the CRIIMI QRS1 Purchased
Stock.
"ERISA" shall, with respect to any Person, mean the Employee Retirement
Income Security Act of 1974, as amended from time to time and any successor
thereto, and the regulations promulgated and rulings issued thereunder.
"Escrow Agreement" shall have the meaning set forth in Section 3(b)(iii) of
this Repurchase Agreement.
"Event of Default" shall have the meaning specified in Section 13.01
hereof.
"Existing Indebtedness" shall mean the Indebtedness of the Guarantor
disclosed on Schedule 7, which does not disclose all Indebtedness of the
Guarantor.
"Expenses" shall mean all present and future expenses incurred by or on
behalf of the Buyer in connection with the negotiation, documentation or
consummation and enforcement of transactions contemplated by this Repurchase
Agreement or any of the other Repurchase Documents and any amendment, supplement
or other modification or waiver related hereto or thereto, whether incurred
heretofore or hereafter, which expenses shall include the cost of title, lien,
judgment and other record searches; attorneys' fees; and costs of preparing and
recording any UCC financing statements or other filings necessary to perfect the
security interest created hereby.
"Fitch" shall mean Fitch Ratings, Inc., or any successor thereto.
"GAAP" shall mean generally accepted accounting principles in the United
States of America, applied on a consistent basis and applied to both
classification of items and amounts, and shall include, without limitation, the
official interpretations thereof by the Financial Accounting Standards Board,
its predecessors and successors.
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"Governmental Authority" shall mean the government of the United States of
America or of any state, county, municipality or other political subdivision
thereof or any governmental body, agency, authority, department or commission
(including, without limitation, any taxing authority) or any instrumentality or
officer of any of the foregoing (including, without limitation, any court or
tribunal) exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any corporation,
partnership or other entity directly or indirectly owned by or controlled by the
foregoing.
"Guarantee" shall mean, as to any Person, any obligation of such Person
directly or indirectly guaranteeing any Indebtedness of any other Person or in
any manner providing for the payment of any Indebtedness of any other Person or
otherwise protecting the holder of such Indebtedness against loss (whether by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, or to take-or-pay or otherwise); provided
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business. The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
"Guarantee" and "Guaranteed" used as verbs shall have correlative meanings.
"Guarantor" shall mean CRIIMI MAE Inc., a Maryland corporation, or any
successor in interest under the Guaranty.
"Guaranty" shall mean that certain Guaranty, dated as of the date hereof,
by the Guarantor in favor of the Buyer, in form and substance acceptable to
Buyer, as the same may be further amended, supplemented or otherwise modified in
accordance with the terms thereof.
"Indebtedness" shall mean, with respect to any Person, (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business, so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person; (e) Capital Lease Obligations of such Person;
(f) obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (g) Indebtedness of others Guaranteed by such
Person; (h) all capitalized obligations of such Person incurred in connection
with the acquisition or carrying of fixed assets by such Person; and (i)
Indebtedness of general partnerships of which such Person is a general partner;
provided, however, the foregoing (a)-(i) does not include payment obligations
which are not personal recourse to such Person.
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"Insolvency Event" shall mean:
(a) that Guarantor, either Seller or either REIT Subsidiary shall
discontinue or abandon operation of its business; or
(b) that Guarantor, either Seller or either REIT Subsidiary shall fail
generally to, or admit in writing its inability to, pay its debts as they become
due; or
(c) a proceeding shall have been instituted in a court having jurisdiction
in the premises seeking a decree or order for relief in respect of Guarantor,
either Seller or either REIT Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency, liquidation, reorganization or other similar
law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator, conservator or other
similar official of Guarantor, either Seller or either REIT Subsidiary, or for
any substantial part of its property, or for the winding-up or liquidation of
its affairs, and shall remain undismissed for more than sixty (60) days; or
(d) the commencement by Guarantor, either Seller or either REIT Subsidiary
of a voluntary case under any applicable bankruptcy, insolvency or other similar
Law now or hereafter in effect, or either Seller's, Guarantor's or either REIT
Subsidiary's consent to the entry of an order for relief in an involuntary case
under any such Law, or consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or
other similar official of Guarantor, either Seller or either REIT Subsidiary, or
for any substantial part of its property, or any general assignment for the
benefit of creditors; or
(e) that Guarantor, either Seller or either REIT Subsidiary shall become
insolvent within the meaning of section 101(32) of the Bankruptcy Code; or
(f) if either Seller, Guarantor or either REIT Subsidiary is a corporation,
Guarantor, such Seller or either REIT Subsidiary, or any of their Subsidiaries,
shall take any corporate action in furtherance of, or the action of which would
directly result in any of the actions set forth in the preceding clause (a),
(b), (c), (d) or (e).
"Intercreditor Agreement" shall have the meaning set forth in Section
3(a)(i)(h) hereof, as the same may be further amended, supplemented or otherwise
modified in accordance with the terms thereof.
"Investment Agreement" shall mean that certain Investment Agreement, by and
between Brascan Investor and the Guarantor, dated as of November 14, 2002, as
amended on December 2, 2002 and as further amended on January 14, 2003, as the
same may be further amended, supplemented or otherwise modified in accordance
with the terms thereof.
"Knowledge" shall mean, as it relates to either Seller or the Guarantor,
the knowledge, after reasonable investigation, of any officer of Guarantor at
the group vice president level or higher.
"LIBOR Rate" shall mean the London interbank offered rate for one-month US
Dollar deposits as quoted on Telerate Page 3750 at 8:30 a.m. eastern time. The
LIBOR Rate will
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be reset on a monthly basis on the Reset Date based on the rate in effect
two London Business Days prior to such Reset Date. If the LIBOR Rate is
unavailable on Telerate Page 3750 (or such other page as may replace Page 3750)
on such London Business Day, the Buyer shall determine the arithmetic mean of
the offered quotations of four major banks in the London interbank market
selected by Buyer and approved by Seller (the "Reference Banks") to leading
banks in the London interbank market for one-month U.S. Dollar deposits in an
amount determined by Buyer by reference to requests for quotations as of
approximately 8:30 a.m. eastern standard time on the determination date made by
the Buyer to the Reference Banks. If on such date at least two of the Reference
Banks provide such quotations, the LIBOR Rate shall equal such arithmetic mean
of such quotations. If on such date only one or none of the Reference Banks
provide such quotations, the LIBOR Rate shall be deemed to be the arithmetic
mean of the offered quotations that leading banks in The City of New York
selected by Buyer and approved by the Sellers are quoting on such date for
one-month U.S. Dollar deposits in an amount reasonably determined by Buyer to be
representative of a single transaction in such market at such time by reference
to the principal London offices of leading banks in the London interbank market;
provided that if the LIBOR Rate cannot be determined in accordance with one of
the foregoing procedures, the LIBOR Rate shall be the LIBOR Rate as determined
on the previous determination date.
"Lien" shall mean any lien, claim, charge, restriction, pledge, security
interest, mortgage, deed of trust or other encumbrance.
"London Business Day" shall mean, for purposes of the determination of the
LIBOR Rate, any day on which dealings in deposits in U.S. Dollars are transacted
in the London interbank market.
"Margin Call" shall have the meaning specified in Section 4.
"Margin Deficit" shall have the meaning specified in Section 4.
"Market Value" shall mean with respect to any Purchased Asset as of any
date, the market value of such Purchased Asset on such date as determined by
Buyer (or an Affiliate thereof) in its sole good faith discretion (provided
that, with respect to any Purchased Asset related to an Equity Interest, the
Market Value of the Subject Securities owned by the issuer of the Equity
Interest shall be taken into account in making such determination). The Buyer's
determination of Market Value shall be conclusive absent manifest error;
provided, that there shall be no discount applied to Purchased Assets consisting
of cash. Without limiting the generality of the foregoing, the Market Value
shall be deemed zero for (a) each Subject Security which fails to comply with
the representations and warranties set forth on Schedule 1 hereto (other than
clauses (h), (i), (j), (l), (n) and (k) thereof) or (b) any Purchased Asset
which fails to comply with the representations and warranties set forth in
Section 11(h).
"Market Value Trigger Event" shall mean, as of any date of determination,
the aggregate outstanding Purchase Price exceeds 85% of the aggregate Market
Value of the Purchased Assets.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
Property, business, operations, financial condition of either Seller or either
REIT Subsidiary,
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(b) the ability of either Seller or either REIT Subsidiary to perform its
obligations under any of the Repurchase Documents to which it is a party, (c)
the validity or enforceability of any of the Repurchase Documents or (d) the
rights and remedies of the Buyer or any Affiliate under any of the Repurchase
Documents.
"▇▇▇▇▇'▇" shall mean ▇▇▇▇▇'▇ Investor's Service, Inc. or any successors
thereto.
"Net Income" shall mean, for any Person for any period, the net income of
such Person for such period as determined in accordance with GAAP.
"Newco" shall mean CRIIMI Newco, LLC, a Delaware limited liability company.
"Newco Member" shall mean CRIIMI Newco Member, Inc., a Maryland corporation
and the sole member of Newco.
"Nomura Securities" shall have the meaning set forth on Schedule 5 hereto.
"Non-Excluded Taxes" shall have the meaning set forth in Section 7(a)
hereof.
"Obligations" shall mean any amounts due and payable by the Sellers to
Buyer in connection with the Transaction hereunder (including interest which
would be payable as post-petition interest in connection with any bankruptcy or
similar proceeding), and all other fees or expenses which are payable hereunder
or under any of the Repurchase Documents.
"Other Taxes" shall have the meaning set forth in Section 7(b) hereof.
"Payment Date" shall mean the fifth calendar day of each month, or if such
date is not a Business Day, the next succeeding Business Day.
"Periodic Advance Repurchase Payment" shall have the meaning specified in
Section 5(a).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Post-Default Rate" shall mean a rate equal to the sum of (a) the Pricing
Rate plus (b) three percent (3.00%).
"Price Differential" shall mean, as of any date (the "Date of
Determination"), the aggregate amount obtained by daily application of the
Pricing Rate (or, during the continuation of an Event of Default, by daily
application of the Post-Default Rate) for the Transaction to the then
outstanding Purchase Price for the Transaction on a 360 day per year basis for
the actual number of days during the period commencing on (and including) the
Purchase Date for the Transaction and ending on (but excluding) the Date of
Determination (reduced by any amount of such Price Differential previously paid
by Sellers to Buyer with respect to the Transaction).
"Pricing Rate" shall mean,
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(a) prior to the CDO Trigger Event, a rate per annum equal to the sum of
(i) the LIBOR Rate plus (ii) 3.0%; and
(b) after the occurrence of the CDO Trigger Event, a rate per annum equal
to the sum of (i) the LIBOR Rate plus (ii) 4.0%.
"Proceeds" shall mean, with respect to any property (whether real, personal
or mixed, and whether tangible or intangible), "proceeds" (as defined in Section
9-102(a)(64) of the Uniform Commercial Code) including without limitation
whatever is received upon the sale, exchange, collection, or other disposition
of such property or any Proceeds thereof, including without limitation (i)
insurance payable by reason of loss or damage to such property (except to the
extent payable to a Person other than the owner of such property), (ii) in the
case of any "investment property" (as defined in the Uniform Commercial Code),
any payments or distributions, whether of principal, interest or otherwise, cash
dividends, stock dividends, securities received in exchange therefore, and
liquidation distributions in respect of such property, (iii) all accounts
receivable arising out of such Equity Interests, (iv) all general intangibles
arising out of such Equity Interests, (v) any and all contractual rights of the
related Seller under any revenue sharing or similar agreement relating to the
Equity Interests to receive all or any portion of the revenues or profits of CBO
REIT II, CRIIMI CMBS or CRIIMI QRS1, as applicable.
"Property" shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Purchase Date" shall mean the date on which Purchased Assets are
transferred by the Sellers to the Buyer or its designee.
"Purchase Price" shall mean,
(a) on the Purchase Date, the price at which the Purchased Assets are
transferred by the Sellers to Buyer as stated on the related Transaction Request
(and confirmed by the Buyer) which in no event shall exceed $300,000,000; and
(b) thereafter, except where Buyer and Sellers agree otherwise, such
Purchase Price decreased by the amount of any cash, Proceeds and Amortization
Payments actually received by Buyer pursuant to Sections 5 and applied to reduce
Sellers' obligations under Section 3(d) hereof.
"Purchased Assets" shall mean the Equity Interests and Subject Securities
sold by a Seller to Buyer in the Transaction, as listed on the Asset Schedule,
and any Additional Assets transferred to Buyer by either Seller pursuant to
Section 4 hereof.
"Qualified REIT Subsidiary" shall mean a "qualified REIT subsidiary", as
defined in section 856(i)(2) of the Code.
"Rating Agency" shall mean any of S&P, ▇▇▇▇▇'▇ or Fitch.
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"Records" shall mean all instruments, agreements and other books, records,
and reports and data generated by other media for the storage of information
maintained by a Seller or any other Person with respect to a Purchased Asset.
Records shall include any other instruments necessary to document a Purchased
Asset.
"Regulations T, U and X" shall mean Regulations T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as the same may be
modified and supplemented and in effect from time to time.
"REIT" shall mean a "real estate investment trust", as defined in section
856 of the Code.
"REIT Subsidiaries" shall mean, collectively, CRIIMI CMBS and CRIIMI QRS1.
"Relevant System" shall mean (a) The Depository Trust Corporation in New
York, New York, or (b) such other applicable clearing organization or book-entry
system located in the United States, in either case based upon the system
pursuant to which the related Subject Securities may be held in book-entry form.
"Repurchase Agreement" shall mean this Repurchase Agreement between Buyer
and the Sellers, dated as of the date hereof as the same may be further amended,
supplemented or otherwise modified in accordance with the terms hereof.
"Repurchase Date" shall mean the date on which the Sellers are to
repurchase the Purchased Assets subject to the Transaction from Buyer as
specified in the related Transaction Request, or if not so specified on a date
requested pursuant to Section 3(c) or on the Termination Date, including any
date determined by application of the provisions of Sections 3 or 14.
"Repurchase Documents" shall mean this Repurchase Agreement, the Subsidiary
Agreement, the CDO Engagement Letter, the Intercreditor Agreement, the Guaranty
and each Control Agreement.
"Repurchase Price" shall mean the price at which Purchased Assets are to be
transferred from Buyer or its designee to the Sellers upon termination of the
Transaction, which will be determined as the sum of the then outstanding
Purchase Price and the unpaid Price Differential as of the date of such
determination.
"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Reset Date" shall mean the date on which the LIBOR Rate is reset with
respect to the Transaction, which date shall be the Payment Date of each month.
"Responsible Officer" shall mean an officer of each Seller or Buyer (as the
case may be) listed on Schedule 4 hereto, as such Schedule 4 may be amended from
time to time.
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"S&P" shall mean Standard & Poor's Ratings Services, or any successor
thereto.
"Securitization Document" shall mean, as the context may require, the
pooling and servicing agreement, trust indenture, trust agreement, owner trust
agreement, deposit trust agreement, master servicing agreement and/or special
servicing agreement for a securitization transaction resulting in the issuance
of one or more Subject Securities.
"Seller" shall mean each of Newco and CBO REIT II, or any successor in
interest thereto.
"Subject Security" shall mean, collectively, the commercial mortgage-backed
securities and/or owner trust certificates identified on Schedule 5 to this
Repurchase Agreement together with all certificates, options or rights arising
out of such commercial mortgage-backed securities and/or owner trust
certificates which may be issued by the issuer thereof, and any Additional
Assets acquired by either Seller or either REIT Subsidiary from time to time.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"Subsidiary Agreement" shall mean the subsidiary agreement between Buyer
and each related REIT Subsidiary as the same may be further amended,
supplemented or otherwise modified in accordance with the terms thereof.
"Taxes" shall have the meaning set forth in Section 7(a) hereof.
"Termination Date" shall mean the date which is three years from the date
hereof, which shall be January 13, 2006.
"Transaction" shall have the meaning specified in Section 1.
"Transaction Assets" shall have the meaning provided in Section 8 hereof.
"Transaction Request" shall mean a request from the Seller to Buyer to
enter into the Transaction in the form of Exhibit E hereto.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect from time to time in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Transaction Assets or the
continuation, renewal or enforcement thereof is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York, "Uniform
Commercial Code" shall mean the Uniform Commercial Code as in effect in such
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other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
Section 3.
INITIATION; TERMINATION
(a) Conditions Precedent to Transaction. Upon satisfaction of the
conditions set forth in this Section 3(a), the Buyer shall enter into the
Transaction with the Sellers. Buyer's obligation to enter into the Transaction
is subject to the satisfaction of the following conditions precedent, both
immediately prior to entering into the Transaction and also after giving effect
thereto to the intended use thereof:
(i) The following Repurchase Documents delivered to the Buyer, each of
which shall be satisfactory to Buyer and its counsel in form and substance:
(A) Repurchase Agreement. This Repurchase Agreement, duly executed by the
Sellers and the Buyer.
(B) Control Agreement. Each Control Agreement, duly executed by the Bank,
the Buyer and the related Seller or REIT Subsidiary, as applicable.
(C) Contribution Agreement. A Contribution Agreement, duly executed by each
Seller.
(D) Subsidiary Agreement. The Subsidiary Agreement, duly executed by each
REIT Subsidiary.
(E) CDO Engagement. A CDO engagement letter, duly executed by the Buyer and
the Guarantor.
(F) Direction Letters. (1) A Direction Letter, duly executed by Newco, as a
shareholder, instructing CBO REIT II to deliver payments on the Subject
Securities owned by it to the related Collection Account, (2) a Direction
Letter, duly executed by CBO REIT II, as sole shareholder, instructing each REIT
Subsidiary to deliver any payments on the Subject Securities owned by it to the
related Collection Account and (3) a Direction Letter, executed by each REIT
Subsidiary or CBO REIT II, as applicable, directing each trustee and/or issuer
under each Subject Security owned by each REIT Subsidiary or CBO REIT II, as
applicable, to deliver any payments on the Subject Securities as applicable, to
the related Collection Account.
(G) Guaranty. A Guaranty, duly executed by the Guarantor.
(H) Intercreditor Agreement. An Intercreditor and Subordination Agreement,
in form and substance acceptable to the Buyer, duly executed by the Buyer and
Brascan Lender.
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(ii) Opinions of Counsel.
(A) An opinion or opinions of outside counsel to the Sellers, substantially
in the form of Exhibit A or otherwise acceptable to the Buyer in its sole
discretion.
(B) An opinion or opinions of outside counsel to the Sellers and the REIT
Subsidiaries relating to corporate matters and enforceability under the
Subsidiary Agreements acceptable to the Buyer in its sole discretion.
(C) An opinion or opinions of outside counsel to the Guarantor relating to
corporate matters and enforceability of the Guaranty acceptable to the Buyer in
its sole discretion.
(D) An opinion or opinions of outside counsel to the Sellers and the
Guarantor, in form and substance satisfactory to the Buyer, that each of the
Guarantor and CBO REIT II is and has been at all times since its incorporation a
REIT within the meaning of section 856 of the Code, and each REIT Subsidiary is
and has been at all times since its incorporation a Qualified REIT Subsidiary
acceptable to the Buyer in its sole discretion.
(iii) Guarantor's Organizational Documents. A certificate of corporate
existence of Guarantor delivered to Buyer prior to the Purchase Date (or if
unavailable, as soon as available thereafter) and certified copies of the
charter and by-laws (or equivalent documents) of Guarantor and of all corporate
or other authority for Guarantor with respect to the execution, delivery and
performance of the Repurchase Documents and each other document to be delivered
by the Guarantor from time to time in connection herewith.
(iv) Sellers' Organizational Documents. A certificate of corporate or
limited liability company existence (as the case may be) of each Seller
delivered to Buyer prior to the Purchase Date (or if unavailable, as soon as
available thereafter) and certified copies of the charter and by-laws (or
equivalent documents) of each Seller and of all corporate or other authority for
each Seller with respect to the execution, delivery and performance of the
Repurchase Documents and each other document to be delivered by each Seller from
time to time in connection herewith, including without limitation, evidence, in
form and substance acceptable to the Buyer, that each Seller's Certificate of
Formation or Articles of Incorporation, as the case may be, (a) restrict the
activities of each Seller in accordance with the restrictions set forth in
Section 12(t) of the Repurchase Agreement; (b) require an independent director;
(c) reduce each Seller's authorization to issue stock to the amount currently
outstanding in each class as set forth in Section 11(h)(vi) hereof; and (d)
restrict the Seller's ability to take any action in contravention of this
Repurchase Agreement; and with respect to CBO REIT II, CBO REIT II's Articles of
Incorporation (a) insure that the existing "Holder" limit does not apply to
Buyer or any assignee (so long as any such assignee is not an individual, and
subject to not causing CBO REIT II to violate Section 856(a)(6) of the Code);
(b) remove the ability of the board of directors to determine that CBO REIT II
shall no longer qualify as a REIT; (c)
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eliminate the call right for CBO REIT II's preferred stock until all
Obligations have been paid by Sellers hereunder and this Transaction has been
terminated; and (d) provide that upon the occurrence and continuance of an Event
of Default hereunder, replacements for any resigned or removed directors shall
be appointed by CBO REIT II's shareholders.
(v) REIT Subsidiary's Organizational Documents. A certificate of corporate
existence of each REIT Subsidiary delivered to Buyer prior to the Purchase Date
(or if unavailable, as soon as available thereafter) and certified copies of the
charter and by-laws (or equivalent documents) of each REIT Subsidiary and of all
corporate or other authority for each REIT Subsidiary with respect to the
execution, delivery and performance of the Repurchase Documents and each other
document to be delivered by each REIT Subsidiary from time to time in connection
herewith; including without limitation, evidence, in form and substance
acceptable to the Buyer, of an amendment to each REIT Subsidiary's Certificate
of Incorporation to (a) restrict the activities of each REIT Subsidiary in
accordance with the restrictions set forth in each Subsidiary Agreement; (b)
require an independent director; (c) reduce each REIT Subsidiary's authorization
to issue stock to the amount currently outstanding in each class as set forth in
Section 11(h)(vi) hereof; and (d) restrict each REIT Subsidiary's ability to
take any action in contravention of this Repurchase Agreement or the Subsidiary
Agreement.
(vi) Good Standing. A certified copy of a good standing certificate of
Guarantor, each Seller and each REIT Subsidiary, dated as of no earlier than the
date 10 Business Days prior to the date hereof.
(vii) Warrant. Evidence, in form and substance satisfactory to the Buyer,
that the warrant for 98 shares of Series A Preferred Stock issued to ▇▇▇▇▇▇▇
▇▇▇▇▇ International has been surrendered, cancelled or has expired without
exercise thereof.
(viii) Security Interest. Evidence that all other actions necessary or, in
the opinion of Buyer, desirable to perfect and protect Buyer's interest in the
Purchased Assets, the Subject Securities that are Transaction Assets and other
Transaction Assets have been taken, including, without limitation, UCC searches
and duly authorized and filed Uniform Commercial Code financing statements on
Form UCC-1.
(ix) Insurance. Evidence that Guarantor has added Buyer as an additional
insured under the Guarantor's errors and omissions insurance.
(x) Purchased Assets. Receipt by Buyer or its designee of all security
certificates (as defined in the Uniform Commercial Code) representing the Equity
Interests, together with all executed instruments of transfer necessary to
evidence that each such Equity Interest has been registered in the name of the
Buyer, and (B) an instruction and acknowledgment of CBO REIT II or such REIT
Subsidiary, as applicable.
(xi) Transfer of Subject Securities. No later than the requested Purchase
Date, the steps set forth in Section 8(e) and the Subsidiary Agreement have been
taken with respect to the relevant Subject Security.
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(xii) Other Documents. Buyer shall have received such other documents as
Buyer may reasonably request, in form and substance reasonably acceptable to
Buyer.
(xiii) Due Diligence Review. Without limiting the generality of Section 16
hereof, Buyer shall have completed, to its satisfaction, its due diligence
review of the related Equity Interests, Subject Securities, the Guarantor, each
REIT Subsidiary and each Seller.
(xiv) No Default. No Default or Event of Default shall have occurred and be
continuing under the Repurchase Documents.
(xv) Representations and Warranties. Both immediately prior to the
Transaction and also after giving effect thereto, the representations and
warranties made by each Seller in Section 11 hereof, shall be true, correct and
complete on and as of the Purchase Date in all material respects with the same
force and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).
(xvi) Transaction Request. On or prior to the Purchase Date, the Sellers
shall have delivered to the Buyer a Transaction Request.
(xvii) Fees and Expenses. The Buyer shall have received all fees and
expenses of counsel to the Buyer as contemplated by Sections 10 and 15(d) which
amounts, at the Buyer's option, may be withheld from the proceeds remitted by
Buyer to the Sellers pursuant to the Transaction hereunder.
(xviii) No Material Adverse Change. As of the date hereof, none of the
following shall have occurred and/or be continuing:
(A) an event or events shall have occurred in the good faith determination
of the Buyer resulting in the effective absence of a "repo market" or comparable
"lending market" for financing debt obligations secured by securities or an
event or events shall have occurred resulting in the Buyer not being able to
finance Purchased Assets through the "repo market" or "lending market" with
traditional counterparties at rates which would have been reasonable prior to
the occurrence of such event or events; or
(B) an event or events shall have occurred resulting in the effective
absence of a "securities market" for securities backed by commercial loans or an
event or events shall have occurred resulting in Buyer not being able to sell
securities backed by commercial loans at prices which would have been reasonable
prior to such event or events;
(C) Bear ▇▇▇▇▇▇▇ & Co.'s corporate bond rating as calculated by S&P or
▇▇▇▇▇'▇ has been lowered or downgraded to a rating below its rating as of the
date hereof by S&P or ▇▇▇▇▇'▇ or is on watch for a downgrade;
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(D) a suspension or material limitation in trading in securities generally
on the New York Stock Exchange;
(E) a general moratorium on commercial banking activities declared by
either Federal or New York State governments, regulators or self regulatory
organizations, or a material disruption in commercial banking or securities
settlement or clearance services in the United States;
(F) the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war or the
occurrence of any other calamity or crisis;
(G) any change in national or international financial, political or
economic conditions if the effect of any such event specified in clause (F) or
(G) in the sole judgment of Buyer makes it impracticable or inadvisable to
proceed with the Transaction on the terms and in the manner contemplated in this
Repurchase Agreement.
(xix) Commitment Fee. On or prior to the Purchase Date, the Buyer shall
have received the commitment fee from the Sellers pursuant to Section 10 hereof.
(xx) Brascan Confirmation. The Buyer shall have received satisfactory
evidence of the consummation of the transactions contemplated in the Investment
Agreement as determined by Buyer in its sole discretion.
(xxi) Brascan Loan Documents. The Buyer shall have reviewed and approved in
its sole discretion the Brascan Loan Documents; provided, that the Buyer has
reasonably approved a first Lien on the equity of Newco and Newco Member subject
to the Intercreditor Agreement.
(xxii) Evidence of Contribution. The Buyer shall have received evidence of
the following events, which shall be in form and substance satisfactory to the
Buyer: (i) the liquidation and/or dissolution of CBO REIT, Inc. ("CBO REIT"),
(ii) the payment by CBO REIT to its preferred shareholders of its liquidation
value plus any accrued, unpaid dividends, (iii) the distribution by CBO REIT to
the Guarantor (as the common shareholder) of all assets and liabilities, (iv)
the contribution of such assets and liabilities by Guarantor to Newco Member,
(v) the contribution of such assets and liabilities by Newco Member to Newco and
(vi) the contribution of such assets and liabilities by Newco to CBO REIT II.
(xxiii) Use of Net Proceeds. Written evidence, satisfactory to the Buyer,
that the Guarantor will cause the Sellers to use the net proceeds of the
Transaction, immediately following the Purchase Date (subject to the terms and
conditions of the Escrow Agreement), to fully redeem and retire or defease the
Existing Indebtedness.
The execution of this Repurchase Agreement by the Sellers and the Buyer
shall constitute a certification or acknowledgement and agreement (as the case
may be) by each Seller and Buyer that the conditions set forth in clauses (i)
(other than with respect to the documents
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delivered by the REIT Subsidiaries), (ii), (iii), (iv), (vi), (vii), (ix),
(xii), (xiii), (xviii) and (xxi) have been satisfied as of the date of the
Repurchase Agreement, subject to the terms of a post-closing agreement between
the parties. The Transaction Request delivered by the Sellers hereunder shall
constitute a certification by the Sellers that all remaining conditions set
forth in this Section 3(a) (other than acceptability or satisfaction to Buyer,
where and as applicable) have been satisfied as of the Purchase Date, and
Buyer's execution of the "Certificate Authorizing Release" (as defined in the
Escrow Agreement) shall constitute Buyer's acknowledgement and agreement that
all remaining conditions set forth in this Section 3(a) (other than clause (xv)
hereof) have been satisfied as of the Purchase Date; provided that if subsequent
to the Buyer depositing the Purchase Price in escrow under the Escrow Agreement,
the Buyer determines in good faith that any condition has not been satisfied,
the Sellers shall use good faith efforts to satisfy such condition. The
preceding provisions shall not be a waiver of any representation, warranty or
covenant set forth in this Repurchase Agreement.
(b) Initiation.
(i) The Sellers shall deliver a Transaction Request to the Buyer on or
prior to the date and time set forth in Section 3(a)(xvi) prior to entering into
the Transaction.
(ii) The Repurchase Date for the Transaction shall not be later than the
Termination Date.
(iii) Subject to the provisions of this Section 3, the Purchase Price will
then be made available to the Sellers pursuant to the terms of that certain
Escrow Agreement, dated as of the date hereof, by and among the Buyer,
Guarantor, Brascan Investor and LaSalle Bank, National Association, as escrow
agent (the "Escrow Agreement").
(iv) Within a reasonable time subsequent to the Purchase Date, the Buyer
shall deliver a purchase confirmation to the Sellers, confirming the terms of
the Transaction.
(c) Repurchase.
(i) The Sellers may repurchase all of the Purchased Assets (but not a
portion thereof) without penalty or premium on any date (subject to the
provisions below). The Repurchase Price payable for the repurchase of any such
Purchased Assets shall be reduced as provided in Section 5(e). If the Sellers
intend to make such a repurchase, the Sellers shall give five (5) Business Days'
prior written notice thereof to the Buyer (such intended Repurchase Date, the
"Early Repurchase Date"); provided, however, at any time prior to two (2)
Business Days prior to the Early Repurchase Date, the Sellers may give written
notice to the Buyer of their decision to extend the Repurchase Date to a date
certain, which shall be a Business Day, no more than thirty (30) calendar days
from the date of such notice. If such notice is given to extend the Early
Repurchase Date as provided herein, the Sellers shall pay to the Buyer any
amount required to compensate such Buyer for any additional losses, costs or
expenses which it may reasonably incur as a result of such failure to repurchase
on the Early Repurchase Date, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Buyer to fund or maintain the
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Transaction. If the notice described above is given, the outstanding
Purchase Price shall be due and payable on the Early Repurchase Date as extended
in accordance with the requirements of this section, and, on receipt, such
amount shall be applied to the Repurchase Price for the designated Purchased
Assets. If the Purchased Assets are repurchased on any date other than the Reset
Date, the Sellers shall pay to the Buyer any amount required to compensate such
Buyer for any additional losses, costs or expenses which it may reasonably incur
as a result of such repurchase, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Buyer to fund or maintain the Transaction. Upon the
Sellers' request, the Buyer shall disclose the basis for determining such
additional amounts. Buyer's determination of any amounts due hereunder shall be
conclusive absent manifest error.
(ii) On the Repurchase Date, termination of the Transaction will be
effected by reassignment to the Sellers or their designee (including, without
limitation, in connection with the issuance of a CDO) of the Purchased Assets
(and any Proceeds in respect thereof received by Buyer not previously credited
or transferred to, or applied to the obligations of, the Sellers pursuant to
Section 5) against the simultaneous transfer of the Repurchase Price to an
account of Buyer or its designee.
(d) Buydown. At any time and from time to time during the term of this
Repurchase Agreement, the Sellers may remit funds ("Buydown Amount") to the
Buyer to reduce the Repurchase Price without a corresponding repurchase of
Purchased Assets. The Buyer shall apply the Buydown Amount to the Repurchase
Price on the same Business Day provided Buyer receives the Buydown Amount by
3:00 p.m. New York City time; provided that, all other fees and expenses owing
to the Buyer hereunder shall have been paid prior to the reduction of the
Repurchase Price. The Buyer shall notify the Sellers within two (2) Business
Days after the date the Buyer receives any Buydown Amount if any amount remitted
as a Buydown Amount is not applied to reduce the Repurchase Price.
Section 4.
MARGIN AMOUNT MAINTENANCE
(a) The Buyer shall determine the Market Value of the Purchased Assets at
such intervals as determined by the Buyer in its sole discretion.
(b) If at any time a Market Value Trigger Event has occurred and is
continuing (a "Margin Deficit"), then Buyer may by written notice to the Sellers
(as such notice is more particularly set forth below, a "Margin Call"), require
Sellers to transfer to Buyer or Buyer's designee cash, Cash Equivalents or
Subject Securities approved by the Buyer in its sole discretion ("Additional
Assets") so that the Purchase Price then outstanding will be less than or equal
to 80% of aggregate Market Value of all Purchased Assets, including any such
Additional Assets. If Buyer delivers a Margin Call to the Sellers on any
Business Day, then the Seller shall transfer Additional Assets to Buyer no later
than the time of delivery of such Margin Call on the next Business Day. Any cash
transferred to the Buyer in response to a Margin Call shall be credited to the
Purchase Price on the date of payment.
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(c) Buyer's election, in its sole and absolute discretion, not to make a
Margin Call at any time there is a Margin Deficit shall not in any way limit or
impair its right to make a Margin Call at any time a Margin Deficit exists.
(d) If, at any time prior to the occurrence of a CDO Trigger Event, the
aggregate outstanding Purchase Price is less than 80% of the Market Value of the
Purchased Assets (a "Margin Excess"), then the Sellers may by notice to the
Buyer require Buyer, in Buyer's sole discretion, transfer to either Seller, as
applicable, previously delivered Additional Assets pursuant to Section 4(b)
above, provided that the aggregate outstanding Purchase Price, after deduction
of any such Additional Assets so transferred, will thereupon not exceed 80% of
Market Value of the Purchased Assets. For the avoidance of doubt, only
Additional Assets delivered to Buyer to satisfy a Margin Call under Section 4(b)
(such assets, "Margin Call Assets") may be released by Buyer to satisfy a Margin
Excess, and if the Buyer has no Margin Call Assets, the Buyer shall have no
obligation to take any action in respect of a Margin Excess hereunder.
Section 5.
PAYMENTS; PROCEEDS
(a) The Sellers shall pay to Buyer the accreted value of the Price
Differential (each such payment, a "Periodic Advance Repurchase Payment") on
each Payment Date. Notwithstanding the preceding sentence, if the Sellers fail
to make all or part of the Periodic Advance Repurchase Payment by 5:00 p.m. (New
York time) on any Payment Date, the Pricing Rate shall be equal to the
Post-Default Rate until the Periodic Advance Repurchase Payment is received in
full by Buyer; provided, that any payment in full of the Periodic Advance
Repurchase Payment following an Event of Default shall not be deemed a cure
thereof for any purpose hereunder.
(b) The Sellers shall pay to Buyer, on the first Payment Date of each
calendar quarter, an amount (any such payment, an "Amortization Payment"), which
in each case shall be calculated by the Buyer (which calculation shall be
binding absent manifest error) equal to (i) prior to the occurrence of the
earlier of (x) a CDO Trigger Event or (y) one year following the Purchase Date,
a quarterly amortization payment equal to 1/240th of the original principal
balance of the Purchase Price or (ii) upon the occurrence of the earlier of (x)
a CDO Trigger Event or (y) one year following the Purchase Date, a quarterly
amortization payment equal to 1/160th of the original principal balance of the
Purchase Price.
(c) The Sellers shall deposit or cause the related REIT Subsidiary to
deposit for Sellers' account, all income, including without limitation, all
Proceeds received by or on behalf of the Sellers or the REIT Subsidiaries with
respect to the Purchased Assets and the Subject Securities in a deposit account
(the title of which shall indicate that the funds are in the name of the related
Seller or the related REIT Subsidiary) (each such account, a "Collection
Account") with a financial institution acceptable to Buyer and subject to a
Control Agreement. All such Proceeds shall not be commingled with other property
of the Sellers or any Affiliate of the Sellers except as expressly permitted
above.
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(d) Each Seller, as applicable, shall deliver or cause each REIT Subsidiary
to deliver, on or prior to the Purchase Date, a Direction Letter to the Buyer
with respect to each issuer of the Subject Securities, which shall direct such
issuer to deposit directly all Proceeds received with respect to any of the
Subject Securities into the related Collection Account. The Buyer shall deposit
any Proceeds received with respect to any of the Subject Securities into the
related Collection Account.
(e) All such amounts shall be withdrawn from the related Collection Account
on each Payment Date and remitted by the related Seller or REIT Subsidiary as
follows:
(i) First, to the Buyer in payment of any accrued and unpaid Price
Differential;
(ii) Second, without limiting the rights of Buyer under Section 4 of this
Repurchase Agreement, in the amount of any unpaid Margin Deficit;
(iii) Third, to the Buyer in payment of any Amortization Payment then due;
and
(iv) Fourth, to pay costs and fees payable by CBO REIT II or either REIT
Subsidiary under the Securitization Documents to trustees, Rating Agencies or
any other Person (other than an Affiliate of the Sellers) specified under the
Securitization Documents;
(v) Fifth, to CBO REIT II for payment of annual cash dividends by CBO REIT
II to the holders of its Series A Preferred Stock pursuant to the Articles of
Incorporation of CBO REIT II as in effect on the Purchase Date; provided that
CBO REIT II may only make such payments (a) pursuant to this paragraph and (b)
during a month in which a quarterly Amortization Payment is due; and
(vi) Sixth, to the Sellers.
(f) Notwithstanding the preceding provisions, if an Event of Default has
occurred, all funds in the Collection Account shall be withdrawn and applied as
determined by the Buyer in its sole discretion.
Section 6.
REQUIREMENTS OF LAW
(a) If any Requirement of Law (other than with respect to any amendment
made to the Buyer's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation or
application thereof or compliance by the Buyer with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject the Buyer to any tax of any kind whatsoever with respect
to this Repurchase Agreement or the Transaction (excluding net income taxes,
branch profits taxes, franchise taxes or similar taxes imposed on the Buyer as a
result of any
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present or former connection between the Buyer and the United States, other
than any such connection arising solely from the Buyer having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Repurchase Agreement) or change the basis of taxation of payments to the
Buyer in respect thereof;
(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, or other extensions of credit
by, or any other acquisition of funds by, any office of the Buyer which is not
otherwise included in the determination of the LIBOR Rate hereunder;
(iii) shall impose on the Buyer any other condition;
and the result of any of the foregoing is to increase the cost to the Buyer, by
an amount which the Buyer deems to be material, of entering, continuing or
maintaining the Transaction or to reduce any amount due or owing hereunder in
respect thereof, then, in any such case, the Sellers shall promptly pay the
Buyer such additional amount or amounts as calculated by the Buyer in good faith
as will compensate the Buyer for such increased cost or reduced amount
receivable.
(b) If the Buyer shall have determined that the adoption of or any change
in any Requirement of Law (other than with respect to any amendment made to the
Buyer's certificate of incorporation and by-laws or other organizational or
governing documents) regarding capital adequacy or in the interpretation or
application thereof or compliance by the Buyer or any corporation controlling
the Buyer with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on the
Buyer's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which the Buyer or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
the Buyer's or such corporation's policies with respect to capital adequacy) by
an amount deemed by the Buyer to be material, then from time to time, the
Sellers shall promptly pay to the Buyer such additional amount or amounts as
will compensate the Buyer for such reduction.
(c) If the Buyer becomes entitled to claim any additional amounts pursuant
to this Section, it shall promptly provide the Sellers with notice of the event
by reason of which it has become so entitled and a good faith explanation of any
amounts due hereunder. A certificate as to any additional amounts payable
pursuant to this Section submitted by the Buyer to the Sellers shall be
conclusive in the absence of manifest error.
(d) No amount shall be payable by either Seller under this Section 6 with
respect to any period in excess of ninety (90) days prior to the date of demand
by the Buyer unless the effect of a change in the interpretation or application
of the Requirement of Law is retroactive by its terms to a period prior to the
date of the change in interpretation or application of the Requirement of Law,
in which case any additional amount or amounts shall be payable for the
retroactive period but only if the Buyer provides its written demand not later
than ninety (90) days after the change in the interpretation or application of
the Requirement of Law.
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Section 7.
TAXES
(a) All payments made by any Seller or Guarantor (including any amounts
paid to Buyer in respect of the Purchased Assets or the Subject Securities)
under this Repurchase Agreement or any Repurchase Document shall be made free
and clear of, and without deduction or withholding for, or on account of, any
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities (including penalties, interest and additions to tax) with
respect thereto imposed by any Governmental Authority thereof or therein
("Taxes"), excluding income taxes, branch profits taxes, franchise taxes or
similar taxes imposed on the Buyer as a result of any present or former
connection between the Buyer and the United States, other than any such
connection arising solely from the Buyer having executed, delivered or performed
its obligations or received a payment under, or enforced, this Repurchase
Agreement (all such nonexcluded Taxes, "Non-Excluded Taxes"). If either Seller
or any issuer of a Purchased Asset or Subject Security shall be required to
deduct or withhold any Taxes from or in respect of any amount payable hereunder,
(i) such Seller or issuer shall make such deductions or withholdings, (ii) such
Seller shall or shall cause such issuer to pay the full amount deducted or
withheld to the relevant Governmental Authority in accordance with applicable
law, and (iii) with respect to any Non-Excluded Taxes, the amount payable shall
be increased by an amount (the "additional amount") necessary so that the Buyer
shall receive a net amount equal to the amount it would have received had no
such deductions or withholdings in respect of Non-Excluded Taxes been made;
provided that Buyer is a resident of the United States or the United Kingdom.
(b) In addition, each Seller agrees to pay or cause the issuers of each of
the Purchased Assets and Subject Securities (other than the Nomura Securities)
to pay to the relevant Governmental Authority in accordance with applicable law
any current or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies (including, without limitation, mortgage
recording taxes, transfer taxes and similar fees) imposed by the United States
or any taxing authority thereof or therein that arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Repurchase Agreement ("Other Taxes").
(c) Each Seller will indemnify the Buyer for the full amount of
Non-Excluded Taxes (including additional amounts with respect thereto) and Other
Taxes paid by the Buyer (for avoidance of doubt, on a joint and several basis),
provided that the Buyer shall have provided the Sellers with evidence,
reasonably satisfactory to the Sellers, of payment of Non-Excluded Taxes or
Other Taxes, as the case may be.
(d) As soon as practicable after the date of any payment of Taxes or Other
Taxes by the Sellers or the issuer of any Purchased Asset or Subject Security
(other than the Nomura Securities) to the relevant Governmental Authority, the
Sellers will deliver, or shall cause the issuer of the Purchased Asset or
Subject Security to deliver, to the Buyer the original or a certified copy of
the receipt issued by such Governmental Authority evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of the Sellers
hereunder, the agreements and obligations of the Seller contained in this
Section 7 shall survive
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the termination of this Repurchase Agreement. Notwithstanding any other
provision of this Repurchase Agreement to the contrary, nothing contained in
this Section 7, or otherwise in this Repurchase Agreement, shall require the
Buyer to make available any of its tax returns or any other information that it
deems to be confidential or proprietary.
(f) If the Buyer is required to deduct or withhold any Taxes from or in
respect of any amount payable or deemed payable hereunder by the Buyer to any
Seller, the Buyer shall make such deductions or withholdings, pay the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law, and such amount shall be treated for purposes of this
Repurchase Agreement as if it were paid to and received by the Sellers. Each of
Newco and CBO REIT II shall make all reasonable efforts to obtain and timely
deliver a U.K. Inland Revenue Form MOD2 (Application for Relief From UK Income
Tax on Manufactured Overseas Dividends) with an appropriate certificate from the
U.S. Internal Revenue Service certifying, respectively, the Guarantor's and CBO
REIT II's residence in the United States and/or such other tax forms,
certifications or other documents which may eliminate or reduce any deductions
or withholdings on account of Taxes in respect of any amount payable by the
Buyer hereunder. Such forms shall be renewed and timely delivered at such times
as may be required by U.K. Inland Revenue and, in any event, on the Repurchase
Date. The Buyer may rely on any such tax forms, certifications or other
documents provided to it, and the Sellers will indemnify the Buyer on an
after-Tax basis for any Costs relating to or arising out of Buyer's reliance on
such tax forms, certifications or other documents or either Seller's inability
to provide such tax forms, certifications or other documents.
Section 8.
SECURITY INTEREST; BUYER's appointment as Attorney-in-fact
(a) Security Interest. Although the parties intend that the Transaction
hereunder be a sale and purchase pursuant to a repurchase agreement and not a
loan (other than for accounting and federal, state and local income and
franchise tax purposes), in the event the Transaction is deemed to be a loan,
each Seller hereby pledges as of the Purchase Date to Buyer as security for the
performance by each Seller of its Obligations and hereby grants, assigns and
pledges as of the Purchase Date to Buyer a fully perfected first priority
security interest in the Purchased Assets, each Collection Account, all books,
records and files relating to any Purchased Assets, any other accounts,
payments, rights to payment and general intangibles relating to any Purchased
Asset, all "securities accounts" (as defined in Section 8-501(a) of the Uniform
Commercial Code) to which any or all of the Purchased Assets are or may be
credited, and all Proceeds with respect to the foregoing, in all instances,
whether now owned or hereafter acquired, now existing or hereafter created
(collectively, the "Transaction Assets"). For the removal of doubt, the parties
acknowledge that this definition of "Transaction Assets" does not include or
refer to any Subject Securities owned by either REIT Subsidiary.
Each Seller hereby authorizes the Buyer to file such financing statement or
statements relating to the Transaction Assets as the Buyer, at its option, may
deem appropriate. Each Seller shall pay the filing costs for any financing
statement or statements prepared pursuant to this Section 8.
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(b) Equity Interest. The parties acknowledge and agree that the Equity
Interests constitute "certificated securities" (as defined in Section
8-102(a)(4) of the Uniform Commercial Code).
(i) Record Ownership. On the Purchase Date, record ownership of the Equity
Interests shall be transferred to Buyer.
(ii) Certificates. The original certificate or certificates representing
the Equity Interests, registered in the name of the Buyer, shall be held by the
Buyer.
(iii) Cash Dividends; Voting Rights. The Buyer shall exercise all voting
and shareholder rights with respect to the Equity Interests. The Sellers shall
be entitled to income from any dividends or proceeds paid on account of the
Equity Interests in accordance with Section 5(e) hereof. Notwithstanding
anything to the contrary, absent the occurrence and continuance of an Event of
Default, Buyer shall exercise all voting, consent or other shareholder rights
with respect to the Equity Interests in accordance with the Sellers'
instructions; provided, however that Buyer (A) shall not be required to cast a
vote or exercise a shareholder right or take any other action and (B) will be
entitled to vote against any measure, which, in either case, would impair the
market value of any Equity Interest or which would be inconsistent with or
result in a violation of any provision of this Repurchase Agreement or the
Repurchase Documents; and provided, further, that Buyer shall not be required at
any time to (i) vote to enable, or take any other action to permit either REIT
Subsidiary or CBO REIT II to issue any shares of any nature or to issue any
other shares convertible into or granting the right to purchase or exchange for
any shares of either REIT Subsidiary, or (ii) sell, assign, transfer, exchange
or otherwise dispose of, or grant any option with respect to, the Equity
Interests or (iii) create, incur or permit to exist any Lien or option in favor
of, or any claim of any Person with respect to, any of the Equity Interests, or
any interest therein, except for the Lien provided for by this Repurchase
Agreement, or (iv) enter into any agreement or undertaking providing for the
right or ability of either Seller to sell, assign or transfer any of the Equity
Interests. Upon the occurrence and continuance of an Event of Default, Buyer may
vote or take any other shareholder action as it deems appropriate in its sole
discretion. Notwithstanding any provision in this Repurchase Agreement to the
contrary, it is understood and agreed that prior to an Event of Default the
Buyer shall exercise all voting, consent and other shareholder rights in
connection with the election, appointment and removal of directors in accordance
with the Sellers' instructions.
(c) Additional Interests. If either Seller shall, as a result of its
interest in an Equity Interest, become entitled to receive or shall receive any
certificate evidencing any other equity interest, any option rights to acquire
an equity interest, or any equity interest in either REIT Subsidiary or CBO REIT
II, as applicable, whether in addition to, in substitution for, as a conversion
of, or in exchange for its related Equity Interests, or otherwise in respect
thereof, such Seller shall accept the same as the Buyer's agent, hold the same
in trust for the Buyer and deliver the same forthwith to the Buyer in the exact
form received, duly endorsed by the Seller to the Buyer, if required, together
with an undated transfer power, if required, covering such certificate duly
executed in blank, to be held by the Buyer subject to the terms hereof as
Purchased Assets.
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(d) Liquidation. Any sums paid upon or in respect of any Equity Interests
upon the liquidation or dissolution of CBO REIT II or either REIT Subsidiary
shall be paid over to the Buyer as Purchased Assets, and in case any
distribution of capital shall be made on or in respect of the Equity Interests
or any property shall be distributed upon or with respect to any Equity
Interests pursuant to the recapitalization or reclassification of the capital of
CBO REIT II or such REIT Subsidiary to be held as Purchased Assets, such sums
shall be paid over to the Buyer as Purchased Assets. If any sums of money or
property so paid or distributed in respect of any Equity Interests shall be
received by either Seller, such Seller shall, until such money or property is
paid or delivered to the Buyer, hold such money or property in trust for the
Buyer segregated from other funds of such Seller, as Purchased Assets. All cash
received by any party pursuant to this section shall be deposited in the
Collection Account in the name of CBO REIT II and applied in accordance with
Section 5(e).
(e) Subject Securities.
(i) With respect to Subject Securities that are Transaction Assets that
shall be delivered or held in definitive, certificated form, each Seller shall
deliver to the Buyer or its designee the original of the relevant certificate in
form suitable for transfer, with accompanying, duly executed instruments of
transfer or appropriate instruments of assignment executed in blank or in the
name of the Buyer or its designee, transfer tax stamps, and any other documents,
opinions, approvals or instruments to effect a legally valid delivery of such
security or other item of investment property to the Buyer, including, without
limitation, a Direction Letter with respect to each Subject Security and, with
respect to Subject Securities that are Transaction Assets, any confirmations
from Rating Agencies and legal opinions as deemed necessary by the Buyer to
effect any transfer or re-registration thereof. Each Subject Security that is a
Transaction Asset delivered in certificated form shall be registered in the name
of the Buyer or its designee, and the Buyer or its designee shall have the
rights of conversion, exchange and subscription pertaining to such Subject
Security which is a Transaction Asset. The Sellers agree to take such action as
is necessary in order to expedite the re-registration of the Subject Securities
that are Transaction Assets in the name of the Buyer or its designee.
(ii) With respect to Subject Securities that are Transaction Assets that
shall be delivered or held in uncertificated form and the ownership of which is
registered on books maintained by the issuer thereof or its transfer agent, each
Seller shall cause the registration of such security for perfection purposes in
the name of the Buyer or its designee and at the request of the Buyer, shall
take such other and further steps, and shall execute and deliver such documents
or instruments necessary, to effect a legally valid delivery of the security
interest granted therein to Buyer hereunder;
(iii) With respect to Subject Securities that are Transaction Assets that
shall be delivered through a Relevant System in book-entry form and credited to
or otherwise held in an account, each Seller shall take such actions necessary
to provide instruction to the relevant financial institution or other entity,
which instruction shall be sufficient if complied with to effect a legally valid
delivery of the security interest granted therein to Buyer hereunder. In
connection with any account to which such Subject Securities are credited or
otherwise held, each Seller shall execute and deliver such other and further
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documents or instruments necessary, in the reasonable opinion of the Buyer,
to effect a legally valid delivery of the security interest granted therein to
Buyer hereunder. Any account to which such Subject Securities are credited shall
be designated for perfection purposes as the Buyer may direct;
(iv) With respect to Subject Securities (A) registered in Buyer's name
pursuant to clauses (i) or (ii), the Buyer, as a perfected secured party, or (B)
credited to an account, pursuant to clause (iii), the Buyer, as "entitlement
holder" (as defined in Section 8-102(a) of the Uniform Commercial Code) with
respect to such Subject Securities shall be entitled to receive all cash
dividends and distributions paid in respect thereof, all such amounts to be
remitted to the related Collection Account. Notwithstanding the foregoing, the
Sellers shall be entitled to income from any interest or proceeds paid on
account of such Subject Securities in accordance with Section 5(e) hereof.
(v) With respect to Subject Securities held in physical form pursuant to
clause (i), each Seller or the related REIT Subsidiary shall instruct the
trustee to remit all cash dividends or other cash distributions paid in the
normal course of business, in respect of the Subject Securities to the related
Collection Account. With respect to any Subject Security re-registered in the
name of the Buyer, the Buyer shall instruct the trustee to remit all cash
dividends or other cash distributions paid in the normal course of business, in
respect of such Subject Securities, to the related Collection Account.
(vi) Without the prior consent of Buyer, neither Seller will (i) sell,
assign, transfer, exchange or otherwise dispose of, or grant any option with
respect to the Subject Securities or (ii) create, incur or permit to exist any
Lien or option in favor of, or any claim of any Person with respect to, any of
such Subject Securities, or any interest therein, except for the Lien provided
for by this Repurchase Agreement, or (iii) enter into any agreement or
understanding restricting the right or ability of either Seller to sell, assign
or transfer any of such Subject Securities.
(vii) Cash Dividends; Voting Rights. All cash dividends or other cash
distributions paid in respect of the Subject Securities shall be remitted
directly into the related Collection Account. Subject to the following
provisions, Buyer shall exercise all voting rights with respect to the Subject
Securities that constitute Transaction Assets. Notwithstanding anything to the
contrary, absent the occurrence and continuance of an Event of Default, Buyer
shall exercise all voting, consent or other holder's rights with respect to the
Subject Securities that are Transaction Assets in accordance with the Sellers'
instructions; provided, however that Buyer (A) shall not be required to cast a
vote or exercise a holder's right or take any other action and (B) will be
entitled to vote against any measure, which would be inconsistent with or result
in a violation of any provision of this Repurchase Agreement or the Repurchase
Documents. Upon the occurrence and continuance of an Event of Default, Buyer may
vote or take any other holder action as it deems appropriate in its sole
discretion. Notwithstanding the foregoing, the applicable REIT Subsidiary shall
retain all voting and other control rights with respect any Subject Security
that is not a Transaction Asset.
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(f) Buyer's Appointment as Attorney in Fact. Each Seller hereby irrevocably
constitutes and appoints the Buyer and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Seller and in the
name of such Seller or in its own name, from time to time in the Buyer's
discretion after the occurrence and continuance of an Event of Default, for the
purpose of carrying out the terms of this Repurchase Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be reasonably necessary or desirable to accomplish the purposes of
this Repurchase Agreement, and, without limiting the generality of the
foregoing, each Seller hereby gives the Buyer the power and right, on behalf of
such Seller, without assent by, but with notice (which shall be concurrent with
the exercise of such power-of-attorney to the extent possible under the relevant
circumstances) to, such Seller, if an Event of Default shall have occurred and
be continuing, to do the following:
(i) in the name of such Seller, or in its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due with respect to any other
Transaction Assets and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the
Buyer for the purpose of collecting any and all such moneys due with respect to
any other Transaction Assets whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or threatened
against the Transaction Assets;
(iii) with respect to the Subject Securities that are Transaction Assets,
(A) to register such Subject Securities in the Buyer's or its designee's name;
(B) to direct any trustee thereunder as it deems appropriate and (C) to exercise
any voting rights as it deems appropriate;
(iv) (i) with respect to the Equity Interests, (A) to register the Equity
Interests in the Buyer's or its designee's name; and (B) to exercise any voting
rights as it deems appropriate;
(v) (A) to direct any party liable for any payment under any Transaction
Assets to make payment of any and all moneys due or to become due thereunder
directly to the Buyer or as the Buyer shall direct; (B) to ask or demand for,
collect, receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Transaction Assets; (C) to sign and endorse any invoices, assignments,
verifications, notices and other documents in connection with any Transaction
Assets; (D) to commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Transaction
Assets or any proceeds thereof and to enforce any other right in respect of any
Transaction Assets; (E) to defend any suit, action or proceeding brought against
such Seller with respect to any Transaction Assets; (F) to settle, compromise or
adjust any suit, action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as the Buyer may deem
appropriate; and (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise
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deal with any Transaction Assets as fully and completely as though the
Buyer were the absolute owner thereof for all purposes, and to do, at the
Buyer's option and the Sellers' expense, at any time, and from time to time, all
acts and things which the Buyer deems necessary to protect, preserve or realize
upon the Transaction Assets and the Buyer's Liens thereon and to effect the
intent of this Repurchase Agreement, all as fully and effectively as either
Seller might do.
Each Seller hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
Each Seller also authorizes the Buyer, if an Event of Default shall have
occurred, from time to time, to execute, in connection with any sale provided
for in Section 14 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Transaction Assets.
The powers conferred on the Buyer hereunder are solely to protect the
Buyer's interests in the Transaction Assets and shall not impose any duty upon
it to exercise any such powers. The Buyer shall be accountable only for amounts
that it actually receives as a result of the exercise of such powers, and
neither it nor any of its officers, directors, employees or agents shall be
responsible to either Seller for any act or failure to act hereunder, except for
its or their own gross negligence or willful misconduct or its breach of its
covenant set forth in Section 12.02 hereof.
(g) REIT Matters. Notwithstanding any other provision in this Repurchase
Agreement to the contrary, it is understood and agreed by the parties hereto
that neither Seller has (a) authorized Buyer to, (b) agreed that Buyer may, or
(c) agreed to facilitate, any action that would result in either REIT Subsidiary
or either issuer of Subject Securities (other than the Nomura Securities)
ceasing to be a Qualified REIT Subsidiary.
Section 9.
PAYMENT, TRANSFER AND CUSTODY
(a) Unless otherwise mutually agreed in writing, all transfers of funds to
be made by the Sellers hereunder shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Buyer at the
following account maintained by the Buyer: BANK ONE NA CHGO/Bear ▇▇▇▇▇▇▇
ABA#▇▇▇▇▇▇▇▇▇, Acct: MBS A/C # 5801230 Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, on the date on which
such payment shall become due (and each such payment made after such time shall
be deemed to have been made on the next succeeding Business Day). Each Seller
acknowledges that it has no rights of withdrawal from the foregoing account.
(b) On the Purchase Date for the Transaction, ownership of the Purchased
Assets shall be transferred to the Buyer or its designee against the
simultaneous transfer of the Purchase Price as required under the Escrow
Agreement simultaneously with the delivery to the Buyer of the Purchased Assets
relating to the Transaction. With respect to the Purchased Assets being sold by
a Seller on the Purchase Date, such Seller hereby sells, transfers, conveys and
assigns to
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Buyer or its designee, without recourse, but subject to the terms of this
Repurchase Agreement, all the right, title and interest of such Seller in and to
the Purchased Assets in all cases subject to the rights and obligations of the
Sellers under Section 3(c) of this Repurchase Agreement.
Section 10.
COMMITMENT Fee
The Sellers shall pay to Buyer in immediately available funds, a commitment
fee of (a) 0.50% multiplied by (b) the Purchase Price, which shall be paid on
the Purchase Date as set forth in the Escrow Agreement. Such payment shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to Buyer at such account designated by Buyer.
Section 11.
REPRESENTATIONS
(1) Each Seller jointly and severally represents and warrants to the Buyer
that as of the date of this Repurchase Agreement or such other date set forth
below, except in each case as specifically set forth in that certain letter
dated as of the date of this Repurchase Agreement and delivered by the Sellers
to the Buyer, a copy of which is attached hereto as Exhibit G (the "Sellers'
Letter"):
(a) Acting as Principal. Each Seller will engage in the Transaction as
principal (or, if agreed in writing in advance of the Transaction by the other
party hereto, as agent for a disclosed principal).
(b) No Broker. Neither Seller has dealt with any broker, investment banker,
agent, or other person, except for the Buyer, who may be entitled to any
commission or compensation in connection with the sale of Purchased Assets
pursuant to this Repurchase Agreement.
(c) Financial Information. All financial data (other than projections and
pro forma financial information) concerning the Equity Interests and the Subject
Securities that has been delivered by or on behalf of the Sellers to Buyer in
connection with the Transaction was, at the time so delivered, correct in all
material respects, and all projections and pro forma financial information so
delivered were based on good faith estimates and assumptions believed by the
related Seller to be reasonable at the time when made. All balance sheets and
statements of cash flows of the Guarantor and its consolidated Subsidiaries
constituting part of the consolidated financial statements contained in (a)
Guarantor's annual reports on Form 10-K for the years ended December 31, 2001
and (b) Guarantor's quarterly reports on Form 10-Q for the first three quarters
of the year ended December 31, 2002, in each case as filed with the SEC
(collectively, the "Recent Financial Statements"), were prepared in conformity
with GAAP except as set forth therein. Since September 30, 2002, there has been
no material adverse change in the consolidated business, operations or financial
condition of the Guarantor and its consolidated Subsidiaries taken as a whole
from that set forth in the Recent Financial Statements
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nor is either Seller aware of any state of facts which (without notice or
the lapse of time) would or could result in any such material adverse change or
could have a Material Adverse Effect. None of the Guarantor or either Seller
has, on the date of this Repurchase Agreement, any liabilities, direct or
indirect, fixed or contingent, matured or unmatured, known or unknown, or
liabilities for taxes, long-term leases or unusual forward or long-term
commitments not disclosed by, or reserved against in, said Recent Financial
Statements (except (a) liabilities that have arisen since the date of such
Recent Financial Statements in the ordinary course of business and that are
similar in nature and amount to the liabilities that arose during the comparable
period of time in the immediately preceding fiscal period, (b) liabilities
incurred in the ordinary course of business that are not required by GAAP to be
reflected on such Recent Financial Statements and that are not, in the
aggregate, material, and (c) liabilities assumed pursuant to the Repurchase
Documents, Brascan Loan Documents and the Investment Agreement, and at the
present time there are no material unrealized or anticipated losses from any
loans, advances or other commitments of either Seller except as heretofore
disclosed to the Buyer in writing.
(d) Organization, Etc. Newco is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
CBO REIT II is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland. Each Seller (a) has all
requisite corporate or other power, and has all governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; (b) is qualified to do
business and is in good standing in all other jurisdictions in which the nature
of the business conducted by it makes such qualification necessary; and (c) has
full power and authority to execute, deliver and perform its obligations under
the Repurchase Documents. CBO REIT II is qualified as a REIT.
(e) REIT Subsidiary Organization. CRIIMI CMBS is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
CRIIMI QRS1 is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Each REIT Subsidiary is a Qualified REIT
Subsidiary.
(f) Authorization, Compliance, Etc. The execution and delivery (subject to
the provisions of the Escrow Agreement) of, and the performance by each Seller
of its obligations under, the Repurchase Documents to which it is a party (a)
are within such Seller's powers, (b) have been duly authorized by all requisite
action, (c) do not violate any provision of applicable law, rule or regulation,
or any order, writ, injunction or decree of any court or other Governmental
Authority, or its organizational documents, (d) do not violate any indenture,
agreement, document or instrument to which such Seller or any of its
consolidated Subsidiaries is a party, or by which any of them or any of their
properties, any of the Transaction Assets or Subject Securities (including,
without limitation, the Securitization Documents) is bound or to which any of
them is subject, (e) are not in conflict with, do not result in a breach of, or
constitute (with due notice or lapse of time or both) a default under, or except
as may be provided by any Repurchase Document, result in the creation or
imposition of any Lien upon any of the property or assets of such Seller or any
of its consolidated Subsidiaries pursuant to, any such indenture, agreement,
document or instrument and (f) will not result in CBO REIT II ceasing to qualify
as a REIT or either REIT Subsidiary ceasing to qualify as a Qualified REIT
Subsidiary. Neither Seller is required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
Governmental Authority in connection with or as a
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condition to the consummation of the Transaction contemplated herein and
the execution, delivery or performance of the Repurchase Documents to which it
is a party.
(g) Litigation. There are no actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are pending or, to
the Knowledge of the Sellers, threatened) or other legal or arbitrable
proceedings affecting either Seller or any of their consolidated Subsidiaries or
affecting any of the Transaction Assets or any of the other properties of the
Seller before any Governmental Authority which (i) questions or challenges the
validity or enforceability of the Repurchase Documents or any action to be taken
in connection with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $1,000,000, (iii) individually or in
the aggregate, if adversely determined, would have a Material Adverse Effect, or
(iv) requires filing with the SEC in accordance with its regulations.
(h) Purchased Assets; Equity Interest.
(i) As of the Purchase Date, neither Seller has assigned, pledged, or
otherwise conveyed or encumbered any Purchased Assets to any other Person, and
immediately prior to the sale of such Purchased Assets to the Buyer, the related
Seller was the sole owner of such Purchased Assets and had good and marketable
title thereto, free and clear of all Liens, in each case except for Liens to be
released simultaneously with the sale to the Buyer hereunder.
(ii) As of the Purchase Date, the related Seller is the record and
beneficial owner of, and has title to, the Equity Interests, free of any and all
Liens or options in favor of, or claims of, any other Person, except the Lien
created herein.
(iii) As of the Purchase Date, all consents to the grant of the security
interests provided herein to the related Seller and to the Transaction provided
for herein have been obtained and are in full force and effect.
(iv) As of the Purchase Date, upon the registration into the name of, and
delivery to, the Buyer of the stock certificates evidencing the Equity Interests
(and assuming the continuing possession by the Buyer of such certificates in
accordance with the requirements of applicable law), the Lien granted hereunder
will constitute a legal, perfected first priority Lien on the Equity Interests
evidenced by such stock certificates, enforceable as such against all creditors
of each Seller and any Persons purporting to purchase any Transaction Assets of
the related Seller.
(v) The provisions of this Repurchase Agreement are effective to either
constitute, as of the Purchase Date, a sale of Transaction Assets to the Buyer
or to create in favor of the Buyer a valid security interest in all right, title
and interest of each Seller in, to and under the Transaction Assets.
(vi) Valid Issuance of Equity Interests, etc. The authorized and issued
capital stock of CBO REIT II consists of 1,000 shares of authorized common
stock, 1,000 shares of which are issued and outstanding, and 499 shares of
authorized preferred stock, 499 shares of which are issued and outstanding. The
authorized and issued capital stock of
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CRIIMI CMBS consists of 1,000 shares of authorized common stock, 1,000
shares of which are issued and outstanding. The authorized and issued capital
stock of ▇▇▇▇▇▇ ▇▇▇▇ consists of 100 shares of authorized common stock, 100
shares of which are issued and outstanding. The Equity Interests have been
validly issued and are fully paid and non-assessable. The Equity Interests have
been offered, issued and sold in compliance with (or pursuant to an available
exemption from) all applicable securities laws.
(vii) No Options, Warrants, etc. There are no outstanding rights, rights to
acquire, options, warrants, agreements to issue or any other agreements that
would entitle any Person to purchase or otherwise acquire all or any portion of
the Equity Interests.
(viii) Securities Exchange. None of the Equity Interests (i) are dealt in
or traded on securities exchanges, (ii) are by their terms expressly subject to
Article 8 of the Uniform Commercial Code of any jurisdiction, (iii) constitute
an investment company security or (iv) are held in a securities account (in each
case within the meaning of Section 8-103(c) of the Uniform Commercial Code).
(i) Chief Executive Office/Jurisdiction of Organization. On the Purchase
Date, Newco's chief executive office is, and has been, located at ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Newco's sole jurisdiction of organization
is, and at all times has been, the State of Delaware. On the Purchase Date, CBO
REIT II's chief executive office is, and has been, located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. CBO REIT II's sole jurisdiction of organization is,
and at all times has been, the State of Maryland. Neither Seller has any trade
name. During the preceding five years, neither Seller has not been known by or
done business under any other name, corporate or fictitious.
(j) Location of Books and Records. The location where each Seller keeps its
current books and records, including all records related to the Transaction
Assets, is its chief executive office.
(k) Enforceability. This Repurchase Agreement and all of the other
Repurchase Documents executed and delivered by each Seller in connection
herewith are legal, valid and binding obligations of such Seller and are
enforceable against such Seller in accordance with their terms except as such
enforceability may be limited by (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors
rights generally and (ii) general principles of equity.
(l) Ability to Perform. Neither Seller believes, nor has any reason or
cause to believe, that it cannot perform each and every covenant contained in
the Repurchase Documents to which it is a party on its part to be performed
(m) No Default. No Default or Event of Default has occurred and is
continuing.
(n) Indebtedness. Neither Seller has any Indebtedness for borrowed money.
(o) Accurate and Complete Disclosure. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of each
Seller and the Guarantor to the Buyer in connection with the Transaction, when
taken as a whole, do not
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contain any untrue statement of material fact or omit to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
(p) Margin Regulations. The use of all funds acquired by the Sellers under
this Repurchase Agreement will not conflict with or contravene any of
Regulations T, U or X promulgated by the Board of Governors of the Federal
Reserve System as the same may from time to time be amended, supplemented or
otherwise modified.
(q) Investment Company. Neither Seller nor any of their Subsidiaries
(including, without limitation, either REIT Subsidiary) is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(r) Solvency. As of the Purchase Date and immediately after giving effect
to the Transaction, the fair value of the assets of each Seller is greater than
the fair value of the liabilities (including, without limitation, contingent
liabilities if and to the extent required to be recorded as a liability on the
financial statements of such Seller in accordance with GAAP) of such Seller and
each Seller is solvent and, after giving effect to the transactions contemplated
by this Repurchase Agreement and the other Repurchase Documents, will not be
rendered insolvent or left with an unreasonably small amount of capital with
which to conduct its business and perform its obligations. Neither Seller
intends to incur, nor believes that it has incurred, debts beyond its ability to
pay such debts as they mature. Neither Seller is contemplating the commencement
of an insolvency, bankruptcy, liquidation, or consolidation proceeding or the
appointment of a receiver, liquidator, conservator, trustee, or similar official
in respect of itself or any of its property.
(s) Taxes.
(i) CBO REIT II is and has been at all times since its incorporation a
REIT, and each REIT Subsidiary is and has been at all times since its
incorporation a Qualified REIT Subsidiary.
(ii) Newco is and has been at all times since its organization a
disregarded entity treated as a part of the Guarantor for federal income tax
purposes.
(iii) Each Seller and each issuer of the Purchased Assets and Subject
Securities (other than the Nomura Securities) has timely filed all Federal
income tax returns and all other material tax returns that are required to be
filed by them and has timely paid all Taxes due, except for any such Taxes as
are being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided. The charges, accruals and reserves on the books of each Seller and
each issuer of a Subject Security (other than the Nomura Securities) in respect
of Taxes and other governmental charges are adequate.
(iv) None of the issuers of the Subject Securities (other than the Nomura
Securities) are or have been subject to U.S. federal income tax on a net income
basis, or any other material tax, duty or other governmental charge.
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(t) No Reliance. Each Seller has made its own independent decisions to
enter into the Repurchase Documents and the Transaction and as to whether such
Transaction is appropriate and proper for it based upon its own judgment and
upon advice from such advisors (including without limitation, legal counsel and
accountants) as it has deemed necessary. Neither Seller is relying upon any
advice from Buyer as to any aspect of the Transaction, including without
limitation, the legal, accounting or tax treatment of such Transaction.
(u) Use of Purchase Price. As of the Purchase Date, the Purchase Price
shall be used exclusively by the Sellers to extinguish or defease the Existing
Indebtedness and pay the fees and expenses of the Buyer and its counsel.
(v) Investment Agreement Representations. Each representation or warranty
of the Guarantor set forth in the Investment Agreement will be true and correct,
subject to any qualifications contained in such representation or warranty.
Section 11.02 Buyer Representation. The Buyer represents and warrants to
the Sellers that as of the date of this Repurchase Agreement, this Repurchase
Agreement and all of the other Repurchase Documents executed and delivered by
the Buyer in connection herewith are legal, valid and binding obligations of the
Buyer and are enforceable against the Buyer in accordance with their terms
except as such enforceability may be limited by (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors rights generally and (ii) general principles of equity.
Section 12.
COVENANTS
On and as of the date of this Repurchase Agreement and until this
Repurchase Agreement is no longer in force with respect to the Transaction, each
Seller jointly and severally covenants as follows:
(a) Preservation of Existence; Compliance with Law. Each Seller shall:
(i) Preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises necessary for the operation of its
business;
(ii) CBO REIT II shall maintain its status as a REIT, and each REIT
Subsidiary shall maintain its status as a Qualified REIT Subsidiary;
(iii) Comply with the requirements of all applicable laws, rules,
regulations and orders, whether now in effect or hereafter enacted or
promulgated by any applicable Governmental Authority (including, without
limitation, all environmental laws) in all material respects;
(iv) Maintain all licenses, permits or other approvals necessary for such
Seller to conduct its business and to perform its obligations under the
Repurchase Documents, and shall conduct its business strictly in accordance with
applicable law; and
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(v) Permit representatives of the Buyer, upon reasonable notice (unless an
Event of Default shall have occurred and is continuing, in which case, no prior
notice shall be required), during normal business hours, to examine, copy and
make extracts from its books and records, to inspect any of its Properties, and
to discuss its business and affairs with its officers, all to the extent
reasonably requested by the Buyer, subject to the provisions set forth in
Section 16 hereof and applicable law.
(b) Taxes, Etc.
(i) Each Seller shall timely pay and discharge or cause to be paid and
discharged, when due all Taxes imposed upon it and the issuers of the Purchased
Assets and Subject Securities (other than the Nomura Securities) upon its or
their income and profits, and upon any of its or their property, real, personal
or mixed (including without limitation, the Transaction Assets) or upon any part
thereof, as well as any other lawful claims which, if unpaid, might become a
Lien upon such properties or any part thereof.
(ii) Each Seller and the issuer of the Transaction Assets shall file on a
timely basis all federal, state and local tax and information returns, reports
and any other information statements or schedules required to be filed by or in
respect of it and pay all Taxes, except for any such Taxes as are appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves are provided.
(iii) CBO REIT II shall not fail to qualify as REIT from the date of its
incorporation and shall remain a REIT, and each REIT Subsidiary shall remain a
Qualified REIT Subsidiary.
(iv) The transfer of assets from CBO REIT, Inc., a Maryland corporation, to
CBO REIT II on or prior to the Purchase Date does not cause either REIT
Subsidiary to fail to qualify as a Qualified REIT Subsidiary or cause any
Subject Securities to be treated as assets of a corporation which is not a
Qualified REIT Subsidiary.
(v) Newco shall remain a disregarded entity treated as a part of the
Guarantor for federal income tax purposes.
(vi) To the Knowledge of each Seller, each of the Sellers is fully eligible
to make a claim under, and all payments under this Repurchase Agreement will be
entitled to, the benefits of the "Other Income" provision of the income tax
treaty between the United States and the United Kingdom with respect to any
payment received or to be received by it in connection with this Repurchase
Agreement, and no such payments are attributable to a trade or business carried
on by it through a permanent establishment in the United Kingdom.
(vii) None of the issuers of the Subject Securities (other than the Nomura
Securities) shall be subject to U.S. federal income tax on a net tax basis, or
any other material tax, duty or other governmental charge.
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(c) Notice of Proceedings or Adverse Change. Each Seller shall give notice
to the Buyer immediately after a Responsible Officer of a Seller has any
knowledge of:
(i) the occurrence of any Default or Event of Default;
(ii) any litigation or proceeding that is pending or threatened against (a)
either Seller in which the amount involved exceeds $100,000 and is not covered
by insurance, in which injunctive or similar relief is sought, or which, would
reasonably be expected to have a Material Adverse Effect and (b) any litigation
or proceeding that is pending or threatened in connection with any of the
Transaction Assets, which, if adversely determined, would reasonably be expected
to have a Material Adverse Effect;
(iii) with thirty days advance notice of any change in either Seller's
name, principal office or place of business or jurisdiction;
(iv) and, as soon as reasonably possible, notice of any of the following
events:
(A) any material change in accounting policies or financial reporting
practices of either Seller; and
(B) promptly upon receipt of notice or knowledge of any Lien or security
interest (other than security interests created hereby or under any other
Repurchase Document) on, or claim asserted against, any of the Transaction
Assets; and
(v) Promptly, but no later than five (5) Business Days after either Seller
receives any of the same, deliver to the Buyer a true, complete, and correct
copy of any material schedule, report, notice, or any other material document
delivered to the Seller by any Person pursuant to, or in connection with, any of
the Transaction Assets.
(d) Financial Reporting. Sellers shall furnish to the Buyer:
(i) When and to the extent such information shall be made available to the
general public, all publicly filed financial information with respect to
Guarantor and its consolidated Subsidiaries;
(ii) Promptly (and in any event not later than two (2) Business Days
following receipt thereof by either Seller or any of its consolidated
Subsidiaries) deliver to Buyer a copy of (i) any written notice of the
occurrence of an event of default or other material event under any
Securitization Document relating to any of the Subject Securities, (ii) unless
otherwise instructed by Buyer in writing, any material report received by or
required to be delivered by either Seller or any of its consolidated
Subsidiaries pursuant to any such Securitization Document (other than any such
reports included in the monthly reporting package referred to in Section 12(n)
and (iii) unless otherwise instructed by Buyer in writing, any written notice of
transfer of servicing and/or special servicing under any such Securitization
Document; and
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(iii) Promptly, from time to time, such other information and data
regarding the business affairs, operations and financial condition of the
Sellers and the REIT Subsidiaries or the Subject Securities as the Buyer may
reasonably request.
(e) Reimbursement of Expenses. The Sellers shall promptly reimburse the
Buyer for all expenses as the same are incurred by the Buyer as required, and
subject to the Initial Transaction Cap set forth in Section 15(d) hereof.
(f) Further Assurances. Each Seller shall execute and deliver to the Buyer
all further documents, financing statements, agreements and instruments, and
take all further action that may be required under applicable law, or that the
Buyer may reasonably request, in order to effectuate the transactions
contemplated by this Repurchase Agreement and the Repurchase Documents or,
without limiting any of the foregoing, to grant, preserve, protect and perfect
the validity and first-priority of the security interests created or intended to
be created hereby. From and after the Purchase Date, each Seller shall do all
things necessary to preserve the Transaction Assets so that they remain subject
to a first priority perfected security interest hereunder. Without limiting the
foregoing, each Seller will comply with all rules, regulations, and other laws
of any Governmental Authority and cause the Transaction Assets to comply with
all applicable rules, regulations and other laws. Each Seller will not allow any
default for which such Seller is responsible to occur under any Transaction
Assets or any Repurchase Document and each Seller shall fully perform or cause
to be performed when due all of its obligations under any Transaction Assets or
the Repurchase Documents.
(g) True and Correct Information. All written information, reports,
exhibits, schedules, financial statements or certificates of each Seller or any
of their Affiliates thereof or any of their officers furnished to Buyer
hereunder and furnished to Buyer during Buyer's diligence of the Sellers will be
true and complete and will not omit to disclose any material facts necessary to
make the statements therein or therein, in light of the circumstances in which
they are made, not misleading. All required financial statements, information
and reports to be delivered by the Sellers to the SEC shall be prepared in
accordance with GAAP, or if applicable, the appropriate SEC accounting
requirements.
(h) Books and Records. Each Seller shall, to the extent practicable,
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the Transaction
Assets in the event of the destruction of the originals thereof), and keep and
maintain or obtain, as and when required, all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Transaction Assets.
(i) Illegal Activities. Neither Seller shall engage in any conduct or
activity that could subject its assets to forfeiture or seizure.
(j) Material Change in Business. Neither Seller shall make any material
change in the nature of its business as carried on at the date hereof.
(k) Disposition of Assets; Liens. From and after the Purchase Date, neither
Seller shall create, incur or assume any mortgage, pledge, Lien, charge or other
encumbrance of any
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nature whatsoever on any of the Transaction Assets, whether real, personal
or mixed, now or hereafter owned, other than the Liens created in connection
with the transactions contemplated by this Repurchase Agreement or in the case
of the Subject Securities, the related indentures; nor shall either Seller cause
or allow any of the Purchased Assets to be sold, pledged, assigned or
transferred.
(l) Transactions with Affiliates. Neither Seller shall enter into any
transaction, including, without limitation, the purchase, sale, lease or
exchange of property or assets or the rendering or accepting of any service with
any Affiliate, unless such transaction is (a) not otherwise prohibited in this
Repurchase Agreement, (b) in the ordinary course of such Seller's business and
(c) upon fair and reasonable terms no less favorable to such Seller, as the case
may be, than it would obtain in a comparable arm's length transaction with a
Person which is not an Affiliate.
(m) ERISA Matters. Each Seller represents and covenants that as of the date
hereof and for so long as it is a party to this Agreement or any Transaction
hereunder, it is not, and it is not using the assets of, an employee benefit
plan subject to Section 406 of ERISA, a plan subject to Section 4975 of the
Code, a plan subject to another law, regulation or restriction materially
similar to Section 406 of ERISA or Section 4975 of the Code, or an entity the
assets of which constitute assets of any such plans by reason of investment by
such plans in the entity (including for this purpose, the general account of a
life insurance company), because no class of equity interest in such Seller is
held to the extent of 25 % or more (as measured by value) by one or more
so-called "benefit plan investors", after disregarding the interests in such
Seller held by certain controlling persons, or because of another exception set
forth in U. S. Department of Labor Regulation Section 2510.3-101 (the "Plan
Assets Regulation"). The parties hereto agree that the foregoing representation
and covenant and the terms used therein shall be interpreted in a manner
consistent with the Plan Assets Regulation.
(n) Asset Reports. Monthly, or with such greater frequency as requested by
the Buyer, the Seller will furnish to Buyer Subject Securities performance data
in the form of Exhibit F hereto, including, without limitation, (i) trustee
reports for the Subject Securities, (ii) CMSLP-prepared reports: (a) CMBS
monthly performance reports, (b) assets under review (AUR) reports, (c) monetary
defaults added to special servicing, (d) schedule of realized losses and
appraisal reduction events, and (e) corrected loan report; and (iii) such other
reports as may be reasonably requested by the Buyer from time to time. Monthly,
the Sellers will furnish to Buyer information describing any other event,
circumstance or condition that has resulted, or has a possibility of resulting,
in the Sellers' good faith discretion, in a Material Adverse Effect.
(o) No Amendment to Securitization Documents. Neither Seller shall, or
permit either REIT Subsidiary to, consent or assent to any amendment,
modification or termination of any Securitization Document directly or
indirectly relating to any of the Subject Securities (in each case other than a
purely ministerial amendment or modification), without the prior written of
consent of Buyer.
(p) CBO REIT II Stock. Newco shall not permit CBO REIT II to and CBO REIT
II shall not issue any stock or other securities in addition to, in substitution
for, upon conversion or exchange or, or otherwise in respect of, the CBO REIT II
Purchased Stock in each case unless
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such stock or other securities (A) are delivered to the Buyer as Additional
Assets, and (B) are issued in certificated form; provided, however that
concurrent with the issuance of the CBO REIT II Purchased Stock to Newco, CBO
REIT II shall issue ninety nine (99) shares of preferred stock to the Guarantor.
The Guarantor shall use such ninety nine (99) shares of preferred stock to
satisfy the REIT 100 shareholder requirement within the time specified in
Section 856 of the Code.
(q) CRIIMI CMBS; CRIIMI QRS1. CBO REIT II shall not permit either REIT
Subsidiary to, (i) issue any stock or other securities in addition to, in
substitution for, upon conversion or exchange or, or otherwise in respect of,
the CRIIMI CMBS Purchased Stock or CRIIMI QRS1 Purchased Stock, in each case
unless such stock or other securities (A) are delivered to the Buyer as
Purchased Assets, and (B) are issued in certificated form, (ii) directly or
indirectly sell, transfer, assign or otherwise dispose of, or create, incur or
permit to exist any Lien upon, any interest in any of the Subject Securities
held by it or for the benefit of any Person, (iii) engage in any business other
than as provided for in its organizational documents as in effect on the
Purchase Date, (iv) fail to comply with the separateness provisions of its
organizational documents as in effect on the Purchase Date, or (v) amend its
related organizational documents.
(r) No Options, Warrants, etc. Neither Seller shall, nor permit either REIT
Subsidiary to, issue any rights, rights to acquire, options, warrants,
agreements to issue or any other agreements that would entitle any Person to
purchase or otherwise acquire all or any portion of the Equity Interests (other
than as expressly permitted in writing by the Buyer).
(s) Most Favored Status. In the event that either Seller enters into a
repurchase arrangement, credit facility or similar financing arrangement secured
directly or indirectly by non-investment grade commercial mortgage-backed
securities with any Person other than Buyer or an Affiliate which by its terms
is more favorable to such other Person with respect to grace periods related to
any margin requirement, financial covenants, Events of Default, or grace periods
or remedies with respect to Events of Default, the terms of this Agreement shall
be deemed automatically amended to include each additional more favorable
provision contained in such other agreement with no further action required on
the part of the Sellers or the Buyer.
(t) Separateness. Each Seller shall (a) not own any assets, or engage in
any business, other than the assets and business specifically contemplated by
this Repurchase Agreement; (b) not incur any Indebtedness or obligation, secured
or unsecured, direct or indirect, absolute or contingent (including guaranteeing
any obligation), other than pursuant to the Repurchase Documents; (c) not make
any loans or advances to any third party, and shall not acquire obligations or
securities of its Affiliates; (d) pay its debts and liabilities (including, as
applicable, shared personnel and overhead expenses) only from its own assets;
(e) comply with the provisions of its organizational documents (including
articles of formation and by-laws); (f) do all things necessary to observe
organizational formalities and to preserve its existence, and shall not amend,
modify or otherwise change its organizational documents (including articles of
formation and by-laws), or suffer same to be amended, modified or otherwise
changed, without the prior written consent of Buyer; (g) maintain all of its
books, records, financial statements and bank accounts separate from those of
its Affiliates; (h) be, and at all times will hold itself out to the public as,
a legal entity separate and distinct from any other entity (including any
Affiliate), correct any known misunderstanding regarding its status as a
separate entity, conduct business in
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its own name, not identify itself or any of its Affiliates as a division or
part of the other and shall maintain and utilize a separate telephone number and
separate stationery, invoices and checks; (i) maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations; (j) not engage
in or suffer any Change of Control, dissolution, winding up, liquidation,
consolidation or merger in whole or in part; (k) not commingle its funds or
other assets with those of any Affiliate or any other Person; (l) maintain its
assets in such a manner that it will not be difficult to segregate, ascertain or
identify its individual assets from those of any Affiliate or any other Person;
(m) not hold itself out to be responsible for the debts or obligations of any
other Person; (n) cause each of its direct and indirect owners to agree (and
Newco hereby agrees) to (i) not file or consent to the filing of any bankruptcy,
insolvency or reorganization case or proceeding with respect to Sellers; not
institute any proceedings under any applicable insolvency law or otherwise seek
any relief under any laws relating to the relief from debts or the protection of
debtors generally with respect to Sellers, (ii) not seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for Sellers or a substantial portion of its
properties; or (iii) not make any assignment for the benefit of either Seller's
creditors; and (o) agree (and each Seller hereby agrees) to (i) not file or
consent to the filing of any bankruptcy, insolvency or reorganization case or
proceeding with respect to either REIT Subsidiary; not institute any proceedings
under any applicable insolvency law or otherwise seek any relief under any laws
relating to the relief from debts or the protection of debtors generally with
respect to either REIT Subsidiary; (ii) not seek or consent to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any
similar official for either REIT Subsidiary or a substantial portion of its
properties; or (iii) not make any assignment for the benefit of either REIT
Subsidiary's creditors.
(u) Securitization Documents. The Sellers shall comply with, and shall
cause the REIT Subsidiaries to comply with, all obligations of the Sellers and
REIT Subsidiaries as issuer or depositor, as applicable, under the
Securitization Documents.
(v) Investment Company. The Sellers shall not take any action to be or
become, and shall use their best efforts to avoid being or becoming, at any time
prior to the payment in full of the Repurchase Price and any other amount
payable under this Repurchase Agreement, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act of 1940, as amended.
Section 12.02 Buyer Covenant. Buyer covenants that, following the Purchase
Date, notwithstanding any other provision in this Repurchase Agreement to the
contrary, the Buyer will not take any action in connection with this Transaction
which results in either REIT Subsidiary or issuer of Subject Securities (other
than the Nomura Securities) ceasing to be a Qualified REIT Subsidiary.
Notwithstanding anything to the contrary contained herein, the Guarantor is a
third-party beneficiary of the Buyer's covenant set forth herein.
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Section 13.
EVENTS OF DEFAULT
Section 13.01 Events of Default. If any of the following events (each an
"Event of Default") occur, the Sellers and Buyer shall have the rights set forth
in Section 14, as applicable:
(a) Payment Default. Either Seller shall default in the payment of Price
Differential or Amortization Payment on its related Payment Date or any amount
necessary to satisfy a Margin Deficit when due pursuant to Section 4 or the
payment of the Repurchase Price on the Repurchase Date; or
(b) Other Payment Default. Either Seller shall default in the payment of
any amount not specified in clause (a) of Section 13.01 payable by it hereunder
or under any other Repurchase Document, or the payment of Expenses or any other
Obligations, when the same shall become due and payable, whether at the due date
thereof, or by acceleration or otherwise and such failure to make such payment
shall continue unremedied for a period of two Business Days after notice by
Buyer; or
(c) Representation and Warranty Breach. Any representation, warranty or
certification made or deemed made herein (other than those set forth on Schedule
1 hereto) or in any other Repurchase Document by either Seller or any
certificate furnished to the Buyer pursuant to the provisions hereof or thereof
or any information with respect to the Transaction Assets furnished in writing
by or on behalf of either Seller shall prove to have been untrue or misleading
in any material respect as of the time made or furnished; or
(d) Immediate Covenant Default. The failure of either Seller to perform,
comply with or observe any term, covenant or agreement applicable to the Seller
contained in any of Sections 12(a)(i), (ii) and (iii), (i), (k), (m), (o), (p),
(q), (r), (t) or (v); or
(e) Additional Covenant Defaults. Either Seller shall fail to observe,
comply with or perform any other term, covenant or agreement contained in this
Repurchase Agreement (and not identified in clause (d) of Section 13.01) or any
other Repurchase Document, and if such default shall be capable of being
remedied, such failure to observe or perform shall continue unremedied for a
period of 10 Business Days after (i) Sellers have actual knowledge of such
default or (ii) Buyer notifies Sellers of such default; or
(f) Guaranty Default. The Guarantor shall fail to make any payment required
under, or shall fail to observe or perform any covenant after the expiration of
any applicable grace period set forth therein, condition or agreement contained
in, the Guaranty after any grace period specifically provided for in the
Guaranty; or
(g) Judgments.
(i) A judgment or judgments for the payment of money in excess of $100,000
shall be rendered against either Seller or any of its consolidated Subsidiaries
by one or more courts, administrative tribunals or other bodies having
jurisdiction and the same
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shall not be satisfied, discharged (or provision shall not be made for such
discharge) or bonded, or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof, and such Seller or any such
consolidated Subsidiary shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been stayed or bonded,
appeal therefrom and cause the execution thereof to be stayed during such
appeal; or
(ii) A judgment or judgments for the payment of money in excess of
$1,000,000 in the aggregate shall be rendered against the Guarantor by one or
more courts, administrative tribunals or other bodies having jurisdiction and
the same shall not be satisfied, discharged (or provision shall not be made for
such discharge) or bonded, or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof, and the Guarantor shall not,
within said period of 30 days, or such longer period during which execution of
the same shall have been stayed or bonded, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or
(h) Cross-Default. Any "event of default" or any other default which
permits a demand for, or requires, the early repayment of all obligations due by
the Guarantor under any agreement (after any applicable notice and the
expiration of any applicable grace period under any such agreement) relating to
any Indebtedness of the Guarantor (including the Brascan Loan Documents, but
subject to the Intercreditor Agreement); or
(i) Subsidiary Agreement. An "event of default" or material breach shall
have occurred and be continuing under the Subsidiary Agreement; or
(j) Insolvency Event. An Insolvency Event shall have occurred with respect
to the Guarantor, either Seller or either REIT Subsidiary; or
(k) Enforceability. For any reason, any Repurchase Document at any time
shall not be in full force and effect in all material respects or shall not be
enforceable in all material respects in accordance with its terms, or any Lien
granted pursuant thereto shall fail to be perfected and of first priority, or
any Person (other than Buyer) shall contest the validity, enforceability,
perfection or priority of any Lien granted pursuant thereto, or any party
thereto (other than Buyer) shall seek to disaffirm, terminate, limit or reduce
its obligations hereunder; or
(l) Liens. Either Seller shall grant, or suffer to exist, any Lien on any
Transaction Asset, except as contemplated or permitted in the Repurchase
Documents; or at least one of the following fails to be true from and after the
Purchase Date (A) the Purchased Assets shall not have been sold to the Buyer in
accordance with this Repurchase Agreement, or (B) the Liens contemplated hereby
shall cease or fail to be first priority perfected Liens on any Transaction
Assets in favor of the Buyer or shall be Liens in favor of any Person other than
the Buyer; or
(m) Change of Control. A Change of Control shall have occurred; or
(n) Going Concern. Guarantor's audited financial statements or the notes
thereto or other opinions or conclusions stated therein shall be qualified or
limited by reference to the status of Guarantor as a "going concern" or a
reference of similar import; or
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(o) Tax Matters.
(i) Any judicial decision, administrative pronouncement, notice or
announcement, or change in law, that presents more than an insubstantial risk
that dividends paid on CBO REIT II's, Guarantor's or either REIT Subsidiary's
equity interests will not be wholly deductible by CBO REIT II, Guarantor or
either REIT Subsidiary, respectively, for U.S. federal income tax purposes; or
(ii) Newco fails to qualify or ceases to qualify as a disregarded entity
treated as a part of the Guarantor for federal income tax purposes; or
(iii) Either the Guarantor or CBO REIT II fails to qualify or ceases to
qualify as a REIT or either REIT Subsidiary fails to qualify or ceases to be
qualified as a Qualified REIT Subsidiary; or
(iv) Any of the issuers of the Subject Securities (other than with respect
to the Nomura Securities) are or will be subject to U.S. federal income tax on a
net income basis or any other material tax, duty or other governmental charge.
Section 14.
REMEDIES
(a) If an Event of Default occurs with respect to either Seller, the
following rights and remedies are available to the Buyer; provided, that an
Event of Default shall be deemed to be continuing unless expressly waived by the
Buyer in writing.
(i) At the option of the Buyer, exercised by notice to the Seller (which
option shall be deemed to have been exercised, even if no notice is given,
immediately upon the occurrence of an Insolvency Event), the Repurchase Date for
the Transaction hereunder, if it has not already occurred, shall be deemed
immediately to occur. Upon the occurrence of any Event of Default which is not
an Insolvency Event, the Buyer shall give notice to the Sellers of the exercise
of such option as promptly as practicable.
(ii) If the Buyer exercises or is deemed to have exercised the option
referred to in subsection (a)(i) of this Section,
(A) the Sellers' obligations in such Transaction to repurchase all
Purchased Assets, at the Repurchase Price therefor on the Repurchase Date
determined in accordance with subsection (a)(i) of this Section, (1) shall
thereupon become immediately due and payable and (2) all Proceeds paid after
such exercise or deemed exercise shall be retained by the Buyer and applied to
the aggregate unpaid Repurchase Price and any other amounts owed by the Sellers
hereunder;
(B) to the extent permitted by applicable law, the Repurchase Price with
respect to each such Transaction shall be increased by the aggregate amount
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obtained by daily application of, on a 360 day per year basis for the actual
number of days during the period from and including the date of the exercise or
deemed exercise of such option to but excluding the date of payment of the
Repurchase Price as so increased, (x) the Post-Default Rate in effect following
an Event of Default to (y) the Repurchase Price for such Transaction as of the
Repurchase Date as determined pursuant to subsection (a)(i) of this Section
(decreased as of any day by (i) any amounts actually in the possession of Buyer
pursuant to clause (C) of this subsection, and (ii) any proceeds from the sale
of Purchased Assets applied to the Repurchase Price pursuant to subsection
(a)(iv) of this Section); and
(C) Subject to Section 5(f) hereof, all Proceeds actually received by the
Buyer pursuant to Section 5 (excluding any Post-Default Rate Price Differential
paid pursuant to Section 5(a) and any amounts paid pursuant to Section 5(e)(i))
shall be applied to the aggregate unpaid Purchase Price owed by the Sellers. Any
Proceeds in excess of the Obligations shall be returned to the Sellers.
(iii) Upon the occurrence of one or more Events of Default, the Buyer shall
have the right to obtain physical possession of all files of the Sellers
relating to the Transaction Assets and all documents relating to the Purchased
Assets which are then or may thereafter come in to the possession of the Sellers
or any third party acting for the Sellers and the Sellers shall deliver to the
Buyer such assignments as the Buyer shall request. The Buyer shall be entitled
to specific performance of all agreements of the Sellers contained in the
Repurchase Documents.
(iv) At any time following notice to the Sellers (which notice may be the
notice given under subsection (a)(i) of this Section), in the event the Sellers
have not repurchased all Purchased Assets, the Buyer may (A) immediately assign
its rights under the Transaction to an Affiliate of the Buyer, (B) immediately
sell (including without limitation effecting a sale to an Affiliate of the
Buyer), without demand or further notice of any kind, at a public or private
sale and at such price or prices as the Buyer may deem satisfactory any or all
Transaction Assets and apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by the Sellers hereunder or (C) in
its sole discretion elect, in lieu of selling all or a portion of such
Transaction Assets, to give the Sellers credit for such Transaction Assets in an
amount equal to the Market Value of the Transaction Assets against the aggregate
unpaid Repurchase Price and any other amounts owing by the Sellers hereunder.
The proceeds of any disposition of the Transaction Assets shall be applied as
determined by Buyer in its sole discretion; provided, however that any amounts
in excess of the Obligations shall be returned to the Sellers.
(v) At any time following notice to the Sellers (which notice may be the
notice given under subsection (a)(i) of this Section), the Buyer may deliver a
Notice of Event of Default (as defined in the Control Agreement) to the Bank.
(vi) Each Seller recognizes that the Buyer may be unable to effect a public
sale of any or all of the Transaction Assets, by reason of certain prohibitions
contained in the
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1934 Act and applicable state securities laws and/or the Securitization
Documents 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 a view to the distribution or resale thereof. Each Seller
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the Buyer than if such sale were a public sale,
and notwithstanding such circumstances, agrees that any such compelled private
sale shall be deemed to have been made in a commercially reasonable manner. The
Buyer shall be under no obligation to delay a sale of any of the Transaction
Assets for the period of time necessary to permit the Sellers to register such
Transaction Assets for public sale under the 1934 Act or under applicable state
securities laws and/or the Securitization Documents, even if the Sellers would
agree to do so.
(vii) Each Seller further agrees to use its 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 any portion of the Transaction Assets pursuant to this
Repurchase Agreement valid and binding and in compliance with any and all other
applicable laws other than registration under applicable securities laws. Each
Seller further agrees that a breach of any of the covenants contained in this
Section will cause irreparable injury to the Buyer, that the Buyer has no
adequate remedy at law in respect of such breach, and as a consequence, that
each and every covenant contained in this Section shall be specifically
enforceable against each Seller, and each Seller hereby waives and agrees not to
assert any defenses against any action for specific performance of such
covenants except for defense that no Event of Default has occurred hereunder.
(viii) The Sellers shall be liable to Buyer for (i) the amount of all
reasonable legal or other expenses (including, without limitation, all costs and
expenses of Buyer in connection with the enforcement of this Repurchase
Agreement or any other agreement evidencing the Transaction, whether in action,
suit or litigation or bankruptcy, insolvency or other similar proceeding
affecting creditors' rights generally, further including, without limitation,
the reasonable fees and expenses of counsel incurred in connection with or as a
result of an Event of Default, (ii) damages in an amount equal to the cost
(including all fees, expenses and commissions) of entering into replacement
transactions and entering into or terminating hedge transactions in connection
with or as a result of Buyer's efforts to mitigate damages following an Event of
Default, and (iii) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default in respect of the
Transaction.
(ix) The Buyer shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or applicable law.
(b) Buyer may exercise one or more of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and at any time
thereafter without notice (other than expressly set forth herein) to the
Sellers. All rights and remedies arising under this Repurchase Agreement as
amended from time to time hereunder are cumulative and not exclusive of any
other rights or remedies which Buyer may have.
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(c) Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and each Seller hereby expressly waives any
defenses such Seller might otherwise have to require Buyer to enforce its rights
by judicial process. Each Seller also waives any defense (other than a defense
of payment or performance) such Seller might otherwise have arising from the use
of nonjudicial process, enforcement and sale of all or any portion of the
Transaction Assets, or from any other election of remedies. Each Seller
recognizes that nonjudicial remedies are consistent with the usages of the
trade, are responsive to commercial necessity and are the result of a bargain at
arm's length.
(d) To the extent permitted by applicable law, each Seller shall be liable
to the Buyer for interest on any amounts owing by the Sellers hereunder, from
the date the Sellers becomes liable for such amounts hereunder until such
amounts are (i) paid in full by the Sellers or (ii) satisfied in full by the
exercise of the Buyer's rights hereunder. Interest on any sum payable by the
Sellers to the Buyer under this paragraph 14(d) shall be at a rate equal to the
Post-Default Rate.
Section 15.
INDEMNIFICATION AND EXPENSES; RECOURSE
(a) Each Seller agrees to hold the Buyer, and its Affiliates and their
officers, directors, employees, agents and advisors and controlling persons
(within the meaning of federal securities laws)(each an "Indemnified Party")
harmless from and indemnify any Indemnified Party on an after-tax basis against
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses and disbursements (and any and all actions, suits, proceedings
and investigations in respect thereof and any and all legal and other costs,
expenses or disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise), including, without limitation, the costs,
expenses, and disbursements, as and when incurred, of investigating, preparing
or defending any such action, suit, proceeding or investigation (whether or not
in connection with litigation in which the Buyer is a party) of any kind which
may be imposed on, incurred by or asserted against such Indemnified Party
(collectively, "Costs"), (a) relating to or arising out of this Repurchase
Agreement, any other Repurchase Document or any transaction contemplated hereby
or thereby, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Repurchase Agreement, any other Repurchase
Document or any transaction contemplated hereby or thereby, that, in each case,
results from anything other than the Indemnified Party's gross negligence or
willful misconduct as determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction, (b) directly or indirectly caused
by, relating to, based upon, arising out of or in connection with any untrue
statement or alleged untrue statement of a material fact contained in, or
omissions or alleged omissions from, any statements or omission in or from any
other information furnished by the Sellers to the Buyer; provided, however, such
indemnity penalty shall not apply to any portion of any such loss, claim,
damage, obligation, penalty, judgment, award, liability, cost, expense or
disbursement to the extent it is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the gross negligence or willful misconduct of Buyer
or a breach by Buyer of its covenant set forth in Section 12.02 hereof.
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(b) Without limiting the generality of the foregoing, each Seller agrees to
hold any Indemnified Party harmless from and indemnify such Indemnified Party
against all Costs with respect to all Purchased Assets or Subject Securities
relating to or arising out of any Taxes incurred or assessed in connection with
the ownership of the Purchased Assets or Subject Securities, including, without
limitation, any and all liabilities with respect to, or resulting from any delay
in paying, any and all stamp, excise, sales or other taxes which may be payable
or determined to be payable with respect to any of the Equity Interests, that,
in each case, results from anything other than the Indemnified Party's gross
negligence or willful misconduct or a breach by Buyer of its covenant set forth
in Section 12.02 hereof as determined by a final judgment (not subject to
further appeal) of a court of competent jurisdiction. In any suit, proceeding or
action brought by an Indemnified Party in connection with any of the Purchased
Assets or Subject Securities for any sum owing thereunder, or to enforce any
provisions of any Purchased Asset or Subject Security, each Seller will save,
indemnify and hold such Indemnified Party harmless from and against all expense,
loss or damage suffered by reason of any defense, set-off, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by either Seller of any obligation
thereunder or arising out of any other agreement, indebtedness or liability at
any time owing to or in favor of such account debtor or obligor or its
successors from a Seller. Each Seller also agrees to reimburse an Indemnified
Party as and when billed by such Indemnified Party for all the Indemnified
Party's costs and expenses incurred in connection with the enforcement or the
preservation of the Buyer's rights under this Repurchase Agreement, any other
Repurchase Document or any transaction contemplated hereby or thereby, including
without limitation the reasonable fees and disbursements of its counsel.
(c) If any action, suit, proceeding or investigation is commenced, as to
which the Buyer proposes to demand indemnification, it shall notify the Sellers
with reasonable promptness; provided, however, that any failure by the Buyer to
notify the Sellers shall not relieve the Sellers from their obligations
hereunder. The Buyer shall have the right to retain counsel of its own choice to
represent it, and the Sellers shall pay the fees, expenses and disbursements of
such counsel; and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with the Sellers and any counsel
designated by the Sellers. The Sellers shall be liable for any settlement of any
claim against the Indemnified Parties with the Seller's written consent, which
consent shall not be unreasonably withheld. The Sellers shall not, without the
prior written consent of Buyer, settle or compromise any claim, or permit a
default or consent to the entry of any judgment in respect thereof, unless such
settlement, compromise or consent includes, as an unconditional term thereof,
the giving by the claimant to Buyer of an unconditional and irrevocable release
from all liability in respect of such claim.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Sellers, on the one hand, and Buyer, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by the
Sellers, on the one hand, and Buyer, on the other hand, and also the relative
fault of the Sellers, on the one hand, and
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Buyer, on the other hand, in connection with the statements, acts or
omissions which resulted in such losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses and disbursements and
the relevant equitable considerations shall also be considered. No person found
liable for a fraudulent misrepresentation shall be entitled to contribution from
any person who is not also found liable for such fraudulent misrepresentation.
Notwithstanding the foregoing, the Buyer shall not be obligated to contribute
any amount hereunder that exceeds the amount of fees received by Buyer pursuant
to the Repurchase Agreement, except in connection with a breach by Buyer of its
covenant set forth in Section 12.02 hereof.
(d) Each Seller agrees to pay as and when billed by the Buyer all of the
out-of-pocket costs and expenses incurred by the Buyer in connection with the
development, preparation and execution of this Repurchase Agreement, any other
Repurchase Document or any other documents prepared in connection herewith or
therewith. Sellers agree to pay as and when billed by the Buyer all of the
reasonable out-of-pocket costs and expenses incurred by Buyer on or prior to the
Purchase Date in connection with the consummation of the transactions
contemplated hereby and thereby including without limitation filing fees and all
the reasonable fees, disbursements and expenses of outside counsel to the Buyer
up to an aggregate amount of $250,000 (the "Initial Transaction Cap"), which
amount shall be deducted from the Purchase Price paid for the Transaction
hereunder (provided, that any expenses incurred following the Purchase Date in
connection with any amendment, supplement or modification to this Repurchase
Agreement, any other Repurchase Document or any other documents prepared in
connection therewith shall not be subject to the Initial Transaction Cap and
provided further that any expenses incurred in connection with the enforcement
of any Repurchase Document shall be borne by the Seller and shall not be subject
to the Initial Transaction Cap. The Buyer or its outside counsel shall provide
the Sellers with itemized or detailed information related to such fees and
expenses outlined above prior to payment thereof, except with respect to up to
$30,000 in legal fees, which itemization shall be provided within a reasonable
time following payment of such fees. Subject to Initial Transaction Cap and
other limitations set forth in Section 16 hereof, each Seller agrees to pay the
Buyer all the reasonable out of pocket due diligence, inspection, testing and
review costs and expenses incurred by the Buyer on or prior to the Purchase Date
with respect to the Subject Securities, including, but not limited to, those out
of pocket costs and expenses incurred by the Buyer pursuant to Sections 15(d)
and 16 hereof. The Sellers shall be responsible for all of their out-of-pocket
costs and expenses incurred in connection herewith.
(e) The obligations of the Sellers from time to time to pay the Repurchase
Price, the Periodic Advance Repurchase Payments, and all other amounts due under
this Repurchase Agreement shall be full recourse obligations of the Sellers.
(f) The Sellers' agreements in this Section 15 shall survive the payment in
full of the Repurchase Price, the Periodic Advance Repurchase Payments, and all
other amounts due under this Repurchase Agreement and the expiration or
termination of this Repurchase Agreement.
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Section 16.
CONTINUING DUE DILIGENCE
Each Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews after the Purchase Date at the Buyer's sole cost and expense
with respect to the Purchased Assets, the Subject Securities and the Sellers,
for purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and each Seller agrees that upon
reasonable prior notice unless an Event of Default shall have occurred, in which
case no notice is required, to the Sellers, Buyer or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of any and all documents, records,
agreements, instruments or information relating to the Purchased Assets in the
possession or under the control of the Sellers. The Sellers also shall make
available to Buyer a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Purchased Assets. Without limiting
the generality of the foregoing, the Sellers acknowledge that Buyer may purchase
Subject Securities that are Transaction Assets and/or Equity Interests from the
Sellers based solely upon the information provided by the Seller to Buyer and
based on the representations, warranties and covenants contained herein, and
that Buyer, at its option, has the right at any time to conduct a partial or
complete due diligence review on some or all of the Transaction Assets and each
Seller shall provide Buyer with access to any and all documents, records,
agreements, instruments or information relating to the Subject Securities in the
possession, or under the control, of such Seller. All out-of-pocket costs and
expenses incurred by Buyer in connection with Buyer's activities pursuant to
this Section 16 ("Due Diligence Costs") shall be for the account of the Buyer,
unless an Event of Default shall have occurred and is continuing, in which event
Buyer shall have the right to perform due diligence, with reasonable Due
Diligence Costs borne at the sole expense of the Sellers.
Section 17.
ASSIGNABILITY
The rights and obligations of the parties under this Repurchase Agreement
and under the Transaction shall not be assigned by either Seller without the
prior written consent of Buyer. Subject to the foregoing, this Repurchase
Agreement and the Transaction shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns. Nothing in
this Repurchase Agreement express or implied, shall give to any Person, other
than the parties to this Repurchase Agreement and their successors and assigns
hereunder, any benefit of any legal or equitable right, power, remedy or claim
under this Repurchase Agreement. Buyer may from time to time assign all or a
portion of its rights and obligations under this Repurchase Agreement and the
Repurchase Documents; provided, however that Buyer shall maintain, for review by
the Sellers upon written request, a register of assignees and a copy of an
executed assignment and acceptance by Buyer and assignee ("Assignment and
Acceptance"), specifying the percentage or portion of such rights and
obligations assigned; and provided, further, with respect to any assignment
hereunder to any Person other than a "Major Broker Dealer", such assignee, for
the purposes of determining Market Value for all purposes hereunder, shall be
required to obtain a Market Value determination from three Major Broker
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Dealers, the average of which shall be considered the determination of
Market Value. For purposes of this Repurchase Agreement, "Major Broker Dealer"
shall mean those brokers dealers listed on Schedule 8 hereof. Upon such
assignment, (a) such assignee shall be a party hereto and to each Repurchase
Document to the extent of the percentage or portion set forth in the Assignment
and Acceptance, and shall succeed to the applicable rights and obligations of
Buyer hereunder, and (b) Buyer shall, to the extent that such rights and
obligations have been so assigned by it be released from its obligations
hereunder and under the Repurchase Documents. Unless otherwise stated in the
Assignment and Acceptance, the Sellers shall continue to take directions solely
from Buyer unless otherwise notified by Buyer in writing. Buyer may distribute
to any prospective assignee any document or other information delivered to Buyer
by Sellers.
The Buyer may sell participations to one or more Persons in or to all or a
portion of its rights and obligations under this Repurchase Agreement; provided,
however, that (i) the Buyer's obligations under this Repurchase Agreement shall
remain unchanged, (ii) the Buyer shall remain solely responsible to the other
parties hereto for the performance of such obligations; and (iii) the Sellers
shall continue to deal solely and directly with the Buyer in connection with the
Buyer's rights and obligations under this Repurchase Agreement and the other
Repurchase Documents. Notwithstanding the terms of Section 7, each participant
of the Buyer shall be entitled to the additional compensation and other rights
and protections afforded the Buyer under Section 7 to the same extent as the
Buyer would have been entitled to receive them with respect to the participation
sold to such participant.
The Buyer may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 17, disclose to
the assignee or participant or proposed assignee or participant, as the case may
be, any information relating to the Sellers or any of their Subsidiaries or to
any aspect of the Transaction that has been furnished to the Buyer by or on
behalf of the Sellers or any of their Subsidiaries; provided that such assignee
or participant agrees with Buyer and Sellers to hold such information subject to
the confidentiality provisions of this Repurchase Agreement.
In the event the Buyer assigns all or a portion of its rights and
obligations under this Repurchase Agreement, the parties hereto agree to
negotiate in good faith an amendment to this Repurchase Agreement to add agency
provisions similar to those included in repurchase agreements for similar
syndicated repurchase facilities.
Nothing set forth herein shall relieve the Buyer's obligation to cause the
Transaction to be treated in the manner described in Section 20.
Section 18.
HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS
(a) Title to all Purchased Assets shall pass to Buyer. Nothing in this
Repurchase Agreement shall preclude the Buyer from engaging in repurchase
transactions with the Purchased Assets or otherwise pledging or repledging the
Purchased Assets and, in the event of a Default by either Seller, from otherwise
transferring, hypothecating or rehypothecating the
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Purchased Assets; but no such transaction shall relieve Buyer of its
obligations under the Repurchase Documents, including, without limitation, its
obligation to transfer the Purchased Assets pursuant to Section 3 or its
obligation to credit or pay Proceeds of the Purchased Assets to the Sellers, or
to apply any such Proceeds to the Obligations of the Sellers, in accordance with
Section 5, or in the absence of a Default by either Seller to cause the
Transaction to be treated in the manner described in Section 20. Nothing
contained in this Repurchase Agreement shall obligate the Buyer to segregate any
Transaction Assets or Subject Securities delivered to the Buyer by the Sellers.
(b) Notwithstanding anything to the contrary in this Repurchase Agreement
or any other Repurchase Document, no Equity Interest, or Subject Security shall
remain in the custody of either Seller or any Affiliate thereof.
Section 19. Establishment of ESCROW.
Contemporaneously with the execution of this Repurchase Agreement,
Guarantor, Buyer, Brascan Investor and LaSalle Bank, National Association have
entered into the Escrow Agreement which shall govern the escrow and release of
the Purchase Price on the Purchase Date. In the event that the Escrow Release
(as defined in the Escrow Agreement) does not occur on or before the date that
is 30 calendar days after the date hereof or if a Change of Control shall have
occurred on such earlier date, then on such applicable date, the Escrow Agent
(as defined in the Escrow Agreement) shall release the funds as set forth in
Section 5(e) of the Escrow Agent.
Section 20.
TAX TREATMENT
Each party to this Repurchase Agreement acknowledges that its intent for
accounting purposes and purposes of U.S. federal, state and local income and
franchise taxes, to treat the Transaction as indebtedness of each Seller that is
secured by the Purchased Assets and that the Purchased Assets are owned by the
CBO REIT II and the Guarantor for federal income tax purposes (Newco being a
disregarded entity for federal income tax purposes) so long as no Event of
Default has occurred. All parties to this Repurchase Agreement agree to such
treatment and agree to take no action inconsistent with this treatment, unless
required by law.
Section 21.
Set-off
In addition to any rights and remedies of the Buyer hereunder and by law,
the Buyer shall have the right, without prior notice to the Sellers, any such
notice being expressly waived by each Seller to the extent permitted by
applicable law, upon any amount becoming due and payable by the Sellers
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or
-52-
contingent, matured or unmatured, at any time held or owing by the Buyer or
any Affiliate which is a part of Buyer's consolidated group for financial
reporting purposes to or for the credit or the account of either Seller or any
Affiliate thereof which is part of the Guarantor's consolidated group for
financial reporting purposes. The Buyer agrees promptly (but in no event later
than five (5) Business Days following any set-off) to notify the Sellers after
any such set-off and application made by the Buyer; provided that the failure to
give such notice shall not affect the validity of such set-off and application.
Section 22.
TERMINABILITY
Each representation and warranty made or deemed to be made by entering into
the Transaction, herein or pursuant hereto shall survive the making of such
representation and warranty, and the Buyer shall not be deemed to have waived
any Default that may arise because any such representation or warranty shall
have proved to be not true and correct in all material respects, notwithstanding
that the Buyer may have had notice or knowledge or reason to believe that such
representation or warranty was false or misleading at the time the Transaction
was made. Notwithstanding any such termination or the occurrence of an Event of
Default, all of the representations and warranties and covenants hereunder shall
continue and survive. The obligations of the Sellers under Section 15 hereof
shall survive the termination of this Repurchase Agreement.
Section 23.
NOTICES AND OTHER COMMUNICATIONS
Except as otherwise expressly permitted by this Repurchase Agreement, all
notices, requests and other communications provided for herein (including
without limitation any modifications of, or waivers, requests or consents under,
this Repurchase Agreement) shall be given or made in writing (including without
limitation by telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof or thereof); or,
as to any party, at such other address as shall be designated by such party in a
written notice to each other party. Except as otherwise provided in this
Repurchase Agreement and except for notices given under Section 3 (which shall
be effective only on receipt), all such communications shall be deemed to have
been duly given when transmitted by telecopy or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
Section 24.
ENTIRE AGREEMENT; SEVERABILITY; Single Agreement
This Repurchase Agreement, together with the Repurchase Documents,
constitute the entire understanding between Buyer and the Sellers with respect
to the subject matter they cover and shall supersede any existing agreements
between the parties containing general terms
-53-
and conditions for repurchase transactions involving Purchased Assets other
than the CDO Engagement Letter. By acceptance of this Repurchase Agreement,
Buyer and each Seller acknowledge that they have not made, and are not relying
upon, any statements, representations, promises or undertakings not contained in
this Repurchase Agreement or the CDO Engagement Letter. Each provision and
agreement herein shall be treated as separate and independent from any other
provision or agreement herein and shall be enforceable notwithstanding the
unenforceability of any such other provision or agreement.
Section 25.
GOVERNING LAW
THIS REPURCHASE AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
Section 26.
Submission To Jurisdiction; Waivers
BUYER AND EACH SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS REPURCHASE AGREEMENT AND THE OTHER REPURCHASE DOCUMENTS, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS
OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY
BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH
UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE BUYER SHALL HAVE
BEEN NOTIFIED; AND
-54-
(iv) THE BUYER AND THE SELLER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS REPURCHASE AGREEMENT, ANY
OTHER REPURCHASE DOCUMENT OR THE TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
Section 27.
NO WAIVERS, ETC.
No failure on the part of the Buyer or either Seller to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Repurchase Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Repurchase Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law. An Event of
Default shall be deemed to be continuing unless expressly waived by the Buyer in
writing.
Section 28.
NETTING
If the Buyer and the Seller are "financial institutions" as now or
hereinafter defined in Section 4402 of Title 12 of the United States Code
("Section 4402") and any rules or regulations promulgated thereunder,
(a) All amounts to be paid or advanced by one party to or on behalf of the
other under this Repurchase Agreement or the Transaction hereunder shall be
deemed to be "payment obligations" and all amounts to be received by or on
behalf of one party from the other under this Repurchase Agreement or the
Transaction hereunder shall be deemed to be "payment entitlements" within the
meaning of Section 4402, and this Repurchase Agreement shall be deemed to be a
"netting contract" as defined in Section 4402.
(b) The payment obligations and the payment entitlements of the parties
hereto pursuant to this Repurchase Agreement and the Transaction hereunder shall
be netted as follows. In the event that either party (the "Defaulting Party")
shall fail to honor any payment obligation under this Repurchase Agreement or
the Transaction hereunder, the other party (the "Nondefaulting Party") shall be
entitled to reduce the amount of any payment to be made by the Nondefaulting
Party to the Defaulting Party by the amount of the payment obligation that the
Defaulting Party failed to honor.
-55-
Section 29.
CONFIDENTIALITY
The Buyer and each Seller hereby acknowledge and agree that all written or
computer-readable information provided by one party to any other regarding the
terms set forth in any of the Repurchase Documents or the Transaction
contemplated thereby (the "Confidential Terms") shall be kept confidential and
shall not be divulged to any party without the prior written consent of such
other party except to the extent that (i) it is necessary to do so in working
with legal counsel, auditors, taxing authorities or other governmental agencies
or regulatory bodies or in order to comply with any applicable federal or state
laws, (ii) any of the Confidential Terms are in the public domain other than due
to a breach of this covenant, or (iii) in the event of an Event of Default the
Buyer determines such information to be necessary or desirable to disclose in
connection with the marketing and sales of the Purchased Assets or otherwise to
enforce or exercise the Buyer's rights hereunder. The provisions set forth in
this Section 29 shall survive the termination of this Repurchase Agreement.
Section 30.
Intent
(a) The parties recognize that the Transaction is a "repurchase agreement"
as that term is defined in Section 101 of Title 11 of the United States Code, as
amended (except insofar as the type of Transaction Assets subject to the
Transaction or the term of the Transaction would render such definition
inapplicable), and a "securities contract" as that term is defined in Section
741 of Title 11 of the United States Code, as amended (except insofar as the
type of assets subject to the Transaction would render such definition
inapplicable).
(b) It is understood that the Buyer's right to liquidate the Transaction
Assets delivered to it in connection with the Transaction hereunder or to
exercise any other remedies pursuant to Paragraph 14 hereof is a contractual
right to liquidate the Transaction as described in Sections 555 and 559 of Title
11 of the United States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an "insured
depository institution," as such term is defined in the Federal Deposit
Insurance Act, as amended ("FDIA"), then the Transaction hereunder is a
"qualified financial contract," as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of assets
subject to the Transaction would render such definition inapplicable).
(d) It is understood that this Repurchase Agreement constitutes a "netting
contract" as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment entitlement and
payment obligation under the Transaction hereunder shall constitute a "covered
contractual payment entitlement" or "covered contractual payment obligation",
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a "financial institution" as that term is defined in
FDICIA).
-57-
Section 31.
Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) in the case of a Transaction in which one of the parties is a broker or
dealer registered with the Securities and Exchange Commission ("SEC") under
Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the Securities
Investor Protection Corporation has taken the position that the provisions of
the Securities Investor Protection Act of 1970 ("SIPA") do not protect the other
party with respect to such Transaction hereunder;
(b) in the case of a Transaction in which one of the parties is a
government securities broker or a government securities dealer registered with
the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to
the other party with respect to such Transaction hereunder; and
(c) in the case of a Transaction in which one of the parties is a financial
institution, funds held by the financial institution pursuant to such
Transaction hereunder are not a deposit and therefore are not insured by the
Federal Deposit Insurance Corporation or the National Credit Union Share
Insurance Fund, as applicable.
Section 32.
AUTHORIZATIONS
Any of the persons whose names and titles appear on Schedule 4 are
authorized, acting singly, to act for each Seller or Buyer, as the case may be,
under this Repurchase Agreement.
Section 33.
MISCELLANEOUS
(a) Counterparts. This Repurchase Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Repurchase Agreement
by signing any such counterpart.
(b) Captions. The captions and headings appearing herein are for included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Repurchase Agreement.
(c) Acknowledgment. Each party hereby acknowledges that:
(i) it has been advised by counsel in the negotiation, execution and
delivery of this Repurchase Agreement and the other Repurchase Documents;
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(ii) the Buyer and the Sellers have no fiduciary relationship to one
another; and
(iii) no joint venture exists between the Buyer and either Seller.
Section 34.
Joint and Several OBLIGATIONS.
Sellers and Buyer hereby acknowledge and agree that Sellers are each
jointly and severally liable to Buyer for all of their respective
representations, warranties and covenants hereunder.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have entered into this Repurchase Agreement
as of the date set forth above.
BUYER:
BEAR, ▇▇▇▇▇▇▇ INTERNATIONAL LIMITED
/s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Managing Director
Address for Notices:
-------------------
Bear, ▇▇▇▇▇▇▇ International Limited
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Bear, ▇▇▇▇▇▇▇ International Limited
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Managing
Director
Fax: ▇▇▇-▇▇▇-▇▇▇▇
SELLER:
CRIIMI NEWCO, LLC
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
Address for Notices:
-------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
SELLER:
CBO REIT II, INC.
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
Address for Notices:
-------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: SUBJECT SECURITIES
For purposes of this Schedule 1 and the representations and warranties set forth
herein, a breach of a representation or warranty shall be deemed to have been
cured with respect to a Subject Security if and when the related Seller has
taken or caused to be taken action such that the event, circumstance or
condition that gave rise to such breach no longer adversely affects such Subject
Security. With respect to those representations and warranties which are made to
the Knowledge of the Sellers, if it is discovered by the related Seller or the
Buyer that the substance of such representation and warranty is inaccurate,
notwithstanding such Seller's lack of knowledge with respect to the substance of
such representation and warranty, such inaccuracy shall be deemed a breach of
the applicable representation and warranty.
Each Seller represents and warrants to the Buyer, with respect to each Subject
Security, that as of the Purchase Date for the purchase of any Equity Interest
by the Buyer from the related Seller and as of the date of this Repurchase
Agreement and the Transaction hereunder and at all times while the Repurchase
Documents and the Transaction hereunder is in full force and effect, the
following:
(a) Securities as Described. The information set forth in the Asset
Schedule is complete, true and correct:
(b) Compliance with Applicable Laws. To the Knowledge of the Sellers, all
of the Subject Securities have been validly issued in accordance with all
applicable laws, and are fully paid and non-assessable;
(c) No Encumbrances. There are (i) no outstanding rights, options, warrants
or agreements for a purchase, sale or issuance, in connection with the Subject
Securities other than any clean-up call described in the related offering
memorandum, (ii) no agreements on the part of either Seller to issue, sell or
distribute the Subject Securities, and (iii) no obligations on the part of
either Seller (contingent or otherwise) to purchase, redeem or otherwise acquire
any securities or any interest therein or to pay any dividend or make any
distribution in respect of the Subject Securities;
(d) Ownership. The related Seller or REIT Subsidiary, as applicable, is, or
will be upon issuance of the Subject Securities, the record and beneficial owner
of, and has, or will have upon issuance, good title to, the Subject Securities
free of any and all liens or options in favor of, or claims of, any other
Person, except the security interest created by this Repurchase Agreement;
(e) First Priority Security Interest; Security Entitlement. The Subject
Securities, to the extent pledged hereunder, shall be unencumbered, and the
Repurchase Agreement, together with delivery to the Buyer and the filing of a
financing statement naming the related
Sch. 1-1
Seller or REIT Subsidiary as "debtor" and the Buyer as "secured party" and
describing such Subject Securities as the "collateral", will create a valid
first priority perfected security interest in such Subject Securities in favor
of the Buyer in accordance with its terms against all creditors of each Seller
and any Persons purporting to purchase such Subject Securities from the related
Seller, and without limitation the Buyer shall have a "security entitlement"
thereto. Each Seller has obtained from any and all concerned creditors, any
waivers, amendments, releases or acknowledgments necessary to create and perfect
in favor of the Buyer the first priority security interests provided herein;
(f) Proper Form. The Subject Securities are certificated securities in
registered form, or are in uncertificated form and (i) held through the
facilities of a Relevant System in book-entry form, or (ii) registered on the
books of the issuer thereof;
(g) Validity of Governing Agreement. To the Knowledge of the Sellers, the
related Securitization Document and any other agreement executed and delivered
in connection with the Securitization Document are genuine, and each is the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms; the issuer of the Subject Securities had legal
capacity to enter into the Securitization Document and the Trustee had the legal
capacity to execute and deliver Securitization Document and any such agreement,
and the Securitization Document and any such other related agreement to which
such issuer is a party have been duly and properly executed by such issuer, as
applicable;
(h) Original Terms Unmodified. To the Knowledge of the Sellers, the terms
of the Securitization Document and the related Subject Securities have not been
impaired, altered or modified in any material respect other than as set forth on
the Asset Schedule.
(i) No Waiver. Neither Seller has waived the performance by the Trustee of
any action, if the Trustee's failure to perform such action would cause the
Securitization Document to be in default, nor has either Seller waived any
default resulting from any action or inaction by the Trustee.
(j) No Defaults. To the Knowledge of the Sellers, there is no default,
breach, violation or event of acceleration existing under the Securitization
Document and no event has occurred which, with the passage of time or giving of
notice or both and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration thereunder, and neither
Seller nor, to the Knowledge of the Sellers, its predecessors in interest have
waived any such default, breach, violation or event of acceleration.
(k) Subject Securities Assignable. Each Subject Security that is a
Transaction Asset is transferable to the Buyer subject to any documents required
to be delivered pursuant to the related Securitization Document, and each such
required document has been delivered to the Buyer on or prior to the Purchase
Date. The Securitization Document permits the related Seller to pledge or
transfer such Subject Security pursuant to the Repurchase Agreement.
(l) Taxes. Each Seller or issuer of Subject Securities has timely filed all
federal income tax returns and all other material tax returns that are required
to be filed by them and has timely paid all Taxes due, except for any such Taxes
as are being appropriately contested in good
Sch. 1-2
faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves have been provided. The charges, accruals and reserves
on the books of each Seller or issuer with respect to the Subject Securities in
respect of Taxes and other governmental charges are adequate.
(m) Nomura. To the Knowledge of the Sellers, the issuer of the Nomura
Securities is and has been at all times since its organization a REMIC, as
defined in section 860D of the Code.
(n) None of the issuers of the Subject Securities is subject to U.S.
federal income tax on a net income basis, or any other material tax, duty or
other government charge.
Sch. 1-3
SCHEDULE 2
RESERVED
Sch. 2-1
SCHEDULE 3
RESERVED
Sch. 3-1
SCHEDULE 4
RESPONSIBLE OFFICERS OF THE SELLERS
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇--Executive Vice President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇--Senior Vice President/Chief Financial Officer/Treasurer
▇▇▇▇ ▇. ▇▇▇▇▇▇--Vice President and General Counsel
▇▇▇▇▇▇ ▇▇▇▇▇▇--Vice President and Controller
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇--Vice President and Assistant Secretary
Sch. 4-1
RESPONSIBLE OFFICERS OF THE BUYER
▇▇▇▇ ▇▇▇▇▇▇▇▇--Senior Managing Director
▇▇▇▇▇ ▇▇▇▇▇▇--Director
Sch. 4-2
SCHEDULE 5
SUBJECT SECURITIES
Nomura Securities:
Nomura Asset Securities Corporation, NASC Commercial Mortgage Trust 1998-D6,
Commercial Mortgage Pass-Through Certificates, Series 1998-D6,
Class B7 Certificates. [Owned by CBO REIT II]
CBO-1 Securities:
CRIIMI MAE Trust I Commercial Mortgage Bond, Series 1996-C1: Class P Owner Trust
Certificates. [Owned by CRIIMI QRS1]
CRIIMI MAE Trust I Commercial Mortgage Bond, Series 1996-C1: Class R Owner Trust
Certificates. [Owned by CRIIMI QRS1]
CRIIMI MAE Trust I Commercial Mortgage Bond, Series 1996-C1: Class XS Owner
Trust Certificate. [Owned by CRIIMI QRS1]
CRIIMI MAE Trust I Commercial Mortgage Bond, Series 1996-C1: Class F Bond.
[Owned by CRIIMI QRS1]
CBO-2 Securities:
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1
Class A Owner Trust Certificate. [Owned by CRIIMI CMBS]
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class R Owner Trust Certificate. [Owned by CRIIMI CMBS]
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class D1 Bonds. [Owned by CBO REIT II].
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class D2 Bonds. [Owned by CBO REIT II]
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class E Bonds. [Owned by CBO REIT II]
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class F Bonds. [Owned by CBO REIT II]
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class G Bonds. [Owned by CBO REIT II]
Sch. 5-1
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class H1 Bonds. [Owned by CBO REIT II]
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class H2 Bonds. [Owned by CBO REIT II]
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class J Bonds. [Owned by CBO REIT II]
Sch. 5-2
SCHEDULE 6
ASSET SCHEDULE
CBO REIT II Purchased Stock:
Certificates Number 1 representing 1000 shares of common stock and Certificate
Number 3 representing 400 shares of preferred stock issued to CRIIMI Newco,
LLC by CBO REIT II, Inc. with a duly executed stock power from CRIIMI Newco,
LLC.
CMBS Corp. Purchased Stock:
--------------------------
Certificate number 1 representing 1000 shares of common stock issued to
CRIIMI MAE Inc. by CRIIMI MAE CMBS Corp., with (a) a stock power endorsed from
CRIIMI MAE Inc. to CRIIMI Newco Member Inc., (b) a stock power endorsed from
CRIIMI Newco Member, Inc. to CRIIMI Newco LLC, (c) a stock power endorsed
from CRIIMI Newco, LLC to CBO REIT II, Inc. and (d) a stock power endorsed
in blank from CBO REIT II, Inc.
QRS 1 Purchased Stock:
Certificate number 1 representing 100 shares of common stock issued to CRIIMI
MAE Inc. by CRIIMI MAE QRS 1, Inc. with (a) a stock power endorsed from CRIIMI
MAE Inc. to CRIIMI Newco Member Inc., (b) a stock power endorsed from CRIIMI
Newco Member, Inc. to CRIIMI Newco LLC, (c) a stock power endorsed from CRIIMI
Newco, LLC to CBO REIT II, Inc. and (d) a stock power endorsed in blank from
CBO REIT II, Inc.
Nomura Securities:
Nomura Asset Securities Corporation, NASC Commercial Mortgage Trust 1998-D6,
Commercial Mortgage Pass-Through Certificates, Series 1998-D6, Class B7
Certificates.
CBO-2 Securities:
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class D1 Bonds.
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class D2 Bonds.
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class E Bonds.
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class F Bonds.
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class G Bonds.
Sch. 6-1
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class H1 Bonds.
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class H2 Bonds.
CRIIMI MAE Commercial Mortgage Trust, Commercial Mortgage Bonds, Series 1998-C1,
Class J Bonds.
Sch. 6-2
SCHEDULE 7
EXISTING INDEBTEDNESS
The outstanding Series A Senior Secured Notes and Series B Senior Secured Notes
of the Guarantor.
The Master Repurchase Agreement (including all annexes thereto) between the
Guarantor and ORIX Capital Markets, LLC (the successor in interest to ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Capital, Inc. and German American Capital Corporation).
Sch. 7-1
SCHEDULE 8
LIST OF MAJOR BROKER DEALERS
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Credit Suisse First Boston Corporation
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Deutsche Bank Securities Inc.
Greenwich Capital Markets, Inc.
▇▇ ▇▇▇▇▇▇ Securities Inc.
Wachovia Securities, Inc.
Banc of America Securities LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Nomura Securities International, Inc.
UBS Warburg LLC
Sch. 7-1
EXHIBIT A
FORM OF OPINION LETTER
Bear, ▇▇▇▇▇▇▇ International Limited
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
You have requested our opinion as counsel to CRIIMI MAE, Inc., a corporation
organized and existing under the laws of Maryland ("CRIIMI"), CRIIMI NEWCO, LLC,
a limited liability company organized and existing under the laws of Maryland
("Newco"), CBO REIT, Inc., a corporation organized and existing under the laws
of Maryland ("CBO REIT"), and CBO REIT II, Inc., a corporation organized and
existing under the laws of Maryland ("CBO REIT II", and collectively with Newco,
the "Sellers"), with respect to certain matters in connection with that certain
Repurchase Agreement governing purchases and sales of certain Transaction
Assets, dated as of January __, 2003 (the "Repurchase Agreement"), by and among
the Sellers and Bear, ▇▇▇▇▇▇▇ International Limited (the "Buyer"), that certain
Control Agreement, dated as of January __, 2003 (the "Control Agreement"), by
and between the Buyer, the Sellers and [BANK], that certain Subsidiary
Agreement, dated as of January __, 2003 (the "Subsidiary Agreement"), by and
between CRIIMI MAE QRS1, Inc., a corporation organized and existing under the
laws of Delaware ("CRIIMI QRS1"), and CRIIMI MAE CMBS Corp., a corporation
organized and existing under the laws of Delaware ("CRIIMI CMBS", and
collectively with CRIIMI QRS1, the "REIT Subsidiaries") in favor of the Buyer,
that certain Contribution Agreement, dated as of January __, 2003 (the
"Contribution Agreement"), by and between the Sellers, [insert description of
transfer documents, pursuant to which CBO REIT's assets are transferred to CBO
REIT II] (the "Transfer Agreements") and that certain Guarantee, dated as of
January __, 2003 (the "Guarantee"), by CRIIMI in favor of the Buyer. The
Repurchase Agreement, the Subsidiary Agreement, the Contribution Agreement, the
Guarantee, the Transfer Agreements and the Control Agreement are hereinafter
collectively referred to as the "Governing Agreements." [Note: "Governing
Agreements" may have to include the agreements pursuant to which the CBO REIT
assets end up as assets of CBO REIT II.] Capitalized terms not otherwise defined
herein have the meanings set forth in the Repurchase Agreement.
We have examined the following documents:
1. the Repurchase Agreement;
2. the Control Agreement;
3. the Subsidiary Agreement;
4. the Guarantee;
5. the Contribution Agreement;
Exh. A-1
6. the Transfer Agreements;
7. the Securitization Documents;
8. unfiled copies of the financing statements listed on
Schedule 1 (collectively, the "Financing Statements")
naming each Seller as debtor and the Buyer as secured
party and describing the Transaction Assets (as
defined in the Repurchase Agreement) as to which
security interests may be perfected by filing under
the Uniform Commercial Code of the States listed on
Schedule 1 (the "Filing Collateral"), which we
understand will be filed in the filing offices listed
on Schedule 1 (the "Filing Offices");
9. the reports listed on Schedule 2 as to UCC financing
statements (collectively, the "UCC Search Report")
naming the Sellers as debtor and on file in the
Filing Office; and
10. the organizational documents of CRIIMI, the Sellers
and the REIT Subsidiaries, and such other documents,
records and papers as we have deemed necessary and
relevant as a basis for this opinion.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to the originals of all documents submitted to us as
copies.
Based upon the foregoing, it is our opinion that:
1. CBO REIT II is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland and is qualified to
transact business in, and is in good standing under, the laws of the [State of
__________]. Newco is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified to transact business in, and is in good standing under, the laws of
the [State of __________].
2. CRIIMI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland and is qualified to transact
business in, and is in good standing under, the laws of the [State of
__________].
3. ▇▇▇▇▇▇ ▇▇▇▇ is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is qualified to
transact business in, and is in good standing under, the laws of the [State of
__________]. CRIIMI CMBS is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is qualified to
transact business in, and is in good standing under, the laws of the [State of
__________].
4. CBO REIT is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland and is qualified to transact
business in, and is in good standing under, the laws of the [State of
__________].
Exh. A-2
5. At the date hereof, the authorized capital stock of CBO REIT II consists
of 1,000 shares of common stock and 499 shares of preferred stock, of which all
shares have been designated Series A Preferred Stock. As of the date of this
Agreement, 1,000 shares of common stock and 400 shares of Series A Preferred
Stock were issued and outstanding. All of the issued and outstanding shares of
capital stock of CBO REIT II are validly issued, fully paid and nonassessable
and free of preemptive rights. To the best of our knowledge, there are no shares
of capital stock of CBO REIT II issued or outstanding, no options, warrants or
rights to acquire, or other securities convertible into, capital stock of CBO
REIT II, and no agreements or commitments obligating CBO REIT II to issue, sell
or acquire any shares of its capital stock.
6. All the outstanding shares of capital stock of CBO REIT II are
beneficially owned by Newco, directly or indirectly, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state or foreign securities laws) or, to the best of our knowledge, claims,
Liens, options, warrants, rights, contracts or commitments, and all such shares
are, to the best of our knowledge, duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights.
7. At the date hereof, the authorized capital stock of ▇▇▇▇▇▇ ▇▇▇▇ consists
of 100 shares of common stock and the authorized stock of CRIIMI CMBS consists
of 1,000 shares of common stock. As of the date of this Agreement, 100 shares of
common stock with respect to CRIIMI QRS1 and 1000 shares of common stock with
respect to CRIIMI CMBS were issued and outstanding. All of the issued and
outstanding shares of capital stock with respect to each REIT Subsidiary are
validly issued, fully paid and nonassessable and free of preemptive rights. To
the best of our knowledge, there are no shares of capital stock of either REIT
Subsidiary issued or outstanding, no options, warrants or rights to acquire, or
other securities convertible into, capital stock of either REIT Subsidiary, and
no agreements or commitments obligating either REIT Subsidiary to issue, sell or
acquire any shares of its capital stock.
8. All the outstanding shares of capital stock of each REIT Subsidiary are
beneficially owned by CBO REIT II, directly or indirectly, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state or foreign securities laws) or, to the best of our knowledge, claims,
Liens, options, warrants, rights, contracts or commitments, and all such shares
are, to the best of our knowledge, duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights.
9. The execution, delivery and performance by each Seller of the Governing
Agreements to which it is a party, and the sales by each Seller and the pledge
of the Transaction Assets under the Repurchase Agreement have been duly
authorized by all necessary corporate action on the part of such Seller. Each of
the Governing Agreements have been executed and delivered by each Seller, and
are legal, valid and binding agreements enforceable in accordance with their
respective terms against such Seller, subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder or with the Buyer's
purchase of the Transaction Assets and/or the Buyer's security interest in the
Transaction Assets.
Exh. A-3
10. The execution, delivery and performance by each REIT Subsidiary of the
Governing Agreements to which it is a party have been duly authorized by all
necessary corporate action on the part of such REIT Subsidiary. Each of the
Governing Agreements have been executed and delivered by each REIT Subsidiary,
and are legal, valid and binding agreements enforceable in accordance with their
respective terms against such REIT Subsidiary, subject to bankruptcy laws and
other similar laws of general application affecting rights of creditors and
subject to the application of the rules of equity, including those respecting
the availability of specific performance, none of which will materially
interfere with the realization of the benefits provided thereunder.
11. The execution, delivery and performance by CRIIMI of the Governing
Agreements to which it is a party have been duly authorized by all necessary
corporate action on the part of CRIIMI. Each of the Governing Agreements have
been executed and delivered by CRIIMI, and are legal, valid and binding
agreements enforceable in accordance with their respective terms against CRIIMI,
subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of the rules of
equity, including those respecting the availability of specific performance,
none of which will materially interfere with the realization of the benefits
provided thereunder.
12. The execution, delivery and performance by CBO REIT of the Governing
Agreements to which it is a party have been duly authorized by all necessary
corporate action on the part of CBO REIT. Each of the Governing Agreements have
been executed and delivered by CBO REIT, and are legal, valid and binding
agreements enforceable in accordance with their respective terms against CBO
REIT, subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of the rules of
equity, including those respecting the availability of specific performance,
none of which will materially interfere with the realization of the benefits
provided thereunder.
13. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of each Seller for the execution, delivery or performance
by such Seller of the Governing Agreements to which it is a party, or for the
sales by each Seller under the Repurchase Agreement or the sale of the
Transaction Assets to the Buyer and/or the granting of a security interest to
the Buyer in the Transaction Assets pursuant to the Repurchase Agreement.
14. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of each REIT Subsidiary for the execution, delivery or
performance by such REIT Subsidiary of the Governing Agreements to which it is a
party.
15. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of CRIIMI for the execution, delivery or performance of the
Governing Agreements to which it is a party.
16. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of
Exh. A-4
CBO REIT for the execution, delivery or performance of the Governing
Agreements to which it is a party.
17. The execution, delivery and performance by each Seller of, and the
consummation of the transactions contemplated by, the Governing Agreements to
which it is a party do not and will not (a) violate any provision of such
Seller's charter, by-laws or other organizational documents, (b) violate any
applicable law, rule or regulation, (c) violate any order, writ, injunction or
decree of any court or governmental authority or agency or any arbitral award
applicable to such Seller of which we have knowledge (after due inquiry) or (d)
result in a breach of, constitute a default under, require any consent under, or
result in the acceleration or required prepayment of any indebtedness pursuant
to the terms of, any agreement or instrument to which such Seller is a party or
by which it is bound or to which it is subject, or (except for the Liens created
pursuant to the Repurchase Agreement) result in the creation or imposition of
any Lien upon any Property of such Seller pursuant to the terms of any such
agreement or instrument.
18. The execution, delivery and performance by each REIT Subsidiary of, and
the consummation of the transactions contemplated by, the Governing Agreements
to which it is a party do not and will not (a) violate any provision of such
REIT Subsidiary's charter, by-laws or other organizational documents, (b)
violate any applicable law, rule or regulation, (c) violate any order, writ,
injunction or decree of any court or governmental authority or agency or any
arbitral award applicable to such REIT Subsidiary of which we have knowledge
(after due inquiry) or (d) result in a breach of, constitute a default under,
require any consent under, or result in the acceleration or required prepayment
of any indebtedness pursuant to the terms of, any agreement or instrument to
which such REIT Subsidiary is a party or by which it is bound or to which it is
subject, or result in the creation or imposition of any Lien upon any Property
of such REIT Subsidiary pursuant to the terms of any such agreement or
instrument.
19. The execution, delivery and performance by CRIIMI of, and the
consummation of the transactions contemplated by, the Governing Agreements to
which it is a party do not and will not (a) violate any provision of CRIIMI's
charter, by-laws or other organizational documents, (b) violate any applicable
law, rule or regulation, (c) violate any order, writ, injunction or decree of
any court or governmental authority or agency or any arbitral award applicable
to CRIIMI of which we have knowledge (after due inquiry) or (d) result in a
breach of, constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument to which CRIIMI is a party or by which it
is bound or to which it is subject, or result in the creation or imposition of
any Lien upon any Property of CRIIMI pursuant to the terms of any such agreement
or instrument.
20. The execution, delivery and performance by CBO REIT of, and the
consummation of the transactions contemplated by, the Governing Agreements to
which it is a party do not and will not (a) violate any provision of CBO REIT's
charter, by-laws or other organizational documents, (b) violate any applicable
law, rule or regulation, (c) violate any order, writ, injunction or decree of
any court or governmental authority or agency or any arbitral award applicable
to CBO REIT of which we have knowledge (after due inquiry) or (d) result in a
breach of, constitute a default under, require any consent under, or result in
the acceleration or
Exh. A-5
required prepayment of any indebtedness pursuant to the terms of, any
agreement or instrument to which CBO REIT is a party or by which it is bound or
to which it is subject, or result in the creation or imposition of any Lien upon
any Property of CBO REIT pursuant to the terms of any such agreement or
instrument.
21. There is no action, suit, proceeding or investigation pending or, to
the best of our knowledge, threatened against either Seller which, in our
judgment, either in any one instance or in the aggregate, would be reasonably
likely to result in any material adverse change in the properties, business or
financial condition, or prospects of such Seller or in any material impairment
of the right or ability of such Seller to carry on its business substantially as
now conducted or in any material liability on the part of such Seller or which
would draw into question the validity of the Governing Agreements to which it is
a party or the Transaction Assets or of any action taken or to be taken in
connection with the transactions contemplated thereby, or which would be
reasonably likely to impair materially the ability of such Seller to perform
under the terms of the Governing Agreements to which it is a party or the
Transaction Assets.
22. There is no action, suit, proceeding or investigation pending or, to
the best of our knowledge, threatened against either REIT Subsidiary which, in
our judgment, either in any one instance or in the aggregate, would be
reasonably likely to result in any material adverse change in the properties,
business or financial condition, or prospects of such REIT Subsidiary or in any
material impairment of the right or ability of such REIT Subsidiary to carry on
its business substantially as now conducted or in any material liability on the
part of such REIT Subsidiary or which would draw into question the validity of
the Governing Agreements to which it is a party or the Subject Securities or of
any action taken or to be taken in connection with the transactions contemplated
thereby, or which would be reasonably likely to impair materially the ability of
such REIT Subsidiary to perform under the terms of the Governing Agreements to
which it is a party or the Subject Securities.
23. There is no action, suit, proceeding or investigation pending or, to
the best of our knowledge, threatened against CRIIMI which, in our judgment,
either in any one instance or in the aggregate, would be reasonably likely to
result in any material adverse change in the properties, business or financial
condition, or prospects of CRIIMI or in any material impairment of the right or
ability of CRIIMI to carry on its business substantially as now conducted or in
any material liability on the part of CRIIMI or which would draw into question
the validity of the Governing Agreements to which it is a party or of any action
taken or to be taken in connection with the transactions contemplated thereby,
or which would be reasonably likely to impair materially the ability of CRIIMI
to perform under the terms of the Governing Agreements to which it is a party.
24. There is no action, suit, proceeding or investigation pending or, to
the best of our knowledge, threatened against CBO REIT which, in our judgment,
either in any one instance or in the aggregate, would be reasonably likely to
result in any material adverse change in the properties, business or financial
condition, or prospects of CBO REIT or in any material impairment of the right
or ability of CBO REIT to carry on its business substantially as now conducted
or in any material liability on the part of CBO REIT or which would draw into
question the validity of the Governing Agreements to which it is a party or the
Transaction
Exh. A-6
Assets or of any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be reasonably likely to impair
materially the ability of CBO REIT to perform under the terms of the Governing
Agreements to which it is a party or the Transaction Assets.
25. The Repurchase Agreement is effective to create, in favor of the Buyer,
either a valid sale of the Transaction Assets to the Buyer or a valid security
interest under the Uniform Commercial Code in all of the right, title and
interest of each Seller in, to and under the Transaction Assets as collateral
security for the payment of each Seller's obligations under the Repurchase
Agreement, except that (a) such security interest will continue in the
Transaction Assets after their sale, exchange or other disposition only to the
extent provided in Section 9-315 of the Uniform Commercial Code, (b) the
security interest of the Buyer in the Transaction Assets in which any Seller
acquires rights after the commencement of a case under the Bankruptcy Code in
respect of such Seller may be limited by Section 552 of the Bankruptcy Code.
26. The Repurchase Agreement is effective to create, in favor of the Buyer,
either a valid sale of the Transaction Assets to the Buyer or a valid security
interest under the Uniform Commercial Code in all of the right, title and
interest of CBO REIT in, to and under the Transaction Assets as collateral
security for the payment of CBO REIT's obligations under the Repurchase
Agreement, except that (a) such security interest will continue in the
Transaction Assets after their sale, exchange or other disposition only to the
extent provided in Section 9-315 of the Uniform Commercial Code, (b) the
security interest of the Buyer in the Transaction Assets in which CBO REIT
acquires rights after the commencement of a case under the Bankruptcy Code in
respect of CBO REIT may be limited by Section 552 of the Bankruptcy Code.
27. When the Transaction Assets consisting of "certificated securities"
(within the meaning of Section 8-102(a)(4) of the Uniform Commercial Code) are
delivered to the Buyer, the security interest referred to in Section 16 above in
the Transaction Assets will constitute a fully perfected first priority security
interest in all right, title and interest of each Seller therein.
28. (a) Upon the filing of financing statements on Form UCC-1 with respect
to each Seller naming the Buyer as "Secured Party" and the respective Seller as
a "Debtor", and describing the Transaction Assets, in the jurisdictions and
recording offices listed on Schedule 1 attached hereto, the security interests
referred to in Section 16 above will constitute fully perfected security
interests under the Uniform Commercial Code in all right, title and interest of
each Seller in, to and under such Transaction Assets, which can be perfected by
filing under the Uniform Commercial Code.
(b) The UCC Search Report sets forth the proper filing offices and the
proper debtors necessary to identify those Persons who have on file in the
jurisdictions listed on Schedule 1 financing statements covering the Transaction
Assets as of the dates and times specified on Schedule 2. The UCC Search Report
identifies no Person who has filed in any Filing Office a financing statement
describing the Transaction Assets prior to the effective dates of the UCC Search
Report.
Exh. A-7
29. The provisions of the Collection Account Agreement are effective to
cause the security interest of the Buyer in the Collection Account to be a fully
perfected first priority security interest therein.
30. Neither the Seller's nor any Subsidiary thereof (including, without
limitation, any REIT Subsidiary) is an "investment company", or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
31. Each of CRIIMI, CBO REIT and CBO REIT II is and has been at all times
since its incorporation a "real estate investment trust", as defined in section
856 of the Internal Revenue Code of 1986, as amended. Each REIT Subsidiary is
and has been at all times since its incorporation a "qualified REIT subsidiary",
as defined in section 856(i)(2) of the Internal Revenue Code of 1986, as
amended.
Very truly yours,
Exh. A-8
EXHIBIT B
[FORM OF CONTROL AGREEMENT]
[__________], 200__
[SELLER]
[ADDRESS]
Attn:
[BANK], as Bank
[ADDRESS]
Attn:
Re: Collection Account Established by [SELLER/REIT SUBSIDIARY]
(the "Seller/REIT Subsidiary") at [_______________] (the
"Bank") pursuant to that certain Repurchase Agreement (as
amended, supplemented or otherwise modified from time to time,
the "Repurchase Agreement"), dated January __, 2003, between
Bear, ▇▇▇▇▇▇▇ International Limited(the "Buyer"), and the
Sellers.
Ladies and Gentlemen:
The Sellers have entered into the Repurchase Agreement pursuant to which
the Buyer may enter into a Transaction (as defined therein) secured by, among
other things, the payments made on account of Purchased Assets sold to the Buyer
under the Repurchase Agreement. As a requirement of such Transaction, all such
payments are required to be deposited into the Collection Account identified
below within two (2) Business Days of receipt.
[The Seller] [REIT Subsidiary] has established a collection account,
Account No. [_____], for the account of Bear, ▇▇▇▇▇▇▇ International Limited,
with the Bank, ABA# [__________] (the "Collection Account") which the Bank
maintains in the name of [Seller] [REIT Subsidiary]. The Sellers have granted to
the Buyer a security interest in all payments deposited in the Collection
Account with respect to the Purchased Assets sold to the Buyer under the
Repurchase Agreement.
The Bank acknowledges that (a) the Sellers have granted a security interest
in all of each Sellers' right, title and interest in and to any funds from time
to time on deposit in the Collection Account with respect to the Purchased
Assets sold to the Buyer under the Repurchase Agreement, (b) that such funds are
received by the Bank and, except as provided below, are for application as
instructed by the [Seller] [REIT Subsidiary], and (c) that the Bank shall
transfer funds from the Collection Account in accordance with such instructions
until the Bank receives notice from the Buyer that an event of default has
occurred and is continuing under the Repurchase Agreement or the Subsidiary
Agreement (a "Notice of Event of Default"). Upon
Exh. B-1
Bank's receipt of a Notice of Event of Default, the Bank shall (i) in no
event (a) transfer funds from the Collection Account to either Seller, (b) act
on the instruction of either Seller or (c) cause or permit withdrawals from the
Collection Account in any manner not approved by the Buyer in writing and (ii)
comply with instructions originated by the Buyer concerning the disposition of
funds in the Collection Account, without further consent from either Seller.
In the event that the Bank has or subsequently obtains by agreement,
operation of law or otherwise a security interest in the Collection Account or
funds held therein, the Bank hereby agrees that such security interest shall be
subordinate to the security interest of the Buyer. The funds or other items
deposited to the Collection Account will not be subject to deduction, set-off,
banker's lien or any other right in favor of any person other than the Buyer
(except that the Bank may set off (i) all amounts due to the Bank in respect of
customary fees and expenses for the routine maintenance and operation of the
Collection Account and (ii) the face amount of any checks which have been
credited to the Collection Account but are subsequently returned unpaid because
of uncollected or insufficient funds).
All bank statements in respect to the Collection Account shall be sent to
the [Seller] [REIT Subsidiary] at:
[SELLER] [REIT SUBSIDIARY]
[ADDRESS]
Attention:
with copies to Buyer at:
BEAR, ▇▇▇▇▇▇▇ INTERNATIONAL LIMITED
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exh. B-2
Kindly acknowledge your agreement with the terms of this agreement by
signing the enclosed copy of this letter and returning it to the undersigned.
Very truly yours,
[CRIIMI NEWCO, LLC, as Seller
By:_________________________________
Title:
CBO REIT II, INC., as Seller
By:_________________________________
Title:
CRIIMI MAE CMBS Corp., as REIT
Subsidiary
By:_________________________________
Title:
CRIIMI MAE QRS1, Inc., as REIT
Subsidiary
By:_________________________________
Title:]
Agreed and acknowledged:
BEAR, ▇▇▇▇▇▇▇ INTERNATIONAL LIMITED
Exh. B-3
By:
Name:________________________________________________
Title:_______________________________________________
Agreed and Acknowledged:
[BANK], as Bank
By:_____________________________________________________
Title:
Exh. B-4
EXHIBIT C
[RESERVED]
Exh. C-1
EXHIBIT D
[FORM OF DIRECTION LETTER]
__________ __, 200___
____________________, as [Trustee]
Attention: _______________
Re: Repurchase Agreement, dated as of January __, 2003, by and
among Bear, ▇▇▇▇▇▇▇ International Limited ("Buyer"), CRIIMI
Newco, LLC and CBO REIT II, Inc. ("Sellers").
Ladies and Gentlemen:
Pursuant to the [Repurchase] [Subsidiary] Agreement, dated as of January
___ 2003 (the "Repurchase Agreement"), between the Buyer and the Sellers, you
are hereby notified that: [(i) the Buyer has purchased from the Seller the
assets described on Schedule 1 hereto (the "Subject Securities") (ii) each of
the Subject Securities is subject to a security interest in favor of the Buyer,]
and (iii) any payments or distributions made with respect to such Subject
Securities should be remitted immediately by the Trustee to the Collection
Account, in accordance with the following wire instructions
Account No.: [____________________]
ABA No.: [____________________]
[____________________]
Reference: [____________________]
These instructions may not be modified or rescinded without the prior written
consent of the Buyer.
D-1
Very truly yours,
[Owner of Subject Securities]
By:
------------------------------------
Name:
Title:
BEAR, ▇▇▇▇▇▇▇ INTERNATIONAL LIMITED
By:
------------------------------------
Name:
Title:
E-2
Exhibit E
FORM OF TRANSACTION REQUEST
[Date]
Bear, ▇▇▇▇▇▇▇ International Limited
[Address]
Attention: ________________
Re: Repurchase Agreement dated as of ____________ __, 200__
(the "Repurchase Agreement") by and among CBO REIT II, INC.,
[NEWCO] (the "Sellers"), and Bear, ▇▇▇▇▇▇▇ International Limited
[Seller Name] hereby requests that Bear, ▇▇▇▇▇▇▇ International Limited ("BSIL")
enter into a Transaction with respect to the Purchased Assets listed on the
schedule attached to the Repurchase Agreement.
PROPOSED PURCHASE PRICE: $
PROPOSED PURCHASE DATE:
The Repurchase Agreement is incorporated by reference into this Transaction
Request and is made a part hereof as if it were fully set forth herein. (All
capitalized terms used herein but not defined herein shall have the meanings
specified in the Repurchase Agreement.)
[Name]
By:______________________________
Name:
Title:
[wire instructions]
E-3