Exhibit 10.1
Master Repurchase
Agreement
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Bond Market Association September 1996 Version
Dated as of: August 17, 2004
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Between: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company ("Buyer")
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and Capital Trust, Inc. ("Seller")
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1. Applicability
From time to time the parties hereto may enter into transactions in which
one party ("Seller") agrees to transfer to the other ("Buyer") securities
or other assets ("Securities") against the transfer of funds by Buyer, with
a simultaneous agreement by Buyer to transfer to Seller such Securities at
a date certain or on demand, against the transfer of funds by Seller. Each
such transaction shall be referred to herein as a "Transaction" and, unless
otherwise agreed in writing, shall be governed by this Agreement, including
any supplemental terms or conditions contained in Annex I hereto and in any
other annexes identified herein or therein as applicable hereunder.
2. Definitions
(a) "Act of Insolvency", with respect to any party, (i) the commencement by
such party as debtor of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, moratorium, dissolution,
delinquency or similar law, or such party seeking the appointment or
election of a receiver, conservator, trustee, custodian or similar
official for such party or any substantial part of its property, or the
convening of any meeting of creditors for purposes of commencing any
such case or proceeding or seeking such an appointment or election,
(ii) the commencement of any such case or proceeding against such
party, or another seeking such an appointment or election, or the
filing against a party of an application for a protective decree under
the provisions of the Securities Investor Protection Act of 1970, which
(A) is consented to or not timely contested by such party, (B) results
in the entry of an order for relief, such an appointment or election,
the issuance of such a protective decree or the entry of an order
having a similar effect, or (C) is not dismissed within 15 days, (iii)
the making by such party of a general assignment for the benefit of
creditors, or (iv) the admission in writing by such party of such
party's inability to pay such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided by Seller to
Buyer pursuant to Paragraph 4 (a) hereof,
(c) "Buyer's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Buyer's Margin
Percentage to the Repurchase Price for such Transaction as of such
date;
(d) "Buyer's Margin Percentage", with respect to any Transaction as of any
date, a percentage (which may be equal to the Seller's Margin
Percentage) agreed to by Buyer and Seller or, in the absence of any
such agreement, the percentage obtained by
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dividing the Market Value of the Purchased Securities on the Purchase
Date by the Purchase Price on the Purchase Date for such Transaction;
(e) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(f) "Income", with respect to any Security at any time, any principal
thereof and all interest, dividends or other distributions thereon;
(g) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(h) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(i) "Margin Notice Deadline", the time agreed to by the parties in the
relevant Confirmation, Annex I hereto or otherwise as the deadline for
giving notice requiring same-day satisfaction of margin maintenance
obligations as provided in Paragraph 4 hereof (or, in the absence of
any such agreement, the deadline for such purposes established in
accordance with market practice);
(j) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally
recognized source agreed to by the parties or the most recent closing
bid quotation from such a source, plus accrued Income to the extent not
included therein (other than any Income credited or transferred to, or
applied to the obligations of, Seller pursuant to Paragraph 5 hereof)
as of such date (unless contrary to market practice for such
Securities);
(k) "Price Differential", with respect to any Transaction as of any date,
the aggregate amount obtained by daily application of the Pricing Rate
for such Transaction to the Purchase Price for such 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 such Transaction
and ending on (but excluding) the date of determination (reduced by any
amount of such Price Differential previously paid by Seller to Buyer
with respect to such Transaction);
(1) "Pricing Rate", the per annum percentage rate for determination of the
Price Differential;
(m) "Prime Rate", the prime rate of U.S. commercial banks as published in
The Wall Street Journal (or, if more than one such rate is published,
the average of such rates);
(n) "Purchase Date", the date on which Purchased Securities are to be
transferred by Seller to Buyer;
(o) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii)
thereafter, except where Buyer and Seller agree otherwise, such price
increased by the amount of any cash transferred by Buyer to Seller
pursuant to Paragraph 4(b) hereof and decreased by the amount of any
cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof
or applied to reduce Seller's obligations under clause (ii) of
Paragraph 5 hereof;
(p) "Purchased Securities", the Securities transferred by Seller to Buyer
in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term "Purchased Securities"
with respect to any Transaction at any time
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also shall include Additional Purchased Securities delivered pursuant
to Paragraph 4(a) hereof and shall exclude Securities returned pursuant
to Paragraph 4(b) hereof;
(q) "Repurchase Date", the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined by
application of the provisions of Paragraph 3(c) or 11 hereof;
(r) "Repurchase Price", the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction,
which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Purchase Price and the Price
Differential as of the date of such determination;
(s) "Seller's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Seller's Margin
Percentage to the Repurchase Price for such Transaction as of such
date;
(t) "Seller's Margin Percentage", with respect to any Transaction as of any
date, a percentage (which may be equal to the Buyer's Margin
Percentage) agreed to by Buyer and Seller or, in the absence of any
such agreement, the percentage obtained by dividing the Market Value of
the Purchased Securities on the Purchase Date by the Purchase Price on
the Purchase Date for such Transaction.
3. Initiation; Confirmation; Termination
(a) An agreement to enter into a Transaction may be made orally or in
writing at the initiation of either Buyer or Seller. On the Purchase
Date for the Transaction, the Purchased Securities shall be transferred
to Buyer or its agent against the transfer of the Purchase Price to an
account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller
(or both), as shall be agreed, shall promptly deliver to the other
party a written confirmation of each Transaction (a "Confirmation").
The Confirmation shall describe the Purchased Securities (including
CUSIP number, if any), identify Buyer and Seller and set forth (i) the
Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date,
unless the Transaction is to be terminable on demand, (iv) the Pricing
Rate or Repurchase Price applicable to the Transaction, and (v) any
additional terms or conditions of the Transaction not inconsistent with
this Agreement. The Confirmation, together with this Agreement, shall
constitute conclusive evidence of the terms agreed between Buyer and
Seller with respect to the Transaction to which the Confirmation
relates, unless with respect to the Confirmation specific objection is
made promptly after receipt thereof. In the event of any conflict
between the terms of such Confirmation and this Agreement, this
Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand shall
be made by Buyer or Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior
to the business day on which such termination will be effective. On the
date specified in such demand, or on the date fixed for termination in
the case of Transactions having a fixed term, termination of the
Transaction will be effected by transfer to Seller or its agent of the
Purchased Securities and any Income in respect thereof received by
Buyer (and not previously credited or transferred to, or applied to the
obligations of, Seller pursuant to Paragraph 5 hereof) against the
transfer of the Repurchase Price to an account of Buyer.
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4. Margin Maintenance
(a) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is
acting as Buyer is less than the aggregate Buyer's Margin Amount for
all such Transactions (a "Margin Deficit"), then Buyer may by notice to
Seller require Seller in such Transactions, at Seller's option, to
transfer to Buyer cash or additional Securities reasonably acceptable
to Buyer ("Additional Purchased Securities"), so that the cash and
aggregate Market Value of the Purchased Securities, including any such
Additional Purchased Securities, will thereupon equal or exceed such
aggregate Buyer's Margin Amount (decreased by the amount of any Margin
Deficit as of such date arising from any Transactions in which such
Buyer is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is
acting as Seller exceeds the aggregate Seller's Margin Amount for all
such Transactions at such time (a "Margin Excess"), then Seller may by
notice to Buyer require Buyer in such Transactions, at Buyer's option,
to transfer cash or Purchased Securities to Seller, so that the
aggregate Market Value of the Purchased Securities, after deduction of
any such cash or any Purchased Securities so transferred, will
thereupon not exceed such aggregate Seller's Margin Amount (increased
by the amount of any Margin Excess as of such date arising from any
Transactions in which such Seller is acting as Buyer).
(c) If any notice is given by Buyer or Seller under subparagraph (a) or (b)
of this Paragraph at or before the Margin Notice Deadline on any
business day, the party receiving such notice shall transfer cash or
Additional Purchased Securities as provided in such subparagraph no
later than the close of business in the relevant market on such day. If
any such notice is given after the Margin Notice Deadline, the party
receiving such notice shall transfer such cash or Securities no later
than the close of business in the relevant market on the next business
day following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be attributed to
such Transactions as shall be agreed upon by Buyer and Seller.
(e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both)
under subparagraphs (a) and (b) of this Paragraph may be exercised only
where a Margin Deficit or Margin Excess, as the case may be, exceeds a
specified dollar amount or a specified percentage of the Repurchase
Prices for such Transactions (which amount or percentage shall be
agreed to by Buyer and Seller prior to entering into any such
Transactions).
(f) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under
subparagraphs (a) and (b) of this Paragraph to require the elimination
of a Margin Deficit or a Margin Excess, as the case may be, may be
exercised whenever such a Margin Deficit or Margin Excess exists with
respect to any single Transaction hereunder (calculated without regard
to any other Transaction outstanding under this Agreement).
5. Income Payments
Seller shall be entitled to receive an amount equal to all Income paid or
distributed on or in respect of the Securities that is not otherwise
received by Seller, to the full extent it would be so entitled if the
Securities had not been sold to Buyer. Buyer shall, as the parties may
agree with respect to any Transaction (or, in the absence of any such
agreement, as Buyer shall reasonably determine in its discretion), on the
date such Income is paid or distributed
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either (i) transfer to or credit to the account of Seller such Income with
respect to any Purchased Securities subject to such Transaction or (ii)
with respect to Income paid in cash, apply the Income payment or payments
to reduce the amount, if any, to be transferred to Buyer by Seller upon
termination of such Transaction. Buyer shall not be obligated to take any
action pursuant to the preceding sentence (A) to the extent that such
action would result in the creation of a Margin Deficit, unless prior
thereto or simultaneously therewith Seller transfers to Buyer cash or
Additional Purchased Securities sufficient to eliminate such Margin
Deficit, or (B) if an Event of Default with respect to Seller has occurred
and is then continuing at the time such Income is paid or distributed.
6. Security Interest
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to
be loans, Seller shall be deemed to have pledged to Buyer as security for
the performance by Seller of its obligations under each such Transaction,
and shall be deemed to have granted to Buyer a security interest in, all of
the Purchased Securities with respect to all Transactions hereunder and all
Income thereon and other proceeds thereof.
7. Payment and Transfer
Unless otherwise mutually agreed, all transfers of funds hereunder shall be
in immediately available funds. All Securities transferred by one party
hereto to the other party (i) shall be in suitable form for transfer or
shall be accompanied by duly executed instruments of transfer or assignment
in blank and such other documentation as the party receiving possession may
reasonably request, (ii) shall be transferred on the book-entry system of a
Federal Reserve Bank, or (iii) shall be transferred by any other method
mutually acceptable to Seller and Buyer.
8. Segregation of Purchased Securities
To the extent required by applicable law, all Purchased Securities in the
possession of Seller shall be segregated from other securities in its
possession and shall be identified as subject to this Agreement.
Segregation may be accomplished by appropriate identification on the books
and records of the holder, including a financial or securities intermediary
or a clearing corporation. All of Seller's interest in the Purchased
Securities shall pass to Buyer on the Purchase Date and, unless otherwise
agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer
from engaging in repurchase transactions with the Purchased Securities or
otherwise selling, transferring, pledging or hypothecating the Purchased
Securities, but no such transaction shall relieve Buyer of its obligations
to transfer Purchased Securities to Seller pursuant to Paragraph 3, 4 or 11
hereof, or of Buyer's obligation to credit or pay Income to, or apply
Income to the obligations of, Seller pursuant to Paragraph 5 hereof.
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Required Disclosure for Transactions in Which the Seller Retains Custody of the
Purchased Securities Seller is not permitted to substitute other securities for
those subject to this Agreement and therefore must keep Buyer's securities
segregated at all times unless in this Agreement Buyer grants Seller the right
to substitute other securities. If Buyer grants the right to substitute, this
means that Buyer's securities will likely be commingled with Seller's own
securities during the trading day. Buyer is advised that during any trading day
that Buyer's securities are commingled with Seller's securities, they [will]*
[may]** be subject to liens granted by Seller to [its clearing bank]* [third
parties]" and may be used by Seller for deliveries on other securities
transactions. Whenever the securities are commingled, Seller's ability to
resegregate substitute
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securities for Buyer will be subject to Seller's ability
to satisfy [the clearing] * [any]** lien or to obtain substitute securities.
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* Language to be used under 17 C.F.R, Section 403.4 (e) if Seller is a
government securities broker or dealer other than a financial
institution.
** Language to be used under 17 C.F.R. Section 403.5 (d) if Seller is a
financial institution.
9. Substitution
(a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such
substitution shall be made by transfer to Buyer of such other
Securities and transfer to Seller of such Purchased Securities. After
substitution, the substituted Securities shall be deemed to be
Purchased Securities.
(b) In Transactions in which Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be deemed, for
purposes of subparagraph (a) of this Paragraph, to have agreed to and
accepted in this Agreement substitution by Seller of other Securities
for Purchased Securities; provided, however, that such other Securities
shall have a Market Value at least equal to the Market Value of the
Purchased Securities for which they are substituted.
10. Representations
Each of Buyer and Seller represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter into
Transactions contemplated hereunder and to perform its obligations
hereunder and has taken all necessary action to authorize such execution,
delivery and performance, (ii) it will engage in such Transactions as
principal (or, if agreed in writing, in the form of an annex hereto or
otherwise, in advance of any Transaction by the other party hereto, as
agent for a disclosed principal), (iii) the person signing this Agreement
on its behalf is duly authorized to do so on its behalf (or on behalf of
any such disclosed principal), (iv) it has obtained all authorizations of
any governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect
and (v) the execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance, charter, bylaw
or rule applicable to it or any agreement by which it is bound or by which
any of its assets are affected. On the Purchase Date for any Transaction
Buyer and Seller shall each be deemed to repeat all the foregoing
representations made by it.
11. Events of Default
In the event that (i) Seller fails to transfer or Buyer fails to purchase
Purchased Securities upon the applicable Purchase Date, (ii) Seller fails
to repurchase or Buyer fails to transfer Purchased Securities upon the
applicable Repurchase Date, (iii) Seller or Buyer fails to comply with
Paragraph 4 hereof, (iv) Buyer fails, after one business day's notice, to
comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with
respect to Seller or Buyer, (vi) any representation made by Seller or Buyer
shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated, or (vii) Seller or Buyer
shall admit to the other its inability to, or its intention not to, perform
any of its obligations hereunder (each an "Event of Default"):
(a) The nondefaulting party may, at its option (which option shall be
deemed to have been exercised immediately upon the occurrence of an Act
of Insolvency), declare an Event of Default to have occurred hereunder
and, upon the exercise or deemed exercise of
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such option, the Repurchase Date for each Transaction hereunder shall,
if it has not already occurred, be deemed immediately to occur (except
that, in the event that the Purchase Date for any Transaction has not
yet occurred as of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). The nondefaulting
party shall (except upon the occurrence of an Act of Insolvency) give
notice to the defaulting party of the exercise of such option as
promptly as practicable.
(b) In all Transactions in which the defaulting party is acting as Seller,
if the nondefaulting party exercises or is deemed to have exercised the
option referred to in subparagraph (a) of this Paragraph, (i) the
defaulting party's obligations in such Transactions to repurchase all
Purchased Securities, at the Repurchase Price therefor on the
Repurchase Date determined in accordance with subparagraph (a) of this
Paragraph, shall thereupon become immediately due and payable, (ii) all
Income paid after such exercise or deemed exercise shall be retained by
the nondefaulting party and applied to the aggregate unpaid Repurchase
Prices and any other amounts owing by the defaulting party hereunder,
and (iii) the defaulting party shall immediately deliver to the
nondefaulting party any Purchased Securities subject to such
Transactions then in the defaulting party's possession or control.
(c) In all Transactions in which the defaulting party is acting as Buyer,
upon tender by the nondefaulting party of payment of the aggregate
Repurchase Prices for all such Transactions, all right, title and
interest in and entitlement to all Purchased Securities subject to such
Transactions shall be deemed transferred to the nondefaulting party,
and the defaulting party shall deliver all such Purchased Securities to
the nondefaulting party.
(d) If the nondefaulting party exercises or is deemed to have exercised the
option referred to in subparagraph (a) of this Paragraph, the
nondefaulting party, without prior notice to the defaulting party, may:
(i) as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or
prices as the nondefaulting party may reasonably deem
satisfactory, any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the aggregate
unpaid Repurchase Prices and any other amounts owing by the
defaulting party hereunder or (B) in its sole discretion elect,
in lieu of selling all or a portion of such Purchased Securities,
to give the defaulting party credit for such Purchased Securities
in an amount equal to the price therefor on such date, obtained
from a generally recognized source or the most recent closing bid
quotation from such a source, against the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting
party hereunder; and
(ii) as to Transactions in which the defaulting party is acting as
Buyer, (A) immediately purchase, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or
prices as the nondefaulting party may reasonably deem
satisfactory, securities ("Replacement Securities") of the same
class and amount as any Purchased Securities that are not
delivered by the defaulting party to the nondefaulting party as
required hereunder or (B) in its sole discretion elect, in lieu
of purchasing Replacement Securities, to be deemed to have
purchased Replacement Securities at the price therefor on such
date, obtained from a generally recognized source or the most
recent closing offer quotation from such a source.
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Unless otherwise provided in Annex 1, the parties acknowledge and
agree that (1) the Securities subject to any Transaction hereunder are
instruments traded in a recognized market, (2) in the absence of a
generally recognized source for prices or bid or offer quotations for
any Security, the nondefaulting party may establish the source
therefor in its sole discretion and (3) all prices, bids and offers
shall be determined together with accrued Income (except to the extent
contrary to market practice with respect to the relevant Securities).
(e) As to Transactions in which the defaulting party is acting as Buyer,
the defaulting party shall be liable to the nondefaulting party for any
excess of the price paid (or deemed paid) by the nondefaulting party
for Replacement Securities over the Repurchase Price for the Purchased
Securities replaced thereby and for any amounts payable by the
defaulting party under Paragraph 5 hereof or otherwise hereunder.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is
acting as Buyer shall not increase above the amount of such Repurchase
Price for such Transaction determined as of the date of the exercise or
deemed exercise by the nondefaulting party of the option referred to in
subparagraph (a) of this Paragraph.
(g) The defaulting party shall be liable to the nondefaulting party for (i)
the amount of all reasonable legal or other expenses incurred by the
nondefaulting party 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 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 a Transaction.
(h) To the extent permitted by applicable law, the defaulting party shall
be liable to the nondefaulting party for interest on any amounts owing
by the defaulting party hereunder, from the date the defaulting party
becomes liable for such amounts hereunder until such amounts are (i)
paid in full by the defaulting party or (ii) satisfied in full by the
exercise of the nondefaulting party's rights hereunder. Interest on any
sum payable by the defaulting party to the nondefaulting party under
this Paragraph 11(h) shall be at a rate equal to the greater of the
Pricing Rate for the relevant Transaction or the Prime Rate.
(i) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other
agreement or applicable law.
12. Single Agreement
Buyer and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon
the fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be
entitled to set off claims and apply property held by them in respect of
any Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other
transfers made by either of them in respect of any Transaction shall be
deemed to have
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been made in consideration of payments, deliveries and other transfers in
respect of any other Transactions hereunder, and the obligations to make
any such payments, deliveries and other transfers may be applied against
each other and netted.
13. Notices and Other Communications
Any and all notices, statements, demands or other communications hereunder
may be given by a party to the other by mail, facsimile, telegraph,
messenger or otherwise to the address specified in Annex 11 hereto, or so
sent to such party at any other place specified in a notice of change of
address hereafter received by the other. All notices, demands and requests
hereunder may be made orally, to be confirmed promptly in writing, or by
other communication as specified in the preceding sentence.
14. Entire Agreement; Severability
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or
agreement.
15. Non-assignability; Termination
(a) The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by either party without the
prior written consent of the other party, and any such assignment
without the prior written consent of the other party shall be null and
void. Subject to the foregoing, this Agreement and any Transactions
shall be binding upon and shall inure to the benefit of the parties and
their respective successors and assigns. This Agreement may be
terminated by either party upon giving written notice to the other,
except that this Agreement shall, notwithstanding such notice, remain
applicable to any Transactions then outstanding.
(b) Subparagraph (a) of this Paragraph 15 shall not preclude a party from
assigning, charging or otherwise dealing with all or any part of its
interest in any sum payable to it under Paragraph 11 hereof.
16. Governing Law
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.
17. No Waivers, Etc.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any
remedy hereunder by any party shall constitute a waiver of its right to
exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure
herefrom shall be effective unless and until such shall be in writing and
duly executed by both of the parties hereto. Without limitation on an of
the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or
4(b) hereof will not constitute a waiver of any right to do so at a later
date.
18. Use of Employee Plan Assets
(a) If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA) are intended
to be used by either party hereto (the "Plan Party") in a Transaction,
the Plan Party shall so notify the other party prior to the
Transaction. The Plan Party shall represent in writing to the other
party that the Transaction does not constitute a prohibited transaction
under ERISA or
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is otherwise exempt therefrom, and the other party may proceed in
reliance thereon but shall not be required so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this Paragraph, any
such Transaction shall proceed only if Seller furnishes or has
furnished to Buyer its most recent available audited statement of its
financial condition and its most recent subsequent unaudited statement
of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph, Seller shall
be deemed (i) to represent to Buyer that since the date of Seller's
latest such financial statements, there has been no material adverse
change in Seller's financial condition which Seller has not disclosed
to Buyer, and (ii) to agree to provide Buyer with future audited and
unaudited statements of its financial condition as they are issued, so
long as it is a Seller in any outstanding Transaction involving a Plan
Party.
19. Intent
(a) The parties recognize that each 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 Securities subject to
such Transaction or the term of such Transaction would render such
definition inapplicable), and a "securities contract" as that term is
defined in Section 741 of Title 11 of the United States Code, as
amended (except insofar as the type of assets subject to such
Transaction would render such definition inapplicable).
(b) It is understood that either party's right to liquidate Securities
delivered to it in connection with Transactions hereunder or to
exercise any other remedies pursuant to Paragraph 11 hereof is a
contractual right to liquidate such 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 each Transaction hereunder is
a "qualified financial contract," as that term is defined in FDIA and
any rules, orders or policy statements thereunder (except insofar as
the type of assets subject to such Transaction would render such
definition inapplicable).
(d) It is understood that this Agreement constitutes a "netting contract"
as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment
entitlement and payment obligation under any Transaction hereunder
shall constitute a "covered contractual payment entitlement" or 11
"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).
20. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a broker or
dealer registered with the Securities and Exchange Commission ("SEC")
under Section 15 of the Securities Exchange Act of 1934 ("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 any Transaction
hereunder;
10
(b) in the case of Transactions in which one of the parties is a government
securities broker or a government securities dealer registered with the
SEC under Section 15C of the 1934 Act, SIPA will not provide protection
to the other party with respect to any Transaction hereunder; and
(c) in the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured
by the Federal Deposit Insurance Corporation or the National Credit
Union Share Insurance Fund, as applicable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
11
CAPITAL TRUST, INC.,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
Date:
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE COMPANY,
By: ▇▇▇▇▇▇▇ Sachs Real Estate Funding Corp.,
its general partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Date:
Annex I
ANNEX I to
MASTER REPURCHASE AGREEMENT
TABLE OF CONTENTS
Page
1. APPLICABILITY; OTHER APPLICABLE ANNEXES....................................1
2. ADDITIONAL AND SUBSTITUTE DEFINITIONS......................................1
3. INITIATION; CONFIRMATION; TERMINATION; FEES...............................19
4. MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS........................29
5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS....................................30
6. SECURITY INTEREST.........................................................32
7. PAYMENT, TRANSFER AND CUSTODY.............................................33
8. CERTAIN RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED LOANS...............41
9. SUBSTITUTION..............................................................41
10. REPRESENTATIONS...........................................................42
11. NEGATIVE COVENANTS OF SELLER..............................................46
12. AFFIRMATIVE COVENANTS OF SELLER...........................................47
13. [INTENTIONALLY OMITTED.]..................................................51
14. EVENTS OF DEFAULT; REMEDIES...............................................51
15. SINGLE AGREEMENT..........................................................55
16. NOTICES AND OTHER COMMUNICATIONS..........................................56
17. NON-ASSIGNABILITY.........................................................56
18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL..............57
19. NO RELIANCE; DISCLAIMERS..................................................58
20. INDEMNITY AND EXPENSES....................................................59
21. DUE DILIGENCE.............................................................60
22. SERVICING.................................................................61
23. TREATMENT FOR TAX PURPOSES................................................62
24. INTENT....................................................................62
25. INTENTIONALLY OMITTED.....................................................63
26. MISCELLANEOUS.............................................................63
i
SCHEDULE 1 Purchase Percentages And Applicable Spreads..................1-1
SCHEDULE 2 Initial Portfolio Loans......................................2-1
SCHEDULE 3 Purchased Loan Information...................................3-1
SCHEDULE 4 Approved Appraisers..........................................4-1
SCHEDULE 5 Approved Engineers...........................................5-1
SCHEDULE 6 Approved Environmental Consultants...........................6-1
SCHEDULE 7-A Form of UCC Financing Statement............................7-A-1
SCHEDULE 7-B Form of UCC Financing Statement Amendment..................7-B-1
EXHIBITS
--------
EXHIBIT I Form of Confirmation
EXHIBIT II Authorized Representatives of Seller
EXHIBIT III Form of Custodial Delivery Certificate
EXHIBIT IV-1 Form of Power of Attorney to Buyer
EXHIBIT IV-2 Form of Power of Attorney to Seller
EXHIBIT V Representations and Warranties Regarding Purchased Loans
EXHIBIT VI Form of Blocked Account Agreement
EXHIBIT VII Form of Direction Letter
EXHIBIT VIII Form of Bailee Agreement
EXHIBIT IX Eligibility Criteria
ii
Supplemental Terms and Conditions
---------------------------------
This Annex I forms a part of the Master Repurchase Agreement dated as
of August 17, 2004 between Capital Trust, Inc., as seller, and ▇▇▇▇▇▇▇ ▇▇▇▇▇
Mortgage Company, as buyer (together with Annex I, the "Agreement"). Capitalized
terms used in this Annex I without definition shall have the respective meanings
assigned to such terms in the Agreement. This Annex I is intended to supplement
the Agreement and shall, wherever possible, be interpreted so as to be
consistent with the Agreement; however, in the event of any conflict or
inconsistency between the provisions of this Annex I, on the one hand, and the
provisions of the Agreement, on the other, the provisions of this Annex I shall
govern and control. All references in the Agreement and in this Annex I to "the
Agreement" shall be deemed to mean and refer to the Agreement, as supplemented
and modified by this Annex I or as otherwise modified after the date hereof.
1. APPLICABILITY; OTHER APPLICABLE ANNEXES
(a) Paragraph 1 of the Agreement ("Applicability") is hereby deleted
and replaced with the following:
From time to time the parties hereto may enter into transactions in
which Seller agrees to transfer to Buyer one or more Eligible Loans against the
transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer
to Seller such Eligible Loans at a date certain (or such earlier date, in
accordance with the terms hereof), against the transfer of funds by Seller. Each
such transaction shall be referred to herein as a "Transaction" and, unless
otherwise agreed in writing, shall be governed by the Agreement, including any
supplemental terms or conditions contained in this Annex I and in any other
annexes identified herein or therein as applicable hereunder.
(b) In addition to this Annex I and the Schedules hereto, the following
Annexes and any Schedules thereto shall form a part of the Agreement and shall
be applicable thereunder:
Annex II - Names and Addresses for Communications Between Parties.
2. ADDITIONAL AND SUBSTITUTE DEFINITIONS
(a) The following capitalized terms in Paragraph 2 of the Agreement
("Definitions") are hereby deleted in their entirety:
(i) "Additional Purchased Securities";
(ii) "Buyer's Margin Amount";
(iii) "Buyer's Margin Percentage";
(iv) "Margin Notice Deadline";
(v) "Prime Rate";
(vi) "Purchased Securities";
(vii) "Seller's Margin Amount"; and
(viii) "Seller's Margin Percentage".
(b) The following capitalized terms shall have the respective meanings
set forth below, in lieu of the meanings for such terms set forth in Paragraph 2
of the Agreement ("Definitions"):
"Act of Insolvency" shall mean, with respect to any party, (i) the
commencement by such party as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, moratorium, dissolution,
delinquency or similar law, or such party seeking the appointment or election of
a receiver, conservator, trustee, custodian or similar official for such party
or any substantial part of its property, or the convening of any meeting of
creditors for purposes of commencing any such case or proceeding or seeking such
an appointment or election, (ii) the making by such party of a general
assignment for the benefit of creditors, or (iii) the admission in writing by
such party of such party's inability to pay such party's debts as they become
due.
"Confirmation" shall have the meaning specified in Section 3(d) of this
Annex I.
"Income" shall mean, with respect to any Purchased Loan at any time,
any payment or other cash distribution thereon of principal, interest,
dividends, fees, reimbursements or proceeds or other cash distributions thereon
(including casualty or condemnation proceeds).
"Margin Deficit" shall have the meaning specified in Section 4(a) of
this Annex I.
"Margin Excess" shall have the meaning specified in Section 4(c) of
this Annex I.
"Market Value" shall mean, with respect to any Purchased Loan as of any
relevant date, the lesser of (x) market value of such Purchased Loan on such
date, as determined by Buyer in its good faith but sole discretion, and (y) the
par amount of such Purchased Loan.
For purposes of Buyer's determination, (i) the Market Value may be
determined by reference to an Appraisal, discounted cash flow analysis or other
method (which method shall be selected by Buyer in good faith), (ii) any amounts
or claims secured by related Eligible Property or Properties ranking senior to
or pari passu with the lien of the Purchased Loan may be deducted from the
Market Value of the Purchased Loan, (iii) the Market Value of any Defaulted Loan
shall be zero (unless Buyer otherwise specifies), (iv) Buyer may consider the
representations and warranties set forth in Exhibit V (including a breach
thereof), and exceptions thereto in its determination of the Market Value of the
Purchased Loans and (iv) for the avoidance of doubt, Buyer may reduce Market
Value for any actual or potential risks (including risk of delay) posed by any
liens or claims on the related Eligible Property or Properties. Seller shall
cooperate with Buyer in its determination of the Market Value of each item of
underlying collateral (including, without limitation, providing all information
and documentation in the possession of Seller regarding such item of underlying
collateral or otherwise required by Buyer in its commercially reasonable
judgment).
2
"Pricing Rate" shall mean, for any Purchased Loan and any Pricing Rate
Period, an annual rate equal to the LIBO Rate for such Pricing Rate Period plus
the Applicable Spread for the applicable Loan Type and shall be subject to
adjustment and/or conversion as provided in Sections 3(j), 3(k) and 3(s) of this
Annex I. The Pricing Rate shall be computed on the basis of a 360-day year and
the actual number of days elapsed.
"Purchase Price" shall mean, with respect to any Purchased Loan the
price at which such Purchased Loan is transferred by Seller to Buyer on the
applicable Purchase Date. The Purchase Price as of any Purchase Date for any
Purchased Loan of a particular Loan Type shall be an amount (expressed in
dollars) equal to the product obtained by multiplying (i) the Market Value of
such Purchased Loan (or the par amount of such Purchased Loan, if lower than the
Market Value) by (ii) the Purchase Percentage for the related Loan Type.
"Purchase Date" shall mean, with respect to any Purchased Loan, the
date on which such Purchased Loan is transferred by Seller to Buyer.
"Repurchase Date" with respect to any Purchased Loan shall mean the
Facility Termination Date or such earlier date specified in the related
Confirmation, or if applicable, the related Early Repurchase Date or Accelerated
Repurchase Date.
"Repurchase Price" shall mean, with respect to any Purchased Loan as of
any date, the price at which such Purchased Loan is to be transferred from Buyer
to Seller upon termination of the related Transaction; in each case, such price
shall equal the sum of the Purchase Price of such Purchased Loan and the accrued
Price Differential with respect to such Purchased Loan as of the date of such
determination, minus all Income and cash actually received by Buyer in respect
of such Transaction and applied towards the Repurchase Price and/or Price
Differential pursuant to this Annex I.
(c) In addition to the terms defined in Paragraph 2 of the Agreement
("Definitions") not otherwise deleted pursuant to Section 2(a) of this Annex I
and the terms defined in Section 2(b) of this Annex I, the following capitalized
terms shall have the respective meanings set forth below:
"Accelerated Repurchase Date" shall have the meaning specified in
Section 14(b)(i) of this Annex I.
"Accepted Servicing Practices" shall mean with respect to any Purchased
Loan, in conformity with those accepted and prudent servicing practices in the
industry for loans of the same type and in a manner at least equal in quality to
the servicing the applicable servicer provides for assets similar to such
Purchased Loans that it owns.
"Affiliate" shall mean, when used with respect to any specified Person,
any other Person directly or indirectly controlling, controlled by, or under
common control with, such Person. Control shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise and "controlling" and "controlled" shall have meanings
correlative thereto.
3
"Agreement" shall have the meaning specified in the introductory
paragraph of this Annex I.
"Alternative Rate" shall have the meaning specified in Section 3(k) of
this Annex I.
"Alternative Rate Transaction" shall mean, with respect to any Pricing
Rate Period, any Transaction with respect to which the Pricing Rate for such
Pricing Rate Period is determined with reference to the Alternative Rate.
"Applicable Spread" shall mean, (i)(a) with respect to a Purchased Loan
(other than Extended Loans), so long as no Event of Default shall have occurred
and be continuing, the per annum rate specified in Schedule 1A attached hereto
as being the "Applicable Spread" for the Purchased Loans in such Loan Type and
(b) with respect to an Extended Loan, so long as no Event of Default shall have
occurred and be continuing, a per annum rate specified in Schedule 1B attached
hereto as being the "Applicable Spread" for such Extended Loan (or such other
spread notified in writing by Buyer to Seller as provided in Section 3(s)), and
(ii) in each case, after the occurrence and during the continuance of an Event
of Default, the applicable per annum rate described in clause (i) of this
definition, plus 400 basis points (4.0%).
"Appraisal" shall mean an appraisal of any Eligible Property prepared
by a licensed appraiser listed on Schedule 4 attached hereto, as such schedule
may be amended from time to time by Seller or Buyer upon approval by Buyer in
its reasonable discretion, in accordance with the Uniform Standards of
Professional Appraisal Practice of the Appraisal Foundation, in compliance with
the requirements of Title 11 of the Financial Institution Reform, Recovery and
Enforcement Act and utilizing customary valuation methods such as the income,
sales/market or cost approaches, as any of the same may be updated by
recertification from time to time by the appraiser performing such Appraisal.
"Asset Base" shall mean, as of any date of determination, the aggregate
Asset Base Components of all Purchased Loans transferred by the Seller to the
Buyer hereunder as of such date.
"Asset Base Component" shall mean, as of any date of determination,
with respect to each Purchased Loan, the product of its Market Value multiplied
by the Purchase Percentage applicable to such Purchased Loan as of such date.
"Assignment of Leases" shall mean, with respect to any Purchased Loan
which is a mortgage loan, any assignment of leases, rents and profits or
equivalent instrument, whether contained in the related Mortgage or executed
separately, assigning to the holder or holders of such Mortgage all of the
related Mortgagor's interest in the leases, rents and profits derived from the
ownership, operation, leasing or disposition of all or a portion of the related
Mortgaged Property as security for repayment of such Purchased Loan.
"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
assignment of the mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related property is located to reflect the assignment and pledge of the
Mortgage.
4
"Bailee" shall mean Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP or such other
third party as Buyer may approve in its sole discretion.
"Bailee Agreement" shall mean the Bailee Agreement among Seller, Buyer
and Bailee in the form of Exhibit VIII hereto.
"Blocked Account" shall have the meaning specified in Section 5 of this
Annex I.
"Blocked Account Agreement" shall mean the Blocked Account Agreement,
in the form attached hereto as Exhibit VI (or such other form as shall have been
approved by Buyer, such approval not to be unreasonably withheld, delayed or
conditioned), dated as of the date hereof and executed by Buyer, Seller and the
Depository Bank (and any successor thereto or replacement thereof executed by
Buyer, Seller and the Depository Bank).
"Business Day" shall mean any day other than (i) a Saturday or Sunday
or (ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of
New York or the Custodian is authorized or obligated by law or executive order
to be closed.
"Buyer" shall mean ▇▇▇▇▇▇▇ Sachs Mortgage Company, and any successor or
assign.
"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 the Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"CDO Indenture" shall mean the Indenture dated as of July 20, 2004,
among Capital Trust RE CDO 2004-1 Ltd. and Capital Trust RE CDO 2004-1 Corp., as
co-issuers, and LaSalle Bank National Association, as trustee.
"Change of Control" shall mean the occurrence of any of the following:
(i) a majority of the members of the board of directors of
Seller changes during any twelve (12) month period after the date
hereof; or
(ii) a merger, consolidation or other transaction in which a
Person which is not an Affiliate acquires in excess of 50% of the
voting common equity of Seller; or
(iii) both of ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ cease to hold a
senior management position with direct day-to-day responsibility for
the management of Seller and a replacement for ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇▇▇ (whichever is the last to hold a senior management position)
acceptable to Buyer has not been appointed within 45 days.
"Collection Period" shall mean with respect to the Remittance Date in
any month, the period beginning on but excluding the Cut-off Date in the month
preceding the month in which such Remittance Date occurs and continuing to and
including the Cut-off Date immediately preceding such Remittance Date.
5
"Costs" shall mean, with respect to any Purchased Loan, all
out-of-pocket obligations, costs, fees, indemnities and expenses in respect of
such Purchased Loan actually incurred by Buyer, that (i) arise out of Seller's
conduct or (ii) (A) are required to be paid by the lender under the applicable
Purchased Loan Documents and (B) do not arise out of the gross negligence or
willful misconduct of the Buyer.
"Custodial Agreement" shall mean the Custodial Agreement, dated as of
the date hereof, by and among Custodian, Seller and Buyer.
"Custodial Delivery Certificate" shall mean the delivery certificate, a
form of which is attached hereto as Exhibit III, executed by Seller in
connection with its delivery of a Purchased Loan File to Buyer or its designee
(including the Custodian) pursuant to Section 7 of this Annex I.
"Custodian" shall mean Deutsche Bank Trust Company Americas or any
successor Custodian appointed by Buyer.
"Cut-off Date" shall mean the last Business Day of the calendar month
preceding each Remittance Date.
"Debt to Equity Ratio" shall mean the ratio of Total Indebtedness to
Tangible Net Worth.
"Default" shall mean any event which, with the giving of notice, the
passage of time, or both, would constitute an Event of Default.
"Defaulted Loan" shall mean any Purchased Loan as to which (A) there is
a breach beyond any applicable cure period of a representation, warranty or
covenant by the related borrower or obligor under the applicable Purchased Loan
Documents or by Seller under Exhibit V, (B) there is a default beyond any
applicable cure period under the related Purchased Loan Documents in the payment
when due of interest, principal or any other amounts which default continues,
(C) any other "Event of Default" under the related Purchased Loan Document, (D)
to the extent that the related Transaction is deemed a loan under federal, state
or local law Buyer ceases to have a first priority perfected security interest
or (E) the related Purchased Loan File or any portion thereof has been released
from the possession of the Custodian under the Custodial Agreement to anyone
other than Buyer or any Affiliate of Buyer except in accordance with the terms
of the Custodial Agreement.
"Depository Bank" shall mean PNC Bank, N.A. or any successor Depository
Bank appointed by Seller with the prior written consent of Buyer (which consent
shall not be unreasonably withheld, delayed or conditioned) which delivers a
deposit account agreement in the form of the Blocked Account Agreement or
another form reasonably acceptable to Buyer.
"Diligence Fee" shall mean fees (not to exceed $35,000 annually)
payable by Seller to Buyer in respect of Buyer's expenses (other than legal
expenses) incurred in connection with its review of the Diligence Materials.
"Diligence Materials" shall mean the Preliminary Due Diligence Package
together with the Supplemental Due Diligence List.
6
"Disqualified Transferee" shall mean any one of the following:
(a) iStar Financial and its Affiliates;
(b) Anthracite Carbon Fund, together with any successor funds,
to the extent such funds are in the same business as their predecessor
fund and its Affiliates;
(c) DB Realty Mezzanine Investment Fund I LLC and DB Realty
Mezzanine Investment Fund II LLC, together with any successor funds, to
the extent such funds are in the same business as their predecessor
fund;
(d) Brascan and its Affiliates;
(e) Guggenheim Structured Real Estate Operating Company, LLC
and its Affiliates;
(f) ▇▇ ▇▇▇▇▇/Gramercy Capital and their Affiliates;
(g) Arbor Commercial Mortgage LLC and its Affiliates;
(h) CW Capital and its Affiliates;
(i) Fortress/Draw Bridge and its Affiliates; and
(j) Whitehall.
"Draft Appraisal" shall mean a short form appraisal, "letter opinion of
value," or any other form of draft appraisal reasonably acceptable to Buyer.
"Early Repurchase Date" shall have the meaning specified in Section
3(g) of this Annex I.
"Early Repurchase Deposit" shall have the meaning specified in Section
3(j) of this Annex I.
"Early Repurchase Deposit Application Date" shall have the meaning
specified in Section 3(j) of this Annex I.
"Early Repurchase Deposit Funding Date" shall have the meaning
specified in Section 3(j) of this Annex I.
"EBITDA" shall mean, for each fiscal quarter, with respect to Seller
and its consolidated Subsidiaries, an amount equal to (a) Net Income for such
period (excluding the effect of any extraordinary gains or losses resulting from
the sale of property or non-cash gains or losses outside the ordinary course of
business) plus (b), without duplication, an amount which, in the determination
of Net Income for such period, has been deducted for (i) interest expense for
such period, (ii) total federal, state, foreign or other income or franchise
taxes for such period, and (iii) all depreciation and amortization for such
period, all as determined with respect to any consolidated Subsidiary in
accordance with the methodology specified in the definition of Net
7
Income, plus (c) any nonrecurring fees and expenses incurred on or prior to the
date of the execution and delivery of the Agreement, less (d) any non-cash
reserve activity.
"Eligible Loans" shall mean any of the following types of loans listed
in (i) through (v) below, (v) acceptable to Buyer in the exercise of its sole
and absolute discretion, (w) secured directly or indirectly by an Eligible
Property, (x) as to which the applicable representations and warranties set
forth in Exhibit V are true and correct as of the applicable Purchase Date, (y)
as to which the eligibility criteria set forth in Exhibit IX are met as of the
applicable Purchase Date and (z) has a maximum LTV of 85%:
(i) performing Mezzanine Loans (or participation interests
therein) which are secured by pledges of the equity ownership interests
in entities that directly or indirectly own Eligible Properties
("Mezzanine Loans").
(ii) performing Mortgage Loans secured by first liens on
Eligible Properties ("First Mortgage Loans") or second liens on
Eligible Properties ("Second Mortgage Loans").
(iii) senior subordinate participation interests (or a senior
subordinate promissory note that is, in effect, similar in nature to a
senior subordinate participation interest) in performing Mortgage Loans
secured by first liens on Eligible Properties that also secures a
senior promissory note (or senior interest) in such loan and may also
secure a junior subordinate promissory note (or junior subordinate
interest) in such loan ("Senior First Mortgage B Notes").
(iv) junior participation interests (or a junior promissory
note that is, in effect, similar in nature to a junior participation
interest) in performing Mortgage Loans secured by first liens on
Eligible Properties that also secure a senior (or senior subordinate)
promissory note (or senior (or senior subordinate) interest) in such
loan ("Junior First Mortgage B Notes").
"Eligible Property" shall mean a property that is a multifamily,
retail, office, industrial, warehouse, condominium or hospitality property or
such other property type acceptable to Buyer in the exercise of its good faith
business judgment; provided, however, that Buyer shall determine in its sole and
absolute discretion, on a case-by-case basis, whether any healthcare related
property, such as assisted living, nursing homes, acute care, rehabilitation
centers, diagnostic centers and psychiatric centers, qualifies as an Eligible
Property.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder. Section
references to ERISA are to ERISA, as in effect at the date of this Annex I and,
as of the relevant date, any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business (whether
or not incorporated) that is a member of any group of organizations described in
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA of which
Seller is a member at any relevant time.
8
"Event of Default" shall have the meaning specified in Section 14(a) of
this Annex I.
"Extended Loan" shall have the meaning specified in Section 3(s) of
this Annex I.
"Facility Amount" shall mean $50,000,000.
"Facility Termination Date" shall mean September 1, 2007 unless
extended pursuant to Section 3(q) of this Annex I.
"Federal Funds Rate" shall mean, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day, (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (New York
time) on such day or such transactions received by the Buyer from three Federal
funds brokers of recognized standing selected by the Buyer in its sole
discretion.
"Filings" shall have the meaning specified in Section 6(b) of this
Annex I.
"Financing Transaction" shall mean a repurchase transaction or a
financing transaction between Buyer (or an Affiliate of Buyer) and any
counterparty.
"First Mortgage B Note" shall mean any Senior First Mortgage B Note or
Junior First Mortgage B Note.
"Fitch" means Fitch Inc.
"Fixed Charge Ratio" shall mean, with respect to any period, the ratio
of (a) EBITDA for such period to (b) the sum of (i) interest expense and (ii)
preferred dividends (specifically excluding any convertible trust preferred
dividends) paid by Seller during such period.
"GAAP" shall mean United States generally accepted accounting
principles consistently applied as in effect from time to time.
"Governmental Authority" shall mean any national or federal government,
any state, regional, local or other political subdivision thereof with
jurisdiction and any Person with jurisdiction exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"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 maximum reasonably
anticipated liability in respect thereof as determined by such
9
Person in good faith in accordance with GAAP. The terms "Guarantee" and
"Guaranteed" used as verbs shall have correlative meanings.
"Hedging Transactions" shall mean, with respect to any or all of the
Purchased Loans, any short sale of U.S. Treasury Securities or mortgage-related
securities, futures contract (including Eurodollar futures) or options contract
or any interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by Seller or the underlying obligor with respect to
any Purchased Loan and pledged to Seller as collateral for such Purchased Loan,
with one or more counterparties whose unsecured debt is rated at least AA (or
its equivalent) by any Rating Agency or, with respect to any Hedging Transaction
pledged to Seller as additional collateral for a Purchased Loan, such other
rating requirement applicable to such Hedging Transaction set forth in the
related Purchased Loan Documents or which is otherwise reasonably acceptable to
Buyer; provided that Seller shall not grant or permit any liens, security
interests, charges, or encumbrances with respect to any such hedging
arrangements for the benefit of any Person other than Buyer.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a lien on the property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (e) Capital Lease Obligations of such Person; (f)
obligations of such Person under repurchase agreements or like arrangements; (g)
Indebtedness of others Guaranteed by such Person; (h) all 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.
"Indemnified Amounts" and "Indemnified Parties" shall have the meaning
specified in Section 20 of this Annex I.
"Insured Closing Letter and Escrow Instructions" shall mean a letter
addressed to Seller and Buyer from the title insurance underwriter (or any agent
thereof) acting as an agent for each Table Funded Purchased Loan and related
escrow instructions, which letter and instructions shall be in form and
substance reasonably acceptable to Buyer and Seller.
"LIBO Rate" shall mean, with respect to any Pricing Rate Period
pertaining to a Transaction, a rate per annum determined for such Pricing Rate
Period in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
10
LIBOR
________________________
1 - Reserve Requirement
"LIBOR" shall mean the rate per annum calculated as set forth below:
(i) On each Pricing Rate Determination Date, LIBOR for the
next Pricing Rate Period will be the rate for deposits in United States
dollars for a one-month period which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on such date; or
(ii) On any Pricing Rate Determination Date on which no such
rate appears on Telerate Page 3750 as described above, LIBOR for the
next Pricing Rate Period will be determined on the basis of the
arithmetic mean of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London
time, on such date to prime banks in the London interbank market for a
one-month period.
All percentages resulting from any calculations or determinations referred to in
this definition will be rounded upwards, if necessary, to the nearest multiple
of 1/100th of 1% and all U.S. dollar amounts used in or resulting from such
calculations will be rounded to the nearest cent (with one-half cent or more
being rounded upwards).
"LIBOR Transaction" shall mean, with respect to any Pricing Rate
Period, any Transaction with respect to which the Pricing Rate for such Pricing
Rate Period is determined with reference to the LIBO Rate.
"Loan Type" shall mean, with respect to any Purchased Loan, each of the
loan types listed in Schedule 1A attached hereto.
"LTV" shall mean, with respect to any Eligible Property or Properties,
the ratio of the aggregate outstanding debt (which shall include the related
Eligible Loan and all debt senior to or pari passu with such Eligible Loan)
secured, directly or indirectly, by such Eligible Property or Properties to the
aggregate value of such Eligible Property or Properties as determined by Buyer
in its sole and absolute discretion. For purposes of Buyer's determination, (i)
the value may be determined by reference to an Appraisal, discounted cash flow
analysis or other commercially reasonable method and (ii) for the avoidance of
doubt, Buyer may reduce value for any actual or potential risks (including risk
of delay) posed by any liens or claims on the related Eligible Property or
Properties.
"Margin Excess Advance" shall have the meaning specified in Section
4(c) of this Annex I.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the property, business, operations, financial condition or prospects of Seller,
(b) the ability of Seller to perform its obligations under any of the
Transaction Documents to which it is a party, (c) the validity or enforceability
of any of the Transaction Documents, (d) the rights and remedies of Buyer under
any of the Transaction Documents, (e) the timely payment of the Repurchase Price
of or accrued
11
Price Differential in respect of the Purchased Loans or other amounts payable in
connection therewith, or (f) the aggregate Market Value of the Purchased Loans.
"Mezzanine Loan" shall mean any loan (including any participation
interest therein) secured by a pledge of the direct or indirect equity ownership
interests in a Person that owns a Mortgaged Property that also secures a
Mortgage Note.
"Mezzanine Note" shall mean a note or other evidence of indebtedness of
the owner or owners of direct or indirect equity ownership interests in an
underlying real property owner secured by a pledge of such ownership interests.
"Monthly Statement" shall mean, for each calendar month during which
the Agreement shall be in effect, Seller's or Servicer's, as applicable,
reconciliation in arrears of beginning balances, interest and principal
paid-to-date and ending balances for each Purchased Loan, together with a
certified written report describing (a) any developments or events that are
reasonably likely to have a Material Adverse Effect, (b) any and all written
modifications to any Purchased Loan Documents, (c) any delinquency and loss
experience with respect to any Purchased Loan and (d) such other information as
mutually agreed by Seller and Buyer which reconciliation and report shall be
delivered to Buyer for each calendar month during the term of the Agreement
within ten (10) days following the end of each such calendar month.
"Moody's" shall mean ▇▇▇▇▇'▇ Investor Service, Inc.
"Mortgage" shall mean the mortgage, deed of trust, deed to secure debt
or other instruments, creating a valid and enforceable first or second lien, as
applicable, on or a first or second priority ownership interest in a Mortgaged
Property.
"Mortgage Loan" shall mean a commercial mortgage loan secured by a lien
on real property, and includes any First Mortgage Loan, Second Mortgage Loan,
Senior First Mortgage B Note and Junior First Mortgage B Note.
"Mortgage Note" shall mean a note or other evidence of indebtedness of
a Mortgagor secured by a Mortgage.
"Mortgaged Property" shall mean the real property or properties
securing repayment of the debt evidenced by a Mortgage Note, or, in the case of
any Mezzanine Loan, owned indirectly by the related obligor.
"Mortgagor" shall mean the obligor on a Mortgage Note, the grantor of
the related Mortgage and the owner of the related Mortgaged Property.
"Net Income" shall mean, for any period, the consolidated net income
for such period of Seller as reported in Seller's public financial statements
prepared in accordance with GAAP.
"New Loan" shall mean an Eligible Loan that Seller proposes to be
included as a Purchased Loan.
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"Officer's Certificate" shall mean, as to any Person, a certificate of
the chief executive officer, any vice chairman and the chief financial officer
of such Person or, for the purpose of executing certificates, the president, the
vice president and counsel responsible therefor.
"Originated Loan" shall mean any loan that is an Eligible Loan and
whose related loan documents were prepared by Seller or an Affiliate controlled
by Seller.
"Permitted Transferee" shall mean any of the following that is not a
Disqualified Transferee:
(x) any Affiliate of Buyer; or
(y) any Person that is an insurance company, bank, savings and
loan association, trust company, commercial credit corporation, pension
plan, pension fund or pension fund advisory firm, mutual fund or other
investment company, governmental entity or plan, or a financial
institution substantially similar to any of the foregoing and being
experienced in making commercial loans and which holds at least
$600,000,000 of real estate or other assets (including, without
limitation, loans secured directly or indirectly by real estate assets)
located in the United States (or any entity wholly-owned by any one or
more institutions meeting the foregoing criteria).
"Person" shall mean an individual, corporation, limited liability
company, business trust, partnership, joint tenant or tenant-in-common, trust,
unincorporated organization, or other entity, or a federal, state or local
government or any agency or political subdivision thereof.
"Plan" shall mean an employee benefit or other plan established or
maintained during the five year period ended prior to the date of the Agreement
or to which Seller or any ERISA Affiliate makes, is obligated to make or has,
within the five year period ended prior to the date of the Agreement, been
required to make contributions and that is covered by Title IV of ERISA or
Section 302 of ERISA or Section 412 of the Code.
"Plan Assets" shall mean assets of any (i) employee benefit plan (as
defined in Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan (as
defined in Section 4975(e)(l) of the Code) subject to Section 4975 of the Code,
or (iii) governmental plan (as defined in Section 3(32) of ERISA) subject to any
other federal, state or local laws, rules or regulations substantially similar
to Title I of ERISA or Section 4975 of the Code.
"Portfolio Loans" shall mean all of the Purchased Loans. As of the date
of the Agreement, the Eligible Loans identified on Schedule 2 hereto have been
approved by Buyer as suitable for inclusion as Portfolio Loans, subject to
completion of the deliveries and actions described in Section 7.
"Pre-Existing Loans" shall mean any loan that is an Eligible Loan and
is not an Originated Loan.
"Preliminary Due Diligence Package" shall mean with respect to any New
Loan, the following due diligence information relating to such New Loan to be
provided by Seller to Buyer pursuant to this Annex I:
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(i) a summary memorandum, among other things, outlining the
proposed transaction, including potential transaction benefits and all
material underwriting risks, and Underwriting Issues, anticipated exit
strategies and all other characteristics of the proposed transaction
that a prudent buyer would consider material;
(ii) current rent roll, if applicable;
(iii) cash flow pro-forma, plus historical information, if
available;
(iv) indicative interest coverage ratios;
(v) indicative loan-to-value ratio;
(vi) Seller's or any Affiliate's relationship with its
potential underlying borrower or any affiliate;
(vii) third party reports, to the extent available and
applicable, including:
(a) engineering and structural reports;
(b) current Appraisal;
(c) Phase I environmental report (including asbestos
and lead paint report) and, if applicable, Phase II or other
follow-up environmental report if recommended in Phase I;
(d) seismic reports; and
(e) operations and maintenance plan with respect to
asbestos containing materials;
(viii) documents evidencing such New Loan, or current drafts
thereof, including, without limitation, underlying debt and security
documents, guaranties, underlying borrower's organizational documents,
warrant agreements, loan and collateral pledge agreements, and
intercreditor agreements, as applicable;
(ix) a list that specifically identifies any Purchased Loan
Documents that relate to such Purchased Loan but are not in Seller's
possession;
(x) in the case of a participation interest, all information
described in this definition which would otherwise be provided for the
underlying Mortgage Loan if it constituted an Eligible Loan except
that, as to items set forth in subparagraphs (vii) and (xii), to the
extent Seller possesses such information or has access to such
information because it was provided to the related lead lender and made
available to Seller, and in addition, all documentation evidencing the
participation interest;
(xi) insurance documentation as shall be satisfactory to Buyer
in its sole discretion; and
14
(xii) analyses and reports with respect to such other matters
concerning the New Loan as Buyer may in its reasonable discretion
require.
"Pricing Rate Determination Date" shall mean with respect to any
Pricing Rate Period, the second (2nd) Business Day preceding the first day of
the Pricing Rate Period.
"Pricing Rate Period" shall mean (a) in the case of the first Pricing
Rate Period with respect to any Transaction, the period commencing on and
including the Purchase Date for such Transaction and ending on and including the
last day of the calendar month in which the Purchase Date occurs, and (b) in the
case of any subsequent Pricing Rate Period, the period commencing on and
including the first day of a calendar month and ending on and including the last
day of such calendar month; provided, however, that in no event shall any
Pricing Rate Period end subsequent to the Repurchase Date.
"Principal Payment" shall mean, with respect to any Purchased Loans,
any payment or prepayment of principal received in respect thereof (including
casualty or condemnation proceeds to the extent such proceeds are not required
under the underlying loan documents to be reserved, escrowed, readvanced or
applied for the benefit of the obligor or the underlying real property). For
purposes of clarification, prepayment premiums or penalties shall not be deemed
principal.
"Purchase Percentage" shall mean, (i) with respect to any Purchased
Loan (other than an Extended Loan), the "Purchase Percentage" specified in
Schedule 1A for the related Loan Type (or as otherwise specified in the
applicable Confirmation) and (ii) with respect to any Extended Loan, the
"Purchase Percentage" specified in Schedule 1B for an Extended Loan (or as
otherwise notified in writing by Buyer to Seller as provided in Section 3(s) of
this Annex I).
"Purchased Loan Documents" shall mean, with respect to a Purchased
Loan, the documents comprising the Purchased Loan File for such Purchased Loan.
"Purchased Loan File" shall mean the documents specified as the
"Purchased Loan File" in Section 7(b) of this Annex I, together with any
additional documents and information required to be delivered to Buyer or its
designee (including the Custodian) pursuant to this Annex I.
"Purchased Loan Information" shall mean, with respect to each Purchased
Loan, the information set forth in Schedule 3 attached hereto.
"Purchased Loan Schedule" shall mean a schedule of Purchased Loans,
together with the Purchased Loan Information for each such loan attached to each
Trust Receipt and Custodial Delivery Certificate.
"Purchased Loans" shall mean (i) with respect to any Transaction, the
Eligible Loans sold by Seller to Buyer in such Transaction and (ii) with respect
to the Transactions in general, all Eligible Loans sold by Seller to Buyer and
any additional cash and/or other assets delivered by Seller to Buyer pursuant to
Section 4(a) of this Annex I.
"Rating Agency" shall mean any of Fitch, Moody's and Standard & Poor's.
15
"Reference Banks" shall mean banks each of which shall (i) be a leading
bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency market and (ii) have an established place of business in London.
Initially, the Reference Bank shall be JPMorgan Chase Bank. If any such
Reference Bank should be unwilling or unable to act as such or if Buyer shall
terminate the appointment of any such Reference Bank or if any of the Reference
Banks should be removed from the Reuters Monitor Money Rates Service or in any
other way fail to meet the qualifications of a Reference Bank, Buyer in the
exercise of its good faith business judgment may designate alternative banks
meeting the criteria specified in clauses (i) and (ii) above.
"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.
"Remittance Date" shall mean the first (1st) calendar day of each
month, or the next succeeding Business Day, if such calendar day shall not be a
Business Day.
"Requirement of Law" shall mean any law, treaty, rule, regulation,
code, directive, policy, order or requirement or determination of an arbitrator
or a court or other governmental authority whether now or hereafter enacted or
in effect.
"Reserve Requirement" shall mean, with respect to any Pricing Rate
Period, the aggregate (without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect during such Pricing Rate Period
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other governmental authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of such Board of
Governors) maintained by Buyer.
"Reset Date" shall mean, with respect to any Pricing Rate Period, the
second Business Day preceding the first day of such Pricing Rate Period with
respect to any Transaction.
"Scheduled Purchase Date" shall mean the date agreed between the
parties or specified in the applicable Confirmation as the "Purchase Date" or
the "Scheduled Purchase Date".
"Seller" shall mean Capital Trust, Inc., a Maryland corporation and its
permitted successors and assigns.
"Servicer" shall mean Midland Loan Services, Inc. or an Affiliate of
Seller approved by Buyer in its reasonable discretion.
"Servicing Agreement" shall mean that certain Servicing Agreement
entered into by Seller and Servicer dated as of August 17, 2004 or such other
servicing agreement approved by Buyer in its reasonable discretion.
"Servicing Fee" shall mean the servicing fees as defined in the
Servicing Agreement payable to the Servicer thereunder.
16
"Servicing Records" has the meaning specified in Section 22(b) of this
Annex I.
"Significant Modification" shall mean (a) any modification or amendment
of a Purchased Loan which:
(i) reduces the principal amount of the Purchased Loan in
question other than (1) with respect to a dollar-for-dollar principal
payment or (2) reductions of principal to the extent of deferred,
accrued or capitalized interest added to principal which additional
amount was not taken into account by Buyer in determining the related
Purchase Price;
(ii) increases the principal amount of a Purchased Loan other
than increases which are derived from accrual or capitalization of
deferred interest which is added to principal or protective advances;
(iii) modifies the payments of principal and interest when due
of the Purchased Loan in question;
(iv) changes the frequency of scheduled payments of principal
and interest in respect of a Purchased Loan;
(v) subordinates the lien priority of the Purchased Loan or
the payment priority of the Purchased Loan other than subordinations
expressly required under the then existing terms and conditions of the
Purchased Loan (provided, however, the foregoing shall not preclude the
execution and delivery of subordination, nondisturbance and attornment
agreements with tenants, subordination to tenant leases, easements,
plats of subdivision and condominium declarations and similar
instruments which in the commercially reasonable judgment of Seller do
not materially adversely affect the rights and interest of the holder
of the Purchased Loan in question);
(vi) releases any collateral for the Purchased Loan other than
releases required under the then existing Purchased Loan Documents or
releases in connection with eminent domain or under threat of eminent
domain;
(vii) waives, amends or modifies any cash management or
reserve account requirements of the Purchased Loan other than changes
required under the then existing Purchased Loan Documents;
(viii) waives any due-on-sale or due-on-encumbrance provisions
of the Purchased Loan other than waivers required to be given under the
then existing Purchased Loan Documents; and
(b) any modification, amendment or other material action with respect
to a Purchased Loan (or the related mortgage loan, if such Purchased Loan is
Mezzanine Loan) which under the terms of the related intercreditor agreement or
participation agreement, as the case may be, requires the consent of Seller or
its "operating advisor" or the agent (as distinct from consultation rights).
17
"Standard & Poor's" shall mean Standard & Poor's Ratings Services,
Inc., a division of the McGraw Hill Companies Inc.
"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.
"Supplemental Due Diligence List" shall mean, (i) with respect to any
New Loan, information or deliveries concerning such New Loan that Buyer shall
request in addition to the Preliminary Due Diligence Package, including, without
limitation, a credit approval memorandum representing the final terms of the
underlying transaction, a loan-to-value ratio computation and a final debt
service coverage ratio computation for such proposed New Loan and (ii) with
respect to any Extended Loan, information or deliveries concerning such Extended
Loan that Buyer shall request, including, without limitation, such information
or documents as may be necessary for Buyer to recalculate the LTV of such
Extended Loan and/or the debt service coverage ratio for such Extended Loan.
"Survey" shall mean a certified ALTA/ACSM (or applicable state
standards for the state in which a Mortgaged Property is located) survey of a
Mortgaged Property prepared by a registered independent surveyor and in form and
content reasonably satisfactory to Buyer and the company issuing the Title
Policy for such Mortgaged Property.
"Table Funded Purchased Loan" shall mean a Purchased Loan which is sold
to Buyer simultaneously with the origination or acquisition thereof, which
origination or acquisition is financed with the Purchase Price, pursuant to
Seller's request, paid directly to a title company or other settlement agent, in
each case, approved by Buyer, for disbursement in connection with such
origination or acquisition. A Purchased Loan shall cease to be a Table Funded
Purchased Loan after the Custodian has delivered a Trust Receipt to Buyer
certifying its receipt of the Purchased Loan File therefor.
"Tangible Net Worth" shall mean, as of any date of determination, (a)
all amounts which would be included under capital (it being agreed that any
convertible trust preferred securities and any unfunded commitments or capital
which can be drawn will be included as capital) on the balance sheet of Seller
at such date, determined in accordance with GAAP as of such date, less (b)(i)
amounts owing to Seller from Affiliates and (ii) intangible assets of the Seller
as of such date.
"Telerate Page 3750" shall mean the display page currently so
designated on the Dow ▇▇▇▇▇ Telerate Service (or such other page as may replace
that page on that service for the purpose of displaying comparable rates or
prices).
18
"Title Policy" shall have the meaning specified in paragraph 2(d) of
Exhibit V.
"Total Indebtedness" shall mean, as of any date of determination, the
aggregate Indebtedness of Seller as of such date less the amount of any
nonspecific balance sheet reserves maintained in accordance with GAAP as of such
date.
"Transaction" shall have the meaning specified in Section 1(a) of this
Annex I.
"Transaction Conditions Precedent" shall have the meaning specified in
Section 3(e) of this Annex I.
"Transaction Costs" shall mean, with respect to any Purchased Loan, all
actual out-of-pocket reasonable costs and expenses paid or incurred by Buyer and
payable by Seller relating to the purchase of such Purchased Loan (including
legal fees and other fees described in Section 20(b) of this Annex I).
Transaction Costs shall not include costs incurred by Buyer for overhead and
general administrative expenses.
"Transaction Documents" shall mean, collectively, the Agreement
(including this Annex I and any other annexes and schedules attached to the
Agreement), the Blocked Account Agreement, the Custodial Agreement, the
Servicing Agreement, all Transfer Documents, all Confirmations executed pursuant
to this Annex I in connection with specific Transactions and all other documents
executed in connection herewith and therewith.
"Transfer Documents" shall mean, with respect to any Purchased Loan,
all applicable documents described in Section 7(b) of this Annex I necessary to
transfer all of Seller's right, title and interest in such Purchased Loan to
Buyer in accordance with the terms of this Annex I.
"Trust Receipt" shall mean a trust receipt issued by the Custodian, or
the Bailee, as applicable, to Buyer confirming the Bailee's or the Custodian's,
as applicable, possession of certain Purchased Loan Files which are the property
of and held by the Bailee or the Custodian, as applicable, on behalf of Buyer
(or any other holder of such trust receipt) in the form required under the
Custodial Agreement or the Bailee Agreement.
"UCC" 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 any security interest 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 other jurisdiction for purposes of
the provisions of this Annex I relating to such perfection or effect of
perfection or non-perfection.
"Underwriting Issues" shall mean, with respect to any Eligible Loan as
to which Seller intends to request a Transaction, all material information that
has come to Seller's attention that, based on the making of reasonable inquiries
and the exercise of reasonable care and diligence under the circumstances,
would, in the context of the totality of the Transaction in question, be
considered a materially "negative" factor (either separately or in the aggregate
with other information), (including, but not limited to, whether any of the
Eligible Loans were repurchased from any warehouse loan facility or a repurchase
transaction due to the breach of a
19
representation and warranty or a material defect in loan documentation or
closing deliveries (such as any absence of any material Purchased Loan
Document(s)), to a reasonable institutional mortgage or mezzanine loan buyer in
determining whether to originate or acquire the Eligible Loan in question.
3. INITIATION; CONFIRMATION; TERMINATION; FEES
The provisions of Paragraph 3 of the Agreement ("Initiation;
Confirmation; Termination") are hereby deleted and replaced in their respective
entireties by the following provisions of this Section 3:
(a) Seller may, from time to time, prior to the Facility Termination
Date, request that Buyer enter into a Transaction with respect to one or more
New Loans. Seller shall initiate each request by submitting a Preliminary Due
Diligence Package for Buyer's review and approval. Notwithstanding anything to
the contrary herein, Buyer shall have no obligation to consider for purchase any
proposed Transaction which has an aggregate Repurchase Price (excluding the
Price Differential with respect to the Purchased Loans as of the date of
determination) that when combined with all Purchased Loans which have not been
repurchased by Seller exceeds the Facility Amount. Buyer shall have the right to
review all New Loans proposed to be sold to Buyer in any Transaction and to
conduct its own due diligence investigation of such New Loans as Buyer
determines is reasonably necessary. Seller agrees to promptly reimburse Buyer
for its Diligence Fees (subject to a cap of $35,000 per annum) upon request for
payment or reimbursement thereof. Notwithstanding any provision to the contrary
herein or any other Transaction Document, Buyer shall be entitled to make a
determination, in its sole and absolute discretion, whether a New Loan qualifies
as an Eligible Loan and whether to reject any or all of the New Loans proposed
to be sold to Buyer by Seller. Buyer shall have no obligation to consider for
purchase any New Loans proposed by Seller after the Facility Termination Date.
(b) Upon Buyer's receipt of a complete Preliminary Due Diligence
Package with respect to a proposed Transaction, Buyer shall have the right
within two (2) Business Days, to request in a Supplemental Due Diligence List
such additional Diligence Materials and deliveries that Buyer deems necessary to
properly evaluate the New Loans. Upon Buyer's receipt of such additional
Diligence Materials or Buyer's waiver thereof, Buyer shall within five (5)
Business Days either (i) notify Seller of Buyer's intent to proceed with the
Transaction and of its determination with respect to the Purchase Price and the
Market Value for the related New Loans (such notice, a "Preliminary Approval")
or (ii) deny, in Buyer's sole and absolute discretion, Seller's request for the
applicable Transaction. Buyer's failure to respond to Seller within five (5)
Business Days, as applicable, shall be deemed to be a denial of Seller's request
to enter into the proposed Transaction, unless Buyer and Seller have agreed
otherwise in writing.
(c) Upon Seller's receipt of Buyer's Preliminary Approval with respect
to a Transaction, Seller shall, if Seller desires to enter into such Transaction
with respect to the related New Loans upon the terms set forth by Buyer in its
Preliminary Approval, deliver the documents set forth below in this Section 3(c)
with respect to each New Loan and related Eligible Property or Properties (to
the extent not already delivered in the Preliminary Due Diligence Package) as a
condition precedent to Buyer's Final Approval and issuance of a
20
Confirmation (as defined below), all in a manner reasonably satisfactory to
Buyer and pursuant to documentation reasonably satisfactory to Buyer:
(i) Delivery of Purchased Loan Documents. Seller shall deliver
to Buyer: (x) with respect to any New Loan that is a Pre-Existing Loan,
copies of the Purchased Loan Documents, except for such Purchased Loan
Documents that Seller expressly and specifically disclosed in Seller's
Preliminary Due Diligence Package were not in Seller's possession; and
(y) with respect to any New Loan that is an Originated Loan, drafts of
the Purchased Loan Documents.
(ii) Environmental and Engineering. Buyer shall have received
a "Phase 1" (and, if necessary, "Phase 2") environmental report, an
asbestos survey, if applicable, and an engineering report, each in form
reasonably satisfactory to Buyer, by an engineer and an environmental
consultant, each as listed on Schedules 5 and 6, respectively, as such
schedules may be amended from time to time by Seller or Buyer upon
approval by Buyer in its reasonable discretion.
(iii) Appraisal. If obtained by Seller, Buyer shall have
received either an Appraisal or a Draft Appraisal of the related
Eligible Property or Properties. If Buyer receives only a Draft
Appraisal prior to entering into a Transaction, Seller shall deliver an
Appraisal on or before thirty (30) days after the Purchase Date.
(iv) Insurance. Buyer shall have received certificates or
other evidence of insurance detailing insurance coverage in respect of
the related Eligible Property or Properties of types (including but not
limited to casualty, general liability and terrorism insurance
coverage), in amounts, with insurers and otherwise in compliance with
the terms, provisions and conditions set forth in the Purchased Loan
Documents and otherwise reasonably satisfactory to Buyer. Such
certificates or other evidence shall indicate that Seller (or as to a
New Loan that is a participation interest, the lead lender on the
related whole loan in which Seller is a participant) will be named as
an additional insured as its interest may appear and shall contain a
loss payee endorsement in favor of such additional insured with respect
to the policies required to be maintained under the Purchased Loan
Documents.
(v) Survey. Buyer shall have received all surveys of the
related Eligible Property or Properties that are in Seller's
possession.
(vi) Lien Search Reports. Buyer or Buyer's counsel shall have
received, as reasonably requested by Buyer, satisfactory reports of
UCC, tax lien, judgment and litigation searches and any existing Title
Policies relating to the New Loan, Eligible Property or Properties,
Seller and related underlying obligor, such searches to be conducted in
each location Buyer shall reasonably designate.
(vii) Opinions of Counsel. Buyer shall have received copies of
all legal opinions with respect to the New Loan which shall be in form
and substance reasonably satisfactory to Buyer.
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(viii) Title Policy.
(a) With respect to any New Loan that is a Mortgage
Loan, Seller shall have delivered to Buyer (1) an
unconditional commitment to issue a Title Policy or Policies
in favor of Seller and Seller's successors and/or assigns with
respect to Seller's interest in the related real property with
an amount of insurance that shall be not less than the related
Repurchase Price or such other amount as Buyer shall require
in its reasonable discretion or (2) an endorsement or
confirmatory letter from the existing title company to an
existing Title Policy (in an amount not less than the related
Repurchase Price or such other amount as Buyer shall require
in its reasonable discretion) in favor of Seller and Seller's
successors and/or assigns that adds such parties as an
additional insured.
(b) With respect to any New Loan that is a First
Mortgage B-Note, Seller shall have delivered to Buyer a copy
of an unconditional commitment to issue a Title Policy or
endorse an existing Title Policy in favor of the lead lender
to whom the related obligor issued the related Mortgage Note,
in an amount not less than the amount of such Mortgage Note
and, if the First Mortgage B-Note is evidenced by a separate
promissory note rather than a participation certificate, in an
amount not less than the amount of all Mortgage Notes secured
by the Mortgage that secures the related promissory notes.
(c) With respect to a Mezzanine Loan, (i) Seller shall
have delivered to Buyer such evidence as Buyer on a
case-by-case basis, in its sole discretion, shall require of
the ownership of the real property underlying New Loan
including, without limitation, (i) a copy of a Title Policy,
issued by a title insurer and with such endorsements
(including, without limitation, a "Mezzanine Lender's
Endorsement", if obtained by Seller), in each case acceptable
to Buyer in its sole discretion, showing that title is vested
in the related obligor or in an entity in whom such obligor
holds an equity interest and (ii) if obtained by Seller,
Seller shall have delivered to Buyer an Eagle 9 UCC Title
Policy which policy shall (x) provide an amount of insurance
that shall be not less than the related Repurchase Price or
such other amount as Buyer shall require in its sole
discretion, (y) shall insure Seller's security interest in the
equity interests pledged and (z) be assignable by its terms
with a transfer of the Mezzanine Loan, as applicable.
(ix) Additional Real Estate Matters. To the extent obtained by
Seller, Seller shall have delivered to Buyer such other real estate
related certificates and documentation as may have been requested by
Buyer, such as: (y) certificates of occupancy issued by the appropriate
Governmental Authority and either letters certifying that the related
Eligible Property or Properties is in compliance with all applicable
zoning laws issued by the appropriate Governmental Authority or
evidence that the related Title Policy includes a zoning endorsement
and (z) abstracts of all leases in effect at the Mortgaged Property
delivered in connection with the New Loan.
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(x) First Mortgage B Notes. In the case of a First Mortgage B
Note, in addition to the delivery of the items in clauses (vi), (vii)
and (viii), Buyer shall have received all documentation specified in
clauses (i) through (v) and (ix) as if the underlying Mortgage Loan
were the direct collateral to the extent Seller possesses such
documentation or has access to such documentation because it was
provided to the related lead lender and made available to Seller and,
to the extent applicable, all documents evidencing a participation
interest, including, but not limited to, an original participation
certificate, if applicable, and the related participation agreement
and/or the related intercreditor agreement.
(xi) Other Documents. Buyer shall have received such other
documents as Buyer or its counsel shall reasonably deem necessary.
Within five (5) Business Days of Seller's delivery of the documents and
materials contemplated in clauses (i) through (xi) above, Buyer shall either (A)
if the Purchased Loan Documents with respect to the New Loan are not reasonably
satisfactory in form and substance to Buyer, notify Seller that Buyer has not
approved the New Loan or (B) notify Seller that Buyer agrees to purchase the New
Loan, subject to satisfaction (or waiver by Buyer) of the Transaction Conditions
Precedent (a "Final Approval") set forth in Section 3(e), below. Buyer's failure
to respond to Seller within five (5) Business Days shall be deemed to be a
denial of Seller's request that Buyer purchase the New Loan, unless Buyer and
Seller have agreed otherwise in writing.
(d) Buyer shall promptly deliver to Seller a written confirmation of
any Final Approval in the form of Exhibit I attached hereto of each proposed
Transaction (a "Confirmation"); provided, that unless otherwise agreed by
Seller, Buyer shall deliver a separate Confirmation with respect to each New
Loan which will be the subject of a Transaction. Such Confirmation shall
describe the related New Loan and shall set forth (x) the name of the borrower
with respect to the New Loan, (y) the loan agreement (including the date) or
other document or instrument pursuant to which the related New Loan is made or
governed, and (z) the initial or then outstanding principal amount of the
related New Loan), shall identify Buyer and Seller, and shall set forth (i) the
Purchase Date, (ii) the Purchase Price for such New Loan (which based on Buyer's
diligence may be different than the Purchase Price set forth in the Preliminary
Approval delivered to Seller), (iii) the Repurchase Date, (iv) the Pricing Rate
applicable to such New Loan (including the Applicable Spread) and (v) any
additional terms or conditions not inconsistent with the Agreement reasonably
and in good faith requested by Buyer which do not have the effect of materially
changing the terms and conditions of the Agreement. Each Confirmation shall be
deemed incorporated herein by reference with the same effect as if set forth
herein at length. With respect to any Transaction, the Pricing Rate shall be
determined initially on the Pricing Rate Determination Date applicable to the
first Pricing Rate Period for such Transaction, and shall be reset on each Reset
Date for the next succeeding Pricing Rate Period for such Transaction. Buyer or
its agent shall determine in accordance with the terms of the Agreement the
Pricing Rate on each Pricing Rate Determination Date for the related Pricing
Rate Period and notify Seller of such rate for such period on the Reset Date.
(e) Provided each of the Transaction Conditions Precedent set forth in
this Section 3(e) shall have been satisfied (or waived by Buyer), and subject to
Seller's rights under Section 3(f), Buyer shall transfer the Purchase Price to
Seller with respect to each New Loan for which it
23
has issued a Confirmation on the Purchase Date specified in such Confirmation
(provided Seller has not objected to such Confirmation within the time frame
permitted under Section 3(f)), and the related Purchased Loan shall be
concurrently transferred by Seller to Buyer or its nominee. For purposes of this
Section 3(e), the "Transaction Conditions Precedent" shall be satisfied with
respect to any proposed Transaction if:
(1) No (x) monetary or material non-monetary Default or (y)
Event of Default under the Agreement shall have occurred and be
continuing as of the Purchase Date for such proposed Transaction;
(2) Seller's Fixed Charge Ratio shall be greater than or equal
to 1.2 to 1 and Seller's Debt to Equity Ratio shall be less than or
equal to 5:1 for the fiscal quarter most recently ended;
(3) The Seller shall have delivered to the Buyer an Officer's
Certificate of the Seller certifying that (A) the representations and
warranties made by Seller in any of the Transaction Documents are true
and correct in all material respects as of the Purchase Date for such
Transaction and unless waived by Buyer (except (i) such representations
which by their terms speak as of a specified date and (ii) to the
extent such representations and warranties have been previously
qualified and such qualifications have been accepted by Buyer), (B)
Seller is in compliance with all governmental licenses and
authorizations, (C) Seller is qualified to do business, validly
existing and, to the extent determinable, in good standing, in all
required jurisdictions, (D) the facts set forth in the Diligence
Materials related to the collateral for the Purchased Loan are, to the
best knowledge of Seller after diligent inquiry, true and correct (or
shall fully explain all adverse changes from the information previously
supplied to Buyer), (E) there has been no change in the organizational
and authority documents provided to Buyer pursuant to Section 7(d)(ii)
of this Annex I since the date of the most recent certification thereof
to Buyer, and (F) there has not occurred an event or circumstance that
would have a Material Adverse Effect since the last Purchase Date. If
requested by Buyer, Seller shall also deliver an Officer's Certificate
covering such matters as Buyer may request with respect to matters
relating to the Agreement or the other Transaction Documents;
(4) Buyer shall have (A) determined, in accordance with the
applicable provisions of Section 3(a) of this Annex I that the New Loan
proposed to be sold to Buyer by Seller in such Transaction is an
Eligible Loan and (B) obtained internal credit approval for the
inclusion of such New Loan as a Purchased Loan in a Transaction;
(5) The applicable Purchased Loan File described in Section
7(b) shall have been delivered to Custodian or Bailee and Buyer shall
have received a Trust Receipt from Custodian or Bailee with respect to
such Purchased Loan File;
(6) Seller shall have delivered to each Mortgagor or obligor
under any Purchased Loan a direction letter in accordance with Section
5(a) of this Annex I unless such Mortgagor or obligor or related
servicer or senior lender is already remitting payments to the Servicer
whereupon Seller shall direct the Servicer to remit all such amounts
into the Blocked Account in accordance with Section 5(a) of this Annex
I and to
24
service such payments in accordance with the Servicing Agreement and
the provisions of this Annex I;
(7) Seller shall have paid to Buyer any unpaid Diligence Fees
in respect of such Purchased Loan;
(8) No Purchased Loan shall be a Defaulted Loan;
(9) Buyer shall have received fully executed originals of all
Transfer Documents and an opinion of counsel of Seller, in form and
substance reasonably satisfactory to Buyer, covering the
enforceability, authority, execution, delivery and perfection of the
assignment of the Purchased Loan and all Transfer Documents, and such
other matters as Buyer may reasonably require;
(10) No event shall have occurred or circumstance shall exist
which has a Material Adverse Effect; and
(11) There shall not have occurred (i) a material change in
financial markets, an outbreak or escalation of hostilities or a
material change in national or international political, financial or
economic conditions, (ii) a general suspension of trading on major
stock exchanges or suspension of trading in Seller's stock and (iii) a
disruption in or moratorium on commercial banking activities or
securities settlement services.
(f) Each Confirmation, together with the Agreement, shall be conclusive
evidence of the terms of the Transaction covered thereby unless objected to in
writing by Seller no more than two (2) Business Days after the date such
Confirmation is received by Seller. An objection sent by Seller with respect to
any Confirmation must state specifically that the writing is an objection, must
specify the provision(s) of such Confirmation being objected to by Seller, must
set forth such provision(s) in the manner that Seller believes such provisions
should be stated, and must be received by Buyer no more than two (2) Business
Days after such Confirmation is received by Seller. Buyer, in its sole
discretion, may issue another Confirmation addressing Seller's objections or may
elect not to proceed with the proposed Transaction.
(g) Seller shall be entitled to terminate a Transaction on demand, and
repurchase the related Purchased Loan on any Business Day prior to the
Repurchase Date (an "Early Repurchase Date"); provided, however, that:
(i) No Event of Default shall be continuing or would occur or
result from such early repurchase,
(ii) Seller notifies Buyer in writing of its intent to
terminate such Transaction and repurchase the related Purchased Loan no
later than five (5) Business Days prior to the Early Repurchase Date,
and
(iii) Seller shall pay to Buyer on the Early Repurchase Date,
an amount equal to the sum of the Repurchase Price for such
Transaction, all Costs and any other amounts payable by Seller and
outstanding under the Agreement (including, without limitation,
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Section 3(m) of this Annex I) with respect to such Transaction against
transfer to Seller or its agent of the related Purchased Loan.
(h) On the Repurchase Date (or the Early Repurchase Date, as
applicable), termination of the applicable Transactions will be effected by
transfer to Seller or, if requested by Seller, its designee of the related
Purchased Loans, and any Income in respect thereof received by Buyer (and not
previously credited or transferred to, or applied to the obligations of, Seller
pursuant to Section 4(a) or Section 5) against the simultaneous transfer of the
Repurchase Price, all Costs and any other amounts payable and outstanding under
the Agreement (including without limitation, Sections 3(m), 3(n) and 3(o) of
this Annex I, if any) to an account of Buyer.
(i) So long as no Default or Event of Default has occurred and is then
continuing, the Repurchase Price with respect to one or more Purchased Loans may
be paid in part at any time upon two (2) Business Days prior written notice;
provided, however, that any such payment shall be accompanied by an amount
representing accrued Price Differential with respect to such Purchased Loan(s)
on the amount of such payment and all other amounts then due under the
Transaction Documents. Each partial payment of the Repurchase Price that is
voluntary (as opposed to mandatory under the terms of the Agreement) shall be in
an amount of not less than One Hundred Thousand Dollars ($100,000).
(j) In lieu of repaying the Repurchase Price, in whole or in part, with
respect to the Transactions when and as otherwise required or permitted by the
Agreement, Seller may elect to deposit any such amount (the "Early Repurchase
Deposit") with Buyer (the date of such deposit, the "Early Repurchase Deposit
Funding Date") until such date as the application of the Early Repurchase
Deposit towards the Repurchase Price would not cause Buyer to incur the costs
described in Section 3(m) hereof (the "Early Repurchase Deposit Application
Date"). The Early Repurchase Deposit shall be held in an interest-bearing
account controlled by Buyer and, at Buyer's option, shall be accompanied by a
payment (as estimated by Buyer) equal to the difference between the interest
earned on the Early Repurchase Deposit and the Price Differential that will
accrue on a portion of the relevant Transaction equal to the Early Repurchase
Deposit during the period from the Early Repurchase Deposit Funding Date to the
Early Repurchase Deposit Application Date.
(k) If prior to the first day of any Pricing Rate Period with respect
to any Transaction, (i) Buyer shall have reasonably determined (which
determination shall be conclusive and binding upon Seller absent manifest error)
that, by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the LIBO Rate for such Pricing
Rate Period, or (ii) the LIBO Rate determined or to be determined for such
Pricing Rate Period will not adequately and fairly reflect the cost to Buyer (as
reasonably determined by Buyer) of making or maintaining Transactions during
such Pricing Rate Period, Buyer shall give telecopy or telephonic notice thereof
to Seller as soon as practicable thereafter. If such notice is given, the
Pricing Rate with respect to such Transaction for such Pricing Rate Period, and
for any subsequent Pricing Rate Periods until such notice has been withdrawn by
Buyer, shall be a per annum rate equal to the sum of (i) the Federal Funds Rate,
(ii) 0.25% and (iii) the Applicable Spread (the "Alternative Rate").
26
(l) Notwithstanding any other provision herein, if after the date of
the Agreement, the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for Buyer to effect
LIBOR Transactions as contemplated by the Transaction Documents, (a) the
commitment of Buyer hereunder to enter into new LIBOR Transactions and to
continue LIBOR Transactions as such shall forthwith be canceled, and (b) the
LIBOR Transactions then outstanding shall be converted automatically to
Alternative Rate Transactions on the last day of the then current Pricing Rate
Period or within such earlier period as may be required by law. If any such
conversion of a LIBOR Transaction occurs on a day that is not the last day of
the then current Pricing Rate Period with respect to such LIBOR Transaction,
Seller shall pay to Buyer such amounts, if any, as may be required pursuant to
Section 3(n).
(m) Upon demand by Buyer, Seller shall indemnify Buyer and hold Buyer
harmless from any net loss or expense (not to include any lost profit or
opportunity) (including, without limitation, reasonable attorneys' fees and
disbursements) which Buyer actually sustains or incurs as a consequence of (i)
default by Seller in terminating any Transaction after Seller has given a notice
in accordance with Section 3(g) of a termination of a Transaction, (ii) any
payment of all or any portion of the Repurchase Price, as the case may be, on
any day other than a Remittance Date (including, without limitation, any such
loss or expense arising from the reemployment of funds obtained by Buyer to
maintain Transactions hereunder or from fees payable to terminate the deposits
from which such funds were obtained, provided Seller shall not be obligated to
reimburse Buyer for the incremental cost of reemploying funds or terminating
deposits which arise solely as a result of Buyer depositing funds or employing
funds at a rate calculated other than by reference to LIBOR (as defined herein))
or (iii) default by Seller in selling Eligible Loans after Seller has notified
Buyer of a proposed Transaction and Buyer has agreed to purchase such Eligible
Loans in accordance with the provisions of the Agreement. A certificate as to
such costs, losses, damages and expenses, setting forth the calculations
therefor shall be submitted promptly by Buyer to Seller and shall be conclusive
and binding on Seller in the absence of manifest error.
(n) If (A) the Transactions are characterized by a U.S. Federal, state
or local taxing authority in a manner other than as described in Section 23 of
this Annex I, or (B) after the date of the Agreement, the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
by any Governmental Authority or compliance by Buyer with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority having jurisdiction over Buyer made subsequent to
the date hereof:
(i) shall subject Buyer to any tax of any kind whatsoever with
respect to the Transaction Documents, any Purchased Loan or any
Transaction, or change the basis of taxation of payments to Buyer in
respect thereof (except for changes in the rate of tax on Buyer's
overall net income);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
27
acquisition of funds by, any office of Buyer which is not otherwise
included in the determination of the LIBO Rate hereunder; or
(iii) shall impose on Buyer any other condition due to the
Agreement or the Transactions;
and the result of any of the foregoing is to increase the cost to Buyer of
entering into, continuing or maintaining Transactions or to reduce any amount
receivable under the Transaction Documents in respect thereof; then, in any such
case, Seller shall pay Buyer, within ten (10) Business Days after written demand
therefor is received by Seller, any additional amounts necessary to compensate
Buyer for such increased cost payable or reduced amount receivable. If Buyer
becomes aware that it is entitled to claim any additional amounts pursuant to
this Section 3(o), it shall notify Seller in writing of the event by reason of
which it has become so entitled. A certificate as to the calculation of any
additional amounts payable pursuant to this subsection shall be submitted by
Buyer to Seller and shall be conclusive and binding upon Seller in the absence
of manifest error. This covenant shall survive the termination of the Agreement
and the repurchase by Seller of any or all of the Purchased Loans.
(o) If Buyer shall have reasonably determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by Buyer or any corporation
controlling Buyer with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof does have the effect of reducing the rate of
return on Buyer's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which Buyer or such corporation
could have achieved but for such adoption, change or compliance (taking into
consideration Buyer's or such corporation's policies with respect to capital
adequacy) by an amount deemed by Buyer to be material, then from time to time,
within five (5) Business Days after submission by Buyer to Seller of a written
request therefor, Seller shall pay to Buyer such additional amount or amounts as
will compensate Buyer for such reduction. A certificate as to the calculation of
any additional amounts payable pursuant to this subsection shall be submitted by
Buyer to Seller and shall be conclusive and binding upon Seller in the absence
of manifest error. This covenant shall survive the termination of the Agreement
and the repurchase by Seller of any or all of the Purchased Loans.
(p) If any of the events described in Section 3(k), Section 3(l),
Section 3(n) or Section 3(o) result in Buyer's election to use the Alternative
Rate or Buyer's request for additional amounts, then Seller shall have the
option to notify Buyer in writing of its intent to terminate the Transactions
and repurchase the Purchased Loans no later than one (1) Business Day after
notice is given to Buyer in accordance with Section 3(g). The election by Seller
to terminate the Transactions in accordance with this Section 3(p) shall not
relieve Seller for liability with respect to any additional amounts or increased
costs actually incurred by Buyer prior to the actual repurchase of the Purchased
Loans.
(q) The facility under the Agreement shall terminate on September 1,
2007; provided that Seller may make a written request not later than 45 days
prior to such Facility Termination Date for extension of the term thereof for a
period to be agreed by Buyer and Seller, which extension request shall be
subject to Buyer's approval in its sole and absolute discretion.
28
Buyer's failure to respond to Seller's written request within 15 days of such
request shall be deemed an automatic denial to Seller's request to extend the
term of the facility hereunder.
(r) From and after the Facility Termination Date, Buyer shall have no
further obligation to purchase any New Loans. On the Facility Termination Date,
Seller shall be obligated to repurchase all of the Purchased Loans and transfer
payment of the aggregate Repurchase Price for each such Purchased Loan, together
with the accrued and unpaid Price Differential and all Costs and other amounts
due and payable to Buyer hereunder. Following the Facility Termination Date,
Buyer shall not be obligated to transfer any Purchased Loans to Seller until
payment in full to Buyer of all amounts due hereunder; provided, however, upon
Seller's request, Buyer shall transfer to Seller the Purchased Loans with
respect to which Buyer shall have received the full Repurchase Price and such
other amounts payable to Buyer in respect of such Purchased Loans in accordance
with the requirements of this Annex I, provided an Event of Default is not then
continuing and the transfer of such Purchased Loans would not result in a Margin
Deficit.
(s) If, (i) on the date that is thirty (30) days prior to the one year
anniversary of the Purchase Date of any Purchased Loan, the Seller has not
exercised its right to terminate the related Transaction pursuant to Section
3(g) hereof and repurchase such Purchased Loan or (ii) under the terms of the
CDO Indenture, the issuer thereunder is no longer permitted to purchase
Collateral Interests or Substitute Collateral Interests (each as defined in the
CDO Indenture), then the Buyer shall be entitled to undertake a due diligence
investigation with respect to such Purchased Loan and to request additional
Diligence Materials with respect to such Purchased Loan. Seller agrees to pay as
and when billed by Buyer all of the Due Diligence Fees, testing and review costs
and expenses incurred by Buyer in connection with the evaluation of any such
Purchased Loan. In the event the Seller has not exercised its right to terminate
a Transaction and repurchase a Purchased Loan on demand pursuant to Section 3(g)
prior to the one year anniversary of the Purchase Date of such Purchased Loan
(an "Extended Loan"), then from and after the one year anniversary of such
Purchase Date until the Repurchase Date with respect to such Extended Loan, the
Purchase Percentage and Applicable Spread with respect thereto shall be as set
forth on Schedule 1B attached hereto (or as otherwise notified in writing by
Buyer to Seller). Seller acknowledges and confirms that the redetermination of
the Purchase Price by Buyer of an Extended Loan may result in a Margin Deficit.
If a Margin Deficit shall result, Seller agrees that it shall comply with the
provisions of Section 4(a) of this Annex I.
4. MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS
Paragraphs 4 (a) through (f) of the Agreement ("Margin Maintenance")
shall be deleted in their entirety and replaced with the following provisions of
this Section 4:
(a) Buyer may determine and re-determine the Asset Base on any Business
Day and on as many Business Days as it may elect. If at any such time the
aggregate Repurchase Price of the Portfolio Loans is greater than the aggregate
Asset Base as determined by Buyer in its sole discretion and notified to Seller
on any Business Day (a "Margin Deficit"), then Seller shall, no later than one
(1) Business Day after receipt of such notice, either deliver to Buyer (A) cash
(which shall be applied to reduce the Repurchase Price of each Purchased Loan
pro rata) or (B) additional assets acceptable to Buyer in its sole and absolute
discretion in such amounts that after
29
giving effect to such delivery of cash or other assets, the aggregate Repurchase
Price of the Portfolio Loans does not exceed the Asset Base as re-determined by
Buyer after giving effect to the delivery of cash (or other assets) by Seller to
Buyer pursuant to this Section 4(a).
(b) If at any time a Purchased Loan becomes a Defaulted Loan, Buyer
may, in its sole discretion and without regard to any determination of the
Market Value of such Defaulted Loan, notify Seller that such Purchased Loan has
become a Defaulted Loan and require that the related Repurchase Price be paid in
whole or in part, in the sole discretion of Buyer. Not later than one (1)
Business Day after the receipt of such notice, Seller shall prepay in whole or
in part, as applicable, the related Repurchase Price of such Defaulted Loan.
Buyer may, in its sole discretion, determine and re-determine the amount to be
prepaid irrespective of whether or not any statement of fact contained in any
Officer's Certificate delivered pursuant to Section 3(e)(3) or any
representation of Seller set forth in Section 10(a)(xix) was true to Seller's
actual knowledge.
(c) If at any time the aggregate Repurchase Price of the Portfolio
Loans is less than the aggregate Asset Base as determined by Buyer in its sole
discretion and notified to Seller on any Business Day Seller requests such
notification (a "Margin Excess"), then Seller may, upon providing written notice
to Buyer by 3 p.m. on the Business Day prior to the date funds are requested,
request that Buyer advance additional funds (not to exceed such Margin Excess)
(a "Margin Excess Advance") to Seller in respect of the Purchased Loans. On the
date set forth in such request, Buyer shall transfer cash to Seller in the
amount of such Margin Excess Advance. Each Margin Excess Advance by Buyer to
Seller shall increase the Repurchase Price of one or more Purchased Loans (such
aggregate increase not to exceed such Margin Excess Advance) as Buyer shall
determine in its sole discretion.
(d) To the extent Seller has an obligation to advance additional funds
under one or more Purchased Loans, provided a Margin Deficit does not then
exist, Buyer agrees to transfer to Seller cash in an amount equal to the product
of (i) the amount being advanced by Seller and (ii) the Purchase Percentage for
the related Purchased Loan or such lesser amount determined by Buyer, such that
after giving effect to the cash transfer, a Margin Deficit would not result. The
transfer of cash under this Section 4(d) shall be accounted for as a Margin
Excess Advance.
5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS
Paragraph 5 of the Agreement ("Income Payments") is hereby deleted and
replaced in its entirety by the following provisions of this Section 5:
(a) On or before the date hereof, Seller and Buyer shall establish and
maintain with the Depository Bank a deposit account owned by, in the name of and
under the sole control of Buyer with respect to which the Blocked Account
Agreement shall have been executed (such account, together with any replacement
or successor thereof, the "Blocked Account"). Seller shall cause all Income with
respect to the Purchased Loans or other assets (if cash) delivered under Section
4(a) to be deposited in the Blocked Account no later than the next Business Day
following its collection and receipt thereof. Simultaneously with the transfer
of any Purchased Loan under Section 3, Seller shall deliver to each Mortgagor or
obligor (or the related collection account bank, as applicable), or the related
lead lender or servicer under a Purchased Loan an
30
irrevocable direction letter in the form attached as Exhibit VII to this Annex I
instructing such Person to remit to the Blocked Account all amounts payable to
Seller under the related Purchased Loan (unless such Mortgagor or obligor or
related servicer or lender is already remitting payments to the Servicer,
whereupon Seller shall direct Servicer to remit all such amounts into the
Blocked Account and service such payments in accordance with the Servicing
Agreement and the provisions hereof) and shall provide to Buyer written proof of
such delivery. If a Mortgagor or obligor (or the related collection account
bank) or the related lead lender or servicer under a Purchased Loan forwards any
Income with respect to such Purchased Loan to Seller rather than directly to the
Blocked Account, Seller shall (i) deliver an additional irrevocable direction
letter to the applicable Person and make other commercially reasonable efforts
to cause such Person to forward such amounts directly to the Blocked Account and
(ii) hold such amounts in trust for Buyer and immediately deposit in the Blocked
Account any such amounts. All Income in respect of the Portfolio Loans, which
may include payments in respect of associated Hedging Transactions entered into
by an underlying obligor with respect to a Purchased Loan and pledged to Seller
as collateral for a Purchased Loan, shall be deposited directly into, or, if
applicable, remitted directly from the applicable underlying collection account
to, the Blocked Account. So long as no Event of Default shall have occurred and
be continuing, all Income on deposit in the Blocked Account in respect of the
Portfolio Loans and the associated Hedging Transactions during each Collection
Period shall be remitted to Seller on a daily basis. Upon the occurrence of an
Event of Default, Buyer may terminate such remittances and amounts on deposit in
the Blocked Account will be applied in accordance with Section 5(c).
(b) Seller shall pay to Buyer on each Remittance Date, an amount equal
to the aggregate Price Differential which has accrued and is outstanding in
respect of the Transactions as of each such Remittance Date and shall pay to
Servicer its Servicing Fees and any "Servicing Expenses", "Additional Servicing
Compensation" and "Servicing Advances" (as such terms are defined in the
Servicing Agreement) in accordance with the terms of the Servicing Agreement.
If Seller shall receive a Principal Payment in respect of any Purchased
Loan, not later than one (1) Business Day after receipt of such Principal
Payment, Seller shall (subject to the provisions of Section 3(j)) pay the
Repurchase Price in respect of such Purchased Loan in an amount equal to the
greater of (i) the product of the amount of such Principal Payment multiplied by
the Purchase Percentage applicable to the related Purchased Loan and (ii) such
greater amount, such that after giving effect to such payment of the applicable
Repurchase Price, the aggregate Repurchase Price of the Portfolio Loans does not
exceed the Asset Base, as determined by Buyer after giving effect to such
payment.
(c) If an Event of Default shall have occurred and be continuing, all
Income on deposit in the Blocked Account in respect of the Purchased Loans and
the associated Hedging Transactions shall be applied on the Business Day next
following the Business Day on which such funds are deposited in the Blocked
Account as follows:
(i) first, to Servicer, any outstanding Servicing Fees, any
termination fees which may be payable under the Servicing Agreement and
servicing advances;
(ii) second, to Buyer, an amount equal to the Price
Differential which has accrued and is outstanding in respect of the
Transactions as of such Business Day;
31
(iii) third, to Buyer, all Costs and all other amounts payable
by Seller and outstanding hereunder and under the other Transaction
Documents;
(iv) fourth, to Buyer, an amount equal to the aggregate
Repurchase Price of the Purchased Loans, until the aggregate Repurchase
Price for all of the Purchased Loans has been reduced to zero; and
(v) fifth, to Seller, the remainder.
(d) If at any time during the term of any Transaction any Income is
distributed to Seller or Seller has otherwise received such Income and has made
a payment in respect of such Income to Buyer pursuant to this Section 5, and for
any reason (other than a breach by Buyer of the Purchased Loan Documents) such
amount is required to be returned by Buyer to an obligor under such Purchased
Loan (either before or after the Repurchase Date), Buyer may provide Seller with
notice of such required return, and Seller shall pay the amount of such required
return to Buyer by 11:00 a.m., New York time, on the Business Day following
Seller's receipt of such notice.
(e) Subject to the other provisions hereof, Seller shall be responsible
for all Costs in respect of any Purchased Loans to the extent it would be so
obligated if the Purchased Loans had not been sold to Buyer. Buyer shall provide
Seller with notice of any Costs promptly upon receiving such notice, and Seller
shall pay the amount of any Costs to Buyer by 11:00 a.m., New York time, on the
later of (i) five (5) Business Days after Buyer has informed Seller that such
amount is due under the Purchased Loan Documents and (ii) three (3) Business
Days following Seller's receipt of such notice.
6. SECURITY INTEREST
Paragraph 6 of the Agreement ("Security Interest") is hereby deleted
and replaced in its entirety by the following provisions of this Section 6:
(a) Buyer and Seller intend that all Transactions hereunder be sales to
Buyer of the Purchased Loans for all purposes (other than for U.S. Federal,
state and local income or franchise tax purposes) and not loans from Buyer to
Seller secured by the Purchased Loans. However, in the event any Transaction is
deemed to be a loan, Seller shall be deemed to have pledged to Buyer as security
for the performance by Seller of its obligations under such Transaction and
shall be deemed to have granted to Buyer a security interest in (i) the Blocked
Account, (ii) all of the Purchased Loans, (iii) all Income from the Purchased
Loans and (iv) all proceeds of all of the foregoing.
(b) To the extent Buyer is deemed to have a security interest with
respect to the Purchased Loans, and with respect to the security interests
granted in subsection (c) of this Section 6, Buyer shall have all of the rights
and may exercise all of the remedies of a secured creditor under the UCC and any
other applicable law. In furtherance of the foregoing, (i) Seller, at its sole
cost and expense, shall cause to be filed as a protective filing with respect to
the Purchased Loans and as a UCC filing with respect to the security interests
granted in subsection (c)) of this Section 6 (i) a UCC financing statement in
the form of Schedule 7-A attached hereto (to be filed in the filing office
indicated therein), (ii) amendments to such UCC financing
32
statement in the form of Schedule 7-B attached hereto and having attached to
each such UCC financing statement amendment a description of the Purchased Loans
which identifies the Purchased Loans by setting forth (a) the name of the
borrower with respect to each Purchased Loan, (b) the loan agreement (including
the date) or other document, agreement or instrument pursuant to which each
Purchased Loan was made or is governed, and (c) the initial or then outstanding
principal amount of each Purchased Loan, and (iii) such other UCC filings, in
such locations as may be necessary to perfect and maintain perfection and
priority of the outright transfer and the security interest granted hereby
(including under Section 22 of this Annex I) and, in each case, continuation
statements and any amendments thereto (collectively, the "Filings"), and shall
forward copies of such Filings to Buyer upon completion thereof, and (b) Seller
shall from time to time, at its own expense, deliver and cause to be duly filed
all such further filings, instruments and documents and take all such further
actions as may be necessary or desirable or as may be requested by Buyer with
respect to the perfection and priority of the outright transfer of the Purchased
Loans and the security interest deemed granted hereunder and in the Purchased
Loans and the rights and remedies of the Buyer with respect to the Purchased
Loans (including under Section 22 of this Annex I) (including the payments of
any fees and taxes required in connection with the execution and delivery of the
Agreement).
(c) Seller hereby pledges to Buyer, as security for the performance by
Seller of its obligations under all Transactions, all Hedging Transactions
relating to Purchased Loans entered into by Seller and all proceeds thereof.
Seller shall take all action as is necessary or desirable to obtain consent to
assignment of any such Hedging Transaction to Buyer and shall cause the
counterparty under each such Hedging Transaction to enter into such document or
instrument satisfactory to Buyer, Seller and such counterparty, pursuant to
which such counterparty will covenant and agree to accept notice from Buyer to
redirect payments under such Hedging Transaction as Buyer may direct. So long as
no Event of Default shall be continuing, Buyer agrees that it will not redirect
payments under any Hedging Transaction pledged to Buyer pursuant to the terms of
this Section 6(c).
7. PAYMENT, TRANSFER AND CUSTODY
Paragraph 7 of the Agreement ("Payment and Transfer") is hereby deleted
and replaced in its entirety by the following provisions of this Section 7:
(a) Subject to the terms and conditions of the Agreement, on the
Purchase Date for each Transaction, ownership of the Purchased Loans and all
rights thereunder shall be transferred to Buyer or its designee (including the
Custodian) against the simultaneous transfer of the Purchase Price to an account
of Seller specified in the Confirmation relating to such Transaction. On the
Purchase Date for the first Transaction, Buyer will provide Seller with a power
of attorney, substantially in the form attached as Exhibit IV-2 hereto, in
recordable form, allowing Seller to administer, operate and service such
Purchased Loans. Provided no Event of Default shall have occurred and be
continuing, the power of attorney shall be binding upon Buyer and Buyer's
successors and assigns.
(b) With respect to each Table Funded Purchased Loan, Seller shall
cause the Bailee to deliver to the Custodian (with a copy to Buyer) by no later
than 1:00 p.m. (New York time), on the Purchase Date, by facsimile the related
promissory note (or the participation certificate, as
33
applicable), the Insured Closing Letter and Escrow Instructions, if any, the
Bailee Agreement and a Trust Receipt issued by the Bailee thereunder on or
before the related Purchase Date. In connection with the sale of each Purchased
Loan, not later than 1:00 p.m., two (2) Business Days prior to the related
Purchase Date (or on the related Purchase Date, as may be agreed by Buyer and
Seller on a case by case basis) (or with respect to a Table Funded Purchased
Loan not later than 1:00 p.m. (New York time) on the third Business Day
following the applicable Purchase Date), Seller shall deliver or cause Bailee to
deliver (with a copy to Buyer) and release to the Custodian (together with the
Custodial Delivery Certificate in the form attached hereto as Exhibit III), and
shall cause the Custodian to deliver a Trust Receipt on the Purchase Date (or in
the case of a Table Funded Purchased Loan, not later than two (2) Business Days
following the receipt by the Custodian) confirming the receipt of the following
original documents (collectively, the "Purchased Loan File"), pertaining to each
of the Purchased Loans identified in the Custodial Delivery Certificate
delivered therewith:
(i) With respect to each Purchased Loan that is a Mortgage
Loan (including a First Mortgage B Note), the following documents, as
applicable:
(A) The original Mortgage Note bearing all intervening
endorsements, endorsed "Pay to the order of _________ without
recourse" and signed in the name of the last endorsee (the "Last
Endorsee") by an authorized Person (in the event that the Purchased
Loan was acquired by the Last Endorsee in a merger, the signature
must be in the following form: "[Last Endorsee], successor by
merger to [name of predecessor]"; in the event that the Purchased
Loan was acquired or originated by the Last Endorsee while doing
business under another name, the signature must be in the following
form: "[Last Endorsee], formerly known as [previous name]") or a
lost note affidavit in a form reasonably approved by Buyer, with a
copy of the applicable Mortgage Note attached thereto.
(B) The original or a copy of the loan agreement and the
guarantee, if any, executed in connection with the Purchased Loan.
(C) The original Mortgage with evidence of recording
thereon, or a copy thereof together with an officer's certificate
of Seller certifying that such represents a true and correct copy
of the original and that such original has been submitted for
recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.
(D) The originals of all assumption, modification,
consolidation or extension agreements with evidence of recording
thereon, or copies thereof together with an officer's certificate
of Seller certifying that such represent true and correct copies of
the originals and that such originals have each been submitted for
recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located.
(E) The original Assignment of Mortgage to Buyer for each
Purchased Loan, in form and substance acceptable for recording and
signed in the name of the Last Endorsee (in the event that the
Purchased Loan was acquired by the Last
34
Endorsee in a merger, the signature must be in the following form:
"[Last Endorsee], successor by merger to [name of predecessor]"; in
the event that the Purchased Loan was acquired or originated while
doing business under another name, the signature must be in the
following form: "[Last Endorsee], formerly known as [previous
name]").
(F) The originals of all intervening assignments of
mortgage with evidence of recording thereon, or copies thereof
together with an officer's certificate of Seller certifying that
such represent true and correct copies of the originals and that
such originals have each been submitted for recordation in the
appropriate governmental recording office of the jurisdiction where
the Mortgaged Property is located.
(G) The original Title Policy, or if the original Title
Policy has not been issued, the original irrevocable marked
commitment to issue the same.
(H) The original of any security agreement, chattel
mortgage or equivalent document executed in connection with the
Purchased Loan.
(I) The original Assignment of Leases, if any, with
evidence of recording thereon, or a copy thereof together with an
officer's certificate of Seller, certifying that such copy
represents a true and correct copy of the original that has been
submitted for recordation in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located.
(J) The originals of all intervening assignments of
assignment of leases and rents, if any, or copies thereof, with
evidence of recording thereon, or copies thereof together with an
officer's certificate of Seller certifying that such represent true
and correct copies of the originals and that such originals have
each been submitted for recordation in the appropriate governmental
recording office of the jurisdiction where the Mortgaged Property
is located.
(K) A copy of the UCC financing statements, certified as
true and correct by Seller, and all necessary UCC continuation
statements with evidence of filing thereon or copies thereof
certified by Seller to have been sent for filing, and UCC
assignments to Buyer, which UCC assignments shall be in form and
substance acceptable for filing in the applicable jurisdictions.
(L) The original environmental indemnity agreement or
similar guaranty or indemnity, whether stand-alone or incorporated
into the applicable loan documents (if any).
(M) The original omnibus assignment to Buyer or such other
documents necessary and sufficient to transfer to Buyer all of
Seller's right, title and interest in and to the Purchased Loan (if
any).
35
(N) A disbursement letter from the Mortgagor to the
original mortgagee or other evidence that the Purchased Loan has
been fully disbursed (if applicable).
(O) Mortgagor's certificate or title affidavit (if any).
(P) A survey of the Mortgaged Property (if any) as
accepted by the title company for issuance of the Title Policy.
(Q) The original of any participation agreement,
intercreditor agreement and/or servicing agreement executed in
connection with such Purchased Loan.
(R) A copy of all servicing agreements and Servicing
Records related to such Purchased Loan, which Seller shall deliver
to Servicer (with a copy to Buyer).
(S) A copy of the Mortgagor's opinions of counsel.
(T) An assignment of any management agreements, permits,
contracts and other material agreements (if any).
(U) Reports of UCC, tax lien, judgment and litigation
searches as requested by Buyer, conducted by search firms
reasonably acceptable to Buyer with respect to the Purchased Loan,
Seller and the related underlying obligor, such searches to be
conducted in each location Buyer shall reasonably designate and
such reports reasonably satisfactory to Buyer.
(V) If the Mortgagor is an Affiliate of Seller, pledge
agreement and any UCC financing statements, executed by the
owner(s) of all the equity interests of the Mortgagor as debtor in
favor of Seller as secured party (which pledge agreement and UCC
financing statements shall be assigned by Seller to Buyer),
covering all equity interests in the Mortgagor, if not previously
delivered to Buyer, together with any related original certificates
of equity ownership and blank assignments thereof, all to give
Buyer a security interest in such equity as additional collateral
for Seller's obligations.
(W) The original or a copy of the intercreditor or loan
coordination agreement (if any) executed in connection with the
Purchased Loan to the extent the subject borrower, or an affiliate
thereof, has encumbered its assets with senior, junior or similar
financing, whether mortgage financing or mezzanine loan financing.
(X) Copies of all documents relating to the formation and
organization of the related obligor under such Purchased Loan,
together with all consents and resolutions delivered in connection
with such obligor's obtaining such Purchased Loan.
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(Y) All other material documents and instruments
evidencing, guaranteeing, insuring or otherwise constituting or
modifying or otherwise affecting such Purchased Loan, or otherwise
executed or delivered in connection with, or otherwise relating to,
such Purchased Loan, including all documents establishing or
implementing any lockbox pursuant to which Seller is entitled to
receive any payments from cash flow of the underlying real
property.
(Z) Evidence that the Purchased Loan has been fully
disbursed (if applicable).
If Seller cannot deliver, or cause to be delivered, any of the
documents and/or instruments required above to be delivered as originals, Seller
shall deliver a photocopy thereof and, unless waived by Buyer, an Officer's
Certificate of Seller certifying that such copy represents a true and correct
copy of the original. Seller shall then, in the event that Seller has a
legitimate and reasonable opportunity to obtain the original documents in
question if the document in question exists in original form (1) use reasonable
efforts to obtain and deliver the original document within 180 days after the
related Purchase Date (or such longer period after the related Purchase Date as
Buyer may consent to, which consent shall not be unreasonably withheld so long
as Seller is, as certified in writing to Buyer no less often than monthly, in
good faith attempting to obtain the original) and (2) after the expiration of
such reasonable efforts period, deliver to Buyer a certification that states,
despite Seller's reasonable efforts, Seller was unable to obtain such original
document.
(ii) With respect to each Purchased Loan which is a Mezzanine Loan
secured by a pledge of the equity ownership interests in an entity that owns
Eligible Property, the following, as applicable:
(A) The original Mezzanine Note signed in connection with
the Purchased Loan bearing all intervening endorsements, endorsed
"Pay to the order of __________ without recourse" and signed in the
name of the Last Endorsee by an authorized Person (in the event
that the Mezzanine Note was acquired by the Last Endorsee in a
merger, the signature must be in the following form: "[Last
Endorsee], successor by merger to [name of predecessor]"; in the
event that the Purchased Loan was acquired or originated by the
Last Endorsee while doing business under another name, the
signature must be in the following form: "[Last Endorsee], formerly
known as [previous name]") or a lost note affidavit in a form
reasonably approved by Buyer with a copy of the applicable
Mezzanine Note attached thereto.
(B) The original or a copy of the loan agreement and the
guarantee, if any, executed in connection with the Purchased Loan.
(C) The original or a copy of the intercreditor or loan
coordination agreement executed in connection with the Purchased
Loan to the extent the subject borrower, or an affiliate thereof,
has encumbered its assets with senior,
37
junior or similar financing, whether mortgage financing or
mezzanine loan financing.
(D) The original security agreement executed in connection
with the Purchased Loan.
(E) Copies of all documents relating to the formation and
organization of the borrower under such Purchased Loan, together
with all consents and resolutions delivered in connection with such
borrower's obtaining the Purchased Loan.
(F) All other material documents and instruments
evidencing, guaranteeing, insuring or otherwise constituting or
modifying or otherwise affecting such Purchased Loan, or otherwise
executed or delivered in connection with, or otherwise relating to,
such Purchased Loan, including all documents establishing or
implementing any lockbox pursuant to which Seller is entitled to
receive any payments from cash flow of the underlying real
property.
(G) An omnibus assignment to Buyer or other documents
necessary and sufficient to transfer to Buyer all of Seller's
right, title and interest in and to the Purchased Loan.
(H) The original of any participation agreement executed
in connection with such Purchased Loan.
(I) A copy of all servicing agreements and Servicing
Records related to such Purchased Loan, which Seller shall deliver
to Servicer (with a copy to Buyer).
(J) A copy of the borrower's opinions of counsel.
(K) A copy of the UCC financing statements, certified as
true and correct by Seller, and all necessary UCC continuation
statements with evidence of filing thereon or copies thereof
certified by Seller to have been sent for filing, and UCC
assignments to Buyer, which UCC assignments shall be in form and
substance acceptable for filing in the applicable jurisdictions.
(L) The original certificates representing the pledged
equity interests to the extent such interests are in certificated
form.
(M) Stock or similar powers relating to each pledged
equity interest, executed in blank, if such equity interests are in
certificated form.
(N) Assignment of any management agreements, agreements
among equity interest holders or other material contracts.
(O) If the pledged equity interests are not certificated,
evidence (which may be an Officer's Certificate confirming such
circumstances or in the form of
38
an executed instruction to register such pledge by the mezzanine
borrower and acknowledgment by the entity in which such pledged
equity interests are held) that the pledged equity interests have
been transferred to, or otherwise made subject to a first priority
security interest in favor of, Seller.
(P) Copies of all material documents evidencing or
securing the related mortgage loan and any other documents
affecting the related mortgaged property to the extent in
possession of Seller.
(Q) If the mezzanine borrower is an Affiliate of Seller, a
pledge agreement and any UCC financing statements, executed by the
owner(s) of all the equity interests of the mezzanine borrower as
debtor in favor of Seller as secured party (which pledge agreement
and UCC financing statements shall be transferred by Seller to
Buyer), covering all equity interests in the mezzanine borrower, if
not previously delivered to Buyer, together with any related
original certificates of equity ownership and blank assignments
thereof, all to give Buyer a security interest in such equity as
additional collateral for Seller's obligations.
(R) Evidence that the Purchased Loan has been fully
disbursed (if applicable).
In connection with the transfer of any Purchased Loan, if
Seller cannot deliver, or cause to be delivered, any of the documents
and/or instruments referred to above, required to be delivered as
originals, Seller shall deliver a photocopy thereof and, unless waived
by Buyer, an Officer's Certificate of Seller certifying that such copy
represents a true and correct copy of the original. Seller shall then,
in the event that Seller has a legitimate and reasonable opportunity to
obtain the original documents in question if the document in question
exists in original form (1) use reasonable efforts to obtain and
deliver the original document within 180 days after the related
Purchase Date (or such longer period after the related Purchase Date as
Buyer may consent to, which consent shall not be unreasonably withheld
so long as Seller is, as certified in writing to Buyer no less often
than monthly, in good faith attempting to obtain the original) and (2)
after the expiration of such reasonable efforts period, deliver to
Buyer a certification that states, despite Seller's reasonable efforts,
Seller was unable to obtain such original document.
(c) From time to time, Seller shall forward to the Custodian additional
original documents or additional documents evidencing any assumption,
modification, consolidation or extension of a Purchased Loan approved in
accordance with the terms of the Agreement, and upon receipt of any such other
documents, the Custodian shall hold such other documents on behalf of Buyer and
as Buyer shall request from time to time. With respect to any documents which
have been delivered or are being delivered to recording offices for recording
and have not been returned to Seller in time to permit their delivery hereunder
at the time required, in lieu of delivering such original documents, Seller
shall deliver to Buyer a true copy thereof with an officer's certificate
certifying that such copy is a true, correct and complete copy of the original,
which has been transmitted for recordation. Seller shall deliver such original
documents to the Custodian promptly when they are received. With respect to all
of the Purchased Loans delivered by Seller to Buyer or its designee (including
the Custodian), Seller shall execute an
39
omnibus power of attorney substantially in the form of Exhibit IV-1 attached
hereto irrevocably appointing Buyer its attorney-in-fact with full power to (i)
complete and record any Assignment of Mortgage, (ii) complete the endorsement of
any Mortgage Note or Mezzanine Note and (iii) take such other steps as may be
necessary or desirable to enforce Buyer's rights against any Purchased Loans and
the related Purchased Loan Files and the Servicing Records. Buyer shall deposit
the Purchased Loan Files representing the Purchased Loans, or cause the
Purchased Loan Files to be deposited directly, with the Custodian to be held by
the Custodian on behalf of Buyer. The Purchased Loan Files shall be maintained
in accordance with the Custodial Agreement. Any Purchased Loan Files not
delivered to Buyer or its designee (including the Custodian) are and shall be
held in trust by Seller or its designee for the benefit of Buyer as the owner
thereof. Seller or its designee shall maintain a copy of the Purchased Loan File
and the originals of the Purchased Loan File not delivered to Buyer or its
designee. The possession of the Purchased Loan File by Seller or its designee is
at the will of Buyer for the sole purpose of servicing the related Purchased
Loan, and such retention and possession by Seller or its designee is in a
custodial capacity only. The books and records (including, without limitation,
any computer records or tapes) of Seller or its designee shall be marked
appropriately to reflect clearly the transfer, subject to the terms and
conditions of the Agreement, of the related Purchased Loan to Buyer. Seller or
its designee (including the Custodian) shall release its custody of the
Purchased Loan File only in accordance with written instructions from Buyer,
unless such release is required as incidental to the servicing of the Purchased
Loans or is in connection with a repurchase of any Purchased Loan by Seller or
is pursuant to the order of a court of competent jurisdiction.
(d) In addition to any documents or instruments that are required to be
delivered by Seller to Buyer hereunder in connection with the transfer of
Purchased Loans by Seller to Buyer, on the date of the Agreement, Buyer shall
have received all of the following items and documents, each of which shall be
satisfactory to Buyer in form and substance:
(i) Transaction Documents.
(A) The Agreement (including this Annex I), duly executed
and delivered by Seller and Buyer;
(B) The Custodial Agreement, duly executed and delivered by
Seller, Buyer and Custodian;
(C) The Blocked Account Agreement, duly executed and
delivered by Seller, Buyer and Depository Bank; and
(D) The Servicing Agreement, duly executed and delivered by
Seller, Buyer and Servicer.
(ii) Organizational Documents. Certified copies of the Seller's
organizational documents and resolutions or other documents evidencing
the authority of Seller with respect to the execution, delivery and
performance of the Transaction Documents to which it is a party and
each other document to be delivered by Seller from time to time in
40
connection with the Transaction Documents (and Buyer may conclusively
rely on such certifications until it receives notice in writing from
Seller to the contrary);
(iii) Legal Opinion. An opinion of counsel to the Seller as to the
enforceability of the Transaction Documents to which it is a party; and
(iv) Other Documents. Such other documents as Buyer may
reasonably request.
8. CERTAIN RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED LOANS
Paragraph 8 of the Agreement ("Segregation of Purchased Securities") is
hereby deleted and replaced in its entirety by the following provisions of this
Section 8:
(a) Subject to the terms and conditions of the Agreement, title to all
Purchased Loans shall pass to Buyer on the applicable Purchase Date, and Buyer
shall have free and unrestricted use of its interest in the Purchased Loans in
accordance with the terms and conditions of the Purchased Loans. Nothing in the
Agreement or any other Transaction Document shall preclude Buyer from engaging
in repurchase transactions with the Purchased Loans with Persons in conformity
with the terms and conditions of the Purchased Loans or otherwise selling,
transferring, pledging, repledging, hypothecating, or rehypothecating all or a
portion of its interest in the Purchased Loans to Persons in conformity with the
terms and conditions to the Purchased Loans, but no such transaction shall
relieve Buyer of its obligations to transfer the Purchased Loans to Seller
pursuant to Section 3 of this Annex I or of Buyer's obligation to credit or pay
Income to, or apply Income to the obligations of, Seller pursuant to Section 5
of this Annex I or otherwise affect the rights, obligations and remedies of any
party to the Agreement. Any such repurchase transaction and any pledge,
repledge, hypothecation or rehypothecation in connection with a Financing
Transaction may be to any Person other than a Disqualified Transferee; provided
that Buyer, other than in connection with a Financing Transaction, may assign or
participate its rights' under the Transaction Documents or any Transaction only
in accordance with Section 17 of this Annex I, unless an Event of Default shall
have occurred and be continuing or the prior written consent of Seller has been
obtained by Buyer.
(b) Subject to the terms and conditions of the Agreement, any documents
delivered to the Custodian pursuant to Section 7(b) and 7(c) of this Annex I
shall only be released in accordance with the terms and conditions of the
Custodial Agreement.
9. SUBSTITUTION
Paragraph 9 of the Agreement ("Substitution") is hereby deleted and
replaced in its entirety by the following provisions of this Section 9:
(a) In the case of any Transaction for which the Repurchase Date is
other than the Business Day immediately following the Purchase Date, Seller
shall have the right, subject to the proviso to this sentence, upon notice to
Buyer, which notice shall be given at or prior to 10:00 a.m. (New York time) on
such Business Day, to substitute substantially the same Eligible Loans for any
Purchased Loans, provided, however, that Buyer may elect, by the close of
business on
41
the Business Day notice is received, or by the close of the next Business Day if
notice is given after 10:00 a.m. (New York time) on such day, not to accept such
substitution in its sole and absolute discretion. In the event such substitution
is accepted by Buyer, such substitution shall be made by Seller's transfer to
Buyer of such other Eligible Loans and Buyer's transfer to Seller of such
Purchased Loans, and after substitution, the substituted Eligible Loans shall be
deemed to be Purchased Loans subject to the terms of the Agreement (including
but not limited to the margin provisions of Section 4 of this Annex I). Each
such substitution shall be deemed to be a representation and warranty by Seller
that each substitute loan is an Eligible Loan and that after giving effect to
such substitution, the aggregate Repurchase Price of the Portfolio Loans shall
not exceed the aggregate Asset Base. In the event Buyer elects not to accept
such substitution, Buyer shall offer Seller the right to terminate the
Transaction.
(b) In the event Seller exercises its right to substitute or terminate
under sub-paragraph (a), Seller shall be obligated to pay to Buyer, by the close
of the Business Day of such substitution or termination, as the case may be, an
amount equal to (A) Buyer's actual out-of-pocket cost (including all fees
(including reasonable attorneys fees), expenses and commissions) of (i) entering
into replacement transactions; (ii) entering into or terminating hedge
transactions; and/or (iii) terminating transactions or substituting mortgage
loans in like transactions with third parties in connection with or as a result
of such substitution or termination, and (B) to the extent Buyer determines not
to enter replacement transactions, the loss incurred by Buyer directly arising
or resulting from such substitution or termination. The foregoing amounts shall
be solely determined and calculated by Buyer in good faith.
10. REPRESENTATIONS
Paragraph 10 of the Agreement ("Representations") is hereby
supplemented by the following:
(a) Seller represents and warrants to Buyer that as of the Purchase
Date for the purchase of any Purchased Loan by Buyer from Seller and any
Transaction thereunder and as of the date of the Agreement and at all times
while the Agreement and any Transaction thereunder is in full force and effect:
(i) Organization. Seller is duly organized, validly existing and in
good standing under the laws and regulations of the state of Seller's
organization and is duly licensed, qualified, and in good standing in
every state where such licensing or qualification is necessary for the
transaction of Seller's business, except where lack of such licenses or
qualifications would not be reasonably likely to result in a Material
Adverse Effect. Seller has the power to own and hold the assets it
purports to own and hold, and to carry on its business as now being
conducted and proposed to be conducted, and has the power to execute,
deliver, and perform its obligations under the Agreement and the other
Transaction Documents.
(ii) Due Execution; Enforceability. The Transaction Documents have
been duly executed and delivered by Seller, for good and valuable
consideration. The Transaction Documents constitute the legal, valid
and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms subject to
42
bankruptcy, insolvency, and other limitations on creditors' rights
generally and to equitable principles.
(iii) Non-Contravention; Consents. Neither the execution and
delivery of the Transaction Documents, nor consummation by Seller of
the transactions contemplated by the Transaction Documents (or any of
them), nor compliance by Seller with the terms, conditions and
provisions of the Transaction Documents (or any of them) will (x)
conflict with or result in a breach or violation of any of the terms,
conditions or provisions of any judgment or order, writ, injunction,
decree or demand of any court applicable to Seller, or (y) result in
the creation or imposition of any lien or any other encumbrance upon
any of the assets of Seller, other than pursuant to the Transaction
Documents. Seller has all necessary licenses, permits and other
consents from Governmental Authorities necessary to acquire, own and
sell the Portfolio Loans and for the performance of its obligations
under the Transaction Documents except where the failure to have any
such license, permit or consent would not be reasonably likely to
result in a Material Adverse Effect.
(iv) Litigation; Requirements of Law. There is no action, suit,
proceeding, investigation, or arbitration pending or, to the best
knowledge of Seller, threatened against Seller, or any of its assets
which may result in any Material Adverse Effect, or which may have an
adverse effect on the validity of the Transaction Documents or any
action taken or to be taken in connection with the obligations of
Seller under any of the Transaction Documents. Seller is in compliance
in all material respects with all Requirements of Law. Seller is not in
default in any material respect with respect to any judgment, order,
writ, injunction, decree, rule or regulation of any arbitrator or
Governmental Authority.
(v) No Broker. Seller has not dealt with any broker, investment
banker, agent or other Person (other than Buyer or an Affiliate of
Buyer) who may be entitled to any commission or compensation in
connection with the sale of the Purchased Loans pursuant to any
Transaction Documents.
(vi) Good Title to Purchased Loans. Immediately prior to the
purchase of any Purchased Loans by Buyer from Seller, such Purchased
Loans are free and clear of any lien, security interest, claim, option,
charge, encumbrance or impediment to transfer (including any "adverse
claim" as defined in Section 8-102(a)(1) of the UCC), and are not
subject to any rights of setoff, any prior sale, transfer, assignment,
or participation by Seller or any agreement by Seller to assign,
convey, transfer or participate, in whole or in part, and Seller is the
sole legal record and beneficial owner of and owns and has the right to
sell and transfer such Purchased Loans to Buyer and, upon transfer of
such Purchased Loans to Buyer, Buyer shall be the owner of such
Purchased Loans (other than for U.S. Federal, state and local income
and franchise tax purposes) free of any adverse claim, subject to
Seller's rights pursuant to the Agreement. In the event the related
Transaction is recharacterized as a secured financing of the Purchased
Loans and with respect to the security interests granted in Sections
6(a) and 6(c), the provisions of the Agreement are effective to create
in favor of Buyer a valid security interest in all rights, title and
interest of Seller in, to and under the Purchased Loans and the
collateral specified in Sections 6(a) and 6(c), Buyer shall have a
valid, perfected and enforceable first priority security
43
interest in the Purchased Loans and such other collateral, subject to
no lien or rights of others other than as granted herein.
(vii) No Default. No Default or Event of Default exists under or
with respect to the Transaction Documents.
(viii) Representations and Warranties Regarding Purchased Loans;
Delivery of Purchased Loan File. Seller represents and warrants to
Buyer that each Purchased Loan sold hereunder and each pool of
Purchased Loans sold in a Transaction hereunder, as of the applicable
Purchase Date for the Transaction in question (y) conforms to the
applicable representations and warranties set forth in Exhibit V
attached hereto and (z) meets the criteria set forth in Exhibit IX
attached hereto, except as have been disclosed to Buyer in writing
prior to Buyer's issuance of a Confirmation with respect to the related
Purchased Loan. It is understood and agreed that the representations
and warranties set forth in Exhibit V hereto, if any, shall survive
delivery of the respective Purchased Loan File to Buyer or its designee
(including the Custodian). With respect to each Purchased Loan, the
Mortgage Note or Mezzanine Note, the Mortgage (if any), the Assignment
of Mortgage (if any) and any other documents required to be delivered
under the Agreement and the Custodial Agreement for such Purchased Loan
have been delivered (or with respect to Table Funded Loans shall be
delivered in accordance with Section 7(b)) to Buyer or the Custodian on
its behalf or such requirement will have been expressly waived in
writing by Buyer. Seller or its designee is in possession of a
complete, true and accurate Purchased Loan File with respect to each
Purchased Loan, except for such documents the originals of which have
been delivered to the Custodian.
(ix) Adequate Capitalization; No Fraudulent Transfer. Seller has,
as of such Purchase Date, adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations. Seller is generally able
to pay, and as of the date hereof is paying, its debts as they come
due. Seller has not become, or is presently, financially insolvent nor
will Seller be made insolvent by virtue of Seller's execution of or
performance under any of the Transaction Documents within the meaning
of the bankruptcy laws or the insolvency laws of any jurisdiction.
Seller has not entered into any Transaction Document or any Transaction
pursuant thereto in contemplation of insolvency or with intent to
hinder, delay or defraud any creditor. Seller has not received any
written notice that any payment or other transfer made to or on account
of Seller from or on account of any Mortgagor or any other person
obligated under any Purchased Loan Documents is or may be void or
voidable as an actual or constructive fraudulent transfer or as a
preferential transfer.
(x) Organizational Documents. Seller has delivered to Buyer
certified copies of its organizational documents, together with all
amendments thereto.
(xi) No Encumbrances. There are (i) no outstanding rights, options,
warrants or agreements on the part of Seller for a purchase, sale or
issuance, in connection with the Purchased Loans and (ii) no agreements
on the part of Seller to issue, sell or distribute the Purchased Loan.
44
(xii) Federal Regulations. Seller is not (A) an "investment
company," or a company "controlled by an investment company," within
the meaning of the Investment Company Act of 1940, as amended, or (B) a
"holding company," or a "subsidiary company of a holding company," or
an "affiliate" of either a "holding company" or a "subsidiary company
of a holding company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
(xiii) Taxes. Seller has filed or caused to be filed all tax
returns which would be delinquent if they had not been filed on or
before the date hereof and has paid all taxes due and payable on or
before the date hereof and all other taxes, fees or other charges
imposed on it and any of its assets by any Governmental Authority; no
tax liens have been filed against any of Seller's assets and, to
Seller's knowledge, no claims are being asserted with respect to any
such taxes, fees or other charges.
(xiv) ERISA. Neither Seller nor any ERISA Affiliate (a) sponsors or
maintains any Plans or (b) makes any contributions to or has any
liabilities or obligations (direct or contingent) with respect to any
Plans. Seller does not, and would not be deemed to, hold Plan Assets
and the consummation of the transactions contemplated by the Agreement
will not constitute or result in any non-exempt prohibited transaction
under Section 406 of ERISA, Section 4975 of the Code or substantially
similar provisions under any other federal, state or local laws, rules
or regulations.
(xv) Judgments/Bankruptcy. Except as disclosed in writing to Buyer,
there are no judgments against Seller or unsatisfied of record or
docketed in any court located in the United States of America and no
Act of Insolvency has ever occurred with respect to Seller.
(xvi) Full and Accurate Disclosure. No information contained in the
Transaction Documents, or any written statement furnished by or on
behalf of Seller pursuant to the terms of the Transaction Documents,
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they
were made when such statements and omissions are considered in the
totality of the circumstances in question.
(xvii) Financial Information. All financial data concerning Seller
and to Seller's knowledge after due inquiry, the Purchased Loans that
has been delivered by or on behalf of Seller to Buyer is true, complete
and correct in all material respects and has been prepared in
accordance with GAAP. Since the delivery of such data, except as
otherwise disclosed in writing to Buyer, there has been no change in
the financial position of Seller or the Purchased Loans, or in the
results of operations of Seller, which change is reasonably likely to
have in a Material Adverse Effect on Seller.
(xviii) Jurisdiction of Organization. The Seller's jurisdiction of
organization is the State of Maryland.
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(xix) Regulation T, U and X. Neither the entering into nor
consummation of any Transaction hereunder, nor the use of the proceeds
thereof, will violate any provisions of Regulation T, U or X. If
requested by Buyer, Seller, any applicable Affiliate of Seller and the
recipient of any portion of the proceeds of, or any portion of, any
Transaction shall furnish to Buyer a statement on Federal Reserve Form
G-3 referred to in Regulation U.
(xx) Seller has delivered to Buyer a true, complete and correct
copy of the CDO Indenture.
(b) On the Purchase Date for any Transaction, Seller shall be deemed to
have made all of the representations set forth in Paragraph 10 of the Agreement
and Section 10(a) of this Annex I as of such Purchase Date.
11. NEGATIVE COVENANTS OF SELLER
On and as of the date hereof and each Purchase Date and until the
Agreement is no longer in force with respect to any Transaction, Seller shall
not without the prior written consent of Buyer:
(a) subject to Seller's right to repurchase, take any action which
would directly or indirectly impair or adversely affect Buyer's title to the
Purchased Loans;
(b) transfer, assign, convey, grant, bargain, sell, set over, deliver
or otherwise dispose of, or pledge or hypothecate, directly or indirectly, any
interest in the Purchased Loans (or any of them) to any Person other than Buyer,
or engage in repurchase transactions or similar transactions with respect to the
Purchased Loans (or any of them) with any Person other than Buyer, except where
the Purchased Loans in question are simultaneously repurchased from Buyer;
(c) create, incur or permit to exist any lien, encumbrance or security
interest in or on the Purchased Loans, except as described in Section 6 of this
Annex I;
(d) create, incur or permit to exist any lien, encumbrance or security
interest in or on any of the other collateral subject to the security interest
granted by Seller pursuant to Section 6 of this Annex I;
(e) create, incur or permit any lien, security interest, charges, or
encumbrances with respect to any Hedging Transaction for the benefit of any
Person other than Buyer;
(f) materially modify or terminate any of the organizational documents
of Seller;
(g) consent or assent to a Significant Modification or any extension or
termination of any note, loan agreement, mortgage, pledge agreement or guaranty
relating to the Purchased Loans or other material agreement or instrument
relating to the Purchased Loans without the prior written consent of Buyer;
46
(h) take any action or permit such action to be taken which would
result in a Change in Control;
(i) after the occurrence and during the continuation of any Event of
Default or monetary Default, make any distribution, payment on account of, or
set apart assets for, a sinking or other analogous fund for the purchase,
redemption, defeasance, retirement or other acquisition of any equity or
ownership interest of Seller, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of Seller; or
(j) sponsor or maintain any Plans or make any contributions to, or have
any liability or obligation (direct or contingent) with respect to any Plan and
shall not permit any ERISA Affiliate to sponsor or maintain any Plans or make
any contributions to, or have any liability or obligation (direct or contingent)
with respect to any Plan;
(k) engage in any transaction that would cause any obligation or action
taken or to be taken hereunder (or the exercise by Buyer of any of its rights
under the Agreement, the Purchased Loans or any Transaction Document) to be a
non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of
the Code or substantially similar provisions under any other federal, state or
local laws, rules or regulations; or
(l) make any future advances under any Purchased Loan to any underlying
obligor which are not permitted by the related Purchased Loan Documents.
12. AFFIRMATIVE COVENANTS OF SELLER
(a) Seller shall promptly notify Buyer of any event and/or condition
which is likely to have a Material Adverse Effect.
(b) Seller shall give notice to Buyer of the following (accompanied by
an Officer's Certificate setting forth details of the occurrence referred to
therein and stating what actions Seller has taken or proposes to take with
respect thereto):
(i) promptly upon receipt of notice or knowledge of the occurrence
of any Default or Event of Default;
(ii) with respect to any Purchased Loan sold to Buyer hereunder,
immediately upon receipt of any Principal Payment (in full or in part);
(iii) with respect to any Purchased Loan sold to Buyer hereunder,
immediately upon receipt of notice or knowledge that the related
Mortgaged Property has been damaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, or otherwise
damaged so as to affect adversely the value of such Mortgaged Property;
(iv) promptly upon receipt of notice or knowledge of (i) any
Purchased Loan which becomes a Defaulted Loan, (ii) any lien or
security interest (other than security interests created hereby) on, or
claim asserted against, any Purchased Loan or, to Seller's
47
knowledge, the underlying collateral therefor or (iii) any event or
change in circumstances that has or could reasonably be expected to
have an adverse affect on the Market Value of a Purchased Loan; and
(v) promptly, and in any event within 10 days after service of
process on any of the following, give to Buyer notice of all
litigation, actions, suits, arbitrations, investigations (including,
without limitation, any of the foregoing which are pending or
threatened) or other legal or arbitrable proceedings affecting Seller
or affecting any of the assets of Seller before any Governmental
Authority that (i) questions or challenges the validity or
enforceability of any of the Transaction 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 $5,000,000,
or (iii) which, individually or in the aggregate, if adversely
determined could reasonably be likely to have a Material Adverse
Effect.
(c) Seller shall provide Buyer with copies of such documents as Buyer
may reasonably request evidencing the truthfulness of the representations set
forth in Section 10.
(d) Seller shall defend the right, title and interest of Buyer in and
to the Purchased Loans against, and take such other action as is necessary to
remove, the liens, security interests, claims, encumbrances, charges and demands
of all Persons (other than security interests granted to Buyer hereunder).
(e) Seller will permit Buyer or its designated representative to
inspect any of Seller's records with respect to all or any portion of the
Purchased Loans and the conduct and operation of its business related thereto,
at such reasonable times and with reasonable frequency requested by Buyer or its
designated representative, and to make copies of extracts of any and all
thereof.
(f) If any amount payable under or in connection with any of the
Purchased Loans shall be or become evidenced by any promissory note, other
instrument or chattel paper (as each of the foregoing is defined under the UCC),
such note, instrument or chattel paper shall be immediately delivered to Buyer
or its designee, duly endorsed in a manner satisfactory to Buyer or if any
collateral or other security shall subsequently be delivered to Seller in
connection with any Purchased Loan, Seller shall immediately deliver or forward
such item of collateral or other security to Buyer or its designee, together
with such instruments of assignment as Buyer may request.
(g) Seller shall provide (or cause to be provided to) Buyer with the
following financial and reporting information:
(i) the Monthly Statement;
(ii) within the later of 30 days after the end of each calendar
quarter or 10 days of Seller's receipt, all operating statements and
occupancy information that Seller or Servicer has received for the
previous quarter relating to the Portfolio Loans and within the later
of 45 days after the last day of each calendar quarter or 10 days of
Seller's receipt, the remainder of the operating statements and
occupancy information for the previous quarter relating to the
Portfolio Loans;
48
(iii) as soon as available and in any event within forty-five (45)
days after the end of each of the first three quarterly fiscal periods
of each fiscal year of Seller, the unaudited, consolidated balance
sheets of Seller, which shall incorporate its consolidated
subsidiaries, as at the end of such period and the related unaudited,
consolidated statements of income and retained earnings and of cash
flows for Seller, which shall incorporate its consolidated
Subsidiaries, for such period and the portion of the fiscal year
through the end of such period, accompanied by an Officer's Certificate
of Seller, which certificate shall state that said consolidated
financial statements fairly present the consolidated financial
condition and results of operations Seller and its consolidated
Subsidiaries in accordance with GAAP, consistently applied, as at the
end of, and for, such period (subject to normal year-end audit
adjustments);
(iv) within forty-five (45) days following the end of each quarter,
or within ninety (90) days following the end of each fiscal year, as
the case may be, an Officer's Certificate of Seller in form and
substance reasonably satisfactory to Buyer that Seller during such
fiscal period or year has observed or performed all of its covenants
and other agreements, and satisfied every condition, contained in the
Agreement and the other Transaction Documents to be observed, performed
or satisfied by it, and that there has been no Event of Default and no
event or circumstance has occurred that is reasonably likely to result
in a Material Adverse Effect;
(v) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of Seller, the consolidated balance
sheets of Seller, which shall incorporate its consolidated
Subsidiaries, as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash
flows for Seller, which shall incorporate its consolidated
Subsidiaries, for such year, accompanied by an opinion thereon of
independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated financial
statements fairly present the consolidated financial condition and
results of operations of Seller and its consolidated Subsidiaries as at
the end of, and for, such fiscal year in accordance with GAAP;
(vi) within fifteen (15) Business Days after Buyer's request, such
further information with respect to the operation of any Mortgaged
Property, Purchased Loan, the financial affairs of the Seller and any
Plan and Multiemployer Plan as may be requested by Buyer, including all
business plans prepared by or for Seller; provided, however, that with
respect to information not previously known to, or in the possession
of, Seller relating to any Multiemployer Plan, Seller shall only be
required to provide such information as may be obtained through good
faith efforts;
(vii) within sixty (60) Business Days after the end of each
calendar year, such information as may be requested by Buyer, its
successors and assigns, and transferees, in connection with the
Portfolio Loans, and that are necessary for the party requesting such
information in preparing its tax return and paying taxes in any country
or jurisdiction where such tax return or taxes are due; and
(viii) such other reports as Buyer shall reasonably require.
49
(h) Seller shall at all times comply in all material respects with all
laws, ordinances, rules and regulations of any federal, state, municipal or
other public authority having jurisdiction over Seller or any of its assets and
Seller shall do or cause to be done all things reasonably necessary to preserve
and maintain in full force and effect its legal existence, and all licenses
material to its business.
(i) Seller shall at all times keep proper books of records and accounts
in which full, true and correct entries shall be made of its transactions in
accordance with GAAP and set aside on its books from its earnings for each
fiscal year all such proper reserves in accordance with GAAP.
(j) Seller shall observe, perform and satisfy all the terms,
provisions, covenants and conditions required to be observed, performed or
satisfied by it, and shall pay when due all costs, fees and expenses required to
be paid by it, under the Transaction Documents. Seller shall pay and discharge
all taxes, levies, liens and other charges, if any, on its assets and on the
Purchased Loans that, in each case, in any manner would create any lien or
charge upon the Purchased Loans, 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 in
accordance with GAAP.
(k) Seller shall maintain its existence as corporation, organized
solely and in good standing under the law of the State of Maryland and shall not
dissolve, liquidate, merge with or into any other Person or otherwise change its
organizational structure or identity or incorporate in any other jurisdiction
unless Seller shall have notified Buyer in writing at least 30 days prior to any
intent not to so maintain its existence and, in connection with a merger, (i)
the surviving or resulting entity shall be a corporation or partnership
organized under the laws of the United States or any state thereof; (ii) such
entity shall expressly assume by written agreement, in form and substance
satisfactory to Buyer in Buyer's sole discretion, the performance of all of
Seller's duties and obligations hereunder and the Transaction Documents and
(iii) such entity shall be at least as creditworthy as Seller, as determined by
Buyer in Buyer's sole and absolute discretion; and provided, further, that after
giving effect thereto, no Default or Event of Default would exist hereunder.
(l) Seller shall maintain all records with respect to the Purchased
Loans and the conduct and operation of its business with no less a degree of
prudence than if the Purchased Loans were held by Seller for its own account and
will furnish Buyer, upon request by Buyer or its designated representative, with
information reasonably obtainable by Seller with respect to the Purchased Loans
and the conduct and operation of its business.
(m) Seller shall provide Buyer with notice of each modification of any
Purchased Loan Documents consented to by Seller (including such modifications
which do not constitute a Significant Modification).
(n) Seller shall provide Buyer with notice of the occurrence of any
"appraisal reduction event", "control appraisal period" or similar event under
any participation agreement related to any Purchased Loan.
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(o) Seller shall provide Buyer with reasonable access to operating
statements, the occupancy status and other property level information, with
respect to the Mortgaged Properties, plus any such additional reports as Buyer
may reasonably request.
(p) Seller may propose, and Buyer will consider but shall be under no
obligation to approve, strategies for the foreclosure or other realization upon
the security for any Purchased Loan that has become a Defaulted Loan.
(q) Seller shall not cause any Purchased Loan to be serviced by any
servicer other than a servicer expressly approved in writing by Buyer.
(r) Seller shall promptly deliver to Buyer true, correct and complete
copies of any material amendment, waiver or other modification to the CDO
Indenture.
13. [INTENTIONALLY OMITTED.]
14. EVENTS OF DEFAULT; REMEDIES
Paragraph 11 ("Events of Default") of the Agreement is hereby amended
by the deletion in their entirety of the first paragraph thereof (other than the
clauses referenced in Section 14(a) below) and Paragraphs 11(a) through (i)
thereof and by the addition of the provisions (a) through (c) of Section 14 of
this Annex I:
(a) Together with clauses (iii) through (v) and (vii) of the first
paragraph of Paragraph 11 of the Agreement, the following shall constitute an
event of default hereunder (each an "Event of Default"):
(i) failure of Seller to repurchase or the failure of Buyer to
transfer the Purchased Loan on the applicable Repurchase Date (except
when such failure to transfer is a result of Buyer's inability to
obtain necessary consents to, or fulfill restrictions on, such
transfer);
(ii) failure of Seller to apply any Income received by Seller in
accordance with the provisions hereof;
(iii) (A) the Transaction Documents shall for any reason not cause,
or shall cease to cause, Buyer to be the owner or, if recharacterized
as a secured financing, a secured party with respect to any of the
Purchased Loans or the collateral specified in Section 6(a) and 6(c)
free of any adverse claim, liens and other rights of others (other than
as granted herein) or (B) if a Transaction is recharacterized as a
secured financing, the Transaction Documents with respect to any
Transaction shall for any reason cease to create a valid first priority
security interest in favor of Buyer in any of the Purchased Loans or
the collateral specified in Sections 6(a) and 6(c) or (C) if the
Transaction Documents shall cease to be in full force and effect or if
their enforceability is challenged by Seller;
(iv) failure of Seller to make the payments required under Section
5(b) on any Remittance Date which failure is not remedied within one
(1) Business Day;
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(v) failure of Seller to make any other payment owing to Buyer
which has become due, whether by acceleration or otherwise, under the
terms of the Agreement which failure is not remedied within the
applicable period (in the case of a failure pursuant to Section 4) or,
if no period is specified, five (5) Business Days after notice thereof
to Seller; provided, however, that Buyer shall not be required to
provide notice in the event of a failure by Seller to repurchase on the
Repurchase Date;
(vi) failure by Seller in the due performance or observance of any
term, covenant or agreement contained in Section 11(k) of this Annex I;
(vii) Change of Control shall have occurred with respect to the
Seller;
(viii) any representation made by Seller or Buyer (other than the
representations and warranties set forth in Exhibit V hereto, which
shall be considered, except as set forth below, solely for the purpose
of determining the Market Value of the Purchased Loans) shall have been
incorrect or untrue in any material respect when made or repeated or
deemed to have been made or repeated (and, if susceptible to cure, the
breach of such representation shall not have been cured within ten (10)
Business Days of written notice of breach thereof); provided that the
representations and warranties set forth in Section 10(a) (vi) or
(viii) (in the case of (vi), with respect to the affected or Purchased
Loans only) made by Seller shall not be considered an Event of Default
if incorrect or untrue in any material respect, if Buyer terminates the
related Transaction and Seller repurchases the related Purchased Loans
on an Early Repurchase Date no later than ten (10) Business Days after
receiving written notice of such incorrect or untrue representation (or
if the breach of such representations and warranties is susceptible to
cure, Seller effects a cure within such 10-Business Day period);
provided, however, that if Seller shall have made any such
representation (including the representations set forth in Exhibit V)
with knowledge that it was materially incorrect or untrue at the time
made, such misrepresentation shall constitute an Event of Default;
(ix) a final judgment by any competent court in the United States
of America for the payment of money in an amount greater than
$5,000,000 shall have been rendered against Seller, and remained
undischarged or unpaid for a period of thirty (30) days, during which
period execution of such judgment is not effectively stayed;
(x) Seller shall have defaulted or failed to perform under any
note, indenture, loan agreement, guaranty, swap agreement or any other
contract, agreement or transaction to which it is a party, which
default (A) involves the failure to pay a matured obligation in excess
of $10,000,000, or (B) involving an obligation of at least $10,000,000
is a monetary default or a material non-monetary default and results in
acceleration or permits the acceleration of the obligation by any other
party to or beneficiary of such note, indenture, loan agreement,
guaranty, swap agreement or other contract agreement or transaction;
provided, however, that any such default, failure to perform or breach
shall not constitute an Event of Default if Seller cures such default,
failure to perform or breach, as the case may be, within the grace
period, if any, provided under the applicable agreement; or
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(xi) if Seller's Fixed Charge Ratio is less than 1.2:1 and/or
Seller's Debt to Equity Ratio is greater than 5:1 as of the end of any
fiscal quarter;
(xii) if Seller or Buyer shall breach or fail to perform any of the
terms, covenants, obligations or conditions of the Agreement, other
than as specifically otherwise referred to in this definition of "Event
of Default", and such breach or failure to perform is not remedied
within ten (10) Business Days, or if such breach is not curable by the
payment of a sum of money, thirty (30) days after notice thereof to
Seller or Buyer from the applicable party or its successors or assigns;
(xiii) an Act of Insolvency shall have occurred with respect to the
Seller; or
(xiv) an "event of default" beyond any applicable notice and cure
period shall have occurred under any repurchase facility or loan
facility entered into by Buyer and Seller or under any facility with
Buyer in which Seller is a guarantor.
(b) If an Event of Default shall occur and be continuing with respect
to Seller, the following rights and remedies shall be available to Buyer:
(i) At the option of Buyer, exercised by written notice to Seller
(which option shall be deemed to have been exercised, even if no notice
is given, immediately upon the occurrence of an Act of Insolvency), the
Repurchase Date for each Transaction hereunder shall, if it has not
already occurred, be deemed immediately to occur (the date on which
such option is exercised or deemed to have been exercised being
referred to hereinafter as the "Accelerated Repurchase Date") (and any
Transaction for which the related Purchase Date has not yet occurred
shall be canceled).
(ii) If Buyer exercises or is deemed to have exercised the option
referred to in Section 14(b)(i):
(A) Seller's obligations hereunder to repurchase all Purchased
Loans shall become immediately due and payable on and as of the
Accelerated Repurchase Date and all Income deposited in the Blocked
Account shall be retained by Buyer and applied to the aggregate
unpaid Repurchase Price and any other amounts owing by Seller
hereunder; and
(B) to the extent permitted by applicable law, the Repurchase
Price with respect to each Transaction (determined as of the
Accelerated Repurchase Date) shall be increased by the aggregate
amount obtained by daily application of, on a 360 day per year
basis for the actual number of days during the period from and
including the Accelerated Repurchase Date to but excluding the date
of payment of the Repurchase Price (as so increased), (x) the
Pricing Rate applicable upon an Event of Default for such
Transaction multiplied by (y) the Repurchase Price for such
Transaction (decreased by (I) any amounts actually remitted to
Buyer by Seller from time to time pursuant to Section 5 and applied
to such Repurchase Price to the extent such amounts are not already
included in the computation of the Repurchase Price and (II) any
amounts applied to the Repurchase Price pursuant Section 14(b)(iii)
of this Annex I); and
53
(C) the Custodian shall, upon the request of Buyer (with
simultaneous copy of such request to Seller), deliver to Buyer all
instruments, certificates and other documents then held by the
Custodian relating to the Purchased Loans.
(iii) Buyer may, after ten (10) days notice to Seller of Buyer's
intent to take such action, (A) immediately sell, at a public or
private sale in a commercially reasonable manner and at such price or
prices as Buyer may reasonably deem satisfactory any or all of the
Purchased Loans or (B) in its sole discretion elect, in lieu of selling
all or a portion of such Purchased Loans, to give Seller credit for
such Purchased Loans in an amount equal to the Market Value of such
Purchased Loans against the aggregate unpaid Repurchase Price for such
Purchased Loans and any other amounts owing by Seller under the
Transaction Documents. The proceeds of any disposition of Purchased
Loans effected pursuant to this Section 14(b)(iii) shall be applied,
(v) first, to the costs and expenses incurred by Buyer in connection
with Seller's default; (w) second, to costs of cover and/or Hedging
Transactions, if any; (x) third, to the Repurchase Price; (y) fourth,
to any other outstanding obligation of Seller to Buyer or its
Affiliates pursuant to the Transaction Documents, and (z) the balance,
if any, to Seller.
(iv) The parties recognize that it may not be possible to purchase
or sell all of the Purchased Loans on a particular Business Day, or in
a transaction with the same purchaser, or in the same manner because
the market for such Purchased Loans may not be liquid. In view of the
nature of the Purchased Loans, the parties agree that, to the extent
permitted by applicable law, liquidation of a Transaction or the
Purchased Loans shall not require a public purchase or sale and that a
good faith private purchase or sale shall be deemed to have been made
in a commercially reasonable manner. Accordingly, Buyer may elect, in
its sole discretion, the time and manner of liquidating any Purchased
Loans, and nothing contained herein shall (A) obligate Buyer to
liquidate any Purchased Loans on the occurrence and during the
continuance of an Event of Default or to liquidate all of the Purchased
Loans in the same manner or on the same Business Day or (B) constitute
a waiver of any right or remedy of Buyer.
(v) Seller shall be liable to Buyer for the amount of all
reasonable expenses, including reasonable legal fees and expenses,
actually incurred by Buyer in connection with or as a consequence of an
Event of Default with respect to Seller, (B) all costs incurred in
connection with covering transactions or Hedging Transactions
(including short sales) or entering into replacement transactions (C)
all damages, losses, judgment costs and expenses of any kind which may
be imposed on, incurred by or asserted against Buyer relating to or
arising out of such Hedging Transactions or covering transactions and
(D) any other loss, damage, cost or expense directly arising or
resulting from the occurrence of an Event of Default with respect to
Seller.
(vi) Buyer may exercise any or all of the remedies available to
Buyer immediately upon the occurrence of an Event of Default and at any
time during the continuance thereof. All rights and remedies arising
under the Transaction Documents, as amended from time to time, are
cumulative and not exclusive of any other rights or remedies which
Buyer may have.
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(vii) Buyer may enforce its rights and remedies hereunder without
prior judicial process or hearing, and Seller hereby expressly waives
any defenses Seller might otherwise have to require Buyer to enforce
its rights by judicial process. Seller also waives any defense Seller
might otherwise have arising from the use of nonjudicial process,
disposition of any or all of the Purchased Loans, or from any other
election of remedies. Seller recognizes that nonjudicial remedies are
consistent with the usages of the trade, are responsive to commercial
necessity and are the result of a bargain at arm's length.
(viii) Without limiting any other rights or remedies of Buyer,
Buyer shall have the right to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time
held by or for account of Buyer or Buyer's Affiliates on behalf of
Seller to any obligations of Seller hereunder to Buyer, irrespective of
whether Buyer shall have made any demand under the Agreement or the
other Transaction Documents.
Notwithstanding anything to the contrary in the Agreement, Buyer shall not be
required, prior to exercising any remedy in respect of any Event of Default by
Seller, to give notice otherwise required hereunder, if Buyer reasonably
believes that (A) the Purchased Loans then held by Buyer threaten to decline
speedily in value or are of a type customarily sold in a recognized market or
(B) any delay occasioned by the giving of such notice will jeopardize Buyer's
ability to recover, by sale or otherwise, all or part of the then-outstanding
amount of the Repurchase Price or of any other amounts owed to Buyer in
connection therewith.
(c) If an Event of Default occurs and is continuing with respect to
Buyer, the following rights and remedies shall be available to Seller:
(i) Upon tender by Seller of payment of the aggregate Repurchase
Price for all Purchased Loans, together with all other amounts due
hereunder to Buyer, Buyer's right, title and interest in such Purchased
Loans shall be deemed transferred to Seller, and Buyer shall
simultaneously deliver such Purchased Loans to Seller.
(ii) Seller shall have all the rights and remedies provided herein
or provided by applicable federal, state, foreign, local and any other
applicable laws, in equity, and under any other agreement between Buyer
and Seller (including the right to offset any debt or claim).
15. SINGLE AGREEMENT
Clause (ii) of Paragraph 12 of the Agreement ("Single Agreement") is
hereby deleted.
16. NOTICES AND OTHER COMMUNICATIONS
Paragraph 13 of the Agreement ("Notices and Other Communications") is
hereby deleted and replaced in its entirety by the following provisions of this
Section 16:
All notices, consents, approvals and requests required or permitted
hereunder shall be given in writing and shall be effective for all purposes if
hand delivered or sent by (a) hand
55
delivery, with proof of attempted delivery, (b) certified or registered United
States mail, postage prepaid, (c) expedited prepaid delivery service, either
commercial or United States Postal Service, with proof of attempted delivery, or
(d) by telecopier (with answerback acknowledged); provided that such telecopied
notice must also be delivered by one of the means set forth in (a), (b) or (c)
above, to the addresses specified in Annex II hereto or at such other address
and person as shall be designated from time to time by any party hereto, as the
case may be, in a written notice to the other parties hereto in the manner
provided for in this Section 16. A notice shall be deemed to have been given:
(a) in the case of hand delivery, at the time of delivery, (b) in the case of
registered or certified mail, when delivered or the first attempted delivery on
a Business Day, (c) in the case of expedited prepaid delivery upon the first
attempted delivery on a Business Day; or (d) in the case telecopier, upon
receipt of answerback confirmation, provided that such telecopied notice was
also delivered as required in this Section. A party receiving a notice which
does not comply with the technical requirements for notice under this Section
may elect to waive any deficiencies and treat the notice as having been properly
given.
17. NON-ASSIGNABILITY
The provisions of Paragraph 15 of the Agreement ("Nonassignability;
Termination") are hereby deleted and replaced in their respective entireties by
the following provisions of this Section 17:
(a) The rights and obligations of Seller under the Transaction
Documents, the Hedging Transactions and under any Transaction shall not be
assigned by Seller without the prior written consent of Buyer. Buyer may assign
or participate (other than pursuant to a Financing Transaction) its rights and
obligations under the Transaction Documents and under any Transaction without
the prior written consent of Seller only to a Permitted Transferee which
assignment or participation shall be at the sole cost and expense of Buyer.
Buyer may assign its rights and interests in any Hedging Transaction without the
prior written consent of Seller. Seller agrees to use its good faith efforts to
include in the participation agreement or intercreditor agreement, as
applicable, relating to each Purchased Loan a provision expressly recognizing
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company, together with its successors and assigns, as a
permitted transferee of each such Purchased Loan.
Notwithstanding anything to the contrary contained herein, with respect
to Seller, (A) Buyer shall remain responsible for reviewing and determining the
eligibility of any New Loan for purposes of any Transaction and (B) Seller shall
continue to deal solely and directly with Buyer in connection with any
Transaction.
As long as an Event of Default on the part of Seller shall have
occurred and be continuing, Buyer may assign or participate its rights and
obligations under the Transaction Documents and/or any Transaction (including in
connection with any Financing Transaction) to any Person.
(b) The Buyer shall maintain a record of ownership identifying all
assignees. If any assignee is a non-U.S. Person, such assignee shall timely
provide Seller with such forms as may be required to establish the assignee's
status for U.S. withholding tax purposes.
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(c) With respect to any issuance by Buyer of a participation in any
Transaction, (i) Buyer shall act as exclusive agent for all participants in any
dealings with Seller in connection with such Transactions and will maintain, on
behalf of Seller, a record of ownership that identifies all participants, and
(ii) Seller shall not be obligated to deal directly with any party other than
Buyer in connection with such Transactions, or to pay or reimburse Buyer for any
costs that would not have been incurred by Buyer had no participation interests
in such Transactions been issued.
(d) Subject to the foregoing, the Transaction Documents and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and permitted assigns. Nothing in the
Transaction Documents, express or implied, shall give to any Person, other than
the parties to the Transaction Documents and their respective successors, any
benefit or any legal or equitable right, power, remedy or claim under the
Transaction Documents.
18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
The language in Paragraph 16 of the Agreement ("Governing Law") which
reads "without giving effect to the conflict of law principals thereof" is
hereby deleted. Paragraph 18 of the Agreement ("Use of Employee Plan Assets") is
hereby deleted in its entirety. Paragraph 17 ("No Waivers, Etc.") is hereby
deleted and replaced in its entirety by the following provisions of this Section
18:
(a) Each party irrevocably and unconditionally submits to the
non-exclusive jurisdiction of any United States Federal or New York State court
sitting in Manhattan, and any appellate court from any such court, solely for
the purpose of any suit, action or proceeding brought to enforce its obligations
under the Agreement or relating in any way to the Agreement or any Transaction
under the Agreement.
(b) To the extent that either party has or hereafter may acquire any
immunity (sovereign or otherwise) from any legal action, suit or proceeding,
from jurisdiction of any court or from set off or any legal process (whether
service or notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) with respect to itself or any
of its property, such party hereby irrevocably waives and agrees not to plead or
claim such immunity in respect of any action brought to enforce its obligations
under the Agreement or relating in any way to the Agreement or any Transaction
under the Agreement.
(c) Each party hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court and any right of jurisdiction on
account of its place of residence or domicile and irrevocably consents to the
service of any summons and complaint and any other process by the mailing of
copies of such process to them at their respective address specified herein.
Each party hereby agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Section 18
shall affect the right of Buyer to serve legal process in any other manner
permitted by law or affect the right of Buyer to bring any action or proceeding
against Seller or its property in the courts of other jurisdictions.
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(d) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT
DELIVERED HEREUNDER OR THEREUNDER.
19. NO RELIANCE; DISCLAIMERS
(a) Each of Buyer and Seller hereby acknowledges, represents and
warrants to the other that, in connection with the negotiation of, the entering
into, and the performance under, the Transaction Documents and each Transaction
thereunder:
(i) It is not relying (for purposes of making any investment
decision or otherwise) upon any advice, counsel or representations
(whether written or oral) of the other party to the Transaction
Documents, other than the representations expressly set forth in the
Transaction Documents;
(ii) It has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisors to the extent
that it has deemed necessary, and it has made its own investment,
hedging and trading decisions (including decisions regarding the
suitability of any Transaction) based upon its own judgment and upon
any advice from such advisors as it has deemed necessary and not upon
any view expressed by the other party;
(iii) It is a sophisticated and informed Person that has a full
understanding of all the terms, conditions and risks (economic and
otherwise) of the Transaction Documents and each Transaction thereunder
and is capable of assuming and willing to assume (financially and
otherwise) those risks;
(iv) It is entering into the Transaction Documents and each
Transaction thereunder for the purposes of managing its borrowings or
investments or hedging its underlying assets or liabilities and not for
purposes of speculation;
(v) It is not acting as a fiduciary or financial, investment or
commodity trading advisor for the other party and has not given the
other party (directly or indirectly through any other Person) any
assurance, guaranty or representation whatsoever as to the merits
(either legal, regulatory, tax, business, investment, financial
accounting or otherwise) of the Transaction Documents or any
Transaction thereunder;
(b) Each determination by Buyer of the Market Value with respect to
each New Loan or Purchased Loan or the communication to Seller of any
information pertaining to Market Value under the Agreement shall be subject to
the following disclaimers:
(i) Buyer has assumed and relied upon, with Seller's consent and
without independent verification, the accuracy and completeness of the
information provided by Seller and reviewed by Buyer. Buyer has not
made any independent inquiry of any aspect of the New Loans or
Purchased Loans or the underlying collateral. Buyer's view is based on
economic, market and other conditions as in effect on, and the
information
58
made available to Buyer as of, the date of any such determination or
communication of information, and such view may change at any time
without prior notice to Seller.
(ii) Market Value determinations and other information provided to
Seller constitute a statement of Buyer's view of the value of one or
more loans or other assets at a particular point in time and neither
(x) constitute a bid for a particular trade, (y) indicate a willingness
on the part of Buyer or any Affiliate thereof to make such a bid, nor
(z) reflect a valuation for substantially similar assets at the same or
another point in time, or for the same assets at another point in time.
(iii) Market Value determinations and other information provided to
Seller may vary significantly from valuation determinations and other
information which may be obtained from other sources.
(iv) Market Value determinations and other information provided to
Seller are communicated to Seller solely for its use and may not be
relied upon by any other person and may not be disclosed or referred to
publicly or to any third party without the prior written consent of
Buyer, which consent Buyer may withhold or delay in its sole and
absolute discretion.
(v) Buyer makes no representations or warranties with respect to
any Market Value determinations or other information provided to
Seller. Buyer shall not be liable for any incidental or consequential
damages arising out of any inaccuracy in such valuation determinations
and other information provided to Seller, including as a result of any
act of gross negligence or breach of any warranty.
(vi) Market Value indications and other information provided to
Seller in connection with Section 3(b) are only indicative of the
initial Market Value of the New Loan submitted to Buyer for
consideration thereunder, and may change without notice to Seller prior
to, or subsequent to, the transfer by Seller of the New Loan pursuant
to Section 3(e). No indication is provided as to Buyer's expectation of
the future value of such Purchased Loan or the underlying collateral.
(vii) Initial Market Value indications and other information
provided to Seller in connection with Section 3(b) are to be used by
Seller for the sole purpose of determining whether to proceed in
accordance with Section 3 and for no other purpose.
20. INDEMNITY AND EXPENSES
(a) Seller hereby agrees to hold Buyer and its Affiliates and each of
their respective officers, directors, employees and agents ("Indemnified
Parties") harmless from and indemnify the Indemnified Parties against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, taxes (including stamp, excise, sales or other taxes which may be payable
or determined to be payable with respect to any of the Purchased Loans or in
connection with any of the transactions contemplated by the Agreement (or the
recharacterization of any Transaction) and the documents delivered in connection
herewith and therewith, other than net income taxes of Buyer), fees, costs,
expenses (including reasonable attorneys fees and disbursements and any and all
servicing and enforcement costs with respect to the Purchased
59
Loans) or disbursements (all of the foregoing, collectively "Indemnified
Amounts") which may at any time (including, without limitation, such time as the
Agreement shall no longer be in effect and the Transactions shall have been
repaid in full) be imposed on or asserted against any Indemnified Party in any
way whatsoever arising out of or in connection with, or relating to, the
Agreement or any Transactions thereunder or any action taken or omitted to be
taken by any Indemnified Party under or in connection with any of the foregoing;
provided, that Seller shall not be liable for Indemnified Amounts resulting from
the gross negligence or willful misconduct of any Indemnified Party. Without
limiting the generality of the foregoing, Seller agrees to hold Buyer harmless
from and indemnify Buyer against all Indemnified Amounts with respect to all
Purchased Loans relating to or arising out of any violation or alleged violation
of any environmental law, rule or regulation or any consumer credit laws,
including without limitation ERISA, that, in each case, results from anything
other than Buyer's gross negligence or willful misconduct. In any suit,
proceeding or action brought by Buyer in connection with any Purchased Loan for
any sum owing thereunder, or to enforce any provisions of any Purchased Loan
Documents, Seller will save, indemnify and hold Buyer 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 Seller of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from Seller. Seller also agrees to reimburse an Indemnified Party
as and when billed by such Indemnified Party for all such Indemnified Party's
costs and expenses incurred in connection with the enforcement or the
preservation of such Indemnified Party's rights under the Agreement and any
other Transaction Document or any transaction contemplated hereby or thereby,
including without limitation the reasonable fees and disbursements of its
counsel. Seller hereby acknowledges its obligations hereunder are recourse
obligations of Seller.
(b) Other than as provided in Section 17(a) hereof, Seller agrees to
pay as and when billed by Buyer all of the out-of-pocket costs and expenses
incurred by Buyer in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, the Agreement, this Annex
I and the other Transaction Documents or any other documents prepared in
connection herewith or therewith. Seller agrees to pay as and when billed by
Buyer all of the out-of-pocket costs and expenses incurred in connection with
the consummation and administration of the transactions contemplated hereby and
thereby including without limitation (i) all the reasonable fees, disbursements
and expenses of counsel to Buyer and (ii) all the Due Diligence Fees, testing
and review costs and expenses incurred by Buyer in connection with the
evaluation of any New Loan and with respect to any Transaction.
21. DUE DILIGENCE
Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Purchased Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or determining or re-determining the Asset Base for purposes of
Section 4(a) of this Annex I, or otherwise, and Seller agrees that Buyer, at its
option, has the right at any time to conduct a partial or complete due diligence
review on any or all of the Purchased Loans, including, without limitation,
ordering new credit reports and Appraisals on the applicable collateral and
otherwise regenerating the information used to originate such Purchased Loans.
Upon reasonable (but no less than one (1) Business
60
Day) prior notice to Seller, Buyer or its authorized representatives will be
permitted during normal business hours to examine, inspect, and make copies and
extracts of, the Purchased Loan Files and any and all documents, records,
agreements, instruments or information relating to any Purchased Loan in the
possession or under the control of Seller, any servicer or sub-servicer and/or
Custodian. Seller also shall make available to Buyer a knowledgeable financial
or accounting officer for the purpose of answering questions respecting the
Purchased Loan Files and the Purchased Loans. Seller agrees to cooperate with
Buyer and any third party underwriter designated by Buyer in connection with
such underwriting, including, but not limited to, providing Buyer and any third
party underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Purchased Loans in the possession,
or under the control, of such Seller.
22. SERVICING
(a) Notwithstanding the purchase and sale of the Purchased Loans by
Seller to Buyer hereunder, Midland Loan Services, Inc. or, with the consent of
Buyer (which consent shall not unreasonably be withheld), an Affiliate of Seller
("Servicer") shall continue to service the Purchased Loans at Seller's sole cost
and for the benefit of Buyer and, if Buyer shall exercise its rights to pledge
or hypothecate the Purchased Loans prior to the Repurchase Date pursuant to
Section 8 or 17 of this Annex I, Buyer's assigns; provided, however, that the
obligations of Seller to service any of the Purchased Loans shall cease
automatically upon the earliest of (i) an Event of Default, (ii) the date on
which the aggregate Repurchase Price for the Portfolio Loans together with all
accrued and unpaid Price Differential, unpaid Costs and other amounts payable by
Seller to Buyer hereunder have been paid in full or (iii) the transfer of
servicing approved by Seller and Buyer, which Buyer's consent shall not be
unreasonably withheld. Seller shall service and shall cause the Servicer to
service the Purchased Loans in accordance with Accepted Servicing Practices.
(b) Seller agrees that Buyer is the owner of all servicing records,
including but not limited to any and all servicing agreements (the "Servicing
Agreements"), files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Purchased Loans (the "Servicing
Records") so long as the Purchased Loans are subject to the Agreement. Seller
covenants to safeguard such Servicing Records and to deliver them promptly to
Buyer or its designee (including the Custodian) at Buyer's request.
(c) Upon the occurrence and continuance of an Event of Default, Buyer
may, in its sole discretion, (i) sell its right to the Purchased Loans on a
servicing released basis or (ii) terminate Servicer or any sub-servicer of the
Purchased Loans with or without cause, in each case without payment of any
termination fee or such other costs or expenses to Buyer, it being agreed that
Seller will pay any and all fees, costs and expenses required to terminate the
Servicing Agreement and to effectuate a transfer of servicing to a designee of
the Buyer; provided, however, that Buyer shall cause any successor servicer to
deliver to Seller reports generated for Buyer relating to the Purchased Loans.
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(d) Seller shall not, and shall not permit Servicer to, employ
sub-servicers to service the Purchased Loans without the prior written approval
of Buyer which shall not be unreasonably withheld. If the Purchased Loans are
serviced by a sub-servicer, Seller shall irrevocably assign all rights, title
and interest in the Servicing Agreements with such sub-servicer to Buyer.
(e) Seller shall cause Servicer and any sub-servicers engaged by Seller
to execute a letter agreement with Buyer acknowledging Buyer's security interest
in the Purchased Loans and the Servicing Agreements and agreeing that each such
sub-servicer shall deposit all Income with respect to the Purchased Loans in the
Blocked Account, all in such manner as shall be reasonably acceptable to Buyer.
(f) In the event Seller or its Affiliate is servicing any Purchased
Loan, Seller shall permit Buyer to inspect Seller's or its Affiliate's servicing
facilities, as the case may be, for the purpose of satisfying Buyer that Seller
or its Affiliate, as the case may be, has the ability to service such Purchased
Loans as provided in the Agreement.
(g) Seller shall cause the Servicer to provide a copy of each report
and notice sent to Seller to be sent to Buyer concurrently therewith.
23. TREATMENT FOR TAX PURPOSES
It is the intention of the parties that, for U.S. Federal, state and
local income and franchise tax purposes, the Transactions constitute a
financing, and that the Seller is, and, so long as no Event of Default shall
have occurred and be continuing, will continue to be, treated as the owner of
the Purchased Loans for such purposes. Unless prohibited by applicable law,
Seller and Buyer agree to treat the Transactions as described in the preceding
sentence on any and all filings with any U.S. Federal, state or local taxing
authority.
24. INTENT
The provisions of Paragraph 19 of the Agreement ("Intent") are hereby
deleted and replaced in their respective entireties by the following provisions
of this Section 24:
The parties recognize that each Transaction is a "repurchase agreement"
as that term is defined in Section 101 of Title 11 of the United States Code, as
amended (except in so far as the type of asset subject to the Transaction or the
term of that Transaction would render such definition inapplicable). The parties
recognize that each Transaction is a "securities contract" as that term is
defined in Section 741 of Title 11 of the United States Code, as amended.
25. INTENTIONALLY OMITTED
26. MISCELLANEOUS
The provisions of Paragraph 20 of the Agreement ("Disclosure Relating
to Certain Federal Protections") are hereby deleted in their entirety and
replaced by the following provisions of this Section 26:
62
(a) Time is of the essence under the Transaction Documents and all
Transactions thereunder and all references to a time shall mean New York time in
effect on the date of the action unless otherwise expressly stated in the
Transaction Documents.
(b) All rights, remedies and powers of Buyer hereunder and in
connection herewith are irrevocable and cumulative, and not alternative or
exclusive, and shall be in addition to all other rights, remedies and powers of
Buyer whether under law, equity or agreement. In addition to the rights and
remedies granted to it in the Agreement to the extent applicable, Buyer shall
have all rights and remedies of a secured party under the UCC and any other
applicable law.
(c) The Transaction Documents may be executed in counterparts, each of
which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.
(d) The headings in the Transaction Documents are for convenience of
reference only and shall not affect the interpretation or construction of the
Transaction Documents.
(e) Each provision of the Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of the
Agreement shall be prohibited by or be invalid under such law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of the
Agreement.
(f) This Annex I, together with the Agreement contain a final and
complete integration of all prior expressions by the parties with respect to the
subject matter hereof and thereof and shall constitute the entire agreement
among the parties with respect to such subject matter, superseding all prior
oral or written understandings.
(g) The parties understand that the Agreement is a legally binding
agreement that may affect such party's rights. Each party represents to the
other that it has received legal advice from counsel of its choice regarding the
meaning and legal significance of the Agreement and that it is satisfied with
its legal counsel and the advice received from it.
(h) Should any provision of the Agreement require judicial
interpretation, it is agreed that a court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against any Person by reason of the rule of construction that a
document is to be construed more strictly against the Person who itself or
through its agent prepared the same, it being agreed that all parties have
participated in the preparation of the Agreement.
(i) Buyer agrees not to seek before any court or governmental agency to
have any director or officer of the Seller held personally liable for any action
or inactions of the Seller or any obligations of the Seller under the Agreement
or the related Transaction Documents, except if such actions or inactions are
the result of the gross negligence, fraud or willful misconduct of such director
or officer.
[SIGNATURES COMMENCE ON NEXT PAGE]
63
IN WITNESS WHEREOF, the parties have executed this Annex I as of the
17th day of August 2004.
BUYER:
------
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE COMPANY,
a New York limited partnership
By: ▇▇▇▇▇▇▇ Sachs Real Estate Funding Corp.,
its general partner
By:/s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
SELLER:
-------
CAPITAL TRUST, INC., a Maryland corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
64
SCHEDULE 1-A
Purchase Percentages and Applicable Spreads
-------------------------------------------
Purchase Applicable Spread
Loan Type Percentage (basis points)
---------
--------------------------------------------------------------------------------
Mezzanine Loans 75% LIBOR +175
--------------------------------------------------------------------------------
First Mortgage Loans 75% LIBOR +175
--------------------------------------------------------------------------------
Second Mortgage Loans 75% LIBOR +175
--------------------------------------------------------------------------------
Senior First Mortgage B Notes 75% LIBOR +175
--------------------------------------------------------------------------------
Junior First Mortgage B Notes 75% LIBOR +175
--------------------------------------------------------------------------------
Schedule 1A-1
SCHEDULE 1-B
Purchase Percentages and Applicable Spreads
-------------------------------------------
--------------------------------------------------------------------------------
Applicable
Purchase Spread
LTV Percentage* (basis points)*
--------------------------------------------------------------------------------
LTV less than or equal to 60% Less than or 100
equal to 65%
--------------------------------------------------------------------------------
Greater than 125
65% but less
than or equal
to 85%
--------------------------------------------------------------------------------
LTV greater than 60% and less than or equal Less than or 135
to 70% equal to 60%
--------------------------------------------------------------------------------
Greater than 160
60% but less
than or equal
to 80%
--------------------------------------------------------------------------------
Less than or 175
LTV greater than 70% and less than or equal equal to
to 85% 50%
--------------------------------------------------------------------------------
Greater than 200
50% but less
than or equal
to 70%
--------------------------------------------------------------------------------
---------
* Or as otherwise determined by Buyer in its sole discretion on a case-by-case
basis and set forth in a written notice provided by Buyer to Seller.
Schedule 1B-1
SCHEDULE 2
Initial Portfolio Loans
-----------------------
[TO COME]
Schedule 2-1
SCHEDULE 3
Purchased Loan Information
--------------------------
(a) Loan Number/Loan Type
(b) Obligor Name
(c) Property Address
(d) Original Balance
(e) Original Coupon
(f) Outstanding Balance
(g) Maturity Date
(h) Table Funding (Yes/No)
(i) If Participation, the name of the lead lender under the Purchased Loan
(j) Such information as Buyer and Custodian shall agree and that the Buyer
shall set forth in writing, on a case-by-case basis.
Schedule 3-1
SCHEDULE 4
APPROVED APPRAISERS
-------------------
1. KTR Appraisal Services
2. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Inc.
3. ▇▇▇▇▇ & ▇▇▇▇▇
4. CB ▇▇▇▇▇▇▇ ▇▇▇▇▇
5. The Weitzman Group
6. Greenwich Group
7. ▇▇▇▇▇▇ ▇▇▇▇▇
8. HVS International
9. PWC
Schedule 4-1
SCHEDULE 5
APPROVED ENGINEERS
------------------
1. KTR Realty Services
2. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc.
3. C.A. Rich, Inc.
4. IVI
5. Dames & ▇▇▇▇▇
6. Law Environmental
7. ▇▇▇▇▇▇▇
8. EM&CA
9. Aqua Terra
10. ATC (BCM Engineers)
11. Horn Chandler & ▇▇▇▇▇▇
12. National Assessment Corporation
13. EMG
14. Property Solutions Inc.
15. ▇▇▇▇▇ & ▇▇▇▇▇▇
16. PSI
Schedule 5-1
SCHEDULE 6
APPROVED ENVIRONMENTAL CONSULTANTS
----------------------------------
1. Acqua Terra
2. Law Environmental
3. KTR Realty Services
4. EMG
5. ▇▇▇▇▇▇▇
6. Dames & ▇▇▇▇▇
7. ▇▇▇▇▇ & Root
8. C.A. Rich, Inc.
9. ▇▇▇▇▇▇▇
10. EM&CA
11. ATC (BCM Engineers)
12. IVI
13. ▇▇▇▇▇ & ▇▇▇▇▇▇
14. Certified Environmental Inc.
15. Environ Business, Inc.
16. Property Solutions, Inc.
17. National Assessment Corporation
18. ▇▇▇▇▇▇▇ Environmental Group
19. Front Royal
20. PSI
Schedule 6-1
SCHEDULE 7-A
Form of UCC Financing Statement
-------------------------------
Debtor: Secured Party:
------ -------------
Capital Trust, Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTACHMENT A TO UCC FINANCING STATEMENT
This filing is for protective purposes only with respect to the
Purchased Loans and the Blocked Account in case the sale of any Purchased Loan
under the Repurchase Agreement is re-characterized as a grant of a security
interest in any such Purchased Loan.
The collateral covered by this financing statement is all of the
Debtor's right, title and interest in, to and under the following property,
whether now owned or existing, hereafter acquired or arising, or in which the
Debtor now or hereafter has any rights, and wheresoever located (the
"Collateral"):
(a) the Blocked Account, all of the Purchased Loans including
those identified in Schedule I hereto, all Income from such Purchased
Loans and all proceeds of all of the foregoing, and
(b) all Hedging Transactions relating to Purchased Loans
entered into by Seller and all proceeds thereof.
The following terms shall have the following meanings. Such definition
shall be equally applicable to the singular and plural forms of the terms
defined.
"Blocked Account" means that certain Account No. ▇▇▇▇▇▇▇▇▇▇ established
and maintained by Debtor at PNC Bank pursuant to Section 5(a) of the Repurchase
Agreement (and any successor thereto or replacement thereof established and
maintained pursuant to Section 5(a) of the Repurchase Agreement and a Blocked
Account Agreement).
"Blocked Account Agreement" means the Blocked Account Agreement, dated
as of the date hereof and executed by Buyer, Seller and the Depository Bank (and
any successor thereto or replacement thereof extended by Buyer, Seller and the
Depository Bank).
"Buyer" means Secured Party.
"Custodian" means Deutsche Bank Trust Company Americas or any successor
Custodian appointed by Buyer.
"Depository Bank" shall mean PNC Bank, N.A. or any successor Depository
Bank appointed by Seller with the prior written consent of Buyer (which consent
shall not be unreasonably withheld, delayed or conditioned) which delivers a
deposit account agreement in the form of the Blocked Account Agreement or
another form reasonably acceptable to Buyer.
Schedule 7-A-1
"Eligible Loans" means any of the following types of loans listed in
(i) through (iv) below:
(i) performing mezzanine loans (or participation interests
therein) which are secured by pledges of the equity ownership interests
in entities that directly or indirectly own Eligible Properties;
(ii) performing mortgage loans secured by first liens on
Eligible Properties or second liens on Eligible Properties;
(iii) senior subordinate participation interests (or a senior
subordinate promissory note that is, in effect, similar in nature to a
senior subordinate participation interest) in performing mortgage loans
secured by first liens on Eligible Properties that also secures a
senior promissory note (or senior interest) in such loan and may also
secure a junior subordinate promissory note (or junior subordinate
interest) in such loan; and
(iv) junior participation interests (or a junior promissory
note that is, in effect, similar in nature to a junior participation
interest) in performing mortgage loans secured by first liens on
Eligible Properties that also secure a senior (or senior subordinate)
promissory note (or senior (or senior subordinate) interest) in such
loan;
"Eligible Property" shall mean a property that is a multifamily,
retail, office, industrial, warehouse, condominium or hospitality property or
such other property type acceptable to Buyer in the exercise of its good faith
business judgment; provided, however, that Buyer shall determine in its sole and
absolute discretion, on a case-by-case basis, whether any healthcare related
property, such as assisted living, nursing homes, acute care, rehabilitation
centers, diagnostic centers and psychiatric centers, qualifies as an Eligible
Property.
"Hedging Transactions" means, with respect to any or all of the
Purchased Loans, any short sale of U.S. Treasury Securities or mortgage-related
securities, futures contract (including Eurodollar futures) or options contract
or any interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by Seller or the underlying obligor with respect to
any Purchased Loan and pledged to Seller as collateral for such Purchased Loan,
with one or more counterparties whose unsecured debt is rated at least AA (or
its equivalent) by any Rating Agency or, with respect to any Hedging Transaction
pledged to Seller as additional collateral for a Purchased Loan, such other
rating requirement applicable to such Hedging Transaction set forth in the
related Purchased Loan Documents or which is otherwise reasonably acceptable to
Buyer; provided that Seller shall not grant or permit any liens, security
interests, charges, or encumbrances with respect to any such hedging
arrangements for the benefit of any Person other than Buyer.
"Income" means, with respect to any Purchased Loan at any time, any
payment or other cash distribution thereon of principal, interest, dividends,
fees, reimbursements or proceeds or other cash distributions thereon (including
casualty or condemnation proceeds).
Schedule 7-A-2
"Person" means an individual, corporation, limited liability company,
business trust, partnership, joint tenant or tenant-in-common, trust,
unincorporated organization, or other entity, or a federal, state or local
government or any agency or political subdivision thereof.
"Purchased Loan Documents" shall mean, with respect to a Purchased
Loan, the documents comprising the Purchased Loan File for such Purchased Loan.
"Purchased Loan File" shall mean the documents specified as the
"Purchased Loan File" in Section 7(b) of the Repurchase Agreement, together with
any additional documents and information required to be delivered to Buyer or
its designee (including the Custodian) pursuant to the Repurchase Agreement.
"Purchased Loans" means all Eligible Loans sold by Seller to Buyer and
any additional cash and/or other assets delivered by Seller to Buyer pursuant to
Section 4(a) of the Repurchase Agreement, including, without limitation, all
Purchased Loans, the Purchased Loan File of which is held by the Custodian.
Additional information with respect to the Purchased Loans may be obtained from
the Secured Party.
"Rating Agency" means any of Fitch Inc., ▇▇▇▇▇'▇ Investor Service, Inc.
and Standard & Poor's Rating Services, Inc., a division of McGraw Hill Companies
Inc.
"Repurchase Agreement" means that certain Master Repurchase Agreement
dated as of August 17, 2004, between ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company and Capital
Trust, Inc., (together with Annex I and such other annexes and schedules
attached thereto) as the same may be amended, restated or otherwise modified
from time to time.
"Seller" means Debtor.
SCHEDULE 1
1. [B] Participation Interest, dated _____ issued to __________. in the
amount of $__________, in that certain Mortgage Loan [(in the original
principal amount of $__________)], dated as of _______, made by
___________. to _________ under and pursuant to that certain Loan
Agreement dated as of ________ between _________ and _________ and
secured by that certain property located in _________, [as such B
Participation Interest was assigned by _________ to Capital Trust, Inc.
pursuant to that certain Assignment and Assumption Agreement
(Participation B) dated as of _________].
2. [$__________ [Senior/Junior] Mezzanine Loan, dated as of _________ made
by _________ to _________, under and pursuant to that certain [Loan
Agreement] dated as of _________ between _________ and _________, [as
assigned (together with such loan agreement and all of the other loan
documents evidencing and securing such senior mezzanine loan) by
_________ to Capital Trust, Inc. pursuant to that certain Omnibus
Assignment dated as of _________].
Schedule 7-A-3
SCHEDULE 7-B
Form of UCC Financing Statement Amendment
-----------------------------------------
Debtor: Secured Party:
------ -------------
Capital Trust, Inc. ▇▇▇▇▇▇▇ Sachs Mortgage Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTACHMENT A TO UCC FINANCING STATEMENT AMENDMENT
This filing is for protective purposes only with respect to the
Purchased Loans and the Blocked Account in case the sale of any Purchased Loan
under the Repurchase Agreement is re-characterized as a grant of a security
interest in any such Purchased Loan.
The collateral covered by this financing statement is all of the
Debtor's right, title and interest in, to and under the following property,
whether now owned or existing, hereafter acquired or arising, or in which the
Debtor now or hereafter has any rights, and wheresoever located (the
"Collateral"):
(a) the Blocked Account, all of the Purchased Loans including
those identified in Schedule I hereto, all Income from such Purchased
Loans and all proceeds of all of the foregoing, and
(b) all Hedging Transactions relating to Purchased Loans
entered into by Seller and all proceeds thereof.
The following terms shall have the following meanings. Such definition
shall be equally applicable to the singular and plural forms of the terms
defined.
"Blocked Account" means that certain Account No. ▇▇▇▇▇▇▇▇▇▇ established
and maintained by Debtor at PNC Bank pursuant to Section 5(a) of the Repurchase
Agreement (and any successor thereto or replacement thereof established and
maintained pursuant to Section 5(a) of the Repurchase Agreement and a Blocked
Account Agreement).
"Blocked Account Agreement" means the Blocked Account Agreement, dated
as of the date hereof and executed by Buyer, Seller and the Depository Bank (and
any successor thereto or replacement thereof extended by Buyer, Seller and the
Depository Bank).
"Buyer" means Secured Party.
"Custodian" means Deutsche Bank Trust Company Americas or any successor
Custodian appointed by Buyer.
"Depository Bank" shall mean PNC Bank, N.A. or any successor Depository
Bank appointed by Seller with the prior written consent of Buyer (which consent
shall not be unreasonably withheld, delayed or conditioned) which delivers a
deposit account agreement in the form of the Blocked Account Agreement or
another form reasonably acceptable to Buyer.
Schedule 7-B-1
"Eligible Loans" means any of the following types of loans listed in
(i) through (iv) below:
(i) performing mezzanine loans (or participation interests
therein) which are secured by pledges of the equity ownership interests
in entities that directly or indirectly own Eligible Properties;
(ii) performing mortgage loans secured by first liens on
Eligible Properties or second liens on Eligible Properties;
(iii) senior subordinate participation interests (or a senior
subordinate promissory note that is, in effect, similar in nature to a
senior subordinate participation interest) in performing mortgage loans
secured by first liens on Eligible Properties that also secures a
senior promissory note (or senior interest) in such loan and may also
secure a junior subordinate promissory note (or junior subordinate
interest) in such loan; and
(iv) junior participation interests (or a junior promissory
note that is, in effect, similar in nature to a junior participation
interest) in performing mortgage loans secured by first liens on
Eligible Properties that also secure a senior (or senior subordinate)
promissory note (or senior (or senior subordinate) interest) in such
loan.
"Eligible Property" shall mean a property that is a multifamily,
retail, office, industrial, warehouse, condominium or hospitality property or
such other property type acceptable to Buyer in the exercise of its good faith
business judgment; provided, however, that Buyer shall determine in its sole and
absolute discretion, on a case-by-case basis, whether any healthcare related
property, such as assisted living, nursing homes, acute care, rehabilitation
centers, diagnostic centers and psychiatric centers, qualifies as an Eligible
Property.
"Hedging Transactions" means, with respect to any or all of the
Purchased Loans, any short sale of U.S. Treasury Securities or mortgage-related
securities, futures contract (including Eurodollar futures) or options contract
or any interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by Seller or the underlying obligor with respect to
any Purchased Loan and pledged to Seller as collateral for such Purchased Loan,
with one or more counterparties whose unsecured debt is rated at least AA (or
its equivalent) by any Rating Agency or, with respect to any Hedging Transaction
pledged to Seller as additional collateral for a Purchased Loan, such other
rating requirement applicable to such Hedging Transaction set forth in the
related Purchased Loan Documents or which is otherwise reasonably acceptable to
Buyer; provided that Seller shall not grant or permit any liens, security
interests, charges, or encumbrances with respect to any such hedging
arrangements for the benefit of any Person other than Buyer.
"Income" means, with respect to any Purchased Loan at any time, any
payment or other cash distribution thereon of principal, interest, dividends,
fees, reimbursements or proceeds or other cash distributions thereon (including
casualty or condemnation proceeds).
Schedule 7-B-2
"Person" means an individual, corporation, limited liability company,
business trust, partnership, joint tenant or tenant-in-common, trust,
unincorporated organization, or other entity, or a federal, state or local
government or any agency or political subdivision thereof.
"Purchased Loan Documents" shall mean, with respect to a Purchased
Loan, the documents comprising the Purchased Loan File for such Purchased Loan.
"Purchased Loan File" shall mean the documents specified as the
"Purchased Loan File" in Section 7(b) of the Repurchase Agreement, together with
any additional documents and information required to be delivered to Buyer or
its designee (including the Custodian) pursuant to the Repurchase Agreement.
"Purchased Loans" means all Eligible Loans sold by Seller to Buyer and
any additional cash and/or other assets delivered by Seller to Buyer pursuant to
Section 4(a) of the Repurchase Agreement, including, without limitation, all
Purchased Loans, the Purchased Loan File of which is held by the Custodian.
Additional information with respect to the Purchased Loans may be obtained from
the Secured Party.
"Rating Agency" means any of Fitch Inc., ▇▇▇▇▇'▇ Investor Service, Inc.
and Standard & Poor's Rating Services, Inc., a division of McGraw Hill Companies
Inc.
"Repurchase Agreement" means that certain Master Repurchase Agreement
dated as of August 17, 2004, between ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company and Capital
Trust, Inc., (together with Annex I and such other annexes and schedules
attached thereto) as the same may be amended, restated or otherwise modified
from time to time.
"Seller" means Debtor.
SCHEDULE 1
1. [B] Participation Interest, dated _____ issued to __________. in the
amount of $__________, in that certain Mortgage Loan [(in the original
principal amount of $__________)], dated as of _______, made by
___________. to _________ under and pursuant to that certain Loan
Agreement dated as of ________ between _________ and _________ and
secured by that certain property located in _________, [as such B
Participation Interest was assigned by _________ to Capital Trust, Inc.
pursuant to that certain Assignment and Assumption Agreement
(Participation B) dated as of _________].
2. [$__________ [Senior/Junior] Mezzanine Loan, dated as of _________ made
by _________ to _________, under and pursuant to that certain [Loan
Agreement] dated as of _________ between _________ and _________, [as
assigned (together with such loan agreement and all of the other loan
documents evidencing and securing such senior mezzanine loan) by
_________ to Capital Trust, Inc. pursuant to that certain Omnibus
Assignment dated as of _________].
Schedule 7-B-3
EXHIBIT I
CONFIRMATION STATEMENT
▇▇▇▇▇▇▇ SACHS MORTGAGE COMPANY
Ladies and Gentlemen:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company is pleased to deliver our written
CONFIRMATION of our agreement (subject to satisfaction of the Transaction
Conditions Precedent) to enter into the Transaction pursuant to which ▇▇▇▇▇▇▇
Sachs Mortgage Company shall purchase from you the Purchased Loans identified in
Schedule I attached hereto, pursuant to the Master Repurchase Agreement between
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company (the "Buyer") and Capital Trust, Inc. ("Seller"),
dated as of August , 2004 (as amended from time to time the "Agreement";
capitalized terms used herein without definition have the meanings given in the
Agreement), as follows below and on the attached Schedule 1:
Purchase Date: __________, 200_
Purchased Loans: As identified on attached Schedule 1
Aggregate Principal Amount of As identified on attached Schedule 1
Purchased Loans:
Repurchase Date: __________, 200_
Purchase Price: $
Pricing Rate: One-month LIBOR plus 1.75%
Purchase Percentage: 75%
Applicable Spread: 175 bps
Governing Agreements: As identified on attached Schedule 1
Name and address for communications: Buyer: ▇▇▇▇▇▇▇ Sachs Mortgage Company
----- ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Blacklow
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Seller: Capital Trust, Inc.
------
Exhibit I-1
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: 212-230-7830
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE
COMPANY, a New York limited partnership
By: ▇▇▇▇▇▇▇ Sachs Real Estate Funding
Corp., its general partner
By:
------------------------------
Name:
Title:
AGREED AND ACKNOWLEDGED:
CAPITAL TRUST, INC.,
a Maryland corporation
By:
------------------------------
Name:
Title:
Exhibit I-2
Schedule 1 to Confirmation Statement
Purchased Loans: [Mezzanine Loan/ Participation Interest] dated as of
[______] in the original principal amount of $[___],
made by [____] to [____] under and pursuant to that
certain [loan agreement/participation agreement/
applicable document].
Aggregate Principal Amount:
Purchase Price:
Exhibit I-3
EXHIBIT II
AUTHORIZED REPRESENTATIVES OF SELLER
------------------------------------
Name Specimen Signature
---- ------------------
▇▇▇▇ ▇. ▇▇▇▇▇ _____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ _____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ _____________________________
Exhibit II-1
EXHIBIT III
FORM OF CUSTODIAL DELIVERY CERTIFICATE
On this _____ day of _____________ 2004, CAPITAL TRUST, INC.
("Seller"), under that certain Custodial Agreement, dated as of August __, 2004
(the "Custodial Agreement"), among Seller, DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Custodian, and ▇▇▇▇▇▇▇ SACHS MORTGAGE COMPANY, as Buyer, does hereby deliver
to, and instruct, the Custodian to hold, in its capacity as Custodian for the
benefit of Buyer, the documents comprising the Purchased Loan File and listed on
Attachment A hereto with respect to each Purchased Loan to be purchased by
Buyer, which Purchased Loans are listed on the Purchased Loan Schedule attached
hereto as Attachment B and which Purchased Loans shall be subject to the terms
of the Custodial Agreement as of the date hereof.
With respect to the Purchased Loan Files delivered herewith, for
purposes of issuing the Trust Receipt, the Custodian shall review the Purchased
Loan Files to confirm receipt of each of the documents identified on Attachment
A.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Custodial Agreement.
IN WITNESS WHEREOF, Seller has caused this Custodial Delivery
Certificate to be executed and delivered by its duly authorized officer as of
the day and year first above written.
CAPITAL TRUST, INC.
By:
------------------------------
Name:
Title:
Exhibit III-1
Attachment B
Purchased Loan Schedule
-----------------------
(a) Loan Number/Loan Type
(b) Obligor Name
(c) Property Address
(d) Original Balance
(e) Original Coupon
(f) Outstanding Balance
(g) Maturity Date
(h) Table Funding (Yes/No)
(i) If Participation, the name of the lead lender under the Purchased Loan
(j) Such information as Buyer and Custodian shall agree and that the Buyer
shall set forth in writing, on a case-by-case basis.
Exhibit III-2
EXHIBIT IV-1
FORM OF POWER OF ATTORNEY TO BUYER
----------------------------------
"Know All Men by These Presents, that Capital Trust, Inc. ("Seller"),
does hereby appoint ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company ("Buyer"), in connection with
the Repurchase Agreement (defined below) its attorney-in-fact to act in Seller's
name, place and stead in any way which Seller could do with respect to (i) the
completion of the endorsements of the Mortgage Notes and the Assignments of
Mortgages and the Mezzanine Notes, (ii) the recordation of the Assignments of
Mortgages and (iii) the enforcement of Seller's rights under the Purchased Loans
purchased by Buyer pursuant to the Master Repurchase Agreement dated as of
August 17, 2004 , as amended from time to time, between Seller and Buyer (the
"Repurchase Agreement") and to take such other steps as may be necessary or
desirable to enforce Buyer's rights against such Purchased Loans, the related
Purchased Loan Files, the Servicing Records and the Hedging Transactions to the
extent that Seller is permitted by law to act through an agent. Capitalized
terms used herein and not otherwise defined shall have the meanings given such
terms in the Repurchase Agreement.
TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT
ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OF FACSIMILE OF THIS INSTRUMENT
MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE
INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE
OR SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY,
AND SELLER ON ITS OWN BEHALF AND ON BEHALF OF SELLER'S ASSIGNS, HEREBY AGREES TO
INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL
CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY
HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.
IN WITNESS WHEREOF Seller has caused this Power of Attorney to be
executed and the Seller's seal to be affixed this _____ day of August __, 2004.
CAPITAL TRUST, INC.
By:
----------------------------------
Name:
Title:
Exhibit ▇▇-▇-▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
On this _____ of ____________, before me, the undersigned, a Notary
Public in and for said state, personally appeared
_______________________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the person,
or the entity upon behalf of which the person acted, executed the instrument.
---------------------------------------
Notary Public
(Seal)
Exhibit IV-1-2
EXHIBIT IV-2
FORM OF POWER OF ATTORNEY TO SELLER
-----------------------------------
Know All Men by These Presents, that ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company
("Buyer") does hereby appoint Capital Trust, Inc. ("Seller"), its
attorney-in-fact to act in Buyer's name, place and stead in any way which Buyer
could with respect to modifications described below, to mortgage loan documents
with respect to Purchased Loans sold by Seller to Buyer under that certain
Master Repurchase Agreement, dated as of August 17, 2004 (as amended from time
to time, the "Repurchase Agreement"). Capitalized terms used herein and not
otherwise defined shall have the meaning given such terms in the Repurchase
Agreement.
Seller is permitted to administer and service the Purchased Loans
without the consent of Buyer, any assignee or any other Person, pursuant to this
power of attorney delivered by Buyer, which power of attorney shall not be
revoked by Buyer unless an Event of Default under the Repurchase Agreement has
occurred and is then continuing. Notwithstanding the foregoing, Seller shall not
consent or assent to a Significant Modification to or any extension or
termination of any note, loan agreement, mortgage, pledge agreement or guaranty
relating to the Purchased Loans or other material agreement or instrument
relating to the Purchased Loans without the prior written consent of Buyer. All
waivers or material actions entered into or taken in respect of the Purchased
Loans pursuant to this power of attorney shall be in writing. Seller shall
notify Buyer and the Custodian, in writing, of any waiver or other action
entered into or taken thereby in respect of any such Purchased Loan pursuant to
this power of attorney, and shall deliver to Custodian (with a copy to Buyer)
for deposit in the related Purchased Loan File, an original counterpart of the
agreement, if any, relating to such waiver or other action, within three (3)
Business Days following the execution thereof. Actions taken under the foregoing
power of attorney shall be binding upon each holder of the Purchased Loans.
"Purchased Loan" shall mean any loan or other mezzanine investment sold
by Seller to Buyer and any additional assets delivered by Seller to Buyer
pursuant to the Repurchase Agreement.
"Significant Modification" shall mean any modification or amendment of
a Purchased Loan which:
(i) reduces the principal amount of the Purchased Loan in
question other than (1) with respect to a dollar-for-dollar principal
payment or (2) reductions of principal to the extent of deferred,
accrued or capitalized interest added to principal which additional
amount was not taken into account by Buyer in determining the related
Purchase Price,
(ii) increases the principal amount of a Purchased Loan other
than increases which are derived from accrual or capitalization of
deferred interest which is added to principal or protective advances,
(iii) modifies the payments of principal and interest when due
of the Purchased Loan in question,
Exhibit IV-2-1
(iv) changes the frequency of scheduled payments of principal
and interest in respect of a Purchased Loan,
(v) subordinates the lien priority of the Purchased Loan or
the payment priority of the Purchased Loan other than subordinations
expressly required under the then existing terms and conditions of the
Purchased Loan (provided, however, the foregoing shall not preclude the
execution and delivery of subordination, nondisturbance and attornment
agreements with tenants, subordination to tenant leases, easements,
plats of subdivision and condominium declarations and similar
instruments which in the commercially reasonable judgment of Seller do
not materially adversely affect the rights and interest of the holder
of the Purchased Loan in question),
(vi) releases any collateral for the Purchased Loan other than
releases required under the then existing Purchased Loan Documents or
releases in connection with eminent domain or under threat of eminent
domain,
(vii) waives, amends or modifies any cash management or
reserve account requirements of the Purchased Loan other than changes
required under the then existing Purchased Loan Documents, or
(viii) waives any due-on-sale or due-on-encumbrance provisions
of the Purchased Loan other than waivers required to be given under the
then existing Purchased Loan Documents.
Exhibit IV-2-2
THIS POWER OF ATTORNEY MAY BE REVOKED BY BUYER BY DELIVERY OF WRITTEN
NOTICE TO SELLER DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT UNDER THE
REPURCHASE AGREEMENT. IF THIS POWER OF ATTORNEY HAS NOT BEEN REVOKED AND IF
REQUESTED BY SELLER, BUYER WILL PROMPTLY CONFIRM IN WRITING TO SELLER, AND ANY
OTHER PERSON OR ENTITY REASONABLY DESIGNATED BY SELLER, THAT THIS POWER OF
ATTORNEY HAS NOT BEEN REVOKED AND IS IN FULL FORCE AND EFFECT.
IN WITNESS WHEREOF Seller has caused this Power of Attorney to be
executed and the Buyer's seal to be affixed this __ day of August __, 2004.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE
COMPANY, a New York limited partnership
By: ▇▇▇▇▇▇▇ Sachs Real Estate Funding
Corp., its general partner
By:
--------------------------------
Name:
Title:
Exhibit IV-2-3
EXHIBIT V
REPRESENTATIONS AND WARRANTIES
REGARDING THE PURCHASED LOANS
-----------------------------
With respect to each Purchased Loan that is a Mortgage Loan or a First
Mortgage B-Note and to the extent applicable, each Mezzanine Loan, and with
respect to the related Mortgaged Properties on the related Purchase Date and
each date on which Market Value is determined, Seller shall be deemed to make
the following representations and warranties to Buyer as of such date:
(1) Purchased Loan Schedule and Purchased Loan Information. The
information set forth in the Purchased Loan Schedule and the Purchased
Loan Information is complete, true and correct in all material
respects.
(2) Payment Record. The Purchased Loan has not been since the date
of origination, and currently is not, thirty (30) or more days
delinquent, and the underlying obligor is not in default thereunder
beyond any applicable grace period for the payment of any obligation to
pay principal and interest, taxes, insurance premiums and required
reserves.
(3) Purchased Loan Document Status. (i) The Purchased Loan
Documents have been, to the extent necessary, duly and properly
executed, and the Purchased Loan Documents, to the extent applicable,
are legal, valid and binding obligations of the underlying obligor, and
their terms are enforceable against the underlying obligor, subject
only to bankruptcy, insolvency, moratorium, fraudulent transfer,
fraudulent conveyance and similar laws affecting rights of creditors
generally and to the application of general principles of equity; (ii)
the Purchased Loan Documents contain customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against each related Mortgaged
Property of the material benefits of the security, including
realization by judicial or, if applicable, non-judicial foreclosure,
and there is no exemption available to the underlying obligor which
would materially interfere with such right to foreclosure; and (iii)
there is no valid defense, counterclaim or right of offset or
rescission available to the related underlying obligor with respect to
any Purchased Loan Document.
(4) Title Insurance. Each Mortgaged Property is covered by an
American Land Title Association (or an equivalent form thereof as
adopted in the applicable jurisdiction) owner's and lender's title
insurance policy (the "Title Policy") in the original principal amount
of the related Purchased Loan after all advances of principal. Each
lender's Title Policy insures that the related Mortgage is a valid
first or second, as applicable, priority lien on such Mortgaged
Property, subject only to (i) the lien of current real property taxes,
ground rents, water charges, sewer rents and assessments not yet due
and payable; (ii) covenants, conditions and restrictions, rights of
way, easements and other matters of public record, none of which,
individually or in the aggregate, in the
Exhibit V-1
reasonable judgment of Seller, materially interferes with the current
use of the related Mortgaged Property or the security intended to be
provided by such Mortgage or with the underlying obligor's ability to
pay its obligations when they become due or the value of the related
Mortgaged Property; (iii) the exceptions (general and specific) set
forth in such policy, none of which, individually or in the aggregate,
in the reasonable judgment of Seller, materially interferes with the
current use of the related Mortgaged Property or security intended to
be provided by such Mortgage, with the underlying obligor's ability to
pay its obligations when they become due or the value of the related
Mortgaged Property; and (iv) in the event such Title Policy has yet to
be issued, an escrow letter or a marked up title insurance commitment
on which the required premium has been paid exists which evidences that
such Title Policy will be issued. Each Title Policy (or, if it has yet
to be issued, the coverage to be provided thereby) is in full force and
effect, all premiums thereon have been paid and, to Seller's knowledge,
no material claims have been made thereunder and no claims have been
paid thereunder. No holder of the related Mortgage has done, by act or
omission, anything that would materially impair the coverage under such
Title Policy. Immediately following the transfer and assignment of the
related Purchased Loan to Buyer, such Title Policy (or, if it has yet
to be issued, the coverage to be provided thereby) will inure to the
benefit of Buyer as its interest may appear without the consent of or
notice to the insurer. In the case of a Mezzanine Loan, if obtained, an
Eagle 9 UCC Title Policy ("UCC Policy") insures Seller's security
interest in the equity interest pledged thereunder. Each UCC Policy
insures that Seller has a first priority perfected security interest in
the pledged equity interests and provides coverage in an amount equal
to the original principal amount of the related Purchased Loan and
immediately following the transfer and assignment of the related
Purchased Loan to Buyer, such UCC Policy (or, if it has yet to be
issued, the coverage to be provided thereby) will inure to the benefit
of Buyer as its interest may appear without the consent of or notice to
the insurer.
(5) No Mechanics' Liens. There are no mechanics', materialman's or
other similar liens or claims which have been filed for work, labor or
materials affecting the Mortgaged Property which are or may be liens
prior to, or equal or coordinate with, the lien of the Mortgage, unless
such lien is insured against under the related title insurance policy.
(6) Insurance. Each Mortgaged Property, including any buildings or
other improvements thereon, is, and is required pursuant to the related
Mortgage to be, insured by (a) a fire and extended perils insurance
policy issued by an insurer meeting the requirements of such Purchased
Loan providing coverage against loss or damage sustained by reason of
fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, terrorism, aircraft, vehicles and smoke, and,
to the extent required as of the date of origination by the originator
of such Purchased Loan consistent with its normal commercial mortgage
lending practices, against other risks, insured against by persons
operating like properties in the locality of the Mortgaged Property in
an amount not less than the replacement cost of the Mortgaged Property;
(b) a business
Exhibit V-2
interruption or rental loss insurance policy, in an amounts generally
required by institutional lenders for similar properties (including
coverage for terrorism); (c) a flood insurance policy (if any portion
of the Mortgaged Property is located in an area identified by the
Federal Emergency Management Agency as having special flood hazards)
and (d) a comprehensive general liability insurance policy in amounts
as are generally required by commercial mortgage lenders. Such
insurance policy contains a standard mortgagee clause that names Seller
as an additional insured and that requires at least thirty days' (in
the case of termination or cancellation other than for nonpayment of
premiums) and at least ten days' (in the case of termination or
cancellation for nonpayment of premiums) prior notice to the holder of
the Mortgage, and no such notice has been received, including any
notice of nonpayment of premiums, that has not been cured. The
Purchased Loan Documents obligate the underlying obligor to maintain or
cause to be maintained all such insurance and, at the underlying
obligor's failure to do so, authorize the holder of the Mortgage to
maintain such insurance at the underlying obligor's cost and expense
and to seek reimbursement therefor from such underlying obligor.
(7) Condition of the Property; Condemnation. No building or other
improvement on any Mortgaged Property has been affected in any material
manner or suffered any material loss as a result of any fire, wind,
explosion, accident, riot, war, or act of God or the public enemy, and
each Mortgaged Property is free of any material damage that would
affect materially and adversely the value of the Mortgaged Property as
security for the Purchased Loan and is in good repair. Seller has
neither received notice, nor is otherwise aware, of any proceedings
pending for the total condemnation of any Mortgaged Property or a
partial condemnation of any portion material to the related underlying
obligor's ability to perform its obligations under the related
Purchased Loan.
(8) Encroachments; Zoning. None of the improvements located on any
Mortgaged Property lies outside of the boundaries and building
restriction lines of the Mortgaged Property, and no improvements on
adjoining properties materially encroach upon the Mortgaged Property
except those which are insured against by the title insurance policy
(including endorsements thereto) issued in connection with the
Purchased Loan and all improvements on the Mortgaged Property comply
with the applicable zoning laws and/or set-back ordinances in force
when improvements were added.
(9) Compliance with Usury Laws. The Purchased Loan, and all parties
involved in the origination and servicing of the Purchased Loan,
complied as of the date of origination with, or is exempt from,
applicable state or federal laws, regulations and other requirements
pertaining to usury. Any and all other requirements of any federal,
state or local laws, including, without limitation, truth-in-lending,
real estate settlement procedures, equal credit opportunity or
disclosure laws, applicable to the Purchased Loan have been complied
with.
Exhibit V-3
(10) Mortgage Status; Waivers and Modifications. Since the date of
origination of the Purchased Loan, the terms of the Purchased Loan have
not been impaired, waived, altered, satisfied, canceled, subordinated
or modified in any respect (except with respect to modifications the
economic terms of which are reflected in the Purchased Loan Schedule
and which are evidenced by documents in the Purchased Loan File
delivered to the Custodian) and no portion of the Mortgaged Property
has been released from the lien of the Mortgage or other Purchased Loan
Document in any manner.
(11) Mortgage Recording Taxes. All applicable Mortgage recording
taxes and other filing fees have been paid in full or deposited with
the issuer of the title insurance policy issued in connection with the
Mortgage Loan for payment upon recordation of the relevant documents.
(12) Assignment of Leases. Each Assignment of Leases, if any,
creates a valid assignment of, or a valid first or second priority, as
applicable, security interest in the related underlying obligor's
interest in all leases, sub-leases, licenses or other agreements
pursuant to which any Person is entitle to occupy, use or possess all
of any portion of the related Mortgage, subject only to a license
granted to the relevant underlying obligor to exercise certain rights
and to perform certain obligations of the lessor under such leases,
including the right to operate the related Mortgage Property, subject
only to those exceptions described in clause (4) above. No person other
than the relevant underlying obligor owns any interest in any payments
due under such leases that is superior to or of equal priority with the
mortgagee's interest therein, subject only to those exceptions
described in clause (4) above.
(13) Underlying Representations and Warranties. Seller has taken no
action, nor has the underlying obligor taken any action, that would
cause the representations and warranties made by the underlying obligor
in any of the Purchased Loan Documents not to be true.
(14) No Holdbacks. The proceeds of the Purchased Loan have been
fully disbursed and there is no obligation for future advances with
respect thereto. With respect to each Purchased Loan, any and all
requirements as to completion of any on-site or off-site improvement
and as to disbursements of any funds escrowed for such purpose that
were to have been complied with on or before the Purchase Date have
been complied with, or any such funds so escrowed have not been
released.
(15) Inspections. Seller or its representative has inspected or
caused to be inspected each Mortgaged Property within six (6) months
preceding the related Purchase Date. The Purchased Loan File for
Mortgaged Property constituting real property includes a property
survey, certified to the Seller, its successors and assigns, and the
title insurance company, reciting that it is in accordance with most
recent minimum standards for title surveys as determined by the ALTA,
with the signature and seal of a licensed engineer or surveyor affixed
thereto.
Exhibit V-4
(16) Contingent Interest; Convertible Notes. The Purchased Loan
does not have a shared appreciation feature, other contingent interest
feature or negative amortization. The indebtedness evidenced by the
Mortgage Note is not convertible to an ownership interest in the
Mortgaged Property or the Mortgage, and Seller has not financed, nor
does it own, directly or indirectly, any equity of any form in the
Mortgaged Property or the underlying obligor. The Mortgage Note or
Mezzanine Note, as applicable, does not by its terms provide for the
capitalization or forbearance of interest.
(17) Cross-Collateralization; Cross-Default. The Purchased Loan is
not cross-collateralized or cross-defaulted with any other loan other
than another Purchased Loan, is a whole loan and contains no equity
participation by the lender.
(18) Fraud. No fraudulent acts were committed by Seller in
connection with the origination process of the Purchased Loan.
(19) Taxes and Assessments. All taxes, water charges, sewer rates,
governmental assessments, insurance premiums, leasehold payments and
any other outstanding fees or charges that prior to the date of
origination of the Purchased Loan became due and owing in respect of
the related Mortgaged Property have been paid, or an escrow of funds in
an amount sufficient to cover such payments has been established or are
insured against by the title insurance policy issued in connection with
the origination of the Purchased Loan.
(20) No Material Default. No loan is a Defaulted Loan and there is
no material default, breach, violation or event of acceleration
existing under any of the Purchased Loan Documents and Seller has not
received actual notice of any event (other than payments due but not
yet delinquent) which, with the passage of time or with notice and the
expiration of any grace or cure period, would and does constitute a
default, breach, violation or event of acceleration; no waiver of the
foregoing exists and no person other than the holder of the Mortgage
Note or Mezzanine Note, as the case may be, may declare any of the
foregoing.
(21) Environmental Conditions. With respect to each Mortgaged
Property, a environmental site assessment conducted by a licensed
qualified engineer. Seller has reviewed each such report and update.
Where such environmental report disclosed the existence of a material
and adverse environmental condition or circumstance affecting any
Mortgaged Property, (i) a party not related to the underlying obligor
was identified as the responsible party for such condition or
circumstance, (ii) the related underlying obligor was required either
to provide additional security and/or to obtain an operations and
maintenance plan or (iii) the related underlying obligor provided
evidence that applicable federal, state or local governmental
authorities would not take any action, or require the taking of any
action, in respect of such condition or circumstance. The related
Purchased Loan Documents contain provisions pursuant to which the
related underlying obligor or a principal of such underlying
Exhibit V-5
obligor has agreed to indemnify the mortgagee for damages resulting
from violations of any applicable environmental laws. Seller, having
made no independent inquiry other than reviewing the environmental
reports and updates referenced herein and without other investigation
or inquiry, has no knowledge of any material and adverse environmental
condition or circumstance affecting any Mortgaged Property that was not
disclosed in the related report and/or update. Each Mortgage requires
the related Mortgagor to comply with all applicable federal, state and
local environmental laws and regulations in all material respects.
Seller has not received any actual notice of a material violation of
the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended, or any applicable federal, state or local
environmental law with respect to any Mortgaged Property that was not
disclosed in the related report and/or update. Seller has not taken any
actions which would cause any Mortgaged Property not to be in
compliance with all federal, state and local laws pertaining to
environmental hazards.
(22) Acceleration. The Purchased Loan Documents contain provisions
for the acceleration of the payment of the unpaid principal balance of
the Purchased Loan if (A) the underlying obligor voluntarily transfers
or encumbers all or any portion of any related Mortgaged Property; or
(B) any direct or indirect interest in underlying obligor is
voluntarily transferred or assigned, other than, in each case, as
permitted under the terms and conditions of the Purchased Loan
Documents.
(23) Actions Concerning Purchased Loans. There is no pending
action, suit or proceeding, arbitration or governmental investigation
against the underlying obligor or any Mortgaged Property an adverse
outcome of which is reasonably likely to result in a Material Adverse
Effect.
(24) Servicing. The servicing and collection practices used by
Seller, and the origination practices of Seller, to the extent
applicable, have been in all respects legal, proper and prudent and
have met customary industry standards.
(25) Assignability. In connection with the assignment, transfer or
conveyance of any individual Mortgage, the Mortgage Note and Mortgage
contain no provision limiting the right or ability of Seller to assign,
transfer and convey the Mortgage to any person or entity.
(26) Buyer under a Deed of Trust. If a Mortgage is a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in the
deed of trust, and no fees or expenses are or will become payable to
the trustee under the deed of trust, except in connection with the sale
or release of the Mortgaged Property following default or payment of
the Purchased Loan.
(27) Insurance Proceeds. The Mortgage provides that any insurance
proceeds in respect of a casualty loss or taking will be applied either
to the repair
Exhibit V-6
or restoration of all or part of the related Mortgaged Property, with
the mortgagee or a trustee appointed by it having the right to hold and
disburse such proceeds (provided that such proceeds exceed the
threshold amount described in the loan documents) as the repair or
restoration progresses, or to the payment of the outstanding principal
balance of the Purchased Loan together with any accrued interest
thereon, except to the extent of any excess proceeds after restoration.
(28) Flood Zone. No Mortgaged Property is located in a special
flood hazard area as defined by the Federal Emergency Management Agency
or if it is, flood insurance is required and has been received under
the Mortgage.
(29) Ground Lease. No Mortgage is secured in whole or in part by
the interest of a borrower as a lessee under a ground lease.
(30) Certificate of Occupancy. Certificates of occupancy and
building permits, as applicable, have been issued with respect to
Mortgaged Property.
(31) Escrow Deposits. Any escrow accounts for taxes or other
reserves required to be funded on the date of origination of the
Purchased Loan pursuant to the Purchased Loan Documents have been
funded and all such escrow accounts required to have been funded as of
the Purchase Date (taking into account any applicable notice and grace
period) have been funded.
(32) Valid Assignment of Mortgage. The related Assignment of
Mortgage constitutes a legal, valid and binding assignment of such
Mortgage to Buyer, and the related reassignment of Assignment of
Leases, rents and profits, if any, constitutes a legal, valid and
binding assignment thereof to Buyer.
(33) Related Collateral. The related Mortgage Note, Mezzanine Note
or B-Note, as applicable, is not, and has not been since the date of
origination of the Purchased Loan, secured by any collateral except the
lien of the related Mortgage, any related Assignment of Leases, any
related security agreement and escrow agreement or other applicable
Purchased Loan Document; and the related Mortgaged Property or
Properties or other securities, as applicable, do not secure any loan
other than the Purchased Loan being sold to Buyer hereunder (except for
Purchased Loans, if any, which are cross-collateralized with other
Purchased Loans being conveyed to Buyer hereunder and identified on the
Purchased Loan Schedule).
(34) Licenses and Permits. As of the date of origination of the
Purchased Loan, the related underlying obligor was in possession of all
material licenses, permits and franchises required by applicable law
for the ownership and operation of the related Mortgaged Property as it
was then operated.
(35) Improvements; Origination. The Purchased Loan is directly (or
in the case of an participation interest, indirectly) secured by a
first or second lien on one or more parcels of real estate upon which
is located one or more multifamily or commercial structures; and the
Purchased Loan was originated by a savings
Exhibit V-7
and loan association, savings bank, commercial bank, credit union,
insurance company, or similar institution which is supervised and
examined by a Federal or State authority, or by a mortgagee approved by
the Secretary of Housing and Urban Development pursuant to Sections 203
and 211 of the National Housing Act.
(36) Tenants. As to each Purchased Loan secured by Mortgaged
Property which is leased to tenants:
(i) the Mortgaged Property is not subject to any
leases other than the leases described in the rent roll
contained in the Purchased Loan Documents (hereinafter
referred to as the "Leases"), and such rent roll is accurate
and complete in all material respects, including description
of the rent and term and any extraordinary rights of tenants
(such as option, rights of first refusal and rights of
termination). No Person has any possessory interest in the
Mortgaged Property or right to occupy the same except under
and pursuant to the provisions of the Leases. Each Lease of
all or any portion of the Mortgaged Property is subordinate to
the Mortgage, unless otherwise approved by the Buyer;
(ii) each such commercial tenant is conducting
business, and each such residential tenant is residing, only
in that portion of the Mortgaged Property covered by its
lease; (B) no leases contain any option to purchase, any right
of first refusal to lease or purchase, any right to terminate
the lease or vacate the premises prior to expiration of the
lease term, or any other similar provisions which adversely
affect the Mortgaged Property or which might adversely affect
the rights of any holder of the Purchased Loan;
(iii) no Lease contains a non-disturbance or similar
recognition agreement; (A) except as otherwise disclosed to
Buyer in writing, there are no prior recorded assignments of
the Leases or of any portion of the rents, additional rents,
charges, issues or profits due and payable or to become due
and payable thereunder (hereinafter collectively referred to
as the "Rents") which are now outstanding and have priority
over the assignment of leases contained in the Purchased Loan
Documents and given in connection with the Purchased Loan; (B)
except as may be disclosed in the rent roll contained in the
Purchased Documents, no tenant is more than twenty-nine (29)
days delinquent in the payment of rent nor in default under
any material provision of its Lease, all material conditions
and obligations on the underlying obligor's part to be
fulfilled under the terms of any Lease of the Mortgaged
Property have been satisfied or fully performed, and all
Leases are in full force and effect; and (C) each Lease
provides for payment of rent by check on a monthly basis; no
tenant has advanced more than one (1) month's payment under
any Lease; and no Person affiliated with the underlying
obligor is a tenant under any Lease; and
(iv) the underlying obligor is the owner and holder
of the landlord's interest under any leases, and the related
Mortgage and assignment of leases, rents and profits, if any,
provides for the appointment of a receiver for rents or allows
Exhibit V-8
the mortgagee to enter into possession to collect rent or
provide for rents to be paid directly to mortgagee in the
event of a default, subject to the exceptions described in
clause (4) of this Exhibit V.
(37) Bankruptcy. Seller has not been served with notice that any
underlying obligor is a debtor in any state or federal bankruptcy or
insolvency proceeding.
(38) Access; Separate Tax Parcels. At the time of origination, (i)
all amenities, access routes or other items crucial to the related
appraised value of the Mortgaged Property were under the direct control
of the underlying obligor or, subject to easements for the benefit of
the underlying obligor, are public property; and (ii) the Mortgaged
Property was contiguous to a physically open, dedicated all-weather
public street, had all necessary permits and approvals for ingress and
egress, was adequately serviced by public water, sewer systems and
utilities and was on a separate Tax parcel, separate and apart from any
other property owned by the underlying obligor or any other person. The
Mortgaged Property has all necessary access by public roads or by
easements which in each case are not terminable and are not
subordinated to any mortgage other the related Mortgage.
(39) Appraisal. The Purchased Loan File contains an Appraisal that
is signed by a qualified appraiser, duly appointed by Seller, who, to
Seller's knowledge, had no interest, direct or indirect, in the
Mortgaged Property or in any loan made on the security thereof, and
whose compensation is not affected by the approval or disapproval of
the Purchased Loan, and the Appraisal and appraiser both satisfy the
requirements of Title XI of the Federal Institutions Reform, Recovery,
and Enforcement Act of 1989 and the regulations promulgated thereunder,
all as in effect on the date the Purchased Loan was originated.
(40) Junior Liens. The Purchased Loan does not permit the related
Mortgaged Property to be encumbered by any lien junior to or of equal
priority with the lien of the related Mortgage without the prior
written consent of the holder thereof or the satisfaction of debt
service coverage or similar criteria specified therein. To Seller's
knowledge, except as disclosed, the related Mortgaged Property is not
encumbered by any lien junior to the lien of the related Mortgage. The
Purchased Loan contains a "due on sale" clause that provides for the
acceleration of the payment of the unpaid principal balance of the
Purchased Loan if, without the prior written consent of the holder of
the Purchased Loan, the related Mortgaged Property is transferred or
sold.
(41) Defeasance. Any Purchased Loan containing provisions for
defeasance of mortgage collateral either (i) requires the prior written
consent of, and compliance with the conditions set by, the holder of
the Purchased Loan, or (ii) requires that (A) defeasance may not occur
prior to the time permitted by applicable "real estate mortgage
investment conduit" rules and regulations (if applicable), (B) the
replacement collateral consist of U.S. governmental securities in an
amount sufficient to make all scheduled payments under the Mortgage
Note
Exhibit V-9
when due, (C) independent public accountants certify that the
collateral is sufficient to make such payments, (D) counsel provide an
opinion that Buyer has a perfected security interest in such collateral
prior to any other claim or interest, and (E) all costs and expenses
arising from the defeasance of the mortgage collateral shall be borne
by the borrower.
(42) Operating or Financial Statement. The related Purchased Loan
Documents require the related borrower to furnish to the mortgagee at
least annually an operating statement with respect to the related
Mortgaged Property.
(43) No Advances of Funds. No party to the Purchased Loan Documents
has advanced funds on account of any default under the Purchased Loan
or under the underlying real property mortgage documents.
(44) Perfection of Security Interests. A Uniform Commercial Code
financing statement has been filed and/or recorded in all places
necessary to perfect a valid security interest in such personal
property, and such security interest is a first or second priority
security interest, subject to any prior purchase money security
interest in such personal property and any personal property leases
applicable to such personal property. The pledge of ownership interests
securing any Purchased Loan that is a Mezzanine Loan relates to direct
or indirect equity or ownership interests in the underlying real
property owner and has been fully perfected in favor of Seller as
mezzanine lender. To the extent the pledged ownership interests have
not been certificated pursuant to the terms of any Purchased Loan that
is a Mezzanine Loan, the terms of such Mezzanine Loan and the related
organizational documents of the underlying real property owner prohibit
the subsequent certification thereof.
(45) Lockbox. The lockbox administrator with respect to the related
Purchased Loan, if any, is not an Affiliate of Seller.
(46) No Plan Assets. The borrower under the Purchased Loan does
not, and would not be deemed to, hold Plan Assets at any time.
Exhibit V-10
EXHIBIT VI
FORM OF BLOCKED ACCOUNT AGREEMENT
Blocked Account Agreement
-------------------------
August 17, 2004
PNC Bank, National Association
Treasury Management
Two PNC Plaza, 31st Floor
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Re: Blocked Account established by Capital Trust, Inc. ("Seller")
and Midland Loan Services, Inc. ("Servicer") pursuant to the
Master Repurchase Agreement dated as of August 17, 2004 (as
amended, supplemented or otherwise modified from time to time,
the "Repurchase Agreement") among the Seller and ▇▇▇▇▇▇▇ Sachs
Mortgage Company ("Buyer")
Ladies and Gentlemen:
We refer to the collection account established by the Seller and the
Buyer, pursuant to the Repurchase Agreement, at PNC Bank, National Association
("Depository Bank"), entitled "▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company, as Buyer under
that certain Master Repurchase Agreement, dated August 17, 2004" Account
No.▇▇▇▇▇▇▇▇▇▇, ABA # ▇▇▇▇▇▇▇▇▇, PNC Bank, Pittsburgh, PA, (the "Collection
Account" or the "Blocked Account"). Capitalized terms used but not defined
herein have the meanings ascribed to such terms in the Repurchase Agreement. In
the event of a conflict between the terms of the Repurchase Agreement or any
Transaction entered into thereunder and this Blocked Account Agreement, the
Repurchase Agreement shall prevail. Notwithstanding the previous sentence, this
Blocked Account Agreement will govern and control the performance of Depository
Bank.
1. Seller shall, and shall cause the Servicer, from time to time, to
deposit or cause to be deposited directly into, or if applicable, remitted
directly from the applicable underlying collection account to, the Collection
Account all Income (including Principal Payments) with respect to the Portfolio
Loans, which may include payments in respect of associated Hedging Transactions
pledged to Buyer and related to the Portfolio Loans. The Buyer has established a
repurchase arrangement with the Seller. By its execution of this letter, the
Seller acknowledges that it has transferred all of the Seller's right, title and
interest in and to the Blocked Account and any funds from time to time on
deposit therein, that such funds are received by Depository Bank for Buyer and
are for application against the Seller's liabilities to the Buyer under the
Repurchase Agreement.
2. Funds in the Blocked Account shall be remitted in accordance with
the most recent instructions originated by the Buyer without the further consent
of the Seller (the
Exhibit VI-1
"Distribution Instructions"), which the Buyer agrees, for the benefit of the
Seller only, shall be in compliance with the provisions of the Repurchase
Agreement. Until Depository Bank shall receive contrary instructions from Buyer,
on each Business Day, the Depository Bank shall remit funds on deposit in the
Blocked Account to the account of Seller as set forth in Schedule A hereto.
3. Buyer shall deliver the Distribution Instructions to the Depository
Bank, Seller and Servicer by facsimile by no later than 12:00 p.m. (New York
City time) on the Business Day prior to each Remittance Date.
4. Depository Bank may rely upon any Distribution Instructions
originated by Buyer, and Depository Bank shall not have any liability to Buyer
for actions taken in reliance on such Distribution Instructions. All
distributions made by the Servicer pursuant to this Section shall be (subject to
any decree of any court of competent jurisdiction) final, and the Servicer shall
have no duty to inquire as to the application by Buyer of any amounts
distributed to it.
5. The Blocked Account shall be an interest bearing account. All income
and gains from the investment of funds in the Blocked Account shall be retained
in the Blocked Account until disbursed in accordance with Section 2 hereof. As
between Seller and Buyer, Seller shall treat all income, gains and losses from
the investment of amounts in the Blocked Account as its income or loss for
federal, state and local income tax purposes.
6. The Blocked Account shall be subject to the sole control of the
Buyer and, neither Seller nor Servicer shall have any right of withdrawal from
the Blocked Account nor any right to deliver instructions to Depository Bank in
respect of the Blocked Account. The Depositary Bank shall accept Distribution
Instructions only from the Buyer at all times and shall comply with all
instructions of Buyer without any further consent of Seller or Servicer being
required.
7. The undersigned parties agree: (a) that Depository Bank will not
exercise any right of set off, banker's lien or any similar right in connection
with such funds, provided that Depository Bank may set off against the Blocked
Account for fees and expenses payable hereunder, for returned deposit items and
for adjustments and corrections in respect of transactions in the Blocked
Account, including, without limitation, returned checks and other deposits with
respect to which Depository Bank fails to receive final payment or settlement;
(b) that Depository Bank shall not withdraw, transfer or otherwise dispose of
funds from the Blocked Account or permit any other person or entity to withdraw,
transfer or otherwise dispose of funds in the Blocked Account except in
accordance with the terms of Section 2 hereof, the Distribution Instructions
originated by Buyer, and the terms of this Section 7; (c) that for the purposes
of the Uniform Commercial Code as in effect from time to time in the State of
New York (the "UCC"), the Blocked Account is a "deposit account", as defined in
Article 9 of the UCC; and (d) upon receipt of written notice of any lien,
encumbrance or adverse claim against the Blocked Account or any funds credited
thereto, Depository Bank will make reasonable efforts promptly to notify Seller,
Buyer and Servicer thereof. The undersigned further agree that if there are
insufficient collected funds in the Blocked Account to cover the amount of any
returned check or other adjustment or correction to be debited thereto, Seller
shall repay Depository Bank the amount of such debit immediately upon demand. If
Seller fails to so repay Depository Bank, then, only after the occurrence and
continuance of an Event of Default under
Exhibit VI-2
the Repurchase Agreement, Buyer shall repay Depository Bank for such debit
immediately upon demand to the extent that Buyer received the proceeds of the
check or other deposit or credit to which the debit relates.
8. In the event of a conflict between this Blocked Account Agreement
and any other agreement between Depository Bank and Seller, the terms of this
Blocked Account Agreement will prevail.
9. This Blocked Account Agreement shall continue in effect until Buyer
has notified Depository Bank in writing that this Blocked Account Agreement is
terminated. Notwithstanding the foregoing, Depository Bank may terminate this
Agreement upon thirty (30) days written notice to the other parties ; provided
that it may terminate this Agreement immediately upon prior written notice to
the Buyer and Seller, in the event Depository Bank has a reasonable basis to
suspect fraud or other illegal activity in connection with the Blocked Account
or this Agreement. In the event of immediate termination by Depository Bank,
Depository Bank shall transfer all funds in the Blocked Account to Buyer or to
its designee, as directed in writing by Buyer.
10. This Blocked Account Agreement and the instructions and notices
required or permitted to be executed and delivered hereunder set forth the
entire agreement of the parties with respect to the subject matter hereof and
supersede any prior agreement and contemporaneous oral agreements of the parties
concerning its subject matter.
11. No amendment, modification or (except as otherwise specified in
Section 9 above) termination of this Blocked Account Agreement, nor any
assignment of any rights hereunder (except to the extent contemplated under
Section 13 below), shall be binding on any party hereto unless it is in writing
and is signed by each of the parties hereto, and any attempt to so amend,
modify, terminate or assign except pursuant to such a writing shall be null and
void. No waiver of any rights hereunder shall be binding on any party hereto
unless such waiver is in writing and signed by the party against whom
enforcement is sought.
12. If any term or provision set forth in this Blocked Account
Agreement shall be invalid or unenforceable, the remainder of this Blocked
Account Agreement, other than those provisions held invalid or unenforceable,
shall be construed in all respects as if such invalid of unenforceable term or
provision were omitted.
13. The terms of this Blocked Account Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
corporate successors. This Blocked Account Agreement may be assigned by Buyer,
Seller and Servicer to any assignee of Buyer, Seller or Servicer, respectively,
permitted under the Repurchase Agreement, provided that written notice thereof
is given by the applicable assignor to Depository Bank.
14. This Blocked Account Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instruments, and
any party hereto may execute this Blocked Account Agreement by signing and
delivering one or more counterparts.
Exhibit VI-3
15. This Blocked Account Agreement shall be governed by and construed
in accordance with the law of the State of New York. The parties agree that New
York is the "bank's jurisdiction" for purposes of the UCC.
16. Depository Bank may rely, and Depository Bank shall be protected in
acting, or refraining from acting, upon any notice (including but not limited to
electronically confirmed facsimiles of such notice) believed by Depository Bank
to be genuine and to have been given by the proper party or parties.
17. Depository Bank's duties and obligations shall be determined solely
by the provisions of this Agreement and Depository Bank shall not be liable
except for the performance of its duties and obligations as are set forth
herein. Depository Bank shall have no obligation to review, or confirm that any
actions taken pursuant to this Agreement comply with, any other agreement or
document. Depository Bank shall have no liability to any party to this Agreement
or to any other party arising out of or in connection with this Agreement other
than for its gross negligence or willful misconduct. Substantial compliance by
Depository Bank with its standard procedures for the services Depository Bank is
providing hereunder shall be deemed to be the exercise by it of ordinary care.
In no event shall Depository Bank be liable for any lost profits or for any
indirect, special, consequential or punitive damages even if advised of the
possibility or likelihood of such damages.
18. Seller agrees to indemnify, defend and hold harmless Depository
Bank and its affiliates and parent(s) and its and their respective officers,
directors, employees, representatives and agents (each an "Indemnified Party")
from and against all liabilities, losses, claims, damages, demands, costs and
expenses of every kind ("Losses") including, without limitation, Losses incurred
as a result of items being deposited in the Blocked Account and being unpaid for
any reason, reasonable attorney's fees and the reasonable charges of Depository
Bank's in-house counsel, incurred or sustained by any Indemnified Party arising
out of Depository Bank's performance of the services contemplated by this
Agreement, except to the extent such Losses are the direct result of the gross
negligence or willful misconduct of Depository Bank.
19. If at any time Depository Bank is served with legal process which
it in good faith believes prohibits the disbursement of the funds deposited in
the Blocked Account, then Depository Bank shall have the right (i) to place a
hold on the funds in the Blocked Account until such time as it receives an
appropriate court order or other assurance satisfactory to it as to the
disposition of the funds in the Blocked Account, or (ii) to commence, at
Seller's expense, an interpleader action in any competent Federal or State Court
located in the Commonwealth of Pennsylvania, and otherwise to take no further
action except in accordance with joint written instructions from Seller and
Buyer or in accordance with the final order of a competent court, served on
Depository Bank.
20. All bank statements in respect to the Blocked Account shall be sent
to Buyer and Seller as follows:
Exhibit VI-4
Seller:
-------
Capital Trust, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
Buyer:
------
▇▇▇▇▇▇▇ Sachs Mortgage Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
All notices to Depository Bank are to be sent to:
PNC Bank, National Association
Treasury Management
Two PNC Plaza, 31st Floor
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Risk Manager and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Exhibit VI-5
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,
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE
COMPANY, a New York limited partnership
By: ▇▇▇▇▇▇▇ Sachs Real Estate Funding
Corp., its general partner
By:
--------------------------------
Title:
Agreed and acknowledged:
PNC BANK, NATIONAL ASSOCIATION,
a national banking association,
as Depository Bank
By:
--------------------------------
Title:
CAPITAL TRUST, INC., a Maryland
corporation, as Seller
By:
--------------------------------
Title:
MIDLAND LOAN SERVICES, INC., a
Delaware corporation, as Servicer
By:
--------------------------------
Title:
Exhibit VI-6
SCHEDULE A
----------
(Seller's Account Information)
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ABA #: 021-000021
Account # 230254632
Account Name: Capital Trust, Inc.
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Exhibit VI-7
EXHIBIT VII
FORM OF DIRECTION LETTER
Exhibit VII-1
EXHIBIT VIII
FORM OF BAILEE AGREEENT
[CAPITAL TRUST, INC.
NAME AND ADDRESS]
_______________ __, 20__
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Bailee Agreement (the "Bailee Agreement") in connection with
the sale of ______________ by Capital Trust, Inc. (the
"Seller") to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company (the "Buyer")
Gentlemen and Mesdames:
In consideration of the mutual promises set forth herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller, the Buyer and Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
(the "Bailee") hereby agree as follows:
1. The Seller shall deliver to the Bailee in connection with any
Purchased Loans delivered to the Bailee hereunder an Identification Certificate
in the form of Attachment 1 attached hereto to which shall be attached a
Purchased Loan Schedule identifying which Purchased Loans are being delivered to
the Bailee hereunder. Such Purchased Loan Schedule shall contain the following
fields of information: (a) the loan identifying number; (b) the obligor's name;
(c) the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ and zip code for the applicable real
property; (d) the original balance; and (e) the current principal balance if
different from the original balance and such other information as the Seller and
Buyer shall require.
2. On or prior to the date indicated on the Custodial Delivery
Certificate delivered by the Seller (the "Funding Date"), the Seller shall have
delivered to the Bailee, as bailee for hire, the original documents set forth on
Schedule A attached hereto (collectively, the "Purchased Loan File") for each of
the Purchased Loans (each a "Purchased Loan" and collectively, the "Purchased
Loans") listed in Exhibit A to Attachment 1 attached hereto (the "Purchased Loan
Schedule").
3. The Bailee shall issue and deliver to the Buyer and the Custodian on
or prior to the Funding Date by facsimile (a) in the name of the Buyer, an
initial trust receipt and certification in the form of Attachment 2 attached
hereto (the "Trust Receipt ") which Trust Receipt shall state that the Bailee
has received the documents comprising the Purchased Loan File as set forth in
the Custodial Delivery Certificate (as defined in that certain Custodial
Agreement dated as of August __, 2004, among Seller, Buyer and Custodian (as
defined in Section 5 below), in addition to such other documents required to be
delivered to Buyer and/or
Exhibit VIII-1
Custodian pursuant to the Master Repurchase Agreement dated as of August 17,
2004, between Seller and Buyer (the "Repurchase Agreement").
4. On the applicable Funding Date, in the event that the Buyer fails to
purchase any New Loan from the Seller that is identified in the related
Custodial Delivery Certificate, the Buyer shall deliver by facsimile to the
Bailee at (▇▇▇) ▇▇▇-▇▇▇▇ to the attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., an
authorization (the "Facsimile Authorization") to release the Purchased Loan
Files with respect to the Purchased Loans identified therein to the Seller. Upon
receipt of such Facsimile Authorization, the Bailee shall release the Purchased
Loan Files to the Seller in accordance with the Seller's instructions.
5. Following the Funding Date, the Bailee shall forward the Purchased
Loan Files to Deutsche Bank Trust Company Americas, ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage Custody-QT041C (the "Custodian") by
insured overnight courier for receipt by the Custodian no later than 1:00 p.m.
on the third Business Day following the applicable Funding Date (the "Delivery
Date").
6. From and after the applicable Funding Date until the time of receipt
of the Facsimile Authorization or the applicable Delivery Date, as applicable,
the Bailee (a) shall maintain continuous custody and control of the related
Purchased Loan Files as bailee for the Buyer and (b) is holding the related
Purchased Loan Loans as sole and exclusive bailee for the Buyer unless and until
otherwise instructed in writing by the Buyer.
7. The Seller agrees to indemnify and hold the Bailee and its partners,
directors, officers, agents and employees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
reasonable attorney's fees, that may be imposed on, incurred by, or asserted
against it or them in any way relating to or arising out of this Bailee
Agreement or any action taken or not taken by it or them hereunder unless such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (other than special, indirect, punitive or
consequential damages, which shall in no event be paid by the Bailee) were
imposed on, incurred by or asserted against the Bailee because of the breach by
the Bailee of its obligations hereunder, which breach was caused by negligence,
lack of good faith or willful misconduct on the part of the Bailee or any of its
partners, directors, officers, agents or employees. The foregoing
indemnification shall survive any resignation or removal of the Bailee or the
termination or assignment of this Bailee Agreement.
8. (a) In the event that the Bailee fails to produce a Mortgage Note,
Mezzanine Note, assignment of Purchased Loan or any other document related to a
Purchased Loan that was in its possession within ten (10) business days after
required or requested by the Seller or Buyer (a "Delivery Failure"), the Bailee
shall indemnify the Seller or Buyer in accordance with the succeeding paragraph
of this Section 8.
(b) The Bailee agrees to indemnify and hold the Buyer and Seller,
and their respective affiliates and designees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
reasonable attorney's fees, that may be imposed on, incurred by, or
Exhibit VIII-2
asserted against it or them in any way relating to or arising out of a Custodial
Delivery Failure or the Bailee's negligence, lack of good faith or willful
misconduct. The foregoing indemnification shall survive any termination or
assignment of this Bailee Agreement.
9. The Seller hereby represents, warrants and covenants that the Bailee
is not an affiliate of or otherwise controlled by the Seller. Notwithstanding
the foregoing, the parties hereby acknowledge that the Bailee hereunder may act
as Counsel to the Seller in connection with a proposed loan and Paul, Hastings,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, if acting as Bailee, has represented the Seller in
connection with negotiation, execution and delivery of the Repurchase Agreement.
10. In connection with a pledge of the Purchased Loans as collateral
for an obligation of the Buyer, the Buyer may pledge its interest in the
corresponding Purchased Loan Files held by the Bailee for the benefit of the
Buyer from time to time by delivering written notice to the Bailee that the
Buyer has pledged its interest in the identified Purchased Loans and Purchased
Loan Files, together with the identity of the party to whom the Purchased Loans
have been pledged (such party, the "Pledgee"). Upon receipt of such notice from
the Buyer, the Bailee shall ▇▇▇▇ its records to reflect the pledge of the
Purchased Loans by the Buyer to the Pledgee. The Bailee's records shall reflect
the pledge of the Purchased Loans by the Buyer to the Pledgee until such time as
the Bailee receives written instructions from the Buyer that the Purchased Loans
are no longer pledged by the Buyer to the Pledgee, at which time the Bailee
shall change its records to reflect the release of the pledge of the Purchased
Loans and that the Bailee is holding the Purchased Loans as custodian for, and
for the benefit of, the Buyer.
11. From time to time, subject to the acceptance and approval of Buyer,
Seller may request pursuant to a request substantially in the form of Annex 6 to
the Custodial Agreement the delivery by the Custodian to the Bailee of some or
all of the Purchased Loan File for the purposes set forth in such request. Upon
receipt of the Purchased Loan File or such portions thereof, Bailee shall hold
the same as sole and exclusive bailee for the Buyer until such time as the
Purchased Loan File, or such portions thereof, are redelivered to Custodian or
to such other Persons, as otherwise directed by Buyer, subject in either case to
the provisions set forth herein governing standards of care and indemnification
and except as otherwise provided by any document specifically amending,
supplementing or modifying the terms hereof which is executed and delivered by
all parties hereto in connection with such delivery of the Purchased Loan File,
or such portions thereof, to Bailee. Notwithstanding anything to the contrary
contained in this Section 11, Bailee shall have the right to deliver such
Purchased Loan File, or portions thereof, to Buyer upon five (5) days written
notice to Buyer.
12. The agreement set forth in this Bailee Agreement may not be
modified, amended or altered, except by written instrument, executed by all of
the parties hereto.
13. This Bailee Agreement may not be assigned by the Seller or the
Bailee without the prior written consent of the Buyer.
14. For the purpose of facilitating the execution of this Bailee
Agreement as herein provided and for other purposes, this Bailee Agreement may
be executed simultaneously in any
Exhibit VIII-3
number of counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute and be one and the same
instrument.
15. This Bailee Agreement shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
16. Capitalized terms used herein and defined herein shall have the
meanings ascribed to them in the Repurchase Agreement.
[signatures begin on next page]
Exhibit VIII-4
Very truly yours,
CAPITAL TRUST, INC., a Maryland
corporation
By:
-------------------------------------
Name:
Title:
ACCEPTED AND AGREED:
PAUL, HASTINGS, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, Bailee
By:
-------------------------------------
Name:
Title:
ACCEPTED AND AGREED:
▇▇▇▇▇▇▇ SACHS MORTGAGE
COMPANY, Buyer
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate
Funding Corp., its general
partner
By:
-------------------------------------
Name:
Title:
Exhibit VIII-5
Attachment 1 to Bailee Agreement
CUSTODIAL DELIVERY CERTIFICATE
------------------------------
Exhibit VIII-6
Attachment 2 to Bailee Agreement
TRUST RECEIPT
-------------
Exhibit VIII-7
ANNEX II
Names and Addresses for Communications Between Parties:
BUYER
-----
▇▇▇▇▇▇▇ Sachs Mortgage Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇- ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SELLER
------
Capital Trust, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Payments to Buyer: Payments to Buyer under the Agreement shall be made
by transfer, via wire transfer, to the following account of the Buyer: Citibank,
N.A., ABA #: ▇▇▇▇▇▇▇▇, Account #: ▇▇▇▇▇▇▇▇▇, Account Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Mortgage Company, Ref: Capital Trust, Inc., Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇. Buyer may consider on a case-by-case-basis in its sole and absolute
discretion alternative funding arrangements.
Exhibit VIII-8
Payments to Seller: Payments to Seller under the Agreement shall be
made by transfer, via wire transfer, to the following account of the Seller: ▇▇
▇▇▇▇▇▇ Chase Bank, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, ABA
#: 021-000021, Account #: 230254632, Account Name: Capital Trust, Inc.,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇
2
EXHIBIT IX
ELIGIBILITY CRITERIA
--------------------
1. Terms used, but not defined in this Exhibit IX shall have the
meaning set forth in Section 2 of this Annex I. The following capitalized terms
shall have the respective meanings set forth below:
"Credit Risk Interest" shall mean a Purchased Loan that, in
the Buyer's reasonable business judgment, has a significant risk of
declining in credit quality or over time may become an Impaired
Interest.
"Impaired Interest" shall mean a Purchased Loan with respect
to which foreclosure or default (whether or not declared) has occurred.
2. Each Purchased Loan satisfies the following criteria as of the
applicable Purchase Date:
(a) the obligor of such Purchased Loan is incorporated or organized
under the laws of the United States;
(b) payments of interest on such Purchased Loan are not subject to
withholding tax unless the issuer thereof or the obligor thereon is required to
make "gross-up" payments sufficient to cover any withholding tax imposed at any
time on payments made to the Issuer with respect thereto;
(c) it is eligible under its underlying instruments to be purchased
by the Issuer (as defined in the CDO Indenture) and pledged to the Trustee (as
defined in the CDO Indenture);
(d) it provides for the payment of principal at not less than par
upon maturity, redemption or acceleration;
(e) it is not an interest that is an Impaired Interest or a Credit
Risk Interest;
(f) it does not have a principal balance greater than $35,000.000;
(g) the maturity date of such Purchased Loan (including any
extension option) is not later than August 2013;
(h) the principal balance of such Purchased Loan has not been
reduced by a realized loss, appraisal event, or similar item since initial
issuance;
(j) the Rating Agency Stressed LTV (as defined in the CDO
Indenture) is less than 125%; and
(k) the Rating Agency Stressed DSCR is greater than 0.80x.
Exhibit ▇▇-▇
▇▇▇▇▇▇▇ ▇▇-▇