$300,000,000
AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
Dated as of March 21, 2005
between
NRFC DB HOLDINGS, LLC,
as Seller,
and
DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH,
as Buyer.
TABLE OF CONTENTS
Page
----
1. APPLICABILITY...........................................................1
2. DEFINITIONS.............................................................1
3. INITIATION; CONFIRMATION; TERMINATION; FEES............................22
4. MARGIN MAINTENANCE.....................................................29
5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS.................................30
6. SECURITY INTEREST......................................................33
7. PAYMENT, TRANSFER AND CUSTODY..........................................34
8. SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED SECURITIES........41
9. RESERVED...............................................................42
10. REPRESENTATIONS........................................................42
11. NEGATIVE COVENANTS OF SELLER...........................................47
12. AFFIRMATIVE COVENANTS OF SELLER........................................48
13. SINGLE-PURPOSE ENTITY..................................................52
14. EVENTS OF DEFAULT; REMEDIES............................................53
15. SINGLE AGREEMENT.......................................................59
16. RECORDING OF COMMUNICATIONS............................................59
17. NOTICES AND OTHER COMMUNICATIONS.......................................59
18. ENTIRE AGREEMENT; SEVERABILITY.........................................60
19. NON-ASSIGNABILITY......................................................60
20. GOVERNING LAW..........................................................61
21. NO WAIVERS, ETC........................................................61
22. USE OF EMPLOYEE PLAN ASSETS............................................61
23. INTENT.................................................................61
24. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS.....................62
25. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL..........................62
26. NO RELIANCE............................................................63
27. INDEMNITY..............................................................64
28. DUE DILIGENCE..........................................................65
29. SERVICING..............................................................65
30. MISCELLANEOUS..........................................................66
ANNEXES, EXHIBITS AND SCHEDULES
ANNEX I Names and Addresses for Communications between Parties
SCHEDULE I Original Purchase Percentages, CF Sweep Purchase Percentages,
Buyer's Margin Percentages and Applicable Spreads
SCHEDULE II CDO Eligible Assets Expectations
EXHIBIT I Form of Confirmation
EXHIBIT II Authorized Representatives of Seller
EXHIBIT III Monthly Reporting Package
EXHIBIT IV Form of Custodial Agreement
EXHIBIT V Form of Power of Attorney
EXHIBIT VI Representations and Warranties Regarding Individual Purchased
Loans
EXHIBIT VII Collateral Information
EXHIBIT VIII Advance Procedure
EXHIBIT IX Form of Redirection Letter
AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT, dated as of March 21,
2005, by and between NRFC DB HOLDINGS, LLC (the "Seller") and DEUTSCHE BANK AG,
CAYMAN ISLANDS BRANCH, a branch of a foreign banking institution (the "Buyer"),
to Master Repurchase Agreement, dated as of December 21, 2004, by and between
Seller and Buyer.
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which
the Seller agrees to transfer to the Buyer certain Eligible Loans or Eligible
Securities (each, as defined herein) or other assets (together, the "Assets")
against the transfer of funds by Buyer, with a simultaneous agreement by Buyer
to transfer to Seller such Assets 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 any
exhibits identified herein as applicable hereunder.
2. DEFINITIONS
"Acceptable Attorney" means any attorney-at-law to which the Seller or the
Custodian, as applicable, has sent an Attorney Bailee Letter, except for an
attorney whom the Buyer has notified the Custodian and the Seller is not
reasonably satisfactory to the Buyer.
"Accepted Servicing Practices" shall mean with respect to any Purchased
Loan, those servicing practices of prudent lending institutions which service
mortgage loans and/or mezzanine loans of the same type as such Purchased Loan in
the jurisdiction where the related Mortgaged Property is located.
"Accelerated Repurchase Date" shall have the meaning specified in Section
14(a)(i) of this Agreement.
"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 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 60 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.
"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.
"Agreement" shall mean this Amended and Restated Master Repurchase
Agreement, dated as of March 21, 2005 between Seller and Buyer, as such
agreement may be modified or supplemented from time to time.
"Alternative Rate" shall have the meaning specified in Section 3(g) of this
Agreement.
"Alternative Rate Transaction" shall mean, with respect to any Pricing Rate
Period, any Transaction with respect to which the Pricing Rate for such Pricing
Rate Period is determined with reference to the Alternative Rate.
"Applicable Spread" shall mean, with respect to a Transaction involving
Purchased Securities in any Rating Category and/or Purchased Loans in any
Collateral Type Grouping:
(i) so long as no Event of Default shall have occurred and be
continuing, during the CDO Ramp-Up Period solely with respect to a CDO
Eligible Asset, 100 basis points (i.e., 1.00%),
(ii) so long as no Event of Default shall have occurred and be
continuing, (a) during the CDO Ramp-Up Period with respect to a Non-CDO
Eligible Asset (other than Eligible Loans of the type described in clause
(ii) of the definition thereof) or (b) after the CDO Ramp-Up Period with
respect to any Asset (other than Eligible Loans of the type described in
clause (ii) of the definition thereof), the incremental per annum rate
(expressed as a number of "basis points", each basis point being equivalent
to 1/100 of 1%) specified in Schedule I attached to this Agreement as being
the "Applicable Spread" for Purchased Securities in such Rating Category or
Purchased Loans in such Collateral Type Grouping, and
(iii) so long as no Event of Default shall have occurred and be
continuing, (a) during the CDO Ramp-Up Period with respect to Purchased
Loans which are Non-CDO Eligible Loans of the type described in clause (ii)
of the definition of Eligible Loans (referred to on Schedule I as the "CTL
Loans" Collateral Structure) or (b) after the CDO Ramp-Up Period with
respect to any Purchased Loans which are of the type described in clause
(ii) of the definition of Eligible Loans (referred to on Schedule I as the
"CTL Loans" Collateral Structure), the incremental per annum rate
(expressed as a number of "basis points", each basis point being equivalent
to 1/100 of 1%) specified in the right hand column below as being the
"Applicable Spread", with such rate being determined based upon the rating
of the tenant that occupies (or if there is a master lessor, the subtenant
that occupies) the related commercial property:
Tenant (Subtenant) Rating(1) Applicable Spread
---------------------------- -----------------
AAA ▇▇
▇▇▇, ▇▇, ▇▇- 100
2
A+, A, A- 125
BBB+, BBB, BBB- 200
----------
(1) Includes qualifiers and, if applicable, the equivalent rating
from ▇▇▇▇▇'▇ Investors Service Inc. In the event of a split
rating, the lower rating shall apply.
(iv) after the occurrence and during the continuance of an Event of
Default, the applicable incremental per annum rate described in clause (i),
(ii) or (iii) of this definition, plus 400 basis points (4.0%).
"Assets" shall have the meaning specified in Section 1.
"Assignment of Leases" shall have the meaning specified in paragraph 5 of
the first paragraph of Exhibit VI.
"Assignment of Mortgage" shall mean, with respect to any Mortgage, an
assignment of the mortgage, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related property is located to reflect the assignment and pledge of the
Mortgage, subject to the terms, covenants and provisions of this Agreement.
"Attorney's Bailee Letter" means a letter from an Acceptable Attorney, in
form and substance acceptable to the Buyer, wherein such Acceptable Attorney in
possession of a Purchased Loan File (i) acknowledges receipt of such Purchased
Loan File, (ii) confirms that such Acceptable Attorney is holding the same as
bailee of the Buyer under such letter and (iii) agrees that such Acceptable
Attorney shall deliver such Purchased Loan File to the Custodian by not later
than the third (3rd) Business Day following the Purchase Date for the related
Purchased Loan.
"Business Day" shall mean a day other than (i) a Saturday or Sunday, or
(ii) a day in which the New York Stock Exchange or banks in the State of New
York or Illinois are authorized or obligated by law or executive order to be
closed. When used with respect to a Pricing Rate Determination Date, "Business
Day" shall mean any day other than a Saturday, a Sunday or a day on which banks
in London, England are closed for interbank or foreign exchange transactions.
"Buyer" shall mean Deutsche Bank AG, Cayman Islands Branch, or any
successor.
"Buyer's Margin Amount" shall mean, 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.
"Buyer's Margin Percentage" shall mean, (i) with respect to any Transaction
for a CDO Eligible Asset during the CDO Ramp-Up Period, as elected by Seller
pursuant to Section 3 of this Agreement, the reciprocal of either (x) 77% (i.e.,
129.87013%) or (y) the "Margin Maintenance Percentage" specified for the
applicable Rating Category or Collateral Type Grouping in Schedule I attached to
this Agreement (i.e., the percentage that when multiplied by the applicable
percentage set forth in Schedule I under the heading "Margin Maintenance
3
Percentage" equals 1.00) and (ii) with respect to any Transaction for a Non-CDO
Eligible Asset during the CDO Ramp-Up Period or any Purchased Security or
Purchased Loan after the CDO Ramp-Up Period, the reciprocal of the "Margin
Maintenance Percentage" specified for the applicable Rating Category or
Collateral Type Grouping in Schedule I attached to this Agreement (i.e., the
percentage that when multiplied by the applicable percentage set forth in
Schedule I under the heading "Margin Maintenance Percentage" equals 1.00). The
Buyer's Margin Percentage for each of the applicable percentages set forth in
Schedule I is set forth below:
MARGIN MAINTENANCE PERCENTAGE
SET FORTH ON SCHEDULE I BUYER'S MARGIN PERCENTAGE
----------------------- -------------------------
45% 222.2222%
50% 200.0000%
55% 181.8181%
60% 166.6667%
65% 153.8462%
70% 142.8571%
75% 133.3333%
80% 125.0000%
85% 117.6471%
92.5% 108.1081%
"Cash Management Account" shall mean a segregated interest bearing account,
in the name of Buyer, established at the Depository.
"CDO Eligible Asset" shall mean any Eligible Loan or Eligible Security
proposed to be sold by Seller to Buyer and designated at such time by Seller as
intended to qualify for inclusion in a DBSI CDO pursuant to Section 3(a) of this
Agreement. If such Eligible Loan or Eligible Security is approved by and
transferred to Buyer pursuant to a Transaction, it shall be a CDO Eligible Asset
for purposes of this Agreement.
"CDO Ramp-Up Period" shall mean the period equal to the shorter of (a) the
initial 180 days after the date hereof and (b) the period commencing on the date
hereof and ending on the date CDO Eligible Assets are included, in whole or in
part, in a DBSI CDO.
"CDOs" shall have the meaning given to such term in the definition of
Eligible Securities.
"CF Sweep Event" shall mean, with respect to any Purchased Security or
Purchased Loan (other than a Purchased Security or Purchased Loan that is a
CDO-Eligible Asset during the CDO Ramp-Up Period with an elected Original
Purchase Percentage of 77%), a determination by Buyer that (i) the Repurchase
Price of such Purchased Security or Purchased Loan as of such date exceeds (ii)
the product obtained by multiplying the aggregate Market Value of such Purchased
Security or Purchased Loan as of such date by the "CF Sweep Purchase Percentage"
for such Purchased Security or Purchased Loan, as set forth in Schedule I
attached to this Agreement; provided that, once such Repurchase Price no longer
exceeds the Target Price (as
4
calculated with respect to the applicable "Original Purchase Percentage" as set
forth in Schedule I) for such Purchased Security or Purchased Loan, the CF Sweep
Event shall terminate.
"CF Sweep Purchase Percentage" shall have the meaning as set forth on
Schedule I.
"Change of Control" shall mean any of the following events shall have
occurred without the prior approval of the Buyer:
(i) a Critical Person Event shall occur;
(ii) the Sponsor, through its general partner interest in NRFC OP and
indirect ownership interest in NRFC Sub-REIT and the Seller, ceases to be
responsible for the investment management and investment decision-making of
the Seller;
(iii) the Sponsor ceases to be the general partner of NRFC OP;
(iv) NRFC OP ceases to own (directly or indirectly) 51% or more of the
legal and beneficial ownership interests in the Seller;
(v) NRFC Sub-REIT ceases to own (directly or indirectly) 51% or more
of the legal and beneficial ownership interests in the Seller;
(vi) a merger, reorganization or consolidation of the Sponsor, NRFC OP
or NRFC Sub-REIT where the successor entity is not the Sponsor, NRFC OP or
NRFC Sub-REIT, respectively, as of the date of this Agreement.
"CMBS" shall have the meaning given to such term in the definition of
Eligible Securities.
"Collateral" shall have the meaning specified in Section 6 of this
Agreement.
"Collateral Information" shall mean, with respect to each Purchased Loan,
the information set forth in Exhibit VII attached hereto.
"Collateral Type Grouping" shall mean, with respect to the Eligible Loans,
any of the types of Eligible Loans listed in Schedule I attached to this
Agreement.
"Collection Period" shall mean (i) with respect to the first Remittance
Date in any month, the period beginning on but excluding the last 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 and (ii) with respect to the second Remittance Date in any
month, the period beginning on but excluding the first Cut-off Date in the month
in which such Remittance Date occurs and continuing to and including the Cut-off
Date immediately preceding such Remittance Date.
"Concentration Limit" means
5
(a) with respect to Non-CDO Eligible Assets during the CDO Ramp-Up Period
(or with respect to any Purchased Security or Purchased Loan after the CDO
Ramp-Up Period if for any reason the Facility Amount is not reduced to
$150,000,000 or the condition precedent in the penultimate proviso of this
definition is satisfied), the limit on the maximum portion of the Repurchase
Price (excluding Price Differential) on each Business Day which may be
represented by specified types of Purchased Securities and Purchased Loans shall
be satisfied if
(x) the Repurchase Price (excluding Price Differential) of the
Purchased Loans referred to in clauses (iii) and (iv) of the definition of
Eligible Loans which are in Collateral Type Grouping C and D is equal to or
less than 35% of the aggregate Repurchase Price (excluding Price
Differential) of all outstanding Transactions; and
(y) the Repurchase Price (excluding Price Differential) of the
Purchased Loans referred to in clauses (iii) and (iv) of the definition of
Eligible Loans which are in Collateral Type Grouping D is equal to or less
than 15% of the aggregate Repurchase Price (excluding Price Differential)
of all outstanding Transactions; and
(z) the Repurchase Price (excluding Price Differential) of the
Purchased Securities referred to in clause (iii) of the definition of
Eligible Securities is equal to or less than 10% of the aggregate
Repurchase Price (excluding Price Differential) of all outstanding
Transactions; and
(b) with respect to any Purchased Security or Purchased Loan after the CDO
Ramp-Up Period (so long as the Facility Amount is equal to $150,000,000 and the
condition precedent set forth in the penultimate proviso of this definition has
not been satisfied), the limit on the maximum portion of the Repurchase Price
(excluding Price Differential) on each Business Day which may be represented by
specified types of Purchased Securities and Purchased Loans shall be satisfied
if
(x) the Repurchase Price (excluding Price Differential) of the
Purchased Loans referred to in clauses (iii) and (iv) of the definition of
Eligible Loans which are in Collateral Type Grouping C and D is equal to or
less than 50% of the aggregate Repurchase Price (excluding Price
Differential) of all outstanding Transactions; and
(y) the Repurchase Price (excluding Price Differential) of the
Purchased Securities referred to in clause (iii) of the definition of
Eligible Securities is equal to or less than 10% of the aggregate
Repurchase Price (excluding Price Differential) of all outstanding
Transactions;
provided, that if, at any time from and after clause (b)(x) of this definition
is applicable, the Repurchase Price (excluding Price Differential) of the
Purchased Loans referred to in clauses (iii) and (iv) of the definition of
Eligible Loans which are in Collateral Type Grouping C and D is greater than 50%
of the aggregate Repurchase Price (excluding Price Differential) of all
outstanding Transactions, then, from such time clause (b)(x) is not satisfied,
clause (a)(x) shall
6
again be applicable (including without limitation for purposes of the definition
of Market Value); provided further, that notwithstanding anything in this
Agreement to the contrary, the proviso to the definition of the term "Market
Value" shall not be of any force or effect at any time the definition of
Concentration Limit is exceeded due to a principal payment or prepayment (i.e.
such principal payment or prepayment shall not result in and of itself in a
Margin Deficit, but the Seller, in order to enter into subsequent Transaction(s)
after such date shall be required to cause the definition of Concentration Limit
to be satisfied).
"Confirmation" shall have the meaning specified in Section 3(b) of this
Agreement.
"Credit Lease" shall have the meaning given to such term in clause (ii) of
the definition of Eligible Loans.
"Critical Person Event" means the event that shall be deemed to have
occurred if at any time during the term of this Agreement any two of Messrs.
▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (or a substitute
Person approved by Buyer) cease to be actively involved in the operations and
investment decision-making of the Seller and the Sponsor.
"Custodial Agreement" shall mean the Custodial Agreement, dated as of March
21, 2005, by and among the Custodian, the Seller and the Buyer.
"Custodial Delivery" shall mean the form executed by each Seller in order
to deliver the Purchased Loan Schedule and the Purchased Loan File to Buyer or
its designee (including the Custodian) pursuant to Section 7, a form of which is
attached hereto as Exhibit IV.
"Custodian" shall mean LaSalle Bank National Association, or any successor
Custodian appointed by Buyer with the prior written consent of Seller (which
consent shall not be unreasonably withheld or delayed).
"Cut-off Date" shall mean the second Business Day preceding each Remittance
Date.
"DBSI CDO" shall mean a collateralized debt obligation transaction under
current rating agency requirements (including, without limitation, the Seller
making representations and warranties with respect to the applicable Eligible
Loans or Eligible Securities that are customary for such transaction) where
Deutsche Bank Securities, Inc. is sole lead manager (or co-lead manager,
provided that the economics to Deutsche Bank Securities, Inc. are the same as if
Deutsche Bank Securities, Inc. were sole lead manager), sole bookrunner and sole
structurer.
"Default" shall mean any event which, with the giving of notice, the
passage of time, or both, would constitute an Event of Default.
"Deficit Cure Amount" shall mean
(i) with respect to any Purchased Security or any Purchased Loan as of
any date (other than a CDO Eligible Asset during the CDO Ramp-Up Period as
to which the Seller has elected an Original Purchase Percentage equal to
77%), the amount (expressed in dollars) obtained by dividing (x) the
Repurchase Price of such Purchased Security or Purchased Loan as of such
date by (y) the "Original Purchase Percentage" for such
7
Purchased Security or Purchased Loan, as set forth in Schedule I attached
to this Agreement, and
(ii) with respect to any Purchased Security or any Purchased Loan that
is a CDO Eligible Asset during the CDO Ramp-Up Period as to which the
Seller has elected an Original Purchase Percentage equal to 77%, the amount
(expressed in dollars) obtained by dividing (x) the Repurchase Price of
such Purchased Security or Purchased Loan as of such date by (y) 77%.
"Depository" shall mean LaSalle Bank National Association, or any successor
Depository appointed by Buyer with the prior written consent of Seller (which
consent shall not be unreasonably withheld or delayed).
"Diligence Materials" shall mean the Preliminary Due Diligence Package
together with the Supplemental Due Diligence List.
"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(d) of
this Agreement.
"Eligible Loans" shall mean any of the following types of loans, which
loans are acceptable to Buyer in its sole discretion and are secured directly or
indirectly by a property that is a multifamily, retail, office, warehouse and
hospitality property (or any other property type acceptable to Buyer, but
excluding in all cases undeveloped land) and is located in the United States of
America, its territories or possessions:
(i) performing whole mortgage loans secured by first liens on
multifamily and commercial properties (or participation interests in
performing whole mortgage loans secured by first liens on multifamily and
commercial properties which are in substance structured, in right and
benefit, like a whole mortgage loan) (referred to on Schedule I as the "1st
Lien" Collateral Structure);
(ii) performing whole mortgage loans secured by first liens on
commercial properties which are subject to a triple net lease, a double net
lease or a bond-type lease to a tenant that occupies (and/or is master
lessor to subtenants that occupy) such commercial property (any such lease,
a "Credit Lease") (referred to on Schedule I as the "CTL Loans" Collateral
Structure);
(iii) junior participation interests in performing whole mortgage
loans secured by first or second liens on multifamily and commercial
properties (referred to on Schedule I as the "B-Note/2nd Mortgages"
Collateral Structure) (it being understood and agreed that such junior
participation interests may include pari passu participation interests
provided such pari passu interests are subject to intercreditor
arrangements acceptable to Buyer);
8
(iv) performing mezzanine loans (or participation interests therein)
secured by pledges of the entire (or such lesser percentage as the Buyer
may approve) equity ownership interests in entities that own multifamily
and commercial properties (referred to on Schedule I as the "Mezzanine
Loan" Collateral Structure);
(v) syndicated bank loans (referred to on Schedule I as the
"Syndicated Bank Loan" Collateral Structure); and
(vi) any other loan which does not conform to the criteria set forth
in clauses (i)-(v) above and Buyer elects in its sole discretion to
purchase;
provided, however, that non-performing loans shall not be Eligible Loans for
purposes of this Agreement.
"Eligible Securities" shall mean any of the following types of securities
which are acceptable to the Buyer in its sole discretion:
(i) commercial mortgage backed securities ("CMBS") that have a rating
of B- (or the equivalent) or higher from any Rating Agency or
(ii) debt securities issued by a real estate investment trust that has
a rating of "BB" (or its equivalent) or higher from any Rating Agency or
(iii) real estate collateralized debt obligation securities ("CDOs")
that (x) have a rating of "BB" (or its equivalent) or higher from any
Rating Agency and (y) have comparable characteristics (i.e. structure,
pricing, analysis, default rates, etc.) to the Sponsor's prior CDOs
transaction (specifically, the N-Star Real Estate CDO II Ltd. and N-Star
CDO II Inc. issue which closed in July, 2004) and (z) are notched, with
respect to pricing and advance rate to a CMBS rating one full rating
category lower from any Rating Agency (i.e. BBB to BB, BB to B, etc.) or
(iv) DBSI CDO securities rated "BB" (or its equivalent) from any
Rating Agency;
provided, however, that any securities with a split rating shall be deemed to
have the lower rating.
"Environmental Report" shall have the meaning specified in paragraph 12 of
the first paragraph of Exhibit VI.
"Equity" shall mean an amount equal to the sum of, (i) with respect to each
Purchased Loan or Purchased Security, the amount (not less than zero) equal to
(x) the Market Value of such Purchased Loan or Purchased Security minus (y) the
related Repurchase Price and (ii) with respect to the Supplemental Equity
Collateral, the value of such collateral as determined by Buyer in good faith.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder. Section
references to ERISA are
9
to ERISA, as in effect at the date of this Agreement and, as of the relevant
date, any subsequent provisions of ERISA, amendatory thereof, supplemental
thereto or substituted therefor.
"ERISA Affiliate" shall mean any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Seller is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which Seller is a
member.
"Event of Default" shall have the meaning specified in Section 14 of this
Agreement.
"Exit Fee" shall mean the fee equal to 0.5% of the Repurchase Price
(excluding Price Differential) with respect to any Purchased Security or
Purchased Loan which is the subject of a Transaction, payable pursuant to
Section 3(f) of this Agreement.
"Extension Conditions" shall have the meaning specified in Section 3(e) of
this Agreement.
"Facility Amount" shall mean $300,000,000; provided, that if the CDO
Eligible Assets are securitized in a DBSI CDO during the CDO Ramp-Up Period,
then $150,000,000 after the closing of such DBSI CDO.
"Federal Funds Rate" shall mean, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Buyer from three
federal funds brokers of recognized standing selected by it.
"Filings" shall have the meaning specified in Section 6 of this Agreement.
"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.
"Guaranty" shall mean the Guaranty, dated as of the date hereof, from the
Sponsor to the Buyer, of an amount equal to the sum of (1) the lesser of (x)
$20,000,000 and (y) an amount (not less than zero) equal to the Minimum Seller's
Equity Requirement minus Seller's Equity plus (2) the costs of enforcement
incurred in connection with the Guaranty.
"Hedging Transactions" shall mean, with respect to any or all of the
Purchased Securities and/or Purchased Loans, any short sale of U.S. Treasury
Securities or mortgage-related securities, federal agency debentures, futures
contract (including Eurodollar futures) or options contract or any interest rate
swap, cap or collar agreement or similar arrangements providing for
10
protection against fluctuations in interest rates or the exchange of nominal
interest obligations, either generally or under specific contingencies, entered
into by Seller, with one or more counterparties reasonably acceptable to the
Buyer.
"Income" shall mean, with respect to any Purchased Security or Purchased
Loan at any time, the sum of (x) any principal thereof and all interest,
dividends or other distributions thereon and (y) all net sale proceeds received
by Seller or any Affiliate of Seller in connection with a sale of such Purchased
Security or Purchased Loan.
"Indemnified Amounts" and "Indemnified Parties" shall have the meaning
specified in Section 27 of this Agreement.
"ISDA Master Agreement" shall mean any ISDA Master Agreement (including
respective schedules, annexes and confirmations) executed by the Seller and
Buyer or an Affiliate of the Buyer in connection with a Hedging Transaction.
"Letter of Credit" shall mean a letter of credit which conforms to the
following:
(1) such letter of credit is a stand-by irrevocable letter of credit
from a financial institution rated not lower than "AA-" (or the equivalent)
by at least two of the Rating Agencies (one of which shall be Standard &
Poor's) in form and substance acceptable to the Buyer;
(2) the expiration date of the Letter of Credit is two (2) Business
Days after the expiration of the CDO Ramp-Up Period;
(3) the provider of the Letter of Credit does not have any interest in
the Purchased Loans or the Purchased Securities; and
(4) such letter of credit may be drawn upon by Buyer for (x) deposit
of funds into the Securities Account upon a reduction below "AA-" (or the
equivalent) by the Rating Agencies of the credit rating of the letter of
credit provider (if Seller does not cure such downgrade of the letter of
credit provider by either depositing cash or Permitted Investments or other
securities acceptable to Buyer into the Securities Account or delivering to
the Buyer a replacement letter of credit that complies with this definition
of "Letter of Credit" within five (5) Business Days) or (y) payment to
Buyer to satisfy in whole or in part a Margin Deficit under Section 4 of
this Agreement.
"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
11
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 1/100 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 rounding upwards).
"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%):
LIBOR
-----------------------
1 - Reserve Requirement
"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.
"Margin Deficit" shall have the meaning specified in Section 4(a) hereof.
"Margin Excess" shall have the meaning specified in Section 4(b) hereof.
Market Value" shall mean, with respect to any Purchased Security as of any
relevant date, the market value for such Purchased Security on such date, as
determined by Buyer in its good faith business judgment or, with respect to any
Purchased Loan as of any relevant date, the lesser of (x) the market value for
such Purchased Loan on such date, as determined by Buyer in its good faith
business judgment and (y) the par amount of such Purchased Loan (and including
in the case of any multiplication of such price or amount, if applicable, by the
Original Purchase Percentage pursuant to this Agreement, the value of any
Hedging Transactions pledged with such Purchased Security or Purchased Loan
where the Buyer or an Affiliate of the Buyer is the counterparty, which may be a
negative value); provided, that, notwithstanding the foregoing, in the event
that the Concentration Limit is not satisfied at any time during the term of
this Agreement, the Buyer may in its good faith business judgment reduce the
Market Value of the applicable Purchased Securities or Purchased Loans (i.e. in
the case of a non-satisfaction of the Concentration Limit referred to in clauses
(a)(x) or (b)(x) of such definition, the Purchased Loans referred to in clause
(iii) and (iv) of the definition of Eligible Loans which are in Collateral Type
Grouping C and D, in the case of a non-satisfaction of the Concentration Limit
referred to in clause (a)(y) of such definition, the Purchased Loans referred to
in clause (iii) and (iv) of the definition of Eligible Loans which are in
Collateral Type Grouping D, or in the case of a non-satisfaction of the
Concentration Limit referred to in clause (a)(z) or (b)(y) of such definition,
the Purchased Securities referred to in clause (iii) of the definition of
Eligible Securities) on a pro rata basis by the amount necessary to satisfy such
Concentration Limit; provided, further, that the immediately preceding proviso
shall in all cases be subject to (and not of any force or effect when mandated
by) the proviso to the definition of the term "Concentration Limit". The Market
Value of each Purchased Security and Purchased Loan shall be determined
12
by Buyer, in its good faith business judgment, on each Business Day during the
term of this Agreement.
"Mezzanine Note" shall mean a note or other evidence of indebtedness of the
owner or owners of all (or such lesser percentage as the Buyer may approve)
equity or ownership interests in an underlying real property owner secured by a
pledge of such ownership interests.
"Minimum Seller's Equity Requirement" shall mean $60,000,000.
"Moody's" shall mean ▇▇▇▇▇'▇ Investor Service, Inc.
"Mortgage" shall mean a mortgage, deed of trust, deed to secure debt or
other instrument, creating a valid and enforceable first lien on or a first
priority ownership interest in an estate in fee simple in real property and the
improvements thereon, securing a mortgage note or similar evidence of
indebtedness.
"Mortgage Note" shall mean a note or other evidence of indebtedness of a
Mortgagor secured by a Mortgage.
"Mortgaged Property" shall mean the real property securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note and the grantor of
the related Mortgage.
"Multiemployer Plan" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been, or were required to
have been, made by Seller or any ERISA Affiliate and which is covered by Title
IV of ERISA.
"New Collateral" shall mean an Eligible Loan or Eligible Security that
Seller proposes to be included as Collateral.
"Non-CDO Eligible Asset" shall mean any Eligible Loan or Eligible Security
proposed to be sold by Seller to Buyer and designated at such time by Seller as
not intended to qualify for inclusion in a DBSI CDO pursuant to Section 3(a) of
this Agreement. If such Eligible Loan or Eligible Security is approved by and
transferred to Buyer in connection with a Transaction, it shall be a Non-CDO
Eligible Asset for purposes of this Agreement.
"NRFC OP" means Northstar Realty Finance L.P., a Delaware limited
partnership, the owner of the entire common stock of NRFC Sub-REIT as of the
date of this Agreement.
"NRFC Sub-REIT" means NRFC Sub-REIT Corp., a Maryland corporation, the
owner of the entire membership interests in the Seller as of the date of this
Agreement.
"Original Purchase Percentage" shall mean,
(i) with respect to any Transaction for a CDO Eligible Asset during
the CDO Ramp-Up Period, as elected by Seller pursuant to Section 3 of this
Agreement, either (x)
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77% (i.e., seventy-seven percent) or (y) the "Original Purchase Percentage"
specified for the applicable Rating Category or Collateral Type Grouping in
Schedule I attached to this Agreement; provided, that if such CDO Eligible
Asset remains subject to an outstanding Transaction after the end of the
CDO Ramp-Up Period, the "Original Purchase Percentage" from and after such
time for purposes of calculating Target Price (as defined herein) or Margin
Deficit pursuant to Section 4(a) hereof shall be the "Original Purchase
Percentage" specified for the applicable Rating Category or Collateral Type
Grouping in Schedule I attached to this Agreement, and
(ii) with respect to any Transaction for a Non-CDO Eligible Asset
during the CDO Ramp-Up Period, or any Purchased Loan or Purchased Security
after the CDO Ramp-Up Period, the "Original Purchase Percentage" specified
for the applicable Rating Category or Collateral Type Grouping in Schedule
I attached to this Agreement.
"Original Repurchase Agreement" shall mean that Master Repurchase
Agreement, dated as of December 21, 2004, by and between Seller and Buyer.
"Originated Collateral" shall mean any Collateral that is an Eligible Loan
and whose Purchased Loan Documents were prepared by Seller.
"Permitted Purchased Loan Modification" shall mean any modification or
amendment of a Purchased Loan which is not a Significant Purchased Loan
Modification.
"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 by Seller or any ERISA Affiliate during the five year period ended
prior to the date of this Agreement or to which Seller or any ERISA Affiliate
makes, is obligated to make or has, within the five year period ended prior to
the date of this Agreement, been required to make contributions and that is
covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code,
other than a Multiemployer Plan.
"Portfolio Collateral" shall mean, collectively, the Portfolio Securities,
the Purchased Loans and the Supplemental Equity Collateral. Notwithstanding
anything to the contrary in this Agreement, the term "Portfolio Collateral"
shall include any New Collateral that the Buyer approves as Collateral for
inclusion in a Transaction and the Sponsor with the prior consent of the Buyer
causes to be owned by the Seller prior to the date the applicable Transaction is
consummated; provided that if, for any reason after the date on which the Seller
takes ownership of such New Collateral and prior to the date on which such
Transaction is consummated, it is determined that such New Collateral shall not
become Collateral for a Transaction (whether because the Buyer's approval is
revoked or the Sponsor decides not to consummate the Transaction or otherwise),
then the Seller shall by not later than the fifth (5th) Business Day after the
date such determination is made cause ownership of such New Collateral to be
transferred out of the Seller to another legal entity.
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"Portfolio Securities" shall mean, collectively, the Purchased Securities
and the Related Securities.
"Pre-Existing Collateral" shall mean any Collateral that is an Eligible
Loan and is not Originated Collateral.
"Preliminary Due Diligence Package" shall mean with respect to any New
Collateral, a summary memorandum outlining the proposed transaction, including
potential transaction benefits and all material underwriting risks, all
Underwriting Issues and all other characteristics of the proposed transaction
that a reasonable buyer would consider material, together with the following due
diligence information relating to the New Collateral to be provided by Seller to
Buyer pursuant to this Agreement:
With respect to each Eligible Loan:
(i) the Collateral Information;
(ii) current rent roll, if applicable;
(iii) cash flow pro-forma, plus historical information, if available;
(iv) description of the Mortgaged Property and the ownership structure
of the borrower and the sponsor (including, without limitation, the board
of directors, if applicable);
(v) indicative debt service coverage ratios;
(vi) indicative loan-to-value ratio;
(vii) term sheet outlining the transaction generally;
(viii) Seller's relationship with the Mortgagor, if any; and
(ix) with respect to any New Collateral that is Pre-Existing
Collateral, a list that specifically and expressly identifies any Purchased
Loan Documents that relate to such New Collateral but are not in Seller's
possession; and
(x) any exceptions to the representations and warranties set forth in
Exhibit VI to this Agreement.
With respect to each Eligible Security:
(i) collateral summary books which include, to the extent provided to
the Seller, the following:
(A) loan detail and asset description;
(B) maps and photos;
15
(C) rent roll;
(D) operating information; and
(E) appraisal, environmental, engineering summary;
(ii) loan data disk;
(iii) materials furnished to the Rating Agencies in connection with
the issuance of the Eligible Securities, to the extent provided to Seller;
(iv) Securitization Documents;
(v) remittance report for most recent period in Seller's possession;
(vi) quarterly remittance reports in Seller's possession;
(vii) accounting reports delivered with respect to the Eligible
Security in Seller's possession; and
(viii) legal opinions delivered with respect to the Eligible Security
in Seller's possession.
"Price Differential" shall mean, 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 Repurchase 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).
"Pricing Rate" shall mean, for any Pricing Rate Period, an annual rate
equal to the LIBO Rate for such Pricing Rate Period plus the relevant Applicable
Spread for such Transaction and shall be subject to adjustment and/or conversion
as provided in Sections 3(g) and 3(h) of this Agreement.
"Pricing Rate Determination Date" shall mean (a) in the case of the first
Pricing Rate Period with respect to any Transaction, the second (2nd) Business
Day preceding the first day of such Pricing Rate Period and (b) with respect to
any subsequent Pricing Rate Period, the second (2nd) Business Day preceding the
first day of the Pricing Rate Period commencing on and including the first
Remittance Date in a calendar month. Each Pricing Rate Determination Date after
the first Pricing Rate Period with respect to any Transaction, shall be
applicable to the immediately following two Pricing Rate Periods.
"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 excluding the following
Remittance Date, and (b) in the case of any subsequent Pricing Rate Period, the
period commencing on and including such Remittance
16
Date and ending on and excluding the following Remittance Date; 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 Loan or
Purchased Security, any payment or prepayment of principal received by the
Depository in respect thereof.
"Purchase Date" shall mean the date on which Purchased Securities are to be
transferred by Seller to Buyer.
"Purchase Price" shall mean, with respect to any Purchased Security or
Purchased Loan, the price at which such Purchased Security or Purchased Loan is
transferred by Seller to Buyer on the applicable Purchase Date. The Purchase
Price as of any Purchase Date for any Purchased Security or any Purchased Loan
shall be an amount (expressed in dollars) equal to the product obtained by
multiplying (i) the Market Value of such Purchased Security (or, if the Security
proposed to be included in a Transaction is being or was acquired by the Seller
from the Sponsor, the acquisition cost of the Sponsor in such Security, if lower
than the Market Value) or such Purchased Loan (or the par amount of such
Purchased Loan, if lower than Market Value) by (ii) the "Original Purchase
Percentage" for such Purchased Security or such Purchased Loan, as defined in
this Agreement; provided, that notwithstanding the foregoing, the Seller may
request that the Purchase Price set forth in a Confirmation be determined by
applying a percentage lower than the Original Purchase Percentage, as defined in
this Agreement, and, in such event, such lower percentage shall be deemed the
"Original Purchase Percentage" for purposes of the calculation of the Target
Price but not for any other purpose under the Agreement.
"Purchased Loan File" shall mean the documents specified as the "Purchased
Loan File" in Section 7(e), together with any additional documents and
information required to be delivered to Buyer or its designee (including the
Custodian) pursuant to this Agreement.
"Purchased Loan Documents" shall mean, with respect to a Purchased Loan,
the documents comprising the Purchased Loan File for such Purchased Loan.
"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 collateral delivered by Seller to Buyer pursuant to Section 4(a)
of this Agreement.
"Purchased Loan Schedule" shall mean a schedule of Purchased Loans attached
to each Trust Receipt and Custodial Delivery containing information
substantially similar to the Collateral Information.
"Purchased Securities" shall mean, (i) with respect to any Transaction, the
Eligible Securities sold by Seller to Buyer in such Transaction, and (ii) with
respect to the Transactions in general, all Eligible Securities sold by Seller
to Buyer and any additional collateral delivered by Seller to Buyer pursuant to
Section 4(a) of this Agreement.
"Rating Agency" shall mean any of Fitch Inc., ▇▇▇▇▇'▇ Investor Services,
Inc. and Standard & Poor's Ratings Group, a division of the ▇▇▇▇▇▇-▇▇▇▇
Companies.
17
"Rating Category" shall mean any of the rating categories listed in
Schedule I attached to this Agreement.
"Reference Banks" shall mean banks each of which shall (i) be a leading
bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency market and (ii) have an established place of business in London.
Initially, the Reference Banks shall be JPMorgan Chase Bank, Barclays Bank, Plc
and Deutsche Bank AG. If any such Reference Bank should be unwilling or unable
to act as such or if the 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, the Buyer in the exercise of its good faith
business judgment may designate alternative banks meeting the criteria specified
in clauses (i) and (ii) above.
"Related Securities" shall mean commercial mortgage backed securities
(other than the Purchased Securities) issued as part of the same transaction as
the transaction in which the Purchased Securities are issued and having a lower
rating than such Purchased Securities or having no rating.
"Relevant System" shall mean (a) The Depository Trust Company in New York,
New York, or (b) such other clearing organization or book-entry system as is
designated in writing by the Buyer.
"Remittance Date" shall mean each of the tenth (10th) calendar day and the
twentieth (20th) calendar day of each month, or the next succeeding Business
Day, if either such calendar day shall not be a Business Day, or such other day
as is mutually agreed to by Seller and Buyer.
"Replacement Collateral" shall have the meaning specified in Section
14(b)(ii) of this Agreement.
"Repurchase Date" shall mean the last Business Day prior to the third
anniversary of December 21, 2004; provided, however, that if all of the
Extension Conditions described in Section 3(e) of this Agreement shall be timely
satisfied, the Repurchase Date shall be extended for an additional twelve (12)
months following the initial Repurchase Date.
"Repurchase Price" shall mean, with respect to any Purchased Securities or
Purchased Loans as of any date, the price at which such Purchased Securities or
Purchased Loans are to be transferred from Buyer to Seller upon termination of
the related Transaction; such price will be determined in each case as the sum
of the Purchase Price of such Purchased Securities or Purchased Loans (or
adjusted Purchase Price, if applicable, in the case of the Purchased Securities
or Purchased Loans which are CDO Eligible Assets with an elected Original
Purchase Percentage of 77%) and the Price Differential with respect to such
Purchased Securities or Purchased Loans as of the date of such determination,
minus all Income and cash actually received by Buyer in respect of such
Transaction pursuant to Sections 4(a), 5(b), 5(c), 5(d), 5(e) and 5(f) of this
Agreement.
"Requirement of Law" shall mean any law, treaty, rule, regulation, code,
directive, policy, order or requirement or determination of an arbitrator or a
court or other governmental authority whether now or hereafter enacted or in
effect.
18
"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 the 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.
"Securities Account" shall mean a securities account or other account
acceptable to Buyer the control of which in each case may be shifted to Buyer
upon the occurrence of an Event of Default and which consists solely of cash
and/or Permitted Investments (as defined in the Custodial Agreement) and/or CMBS
and/or other investments acceptable to Buyer.
"Securitization Document" shall mean, with respect to any Eligible
Securities, any pooling and servicing agreement or other agreement governing the
issuance and administration of such Eligible Securities.
"Seller" shall mean NRFC DB Holdings, LLC, a Delaware limited liability
company.
"Seller's Equity" shall mean an aggregate amount equal to the sum of the
Equity with respect to each Purchased Loan and Purchased Security and
Supplemental Equity Collateral, which amount and its relationship to the Minimum
Seller's Equity Requirement (i.e. lower than on the one hand or equal to or
greater than on the other hand) shall determine the applicable "Original
Purchase Percentage," "CF Sweep Purchase Percentage" and "Margin Maintenance
Percentage" for each Transaction and the then current amount of the Repurchase
Price (excluding Price Differential) covered by the Guaranty.
"Servicing Agreement" shall have the meaning specified in Section 29(b).
"Servicing Records" shall have the meaning specified in Section 29(b).
"Significant Purchased Loan Modification" means 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,
19
(iii) modifies the regularly scheduled payments of principal and
non-contingent interest 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 in question
or the payment priority of the Purchased Loan in question other than
subordinations required under the then existing terms and conditions of the
Purchased Loan in question (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 the 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 in question 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 documentation, or
(viii) waives any due-on-sale or due-on-encumbrance provisions of the
Purchased Loan in question other than waivers required to be given under
the then existing Purchased Loan documents.
"Single-Purpose Entity" shall mean a Person, other than an individual,
which is formed or organized solely for the purpose of holding, directly and
subject to this Agreement, the Portfolio Collateral, does not engage in any
business unrelated to the Portfolio Collateral and the financing thereof, does
not have any assets other than the Portfolio Collateral and the financing
thereof, or any indebtedness other than as permitted by this Agreement, has its
own separate books and records and its own accounts, in each case which are
separate and apart from the books and records and accounts of any other Person,
and holds itself out as being a Person, separate and apart from any other
Person.
"Sponsor" shall mean Northstar Realty Finance Corp., a Maryland
corporation.
"Supplemental Due Diligence List" shall mean, with respect to any New
Collateral, information or deliveries concerning the New Collateral that Buyer
shall reasonably request in addition to the Preliminary Due Diligence Package.
"Supplemental Equity Collateral" shall mean cash or cash equivalents or
other assets, if any, which Seller places in Buyer's sole possession and control
and which Buyer elects in its sole discretion to permit Seller to own and to
ascribe value to for the purpose of inclusion in Seller's Equity in order to
meet the Minimum Seller's Equity Requirement.
20
"Survey" shall mean a certified ALTA/ACSM (or applicable state standards
for the state in which the Collateral is located) survey of a Mortgaged Property
prepared by a registered independent surveyor or engineer and in form and
content satisfactory to the Buyer and the company issuing the Title Policy for
such Property.
"Target Price" shall mean, with respect to any Purchased Securities or
Purchased Loans as of any date, the amount (expressed in dollars) obtained by
multiplying (i) the Market Value of such Purchased Securities or Purchased Loans
as of such date by (ii) the "Original Purchase Percentage" for such Purchased
Securities or such Purchased Loans, as defined in this Agreement.
"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).
"Title Policy" shall have the meaning specified in paragraph 8 of the first
paragraph of Exhibit VI.
"Transaction Conditions Precedent" shall have the meaning specified in
Section 3(b) of this Agreement.
"Transaction Documents" shall mean, collectively, this Agreement, any
applicable Annexes to this Agreement, the Guaranty, the Custodial Agreement and
all Confirmations executed pursuant to this Agreement in connection with
specific Transactions.
"Trustee" shall mean, with respect to any Eligible Securities, the trustee
under the Securitization Document applicable to such Eligible Securities.
"Trust Receipt" shall mean a trust receipt issued by Custodian to Buyer
confirming the Custodian's possession of certain Purchased Loan Files which are
the property of and held by Custodian for the benefit of the Buyer (or any other
holder of such trust receipt) or a bailment arrangement with counsel or other
third party acceptable to Buyer in its sole discretion.
"UCC" shall have the meaning specified in Section 6 of this Agreement.
"Underwriting Issues" shall mean, with respect to any Collateral as to
which Seller intends to request a Transaction, all material information that has
come to Seller's attention that, based on the making of reasonable inquiries and
the exercise of reasonable care and diligence under the circumstances, would be
considered a materially "negative" factor (either separately or in the aggregate
with other information), or a material defect in loan documentation or closing
deliveries (such as any absence of any material Purchased Loan Document(s)), to
a reasonable institutional mortgage Buyer in determining whether to originate or
acquire the Collateral in question.
"Usage Fee" shall have the meaning specified in Section 3(f)(i) of this
Agreement.
21
3. INITIATION; CONFIRMATION; TERMINATION; FEES
(a) Subject to the terms and conditions set forth in this Agreement
(including, without limitation, the "Transaction Conditions Precedent" specified
in Section 3(b) of this Agreement), an agreement to enter into a Transaction
shall be made in writing at the initiation of Seller as provided below;
provided, however, that (i) the aggregate Repurchase Price (excluding the Price
Differential with respect to the Purchased Securities and Purchased Loans as of
the date of determination) for all Transactions shall not exceed the Facility
Amount and (ii) the Buyer shall not have any obligation to enter into
Transactions with the Seller after the Business Day prior to the three year
anniversary date of the date of the Agreement. Seller shall give Buyer written
notice of each proposed Transaction, including (x) designation of any assets
during the CDO Ramp-Up Period as CDO Eligible Assets or Non-CDO Eligible Assets
and (y) with respect to any CDO Eligible Assets during the CDO Ramp-Up Period,
Seller's election of the Original Purchase Percentage as defined for such asset
(i.e., an Original Purchase Percentage equal to 77% or as specified for the
applicable Rating Category or Collateral Type Grouping in Schedule I attached to
this Agreement); provided, that, with respect to any CDO Eligible Asset during
the CDO Ramp-Up Period, if Seller elects an Original Purchase Percentage equal
to 77% instead of the "Original Purchase Percentage" specified for the
applicable Rating Category or Collateral Type Grouping in Schedule I attached to
this Agreement, then Seller shall be obligated to meet the requirements set
forth in Section 12(r) of this Agreement. Any assets designated as CDO Eligible
Assets by Seller shall conform (in approximate terms as acceptable to Buyer) to
the parameters set forth in Schedule II attached to this Agreement. Buyer shall
inform Seller of Buyer's determination with respect to any assets proposed to be
sold to Buyer by Seller solely in accordance with Exhibit VIII attached hereto.
Buyer shall have the right to review all Eligible Loans and Eligible Securities
proposed to be sold to Buyer in any Transaction and to conduct its own due
diligence investigation of such Eligible Loans and Eligible Securities as Buyer
reasonably determines. Buyer shall be entitled to make a determination, in the
exercise of its good faith business judgment, that it shall or shall not
purchase any or all of the assets proposed to be sold to Buyer by Seller. On the
Purchase Date for the Transaction which shall be not less than three (3)
Business Days following the approval of an Eligible Loan or an Eligible Security
by the Buyer in accordance with Exhibit VIII hereto, 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 Buyer agreeing to enter into a Transaction hereunder, provided
each of the Transaction Conditions Precedent (as hereinafter defined) shall have
been satisfied (or waived by Buyer), Buyer shall promptly deliver to Seller a
written confirmation in the form of Exhibit I attached hereto of each
Transaction (a "Confirmation"). Such Confirmation shall describe the Purchased
Securities (including CUSIP number, if any) and/or Purchased Loans, shall
identify Buyer and Seller, and shall set forth:
(i) the Purchase Date,
(ii) the Purchase Price for such Purchased Securities and/or
Purchased Loans,
(iii) the Repurchase Date,
22
(iv) the Pricing Rate (including the Applicable Spread) applicable
to the Transaction (with respect to CDO Eligible Assets, during
and after the CDO Ramp-Up Period, as applicable),
(v) the Buyer's Margin Percentage (with respect to any CDO Eligible
Asset during the CDO Ramp-Up Period, both the Buyer's Margin
Percentage during the CDO Ramp-Up Period and after the CDO
Ramp-Up Period),
(vi) solely with respect to CDO Eligible Assets for which a 77%
Original Purchase Percentage is elected, the amount (which may
be set forth in an attachment to such Confirmation) required to
be deposited into the Securities Account or provided as a
Letter of Credit, and
(vii) any additional terms or conditions not inconsistent with this
Agreement. 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 this
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. For purposes of
this Section 3(b), the "Transaction Conditions Precedent" shall
be deemed to have been satisfied with respect to any proposed
Transaction if:
(A) no Default or Event of Default under this Agreement shall
have occurred and be continuing as of the Purchase Date for such
proposed Transaction;
(B) Seller shall have certified to Buyer in writing the
acquisition cost of such Assets (including therein reasonable
supporting documentation required by the Buyer, if any);
(C) the representations and warranties made by Seller in any of
the Transaction Documents shall be true and correct in all material
respects as of the Purchase Date for such Transaction (except to the
extent such representations and warranties are made as of a particular
date);
(D) Buyer shall have (A) determined, in accordance with the
applicable provisions of Section 3(a) of this Agreement, that the
Assets proposed to be sold to Buyer by Seller in such Transaction are
Eligible Securities and/or Eligible Loans and (B) obtained internal
credit approval for the inclusion of such Eligible Securities and/or
Eligible Loans as Purchased Securities and/or Purchased Loans in a
Transaction and that following the consummation of the proposed
Transaction, the Concentration Limit shall be satisfied;
23
(E) Seller shall have paid to Buyer the Usage Fee due and payable
(which amount, upon the agreement of Buyer and Seller, may be held
back from funds remitted to Seller by Buyer); and
(F) with respect to any proposed Transaction for Securities in
the event the Seller or an Affiliate of the Seller owns the Related
Securities, the Seller shall have caused ownership of the Related
Securities to be transferred to the Seller simultaneous with or prior
to the purchase of the Purchased Securities by Buyer and delivered to
the Buyer a power of attorney, bond powers and any other documentation
reasonably required by the Buyer sufficient to permit the Buyer upon
the occurrence and during the continuance of an Event of Default to
register the transfer of the Related Securities from Seller to Buyer
or its designee.
(c) Each Confirmation, together with this Agreement, shall be conclusive
evidence of the terms of the Transaction(s) covered thereby unless specific
objection is made no less than three (3) Business Days after the date thereof.
In the event of any conflict between the terms of such Confirmation and the
terms of this Agreement, the Confirmation shall prevail. An objection 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 the Seller
believes such provisions should be stated, and must be received by Buyer no more
than three (3) Business Days after such Confirmation is received by Seller.
(d) No Transaction shall be terminable on demand by Buyer (other than upon
the occurrence and during the continuance of an Event of Default by Seller).
Seller shall be entitled to terminate a Transaction in whole or in part on
demand and repurchase all or a portion of the Purchased Securities and/or
Purchased Loans subject to a Transaction on any Business Day prior to the
Repurchase Date (an "Early Repurchase Date"); provided, however, that:
(i) Seller repurchases on such Early Repurchase Date, all or the
applicable portion of the Purchased Securities and/or Purchased
Loans subject to such Transaction which Seller has elected to
repurchase,
(ii) Seller notifies Buyer in writing of its intent to terminate
such Transaction and repurchase such Purchased Securities
and/or Purchased Loans no later than five (5) Business Days
prior to such Early Repurchase Date,
(iii) on such Early Repurchase Date Seller pays to Buyer an amount
equal to the sum of the Repurchase Price for such Transaction
(or, in the case of a termination of a Transaction in part an
amount acceptable to the Buyer in the exercise of its good
faith business judgment but not more than such Repurchase
Price), the Exit Fee, if any, and any other amounts payable
under this Agreement (including, without limitation, Section
3(i) of this Agreement) with respect to such Transaction
against transfer to the Seller or its agent of such Purchased
Securities and/or Purchased Loans, and
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(iv) on such Early Repurchase Date, in addition to the amounts set
forth in subclause (iii) above, Seller pays to Buyer, on
account of each Purchased Security or Purchased Loan not
subject to termination, an amount sufficient to reduce the
Repurchase Price for each Purchased Security and each Purchased
Loan to the Target Price for each such Purchased Security and
Purchased Loan.
Such notice shall set forth the Early Repurchase Date and shall identify with
particularity the Purchased Securities and/or Purchased Loans to be repurchased
on such Early Repurchase Date.
(e) On the Repurchase Date, termination of the Transactions will be
effected by transfer to Seller or its agent of the Purchased Securities and
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 5 of this Agreement) against the simultaneous transfer of
the Repurchase Price to an account of Buyer. Notwithstanding the foregoing,
provided all of the Extension Conditions (as hereinafter defined) shall have
been satisfied, the Repurchase Date shall be extended with respect to all of the
Transactions until the first (1st) anniversary of the originally scheduled
Repurchase Date (or if such day is not a Business Day, the next succeeding
Business Day) (all of the other terms and conditions of such Transactions
remaining the same). For purposes of the preceding sentence, the "Extension
Conditions" shall be deemed to have been satisfied if:
(i) Seller shall have given Buyer written notice, not less than
thirty (30) days prior to the originally scheduled Repurchase
Date, of Seller's desire to extend the Repurchase Date;
provided; that if Seller fails to give such notice, the Seller
shall be deemed to have notified Buyer of its desire to extend
the originally scheduled Repurchase Date,
(ii) no Default or Event of Default under this Agreement shall have
occurred and be continuing as of the originally scheduled
Repurchase Date,
(iii) Seller shall have paid Buyer an extension fee in an amount
equal to one-quarter of one percent (0.25%) of the aggregate
outstanding Repurchase Price of all Transactions as of the
Business Day prior to the originally scheduled Repurchase Date,
and
(iv) on the originally scheduled Repurchase Date, in addition to the
amounts set forth in subclause (iii) above, Seller pays to
Buyer, on account of each Purchased Security or Purchased Loan,
an amount sufficient to reduce the Repurchase Price for each
Purchased Security and each Purchased Loan to the Target Price
for each such Purchased Security and Purchased Loan.
In the event the Repurchase Date is extended pursuant to this Section 3(e) of
this Agreement, then Seller shall be required to terminate all Transactions in
part (without the payment of any Exit Fee if the termination payment is not made
in connection with an Early Repurchase Date) by paying 25%, 50% and 75% of the
aggregate outstanding Repurchase Price, determined as of the Business Day prior
to the third anniversary of the date of this Agreement, by not later than
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the later of the Remittance Dates occurring in March, June and September 2008,
respectively (including, without limitation, by terminating Transactions on
demand on Early Repurchase Dates pursuant to Section 3(d))and by paying any
unpaid portion of the Repurchase Price of all Transactions on the Repurchase
Date.
(f)
(i) On the last day of the CDO Ramp-Up Period, Seller shall pay Buyer
a usage fee (a "Usage Fee") in an amount equal to 0.60% of the
Purchase Price specified in the related Confirmation with respect
to each Transaction consummated during the CDO Ramp-Up Period
where the related Purchased Loan or Purchased Security was not
included in a DBSI CDO. After the CDO Ramp-Up Period, on each
Purchase Date, Seller shall pay Buyer a Usage Fee in an amount
equal to 0.60% of the Purchase Price specified in the related
Confirmation with respect to such Transaction. If a DBSI CDO is
consummated during the CDO Ramp-Up Period and Sponsor or its
Affiliate is obligated to pay to Deutsche Bank Securities, Inc.
any structuring and placement fees in connection therewith,
Sponsor or its Affiliate, as applicable, shall be entitled to
credit any Usage Fees (as defined in the Original Repurchase
Agreement) paid under the Original Repurchase Agreement during
the period from December 21, 2004 through the date of this
Agreement against such structuring and placement fees.
(ii) Seller shall pay Buyer the Exit Fee with respect to any
Transaction which is terminated for any reason (other than an
Event of Default on the part of the Buyer) prior to the
Repurchase Date; provided, that the Exit Fee shall be waived by
the Buyer if the reason for the termination is (1) principal
payments (including prepayments and repayments) received on the
related Purchased Securities or Purchased Loans (whether at
maturity or otherwise), (2) the related Purchased Securities or
Purchased Loans are simultaneously included in a DBSI CDO, (3)
the Market Value determined by the Buyer for such Purchased
Securities or Purchased Loans has decreased by more than 25% from
such Market Value as of the related Purchase Date or (4) if the
DBSI CDO is not consummated during the CDO Ramp-Up Period and
Deutsche Bank Securities, Inc. has terminated its engagement to
underwrite a DBSI CDO on or before the end of the CDO Ramp-Up
Period.
(g) If prior to the first day of any Pricing Rate Period with respect to
any Transaction, (i) Buyer shall have determined in the exercise of its
reasonable business judgment (which determination shall be conclusive and
binding upon Seller) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining 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 determined and certified by Buyer) of making or
maintaining Transactions during such Pricing Rate Period, Buyer shall give
telecopy or telephonic notice thereof to Seller as soon as
26
practicable thereafter. If such notice is given, the Pricing Rate with respect
to such Transaction for such Pricing Rate Period, and for any subsequent Pricing
Rate Periods until such notice has been withdrawn by Buyer, shall be a per annum
rate equal to the Federal Funds Rate plus the Applicable Spread (the
"Alternative Rate").
(h) Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
shall make it unlawful for Buyer to effect Transactions as contemplated by the
Transaction Documents, (a) the commitment of Buyer hereunder to enter into new
Transactions and to continue Transactions as such shall forthwith be canceled,
and (b) the Transactions then outstanding shall be converted automatically to
Alternative Rate Transactions on the last day of the then current Pricing Rate
Period or within such earlier period as may be required by law. If any such
conversion of a Transaction occurs on a day which is not the last day of the
then current Pricing Rate Period with respect to such Transaction, Seller shall
pay to Buyer such amounts, if any, as may be required pursuant to Section 3(i)
of this Agreement.
(i) Upon demand by Buyer, Seller shall indemnify Buyer and hold Buyer
harmless from any net actual, out-of-pocket loss or expense (not to include any
lost profit or opportunity) (including, without limitation, reasonable
attorneys' fees and disbursements) which Buyer may sustain or incur as a
consequence of (i) default by the Seller in terminating any Transaction after
the Seller has given a notice in accordance with Section 3(d) of a termination
of a Transaction, (ii) any payment of the Repurchase Price on any day other than
a Remittance Date or the Repurchase Date (including, without limitation, any
such reasonable actual, out-of-pocket 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)
or (iii) a default by Seller in selling Eligible Securities after Seller has
notified Buyer of a proposed Transaction and Buyer has agreed to purchase such
Eligible Securities in accordance with the provisions of this 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 prima facie evidence of the information set forth therein.
(j) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof by any Governmental Authority or
compliance by Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority having
jurisdiction over Buyer made subsequent to the date hereof:
(i) shall subject Buyer to any tax of any kind whatsoever with
respect to the Transaction Documents, any Purchased Security or
Purchased Loan or any Transaction, or change the basis of
taxation of payments to Buyer in respect thereof (except for
income taxes and any changes in the rate of tax on Buyer's
overall net income);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of
27
Buyer which is not otherwise included in the determination of
the LIBO Rate hereunder; or
(iii) shall impose on Buyer any other condition;
and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems, in the exercise of its reasonable business judgment,
to be material, of entering into, continuing or maintaining Transactions or to
reduce any amount receivable under the Transaction Documents in respect thereof;
then, in any such case, Seller shall promptly pay Buyer, upon its demand, any
additional amounts necessary to compensate Buyer for such increased cost or
reduced amount receivable. If Buyer becomes entitled to claim any additional
amounts pursuant to this Section 3(j), it shall, within ten (10) Business Days
of such event, notify Seller of the event by reason of which it has become so
entitled. Such notification as to the calculation of any additional amounts
payable pursuant to this subsection shall be submitted by Buyer to Seller and
shall be prima facie evidence of such additional amounts. This covenant shall
survive the termination of this Agreement and the repurchase by Seller of any or
all of the Purchased Securities and Purchased Loans.
(k) If Buyer shall have determined that the adoption of or any change in
any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by Buyer or any corporation controlling Buyer
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the date
hereof does or shall have the effect of reducing the rate of return on Buyer's
or such corporation's capital as a consequence of its obligations hereunder to a
level below that which Buyer or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration Buyer's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
Buyer, in the exercise of its reasonable business judgment, to be material, then
from time to time, after submission by Buyer to Seller of a written request
therefor, Seller shall pay to Buyer such additional amount or amounts as will
compensate Buyer for such reduction. Such notification as to the calculation of
any additional amounts payable pursuant to this subsection shall be submitted by
Buyer to Seller and shall be prima facie evidence of such additional amounts.
This covenant shall survive the termination of this Agreement and the repurchase
by Seller of any or all of the Purchased Securities and Purchased Loans.
(a) Seller shall have the right, from time to time and without the payment
of any Exit Fee, to transfer cash to Buyer for the purpose of reducing the
Repurchase Price on, but not terminating, a Transaction for a Purchased Security
or Purchased Loan on a date before the Repurchase Date; provided that, any Exit
Fee required to be paid in connection with a repurchase on an Early Repurchase
Date of a Purchased Security or Purchased Loan previously subject to any
Repurchase Price reduction pursuant to this Section 3(l) shall be calculated by
using the Repurchase Price calculated without regard to any reduction pursuant
to this Section 3(l) of this Agreement.
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4. MARGIN MAINTENANCE
(a) If, at any time (including, with respect to any Purchased Security or
Purchased Loan, by way of failure of any of the representations and warranties
set forth in Section 10(B)(vii), (ix) or (xx) (in the case of clause (xx), with
respect to the affected Purchased Securities or Purchased Loans only)), the
Market Value of any of the Purchased Securities or any of the Purchased Loans
shall be less than the Buyer's Margin Amount for such Purchased Securities or
Purchased Loans, respectively (a "Margin Deficit"), then Buyer may by notice to
Seller require Seller to transfer to Buyer (without the payment of any Exit Fee)
(A) cash or (B) additional collateral acceptable to Buyer in its sole and
absolute discretion, so that the sum obtained by adding the Market Value of each
of the Purchased Securities or Purchased Loans for which a Margin Deficit exists
plus such cash and additional collateral shall equal or exceed the Deficit Cure
Amount for such Purchased Securities or Purchased Loans, respectively, as of the
same date. Seller's failure to cure any Margin Deficit as required by the
preceding sentence shall constitute an Event of Default under the Transaction
Documents and shall entitle Buyer to exercise its remedies under Section 14 of
this Agreement (including, without limitation, the liquidation remedy provided
for in Section 14(a)(iv) of this Agreement).
(b) If any time the Market Value of any Purchased Security in any Rating
Category or Purchased Loan in any Collateral Type Grouping multiplied by the
"Original Purchase Percentage" for such Rating Category or such Collateral Type
Grouping (or in the case of a CDO Eligible Asset during the CDO Ramp-Up Period,
the Original Purchase Percentage equal to 77%, if so elected by Seller) as such
Original Purchase Percentage may be adjusted in accordance with this Agreement
shall be greater than the Repurchase Price for the Transaction relating to such
Purchased Security or Purchased Loan, respectively (a "Margin Excess") then
Seller may by notice to Buyer require Buyer to transfer to Seller cash in an
amount (expressed in dollars) up to the Margin Excess; provided, that any such
transfer of cash (1) shall be subject to the restrictions set forth in the
parenthetical in and the proviso to the definition of "Purchase Price", (2)
shall not be in an amount less than $500,000 and (3) shall be evidenced by
amended and restated Confirmations.
(c) If any notice is given by Buyer under Section 4(a) of this Agreement on
any Business Day, the Seller shall transfer cash or additional collateral as
provided in Section 4(a) by no later than seventy-two (72) hours after the
giving of such notice. Notice required pursuant to Section 4(a) of this
Agreement may be given by any means of telecopier or telegraphic transmission
and shall be delivered in accordance with the terms of this Agreement. The
failure of Buyer, on any one or more occasions, to exercise its rights under
Section 4(a) of this Agreement shall not change or alter the terms and
conditions to which this Agreement is subject or limit the right of Buyer or
Seller to do so at a later date. Buyer and Seller agree that any failure or
delay by Buyer to exercise its rights under Section 4(a) of this Agreement shall
not limit such party's rights under this Agreement or otherwise existing by law
or in any way create additional rights for such party.
(d) Any additional collateral transferred to Buyer pursuant to Section 4(a)
of this Agreement with respect to any Purchased Securities or any Purchased
Loans shall be attributed to increasing the aggregate Market Value of such
Purchased Securities or Purchased Loans, respectively, for which there was a
Margin Deficit. Any cash transferred to Buyer pursuant to
29
Section 4(a) of this Agreement with respect to any Purchased Securities or any
Purchased Loans shall be attributed to decreasing the Repurchase Price for such
Purchased Security or Purchased Loan, respectively, for which there was a Margin
Deficit.
5. INCOME PAYMENTS AND PRINCIPAL PAYMENTS
(a) The Cash Management Account shall be established at the Depository
concurrently with the execution and delivery of this Agreement by Seller and
Buyer. Buyer shall have sole dominion and control over the Cash Management
Account, which shall be an interest-bearing account as to which the Seller has
"view only" rights. All Income in respect of the Portfolio Collateral and any
payments in respect of associated Hedging Transactions, as well as any interest
received from the reinvestment of such Income, shall be deposited directly into
the Cash Management Account and shall be remitted by the Depository in
accordance with the applicable provisions of Sections 5(b), 5(c), 5(d), 5(e),
5(f) and 14(a)(i) of this Agreement.
(b) With respect to Purchased Loans, Seller shall deliver to each
Mortgagor, issuer of a participation or borrower under a Purchased Loan an
irrevocable direction letter in the form attached as Exhibit IX to this
Agreement instructing the Mortgagor, issuer of a participation or borrower to
pay all amounts payable under the related Purchased Loan to the Cash Management
Account and shall provide to Buyer proof of such delivery. If a Mortgagor,
issuer of a participation or borrower forwards any Income with respect to a
Purchased Loan to Seller rather than directly to the Cash Management Account,
Seller shall (i) deliver an additional irrevocable direction letter to the
applicable Mortgagor, issuer of a participation or borrower and make other
commercially reasonable efforts to cause such Mortgagor, issuer of a
participation or borrower to forward such amounts directly to the Cash
Management Account and (ii) immediately deposit in the Cash Management Account
any such amounts.
(c) So long as no Event of Default or CF Sweep Event shall have occurred
and be continuing, all Income received by the Depository in respect of the
Portfolio Collateral and the associated Hedging Transactions (other than
Principal Payments and net sale proceeds) during each Collection Period shall be
applied by the Depository on the related Remittance Date as follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding as of such
Remittance Date;
(ii) second, to remit to counterparties of the associated Hedging
Transactions an amount equal to the payments required, if any,
on such associated Hedging Transactions as of the such
Remittance Date; and
(iii) third, to remit to Seller the remainder, if any.
(d) So long as no Event of Default or CF Sweep Event shall have occurred
and be continuing, any Principal Payment and any net sale proceeds in excess of
the related Repurchase Price in respect of any Portfolio Collateral which is a
portion of the Income received by the Depository during each Collection Period
shall be applied by the Depository on the related Remittance Date in the
following order of priority:
30
(i) first, to make a payment to Buyer on account of the Repurchase
Price of the Purchased Securities or Purchased Loans in respect
of which such Principal Payment has been received, until the
Repurchase Price for such Purchased Securities or Purchased
Loans has been reduced to the Target Price for such Purchased
Securities or Purchased Loans, respectively as of the date of
such payment (as determined by Buyer after giving effect to
such Principal Payment);
(ii) second, to make a payment on account of the Repurchase Price of
any other Purchased Securities or Purchased Loans as to which
the Repurchase Price exceeds the Target Price (for this
purpose, making such payment in the order of those Purchased
Securities or Purchased Loans with the largest to smallest
excess of Repurchase Price over Target Price), until the
aggregate Repurchase Price for all of such Purchased Securities
or Purchased Loans has been reduced to the aggregate Target
Price for all of the Purchased Securities or Purchased Loans,
respectively as of the date of such payment (as determined by
Buyer after giving effect to such Principal Payment and
application of net sale proceeds); and
(iii) third, to remit to Seller the remainder of such Principal
Payment or net sale proceeds.
(e) If a CF Sweep Event shall have occurred and be continuing, all Income
(including Principal Payments and any net sale proceeds in excess of the related
Repurchase Price) received by the Depository in respect of the Portfolio
Collateral and the associated Hedging Transactions during each Collection Period
shall be applied by the Depository on the related Remittance Date in the
following order of priority:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding in respect of
all of the Purchased Securities and Purchased Loans as of such
Business Day;
(ii) second, to make a payment to Buyer on account of the Repurchase
Price of the Purchased Securities or Purchased Loans in respect
of which such CF Sweep Event occurred, until the Repurchase
Price for such Purchased Securities or Purchased Loans has been
reduced to the amount (expressed in dollars) obtained by
multiplying (i) the Market Value of such Purchased Securities
or Purchased Loans as of such date by (ii) the "CF Sweep
Purchase Percentage" applicable to such Purchased Securities or
Purchased Loans, as set forth in Schedule I attached to this
Agreement, respectively as of the date of such payment (as
determined by Buyer after giving effect to such Principal
Payment and application of net sale proceeds);
(iii) third, to make a payment on account of the Repurchase Price of
any other Purchased Securities or Purchased Loans as to which a
CF Sweep Event shall have occurred (for this purpose, making
such payment in the order of
31
those Purchased Securities or Purchased Loans whose Repurchase
Price exceeds the product of the related Market Value by the
related "CF Purchase Sweep Percentage" by the largest to
smallest excess), until the aggregate Repurchase Price for all
of such Purchased Securities or Purchased Loans has been
reduced to the amount (expressed in dollars) obtained by
multiplying (i) the Market Value of such Purchased Securities
or Purchased Loans as of such date by (ii) the "CF Sweep
Purchase Percentage" applicable to such Purchased Securities or
Purchased Loans, as set forth in Schedule I attached to this
Agreement, respectively as of the date of such payment (as
determined by Buyer after giving effect to such Principal
Payment and application of net sale proceeds);
(iv) fourth, to make a payment to Buyer on account of the Repurchase
Price of the Purchased Securities or Purchased Loans in respect
of which such Principal Payment has been received, until the
Repurchase Price for such Purchased Securities or Purchased
Loans has been reduced to the Target Price for such Purchased
Securities or Purchased Loans, respectively as of the date of
such payment (as determined by Buyer after giving effect to
such Principal Payment and application of net sale proceeds);
(v) fifth, to make a payment on account of the Repurchase Price of
any other Purchased Securities or Purchased Loans as to which
the Repurchase Price exceeds the Target Price (for this
purpose, making such payment in the order of those Purchased
Securities or Purchased Loans with the largest to smallest
excess of Repurchase Price over Target Price), until the
aggregate Repurchase Price for all of such Purchased Securities
or Purchased Loans has been reduced to the aggregate Target
Price for all of the Purchased Securities or Purchased Loans,
respectively as of the date of such payment (as determined by
Buyer after giving effect to such Principal Payment and
application of net sale proceeds);
(vi) sixth, to remit to counterparties of the associated Hedging
Transactions an amount equal to the payments required, if any,
on such associated Hedging Transactions as of such Business
Day; and
(vii) seventh, to remit to Seller the remainder.
(f) If an Event of Default shall have occurred and be continuing, all
Income received by the Depository in respect of the Portfolio Collateral and the
associated Hedging Transactions shall be applied by the Depository on the
Business Day next following the Business Day on which such funds are deposited
in the Cash Management Account as follows:
(i) first, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding in respect of
all of the Purchased Securities and Purchased Loans as of such
Business Day;
32
(ii) second, to make a payment to Buyer on account of the Repurchase
Price of the Purchased Securities and Purchased Loans until the
Repurchase Price for all of the Purchased Securities and all of
the Purchased Loans has been reduced to zero;
(iii) third, to remit to counterparties of the associated Hedging
Transactions an amount equal to the payments required, if any,
on such associated Hedging Transactions as of such Business
Day; and
(iv) fourth, to remit to Seller the remainder.
6. SECURITY INTEREST
The Buyer and Seller intend that all Transactions hereunder be sales to the
Buyer of the Purchased Securities and Purchased Loans and not loans from the
Buyer to Seller secured by the Purchased Securities and Purchased Loans.
However, in the event any such Transaction is deemed to be a loan, Seller hereby
pledges all of its right, title, and interest in, to and under and grants a
first priority lien on, and security interest in, all of the following property,
whether now owned or hereafter acquired, now existing or hereafter created and
wherever located (collectively, the "Collateral") to the Buyer to secure the
payment and performance of all other amounts or obligations owing to the Buyer
pursuant to this Agreement and the related documents described herein:
(a) the Purchased Securities and all "securities accounts" (as defined in
Section 8-501(a) of the UCC) to which any or all of the Purchased Securities are
credited;
(b) the Purchased Loans, Purchased Loan Documents, Servicing Agreements,
Servicing Records, insurance relating to the Purchased Loans, and collection and
escrow accounts relating to the Purchased Loans;
(c) the Hedging Transactions;
(d) the Cash Management Account and all monies from time to time on deposit
in the Cash Management Account;
(e) all "general intangibles", "accounts" and "chattel paper" as defined in
the UCC relating to or constituting any and all of the foregoing; and
(f) all replacements, substitutions or distributions on or proceeds,
payments, Income and profits of, and records (but excluding any financial models
or other proprietary information) and files relating to any and all of any of
the foregoing.
The Buyer's security interest in the Collateral shall terminate only upon
termination of the Seller's obligations under this Agreement and the documents
delivered in connection herewith and therewith. Upon such termination, Buyer
shall deliver to Seller such UCC termination statements and other release
documents as may be commercially reasonable and to return the Portfolio
Collateral to Seller. For purposes of the grant of the security interest
pursuant to Section 6 of this Agreement, this Agreement shall be deemed to
constitute a security
33
agreement under the New York Uniform Commercial Code (the "UCC"). Buyer shall
have all of the rights and may exercise all of the remedies of a secured
creditor under the UCC and the other laws of the State of New York. In
furtherance of the foregoing, (a) Seller, at its sole cost and expense, shall
cause to be filed in such locations as may be necessary to perfect and maintain
perfection and priority of the security interest granted hereby, UCC financing
statements and continuation statements (collectively, the "Filings"), and shall
forward copies of such Filings to Buyer upon completion thereof, and (b) Seller
shall from time to time take such further actions as may be reasonably requested
by Buyer to maintain and continue the perfection and priority of the security
interest granted hereby (including marking its records and files to evidence the
interests granted to Buyer hereunder).
7. PAYMENT, TRANSFER AND CUSTODY
(a) On the Purchase Date for each Transaction, ownership of the Portfolio
Securities and/or Purchased Loans 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.
(b) On or prior to the applicable Purchase Date, the Seller shall deliver
the related Portfolio Securities re-registered in the name of the Buyer or other
designee of the Buyer in accordance with the Custodial Agreement and the Buyer
or its other designee shall have all rights of conversions, exchange,
subscription and any other rights, privileges and options pertaining to such
Portfolio Securities as the owner thereof, and in connection therewith, the
right to deposit and deliver any and all of the Portfolio Securities with any
committee, depositary transfer, agent, register or other designated agency upon
such terms and conditions as the Buyer may determine. The Portfolio Securities
shall be held by the Buyer or its designee, as exclusive bailee and agent for
the Buyer, either directly or through the facilities of a Relevant System, as
"securities intermediary" (as defined in Section 8-102(a)(14) of the UCC and 31
C.F.R. Section 357.2) and credited to the "securities account" (as defined in
Section 8-501(a) of the UCC) of the Buyer. The Buyer, as "entitlement holder"
(as defined in Section 8-102(a)(7) of the UCC) with respect to the Portfolio
Securities, shall be entitled to receive all cash dividends and distributions
paid in respect thereof. Any such dividends or distributions with respect to the
Portfolio Securities received by the Seller shall be promptly remitted to the
Cash Management Account.
(c) With respect to Portfolio Securities that shall be delivered or held in
uncertificated form and the ownership of which is registered on books maintained
by the issuer thereof or its transfer agent, the Seller shall cause the
registration of such security or other item of investment property in the name
of Buyer or its designee and at the request of the Buyer, shall take such other
and further steps, and shall execute and deliver such documents or instruments
necessary in the reasonable opinion of the Buyer, to effect a legally valid
transfer to Buyer hereunder. With respect to Portfolio Securities that shall be
delivered or held in definitive, certificated form, the Seller shall deliver to
the Buyer or its designee (which shall be the Custodian initially) the original
of the relevant certificate registered in the name of the Buyer or its designee.
Unless otherwise instructed by Buyer, any delivery of a security or other item
of investment property in definitive, certificated form shall be made to the
Custodian. With respect to Portfolio Securities that shall be delivered through
a Relevant System in book entry form and credited to or otherwise held in a
securities account, the Seller shall take such actions necessary to provide
34
instruction to the relevant financial institution or other entity, which
instruction shall be sufficient if complied with to register the transfer of
Portfolio Securities from Seller to Buyer or its designee. In connection with
any account to which the Portfolio Securities are credited or otherwise held,
the Seller shall execute and deliver such other and further documents or
instruments necessary, in the reasonable opinion of the Buyer, to effect a
legally valid transfer to Buyer hereunder. Any account to which the Portfolio
Securities are credited or otherwise held shall be designated in accordance with
the Custodial Agreement or such variation thereon as the Buyer may direct. Any
delivery of a Portfolio Security in accordance with this paragraph, or any other
method acceptable to the Buyer, shall be sufficient to cause the Buyer to be the
"entitlement holder" (as defined in Section 8-102(a)(7) of the UCC) with respect
to the Portfolio Securities and, if the Transaction is recharacterized as a
secured financing, to have a perfected first priority security interest therein.
No Portfolio Securities, whether certificated or uncertificated, shall remain in
the name, or possession, of Seller or any of its agents or in any securities
account in the name of Seller or any of its agents.
(d) Except to the extent waived by Buyer in its sole discretion, as a
condition to Buyer's purchase of any Purchased Securities, Seller shall deliver
to Buyer on or prior to the Purchase Date:
With respect to each Purchased Security:
(i) copies of the executed Securitization Document governing such
Securities, and the offering documents related to such
Purchased Securities and any ancillary documents required to be
delivered to holders of the Purchased Securities under such
Securitization Document, each certified by the Seller as a
true, correct and complete copy of the original document
delivered to the Seller;
(ii) one or more officer's certificates with respect to the
completeness of the documents delivered and one or more
opinions of counsel as may be reasonably requested by Buyer,
(iii) an instruction letter from the Seller to the Trustee under such
Securitization Document, instructing the Trustee to remit all
sums required to be remitted to the holder of such Purchased
Securities under such Securitization Document to the Depository
or as otherwise directed in a written notice signed by Seller
and Buyer,
(iv) copies of all distribution statements, if any, delivered to the
Seller pursuant to such Securitization Document during the
three-month period immediately preceding such Purchase Date,
and
(v) any other documents or instruments necessary in the reasonable
opinion of the Buyer to consummate the sale of such Purchased
Securities to the Buyer or, if such Transaction is
recharacterized as a secured financing, to create and perfect
in favor of Buyer a valid perfected first priority security
interest in such Purchased Securities.
35
(e) On or before each Purchase Date, Seller shall deliver or cause to be
delivered to Buyer or its designee the Custodial Delivery in the form attached
hereto as Exhibit IV; provided, that notwithstanding the foregoing, upon request
of the Seller, the Buyer in its sole discretion may elect to permit the Seller
to make such delivery by not later than the third (3rd) Business Day after the
related Purchase Date, so long as the Seller causes an Acceptable Attorney to
deliver to the Buyer and the Custodian an Attorney's Bailee Letter on or prior
to such Purchase Date. In connection with each sale, transfer, conveyance and
assignment of a Purchased Loan, on or prior to each Purchase Date with respect
to such Purchased Loan, the Seller shall deliver or cause to be delivered and
released to the Custodian the following original documents (collectively, the
"Purchased Loan File"), pertaining to each of the Purchased Loans identified in
the Custodial Delivery delivered therewith:
With respect to each Purchased Loan secured by a Mortgage:
(i) 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]").
(ii) The original of any loan agreement and guarantee executed in
connection with the Mortgage Note (if any).
(iii) 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.
(iv) 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.
(v) The original Assignment of Mortgage in blank for each Purchased
Loan, in form and substance acceptable to Buyer and signed in
the name of the Last Endorsee (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 while doing
36
business under another name, the signature must be in the
following form: "[Last Endorsee], formerly known as [previous
name]").
(vi) 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.
(vii) The original attorney's opinion of title and abstract of title
or the original mortgagee title insurance policy, or if the
original mortgagee title insurance policy has not been issued,
the irrevocable marked commitment to issue the same.
(viii) The original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Purchased
Loan.
(ix) The original assignment of leases and rents, 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.
(x) The originals of all intervening assignments of assignment of
leases and rents, if any, or copies thereof, with evidence of
recording thereon.
(xi) 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 executed by Seller in blank, which UCC assignments
shall be in form and substance acceptable for filing.
(xii) An environmental indemnity agreement (if any).
(xiii) An omnibus assignment in blank (if any).
(xiv) A disbursement letter from the Mortgagor to the original
mortgagee (if any).
(xv) Mortgagor's certificate or title affidavit (if any).
(xvi) A survey of the Mortgaged Property (if any) as accepted by the
title company for issuance of the Title Policy.
(xvii) A copy of the Mortgagor's opinion of counsel (if any).
37
(xviii) An assignment of permits, contracts and agreements (if any).
With respect to each Purchased Loan which is a mezzanine loan secured by a
pledge of the entire (or such lesser percentage as the Buyer may approve) direct
or indirect equity ownership interest of Seller in an entity that owns a
multifamily or commercial property:
(i) 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]").
(ii) The original of the loan agreement and the guarantee, if any,
executed in connection with the Purchased Loan.
(iii) The original intercreditor or loan coordination agreement, if
any, executed in connection with the Purchased Loan.
(iv) The original security agreement executed in connection with the
Purchased Loan.
(v) Copies of all documents relating to the formation and
organization of the borrower of such Purchased Loan, together
with all consents and resolutions delivered in connection with
such borrower's obtaining the Purchased Loan.
(vi) All other 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.
(vii) The assignment of Purchased Loan sufficient to transfer to
Buyer all of Seller's rights, title and interest in and to the
Purchased Loan.
(viii) A copy of the borrower's opinion of counsel (if any).
(ix) A copy of the UCC financing statements, certified as true and
correct by the Seller, and all necessary UCC continuation
statements with evidence of filing thereon or copies thereof
certified by the Seller to have been sent for filing, and UCC
assignments executed by the Seller in blank, which UCC
assignments shall be in form and substance acceptable for
filing.
38
(x) The original certificates representing the pledged equity
interests (if any).
(xi) Stock powers relating to each pledged equity interest, executed
in blank, if an original stock certificate is provided.
(xii) Assignment of any management agreements, agreements among
equity interest holders or other material contracts.
(xiii) If no original stock certificate is provided, evidence (which
may be an officer's certificate confirming such circumstances)
that the pledged ownership interests have been transferred to,
or otherwise made subject to a first priority security interest
in favor of, the Seller.
With respect to each Purchased Loan which is a participation interest
(including a junior or "B" note or participation and a senior participation) in
a whole mortgage loan secured by a first lien on a multifamily or commercial
property or a mezzanine loan secured by a pledge of the direct or indirect
equity ownership interest of Seller in an entity that owns a multifamily or
commercial property:
(i) the original or a copy of all of the documents described above
with respect to a Purchased Loan secured by a Mortgage or
secured by a pledge of such ownership interests, as applicable;
(ii) the original participation certificate, if any, together with
the original of any participation agreement, intercreditor
agreement and/or servicing agreement executed in connection
with the Purchased Loan; and
(iii) the assignment of Purchased Loan sufficient to transfer to
Buyer all of Seller's rights, title and interest in and to the
Purchased Loan.
With respect to each Purchased Loan which is a syndicated bank loan:
(i) The original assignment and assumption agreement endorsed in
blank sufficient to transfer to Buyer all of the Seller's
right, title and interest in and to the Purchased Loan;
(ii) The original promissory note, if any, 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]");
(iii) The originals of all intervening assignments, if any, in blank
for each Purchased Loan, in form and substance acceptable to
Buyer and signed in
39
the name of the Last Endorsee (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 while doing
business under another name, the signature must be in the
following form: "[Last Endorsee], formerly known as [previous
name]");
(iv) Copies of any loan agreement and guarantee executed in
connection with the Purchased Loan;
(v) Copies of any security agreement, chattel mortgage or
equivalent document executed in connection with the Purchased
Loan;
(vi) 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 executed by Seller in blank, which UCC assignments
shall be in form and substance acceptable for filing;
(vii) Copies of the borrower's opinions of counsel or any other
opinions for the benefit of lender (if any) with respect to
such syndicated bank loan.
(viii) Any other documents which Buyer may determine to be necessary
to effectuate the sale, transfer, conveyance and assignment of
such Purchased Loan.
With respect to each Purchased Loan which is of the type described in
clause (vi) of the definition of Eligible Loan: any of the documentation
referred to above in this Section 7(e) of this Agreement which is determined by
the Buyer to be necessary to effectuate the sale, transfer, conveyance and
assignment of such Purchased Loan.
In addition, with respect to each Purchased Loan, the Seller shall deliver
an instruction letter from the Seller to either the Mortgagor or the borrower
under such Purchased Loan or the servicer with respect to such Purchased Loan,
instructing the Mortgagor, the borrower or the servicer, as applicable, to remit
all sums required to be remitted to the holder of such Purchased Loan under the
loan documents to the Depository for deposit in the Cash Management Account or
as otherwise directed in a written notice signed by Seller and Buyer.
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 this Agreement, and upon receipt of any such other
documents, the Custodian shall hold such other documents as Buyer shall request
from time to time. With respect to any documents 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.
40
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 omnibus
power of attorney substantially in the form of Exhibit V attached hereto
irrevocably appointing Buyer its attorney-in-fact with full power to (i)
complete and record the Assignment of Mortgage, (ii) complete the endorsement of
the Mortgage Note or Mezzanine Note and (iii) take such other steps as may be
reasonably necessary or desirable to enforce Buyer's rights against such
Purchased Loans and the related Purchased Loan Files and the Servicing Records.
Buyer shall deposit the Purchased Loan Files representing the Purchased Loans,
or direct that the Purchased Loan Files be deposited directly, with the
Custodian. 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 the Buyer
for the sole purpose of servicing the related Purchased Loan, and such retention
and possession by the Seller or its designee is in a custodial capacity only.
The books and records (including, without limitation, any computer records or
tapes) of Seller or its designee shall be marked appropriately to reflect
clearly the sale of the related Purchased 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, is in connection
with a repurchase of any Purchased Loan by Seller or as otherwise required by
law.
(f) Unless an Event of Default shall have occurred and be continuing,
except as otherwise provided in Section 12(e) of this Agreement, Buyer shall
exercise all voting and corporate rights with respect to the Portfolio
Securities in accordance with Seller's written instructions; provided, however,
that Buyer shall not be required to follow Seller's instructions concerning any
vote or corporate right if doing so would, in Buyer's good faith business
judgment, impair the Portfolio Securities or be inconsistent with or result in
any violation of any provision of the Transaction Documents. Upon the occurrence
and during the continuation of an Event of Default, Buyer shall be entitled to
exercise all voting and corporate rights with respect to the Portfolio
Securities without regard to Seller's instructions (including, but not limited
to, if an Act of Insolvency shall occur with respect to Seller or the Sponsor,
to the extent Seller controls or is entitled to control selection of the special
servicer, Buyer may transfer such special servicing to an entity satisfactory to
Buyer).
8. SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED SECURITIES
(a) Title to all Purchased Securities and Purchased Loans shall pass to
Buyer on the applicable Purchase Date, and Buyer shall have free and
unrestricted use of all Purchased Securities and Purchased Loans, subject,
however, to the terms of this Agreement. Nothing in this Agreement or any other
Transaction Document shall preclude Buyer from engaging in repurchase
transactions with the Purchased Securities and Purchased Loans or otherwise
selling, transferring, pledging, repledging, hypothecating, or rehypothecating
the Purchased Securities and Purchased Loans, but no such transaction shall
relieve Buyer of its obligations to transfer the
41
Purchased Securities and/or Purchased Loans to Seller pursuant to Section 3 of
this Agreement or of Buyer's obligation to credit or pay Income to, or apply
Income to the obligations of, Seller pursuant to Section 5 hereof.
(b) Nothing contained in this Agreement or any other Transaction Document
shall obligate Buyer to segregate any Purchased Securities or Purchased Loans
delivered to Buyer by Seller. Notwithstanding anything to the contrary in this
Agreement or any other Transaction Document, no Purchased Security or Purchased
Loan shall remain in the custody of the Seller or an Affiliate of the Seller.
9. RESERVED
10. REPRESENTATIONS
(a) Each of Buyer and Seller represents and warrants to the other that (i)
it is duly authorized to execute and deliver this Agreement, to enter into
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance, (ii) it will engage in such Transactions as principal (or, if
agreed in writing, in the form of an annex hereto or otherwise, in advance of
any Transaction by the other party hereto, as agent for a disclosed principal),
(iii) the person signing this Agreement on its behalf is duly authorized to do
so on its behalf (or on behalf of any such disclosed principal), (iv) it has
obtained all authorizations of any governmental body required in connection with
this Agreement and 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 or
rule applicable to it or its organizational documents or any agreement by which
it is bound or by which any of its assets are affected. On the Purchase Date for
any Transaction Buyer and Seller shall each be deemed to repeat all the
foregoing representations made by it.
(b) In addition to the representations and warranties in subsection (a)
above, Seller represents and warrants to Buyer that as of the Purchase Date for
the purchase of any Purchased Securities or Purchased Loans by Buyer from Seller
and any Transaction thereunder and as of the date of this Agreement and at all
times while this Agreement and any Transaction thereunder is in full force and
effect:
(i) Organization. Seller is duly incorporated, validly existing and
in good standing under the laws and regulations of the state of
Seller's incorporation 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. Seller has the power to own and hold the assets it
purports to own and hold, and to carry on its business as now
being conducted and proposed to be conducted, and has the power
to execute, deliver, and perform its obligations under this
Agreement and the other Transaction Documents.
(ii) Due Execution; Enforceability. The Transaction Documents have
been or will be duly executed and delivered by Seller, for good
and valuable
42
consideration. The Transaction Documents constitute the legal,
valid and binding obligations of Seller, enforceable against
Seller in accordance with their respective terms subject to
bankruptcy, insolvency, and other limitations on creditors'
rights generally and to equitable principles.
(iii) Non-Contravention. Neither the execution and delivery of the
Transaction Documents, nor consummation by Seller of the
transactions contemplated by the Transaction Documents (or any
of them), nor compliance by Seller with the terms, conditions
and provisions of the Transaction Documents (or any of them)
will conflict with or result in a breach of any of the terms,
conditions or provisions of (i) the Memorandum and Articles of
Association or similar organizational documents of Seller, (ii)
any contractual obligation to which Seller is now a party or
the rights under which have been assigned to Seller or the
obligations under which have been assumed by Seller or to which
the assets of Seller are subject or constitute a default
thereunder, or result thereunder in the creation or imposition
of any lien upon any of the assets of Seller, other than
pursuant to the Transaction Documents, (iii) any judgment or
order, writ, injunction, decree or demand of any court
applicable to Seller, or (iv) any applicable Requirement of
Law, in the case of clauses (ii)-(iv) above, to the extent that
such conflict or breach would have a material adverse effect
upon Seller's ability to perform its obligations hereunder.
Seller has all necessary licenses, permits and other consents
from Governmental Authorities necessary to acquire, own and
sell the Portfolio Collateral and for the performance of its
obligations under the Transaction Documents.
(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, the
Sponsor or any of their respective assets, nor is there any
action, suit, proceeding, investigation, or arbitration pending
or threatened against the Sponsor which may result in any
material adverse change in the business, operations, financial
condition, properties, or assets of Seller or the Sponsor, or
which may have an adverse effect on the validity of the
Transaction Documents or the Purchased Securities 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. Neither Seller nor the Sponsor is in default in any
material respect with respect to any judgment, order, writ,
injunction, decree, rule or regulation of any arbitrator or
Governmental Authority.
(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 Purchased
Securities pursuant to any of the Transaction Documents.
43
(vi) Good Title to Purchased Securities and Purchased Loans.
Immediately prior to the purchase of any Purchased Securities
or Purchased Loans by Buyer from Seller, such Purchased
Securities and Purchased Loans are free and clear of any lien,
encumbrance or impediment to transfer (including any "adverse
claim" as defined in Section 8-102(a)(1) of the UCC), and
Seller is the record and beneficial owner of and has good and
marketable title to and the right to sell and transfer such
Purchased Securities and Purchased Loans to Buyer and, upon
transfer of such Purchased Securities or Purchased Loans to
Buyer, Buyer shall be the owner of such Purchased Securities
and Purchased Loans free of any adverse claim, subject to the
rights of Seller pursuant to the terms of this Agreement. In
the event the related Transaction is recharacterized as a
secured financing of the Purchased Securities or Purchased
Loans, the provisions of this Agreement are effective to create
in favor of the Buyer a valid security interest in all rights,
title and interest of the Seller in, to and under the
Collateral and the Buyer shall have a valid, perfected first
priority security interest in the Purchased Securities or
Purchased Loans (and without limitation on the foregoing, the
Buyer, as entitlement holder, shall have a "security
entitlement" to the Purchased Securities).
(vii) No Default. No Default or Event of Default exists under or with
respect to the Transaction Documents.
(viii) Representations in Securitization Documents. All of the
Purchased Securities have been validly issued and are fully
paid and non-assessable and not subject to preemptive rights
and have been offered, issued and sold in compliance with all
Requirements of Law. To the extent that an Affiliate of the
Seller is a party thereto, the Securitization Documents are
genuine, in full force and effect and the legal, valid and
binding obligation of such Affiliate enforceable in accordance
with their terms. The Securitization Documents have not been
altered or modified in any material respect, except as
disclosed to the Buyer in writing. The Seller has not waived
the performance of any action or any default, breach or
violation resulting from action or inaction under a
Securitization Document and has not been made aware of any such
waiver. Except as disclosed to the Buyer in writing, there is
no default, breach, violation or event of acceleration existing
under a Securitization Document and no event has occurred
which, with the passage of time or giving of notice or both and
the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration thereunder.
Each Purchased Security is freely assignable and the related
Securitization Document permits the Seller to sell, assign or
pledge such Purchased Security.
(ix) Representations and Warranties Regarding Purchased Loans;
Delivery of Purchased Loan File. Seller represents and warrants
to the Buyer that each Purchased Loan sold hereunder and each
pool of Purchased Loans
44
sold in a Transaction hereunder, as of each Purchase Date for a
Transaction conform to the applicable representations and
warranties set forth in Exhibit VI attached hereto, except as
disclosed to the Buyer in writing. It is understood and agreed
that the representations and warranties set forth in Exhibit VI
hereto, if any, shall survive delivery of the respective
Purchased Loan File to Buyer or its designee (including the
Custodian) to the extent permitted by applicable law. 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
this Agreement and the Custodial Agreement for such Purchased
Loan have been delivered to the Buyer or the Custodian on its
behalf. 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.
(x) 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.
(xi) Consents. No consent, approval or other action of, or filing by
Seller with, any Governmental Authority or any other Person is
required to authorize, or is otherwise required in connection
with, the execution, delivery and performance of any of the
Transaction Documents (other than consents, approvals and
filings that have been obtained or made, as applicable).
(xii) Ownership. All of the membership interests in Seller are owned
directly by the Sponsor.
(xiii) Organizational Documents. Seller has delivered to Buyer
certified copies of its organizational documents, together with
all amendments thereto, if any.
(xiv) No Encumbrances. Subject to the terms of this Agreement, 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 Securities or Purchased Loans,
(ii) no agreements on the part of the Seller to issue, sell or
distribute the Purchased Securities or Purchased Loans,
45
and (iii) no obligations on the part of the Seller (contingent
or otherwise) to purchase, redeem or otherwise acquire any
securities or any interest therein or to pay any dividend or
make any distribution in respect of the Purchased Securities.
(xv) Federal Regulations. Seller is not (A) required to register as
an "investment company" under 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.
(xvi) Taxes. Seller has filed or caused to be filed all tax returns
which to the knowledge of Seller would be delinquent if they
had not been filed on or before the date hereof and has paid
all taxes shown to be due and payable on or before the date
hereof on such returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges
imposed on it and any of its assets by any Governmental
Authority except for any such taxes as 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; 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.
(xvii) ERISA. Seller does not have any Plans or any ERISA Affiliates
and makes no contributions to any Plans or any Multiemployer
Plans.
(xviii) Judgments/Bankruptcy. Except as disclosed in writing to Buyer,
there are no judgments against Seller or the Sponsor
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 or the Sponsor.
(xix) Full and Accurate Disclosure. No information contained in the
Transaction Documents, or any written statement furnished by
Seller pursuant to the terms of the Transaction Documents,
contains any untrue statement of a material fact or, to
Seller's knowledge, 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.
(xx) Financial Information. All financial data concerning Seller
and, to Seller's knowledge, the Purchased Securities and
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 Securities and Purchased
Loans, or in the results of operations
46
of Seller, which change is reasonably likely to have in a
material adverse effect on Seller.
(xxi) Notice Address; Jurisdiction of Organization. On the date of
this Agreement, the Seller's address for notices is located at
c/o NRFC Sub-REIT Corp., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇. Seller's jurisdiction of incorporation is Delaware. The
location where the Seller keeps its books and records,
including all computer tapes and records relating to the
Collateral, is its notice address.
(c) On the Purchase Date for any Transaction, Seller shall be deemed to
have made all of the representations set forth in Section 10(b) of this
Agreement as of such Purchase Date.
11. NEGATIVE COVENANTS OF SELLER
On and as of the date hereof and each Purchase Date and until this
Agreement is no longer in force with respect to any Transaction, Seller shall
not without the prior written consent of the Buyer:
(a) take any action which would directly or indirectly impair or adversely
affect Buyer's title to the Purchased Securities or 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 Securities or 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 Securities or Purchased Loans (or any
of them) with any Person other than Buyer;
(c) with respect to any Purchased Securities purchased by Buyer where the
Related Securities are owned by the Seller, transfer, assign, convey, grant,
bargain, sell, set over, deliver or otherwise dispose of or pledge or
hypothecate, directly or indirectly, any interest in the Related Securities
(including, without limitation, any securities which constitute the "controlling
class" entitling the holder thereof to control the selection of the special
servicer for the mortgage loans underlying such Purchased Securities); provided,
however, that this subsection (c) shall not apply or be operative as to any
Purchased Securities as to which Seller has delivered an agreement reasonably
satisfactory to Buyer irrevocably conveying, transferring and pledging to Buyer
the right to control the selection of the special servicer for the related
mortgage loans;
(d) create, incur or permit to exist any lien, encumbrance or security
interest in or on the Purchased Securities or the Purchased Loans, except as
described in Section 6 of this Agreement;
(e) 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 Agreement;
(f) own any Supplemental Equity Collateral or, to the extent under its
control, modify in any material respect or terminate any of the organizational
documents of Seller or Sponsor;
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(g) consent or assent to any amendment or supplement to, or termination of,
any Securitization Document, any note, loan agreement, mortgage or guaranty
relating to the Purchased Loans or other material agreement or instrument
relating to the Portfolio Securities or the Purchased Loans other than Permitted
Purchased Loan Modifications;
(h) admit any additional members in Seller, or permit the sole member of
Seller to assign or transfer all or any portion of its membership interests in
Seller in a manner which would result in a Change of Control;
(i) at any time after an Event of Default has occurred and is continuing,
vote or take any action to exercise any rights afforded to a holder of the
Portfolio Securities under the related Securitization Documents; or
(j) after the occurrence and during the continuation of any Default or
Event of Default, make any distribution, payment on account of, or set apart
assets for, a sinking or other analogous fund for the purchase, redemption,
defeasance, retirement or other acquisition of any 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.
12. AFFIRMATIVE COVENANTS OF SELLER
(a) Seller shall promptly notify Buyer of any material adverse change in
its business operations and/or financial condition; provided, however, that
nothing in this Section 12 shall relieve Seller of its obligations under this
Agreement.
(b) Seller shall provide Buyer with copies of such documents as Buyer may
reasonably request evidencing the truthfulness of the representations set forth
in Section 10.
(c) Seller (1) shall defend the right, title and interest of the Buyer in
and to the Collateral against, and take such other action as is necessary to
remove, the Liens, security interests, claims and demands of all Persons (other
than security interests by or through Buyer) and (2) shall, at Buyer's
reasonable request, take all action necessary to ensure that Buyer will have a
first priority security interest in the Purchased Securities and Purchased Loans
subject to any of the Transactions in the event such Transactions are
recharacterized as secured financings.
(d) Seller shall notify Buyer and the Depository of the occurrence of any
Default or Event of Default with respect to Seller as soon as possible but in no
event later than the second (2nd) Business Day after obtaining actual knowledge
of such event.
(e) Seller shall cause the special servicer rating of the special servicer
with respect to all mortgage loans underlying Portfolio Securities to be no
lower than "above average" by Standard & Poor's Ratings Group to the extent
Seller controls or is entitled to control the selection of the special servicer.
In the event the special servicer rating with respect to any Person acting as
special servicer for any mortgage loans underlying Portfolio Securities shall be
below "above average" by Standard & Poor's Rating Group, or if an Act of
Insolvency occurs with respect to Seller or Sponsor, Buyer shall be entitled to
transfer special servicing with respect
48
to all Portfolio Securities to an entity satisfactory to Buyer, to the extent
Seller controls or is entitled to control the selection of the special servicer.
(f) With respect to each Purchased Security and Purchased Loan, Seller
shall maintain a hedging strategy (including swaps and other derivatives)
approved by Buyer in Buyer's good faith business judgment, enter into Hedging
Transactions acceptable to Buyer and, upon request of Buyer, provide evidence of
such strategy. Such Hedging Transaction shall be pledged to the Buyer as
collateral for the Transactions and may be marked to market from time to time by
Buyer.
(g) Seller shall promptly (and in any event not later than two (2) Business
Days following receipt) deliver to Buyer (i) any notice of the occurrence of an
event of default under or report received by Seller pursuant to the
Securitization Documents; (ii) any notice of transfer of servicing under the
Securitization Documents and (iii) any other information with respect to the
Portfolio Collateral as may be reasonably requested by Buyer from time to time.
(h) Seller will permit Buyer or its designated representative to inspect
Seller's records with respect to the Collateral and the conduct and operation of
its business related thereto upon reasonable prior written notice from Buyer or
its designated representative, at such reasonable times and with reasonable
frequency, and to make copies of extracts of any and all thereof, subject to the
terms of any confidentiality agreement between the Buyer and the Seller. Buyer
shall act in a commercially reasonable manner in requesting and conducting any
inspection relating to the conduct and operation of Seller's business.
(i) If the Seller shall at any time become entitled to receive or shall
receive any rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for the Portfolio Securities, or otherwise in respect
thereof, the Seller shall accept the same as the Buyer's agent, hold the same in
trust for the Buyer and deliver the same forthwith to the Buyer in the exact
form received, duly endorsed by the Seller to the Buyer, if required, together
with an undated bond power covering such certificate duly executed in blank to
be held by the Buyer hereunder as additional collateral security for the
Transactions. If any sums of money or property so paid or distributed in respect
of the Portfolio Securities shall be received by the Seller, the Seller shall,
until such money or property is paid or delivered to the Buyer, hold such money
or property in trust for the Buyer, segregated from other funds of the Seller,
as additional collateral security for the Transactions.
(j) At any time from time to time upon the reasonable request of Buyer, at
the sole expense of Seller, Seller will promptly and duly execute and deliver
such further instruments and documents and take such further actions as Buyer
may reasonably request for the purposes of obtaining or preserving the full
benefits of this Agreement including the first priority security interest
granted hereunder and of the rights and powers herein granted (including, among
other things, filing such UCC financing statements as Buyer may reasonably
request). If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other instrument
or chattel paper, such note, instrument or chattel paper shall be immediately
delivered to the Buyer, duly endorsed in a manner reasonably satisfactory to the
Buyer, to be held as Collateral pursuant to this Agreement, and the documents
delivered in connection herewith.
49
(k) Seller shall provide Buyer with the following financial and reporting
information:
(i) Within 45 days after the last day of each of the first three
fiscal quarters in any fiscal year, Sponsor's unaudited
consolidated statements of income and statements of changes in
cash flow for such quarter and balance sheets as of the end of
such quarter, in each case presented fairly in accordance with
GAAP and certified as being true and correct by an officer's
certificate;
(ii) Within 90 days after the last day of its fiscal year, Sponsor's
audited consolidated statements of income and statements of
changes in cash flow for such year and balance sheets as of the
end of such year, in each case presented fairly in accordance
with GAAP, and accompanied, in all cases, by an unqualified
report of a nationally recognized independent certified public
accounting firm consented to by Buyer (Buyer hereby consenting
to Ernst & Young or any other national accounting firm selected
by NRFC GP);
(iii) Within 45 days after the last day of each calendar quarter in
any fiscal year, any and all property level financial
information with respect to the Purchased Loans that is in the
possession of the Seller or an Affiliate, including, without
limitation, rent rolls and income statements;
(iv) Within 45 days after the last day of each calendar quarter in
any fiscal year, an officer's certificate from the Seller
addressed to Buyer certifying that, as of such calendar
quarter, (x) Seller is in compliance with all of the terms,
conditions and requirements of this Agreement, and (y) no Event
of Default exists; and
(v) Within thirty days after each month end, a monthly reporting
package containing all substantially in the form of Exhibit III
attached hereto.
(l) 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.
(m) 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.
(n) Seller shall observe, perform and satisfy all the terms, provisions,
covenants and conditions required to be observed, performed or satisfied by it,
and shall pay when due all costs, fees and expenses required to be paid by it,
under the Transaction Documents. Seller shall pay and discharge all taxes,
levies, liens and other charges on its assets and on the Collateral that, in
each case, in any manner would create any lien or charge upon the Collateral,
except for any
50
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 in all material respects.
(o) Seller shall advise Buyer in writing of the opening of any new chief
executive office or the closing of any such office and of any change in Seller's
name or the places where the books and records pertaining to the Purchased
Securities are held not less than fifteen (15) Business Days prior to taking any
such action.
(p) Seller will maintain records with respect to the Collateral and the
conduct and operation of its business with no less a degree of prudence than if
the Collateral were held by Seller for its own account and will furnish Buyer,
upon reasonable request by Buyer or its designated representative, with
reasonable information reasonably obtainable by Seller with respect to the
Collateral and the conduct and operation of its business.
(q) 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 to the extent in Seller's possession. Upon written
direction of Buyer, Seller shall request from the applicable servicer, obligor
or borrower any and all financial statements, property level reports, operating
statements or other information which the holder of the applicable Purchased
Loan or Purchased Security has the right to request under the related Purchased
Loan Documents or the Securitization Documents.
(r) At all times during the CDO Ramp-Up Period, the Seller shall, or shall
cause Sponsor to, provide Buyer with Letters of Credit and/or implement with an
Affiliate of Buyer a Securities Account which collectively have an aggregate
liquidation value (as determined by Buyer) equal to the difference between the
Purchase Price of all CDO Eligible Assets subject to an outstanding Transaction
and the Purchase Price of all such CDO Eligible Assets assuming that the
Original Purchase Percentage applied for the related Transaction were equal to
the respective Original Purchase Percentage in Schedule I of the Agreement.
Seller or Sponsor shall be able to withdraw or exchange amounts in such
Securities Account so long as at all times during the CDO Ramp-Up Period the
aggregate liquidation value of such Securities Account and Letters of Credit
equals the difference between the Purchase Price of all CDO Eligible Assets
subject to an outstanding Transaction and the Purchase Price of all such CDO
Eligible Assets assuming that the Original Purchase Percentage applied for the
related Transaction were equal to the respective Original Purchase Percentage in
Schedule I of the Agreement. The requirements of the Securities Account and
Letters of Credit with respect to any Transaction for a CDO Eligible Asset shall
expire after the earlier of (i) the shift in the Original Purchase Percentage of
such Purchased Loan or Purchased Security to the related Original Purchase
Percentage set forth in Schedule I of the Agreement and the related complete
payment of any additional cash or collateral due to Buyer as a result of such
shift of the Original Purchase Percentage and (ii) the inclusion of such
Purchased Loan or Purchased Asset in a DBSI CDO. To the extent the Seller is
unable to voluntarily meet the requirements of this clause (r), Buyer may
require that the Seller commence marketing for sale or liquidation of any
outstanding Purchased Securities or Purchased Loans and apply the net sale or
liquidation proceeds to meet the requirements of this clause (r).
51
13. SINGLE-PURPOSE ENTITY
Seller hereby represents and warrants to Buyer, and covenants with
Buyer, that as of the date hereof and so long as any of the Transaction
Documents shall remain in effect:
(a) It is and intends to remain solvent and it has paid and will pay its
debts and liabilities (including employment and overhead expenses) from its own
assets as the same shall become due.
(b) It has complied and will comply with the provisions of its
organizational documentation.
(c) It has done or caused to be done and will, to the extent under its
control, do all things necessary to observe corporate formalities and to
preserve its existence.
(d) It has maintained and will maintain all of its books, records,
financial statements and bank accounts separate from those of its Affiliates,
its members and any other Person, and it will file its own tax returns, if any,
which are required by law (except to the extent consolidation is required under
GAAP or as a matter of law).
(e) It has been, is and will be, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other entity
(including any Affiliate), shall correct any known misunderstanding regarding
its status as a separate entity, shall conduct business in its own name, shall
not identify itself or any of its Affiliates as a division or part of the other,
shall maintain and utilize separate stationery, invoices and checks, and shall
pay to any Affiliate that incurs costs for office space and administrative
services that it uses, the amount of such costs allocable to its use of such
office space and administrative services.
(f) It has not owned and will not own any property or any other assets
other than Portfolio Collateral, cash and its interest under any associated
Hedging Transactions.
(g) It has not engaged and will not engage in any business other than the
acquisition, ownership, financing and disposition of Portfolio Collateral in
accordance with the applicable provisions of the Transaction Documents.
(h) It has not entered into, and will not enter into, any contract or
agreement with any of its Affiliates, except upon terms and conditions that are
substantially similar to those that would be available on an arm's-length basis
with Persons other than such Affiliate.
(i) It has not incurred and will not incur any indebtedness or obligation,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (A) obligations under the Transaction
Documents and (B) unsecured trade payables, in an aggregate amount not to exceed
$250,000 at any one time outstanding, incurred in the ordinary course of
acquiring, owning, financing and disposing of Portfolio Collateral; provided,
however, that any such trade payables incurred by Seller shall be paid within 60
days of the date incurred.
52
(j) It has not made and will not make any loans or advances to any other
Person, and shall not acquire obligations or securities of any member or any
Affiliate of any member (other than in connection with the acquisition of the
Portfolio Securities) or any other Person.
(k) It will maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations.
(l) It shall not seek its dissolution, liquidation or winding up, in whole
or in part, or suffer any Change of Control, consolidation or merger with
respect to Seller or the Sponsor.
(m) It will not commingle its funds and other assets with those of any of
its Affiliates or any other Person.
(n) It has maintained and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any of its Affiliates or any other Person.
(o) It has not held and will not hold itself out to be responsible for the
debts or obligations of any other Person.
(p) The Seller shall not take any of the following actions: (i) permit its
shareholders to dissolve or liquidate the Seller, in whole or in part; (ii)
consolidate or merge with or into any other entity (where such member is not the
surviving entity) or convey or transfer all or substantially all of its
properties and assets to any entity; or (iii) institute any proceeding to be
adjudicated as bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition or answer or
consent seeking reorganization or relief under the Bankruptcy Code, or effect
any similar procedure under any similar law, or consent to the filing of any
such petition or to the appointment of a receiver, rehabilitator, conservator,
liquidator, assignee, trustee or sequestrator (or other similar official) of the
Seller or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, or make an assignment for the benefit of creditors,
or admit in writing its inability to pay its debts generally as they become due,
or take any action in furtherance of any of the foregoing.
(q) It has no liabilities, contingent or otherwise, other than those normal
and incidental to the acquisition, ownership, financing and disposition of
Portfolio Collateral.
(r) It has conducted and shall conduct its business consistent with the
requirements of being a Single-Purpose Entity.
(s) It shall not maintain any employees.
14. EVENTS OF DEFAULT; REMEDIES
After the occurrence and during the continuance of an Event of Default,
Seller hereby appoints Buyer as attorney-in-fact of Seller for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing or endorsing any instruments that Buyer may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-
53
in-fact is irrevocable and coupled with an interest. An "Event of Default" under
this Agreement shall be deemed to have occurred and be continuing in the event
that:
(i) Seller fails to repurchase or Buyer fails to transfer Purchased
Securities or Purchased Loans upon the applicable Repurchase
Date;
(ii) Seller or Buyer fails to comply with Section 4 hereof;
(iii) Buyer fails, after five Business Days' notice, to comply with
Section 5 hereof;
(iv) an Act of Insolvency occurs with respect to Seller or Buyer;
(v) Seller or Buyer shall admit to the other its inability to, or
its intention not to, perform any of its obligations hereunder;
(vi) either (A) the Transaction Documents shall for any reason not
cause, or shall cease to cause, Buyer to be the owner free of
any adverse claim of any of the Purchased Securities or
Purchased Loans, 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 Securities or Purchased Loans;
(vii) in the event that the Buyer or any of its Affiliates is a party
to an ISDA Master Agreement with Seller and an event occurs
which would constitute an Event of Default, a Termination Event
or an Additional Termination Event under any Transaction
between Seller and the Buyer or any of its Affiliates,
regardless of whether such Transaction is in effect on the date
of such occurrence (capitalized terms used in this paragraph
(vii) shall have the respective meanings ascribed to them in
the ISDA Master Agreement (including respective Schedules and
Confirmations) between Seller and the Buyer and/or any of its
Affiliates);
(viii) failure of the Buyer to receive on any Remittance Date the
accreted value of the Price Differential (less any amount of
such Price Differential previously paid by Seller to Buyer)
(including, without limitation, in the event the Income paid or
distributed on or in respect of the Purchased Securities and
Purchased Loans is insufficient to make such payment and the
Seller does not make such payment or cause such payment to be
made) (except that such failure shall not be an Event of
Default by Seller if sufficient Income, other than Principal
Payments, is on deposit in the Cash Management Account and the
Depository fails to remit such funds to Buyer);
(ix) failure of the Seller to make any other payment owing to the
Buyer which has become due, whether by acceleration or
otherwise under the terms of this Agreement which failure is
not remedied within the applicable period
54
(in the case of a failure pursuant to Section 4) or five
Business Days (in the case of any other such failure);
(x) any governmental, regulatory, or self-regulatory authority
shall have taken any action to remove, limit, restrict, suspend
or terminate the rights, privileges, or operations of Seller,
which suspension has a material adverse effect on the financial
condition or business operations of Seller;
(xi) Buyer shall have determined, in the exercise of its good faith
business judgment, (A) that there has been a material adverse
change in the financial condition or creditworthiness of Seller
or the Sponsor; (B) that Seller or the Sponsor has breached
beyond applicable notice and cure periods any of its
obligations under any Transaction pursuant to any of the
Transaction Documents;
(xii) a Change of Control or an Act of Insolvency shall have occurred
with respect to the Sponsor;
(xiii) 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 (other than
the representations and warranties set forth in Section
10(b)(viii) or (ix) or (xx) (in the case of (xx), with respect
to the affected Purchased Securities or Purchased Loans only)
made by the Seller, which shall not be considered an Event of
Default if incorrect or untrue in any material respect, unless
the Seller shall have made any such representation with actual
knowledge that it was materially incorrect or untrue at the
time made);
(xiv) the Sponsor shall fail to observe any of the financial
covenants set forth in Section 5 of the Guaranty or shall have
defaulted or failed to perform under the Guaranty;
(xv) a final non-appealable judgment by any competent court in the
United States of America for the payment of money in an amount
greater than $250,000 (in the case of the Seller) or $1 million
(in the case of the Sponsor) shall have been rendered against
Seller or the Sponsor, and remained undischarged or unpaid for
a period of sixty (60) days, during which period execution of
such judgment is not effectively stayed by bonding over or
other means acceptable to Buyer;
(xvi) Sponsor 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 monetary
obligation in excess of $1 million, or (B) permits the
acceleration of the maturity of obligations in excess of $1
million by any other party to or beneficiary of such note,
indenture, loan agreement, guaranty, swap agreement or other
contract agreement or
55
transaction; provided, however, that any such default, failure
to perform or breach shall not constitute an Event of Default
if Sponsor 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
(xvii) Seller or Buyer shall breach or fail to perform any of the
terms, covenants, obligations or conditions of this Agreement,
other than as specifically otherwise referred to in this
definition of "Event of Default", and such breach or failure to
perform is not remedied within twenty (20) Business Days after
notice thereof to Seller or Buyer from the applicable party or
its successors or assigns.
(a) 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").
(ii) If Buyer exercises or is deemed to have exercised the option
referred to in Section 14(a)(i) of this Agreement:
(A) Seller's obligations hereunder to repurchase all Purchased
Securities and Purchased Loans shall become immediately
due and payable on and as of the Accelerated Repurchase
Date; and
(B) to the extent permitted by applicable law, the Repurchase
Price with respect to each Transaction (determined as of
the Accelerated Repurchase Date) shall be increased by the
aggregate amount obtained by daily application of, on a
360 day per year basis for the actual number of days
during the period from and including the Accelerated
Repurchase Date to but excluding the date of payment of
the Repurchase Price (as so increased), (x) the Pricing
Rate for such Transaction multiplied by (y) the Repurchase
Price for such Transaction (decreased by (I) any amounts
actually remitted to Buyer by the Depository or Seller
from time to time pursuant to Sections 4 and 5 of this
Agreement and applied to such Repurchase Price, and (II)
any amounts applied to the Repurchase Price pursuant to
Section 14(a)(iii) of this Agreement); and (C) the
Custodian shall, upon the request of Buyer, deliver to
Buyer all instruments, certificates and other documents
then held by the Custodian relating to the Purchased
Securities and Purchased Loans.
56
(iii) Upon the occurrence of an Event of Default with respect to
Seller, Buyer may (A) immediately sell, at a public or private
sale in a commercially reasonable manner and at such price or
prices as Buyer may reasonably deem satisfactory any or all of
the Purchased Securities and Purchased Loans or (B) in its sole
discretion elect, in lieu of selling all or a portion of such
Purchased Securities and Purchased Loans, to give Seller credit
for such Purchased Securities and Purchased Loans in an amount
equal to the Market Value of such Purchased Securities and
Purchased Loans against the aggregate unpaid Repurchase Price
for such Purchased Securities and Purchased Loans and any other
amounts owing by Seller under the Transaction Documents. The
proceeds of any disposition of Purchased Securities effected
pursuant to this Section 14(a)(iii) shall be applied, (v)
first, to the actual out-of-pocket costs and expenses incurred
by Buyer in connection with Seller's default; (w) second, to
actual damages, including, but not limited to, costs of cover
and/or Hedging Transactions, if any; (x) third, to the
Repurchase Price; (y) fourth, to the Exit Fee and any other
outstanding obligation of Seller to Buyer or its Affiliates;
and (z) fifth, to return any excess to Seller.
(iv) The parties recognize that it may not be possible to purchase
or sell all of the Purchased Securities and 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 Securities and Purchased Loans may not be liquid. In
view of the nature of the Purchased Securities and Purchased
Loans, the parties agree that liquidation of a Transaction or
the Purchased Securities and Purchased Loans does not require a
public purchase or sale and that a good faith private purchase
or sale shall be deemed to have been made in a commercially
reasonable manner. Accordingly, Buyer may elect, in its sole
discretion, the time and manner of liquidating any Purchased
Securities and Purchased Loans, and nothing contained herein
shall (A) obligate Buyer to liquidate any Purchased Securities
and Purchased Loans on the occurrence and during the
continuance of an Event of Default or to liquidate all of the
Purchased Securities and 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 (A) the amount of all
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)
actual damages, including, without limitation, all costs
incurred in connection with covering transactions or Hedging
Transactions, and (C) any other actual, out-of-pocket loss,
damage, cost or expense directly arising or resulting from the
occurrence of an Event of Default with respect to Seller.
(vi) Buyer shall have, in addition to its rights and remedies under
the Transaction Documents, all of the rights and remedies
provided by
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, and local laws (including,
without limitation, if the Transactions are recharacterized as
secured financings, the rights and remedies of a secured party
under the UCC of the State of New York, to the extent that the
UCC is applicable, and the right to offset any mutual debt and
claim), in equity, and under any other agreement between Buyer
and Seller. Without limiting the generality of the foregoing,
Buyer shall be entitled to set off the proceeds of the
liquidation of the Purchased Securities and Purchased Loans
against all of Seller's obligations to Buyer under this
Agreement, whether or not such obligations are then due,
without prejudice to Buyer's right to recover any deficiency.
(vii) Subject to the notice and grace periods set forth herein, Buyer
may exercise any or all of the remedies available to Buyer
immediately upon the occurrence of an Event of Default 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.
(viii) Buyer may enforce its rights and remedies hereunder without
prior judicial process or hearing, and Seller hereby expressly
waives any defenses Seller might otherwise have to require
Buyer to enforce its rights by judicial process. Seller also
waives any defense Seller might otherwise have arising from the
use of nonjudicial process, disposition of any or all of the
Purchased Securities and 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.
(b) 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 Securities and Purchased Loans, Buyer's
right, title and interest in such Purchased Securities and
Purchased Loans shall be deemed transferred to Seller, and
Buyer shall deliver such Purchased Securities and Purchased
Loans to Seller at Buyer's expense.
(ii) If Seller exercises the option referred to in Section 14(b)(i)
hereof and Buyer fails to deliver any Purchased Securities or
Purchased Loans to Seller, after three (3) Business Days'
notice to Buyer, Seller may (A) purchase securities or loans,
as applicable ("Replacement Collateral"), that are in as
similar an amount and interest rate as is reasonably
practicable and in the same Rating Category as such Purchased
Securities or the same Collateral Type Grouping as such
Purchased Loans or (B) in its sole discretion elect, in lieu of
purchasing Replacement Collateral, to be deemed to have
purchased Replacement Collateral at a price therefor equal
58
to the Market Value of such Purchased Securities or Purchased
Loans as of such date.
(iii) Buyer shall be liable to Seller for any excess of the price
paid (or deemed paid) by Seller for Replacement Collateral
therefor over the Repurchase Price for the Purchased Securities
and Purchased Loans replaced thereby, together with Seller's
reasonable costs and expenses.
15. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereunto and will enter
into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions hereunder and
(iii) that payments, deliveries and other transfers made by either of them in
respect of any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions
hereunder, and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.
16. RECORDING OF COMMUNICATIONS
EACH OF BUYER AND SELLER SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) FROM
TIME TO TIME TO MAKE OR CAUSE TO BE MADE TAPE RECORDINGS OF COMMUNICATIONS
BETWEEN ITS EMPLOYEES, IF ANY, AND THOSE OF THE OTHER PARTY WITH RESPECT TO
TRANSACTIONS; PROVIDED, HOWEVER, THAT SUCH RIGHT TO RECORD COMMUNICATIONS SHALL
BE LIMITED TO COMMUNICATIONS OF EMPLOYEES TAKING PLACE ON THE TRADING FLOOR OF
THE APPLICABLE PARTY. EACH OF BUYER AND SELLER HEREBY CONSENTS TO THE
ADMISSIBILITY OF SUCH TAPE RECORDINGS IN ANY COURT, ARBITRATION, OR OTHER
PROCEEDINGS, AND AGREES THAT A DULY AUTHENTICATED TRANSCRIPT OF SUCH A TAPE
RECORDING SHALL BE DEEMED TO BE A WRITING CONCLUSIVELY EVIDENCING THE PARTIES'
AGREEMENT.
17. NOTICES AND OTHER COMMUNICATIONS
Unless otherwise provided in this Agreement, all notices, consents,
approvals and requests required or permitted hereunder shall be given in writing
and shall be effective for all purposes if sent by (a) hand delivery, with proof
of delivery, (b) certified or registered United States mail, postage prepaid,
(c) expedited prepaid delivery service, either commercial or United States
Postal Service, with proof of delivery, or (d) by telecopier (with answerback
acknowledged) provided that such telecopied notice must also be delivered by one
of the means set forth in (a), (b) or (c) above, to the address specified in
Annex I hereto or at such other
59
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. A copy of all notices, consents, approvals
and requests directed to Seller (other than Confirmations) shall be delivered
concurrently to the following: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. 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 of 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.
18. 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.
19. NON-ASSIGNABILITY
(a) The rights and obligations of the Seller under the Transaction
Documents and under any Transaction shall not be assigned by the Seller without
the prior written consent of the Buyer.
(b) The Buyer may assign its rights and obligations under the Transaction
Documents and/or under any Transaction or may issue one or more participation
interests with respect to any or all of the Transactions, without the consent
of, but after prior notice to, the Seller, to any other Person and, in
connection therewith, may bifurcate or allocate (i.e. senior/ subordinate)
amounts owed to Buyer; provided, however, that with respect to any such
participation or assignment, (i) Buyer shall act as exclusive agent for all
participants or assignees in any dealings with Seller in connection with such
Transactions 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. The Seller shall
reasonably cooperate at Buyer's sole cost and expense with the Buyer in
connection with any assignment or participation, provided the Seller's
obligations under the Transactions are not increased and its rights under the
Transactions are not impaired.
(c) Subject to the foregoing, the Transaction Documents and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. Nothing in the Transaction
Documents, express or implied, shall give to any Person, other than the parties
to the Transaction Documents and their respective successors, any benefit or any
legal or equitable right, power, remedy or claim under the Transaction
Documents.
60
20. 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.
21. 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 any of the foregoing, the failure to give
a notice pursuant to Section 4(a) or 4(b) hereof will not constitute a waiver of
any right to do so at a later date.
22. 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 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.
23. 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 Assets subject to such Transaction or the
term of such Transaction would render such definition inapplicable), and a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended (except insofar as the type of assets subject to
such Transaction would render such definition inapplicable).
(b) It is understood that either party's right to liquidate Assets
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Section 14
61
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 "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).
24. 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;
(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.
25. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
(a) Each party irrevocably and unconditionally (i) submits to the
non-exclusive jurisdiction of any United States Federal or New York State court
sitting in Manhattan, and any appellate court from any such court, solely for
the purpose of any suit, action or proceeding brought to enforce its obligations
under this Agreement or relating in any way to this Agreement or any Transaction
under this Agreement and (ii) waives, to the fullest extent it may effectively
do so, any defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile.
(b) To the extent that either party has or hereafter may acquire any
immunity (sovereign or otherwise) from any legal action, suit or proceeding,
from jurisdiction of any court
62
or from set off or any legal process (whether service or notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise) with respect to itself or any of its property, such party
hereby irrevocably waives and agrees not to plead or claim such immunity in
respect of any action brought to enforce its obligations under this Agreement or
relating in any way to this Agreement or any Transaction under this Agreement.
(c) The parties hereby irrevocably waive, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding and irrevocably consent to the service of any summons
and complaint and any other process by the mailing of copies of such process to
them at their respective address specified herein. The parties hereby agree that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section 25 shall affect the right of the Buyer
to serve legal process in any other manner permitted by law or affect the right
of the Buyer to bring any action or proceeding against the Seller or its
property in the courts of other jurisdictions.
(d) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY INSTRUMENT OR DOCUMENT
DELIVERED HEREUNDER OR THEREUNDER.
26. NO RELIANCE
Each of Buyer and Seller hereby acknowledges, represents and warrants to
the other that, in connection with the negotiation of, the entering into, and
the performance under, the Transaction Documents and each Transaction
thereunder:
(a) It is not relying (for purposes of making any investment decision or
otherwise) upon any advice, counsel or representations (whether written or oral)
of the other party to the Transaction Documents, other than the representations
expressly set forth in the Transaction Documents;
(b) It has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisors to the extent that it has deemed
necessary, and it has made its own investment, hedging and trading decisions
(including decisions regarding the suitability of any Transaction) based upon
its own judgment and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the other party;
(c) It is a sophisticated and informed Person that has a full understanding
of all the terms, conditions and risks (economic and otherwise) of the
Transaction Documents and each Transaction thereunder and is capable of assuming
and willing to assume (financially and otherwise) those risks;
(d) It is entering into the Transaction Documents and each Transaction
thereunder for the purposes of managing its borrowings or investments or hedging
its underlying assets or liabilities and not for purposes of speculation; and
63
(e) It is not acting as a fiduciary or financial, investment or commodity
trading advisor for the other party and has not given the other party (directly
or indirectly through any other Person) any assurance, guaranty or
representation whatsoever as to the merits (either legal, regulatory, tax,
business, investment, financial accounting or otherwise) of the Transaction
Documents or any Transaction thereunder.
27. INDEMNITY
The Seller hereby agrees to indemnify the Buyer, the Buyer's designee and
each of its officers, directors, employees and agents ("Indemnified Parties")
from and against any and all liabilities, obligations, actual out-of-pocket
losses, actual out-of-pocket damages, actual out-of-pocket penalties, actions,
judgments, suits, actual out-of-pocket taxes (including stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect to any
of the Collateral or in connection with any of the transactions contemplated by
this Agreement and the documents delivered in connection herewith, other than
income or similar taxes of the Buyer), actual out-of-pocket fees, actual
out-of-pocket costs, actual out-of-pocket expenses (including reasonable
attorneys fees and disbursements) or disbursements (all of the foregoing,
collectively "Indemnified Amounts") which may at any time (including, without
limitation, such time as this Agreement shall no longer be in effect and the
Transactions shall have been repaid in full) be imposed on or asserted against
any Indemnified Party in any way whatsoever arising out of or in connection
with, or relating to, this Agreement or any Transactions 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,
the Truth in Lending Act and/or the Real Estate Settlement Procedures Act, 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, Seller will save, indemnify and hold Buyer
harmless from and against all expense (including reasonable attorneys' fees),
loss or damage suffered by reason of any defense, set-off, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by Seller of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time owing
to or in favor of such account debtor or obligor or its successors from Seller.
Seller also agrees to reimburse Buyer as and when billed by Buyer for all
Buyer's reasonable costs and out-of-pocket expenses incurred in connection with
Buyer's due diligence reviews with respect to the Purchased Loans and Purchased
Securities (including, without limitation, those incurred pursuant to Section
28) and the enforcement or the preservation of Buyer's rights under this
Agreement or any Transaction contemplated hereby, including without limitation
the reasonable fees and disbursements of its counsel. Seller hereby acknowledges
that, the obligation of Seller hereunder is a recourse obligation of Seller.
64
28. DUE DILIGENCE
Seller acknowledges that, at reasonable times and upon reasonable notice,
Buyer has the right to perform continuing due diligence reviews with respect to
the Purchased Securities and the Purchased Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and Seller agrees that upon reasonable prior notice to
Seller, Buyer or its authorized representatives will be permitted during normal
business hours to examine, inspect, and make copies and extracts of, the
Purchased Loan Files, Servicing Records and any and all documents, records,
agreements, instruments or information relating to such Purchased Securities and
Purchased Loans in the possession or under the control of Seller, any other
servicer or subservicer and/or the 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
Securities and Purchased Loans. Without limiting the generality of the
foregoing, Seller acknowledges that Buyer may enter into Transactions with the
Seller based solely upon the information provided by Seller to Buyer and the
representations, warranties and covenants contained herein, and that Buyer, at
its option, has the right at any time to conduct a partial or complete due
diligence review on some or all of the Purchased Securities and Purchased Loans.
Buyer may underwrite such Purchased Loans itself or engage a third party
underwriter to perform such underwriting. Seller agrees to reasonably cooperate
with Buyer and any third party underwriter reasonably acceptable to Seller 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
Securities and Purchased Loans in the possession, or under the control, of
Seller. Seller further agrees that Seller shall reimburse Buyer for any and all
out-of-pocket costs and expenses reasonably incurred by Buyer in connection with
Buyer's activities pursuant to this Section 28.
29. SERVICING
(a) Notwithstanding the purchase and sale of the Purchased Loans hereby,
Seller or Sponsor or any other third party servicer approved by Buyer shall
continue to service the Purchased Loans 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, Buyer's assigns; provided, however,
that the obligations of Seller or Sponsor to service any of the Purchased Loans
shall cease, at Seller's option, upon the payment by Seller to Buyer of the
Repurchase Price therefor. In connection therewith, Seller shall be entitled to
exercise all discretion with respect to the servicing of the Purchased Loans;
provided that Seller shall not effect a Significant Purchased Loan Modification
without the consent of Buyer, such consent not to be unreasonably withheld,
conditioned or delayed. Seller shall service or cause the servicer to service
the Purchased Loans in accordance with Accepted Servicing Practices approved by
Buyer in the exercise of its reasonable business judgment and maintained by
other prudent mortgage lenders with respect to mortgage loans similar to the
Purchased Loans.
(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
65
other records relating to or evidencing the servicing of Purchased Loans (the
"Servicing Records") so long as the Purchased Loans are subject to this
Agreement. Seller grants Buyer a security interest in all servicing fees and
rights relating to the Purchased Loans and all Servicing Records to secure the
obligation of the Seller or its designee to service in conformity with this
Section and any other obligation of Seller to Buyer. Seller covenants to
safeguard such Servicing Records and to deliver them promptly to Buyer or its
designee (including the Custodian) at Buyer's request.
(c) Upon the occurrence and during the continuance of an Event of Default,
Buyer may, in its sole discretion, (i) sell its right to the Purchased Loans on
a servicing released basis or (ii) terminate the Seller or any sub-servicer of
the Purchased Loans with or without cause, in each case without payment of any
termination fee.
(d) Seller shall not employ sub-servicers (other than the Sponsor) to
service the Purchased Loans without the prior written approval of Buyer. If the
Purchased Loans are serviced by a sub-servicer, Seller shall irrevocably assign
all rights, title and interest in the Servicing Agreements in the Purchased
Loans to Buyer.
(e) Seller shall cause any sub-servicers engaged by Seller to execute a
letter agreement with Buyer acknowledging Buyer's security interest and agreeing
that it shall deposit all Income with respect to the Purchased Loans in the Cash
Management Account.
(f) The payment of servicing fees shall be subordinate to payment of
amounts outstanding under any Transaction and this Agreement.
30. MISCELLANEOUS
(a) All rights, remedies and powers of Buyer hereunder and in connection
herewith are irrevocable and cumulative, and not alternative or exclusive, and
shall be in addition to all other rights, remedies and powers of Buyer whether
under law, equity or agreement. In addition to the rights and remedies granted
to it in this Agreement, to the extent this Agreement is determined to create a
security interest, Buyer shall have all rights and remedies of a secured party
under the UCC.
(b) The Transaction Documents may be executed in counterparts, each of
which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.
(c) The headings in the Transaction Documents are for convenience of
reference only and shall not affect the interpretation or construction of the
Transaction Documents.
(d) Without limiting the rights and remedies of Buyer under the Transaction
Documents, Seller shall pay Buyer's reasonable actual out-of-pocket costs and
expenses, including reasonable fees and expenses of accountants, attorneys and
advisors, incurred in connection with the preparation, negotiation, execution
and consummation of, and any amendment, supplement or modification to, the
Transaction Documents and the Transactions thereunder. Seller agrees to pay
Buyer on demand all costs and expenses (including reasonable expenses for legal
services of every kind) of any subsequent enforcement of any of the
66
provisions hereof, or of the performance by Buyer of any obligations of Seller
in respect of the Purchased Securities, or any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement in respect of any of
the Collateral and for the custody, care or preservation of the Collateral
(including insurance costs) and defending or asserting rights and claims of
Buyer in respect thereof, by litigation or otherwise. In addition, Seller agrees
to pay Buyer on demand all reasonable costs and expenses (including reasonable
expenses for legal services) incurred in connection with the maintenance of the
Cash Management Account and registering the Collateral in the name of Buyer or
its nominee. All such expenses shall be recourse obligations of Seller to Buyer
under this Agreement.
(e) Each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or be invalid under such law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
(f) The parties acknowledge and agree that although they intend to treat
each Transaction as a sale of the Purchased Securities and Purchased Loans, in
the event that such sale shall be recharacterized as a secured financing, this
Agreement shall also serve as a security agreement with respect to Buyer's
rights in the Collateral. In order to secure and to provide for the prompt and
unconditional repayment of the Repurchase Price and the performance of its
obligations under this Agreement, Seller hereby pledges to Buyer and hereby
grants to Buyer a first priority security interest in all of its rights in the
Purchased Securities and Purchased Loans. Seller hereby covenants to duly
execute any Form UCC financing statements as reasonably required by Buyer in
order to perfect its security interest created hereby in such rights and
obligations granted above, it being agreed that Seller shall pay any and all
fees required to file such financing statements.
(g) This Agreement contains a final and complete integration of all prior
expressions by the parties with respect to the subject matter hereof and thereof
and shall constitute the entire agreement among the parties with respect to such
subject matter, superseding all prior oral or written understandings.
(h) The parties understand that this Agreement is a legally binding
agreement that may affect such party's rights. Each party represents to the
other that it has received legal advice from counsel of its choice regarding the
meaning and legal significance of this Agreement and that it is satisfied with
its legal counsel and the advice received from it.
(i) Should any provision of this Agreement require judicial interpretation,
it is agreed that a court interpreting or construing the same shall not apply a
presumption that the terms hereof shall be more strictly construed against any
Person by reason of the rule of construction that a document is to be construed
more strictly against the Person who itself or through its agent prepared the
same, it being agreed that all parties have participated in the preparation of
this Agreement.
(j) 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.
67
IN WITNESS WHEREOF, the parties have executed this Agreement as a deed as
of the day first written above.
BUYER:
------
DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
SELLER:
-------
NRFC DB HOLDINGS, LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
ANNEXES, EXHIBITS AND SCHEDULES
-------------------------------
ANNEX I Names and Addresses for Communications between Parties
SCHEDULE I Original Purchase Percentages, CF Sweep Purchase Percentages,
Buyer's Margin Percentages and Applicable Spreads
SCHEDULE II CDO Eligible Assets Expectations
EXHIBIT I Form of Confirmation
EXHIBIT II Authorized Representatives of Seller
EXHIBIT III Monthly Reporting Package
EXHIBIT IV Form of Custodial Delivery
EXHIBIT V Form of Power of Attorney
EXHIBIT VI Representations and Warranties Regarding Individual Purchased
Loans
EXHIBIT VII Collateral Information
EXHIBIT VIII Advance Procedure
EXHIBIT IX Form of Re-Direction Letter
ANNEX I
NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES
Buyer:
------
Deutsche Bank AG, Cayman Islands Branch
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
email: ▇▇▇.▇▇▇▇▇▇▇@▇▇.▇▇▇
With copies to:
---------------
Deutsche Bank AG, Cayman Islands Branch
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
and
---
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
Seller:
-------
NRFC DB Holdings, LLC
c/o NorthStar Realty Finance Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇/(▇▇▇) ▇▇▇-▇▇▇▇/(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇/(▇▇▇) ▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
With a copy to:
---------------
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
SCHEDULE I
----------
Original Purchase Percentages, CF Sweep Purchase Percentages
Buyer's Margin Percentages and Applicable Spreads
ELIGIBLE LOANS:
----------------------------- ---------------- --------------- ----------------- ---------------
COLLATERAL STRUCTURE TIER ONE TIER TWO TIER THREE TIER FOUR
LOANS(1) LOANS(2) LOANS(3) LOANS(4)
----------------------------- ---------------- --------------- ----------------- ---------------
1st Lien(5) A+ A B C
----------------------------- ---------------- --------------- ----------------- ---------------
CTL Loans A+ A B C
----------------------------- ---------------- --------------- ----------------- ---------------
B-Note/2nd Mortgages B+ B C D
----------------------------- ---------------- --------------- ----------------- ---------------
Mezzanine Loan(6) B+ C C D
----------------------------- ---------------- --------------- ----------------- ---------------
Syndicated Bank Loan(7) To be To be To be To be
determined determined determined determined
----------------------------- ---------------- --------------- ----------------- ---------------
----------------- ------------------------- ------------------------- ------------------------- --------------
COLLATERAL TYPE APPLICABLE
GROUPING ORIGINAL CF SWEEP MARGIN MAINTENANCE SPREAD IN
PURCHASE PERCENTAGE PURCHASE PERCENTAGE PERCENTAGE BASIS
POINTS(8)
----------------- ------------------------- ------------------------- ------------------------- --------------
MSER(9) MSER(9) MSER(9) MSER(9) MSER(9) MSER(9)
<$60mm =>$60mm <$60mm =>$60mm <$60mm =>$60mm
----------------- ------------ ------------ ------------ ------------ ------------ ------------ --------------
A+ 85% 92.5% 87.5% 92.5% 90% 95% 75
----------------- ------------ ------------ ------------ ------------ ------------ ------------ --------------
A 80% 85% 85% 90% 90% 95% 100
----------------- ------------ ------------ ------------ ------------ ------------ ------------ --------------
B+ 70% 80% 75% 85% 80% 90% 125
----------------- ------------ ------------ ------------ ------------ ------------ ------------ --------------
B 70% 75% 75% 80% 80% 85% 150
----------------- ------------ ------------ ------------ ------------ ------------ ------------ --------------
C 50% 55% 65% 70% 70% 75% 200
----------------- ------------ ------------ ------------ ------------ ------------ ------------ --------------
D 45% 50% 55% 60% 65% 70% 200
----------------- ------------ ------------ ------------ ------------ ------------ ------------ --------------
ELIGIBLE SECURITIES(10):
--------------------- ------------------------- ------------------------- -------------------------- -------------
RATING CATEGORY APPLICABLE
ORIGINAL CF SWEEP MARGIN MAINTENANCE SPREAD (IN
PURCHASE PERCENTAGE PURCHASE PERCENTAGE PERCENTAGE BASIS
POINTS)
--------------------- ------------------------- ------------------------- -------------------------- -------------
MSER(9) MSER(9) MSER(9) MSER(9) MSER(9) MSER(9)
<$60mm =>$60mm <$60mm =>$60mm <$60mm =>$60mm
--------------------- ------------ ------------ ------------ ------------ ------------ ------------- -------------
BBB- & higher 70% 80% 82.5% 82.5% 85% 85% 75
--------------------- ------------ ------------ ------------ ------------ ------------ ------------- -------------
BB+ & BB 65% 75% 80% 80% 80% 85% 125
--------------------- ------------ ------------ ------------ ------------ ------------ ------------- -------------
BB- 60% 70% 75% 80% 80% 85% 150
--------------------- ------------ ------------ ------------ ------------ ------------ ------------- -------------
B+ & B 55% 65% 70% 75% 75% 80% 180
--------------------- ------------ ------------ ------------ ------------ ------------ ------------- -------------
B- 45% 55% 60% 65% 70% 75% 225
--------------------- ------------ ------------ ------------ ------------ ------------ ------------- -------------
DBSI CDO SECURITIES(11):
------------------- -------------------------- ------------------------- -------------------------- ----------------
RATING CATEGORY APPLICABLE
ORIGINAL CF SWEEP MARGIN MAINTENANCE SPREAD (IN
PURCHASE PERCENTAGE PURCHASE PERCENTAGE PERCENTAGE BASIS POINTS)
------------------- ------------- ------------ ------------ ------------ ------------ ------------- ----------------
MSER(9) MSER(9) MSER(9) MSER(9) MSER(9) MSER(9)
<$60mm =>$60mm <$60mm =>$60mm <$60mm =>$60mm
------------------- ------------- ------------ ------------ ------------ ------------ ------------- ----------------
BB 40% 50% 55% 60% 65% 70% 160
------------------- ------------- ------------ ------------ ------------ ------------ ------------- ----------------
----------
(1) "Tier One Loans" have an loan-to-value ratio of less than or equal to 75%
and a debt service coverage ratio equal to or greater than 1.25.
(2) "Tier Two Loans" have an loan-to-value ratio of less than or equal to 80%
and a debt service coverage ratio equal to or greater than 1.20.
(3) "Tier Three Loans" have an loan-to-value ratio of less than or equal to 85%
and a debt service coverage ratio equal to or greater than 1.15.
(4) "Tier Four Loans" have an loan-to-value ratio of less than or equal to 90%
and a debt service coverage ratio equal to or greater than 1.10.
(5) Includes senior participation interests in whole mortgage loans.
(6) Includes participation interests in mezzanine loans.
(7) The Original Purchase Percentage, CF Sweep Purchase Percentage, Margin
Maintenance Percentage and Applicable Spread with respect to an Eligible
Loan of the type described in clause (v) of the definition thereof shall be
determined by Buyer at the time of entering into the related Transaction
pursuant to Section 3 of the Agreement.
(8) Does not apply to Purchased Loans which are Eligible Loans of the type
described in clause (ii) of the definition thereof.
(9) "MSER" means Minimum Seller's Equity Requirement.
(10) The Original Purchase Percentage, CF Sweep Purchase Percentage, Margin
Maintenance Percentage and Applicable Spread set forth in this table shall
be applicable to Eligible Securities as defined in the Agreement other than
Eligible Securities of the type described in clause (iv) of such
definition.
(11) The Original Purchase Percentage, CF Sweep Purchase Percentage, Margin
Maintenance Percentage and Applicable Spread set forth in this table shall
be applicable to Eligible Securities of the type described in clause (iv)
of the definition of Eligible Security in the Agreement.
2
SCHEDULE II
ELIGIBLE ASSET EXPECTATIONS
-------------------------------------------- ------------------------------ ----------------------------------
TEST PORTFOLIO PARAMETERS DESCRIPTION OF PORTFOLIO
DURING REINVESTMENT AT CLOSE
-------------------------------------------- ------------------------------ ----------------------------------
POOL SIZE
----------------- -------------------------- ------------------------------ ----------------------------------
Minimum Pool Size $375 million
----------------- --------------------------------------------------------- ----------------------------------
----------------- -------------------------- ------------------------------ ----------------------------------
ASSET TYPE
----------------- -------------------------- ------------------------------ ----------------------------------
CMBS <= 35% <= 35%
----------------- -------------------------- ------------------------------ ----------------------------------
Whole loan <= 100% <= 100%
----------------- -------------------------- ------------------------------ ----------------------------------
B-Note/Participation <= 100% <= 100%
----------------- -------------------------- ------------------------------ ----------------------------------
Mezz Loan <= 50% <= 50%
----------------- -------------------------- ------------------------------ ----------------------------------
Inv. Grade REIT <= 100% <= 100%
----------------- -------------------------- ------------------------------ ----------------------------------
BB REIT <= 7.5% <= 7.5%
----------------- -------------------------- ------------------------------ ----------------------------------
Inv. Grade CTL <= 100% <= 100%
----------------- -------------------------- ------------------------------ ----------------------------------
BB CTL <= 7.5% <= 7.5%
----------------- -------------------------- ------------------------------ ----------------------------------
CDO At DB discretion At DB discretion
----------------- -------------------------- ------------------------------ ----------------------------------
----------------- -------------------------- ------------------------------ ----------------------------------
----------------- -------------------------- ------------------------------ ----------------------------------
RATINGS
----------------- -------------------------- ------------------------------ ----------------------------------
▇▇▇▇▇'▇ ▇▇▇▇ <= 4000 3500-4000
----------------- -------------------------- ------------------------------ ----------------------------------
Fitch ▇▇▇▇ <= 40 35-40
----------------- -------------------------- ------------------------------ ----------------------------------
----------------- -------------------------- ------------------------------ ----------------------------------
DIVERSITY
----------------- -------------------------- ------------------------------ ----------------------------------
Max obligor size 8.50% 8.50%
----------------- -------------------------- ------------------------------ ----------------------------------
Deal herf >=20 >=20
----------------- -------------------------- ------------------------------ ----------------------------------
----------------- -------------------------- ------------------------------ ----------------------------------
VINTAGE
----------------- -------------------------- ------------------------------ ----------------------------------
Max single year 75% 75%
----------------- -------------------------- ------------------------------ ----------------------------------
-------------------------------------------- ------------------------------ ----------------------------------
PROPERTY TYPE
----------------- -------------------------- ------------------------------ ----------------------------------
Office <=35% <=35%
----------------- -------------------------- ------------------------------ ----------------------------------
Retail <=35% <=35%
----------------- -------------------------- ------------------------------ ----------------------------------
Multifamily <=35% <=35%
----------------- -------------------------- ------------------------------ ----------------------------------
Industrial <=35% <=35%
----------------- -------------------------- ------------------------------ ----------------------------------
Hotel <=35% <=35%
----------------- -------------------------- ------------------------------ ----------------------------------
Healthcare <=5% <=5%
----------------- -------------------------- ------------------------------ ----------------------------------
Condo conversion <=5% <=5%
----------------- -------------------------- ------------------------------ ----------------------------------
Other <=5% <=5%
----------------- -------------------------- ------------------------------ ----------------------------------
----------------- -------------------------- ------------------------------ ----------------------------------
LOCATION
----------------- -------------------------- ------------------------------ ----------------------------------
CA <=35% <=35%
----------------- -------------------------- ------------------------------ ----------------------------------
NY <=35% <=35%
----------------- -------------------------- ------------------------------ ----------------------------------
DC <=30% <=30%
----------------- -------------------------- ------------------------------ ----------------------------------
FL <=30% <=30%
----------------- -------------------------- ------------------------------ ----------------------------------
Other state <=25% <=25%
----------------- -------------------------- ------------------------------ ----------------------------------
COUPON/SPREAD MINIMUM WEIGHTED AVERAGE/SINGLE ASSET
----------------- -------------------------- ------------------------------ ----------------------------------
Fixed 5.00% 5.00%
----------------- -------------------------- ------------------------------ ----------------------------------
Single Asset 4.50% 4.50%
----------------- -------------------------- ------------------------------ ----------------------------------
Floating 4.00% 4.00%
----------------- -------------------------- ------------------------------ ----------------------------------
Single Asset 2.40% 2.40%
----------------- -------------------------- ------------------------------ ----------------------------------
----------------- -------------------------- -----------------------------------------------------------------
WAL <= 11 years as reduced by the CDO seasoning
----------------- -------------------------- -----------------------------------------------------------------
EXHIBIT I
CONFIRMATION STATEMENT
DEUTSCHE BANK AG,
CAYMAN ISLANDS BRANCH
Ladies and Gentlemen:
Deutsche Bank AG, Cayman Islands Branch, is pleased to deliver our written
CONFIRMATION of our agreement to enter into the Transaction pursuant to which
Deutsche Bank AG, Cayman Islands Branch shall purchase from you the Purchased
Securities and/or Purchased Loans identified in the Amended and Restated Master
Repurchase Agreement, dated as of March 21, 2005 (the "Agreement"), between
Deutsche Bank AG, Cayman Islands Branch (the "Buyer") and NRFC DB Holdings, LLC
(the "Seller") as follows below and on the attached Schedule 1. Capitalized
terms used herein without definition have the meanings given in the Agreement.
Purchase Date: __________, 200_
Purchased Securities/Purchased As identified on attached Schedule 1
Loans:
Aggregate Principal Amount of As identified on attached Schedule 1
Purchased Securities/Purchased Loans:
Repurchase Date:
Purchase Price: $
Pricing Rate: [one month LIBOR plus ______%]
[If a CDO Eligible Asset, during
CDO Ramp-Up Period: one month
LIBOR plus ______%, and after CDO
Ramp-Up Period: one month LIBOR
plus ______%.]
Buyer's Margin Percentage: [______%]
[If a CDO Eligible Asset, during CDO
Ramp-Up Period: ____%, and after CDO
Ramp-Up Period: ____%.]
Amount required to be deposited into [See attachment hereto.]
Securities Account or provided as a
Letter of Credit (applicable for CDO
Eligible Assets with a 77% Original
Purchase Percentage):
Governing Agreements: As identified on attached Schedule 1
Name and address for Buyer: Deutsche Bank AG,
communications: Cayman Islands Branch
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
email: ▇▇▇.▇▇▇▇▇▇▇@▇▇.▇▇▇
Seller: NRFC DB Holdings, LLC
c/o NorthStar Realty Finance Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇/
(▇▇▇) ▇▇▇-▇▇▇▇/
(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇/
(▇▇▇) ▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇/
▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇/
▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
AGREED AND ACKNOWLEDGED:
NRFC DB HOLDINGS, LLC,
a Delaware limited liability company
By:
----------------------------------
Name:
Title:
2
SCHEDULE 1 TO CONFIRMATION STATEMENT
Purchased Securities:
Aggregate Principal Amount:
CUSIP NO.:
Securitization Document (including trustee):
--------------------------------------------------------------------------------
Purchased Loans:
Aggregate Principal Amount:
3
EXHIBIT II
AUTHORIZED REPRESENTATIVES OF SELLER
Name Specimen Signature
---- ------------------
▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- -----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- -----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------------
EXHIBIT III
MONTHLY REPORTING PACKAGE
-------------------------
[SAMPLE TO BE ATTACHED]
EXHIBIT IV
FORM OF CUSTODIAL DELIVERY
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On this ______ of ________, 2005, NRFC DB HOLDINGS, LLC, as Seller under
that certain Amended and Restated Master Repurchase Agreement, dated as of March
21, 2005 (the "Repurchase Agreement") between Deutsche Bank AG, Cayman Islands
Branch ("Buyer") and NRFC DB Holdings, LLC, does hereby deliver to LaSalle Bank
National Association ("Custodian"), as custodian under that certain Custodial
Agreement, dated as of March 21, 2005 (the "Custodial Agreement"), among Buyer,
Custodian and NRFC DB Holdings, LLC, the Purchased Loan Files with respect to
the Purchased Loans to be purchased by Buyer pursuant to the Repurchase
Agreement, which Purchased Loans are listed on the Purchased Loan Schedule
attached hereto and which Purchased Loans shall be subject to the terms of the
Custodial Agreement on the date hereof.
With respect to the Purchased Loan Files delivered hereby, for the purposes
of issuing the Trust Receipt, the Custodian shall review the Purchased Loan
Files to ascertain delivery of the documents listed in Section 3(g) to the
Custodial Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Custodial Agreement.
IN WITNESS WHEREOF, the Seller has caused its name to be signed hereto by
its officer thereunto duly authorized as of the day and year first above
written.
NRFC DB HOLDINGS, LLC,
a Delaware limited liability company
By:
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Name:
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Title:
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EXHIBIT V
FORM OF POWER OF ATTORNEY
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"Know All Men by These Presents, that NRFC DB HOLDINGS, LLC ("Seller"),
does hereby appoint Deutsche Bank AG, Cayman Islands Branch ("Buyer"), 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, the Mezzanine Notes, the Assignments of Mortgages,
participations certificates, participation agreements and/or promissory notes
(ii) the recordation of the Assignments of Mortgages and (iii) the enforcement
of the Seller's rights under the Purchased Loans purchased by Buyer pursuant to
the Amended and Restated Master Repurchase Agreement dated as of March 21, 2005
(the "Repurchase Agreement"), among Buyer and NRFC DB Holdings, LLC, 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 and the Servicing
Records to the extent that Seller is permitted by law to act through an agent.
TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY
THIRD PARTY RECEIVING A DULY EXECUTED COPY 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
as a deed this __ day of __________________, 20__.
NRFC DB HOLDINGS, LLC,
a Delaware limited liability company
By:
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Name:
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Title:
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EXHIBIT VI
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
SECURED BY A MORTGAGE
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1. Purchased Loan Schedule and Collateral Information. As of the Purchase
Date, the information set forth in the Purchased Loan Schedule and the
Collateral Information is complete, true and correct in all material respects.
2. Whole Loan; Ownership of Purchased Loans. Each Purchased Loan is a whole
loan and not a participation interest in a whole loan. Immediately prior to the
transfer to the Buyer of the Purchased Loans, the Seller had good title to, and
was the sole owner of, each Purchased Loan. The Seller has full right, power and
authority to transfer and assign each of the Purchased Loans to or at the
direction of the Buyer and has validly and effectively conveyed (or caused to be
conveyed) to the Buyer or its designee all of the Seller's legal and beneficial
interest in and to the Purchased Loans free and clear of any and all pledges,
liens, charges, security interests and/or other encumbrances. The sale of the
Purchased Loans to the Buyer or its designee does not require the Seller to
obtain any governmental or regulatory approval or consent that has not been
obtained.
3. Payment Record. No scheduled payment of principal and interest under any
Purchased Loan was 30 days or more past due as of the Purchase Date without
giving effect to any applicable grace period, and no Purchased Loan was 30 days
or more delinquent in the twelve-month period immediately preceding the Purchase
Date.
4. Lien; Valid Assignment. The Mortgage related to and delivered in
connection with each Purchased Loan constitutes a valid and, subject to the
exceptions set forth in paragraph 13 below, enforceable first priority lien upon
the related Mortgaged Property, prior to all other liens and encumbrances,
except for:
(a) the lien for current real estate taxes and assessments not yet due
and payable,
(b) covenants, conditions and restrictions, rights of way, easements
and other matters that are of public record and/or are referred to in the
related lender's title insurance policy,
(c) exceptions and exclusions specifically referred to in such
lender's title insurance policy, and
(d) other matters to which like properties are commonly subject,
none of which matters referred to in clauses (b), (c) or (d) materially
interferes with the security intended to be provided by such Mortgage or the
marketability or current use of the Mortgaged Property or the current ability of
the Mortgaged Property to generate operating income sufficient to service the
Purchased Loan debt (the foregoing items (a) through (d) being herein referred
to as the "Permitted Encumbrances").
The related assignment of such Mortgage executed and delivered in favor of the
Buyer is in recordable form and constitutes a legal, valid and binding
assignment, sufficient to convey to the assignee named therein all of the
assignor's right, title and interest in, to and under such Mortgage. Such
Mortgage, together with any separate security agreements, chattel mortgages or
equivalent instruments, establishes and creates a valid and, subject to the
exceptions set forth in paragraph 13 below, enforceable security interest in
favor of the holder thereof in all of the related Mortgagor's personal property
used in, and reasonably necessary to operate the related Mortgaged Property. 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.
Notwithstanding the foregoing, no representation is made as to the perfection of
any security interest in rents or other personal property to the extent that
possession or control of such items or actions other than the filing of Uniform
Commercial Code financing statements are required in order to effect such
perfection.
5. Assignment of Leases and Rents. The assignment of leases and rents
("Assignment of Leases") set forth in the Mortgage (or in a separate instrument)
and related to and delivered in connection with each Purchased Loan establishes
and creates a valid, subsisting and, subject to the exceptions set forth in
paragraph 13 below, enforceable first or second priority perfected lien and
first or second priority perfected security interest in the related Mortgagor's
interest in all leases, sub-leases, licenses or other agreements pursuant to
which any person is entitled to occupy, use or possess all or any portion of the
real property subject to the related Mortgage, and each assignor thereunder has
the full right to assign the same. The related assignment of any Assignment of
Leases, not included in a Mortgage, executed and delivered in favor of the Buyer
is in recordable form and constitutes a legal, valid and binding assignment,
sufficient to convey to the assignee named therein all of the assignor's right,
title and interest in, to and under such Assignment of Leases.
6. Mortgage Status; Waivers and Modifications. No Mortgage has been
satisfied, canceled, rescinded or subordinated in whole or in material part, and
the related Mortgaged Property has not been released by Seller from the lien of
such Mortgage, in whole or in material part, nor has any instrument been
executed by Seller that would effect any such satisfaction, cancellation,
subordination, rescission or release except for any partial reconveyances of
portions of the real property that do not materially adversely affect the value
of the property. None of the terms of any Mortgage Note, Mortgage or Assignment
of Leases have been impaired, waived, altered or modified in any respect, except
by written instruments, all of which are included in the related Mortgage File.
7. Condition of Property; Condemnation. Except as set forth in an
engineering report prepared in connection with the origination of the related
Purchased Loan, each Mortgaged Property is, to the Seller's knowledge, free and
clear of any damage that would materially and adversely affect its value as
security for the related Purchased Loan (normal wear and tear excepted). The
Seller has received no notice of any pending or threatened proceeding for the
condemnation of all or any material portion of any Mortgaged Property. To the
Seller's knowledge (based on surveys and/or title insurance obtained in
connection with the origination of the Purchased Loans to the extent received)
as of the date of the origination of each Purchased
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Loan, all of the material improvements on the related Mortgaged Property which
were considered in determining the appraised value of the Mortgaged Property lay
wholly within the boundaries and building restriction lines of such property,
except for encroachments that are insured against by the lender's title
insurance policy referred to herein or that do not materially and adversely
affect the value or marketability of such Mortgaged Property, and no
improvements on adjoining properties materially encroached upon such Mortgaged
Property so as to materially and adversely affect the value or marketability of
such Mortgaged Property, except those encroachments that are insured against by
the Title Policy referred to herein.
8. Title Insurance. Each Mortgaged Property is covered by an American Land
Title Association (or an equivalent form thereof as adopted in the applicable
jurisdiction) lender's or owner's title insurance policy (the "Title Policy"),
as the case may be, in the original principal amount of the related Purchased
Loan after all advances of principal. Each Title Policy insures that the related
Mortgage is a valid first priority lien on such Mortgaged Property, subject only
to the exceptions stated therein (or 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 the 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 the Buyer, such Title Policy (or, if it has yet to be issued, the coverage to
be provided thereby) will inure to the benefit of the Buyer without the consent
of or notice to the insurer.
9. No Holdbacks. The proceeds of each Purchased Loan have been fully
disbursed and there is no obligation for future advances with respect thereto.
Except as disclosed in any Purchased Loan Documents, 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.
10. Mortgage Provisions. To the extent applicable, the Mortgage Note or
Mortgage for each Purchased Loan, together with applicable state law, contains
customary and enforceable provisions for comparable mortgaged properties
similarly situated (subject to the exceptions set forth in paragraph 13) such as
would be expected to render the rights and remedies of the holder thereof
adequate for the practical realization against the related Mortgaged Property of
the principal benefits of the security intended to be provided thereby.
11. Lender under Deed of Trust. To the extent applicable, if any Mortgage
is a deed of trust, (1) a trustee, duly qualified under applicable law to serve
as such, is properly designated and serving under such Mortgage, and (2) no fees
or expenses are payable to such trustee by the Seller, the Buyer or any
transferee thereof except in connection with a trustee's sale after default by
the related Mortgagor or in connection with any full or partial release of the
related Mortgaged Property or related security for the related Purchased Loan.
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12. Environmental Conditions. An environmental site assessment (or an
update of a previous assessment) was performed with respect to each Mortgaged
Property in connection with the origination of the related Purchased Loan, a
report of each such assessment (an "Environmental Report") has been delivered to
the Buyer, and to Seller's knowledge there is no material and adverse
environmental condition or circumstance affecting any Mortgaged Property that
was not disclosed in such report. Each Mortgage contains customary terms
requiring the related Mortgagor to comply with all applicable federal, state and
local environmental laws and regulations. Where such assessment disclosed the
existence of a material and adverse environmental condition or circumstance
affecting any Mortgaged Property, (i) a party not related to the Mortgagor was
identified as the responsible party for such condition or circumstance, (ii) the
related Mortgagor was required either to provide additional security and/or to
obtain an operations and maintenance plan or (iii) the related Mortgagor
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 borrower or a principal of such
borrower has agreed to indemnify the mortgagee for damages resulting from
violations of any applicable Environmental Laws.
13. Loan Document Status. Each Mortgage Note, Mortgage and other agreement
that evidences or secures a Purchased Loan and that was executed by or on behalf
of the related Mortgagor is the legal, valid and binding obligation of the maker
thereof (subject to any non-recourse provisions contained in any of the
foregoing agreements and any applicable state anti-deficiency or market value
limit deficiency legislation), enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally, and
by general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and there is no valid defense,
counterclaim or right of offset or rescission available to the related Mortgagor
with respect to such Mortgage Note, Mortgage or other agreements.
14. Insurance. Each Mortgaged Property is, and is required pursuant to the
related Mortgage to be, insured by (a) a customary 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, 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 lesser of the principal balance of the
related Purchased Loan and the replacement cost (not allowing for depreciation)
of the Mortgaged Property, and not less than the amount necessary to avoid the
operation of any co-insurance provisions with respect to the Mortgaged Property;
(b) a customary business interruption or rental loss insurance policy, in an
amount at least equal to six months of operations of the Mortgaged Property
(other than manufactured housing communities); (c) a customary 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 customary comprehensive general liability insurance policy in
amounts as are generally required by commercial mortgage lenders, and in any
event not less than $1 million per occurrence. Such insurance policy contains a
standard mortgagee clause that names
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the Mortgagee 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. Each Mortgage obligates the related Mortgagor to maintain
all such insurance and, upon such Mortgagor's failure to do so, authorizes the
holder of the Mortgage to maintain such insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor from such Mortgagor. Other than as
set forth in paragraph 17(h) hereof, each Mortgage provides that casualty
insurance proceeds will be applied either to the restoration or repair of the
related Mortgaged Property or to the reduction or defeasance of the principal
amount of the Purchased Loan.
15. Taxes and Assessments. To Seller's actual knowledge, there are no
delinquent or unpaid taxes or assessments (including assessments payable in
future installments), or other outstanding charges affecting any Mortgaged
Property which are or may become a lien of priority equal to or higher than the
lien of the related Mortgage 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. For purposes of this representation and warranty, real
property taxes and assessments shall not be considered unpaid until the date on
which interest and/or penalties would be first payable thereon.
16. Mortgagor Bankruptcy. To the knowledge of the Seller, no Mortgagor is a
debtor in any state or federal bankruptcy or insolvency proceeding.
17. Leasehold Estate. Each Mortgaged Property consists of the related
Mortgagor's fee simple estate in real estate or, if the related Purchased Loan
is secured in whole or in part by the interest of a Mortgagor as a lessee under
a ground lease of a Mortgaged Property (a "Ground Lease"), by the related
Mortgagor's interest in the Ground Lease but not by the related fee interest in
such Mortgaged Property (the "Fee Interest"). With respect to any Purchased Loan
secured by a Ground Lease but not by the related Fee Interest:
a. Such Ground Lease or a memorandum thereof has been duly recorded; such
Ground Lease (or the related estoppel letter or lender protection
agreement between the Seller and related lessor) permits the current
use of the Mortgaged Property and permits the interest of the lessee
thereunder to be encumbered by the related Mortgage and does not
restrict the use of the related Mortgaged Property by such lessee, its
successors or assigns in a manner that would adversely effect the
security provided by the related Mortgage by limiting in any way its
current use; and there has been no material change in the payment
terms of such Ground Lease since the origination of the related
Purchased Loan, with the exception of material changes reflected in
written instruments that are a part of the related Mortgage File;
b. The lessee's interest in such Ground Lease is not subject to any liens
or encumbrances superior to, or of equal priority with, the related
Mortgage, other than Permitted Encumbrances;
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c. The Mortgagor's interest in such Ground Lease is assignable to the
Buyer and its successors and assigns upon notice to, but without the
consent of, the lessor thereunder (or, if such consent is required, it
has been obtained prior to the Purchase Date) and, in the event that
it is so assigned, is further assignable by the Buyer and its
successors and assigns upon notice to, but without the need to obtain
the consent of, such lessor;
d. Such Ground Lease is in full force and effect, and the Seller has
received no notice that an event of default has occurred thereunder,
and, to the Seller's knowledge, there exists no condition that, but
for the passage of time or the giving of notice, or both, would result
in an event of default under the terms of such Ground Lease;
e. Such Ground Lease, or an estoppel letter or other agreement, (A)
requires the lessor under such Ground Lease to give notice of any
default by the lessee to the mortgagee, provided that the mortgagee
has provided the lessor with notice of its lien in accordance with the
provisions of such Ground Lease to the extent such Ground Lease
requires such notice, further (B) provides that no notice of
termination given under such Ground Lease (including rejection of such
Ground Lease in a bankruptcy proceeding) is effective against the
holder of the Mortgage unless a copy of such notice has been delivered
to such holder and the lessor has offered to enter into a new lease
with such holder on terms that do not materially vary from the
economic terms of the Ground Lease;
f. A mortgagee is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of the
lessee under such Ground Lease) to cure any default under such Ground
Lease, which is curable after the receipt of notice of any such
default, before the lessor thereunder may terminate such Ground Lease;
g. Such Ground Lease has an original term (including any extension
options set forth therein) which extends not less than twenty years
beyond the stated maturity date of the related Purchased Loan;
h. Under the terms of such Ground Lease and the related Mortgage, taken
together, any related insurance proceeds or condemnation award other
than in respect of a total loss will be applied either to the repair
or restoration of all or part of the related Mortgaged Property, with
the mortgagee or a Buyer appointed by it having the right to hold and
disburse such proceeds as the repair or restoration progresses (except
in such cases where a provision entitling another party to hold and
disburse such proceeds would not be viewed as commercially
unreasonable by a prudent commercial mortgage lender for conduit
programs), or to the payment or defeasance of the outstanding
principal balance of the Purchased Loan together with any accrued
interest thereon;
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i. Such Ground Lease does not impose any restrictions on subletting which
would be viewed as commercially unreasonable by prudent commercial
mortgage lenders in the lending area where the Mortgaged Property is
located; and
j. Such Ground Lease provides, or the lessor has otherwise agreed, that
such Ground Lease may not be amended or modified in any fashion
materially adverse to the interest of the mortgagee without the prior
written consent of the mortgagee under such Purchased Loan.
18. Escrow Deposits. All escrow deposits and payments relating to each
Purchased Loan that are, as of the Purchase Date required to be deposited or
paid have been so deposited or paid.
19. Purchased Loan Modifications. Any Purchased Loan that was
"significantly modified" prior to the Purchase Date so as to result in a taxable
exchange under Section 1001 of the Code either (a) was modified as a result of
the default or reasonably foreseeable default of such Purchased Loan or (b)
satisfies the provisions of either clause (a)(i) of paragraph 19 (substituting
the date of the last such modification for the date the Purchased Loan was
originated) or clause (a)(ii) of paragraph 19, including the proviso thereto.
20. Advancement of Funds by the Seller. No holder of a Purchased Loan has
advanced funds or induced, solicited or knowingly received any advance of funds
from a party other than the owner of the related Mortgaged Property, directly or
indirectly, for the payment of any amount required by such Purchased Loan.
21. No Mechanics' Liens. As of the date of the Mortgage, and to the actual
knowledge of the Seller as of the Purchase Date, each Mortgaged Property is free
and clear of any and all mechanics' and materialmen's liens that are prior or
equal to the lien of the related Mortgage, and no rights are outstanding that
under law could give rise to any such lien that would be prior or equal to the
lien of the related Mortgage except, in each case, for liens insured against by
the Title Policy referred to herein or otherwise bonded.
22. Compliance with Usury Laws. Each Purchased Loan complied with, or is
exempt from, all applicable usury laws in effect at its date of origination.
23. Cross-collateralization; Cross-default. No Purchased Loan is
cross-collateralized or cross-defaulted with any loan other than one or more
other Purchased Loans.
24. Releases of Mortgaged Property. Except as described in the next
sentence, no Mortgage Note or Mortgage requires the mortgagee to release all or
any material portion of the related Mortgaged Property from the lien of the
related Mortgage except upon payment in full or defeasance of all amounts due
under the related Purchased Loan. The Mortgages relating to those Purchased
Loans identified on the Purchased Loan Schedule require the mortgagee to grant
releases of portions of the related Mortgaged Properties upon (a) the
satisfaction of certain legal and underwriting requirements and (b) except where
the portion of the Mortgaged Property permitted to be released was not
considered by the Seller to be material in the underwriting of the Purchased
Loan, either (1) the payment of a release price set forth therein and prepayment
consideration in connection therewith or (2) the partial defeasance of such
Purchased Loan.
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No Purchased Loan permits the release or substitution of collateral if such
release or substitution (a) would create a "significant modification" of such
Purchased Loan within the meaning of Treas. Reg. ss.1.1001 3 or (b) would cause
such Purchased Loan not to be a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code (without regard to clauses (A)(i) or (A)(ii)
thereof).
25. No Equity Participation or Contingent Interest. Except as disclosed to
Buyer, no Purchased Loan contains any equity participation by the lender or
provides for negative amortization or for any contingent or additional interest
in the form of participation in the cash flow of the related Mortgaged Property.
26. No Material Default. To the Seller's knowledge, there exists no
material default, breach, violation or event of acceleration (and no event
which, with the passage of time or the giving of notice, or both, would
constitute any of the foregoing) under the documents evidencing or securing the
Purchased Loan, in any such case to the extent the same materially and adversely
affects the value of the Purchased Loan and the related Mortgaged Property;
provided, however, that this representation and warranty does not address or
otherwise cover any default, breach, violation or event of acceleration that
specifically pertains to any matter otherwise covered by any other
representation and warranty made by the Seller in any of paragraphs 3, 7, 12,
14, 15 and 17 of this Exhibit VI.
27. Inspections. The Seller (or if the Seller is not the originator, the
originator of the Purchased Loan) has inspected or caused to be inspected each
Mortgaged Property in connection with the origination of the related Purchased
Loan.
28. Local Law Compliance. Based on due diligence considered reasonable by
prudent commercial mortgage lenders in the lending area where each Mortgaged
Property is located, the improvements located on or forming part of each
Mortgaged Property complies with applicable zoning laws and ordinances, or
constitutes a legal non-conforming use or structure or, if any such improvement
does not so comply, such non-compliance does not materially and adversely affect
the value of the related Mortgaged Property as determined by the appraisal
performed at origination.
29. Junior Liens. None of the Purchased Loans permits 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, none of the Mortgaged Properties is
encumbered by any lien junior to the lien of the related Mortgage except as
otherwise set forth in the Purchased Loan Documents. Each 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 except as otherwise
set forth in the Purchased Loan Documents, the related Mortgaged Property is
transferred or sold.
30. Actions Concerning Purchased Loans. To the knowledge of the Seller,
there are no actions, suits or proceedings pending or threatened before any
court, administrative agency or arbitrator concerning any Purchased Loan or
related Mortgagor or Mortgaged Property that
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might adversely affect title to the Purchased Loan or the validity or
enforceability of the related Mortgage or that might materially and adversely
affect the value of the Mortgaged Property as security for the Purchased Loan or
the use for which the premises were intended.
31. Servicing. The servicing and collection practices used by the Seller
have been in all material respects legal, proper and prudent and have met
customary industry standards for servicing of commercial Purchased Loans for
conduit programs.
32. Licenses and Permits. To the Seller's knowledge, as of the date of
origination of each Purchased Loan, the related Mortgagor 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.
33. Non-Recourse Exceptions. The Purchased Loan Documents for each
Purchased Loan provide that such Purchased Loan constitutes the non-recourse
obligations of the related obligor thereon except that either (i) such provision
does not apply in the case of fraud by the Mortgagor or (ii) such documents
provide that the Mortgagor shall be liable to the holder of the Purchased Loan
for losses incurred as a result of fraud by the Mortgagor.
34. Single Purpose Entity. The Mortgagor on each Purchased Loan with an
outstanding principal balance in excess of $10 million, was, as of the
origination of the Purchased Loan, a Single Purpose Entity. For this purpose, a
"Single Purpose Entity" shall mean an entity, other than an individual, whose
organizational documents provide substantially to the effect that it was formed
or organized solely for the purpose of owning and operating one or more
Mortgaged Properties securing the Purchased Loans and prohibit it from engaging
in any business unrelated to such Mortgaged Property or Properties, and whose
organizational documents further provide, or which entity represented in the
related Purchased Loan documents, substantially to the effect that it does not
have any assets other than those related to its interest in and operation of
such Mortgaged Property or Properties, or any indebtedness other than as
permitted by the related Mortgage or the other related Purchased Loan documents,
that it has its own books and records and accounts separate and apart from any
other person, and that it holds itself out as a legal entity, separate and apart
from any other person.
Each borrower of a Purchased Loan in excess of $10,000,000 is an entity
which has represented in connection with the origination of the Purchased Loan,
or whose organizational documents as of the date of origination of the Purchased
Loan provide that so long as the Purchased Loan is outstanding it will have at
least one independent director.
35. Separate Tax Parcels. Each Mortgaged Property constitutes one or more
complete separate tax lots or is subject to an endorsement under the related
title insurance policy.
36. 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.
37. CTL Loans. With respect to each Purchased Loan which is an Eligible
Loan of the type described in clause (ii) of the definition thereof only:
9
(a) The related Mortgaged Property is subject to a Credit Lease, and such
Credit Lease is in full force and effect, and is a legal, valid, binding and
enforceable agreement of the related tenant, except as such enforcement may be
limited by bankruptcy, insolvency or other laws affecting the rights of
creditors generally, and general principles of equity, and no default by the
Mortgagor or the tenant has occurred under such Credit Lease and, to Seller's
actual knowledge, there is no existing condition which, but for the passage of
time or the giving of notice, or both, would result in a default under the terms
of such Credit Lease.
(b) The related Credit Lease is subordinate to the related Mortgage subject
to the terms and conditions of a subordination, non-disturbance and attornment
agreement between the lender and the applicable tenant; any subleases entered
into by such tenant will be subject and subordinate to the Credit Lease and will
not relieve the tenant of its obligations under the Credit Lease; in the event
that the lender acquires title to such Mortgaged Property by foreclosure or
otherwise, the lessor's interest under the related Credit Lease is freely
assignable by the lender and its successors and assigns to any person without
the consent of the tenant, and, in the event the lessor's interest is so
assigned, the tenant will be obligated to recognize the assignee as lessor under
such Credit Lease.
(c) The related Credit Lease has an original term ending on or after the
date the Mortgagor is required to deposit its final payment on the related
Purchased Loan with the lender unless covered by extended amortization or
residual value insurance.
(d) The monthly payment for such Purchased Loan is less than or equal to
the basic rent due under the related Credit Lease (unless such Purchased Loan
has the benefit of an extended amortization policy or a residual value insurance
policy or cash reserves or other form of credit enhancement which has been in
each case disclosed to Buyer).
(e) No sale of the Mortgaged Property is pending by the related Mortgagor,
and there is no assignment of any Credit Lease by any tenant pending.
(f) Such tenant has agreed to notify the related mortgagee of any default
under the related Credit Lease and to provide such mortgagee with additional
time and opportunity to cure or the related Purchased Loan Documents require the
tenant to cure any default under the related Credit Lease within one-half of the
time period required under the related Credit Lease, except as otherwise
disclosed to Buyer.
(g) Except as otherwise disclosed to Buyer with respect to Credit Tenants
which are master lessor to subtenants, the related Mortgaged Property is not
subject to any lease other than the related Credit Lease, no person has any
possessory interest in, or right to occupy, the related Mortgaged Property
except under and pursuant to such Credit Lease and the tenant under the related
Credit Lease is in occupancy of the Mortgaged Property.
10
(h) No tenant under such Credit Lease (nor Credit Lease guarantor, if
applicable) has been released, in whole or in part, from its obligations under
the Credit Lease (or guaranty, as applicable).
(i) Under the terms of such Credit Lease, the tenant is not permitted to
assign or sublet its interest or obligations under the Credit Lease unless such
tenant remains fully liable thereunder.
(j) Each tenant under such Credit Lease is required to make all rental
payments directly to the mortgagee, its successors and assigns under the related
Mortgage Loan.
(k) With respect to any Credit Lease guaranteed by the parent or affiliate
of a tenant, each existing guaranty is in full force and effect, and no default
exists thereunder.
(l) With respect to any Credit Lease that is not a triple net or double net
lease, such Credit Lease is a bondable lease with no termination or rent
abatement rights by the tenant, except in connection with the exercise of a
purchase option; and the obligations of any tenant under such lease (including,
but not limited to, the obligation of the tenant to pay fixed and additional
rent), are not affected by reason of any damage to or destruction of any portion
of the Mortgaged Property, any taking of the Mortgaged Property or any part
thereof by condemnation or otherwise, or any prohibition, limitation,
interruption, restriction, or interference of the tenant's use, occupancy or
enjoyment of the Mortgaged Property.
(m) Such Credit Lease contains no monetary obligations or obligations
associated with managing, owning, developing and operating the Mortgaged
Property (including, but not limited to, the costs associated with utilities,
taxes, insurance, capital and structural improvements and maintenance and
repairs), on the part of the Mortgagor unless such obligations are fully
reimbursable or paid by the tenant or reserved for under the Mortgage Loan
documents.
(n) Such Credit Lease contains customary and enforceable provisions which
render the rights and remedies of the lessor thereunder adequate for the
enforcement and satisfaction of the lessor's rights thereunder.
(o) The obligations of the tenant under such Credit Lease (including, but
not limited to, the obligations of the tenant to pay fixed and additional rent),
are not affected by reason of any damage to or destruction of any portion of the
leased property or any taking of the leased property, or any part thereof by
condemnation or otherwise, except for Mortgage Loans subject to casualty and
condemnation lease enhancement policies or Mortgage Loans which permit
termination of rent only pursuant to exercise of a funding option sufficient to
pay the Mortgage Loan in full.
(p) Any anticipated maintenance, repair, or replacement obligations imposed
by any easement or reciprocal easement agreement either is a direct obligation
of the tenant or an adjacent property owner or is an obligation or liability of
the Mortgagor,
11
reimbursable by the tenant, or has been reserved for under the Purchased Loan
documents.
(q) Such Purchased Loan provides that the related Credit Lease cannot be
modified without the consent of the mortgagee thereunder, and the tenants have
agreed that no amendment, modification, termination or surrender of the Credit
Lease (except as expressly permitted by the Credit Lease) will be effective
without the prior written consent of the mortgagee or its successors and assigns
(except for those Credit Leases for which the related Purchased Loans include
personal recourse guarantees to principals of the mortgagor if the Credit Lease
is modified without the mortgagee's consent).
(r) No tenant can terminate a Credit Lease for any reason, prior to the
payment in full of or the payment of funds sufficient to pay in full (1) the
principal balance of the Purchased Loan, (2) all accrued and unpaid interest on
the Purchased Loan and (3) any other sums due and payable under the Purchased
Loan, as of the termination date (except for a termination due to a default by
the related borrower under the Credit Lease, or a termination due to casualty or
condemnation).
(s) Such Credit Lease is in full force and effect and no right or claim of
rescission, offset, abatement, diminution, defense or counterclaim to such
Credit Lease has been asserted with respect thereto, nor, to Seller's actual
knowledge, is there any existing condition which, but for the passage of time or
giving of notice, would result in a right or claim of rescission, offset,
abatement, diminution, defense or counterclaim under the terms of any Credit
Lease (other than for nonmaterial punch list items).
(t) In the case of a Purchased Loan with a "lease enhancement policy"
and/or "extended amortization policy" and/or residual value insurance policy,
the entire premium has been paid in full for each such policy (or is required to
be paid within thirty days after the related closing date), such policies are
each in full force and effect, and the legal, valid and binding obligation of
the insurer thereunder, enforceable in accordance with their respective terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
12
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
WHICH IS A MEZZANINE LOAN SECURED BY A PLEDGE OF THE
ENTIRE EQUITY OWNERSHIP INTEREST IN AN ENTITY THAT OWNS
A MULTIFAMILY OR COMMERCIAL PROPERTY
------------------------------------
(1) Purchased Loan Information. The information set forth in the Purchased
Loan Schedule is complete, true and correct in all material respects.
(2) No Default or Dispute Under Purchased Loan Documents. To Seller's
actual knowledge, there exists no material default, breach, violation or event
of acceleration (and no event which, with the passage of time or the giving of
notice, or both, would constitute any of the foregoing) under the documents
evidencing or securing the Purchased Loan, in any such case to the extent the
same materially and adversely affects the value of the Purchased Loan and the
related underlying real property.
(3) No Offsets, Defenses or Counterclaims. To Seller's actual knowledge,
there is no valid offset, defense or counterclaim to such Purchased Loan.
(4) Equity Pledges. The pledge of ownership interests securing such
Purchased Loan relates to all direct or indirect equity or ownership interests
in the underlying real property owner (so that, except for the equity interests
pledged to Seller, there are no direct or indirect equity or ownership interests
in underlying real property owner or in any constituent entity) and has been
fully perfected in favor of Seller as mezzanine lender.
(5) Lockbox. The lockbox administrator, if any, is not an Affiliate of
Seller.
(6) Enforceability. The Purchased Loan Documents have been duly and
properly executed by Seller, and each is the legal, valid and binding obligation
of the parties thereto, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law). The
Purchased Loan is not usurious. Seller has fully and validly perfected all
security interests created or intended to be created pursuant to the Purchased
Loan Documents.
(7) Waivers and Modifications. The terms of the related Purchased Loan
Documents have not been impaired, waived, altered or modified in any material
respect (other than by a written instrument which is included in the related
Purchased Loan File).
(8) Valid Assignment. The assignment of Purchased Loan constitutes the
legal, valid and binding assignment of such Purchased Loan from Seller to or for
the benefit of Buyer. No consent or approval by any third party is required for
any such assignment of such Purchased Loan, for Buyer's exercise of any rights
or remedies under the assignment of Purchased Loan, or for Buyer's sale or other
disposition of such Purchased Loan if Buyer acquires title thereto, other than
consents and approvals which have been obtained. No third party (including
underlying real property owner and underlying real property mortgagee) holds any
"right of first refusal," "right of first negotiation," "right of first offer,"
purchase option, or other similar rights of any
13
kind on account of the occurrence of any of the foregoing. No other impediment
exists to any such transfer.
(9) Certain Representations and Warranties. To Seller's actual knowledge,
all representations and warranties in the Purchased Loan Documents and in the
underlying real property mortgage documents are true and correct in all material
respects.
(10) Parties Authorized. To the extent required under applicable law as of
the Purchase Date, each party to the Purchased Loan Documents was authorized to
do business in the jurisdiction in which the related underlying real property is
located at all times when it held the Purchased Loan to the extent necessary to
ensure the validity and enforceability of such Purchased Loan.
(11) 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.
(12) Servicing. The servicing and collection practices used by Seller for
the Purchased Loan have complied with applicable law in all material respects
and are consistent with those employed by prudent servicers of comparable
Purchased Loans.
(13) No Assignment. Seller has not effectuated any transfer, sale,
assignment, hypothecation, or other conveyance of any of its rights and
obligations under any Purchased Loan Document, except in connection with the
Agreement.
(14) No Bankruptcy. To Seller's actual knowledge, none of the following
parties is a debtor in any state or federal bankruptcy or insolvency proceeding:
Seller; underlying real property owner; or underlying real property mortgagee.
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
WHICH IS A JUNIOR PARTICIPATION INTEREST
(OR JUNIOR OR "B" NOTE) IN A PERFORMING COMMERCIAL
MORTGAGE LOAN SECURED BY A FIRST LIEN ON
A MULTIFAMILY OR COMMERCIAL PROPERTY
------------------------------------
(1) Purchased Loan Information. The information set forth in the Purchased
Loan Schedule is complete, true and correct in all material respects.
(2) No Default or Dispute Under Purchased Loan Documents. To Seller's
actual knowledge, there exists no material default, breach, violation or event
of acceleration (and no event which, with the passage of time or the giving of
notice, or both, would constitute any of the foregoing) under the documents
evidencing or securing the Purchased Loan, in any such case to the extent the
same materially and adversely affects the value of the Purchased Loan and the
related underlying real property.
14
(3) No Offsets, Defenses or Counterclaims. To Seller's actual knowledge,
there is no valid offset, defense or counterclaim to such Purchased Loan.
(4) Lockbox. The lockbox administrator, if any, is not an Affiliate of
Seller.
(5) Enforceability. The Purchased Loan Documents have been duly and
properly executed by Seller, and each is the legal, valid and binding obligation
of the parties thereto, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law). The
Purchased Loan is not usurious. Seller has fully and validly perfected all
security interests created or intended to be created pursuant to the Purchased
Loan Documents.
(6) Waivers and Modifications. The terms of the related Purchased Loan
Documents have not been impaired, waived, altered or modified in any material
respect (other than by a written instrument which is included in the related
Purchased Loan File).
(7) Valid Assignment. The assignment of Purchased Loan constitutes the
legal, valid and binding assignment of such Purchased Loan from Seller to or for
the benefit of Buyer. No consent or approval by any third party is required for
any such assignment of such Purchased Loan, for Buyer's exercise of any rights
or remedies under the assignment of Purchased Loan, or for Buyer's sale or other
disposition of such Purchased Loan if Buyer acquires title thereto, other than
consents and approvals which have been obtained. No third party (including
underlying real property owner and underlying real property mortgagee) holds any
"right of first refusal," "right of first negotiation," "right of first offer,"
purchase option, or other similar rights of any kind on account of the
occurrence of any of the foregoing. No other impediment exists to any such
transfer.
(8) Certain Representations and Warranties. To Seller's actual knowledge,
all representations and warranties in the Purchased Loan Documents and in the
underlying documents for the performing commercial mortgage loan secured by a
first lien on a multifamily or commercial property to which such Purchased Loan
relates are true and correct in all material respects.
(9) Parties Authorized. To the extent required under applicable law as of
the Purchase Date, each party to the Purchased Loan Documents was authorized to
do business in the jurisdiction in which the related underlying real property is
located at all times when it held the Purchased Loan to the extent necessary to
ensure the validity and enforceability of such Purchased Loan.
(10) 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.
(11) Servicing. The servicing and collection practices used by Seller for
the Purchased Loan have complied with applicable law in all material respects
and are consistent with those employed by prudent servicers of comparable
Purchased Loans.
15
(12) No Assignment. Seller has not effectuated any transfer, sale,
assignment, hypothecation, or other conveyance of any of its rights and
obligations under any Purchased Loan Document, except in connection with the
Agreement.
(13) No Bankruptcy. To Seller's actual knowledge, none of the following
parties is a debtor in any state or federal bankruptcy or insolvency proceeding:
Seller; underlying real property owner; or underlying real property mortgagee.
REPRESENTATIONS AND WARRANTIES
REGARDING EACH INDIVIDUAL PURCHASED LOAN
WHICH IS A SYNDICATED BANK LOAN SECURED BY A FIRST LIEN IN ASSETS
ACCEPTABLE TO BUYER IN ITS SOLE DISCRETION
------------------------------------------
(1) Purchased Loan Information. The information set forth in the Purchased
Loan Schedule is complete, true and correct in all material respects.
(2) No Default or Dispute Under Purchased Loan Documents. To Seller's
actual knowledge, there exists no material default, breach, violation or event
of acceleration (and no event which, with the passage of time or the giving of
notice, or both, would constitute any of the foregoing) under the documents
evidencing or securing the Purchased Loan, in any such case to the extent the
same materially and adversely affects the value of the Purchased Loan and the
related underlying real property.
(3) No Offsets, Defenses or Counterclaims. To Seller's actual knowledge,
there is no valid offset, defense or counterclaim to such Purchased Loan.
(4) Equity Pledges. The pledge of ownership interests, if any, securing
such Purchased Loan relates to all direct or indirect equity or ownership
interests in the underlying real property owner (so that, except for the equity
interests pledged to Seller, there are no direct or indirect equity or ownership
interests in underlying real property owner or in any constituent entity) and
has been fully perfected in favor of Seller as lender.
(5) Lockbox. The lockbox administrator, if any, is not an Affiliate of
Seller.
(6) Enforceability. The Purchased Loan Documents have been duly and
properly executed by Seller, and each is the legal, valid and binding obligation
of the parties thereto, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law). The
Purchased Loan is not usurious. Seller has fully and validly perfected all
security interests created or intended to be created pursuant to the Purchased
Loan Documents.
(7) Waivers and Modifications. The terms of the related Purchased Loan
Documents have not been impaired, waived, altered or modified in any material
respect (other than by a written instrument which is included in the related
Purchased Loan File).
16
(8) Valid Assignment. The assignment of Purchased Loan constitutes the
legal, valid and binding assignment of such Purchased Loan from Seller to or for
the benefit of Buyer. No consent or approval by any third party is required for
any such assignment of such Purchased Loan, for Buyer's exercise of any rights
or remedies under the assignment of Purchased Loan, or for Buyer's sale or other
disposition of such Purchased Loan if Buyer acquires title thereto, other than
consents and approvals which have been obtained. No third party (including
underlying real property owner and underlying real property mortgagee) holds any
"right of first refusal," "right of first negotiation," "right of first offer,"
purchase option, or other similar rights of any kind on account of the
occurrence of any of the foregoing. No other impediment exists to any such
transfer.
(9) Certain Representations and Warranties. To Seller's actual knowledge,
all representations and warranties in the Purchased Loan Documents and in the
underlying real property mortgage documents are true and correct in all material
respects.
(10) Parties Authorized. To the extent required under applicable law as of
the Purchase Date, each party to the Purchased Loan Documents was authorized to
do business in the jurisdiction in which the related underlying real property is
located at all times when it held the Purchased Loan to the extent necessary to
ensure the validity and enforceability of such Purchased Loan.
(11) 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.
(12) Servicing. The servicing and collection practices used by Seller for
the Purchased Loan have complied with applicable law in all material respects
and are consistent with those employed by prudent servicers of comparable
Purchased Loans.
(13) No Assignment. Seller has not effectuated any transfer, sale,
assignment, hypothecation, or other conveyance of any of its rights and
obligations under any Purchased Loan Document, except in connection with the
Agreement.
(14) No Bankruptcy. To Seller's actual knowledge, none of the following
parties is a debtor in any state or federal bankruptcy or insolvency proceeding:
Seller; underlying real property owner; or underlying real property mortgagee.
17
EXHIBIT VII
COLLATERAL INFORMATION
----------------------
Loan ID #:
Borrower Name:
Borrower Address:
Borrower City:
Borrower State:
Borrower Zip Code:
Recourse?
Guaranteed?
Related Borrower Name(s):
Original Principal Balance:
Note Date:
Loan Date:
Loan Type (e.g. fixed/arm):
Current Principal Balance:
Current Interest Rate (per annum):
Paid to date:
Annual P&I:
Next Payment due date:
Index (complete whether fixed or arm):
Gross Spread/Margin (complete whether fixed or arm):
Life Cap:
Life Floor:
Periodic Cap:
Periodic Floor:
Rounding Factor:
Lookback (in days):
Interest Calculation Method (e.g., Actual/360):
Interest rate adjustment frequency:
P&I payment frequency:
First P&I payment due:
First interest rate adjustment date:
First payment adjustment date:
Next interest rate adjustment date:
Next payment adjustment date:
Conversion Date:
Converted Interest Rate Index:
Converted Interest Rate Spread:
Maturity date:
Loan term:
Amortization term:
Hyper-Amortization Flag:
Hyper-Amortization Term:
Hyper-Amortization Rate Increase:
Balloon Amount:
COLLATERAL INFORMATION
----------------------
Balloon LTV:
Prepayment Penalty Flag:
Prepayment Penalty Text:
Lockout Period:
Lien Position:
Fee/Leasehold:
Ground Lease Expiration Date:
CTL (Yes/No):
CTL Rating (▇▇▇▇▇'▇):
CTL Rating (Duff):
CTL Rating (S&P):
CTL Rating (Fitch):
Lease Guarantor:
CTL Lease Type (NNN, NN, Bondable):
Property Name:
Property Address:
Property City:
Property Zip Code:
Property Type (General):
Property Type (Specific):
Cross-collateralized (Yes/No)*:
Property Size:
Year built:
Year renovated:
Actual Average Occupancy:
Occupancy Rent Roll Date:
Underwritten Average Occupancy:
Largest Tenant:
Largest Tenant SF:
Largest Tenant Lease Expiration:
2nd Largest Tenant:
2nd Largest Tenant SF:
2nd Largest Tenant Lease Expiration:
3rd Largest Tenant:
3rd Largest Tenant SF:
3rd Largest Tenant Lease Expiration:
Underwritten Average Rental Rate/ADR:
Underwritten Vacancy/Credit Loss:
Underwritten Other Income:
Underwritten Total Revenues:
Underwritten Replacement Reserves:
Underwritten Management Fees:
----------
* If yes, give property information on each property covered and in aggregate
as appropriate. Loan ID's should be denoted with a suffix letter to signify
loans/collateral.
2
COLLATERAL INFORMATION
----------------------
Underwritten Franchise Fees:
Underwritten Total Expenses:
Underwritten Leasing Commissions:
Underwritten Tenant Improvement Costs:
Underwritten NOI:
Underwritten NCF:
Underwritten Debt Service Constant:
Underwritten DSCR at NOI:
Underwritten DSCR at NCF:
Underwritten NOI Period End Date:
Hotel Franchise:
Hotel Franchise Expiration Date:
Appraiser Name:
Appraised Value:
Appraisal Date:
Appraisal Cap Rate:
Appraisal Discount Rate:
Underwritten LTV:
Environmental Report Preparer:
Environmental Report Date:
Environmental Report Issues:
Architectural and Engineering Report Preparer:
Architectural and Engineering Report Date:
Deferred Maintenance Amount:
Ongoing Replacement Reserve Requirement per A&E Report:
Immediate Repairs Escrow % (e.g. 125%):
Replacement Reserve Annual Deposit:
Replacement Reserve Balance:
Tenant Improvement/Leasing Commission Annual Deposits:
Tenant Improvement/Leasing Commission Balance:
Taxes paid through date:
Monthly Tax Escrow:
Tax Escrow Balance:
Insurance paid through date:
Monthly Insurance Escrow:
Insurance Escrow Balance:
Reserve/Escrow Balance as of Date:
Probable Maximum Loss %:
Covered by Earthquake Insurance (Yes/No):
Number of times 30 days late in last 12 months:
Number of times 60 days late in last 12 months:
Number of times 90 days late in last 12 months:
Servicing Fee:
Notes:
3
EXHIBIT VIII
ADVANCE PROCEDURE
Final Approval of New Collateral Which is an Eligible Security/Preliminary
Approval of New Collateral Which is an Eligible Loan.
(a) Seller may, from time to time, submit to Buyer a Preliminary Due
Diligence Package for Buyer's review and approval in order to enter into a
Transaction with respect to any New Collateral that Seller proposes to be
included as Collateral under the Agreement.
(b) Upon Buyer's receipt of a complete Preliminary Due Diligence
Package, Buyer, within five (5) Business Days, shall have the right to
request, in Buyer's good faith business judgment, additional diligence
materials and deliveries that Buyer shall specify on a Supplemental Due
Diligence List. Upon Buyer's receipt of all of the Diligence Materials or
Buyer's waiver thereof, Buyer within ten (10) Business Days and following
receipt of internal credit approval, shall either (i) notify Seller of the
Purchase Price and the Market Value for the New Collateral or (ii) deny, in
Buyer's sole and absolute discretion, Seller's request for a Transaction.
Buyer's failure to respond to Seller within ten (10) Business Days, as
applicable, shall be deemed to be a denial of Seller's request for an
Advance, unless Buyer and Seller have agreed otherwise in writing.
Final Approval of New Collateral which is an Eligible Loan. Upon Buyer's
notification to Seller of the Purchase Price and the Market Value for any New
Collateral which is an Eligible Loan, Seller shall, if Seller desires to enter
into a Transaction with respect to such New Collateral, satisfy the conditions
set forth below (in addition to satisfying the conditions precedent to obtaining
each advance, as set forth in Section 3(b) of this Agreement) as a condition
precedent to Buyer's approval of such New Collateral as Collateral, all in a
manner reasonably satisfactory to Buyer and pursuant to documentation reasonably
satisfactory to Buyer:
(a) Delivery of Purchased Loan Documents. Seller shall deliver to
Buyer: (i) with respect to New Collateral that is Pre-Existing Collateral,
each of the Purchased Loan Documents, except Purchased Loan Documents that
Seller expressly and specifically disclosed in Seller's Preliminary Due
Diligence Package were not in Seller's possession; and (ii) with respect to
New Collateral that is Originated Collateral, each of the Purchased Loan
Documents.
(b) 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 or environmental consultant
reasonably approved by Buyer.
(c) Appraisal. Buyer shall have received either an appraisal approved
by Buyer (or a Draft Appraisal), each by an MAI appraiser. If Buyer
receives only a Draft Appraisal prior to entering into a Transaction,
Seller shall deliver an appraisal approved by Buyer by an MAI appraiser on
or before thirty (30) days after the Purchase Date.
(d) Insurance. Buyer shall have received certificates or other
evidence of insurance demonstrating insurance coverage in respect of the
Mortgaged Property of types, in amounts, with insurers and otherwise in
compliance with the terms, provisions and conditions set forth in the
Purchased Loan Documents. Such certificates or other evidence shall
indicate that Seller 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.
(e) Survey. Buyer shall have received all surveys of the Mortgaged
Property that are in Seller's possession.
(f) 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 title updates conducted by search
firms and/or title companies acceptable to Buyer with respect to the
Eligible Loan, Mortgaged Property, Seller and Mortgagor, such searches to
be conducted in each location Buyer shall reasonably designate.
(g) Opinions of Counsel. Buyer shall have received copies of all legal
opinions in the Seller's possession with respect to the Eligible Loan which
shall be in form and substance reasonably satisfactory to Buyer.
(h) Additional Real Estate Matters. Seller shall have delivered to
Buyer to the extent in Seller's possession such other real estate related
certificates and documentation as may have been requested by Buyer, such
as: (i) certificates of occupancy issued by the appropriate Governmental
Authority and either letters certifying that the Mortgaged Property 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 (ii) abstracts of all leases in effect at the
Mortgaged Property and estoppel certificates, in form and substance
acceptable to Buyer, from any ground lessor and from any tenant that
occupies 7.5% or more of the rentable space at the Mortgaged Property, and
in any event from tenants whose occupancies aggregate not less than 70% of
the occupied rentable square footage at the Mortgaged Property.
(i) 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 satisfaction of all of the conditions
enumerated in clauses (a) through (i) above, Buyer shall either (i) if the
Purchased Loan Documents with respect to the New Collateral are not reasonably
satisfactory in form and substance to Buyer, notify Seller that Buyer has not
approved the New Collateral as Collateral or (ii) notify Seller that Buyer has
approved the New Collateral as Collateral. Buyer's failure to respond to Seller
within two (2) Business Days shall be deemed to be a denial of Seller's request
that Buyer approve the New Collateral, unless Buyer and Seller have agreed
otherwise in writing.
EXHIBIT IX
FORM OF RE-DIRECTION LETTER
NRFC DB HOLDINGS, LLC
c/o NorthStar Realty Finance Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
REDIRECTION LETTER
AS OF [ ], 200[ ]
[ ]
Ladies and Gentlemen:
Please refer to: (a) that certain [Loan Agreement], dated [ ], 200[ ],
by and among [ ] (the "Borrower"), as borrower, and [ ] (the
"Lender"), as lender; and (b) all documents securing or relating to that certain
$[ ] loan made by the Lender to the Borrower on [ ], 200[ ]
(the "Loan").
You are advised as follows, effective as of the date of this letter.
Assignment of the Loan. The Lender has entered into a Amended and Restated
Master Repurchase Agreement, dated as March 21, 2005 (as the same may be amended
and/or restated from time to time, the "Repo Agreement"), with Deutsche Bank AG,
Cayman Islands Branch ("DBAG"), ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, and has
assigned its rights and interests in the Loan (and all of its rights and
remedies in respect of the Loan) to DBAG. This assignment shall remain in effect
unless and until DBAG has notified Borrower otherwise in writing.
Direction of Funds. In connection with Lender's obligations under the Repo
Agreement, Lender hereby directs Borrower to disburse, by wire transfer, any and
all payments to be made under or in respect of the Loan to the following account
at LaSalle Bank for the benefit of DBAG:
LaSalle Bank
ABA [▇▇▇▇▇▇▇▇▇]
Account # [ ]
FFC: [ ]
Attn: Deutsche Bank AG, Cayman Islands Branch -
Buyer's Repurchase Account
Attn: [ ]
This direction shall remain in effect unless and until DBAG has notified
Borrower otherwise in writing.
Modifications, Waivers, Etc. No modification, waiver, deferral, or release (in
whole or in part) of any party's obligations in respect of the Loan, or of any
collateral for any obligations in respect of the Loan, shall be effective
without the prior written consent of DBAG.
Please acknowledge your acceptance of the terms and directions contained in this
correspondence by executing a counterpart of this correspondence and returning
it to the undersigned.
[Signature Page Follows]
Very truly yours,
NRFC DB HOLDINGS, LLC,
a Delaware limited liability company
By:
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Name:
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Title:
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Date: [ ], 200[ ]
Agreed and accepted this [ ]
day of [ ], 200[ ]
[ ]
By:
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Name:
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Title:
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