EXCHANGE AGREEMENT
among
CAPITAL
TRUST, INC.
and
TABERNA
PREFERRED FUNDING V, LTD.,
TABERNA
PREFERRED FUNDING VI, LTD.,
TABERNA
PREFERRED FUNDING VIII, LTD.,
and
TABERNA
PREFERRED FUNDING IX, LTD.
Dated as
of March 16, 2009
THIS
EXCHANGE AGREEMENT, dated as of March 16, 2009 (this “Agreement”), is entered into
by and among CAPITAL TRUST, INC., a Maryland corporation (the “Company”) and TABERNA
PREFERRED FUNDING V, LTD. (“Taberna V”), TABERNA PREFERRED
FUNDING VI, LTD. (“Taberna VI”), TABERNA PREFERRED
FUNDING VIII, LTD., (“Taberna VIII”) and TABERNA PREFERRED
FUNDING IX, LTD. (“Taberna
IX”, and together with Taberna V, Taberna VI and Taberna VIII,
collectively, “Taberna”).
RECITAL:
A. Reference
is made to (i) that certain Junior Subordinated Indenture dated as of February
10, 2006 (the “2006
Indenture”) and (ii) that certain Junior Subordinated Indenture dated as
of March 29, 2007 (the “2007 Indenture” and together with
the 2006 Indenture, the “Existing Indentures”), each by
and between the Company and The Bank of New York Mellon Trust Company, National
Association (“BNYM”)
(the “Existing Indenture
Trustee”).
B. Reference
is made to (i) that certain Amended and Restated Trust Agreement dated as of
February 10, 2006 (the “2006
Trust Agreement”) and (ii) that certain Amended and Restated Trust
Agreement dated as of March 29, 2007 (the “2007 Trust Agreement” and together
with the 2006 Trust Agreement, the “Trust Agreements”), each by
and among the Company, as depositor, BNYM, as property trustee (the “Property Trustee”), BNY Mellon
Trust (Delaware), as Delaware trustee (the “Delaware Trustee”), the
respective administrative trustees named therein and other parties
thereto.
C. CT
Preferred Trust I (“Trust
I”) is the holder of the Junior Subordinated Note due 2036 in the
original principal amount of $51,550,000 issued by the Company pursuant to the
2006 Indenture (“Subordinated
Note I”).
D. CT
Preferred Trust II (“Trust
II”) is the holder of the Junior Subordinated Note due 2037 in the
original principal amount of $77,325,000 issued by the Company pursuant to the
2007 Indenture (“Subordinated
Note II” and together with Subordinated Note I, the “Existing Subordinated
Notes”)
X. Xxxxxxx
V and Taberna VI are the holders of Preferred Securities in the original
aggregate principal amount of $50,000,000 issued by Trust I pursuant to the 2006
Trust Agreement, copies of which are attached hereto as Exhibit A-1 (the
“Trust I Preferred
Securities”).
X. Xxxxxxx
VIII and Taberna IX are the holders of Preferred Securities in the original
aggregate principal amount of $53,125,000 issued by Trust II pursuant to the
2007 Trust Agreement, copies of which are attached hereto as Exhibit A-2 (the
“Trust II Preferred
Securities” and together with the Trust I Preferred Securities, the
“Original Preferred
Securities”).
G. Simultaneously
herewith, the Company and BNYM, as trustee (the “New Indenture Trustee”), have
entered into that certain Junior Subordinated Indenture (the “New Indenture”) pursuant to
which Company proposes to issue One Hundred Eighteen Million Five Hundred
Ninety-Three Thousand Seven Hundred Fifty Dollars ($118,593,750.00) in aggregate
principal amount of the Junior Subordinated Notes due April 30, 2036 of the
Company as follows (collectively, the “Securities”):
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(i)
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Junior
Subordinated Note due 2036 in the original principal amount of
$28,750,000.00 issued by the Company to Taberna V, a copy of which is
attached hereto as Exhibit B-1 (“Note
1”);
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(ii)
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Junior
Subordinated Note due 2036 in the original principal amount of
$28,750,000.00 issued by the Company to Taberna VI, a copy of which is
attached hereto as Exhibit B-2 (“Note
2”);
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(iii)
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Junior
Subordinated Note due 2036 in the original principal amount of
$28,750,000.00 issued by the Company to Taberna VIII, a copy of which is
attached hereto as Exhibit B-3 (“Note 3”);
and
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(iv)
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Junior
Subordinated Note due 2036 in the original principal amount of
$32,343,750.00 issued by the Company to Taberna IX, a copy of which is
attached hereto as Exhibit B-4 (“Note
4”);
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H. On
the terms and subject to the conditions set forth in this Agreement, the Company
and Taberna have agreed to exchange the Original Preferred Securities for the
Securities.
NOW,
THEREFORE, in consideration of the mutual agreements and subject to the terms
and conditions herein set forth, the parties hereto agree as
follows:
1. Definitions. This
Agreement, the New Indenture and the Securities are collectively referred to
herein as the “Operative
Documents.” All other capitalized terms used but not defined in this
Agreement shall have the respective meanings ascribed thereto in the New
Indenture. The following terms shall have the following
meanings:
“2006 Indenture” has the meaning set
forth in the Recitals.
“2007 Indenture” has the meaning set
forth in the Recitals.
“2006 Trust Agreement” has the
meaning set forth in the Recitals.
“2007 Trust Agreement” has the
meaning set forth in the Recitals.
“Bankruptcy Code” means the
Bankruptcy Reform Act of 1978, 11 U.S.C. §§101 et seq., as amended.
“Benefit Plan” means an
“employee benefit plan” (as defined in ERISA) that is subject to Title I of
ERISA, a “plan” as defined in Section 4975 of the Code or any entity whose
assets include (for purposes of U.S. Department of Labor Regulations Section
2510.3-101 or otherwise for purposes of Title I of ERISA or Section 4975 of the
Code) the assets of any such “employee benefit plan” or “plan.”
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“BNYM” has the meaning set
forth in the Recitals.
“CDO Trustee” has the meaning
set forth in Section
2(b)(i).
“Code” means the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
under it.
“Closing Date” has the meaning
set forth in Section 2(b).
“Closing Room” has the meaning
set forth in Section 2(b).
“Company” has the meaning set
forth in the introductory paragraph hereof.
“Company Counsel” has the
meaning set forth in Section 3(b).
“Commission” has the meaning
set forth in Section 4(v)
“Delaware Trustee” has the
meaning set forth in the Recitals.
“Environmental Law” has the
meaning set forth in Section 4(jj).
“Environmental Laws” shall have
the correlative meaning.
“Equity Interests” means with
respect to any Person (a) if such a Person is a partnership, the partnership
interests (general or limited) in a partnership, (b) if such Person is a limited
liability company, the membership interests in a limited liability company and
(c) if such Person is a corporation, the shares or stock interests (both common
stock and preferred stock) in a corporation.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated under it.
“Exchange” has the meaning set
forth in Section 2(b).
“Exchange Act” has the meaning
set forth in Section 4(j).
“Existing Indentures” has the
meaning set forth in the Recitals.
“Existing Indenture Trustee”
has the meaning set forth in the Recitals.
“Existing Subordinated Notes”
has the meaning set forth in the Recitals.
“Financial Statements” has the
meaning set forth in Section 4(w).
“GAAP” has the meaning set
forth in Section 4(w).
“Governmental Entities” has the
meaning set forth in Section 4(o).
“Governmental Licenses” has the
meaning set forth in Section 4(r).
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“Hazardous Materials” has the
meaning set forth in Section 4(jj).
“Holder” has the meaning set
forth in the New Indenture.
“Impairment” means any claim,
counterclaim, setoff, defense, action, demand, litigation (including
administrative proceedings or derivative actions), encumbrance, right (including
expungement, avoidance, reduction, contractual or equitable subordination, or
otherwise) or defect.
“Indemnified Party” has the meaning set
forth in Section 8(a). “Indemnified Parties” shall
have the correlative meaning.
“Investment Company Act” has
the meaning set forth in Section 4(j).
“Interim Financial Statements”
has the meaning set forth in Section 4(w).
“Lien” has the meaning set
forth in Section 4(o).
“Material Adverse Effect” means
a material adverse effect on the condition (financial or otherwise), earnings,
business, liabilities or assets of the Company and its Significant Subsidiaries
taken as a whole, provided, however, that the disclosure set forth in Schedule 2 shall not
be deemed to constitute a Material Adverse Effect.
“Material Adverse Change” has
the meaning set forth in Section 3(e)(ii).
“New Indenture” has the meaning
set forth in the Recitals.
“New Indenture Trustee” has the
meaning set forth in the Recitals.
“Note 1” has the meaning set
forth in the Recitals.
“Note 2” has the meaning set
forth in the Recitals.
“Note 3” has the meaning set
forth in the Recitals.
“Note 4” has the meaning set
forth in the Recitals.
“Original Preferred Securities”
has the meaning set forth in the Recitals.
“Properties” has the meaning
set forth in Section 4(ii).
“Property Trustee” has the
meaning set forth in the Recitals.
“Regulation D” has the meaning
set forth in Section 4(h).
“Repayment Event” has the
meaning set forth in Section 4(o).
“Rule 144A(d)(3)” has the
meaning set forth in Section 4(j).
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“Securities” has the meaning
set forth in the Recitals.
“Securities Act” means the
Securities Act of 1933, 15 U.S.C. §§77a et seq., as amended, and
the rules and regulations promulgated under it.
“Significant Subsidiary” has
the meaning as set forth in Securities and Exchange Commission
Regulation S-X.
“Significant Subsidiaries”
means, collectively, each and every Significant Subsidiary.
“Subordinated Note I” has the
meaning set forth in the Recitals.
“Subordinated Note II” has the
meaning set forth in the Recitals.
“Taberna” has the meaning set
forth in the introductory paragraph hereof.
“Taberna V” has the meaning set
forth in the introductory paragraph hereof.
“Taberna VI” has the meaning
set forth in the introductory paragraph hereof.
“Taberna VIII” has the meaning
set forth in the introductory paragraph hereof.
“Taberna IX” has the meaning
set forth in the introductory paragraph hereof.
“Taberna Transferred Rights”
means any and all of Taberna’s right, title, and interest in, to and under the
Original Preferred Securities, including, without limitation, the
following:
(i) the
Existing Indentures and Trust Agreement;
(ii) all
amounts payable to Taberna under the Original Preferred Securities, the Existing
Indentures and/or the Trust Agreements, excluding, however, amounts payable on
account of interest for the period from January 30, 2009 through March [__],
2009;
(iii) all
claims (including “claims” as defined in Section §101(5) of the Bankruptcy
Code, suits, causes of action, and any other right of Taberna, whether known or
unknown, against the Company or any of its affiliates (including the Trusts),
agents, representatives, contractors, advisors, or any other entity that in any
way is based upon, arises out of or is related to any of the foregoing,
including all claims (including contract claims, tort claims, malpractice
claims, and claims under any law governing the exchange of, purchase and sale
of, or indentures for, securities), suits, causes of action, and any other right
of Taberna against any attorney, accountant, financial advisor, or other entity
arising under or in connection with the Original Preferred Securities, the
Existing Indentures, the Trust Agreements, the Purchase Agreements or the
transactions related thereto or contemplated thereby;
(iv) all
guarantees and all collateral and security of any kind for or in respect of the
foregoing;
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(v) all
cash, securities, or other property, and all setoffs and recoupments, to be
received, applied, or effected by or for the account of Taberna under the
Original Preferred Securities, the Existing Indentures and the Trust Agreements,
other than fees, costs and expenses payable to Taberna hereunder and all cash,
securities, interest, dividends, and other property that may be exchanged for,
or distributed or collected with respect to, any of the foregoing;
and
(vi) all
proceeds of the foregoing.
“Trust I” has the meaning set
forth in the Recitals.
“Trust II” has the meaning set
forth in the Recitals.
“Trust I Preferred Securities”
has the meaning set forth in the Recitals.
“Trust II Preferred Securities”
has the meaning set forth in the Recitals.
“Trust Agreements” has the
meaning set forth in the Recitals.
“Trusts” has the meaning set
forth in the Recitals.
“Venable” has the meaning set
forth in Section 3(b).
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2.
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Exchange
of Original Preferred Securities for
Securities
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(a) The
Company agrees to issue the Securities in accordance with the New Indenture and
has requested that Taberna accept such Securities in exchange for the Original
Preferred Securities, and Taberna hereby accepts such Securities in exchange for
the Original Preferred Securities upon the terms and conditions set forth
herein.
(b) The
closing of the exchange contemplated herein shall occur at the offices of Xxxxx
Peabody, LLP in New York, New York (the “Closing Room”), or such other
place as the parties hereto shall agree, at 11:00 a.m. New York time, on March
16, 2009 or such later date as the parties may agree (such date and time of
delivery the “Closing
Date”). The Company and Taberna hereby agree that the exchange (the
“Exchange”) will occur
in accordance with the following requirements:
(i) Taberna
Capital Management, LLC (as collateral manager for each of the Taberna entities)
shall have delivered an issuer order instructing each trustee (in each such
capacity, a “CDO
Trustee”) under the applicable indenture pursuant to which such CDO
Trustee serves as trustee for the holders of the Original Preferred Securities
to exchange the Original Preferred Securities for the Securities.
(ii) The
Trust I Preferred Securities and the Securities shall have been delivered to the
Closing Room, copies of which Trust I Preferred Securities and Securities shall
have previously been made available for inspection, if so
requested.
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(iii) The
Company shall have directed the New Indenture Trustee to authenticate the
Securities and deliver them to the applicable CDO Trustee, as follows:
(i) Note 1 to Taberna V, (ii) Note 2 to Taberna VI, (iii) Note 3 to Taberna
VIII, and (iv) Note 4 to Taberna IX.
(iv) The
New Indenture Trustee shall have authenticated the Securities in accordance with
the terms of the New Indenture and delivered them as provided
above.
(v) The
Property Trustee, on behalf of Trust I, shall obtain the Trust I Preferred
Securities and shall promptly after the Exchange and receipt of direction to do
so cancel them and the Property Trustee on behalf of Trust II, promptly after
the Exchange and receipt of direction to do so, enter an order with the CDO
Trustee of Taberna VIII and Taberna IX directing such CDO Trustee to cancel the
position of such CDO Trustee in respect of the respective Trust II Preferred
Securities.
(vi) Simultaneously
with the occurrence of the events described in subsections (iv) and (v) hereof,
(A) each Taberna entity holding the applicable Original Preferred Securities
irrevocably transfers, assigns, grants and conveys the related Taberna
Transferred Rights to the Company and the Company assumes all rights and
obligations of Taberna with respect to the Original Preferred Securities and the
Taberna Transferred Rights and (B) each Holder shall be entitled to all of the
rights, title and interest of a Holder of the Securities under the terms of the
Securities, the New Indenture and any other Operative Documents.
(vii) the
Company shall have paid to BNYM all of such party’s reasonable legal fees, costs
and other expenses in connection with the Exchange, as well as all other accrued
and unpaid fees, costs and expenses under the Existing Indentures and the Trust
Agreements, if any.
(viii) The
Company shall have paid to the Trustee, for applications upon the Original
Preferred Securities and for distribution to the applicable Taberna entities
holding such Original Preferred Securities pursuant to the terms of the Existing
Indentures, all accrued interest for the period commencing on the most recent
interest payment date under the Original Preferred Securities and continuing
through and including March 16, 2009.
3. Conditions
Precedent. The
obligations of the parties under this Agreement are subject to the following
conditions precedent:
(a) The
representations and warranties contained herein shall be accurate as of the date
of delivery of the Securities.
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(b) Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP, counsel for the Company (the “Company Counsel”), shall have
delivered an opinion, dated the Closing Date, addressed to each Holder and to
the New Indenture Trustee, in substantially the form set out in Annex A-I hereto, the
Company shall have furnished to the Holders and the New Indenture Trustee, a
certificate signed by the Company’s Chief Executive Officer, President, any
Executive Vice President, Chief Financial Officer, Treasurer or Assistant
Treasurer, dated the Closing Date, addressed to the Holders and to the New
Indenture Trustee, in substantially the form set out in Annex A-II
hereto, and Xxxxxxx LLP, Maryland counsel for the Company (“Venable”), shall
have delivered an opinion, dated the Closing Date, addressed to the Holders and
the New Indenture Trustee, in substantially the form set out in Annex-III
hereto. In rendering its opinion, the Company Counsel and Venable may
rely as to factual matters upon certificates or other documents furnished by
officers, directors and trustees of the Company and by government officials;
provided, however, that copies of any
such certificates or documents are delivered to the Holders and the New
Indenture Trustee) and by and upon such other documents as such counsel may, in
their reasonable opinion, deem appropriate as a basis for the Company Counsel’s
opinion. The Company Counsel may specify the jurisdictions in which
they are admitted to practice and that they are not admitted to practice in any
other jurisdiction and are not experts in the law of any other
jurisdiction.
(c) Intentionally
Omitted.
(d) The
Holders of the Securities shall have received the opinion of Gardere Xxxxx
Xxxxxx LLP, special counsel for the New Indenture Trustee, dated as of the
Closing Date, addressed to the Holders of the Securities and their successors
and assigns, in substantially the form set out in Annex C
hereto.
(e) The
Company shall have furnished to the Holders of the Securities a certificate of
the Company, signed by the Chief Executive Officer, President or an Executive
Vice President, and the Chief Financial Officer, Treasurer or Assistant
Treasurer of the Company, in their capacities as such, dated as of the Closing
Date, as to (i) and (ii) below:
(i) the
representations and warranties in this Agreement and the New Indenture are true
and correct on and as of the Closing Date, and the Company has complied with all
the agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date; and
(ii) since
the date of the latest Interim Financial Statements, there has been no material
adverse change in the condition (financial or other), earnings, business or
assets of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions occurring in the ordinary course of business, other
than the disclosure set forth in Schedule 2, which
disclosure shall not be deemed to constitute a Material Adverse Change. (a
“Material Adverse
Change”).
(f) Intentionally
omitted.
(g) Prior
to the Closing Date, the Company shall have furnished to the Holders of the
Securities and their counsel such further information, certificates and
documents as the Holders of the Securities or such counsel may reasonably
request.
If any of
the conditions specified in this Section 3 shall
not have been fulfilled when and as provided in this Agreement, or if any of the
opinions, certificates and documents mentioned above or elsewhere in this
Agreement shall not be reasonably satisfactory in form and substance to the
Holders of the Securities or their counsel, this Agreement and any obligations
of Taberna hereunder, whether as holders of the Original Preferred Securities or
as prospective Holders of the Securities, may be canceled at, or at any time
prior to, the Closing Date by Taberna. Notice of such cancellation
shall be given to the Company in writing or by telephone and confirmed in
writing, or by e-mail or facsimile.
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Each
certificate signed by any officer of the Company and delivered to the Holders of
the Securities or the Holders’ counsel in connection with the Operative
Documents and the transactions contemplated hereby and thereby shall be deemed
to be a representation and warranty of the Company and not by such officer in
any individual capacity.
4. Representations
and Warranties of the Company. The
Company represents and warrants to, and agrees with the Taberna, as holders of
the Original Preferred Securities and with the Holders of the Securities, as
follows:
(a) It
(i) is duly organized and validly existing under the laws of its jurisdiction of
organization or incorporation, and (ii) has full power and authority to execute,
deliver and perform its obligations under this Agreement and the other Operative
Documents.
(b) Intentionally
Omitted.
(c) Intentionally
omitted.
(d) None
of the Securities, the New Indenture, or the Exchange is or may be subject to
any Impairment. The Company has no current intention to initiate any
bankruptcy or insolvency proceedings. The Company (i) has not
entered into the Exchange or any Operative Documents with the actual intent to
hinder, delay, or defraud any creditor and (ii) received reasonably
equivalent value in exchange for its obligations under the Operative
Documents.
(e) It
(i) is a sophisticated entity with respect to matters such as the Exchange, (ii)
has such knowledge and experience, and has made investments of a similar nature,
so as to be aware of the risks and uncertainties inherent in the Exchange and
(iii) has independently and without reliance upon Taberna, any Holder of the
Securities, Taberna Capital Management, LLC or the Trustee or any of their
affiliates, and based on such information as it has deemed appropriate, made its
own analysis and decision to enter into this Agreement, except that it has
relied upon Taberna’s express representations, warranties, covenants and
agreements in this Agreement. The Company acknowledges that none of
Taberna, any Holders of the Securities, Taberna Capital Management, LLC or
Trustee or any of their affiliates has given it any investment advice, credit
information or opinion on whether the Exchange is prudent.
(f) It
has not engaged any broker, finder or other entity acting under the authority of
it or any of its affiliates that is entitled to any broker’s commission or other
fee in connection with the transaction for which Taberna, any Holder, Trustee or
any of their affiliates could be responsible.
(g) Intentionally
Omitted.
(h) Neither
the Company nor any of its “Affiliates” (as defined in Rule 501(b) of
Regulation D (“Regulation
D”) under the Securities Act (as defined below)), nor any person acting
on its or their behalf, has, directly or indirectly, made offers or sales of any
security, or solicited offers to buy any security, under circumstances that
would require the registration of any of the Securities under the Securities
Act.
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(i) Neither
the Company nor any of its Affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer or sale of any
of the Securities.
(j) The
Securities (i) are not and have not been listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”), or quoted on a U.S. automated inter-dealer quotation system and
(ii) are not of an open-end investment company, unit investment trust or
face-amount certificate company that are, or are required to be, registered
under Section 8 of the Investment Company Act of 1940, as amended (the
“Investment Company
Act”), and the Securities otherwise satisfy the eligibility requirements
of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“Rule 144A(d)(3)”).
(k) Neither
the Company nor any of its Affiliates, nor any person acting on its or their
behalf, has engaged, or will engage, in any “directed selling efforts” within
the meaning of Regulation S under the Securities Act with respect to the
Securities.
(l) The
Company is not, and immediately following consummation of the transactions
contemplated hereby, will not be, an “investment company” or an entity
“controlled” by an “investment company,” in each case within the meaning of
Section 3(a) of the Investment Company Act.
(m) Each
of this Agreement and the New Indenture and the consummation of the transactions
contemplated herein and therein have been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered by the Company,
and, assuming due authorization, execution and delivery by Taberna and/or the
Trustee, as applicable, will be a legal, valid and binding obligations of the
Company enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity.
(n) The
Securities have been duly authorized by the Company and, on the Closing Date,
will have been duly executed and delivered to the Trustee for authentication in
accordance with the New Indenture and, when authenticated in the manner provided
for in the New Indenture and delivered to the Holders in exchange for the
Original Preferred Securities, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the New Indenture,
enforceable against the Company in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity.
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(o) Neither
the issue of the Securities and exchange of the Securities for the Original
Preferred Securities, nor the execution and delivery of and compliance with the
Operative Documents by the Company, nor the consummation of the transactions
contemplated herein or therein, (i) will conflict with or constitute a violation
or breach of (x) the charter or bylaws or similar organizational documents of
the Company or any subsidiary of the Company or (y) any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
governmental authority, agency or instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or their
respective properties or assets (collectively, the “Governmental Entities”), (ii)
will conflict with or constitute a violation or breach of, or a default or
Repayment Event (as defined below) under, or result in the creation or
imposition of any pledge, security interest, claim, lien or other encumbrance of
any kind (each, a “Lien”) upon any property or
assets of the Company or any if its subsidiaries pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which (A) the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or (B) to which any of the property or
assets of any of them is subject, or any judgment, order or decree of any court,
Governmental Entity or arbitrator, except, in the case of clause (i)(y) or this
clause (ii), for such conflicts, breaches, violations, defaults, Repayment
Events (as defined below) or Liens which (X) would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents and (Y) would not, singly or in the aggregate, have a
Material Adverse Effect or (iii) will require the consent, approval,
authorization or order of any court or Governmental Entity. As used
herein, a “Repayment
Event” means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of its subsidiaries
prior to its scheduled maturity.
(p) The
Company has all requisite power and authority to own, lease and operate its
properties and assets and conduct the business it transacts and proposes to
transact, and is duly qualified to transact business and is in good standing in
each jurisdiction where the nature of its activities requires such
qualification, except where the failure of the Company to be so qualified would
not, singly or in the aggregate, have a Material Adverse Effect.
(q) The
Company has no subsidiaries that are material to its business, financial
condition or earnings, other than those Significant Subsidiaries listed in Schedule 1 attached
hereto (which Schedule 1 includes each of the Company’s Significant
Subsidiaries). Each Significant Subsidiary is a corporation,
partnership or limited liability company duly and properly incorporated or
organized or formed, as the case may be, validly existing and in good standing
under the laws of the jurisdiction in which it is chartered or organized or
formed, with all requisite corporate power and authority to own, lease and
operate its properties and conduct the business it transacts. Each
Significant Subsidiary is duly qualified to transact business as a foreign
corporation, partnership or limited liability company, as applicable, and is in
good standing in each jurisdiction where the nature of its activities requires
such qualification, except where the failure to be so qualified would not,
singly or in the aggregate, have a Material Adverse Effect. No
Significant Subsidiary of the Company (other than a taxable REIT subsidiary, if
any) is currently prohibited, directly or indirectly, under any agreement or
other instrument, other than as required by applicable law, to which it is a
party or is subject , from paying any dividends to the Company, from
making any other distribution on such Significant Subsidiary’s
capital stock or other Equity Interests, from repaying to the Company any loans
or advances to such Significant Subsidiary from the Company or from transferring
any of such Significant Subsidiary’s properties or assets to the Company or any
other subsidiary of the Company.
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(r) The
Company and each of the Company’s subsidiaries hold all necessary approvals,
authorizations, orders, licenses, consents, registrations, qualifications,
certificates and permits (collectively, the “Governmental Licenses”) of and
from Governmental Entities necessary to conduct their respective businesses as
now being conducted, and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Governmental License, except where the failure to be so licensed or
approved or the receipt of an unfavorable decision, ruling or finding, would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity or the failure of such Governmental Licenses to be in full force and
effect, would not, singly or in the aggregate, have a Material Adverse Effect;
and the Company and its subsidiaries are in compliance with all applicable laws,
rules, regulations, judgments, orders, decrees and consents, except where the
failure to be in compliance would not, singly or in the aggregate, have a
Material Adverse Effect.
(s) All
of the issued and outstanding Equity Interests of the Company and each of its
subsidiaries are validly issued, fully paid and non-assessable; all of the
issued and outstanding Equity Interests of each consolidated subsidiary of the
Company is owned by the Company, directly or through subsidiaries, free and
clear of any Lien, claim, or equitable right (in each case, other than preferred
equity interests issued by CDO subsidiaries); and none of the issued and
outstanding Equity Interests of the Company or any subsidiary was issued in
violation of any preemptive or similar rights arising by operation of law, under
the charter or by-laws of such entity or under any agreement to which the
Company or any of its subsidiaries is a party.
(t) Neither
the Company nor any of its subsidiaries is (i) in violation of its respective
charter or by-laws or similar organizational documents or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any such subsidiary is a
party or by which it or any of them may be bound or to which any of the property
or assets of any of them is subject, except, in the case of clause (ii), where
such violation or default would not, singly or in the aggregate, have a Material
Adverse Effect.
(u) There
is no action, suit or proceeding before or by any Governmental Entity,
arbitrator or court, domestic or foreign, now pending or, to the knowledge of
the Company after due inquiry, threatened against or affecting the Company or
any of its subsidiaries, except for such actions, suits or proceedings that, if
adversely determined, would not, singly or in the aggregate, adversely affect
the consummation of the transactions contemplated by the Operative Documents or
have a Material Adverse Effect; and the aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries is a
party or of which any of their respective properties or assets is subject,
including ordinary routine litigation incidental to the business, are not
expected to result in a Material Adverse Effect.
(v) The
accountants of the Company who certified the Financial Statements(defined below)
are independent public accountants of the Company and its subsidiaries within
the meaning of the Securities Act, and the rules and regulations of the
Securities and Exchange Commission (the “Commission”)
thereunder.
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(w) The
audited consolidated financial statements (including the notes thereto) and
schedules of the Company and its consolidated subsidiaries for the fiscal year
ended December 31, 2007, (the “Financial Statements”) and the
interim [unaudited] consolidated financial statements of the Company and its
consolidated subsidiaries for the quarter ended September 30, 2008 (the
“Interim Financial
Statements”) provided to Taberna are the most recent publicly available
audited and unaudited consolidated financial statements of the Company and its
consolidated subsidiaries, respectively, and fairly present in all material
respects, in accordance with U.S. generally accepted accounting principles
(“GAAP”), the financial
position of the Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the dates and for the
periods therein specified, subject, in the case of Interim Financial Statements,
to year-end adjustments. Such consolidated financial statements and
schedules have been prepared in accordance with GAAP consistently applied
throughout the periods involved (except as otherwise noted therein and subject
to normal recurring adjustments in the ordinary course).
(x) Neither
the Company nor any of its subsidiaries has any material liability, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or any of its subsidiaries that could give rise to any such
liability), except for (i) liabilities set forth in the Financial
Statements or the Interim Financial Statements and (ii) normal fluctuations
in the amount of the liabilities referred to in clause (i) above occurring
in the ordinary course of business of the Company and all of its subsidiaries
since the date of the most recent balance sheet included in such Interim
Financial Statements and (iii) as described on Schedule A.
(y) Since
the respective dates of the Interim Financial Statements, there has not been (A)
any Material Adverse Change or (B) any dividend or distribution of any kind
declared, paid or made by the Company on any class of its Equity Interests,
other than regular quarterly dividends on the Company’s common
stock.
(z) The
documents of the Company filed with the Commission in accordance with the
Exchange Act, from and including the commencement of the fiscal year covered by
the Company’s most recent Annual Report on Form 10-K, at the time they were or
hereafter are filed by the Company with the Commission (collectively, the “1934 Act Reports”), complied
and will comply in all material respects with the requirements of the Exchange
Act and the rules and regulations of the Commission thereunder (the “1934 Act Regulations”), and,
at the date of this Agreement and on the Closing Date, do not and will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
other than such instruments, agreements, contracts and other documents as are
filed as exhibits to the Company’s Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q or Current Reports on Form 8-K, there are no instruments,
agreements, contracts or documents of a character described in Item 601 of
Regulation S-K promulgated by the Commission to which the Company or any of its
subsidiaries is a party that are required to be so filed. To the
actual knowledge of the Chief Financial Officer of the Company, except as set
forth in Schedule
(x), the Company is in compliance with all currently applicable
requirements of the Exchange Act that were added by the Xxxxxxxx-Xxxxx Act of
2002.
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(aa) No
labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is imminent, except those which
would not, singly or in the aggregate, have a Material Adverse
Effect.
(bb) No
filing with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than those that have
been made or obtained, is necessary or required for the performance by the
Company of its obligations under the Operative Documents, as applicable, or the
consummation by the Company of the transactions contemplated by the Operative
Documents.
(cc) The
Company and each of its subsidiaries has good and marketable title to all of its
respective real and personal property, in each case free and clear of all Liens
and defects, except for those that would not, singly or in the aggregate, have a
Material Adverse Effect; and all of the leases and subleases under which the
Company or any of its subsidiaries holds properties are in full force and
effect, except where the failure of such leases and subleases to be in full
force and effect would not, singly or in the aggregate, have a Material Adverse
Effect, and neither the Company nor any of its subsidiaries has any notice of
any claim of any sort that has been asserted by anyone adverse to the rights of
the Company or any subsidiary of the Company under any such leases or subleases,
or affecting or questioning the rights of such entity to the continued
possession of the leased or subleased premises under any such lease or sublease,
except for such claims that would not, singly or in the aggregate, have a
Material Adverse Effect.
(dd) Commencing
with its taxable year ended December 31, 2003, the Company has been, and
upon the completion of the transactions contemplated hereby, the Company will
continue to be (for as long as the Board of Directors of the Company believes it
is in the Company’s best interest to qualify as a REIT), organized and operated
in conformity with the requirements for qualification and taxation as a real
estate investment trust (a “REIT’) under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and the Company’s
organizational structure and proposed method of operation will enable it to
continue to meet the requirements for qualification and taxation as a REIT under
the Code, and no actions have been taken (or not taken which are required to be
taken) which would cause such qualification to be lost. As long as
the Board of Directors of the Company believes it is in the Company’s best
interests to qualify as a REIT, the Company expects to continue to be organized
and to operate in a manner so as to qualify as a REIT in the taxable year ending
December 31, [____] and succeeding taxable years.
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(ee) The
Company and each Significant Subsidiary has timely and duly filed (or filed
extensions thereof (and which extensions are presently in effect)) all Tax
Returns (as defined below) required to be filed by them, except where such would
not, singly or in the aggregate, have a Material Adverse Effect, and all such
Tax Returns are true, correct and complete in all material
respects. The Company and each Significant Subsidiary has timely and
duly paid in full all Taxes (as defined below) required to be paid by them
(whether or not such amounts are shown as due on any Tax Return), except for any
Taxes that are being disputed in good faith and for which adequate reserves are
held. There are no federal, state, or other Tax audits or deficiency
assessments proposed or pending with respect to the Company or any of the
Significant Subsidiaries, and no such audits or assessments are
threatened. As used herein, the terms “Tax” or “Taxes” mean (i) all federal,
state, local, and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including any interest,
additions to tax, or penalties applicable thereto, imposed by any Governmental
Entity, and (ii) all liabilities in respect of such amounts arising as a result
of being a member of any affiliated, consolidated, combined, unitary or similar
group, as a successor to another person or by contract. As used
herein, the term “Tax Returns” means all federal, state, local, and foreign Tax
returns, declarations, statements, reports, schedules, forms, and information
returns and any amendments thereto filed or required to be filed with any
Governmental Entity.
(ff) Interest
payable by the Company on the Securities is deductible by the
Company for United Stated Federal income tax purposes and there are
no rulemaking or similar proceedings before the U.S. Internal Revenue Service or
comparable federal, state, local or foreign government bodies which involve or
affect the Company or any subsidiary, which, if the subject of an action
unfavorable to the Company or any subsidiary, would likely result in a Material
Adverse Effect.
(gg) The
books, records and accounts of the Company and its subsidiaries accurately and
fairly reflect, in reasonable detail, the transactions in, and dispositions of,
the assets of, and the results of operations of, the Company and its
subsidiaries. The Company and each of its subsidiaries maintains a
system of internal accounting controls to provide reasonable assurances that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(hh) The
Company and the Significant Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts in
all material respects as are customary in the businesses in which they are
engaged or propose to engage after giving effect to the transactions
contemplated hereby including but not limited to, real or personal property
owned or leased against theft, damage, destruction, act of vandalism and all
other risks customarily insured against. All policies of insurance
and fidelity or surety bonds insuring the Company or any of the Significant
Subsidiaries or the Company’s or Significant Subsidiaries’ respective
businesses, assets, employees, officers and directors are in full force and
effect. The Company and each of the Significant Subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects. Neither the Company nor any Significant Subsidiary has reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect. Within the past twelve months, neither the
Company nor any Significant Subsidiary has been denied any insurance coverage it
has sought or for which it has applied.
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(ii) The
Company and its subsidiaries or any person acting on behalf of the Company and
its subsidiaries including, without limitation, any director, officer, agent or
employee of the Company or its subsidiaries has not, directly or indirectly,
while acting on behalf of the Company and its subsidiaries (i) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; (iii) violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any other unlawful payment.
(jj) The
information provided by the Company pursuant to the Operative Documents does
not, as of the date hereof, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(kk) Except
as would not, individually or in the aggregate, result in a Material Adverse
Change, (i) to the Company’s actual knowledge, the Company and its subsidiaries
have been and are in compliance with applicable Environmental Laws (as defined
below), (ii) to the Company’s actual knowledge neither the Company, nor any of
its subsidiaries has at any time released (as such term is defined in CERCLA (as
defined below)) or otherwise disposed of Hazardous Materials (as defined below)
on, to, in, under or from any of the real properties currently or previously
owned, leased or operated by the Company or any of its subsidiaries
(collectively, the “Properties”) other than in
compliance with all Environmental Laws, (iii) to the Company’s actual knowledge,
neither the Company nor any of its subsidiaries has used the Properties, other
than in compliance with applicable Environmental Laws, (iv) neither the Company
nor any of its subsidiaries has received any written notice of, or has any
actual knowledge of any occurrence or circumstance which, with notice or passage
of time or both, is reasonably likely to give rise to a claim under or pursuant
to any Environmental Law with respect to the Properties, or their respective
assets or arising out of the conduct of the Company or its subsidiaries, (v) to
the Company’s actual knowledge, none of the Properties are included or proposed
for inclusion on the National Priorities List issued pursuant to CERCLA by the
United States Environmental Protection Agency or proposed for inclusion on any
similar list or inventory issued pursuant to any other Environmental Law or
issued by any other Governmental Entity, (vi) to the Company’s actual knowledge,
none of the Company, any of its subsidiaries or agents or any other person or
entity for whose conduct any of them is reasonably likely to be held
responsible, has generated, manufactured, refined, transported, treated, stored,
handled, disposed, transferred, produced or processed any Hazardous Material at
any of the Properties, except in compliance with all applicable Environmental
Laws, (vii) to the Company’s knowledge, no lien has been imposed on the
Properties by any Governmental Entity in connection with the presence on or off
such Property of any Hazardous Material, and (viii) none of the Company, any of
its subsidiaries or, to the Company’s actual knowledge, any other person or
entity for whose conduct any of them is reasonably likely to be held
responsible, has entered into or been subject to any consent decree, compliance
order, or administrative order with respect to the Properties or any facilities
or improvements or any operations or activities thereon.
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(ll) As
used herein, “Hazardous
Materials” shall include, without limitation, any flammable materials,
explosives, radioactive materials, hazardous materials, hazardous substances,
hazardous wastes, toxic substances or related materials, asbestos, petroleum,
petroleum products and any hazardous material as defined by any federal, state
or local environmental law, statute, ordinance, rule or regulation,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675
(“CERCLA”), the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 5101-5127,
the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
§§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. §§ 11001-11050, the Toxic Substances Control Act, 15 U.S.C.
§§ 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. §§ 136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the
Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C.
§§ 1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26,
and the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678, and any
analogous state laws, as any of the above may be amended from time to time and
in the regulations promulgated pursuant to each of the foregoing (including
environmental statutes and laws not specifically defined herein) (individually,
an “Environmental Law”
and collectively, the “Environmental Laws”) or by any
Governmental Entity.
5. Representations
and Warranties of Taberna. Each
Taberna entity, for itself, represents and warrants to, and agrees with, the
Company as follows:
(a) It
is a company duly formed, validly existing and in good standing under the laws
of the jurisdiction in which it is organized with all requisite (i) power and
authority to execute, deliver and perform its obligations under the Operative
Documents to which it is a party, to make the representations and warranties
specified herein and therein and to consummate the transactions contemplated in
the Operative Documents.
(b) This
Agreement and the consummation of the transactions contemplated herein has been
duly authorized by it and, on the Closing Date, will have been duly executed and
delivered by it and, assuming due authorization, execution and delivery by the
Company and Trustee of the Operative Documents to which each is a party, will be
a legal, valid and binding obligation of such Taberna entity, enforceable
against such Taberna entity in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and to general principles of equity.
(c) No
filing with, or authorization, approval, consent, license, order registration,
qualification or decree of, any Governmental Entity or any other Person, other
than those that have been made or obtained, is necessary or required for the
performance by such Taberna entity of its obligations under this Agreement or to
consummate the transactions contemplated herein.
(d) It
is a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of
the Investment Company Act.
(e) Taberna
V and Taberna VI are the sole legal and beneficial owners of the Trust I
Preferred Securities and the related Taberna Transferred Rights and shall
deliver the Trust I Preferred Securities free and clear of any
Lien.
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(f) Taberna
VIII, and Taberna IX are the legal and beneficial owners of the Trust II
Preferred Securities and the related Taberna Transferred Rights and shall
deliver the Trust II Preferred Securities free and clear of any
Lien.
(g) Intentionally
Omitted.
(h) Intentionally
Omitted.
(i) There
is no action, suit or proceeding before or by any Governmental Entity,
arbitrator or court, domestic or foreign, now pending or, to its knowledge,
threatened against or affecting it, except for such actions, suits or
proceedings that, if adversely determined, would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents.
(j) The
outstanding principal amount of its respective Original Preferred Securities is
the face amount as set forth in such Original Preferred Securities.
(k) It
is aware that the Securities have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or to
“U.S. persons” (as defined in Regulation S under the Securities Act) except in
accordance with Rule 903 of Regulation S under the Securities Act or
pursuant to an exemption from the registration requirements of the Securities
Act.
(l) It
is an “accredited investor,” as such term is defined in Rule 501(a) of
Regulation D under the Securities Act. It has not made any offers to sell, or
solicitations of any offers to buy, all or any portion of the Original Preferred
Securities or Taberna Transferred Rights in violation of any applicable
securities laws.
(m) Neither
it nor any of its Affiliates, nor any person acting on its or its Affiliate’s
behalf has engaged, or will engage, in any form of “general solicitation or
general advertising” (within the meaning of Regulation D under the Securities
Act) in connection with any offer or sale of the Securities.
(n) It
understands and acknowledges that (i) no public market exists for any of the
Securities and that it is unlikely that a public market will ever exist for the
Securities, (ii) such Holder is purchasing the Securities for its own account,
for investment and not with a view to, or for offer or sale in connection with,
any distribution thereof in violation of the Securities Act or other applicable
securities laws, subject to any requirement of law that the disposition of its
property be at all times within its control and subject to its ability to resell
such Securities pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption therefrom or in a transaction not
subject thereto, and it agrees to the legends and transfer restrictions
applicable to the Securities contained in the New Indenture, and (iii) it has
had the opportunity to ask questions of, and receive answers and request
additional information from, the Company and is aware that it may be required to
bear the economic risk of an investment in the Securities.
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(o) It
has not engaged any broker, finder or other entity acting under its authority
that is entitled to any broker’s commission or other fee in connection with this
Agreement and the consummation of transactions contemplated in this Agreement
and the New Indenture for which the Company could be responsible.
(p) It
(i) is a sophisticated entity with respect to the Exchange, (ii) has such
knowledge and experience, and has made investments of a similar nature, so as to
be aware of the risks and uncertainties inherent in the Exchange and (iii) has
independently and without reliance upon the Company or any of its affiliates,
and based on such information as it has deemed appropriate, made its own
analysis and decision to enter into this Agreement, except that it has relied
upon the Company’s express representations, warranties, covenants and agreements
in the Operative Documents and the other documents delivered by the Company in
connection therewith.
Except as
expressly stated in this Agreement, Taberna make no representations or
warranties, express or implied, with respect to the Exchange, the Taberna
Transferred Rights, the Original Preferred Securities, the Existing Indentures,
or any other matter.
6. Covenants
and Agreements of the Company. The
Company agrees with the Taberna and the Holders as follows:
(a) Reserved.
(b) The
Company will arrange for the qualification of the Securities for sale under the
laws of such jurisdictions as the Holders of the Securities may designate and
will maintain such qualifications in effect so long as required for the sale of
the Securities. The Company will promptly advise the Holders of the
Securities of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such
purpose.
(c) Reserved.
(d) The
Company will not, nor will it permit any of its Affiliates or any person acting
on their behalf to, engage in any “directed selling efforts” within the meaning
of Regulation S under the Securities Act with respect to the
Securities.
(e) The
Company will not, and will not permit any of its Affiliates or any person acting
on its or their behalf to, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances that would
require the registration of any of the Securities under the Securities
Act.
(f) The
Company will not, and will not permit any of its Affiliates or any person acting
on its or their behalf to, engage in any form of “general solicitation or
general advertising” (within the meaning of Regulation D) in connection with any
offer or sale of the any of the Securities.
(g) So
long as any of the Securities are outstanding, (i) the Securities shall not be
listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation system and
(ii) the Company shall not be an open-end investment company, unit investment
trust or face-amount certificate company that is, or is required to be,
registered under Section 8 of the Investment Company Act, and, the
Securities shall otherwise satisfy the eligibility requirements of
Rule 144A(d)(3).
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(h) At
Closing the Company shall furnish to (i) the Holders of the Securities, (ii)
Taberna Capital Management, LLC and (iii) any beneficial owner of the Securities
reasonably identified to the Company, a duly completed and executed Officer’s
Financial Certificate in the form required pursuant to the New
Indenture.
(i) The
Company will, during any period in which it is not subject to and in compliance
with Section 13 or 15(d) of the Exchange Act, or it is not exempt from such
reporting requirements pursuant to and in compliance with Rule 12g3-2(b)
under the Exchange Act, provide to each Holder of the Securities, upon the
request of such Holder, any information required to be provided by
Rule 144A(d)(4) under the Securities Act. If the Company is
required to register under the Exchange Act, such reports filed in compliance
with Rule 12g3-2(b) shall be sufficient information as required
above. This covenant is intended to be for the benefit of the Holders
of the Securities.
(j) The
Company will not, until one hundred eighty (180) days following the Closing
Date, without the Holders’ prior written consent, offer, sell, contract to sell,
grant any option to purchase or otherwise dispose of, directly or indirectly,
(i) any Securities or other securities substantially similar to the
Securities other than as contemplated by the New Indenture, if at all, or (ii)
any other securities convertible into, or exercisable or exchangeable for, any
of the Securities or other securities substantially similar to the Securities or
(ii) any preferred securities, unless the Company provides the Purchasers with
an opinion of counsel (such counsel to have experience and sophistication in the
matters addressed in such opinion) addressed to the Purchasers stating that any
such offer, sale or other disposition will not result in the Securities being
integrated in a transaction that would require registration under the Securities
Act.
(k) The
Company will not identify any of the Indemnified Parties (as defined below) in a
press release or any other public statement without the prior written consent of
such Indemnified Party, unless such disclosure is required by applicable
statute, court of law, regulatory authority or securities exchange.
(l) Intentionally
omitted.
(m) The
Company will use its commercially reasonable efforts to meet the requirements to
qualify as a REIT under sections 856 through 860 of the Code, effective for the
taxable year ending December 31, 2008 (and each fiscal quarter of such year) and
unless and until the Board of Directors of the Company determines that it is in
the best interests of the Company not to be organized as a REIT, the Company
will be organized in conformity with the requirements for qualification as a
REIT under the Code, and the Company will conduct its operations in a manner
that will enable the Company to meet the requirements for qualification and
taxation as a REIT under the Code.
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7. Payment
of Expenses. In
addition to the obligations agreed to by the Company under Section 2(b)(vii)
herein, the Company agrees to pay all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated, including all costs and expenses incident to (i) the authorization,
issuance, sale and delivery of the Securities and any taxes payable in
connection therewith; (ii) the fees and expenses of counsel, accountants and any
other experts or advisors retained by the Company; and (iv) the fees and all
reasonable expenses of the New Indenture Trustee and any other trustee or paying
agent appointed under the Operative Documents, including the fees and
disbursements of counsel for such trustees. The fees of the New Indenture
Trustee (excluding fees and disbursements of counsel) shall not exceed the
amounts set forth in that certain Fee Agreement dated as of the date hereof
between the Company and The Bank of New York Mellon Trust Company, National
Association, executed in connection with this Agreement and the New
Indenture.
8. Indemnification. (a) The
Company agrees to indemnify and hold harmless BNYM, the Holders, Taberna,
Taberna Capital Management, LLC, Taberna Securities, LLC, and their respective
affiliates (collectively, the “Indemnified Parties”) the
Indemnified Parties’ respective directors, officers, employees and agents and
each person, if any, who controls the Indemnified parties within the meaning of
the Securities Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which the Indemnified Parties may
become subject, under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based on (i) any untrue statement or alleged untrue statement of a
material fact contained in any information or documents provided by or on behalf
of the Company, (ii) any omission or alleged omission to state a material fact
required to be stated or necessary to make the statements contained in any
information provided by the Company, in light of the circumstances under which
they were made, not misleading, (iii) the breach or alleged breach of any
representation, warranty, or agreement of the Company contained herein, or (iv)
the execution and delivery by the Company of the Operative Documents and the
consummation of the transactions contemplated herein and therein, and agrees to
reimburse each such Indemnified Party, as incurred, for any legal or other
expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability that the Company
may otherwise have.
(b) Promptly
after receipt by an Indemnified Party under this Section 8 of notice of the
commencement of any action, such Indemnified Party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 8,
promptly notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve the
indemnifying party from liability under paragraph (a) above unless and to the
extent that such failure results in the forfeiture by the indemnifying party of
material rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any Indemnified Party other than the
indemnification obligation provided in paragraph (a) above. The
Indemnified Parties shall be entitled to appoint counsel to represent the
Indemnified Parties in any action for which indemnification is
sought. An indemnifying party may participate at its own expense in
the defense of any such action; provided, that counsel to the
indemnifying party shall not (except with the consent of the Indemnified Party)
also be counsel to the Indemnified Party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, unless an Indemnified Party elects to engage
separate counsel because such Indemnified Party believes that its interests are
not aligned with the interests of another Indemnified Party or that a conflict
of interest might result. An indemnifying party will not, without the
prior written consent of the Indemnified Parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action, suit or
proceeding.
- 21
-
9. Representations
and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company and/or its officers set forth in or made pursuant to
this Agreement will remain in full force and effect and will survive the
Exchange. The provisions of Sections 7 and 8 shall survive the
termination or cancellation of this Agreement.
10. Amendments. This
Agreement may not be modified, amended, altered or supplemented, except upon the
execution and delivery of a written agreement by each of the parties
hereto.
11. Notices. All
communications hereunder will be in writing and effective only on receipt, and
will be mailed, delivered by hand or courier or sent by facsimile and confirmed
or by any other reasonable means of communication, including by electronic mail,
to the relevant party at its address specified in Exhibit
C.
12. Successors
and Assigns. This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person other than the parties hereto and the affiliates, directors,
officers, employees, agents and controlling persons referred to in
Section 8 hereof and their successors, assigns, heirs and legal
representatives, any right or obligation hereunder. None of the
rights or obligations of the Company under this Agreement may be assigned,
whether by operation of law or otherwise, without Taberna’s prior written
consent. The rights and obligations of the Holders under this
Agreement may be assigned by the Holders without the Company’s consent; provided
that the assignee assumes the obligations of any such Holders under this
Agreement.
13. Applicable
Law. THIS
AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW
(OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).
- 22
-
14. Submission
to Jurisdiction. ANY
LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR
ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE
STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE
BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
15. Counterparts
and Facsimile. This
Agreement may be executed by any one or more of the parties hereto in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same
instrument. This Agreement may be executed by any one or more of the
parties hereto by facsimile.
16. Entire
Agreement. This
Agreement constitutes the entire agreement of the parties to this Agreement and
supercedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter
hereof.
[Signature Page Follows]
- 23
-
IN
WITNESS WHEREOF, this Agreement has been entered into as of the date first
written above.
|
CAPITAL
TRUST, INC.
|
|||
|
|
By:
|
/s/ Xxxxxxxx X. Xxxxxx | |
| Name: Xxxxxxxx X. Xxxxxx | |||
| Title: Chief Financial Officer | |||
(Signatures
continue on the next page)
- 24
-
TABERNA,
AS HOLDERS OF THE ORIGINAL PREFERRED SECURITIES AND AS HOLDERS (AS DEFINED IN
THE NEW INDENTURE):
|
TABERNA
PREFERRED FUNDING V LTD.
|
||||
|
|
By:
|
/s/ Xxxxxxxx Xxxxxx | ||
| Name: | Xxxxxxxx Xxxxxx | |||
| Title: | Director | |||
|
TABERNA
PREFERRED FUNDING VI, LTD.
|
||||
|
|
By:
|
/s/ Xxxxxxxx Xxxxxx | ||
| Name: | Xxxxxxxx Xxxxxx | |||
| Title: | Director | |||
|
TABERNA
PREFERRED FUNDING VIII, LTD.
|
||||
|
|
By:
|
/s/ Xxxxxxxx Xxxxxx | ||
| Name: | Xxxxxxxx Xxxxxx | |||
| Title: | Director | |||
|
TABERNA
PREFERRED FUNDING IX, LTD.
|
||||
|
|
By:
|
/s/ Xxxxxxxx Xxxxxx | ||
| Name: | Xxxxxxxx Xxxxxx | |||
| Title: | Director | |||
- 25
-
Acknowledged
and Agreed:
THE BANK
OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION
not in
its individual capacity but as Existing Indenture Trustee, Property Trustee and
New Indenture Trustee
|
By:
|
/s/ Xxxx Xxxxxxxx | |
| Name: Xxxx Xxxxxxxx | ||
| Title: Vice President | ||
- 26
-
EXHIBIT
A-1
Copy of
Trust I Preferred Securities
A-1
EXHIBIT
A-2
Copies of
Trust II Preferred Securities
X-0
XXXXXXX
X-0
Copy of
Note 1
B-1
EXHIBIT
B-2
Copy of
Note
2
B-2
EXHIBIT
B-3
Copy of
Note 3
B-3
EXHIBIT
B-4
Copy of
Note 4
B-4
EXHIBIT
C
Notice
Information
Taberna:
c/o
Taberna Capital Management, LLC
000 Xxxx
Xxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
Attention: Xx.
Xxxxxxx Xxxxx
Facsimile: (000)
000-0000
e-mail: xxxxxx@xxxxxx.xxx
Company:
Capital
Trust, Inc.
000 Xxxx
Xxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
Attention:
Xxxxxxxx Xxxxxx
D-1
SCHEDULE
1
List
of Significant Subsidiaries
(See
attached)
Sch.
1-1
ANNEX
A-I
Pursuant
to Section 3(b) of the Agreement, Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
counsel for the Company, shall deliver an opinion to the effect
that:
Annex
A-1
ANNEX
A-II
CAPITAL
TRUST, INC.
Chief
Financial Officer’s Certificate
I,
__________________, the Chief Financial Officer of Capital Trust, Inc. (the
“Company”), hereby certify that:
(i) as
of December 31, 2008, the Company had total consolidated assets of
approximately $[*], and no event has occurred nor circumstance exists since such
date that materially and adversely affects the total assts of the Company;
and
(ii) the
Company (which, for purposes of this certificate, includes any predecessor
entity) has been in operation since at least 1997.
[Signature
page follows]
Annex
A-1
ANNEX
A-III
Xxxxxxx
Opinion
(see
attached)
Annex
A-1
ANNEX
B
Pursuant
to Section 3(d) of the Agreement, Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
shall deliver an opinion to the effect that for U.S. federal income tax
purposes, the Securities will constitute indebtedness of the
Company.
In
rendering such opinion, such counsel may (A) state that its opinion is
limited to the federal laws of the United States and (B) rely as to matters
of fact, to the extent deemed proper, on certificates of responsible officers of
the Company and public officials.
Annex
B-1
ANNEX
C
Pursuant
to Section 3(d) of the Agreement, Gardere Xxxxx Xxxxxx LLP, special counsel
for the Trustee, shall deliver to the Holders an opinion to the effect
that:
(i) The
Bank of New York Mellon Trust Company, National Association (the “Bank”) is a
national banking association with trust powers, duly and validly existing under
the laws of the United States of America, with corporate power and authority to
execute, deliver and perform its obligations under the New Indenture and to
authenticate and deliver the Securities, and is duly eligible and qualified to
act as Trustee under the New Indenture pursuant to Section 6.1
thereof.
(ii) The
New Indenture has been duly authorized, executed and delivered by the Bank and
constitutes the valid and binding obligation of the Bank, enforceable against it
in accordance with its terms except (A) as may be limited by bankruptcy,
fraudulent conveyance, fraudulent transfer, insolvency, reorganization,
liquidation, receivership, moratorium or other similar laws now or hereafter in
effect relating to creditors’ rights generally, and by general equitable
principles, regardless of whether considered in a proceeding in equity or at law
and (B) that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(iii) Neither
the execution or delivery by the Bank of the New Indenture, the authentication
and delivery of the Securities pursuant to the terms of the New Indenture, nor
the performance by the Bank of its obligations under the New Indenture (A)
requires the consent or approval of, the giving of notice to or the registration
or filing with, any governmental authority or agency under any existing law of
the United States of America governing the banking or trust powers of the Bank
or (B) violates or conflicts with the Articles of Association or By-laws of the
Bank or any law or regulation of the State of New York or the United States of
America governing the banking or trust powers of the Bank.
(iv) The
Securities have been authenticated and delivered by a duly authorized officer of
the Bank.
In
rendering such opinion, such counsel may (A) state that its opinion is limited
to the laws of the State of New York and the laws of the United States of
America, (B) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Bank, the Company and public
officials, and (C) make customary assumptions and exceptions as to
enforceability and other matters.
Annex
C-1
SCHEDULE
2
Disclosure
The
Company paid approximately $100 million in margin calls in Q4 2008.
The risk
factors below will appear in the 10-K the Company plans to file after market
close on Monday:
We are subject to the general risk
of a leveraged investment strategy and the specific risks of
xxxx to market
indebtedness.
Our
restructured secured debt obligations are secured by our investments, which are
subject to being marked to market by our credit providers. If the market value
of the underlying property collateralizing our investments decline, we may be
required to liquidate our investments if we do not have the liquidity in excess
of minimum required liquidity to pay down the related debt obligation. Moreover,
we cannot assure you that we will be able to meet xxxx-to-market capital calls
or debt service obligations in general and, to the extent such obligations are
not met, there is a risk of loss of some or all of our investments through
foreclosure or a financial loss if we or they are required to liquidate assets,
the impact of which could be magnified if such a liquidation is at a
commercially inopportune time. In addition, the occurrence of any event or
condition which causes any obligation or liability of more than $1.0 million to
become due prior to its scheduled maturity or any monetary default under our
restructured debt obligations if the amount of such obligation is at least $1.0
million could constitute a cross-default under our restructured debt
obligations. If a cross-default occurs, the maturity of almost all of our
indebtedness could be accelerated and become immediately due and
payable.
Our
restructured debt obligations with our lenders prohibit new balance sheet
investment activities, which prevents us from growing our balance sheet
portfolio.
Following
a series of negotiations that were precipitated by our decision to conserve our
cash resources and not meet further margin calls made by our secured lenders, we
have restructured our debt obligations with our participating secured and
unsecured lenders, a development that has consequences to our business. Under
the terms of the restructured debt obligations, we are prohibited from acquiring
or originating new investments. This restriction precludes us from growing our
balance sheet portfolio at a time when investment opportunities that provide
targeted risk-adjusted returns may otherwise be available to us. Our interest
earning investments will continue to be reduced which will negatively impact our
net investment income. There can be no assurance that we will be able to retire
completely or refinance our restructured debt obligations so that we can resume
our balance sheet investment activities.
Sch.
2-1
Under our
secured and unsecured credit agreements, such as our repurchase agreements and
derivative agreements, we may make certain representations, warranties and
affirmative and negative covenants that may restrict our ability to operate
while still utilizing those sources of credit. Currently, our restructure plan
prohibits us from acquiring or originating new balance sheet investments or
incurring additional indebtedness unless used to pay down such obligations.
Such representations, warranties and covenants may also include,
but are not limited to, restrictions on corporate guarantees, the maintenance of
certain financial ratios, including our ratio of debt to equity capital and our
debt service coverage ratio, as well as the maintenance of a minimum net worth,
restrictions against a change of control of our company and limitations on
alternative sources of capital. In addition, we may be subject to potential
margin calls under the terms of our repurchase facilities should the value of
our investments decline. If margin calls are not met, we would be forced to sell
investments, which could lead to losses. Given current market conditions, in
many cases there is no active market into which to sell our assets and where
offers to purchase our assets are obtainable there is a risk that the prices
quoted will be significantly below their fair value, and consequently, any
forced sales following unmet margin calls will result in significant
losses.
Sch. 2-2
