MASTER REPURCHASE AGREEMENT
Dated as of May 24, 2006
Between:
BEAR, XXXXXXX INTERNATIONAL LIMITED
and
111 DEBT ACQUISITION -- TWO, LLC
APPLICABILITY
From time to time the parties hereto may enter into transactions in which Bear,
Xxxxxxx International Limited ("Buyer") may, in its sole discretion, agree to
purchase Eligible Assets from 111 Debt Acquisition -- Two, LLC ("Seller"), with
a simultaneous agreement by Buyer to transfer to Seller such Eligible Assets at
a date certain or on demand of Seller subject to and in accordance with the
exercise of Buyer's remedies under this Agreement, against the transfer of funds
by Seller. Each such transaction shall be referred to herein as a "Transaction"
and shall be governed by this Agreement, as the same shall be amended from time
to time.
1. DEFINITIONS
"Accelerated Repurchase Date" shall have the meaning set forth in
Section 14 of this Agreement.
"Accepted Servicing Practices" shall mean with respect to any
Underlying Asset, those mortgage or mezzanine loan servicing practices of
prudent lending institutions which service loans of the same type as such
Underlying Asset in the jurisdiction where the related Mortgaged Property
directly or indirectly securing such Underlying Asset is located.
"Act of Insolvency" shall mean with respect to Buyer, Seller,
Xxxxxxx or Winthrop, (i) the commencement by such party as debtor of any
case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law, or such party seeking the
appointment of a receiver, trustee, custodian or similar official for such
party or any substantial part of its property, or (ii) the commencement of
any such case or proceeding against such party, or another seeking such an
appointment, 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, the issuance of such a protective decree or the entry of an
order having a similar effect, or (C) is not dismissed within 15 days,
(iii) the making by a party of a general assignment for the benefit of
creditors, or (iv) the admission in writing by a party of such party's
inability to pay such party's debts as they become due.
"Additional Assets" shall have the meaning set forth in Section 3(a)
of this Agreement.
"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.
"Aggregate Investment Capitalization" shall mean, with respect to
Xxxxxxx'x Investments, the value of the non real estate assets, as
calculated by Xxxxxxx and approved by Buyer in its reasonable discretion,
plus the value of the underlying real estate assets. The underlying real
estate assets will be valued based upon a 10 year discounted cash flow.
The discount rate will be 9% and the reversionary capitalization rate will
be 11%. The cash flow will be based upon (a) in place rental income
through the expiration of the primary term of the lease, and (b) at
primary term maturity of a given lease, (i) the lease rate will be the
renewal lease rate if the renewal rent is less than Market Rent, and (ii)
if the renewal rate is greater than the Market Rent, the post primary term
income stream will be based on the Market Rent, with a deduction equal to
35% of nine months Market Rent at the primary term expiration date.
"Aggregate Margin" shall mean, with respect to all Purchased Assets
in aggregate, the excess of the sum of their Market Values over the sum of
their Purchase Prices.
"Agreement" shall mean this Master Repurchase Agreement dated as of
May 24, 2006, by and between Buyer and Seller.
"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.
"B Note" shall mean the "B" noteholder's interest in an "A/B" loan
structure.
"Bailee" shall mean an attorney, title company or other closing
agent, appointed by Seller and reasonably acceptable to Buyer, who is
party to a Bailee Agreement and executes a Trust Receipt in connection
with a Table Funded Asset.
"Bailee Agreement" shall mean a written agreement between Seller and
a Bailee relating to the bailment in connection with Table Funded Assets,
naming Buyer as a third party beneficiary and substantially in the form of
Exhibit XIII hereto with such modifications as may be acceptable to Seller
and Buyer.
"BS Repo Agreement" shall mean any Master Repurchase Agreement
between Buyer, or any Affiliate of Buyer, and Seller.
"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 are authorized or obligated by law or executive order to be
closed.
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"Buyer" shall mean Bear, Xxxxxxx International Limited, or any
successor.
"Buyer's Margin Ratio" shall mean, as of any date, a percentage
agreed to by Buyer and Seller or, in the absence of any such agreement,
the percentage obtained by dividing the sum of the Purchase Prices of the
Purchased Assets on the Purchase Date by the aggregate Market Values on
such date for such Transaction.
"Buyer's Pro Rata Amount" shall mean, with respect to Income
received by the Depository in respect of the Purchased Assets and the
associated Hedging Transactions, an amount equal to the product of (a) the
portion of such Income attributable to the repayment of principal on the
Purchased Assets in question and (b) a fraction, the numerator of which is
the aggregate original Purchase Price of the Purchased Assets in question
and the denominator of which is the then current Market Value of the
Purchased Assets in question.
"Calculation Date" shall mean the last day of each calendar quarter,
commencing with May 31, 2006.
"CDO" shall mean the offering of collateralized debt obligations
where Seller or its Affiliate is the depositor or issuer.
"Change of Control" shall mean the occurrence of any event that
results in Seller (i) not being Controlled by Xxxxxxx and/or Winthrop and
(ii) Xxxxxxx and/or Winthrop not directly owning at least 51% of the
ordinary voting power with respect to Seller.
"Collateral" shall have the meaning set forth in Section 5 of this
Agreement.
"Collection Account" shall mean a segregated interest bearing
account established and maintained at the Depository, in the name of and
for the benefit of Buyer pursuant to the terms of the Depository
Agreement.
"Collection Period" shall mean with respect to the Remittance Date
in any month, the period beginning on but excluding the Cut-off Date in
the month preceding the month in which such Remittance Date occurs and
continuing to and including the Cut-off Date immediately preceding such
Remittance Date.
"Confirmation" shall have the meaning specified in Section 2(b) of
this Agreement.
"Consolidated Aggregate Margin" shall mean the sum of the Aggregate
Margin hereunder and the equivalent of the Aggregate Margin under all
other BS Repo Agreements.
"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.
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"Custodial Agreement" shall mean the Custodial Agreement among the
Custodian, Seller and Buyer, as amended, restated, modified and in effect
from time to time.
"Custodial Delivery" shall mean the form executed by Seller in order
to deliver the Purchased Asset Schedule and the Purchased Asset File to
Buyer or its designee (including the Custodian) pursuant to Section 6, a
form of which is attached hereto as Exhibit IV.
"Custodian" shall mean LaSalle Bank National Association, or any
successor Custodian appointed by Buyer and Seller with the prior written
consent of Seller (which consent shall not be unreasonably withheld).
"Cut-off Date" shall mean the second Business Day preceding each
Remittance Date.
"Debt" shall mean, with respect to any Person, without duplication,
(i) all indebtedness of such Person for borrowed money, (ii) all
indebtedness of such Person for the deferred purchase price of property or
services (other than property and services purchased, and expense accruals
and deferred compensation items arising, in the ordinary course of
business), (iii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments (other than performance, surety
and appeal bonds arising in the ordinary course of business), (iv) all
indebtedness of such Person created or arising under any conditional sale
or other title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession
or sale of such property), (v) all obligations of such Person under leases
which have been, or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, to the extent required
to be so recorded, (vi) all reimbursement, payment or similar obligations
of such Person, contingent or otherwise, under acceptance, letter of
credit or similar facilities (other than letters of credit in support of
trade obligations or in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security
benefits in the ordinary course of business), (vii) all Debt in the nature
of that referred to in clauses (i) through (vi) above which is guaranteed
directly or indirectly by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (A) to pay or purchase such
Debt or to advance or supply funds for the payment or purchase of such
Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such Debt or to assure the holder of such Debt
against loss in respect of such Debt, (C) to supply funds to or in any
other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or
such services are rendered) or (D) otherwise to assure a creditor against
loss in respect of such Debt, (viii) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any indebtedness referred to in clause (i) through (vi) above
of any Person, either directly or indirectly, and (ix) all Debt referred
to in clauses (i) through (vi) above secured by (or which the holder of
such Debt has an existing right, contingent or otherwise, to be secured
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by) any Lien, security interest or other charge or encumbrance upon or in
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt.
"Default" shall mean any event which, with the giving of notice, the
passage of time, or both, would constitute an Event of Default.
"Depository" shall mean PNC Bank, National Association, or any
successor Depository appointed by Seller and approved by Buyer, which
approval shall not be unreasonably withheld, conditioned or delayed.
"Depository Agreement" shall mean the agreement governing the
Collection Account between the Depository and Buyer and Seller and their
respective successors and assigns as the same may be modified, amended or
supplemented from time to time.
"Diligence Materials" shall mean the Preliminary Due Diligence
Package together with the Supplemental Due Diligence List.
"Direction Letter" shall mean a letter signed by Seller directing
the Servicer to send all Income with respect to the Purchased Assets, as
well as any payments in respect of associated Hedging Transactions, to the
Collection Account held by the Depository within one (1) Business Day of
receipt.
"Draft Appraisal" shall mean a short form appraisal, "letter opinion
of value," or any other form of draft appraisal acceptable to Buyer.
"Early Repurchase Date" shall have the meaning specified in Section
2(f) of this Agreement.
"Eligible Assets" shall mean any of the following types of assets,
which assets shall not provide for any restrictions (other than notice) on
transfer to Buyer and otherwise are acceptable to Buyer in the exercise of
its good faith judgment, and are secured directly or indirectly by a
property that is a multifamily, retail, office, warehouse, industrial,
healthcare-related or hospitality property (or any other property type
acceptable to Buyer), is located in the United States of America, its
territories or possessions, and meet all of the other requirements of this
Master Repurchase Agreement:
(i) Participation Interests in Whole Loans, B Notes or
Mezzanine Loans that are performing (i.e., current and not in
monetary or material non-monetary default such that remedies can be
exercised by any Person) commercial mortgage loans secured by first
liens on or mezzanine loans relating to multifamily and commercial
(i.e., retail, office, warehouse, industrial, healthcare-related or
hospitality) real property with respect to which the ratio of loan
to value as determined by Buyer, in the exercise of its good faith
judgment, for the real property securing directly such loan
(including for purposes of this calculation, such loan and any loan
senior to or pari passu with such loan and secured, directly or
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indirectly, by the related property) does not exceed the percentage
stated in the Confirmation and for which Buyer is a permitted
transferee of each Purchased Asset and Underlying Asset pursuant to
the terms of the related Participation Agreement or other document
creating such Eligible Asset; and
(ii) any other investment presented to and approved by Buyer
in its sole discretion which does not conform to the criteria set
forth in clause (i) above and which Buyer elects in its sole
discretion to purchase.
An Eligible Asset must have the related Purchased Asset File
segregated and held by the Custodian. Participation Interests in
non-performing loans and loans secured by undeveloped land, coop shares
and construction loans are not eligible for inclusion as Eligible Assets.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this
Agreement and, as of the relevant date, any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business 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)(l1) of ERISA and Section
412(c)(ll) 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 set forth in Section 13 of
this Agreement.
"Exit Fee" shall mean, with respect to any Early Repurchase Date, 75
basis points (3/4 of 1 percent) multiplied by the applicable Repurchase
Price.
"Filings" shall have the meaning assigned in Section 5.
"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.
"Hedging Transactions" shall mean, with respect to any or all of the
Purchased Assets, any short sale of U.S. Treasury Securities or
mortgage-related securities, futures contract (including Eurodollar
futures) or options contract or any interest rate swap, cap or collar
agreement or similar arrangements providing for protection against
fluctuations in interest rates or the exchange of nominal interest
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obligations, either generally or under specific contingencies, entered
into by Seller, with Buyer or its Affiliates as counterparties or one or
more other counterparties acceptable to Buyer.
"Income" shall mean, with respect to any Purchased Asset at any
time, any principal (including any principal prepayments) thereof and all
interest, dividends or other distributions thereon and with respect to any
associated Hedging Transaction, all proceeds thereof.
"Indemnified Amounts" and "Indemnified Parties" shall have the
meaning specified in Section 19 of this Agreement.
"Intercreditor Agreement" shall mean the agreement between Seller
and the holder of a senior or junior participation interest in the related
Purchased Asset.
"Investment" shall mean the acquisition of any real or tangible
personal property or of any stock or other security, any loan, advance,
bank deposit, money market fund, contribution to capital, extension of
credit (except for accounts receivable arising in the ordinary course of
business and payable in accordance with customary terms), or purchase or
commitment or option to purchase or otherwise acquire real estate or
tangible personal property or stock or other securities of any party or
any part of the business or assets comprising such business, or any part
thereof.
"LIBOR" shall mean, unless otherwise agreed to by the parties
hereto, the rate per annum (rounded upwards, if necessary, to the next
1/100th of 1%) calculated on each Pricing Rate Determination Date for the
next Pricing Rate Period as equal to the rate for U.S. dollar deposits for
a one month period which appears on Telerate Page 3750 as of 10:00 am, New
York City time, on such Pricing Rate Determination Date; provided,
however, that if such rate does not appear on Telerate Page 0000, "XXXXX"
determined on each Pricing Rate Determination Date for the next Pricing
Rate Period shall mean a rate per annum equal to the rate at which U.S.
dollar deposits are offered in immediately available funds in the London
Interbank Market to the London office of National Westminster Bank, Plc
(or its successors) by leading banks in the Eurodollar market at 10:00
a.m., New York City time, on the Pricing Rate Determination Date.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Associated Press-Dow Xxxxx Telerate Service (or such other page as may
replace Page 3750 on the Associated Press-Dow Xxxxx Telerate Service or
such other service as may be nominated by the British Bankers' Association
as the information vendor for the purpose of displaying British Banker's
Association interest settlement rates for U.S. Dollar deposits). LIBOR
determined on the basis of the rate displayed on Telerate Page 3750 in
accordance with the provisions hereof shall be subject to corrections, if
any, made in such rate and displayed by the Associated Press-Dow Xxxxx
Telerate Service within one (1) hour of the time when such rate is first
displayed by such Service.
"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 LIBOR .
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"Lien" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance,
charge or transfer, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially
the same economic effect as any of the forgoing, and mechanic's,
materialmen's and other similar liens and encumbrances.
"Margin Call" shall have the meaning set forth in Section 3(a) of
this Agreement.
"Margin Deficit" shall have the meaning set forth in Section 3(a) of
this Agreement.
"Market Rent" shall mean, at any point of determination, the then
current rentals being charged to new tenants for comparable quality space
located on comparable quality property within the subject geographic area
of the subject individual property, taking into account and giving effect
to, without limitation, such considerations as size, location of the
individual property, lease term and level and quality of building
construction and space improvements, tenant allowances, and rent
concessions, all as determined by Buyer in good faith.
"Market Value" shall mean, with respect to any Purchased Assets, as
of any relevant date, the market value for such Purchased Assets on such
date, as determined by Buyer in its sole discretion exercised in good
faith and may be determined on each Business Day during the term of this
Agreement, or less frequently from time to time if Buyer elects in its
sole discretion. Any provision hereof to the contrary notwithstanding, a
Market Value of zero shall, unless otherwise determined by Buyer in its
sole discretion, be assigned to (i) any Purchased Asset that has been
delinquent for at least sixty (60) days, (ii) any Purchased Asset released
by the Custodian for more than 10 Business Days other than with the
consent of Buyer or (iii) any Purchased Asset has become a specially
serviced loan as defined in the applicable servicing agreement.
"Maximum Aggregate Purchase Price" shall be the excess of
$200,000,000 over the outstanding amount advanced under any BS Repo
Agreement.
"MERS" shall mean the Mortgage Electronic Registration Systems, Inc.
"MERS Underlying Asset" shall mean an Underlying Asset that is
registered with MERS.
"Mezzanine Lender" shall mean the originator of the Mezzanine Loan.
"Mezzanine Loan" shall mean a loan secured by pledges of all of the
equity ownership interests in entities that own directly or indirectly
multifamily and commercial (i.e., retail, office, warehouse, industrial,
healthcare-related or hospitality) properties.
"Mezzanine Loan Documents" shall mean any and all documents required
in connection with the financing of a Mezzanine Loan.
"Mezzanine Note" shall mean a note evidencing Mezzanine Loan
indebtedness.
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"Moody's" shall mean Xxxxx'x Investor Service, Inc. or any successor
thereto.
"Mortgage" shall mean a mortgage, deed of trust, deed to secure debt
or other instrument, creating a valid and enforceable first priority lien
on or a first priority ownership interest in an estate in fee simple in
real property or a financeable leasehold interest in real property, and in
each case, 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.
"Net Income" shall mean net income determined in accordance with
GAAP.
"New Asset" shall mean any asset that Seller proposes to be included
as an Eligible Asset.
"Xxxxxxx" shall mean The Xxxxxxx Master Limited Partnership.
"Xxxxxxx Consolidated Leverage Ratio" has the meaning as specified
in Section 11(z) of this Agreement.
"Xxxxxxx Grantor Trust" shall mean the trust created pursuant to the
Xxxxxxx Grantor Trust Agreement, together with any replacement thereof or
successor thereto.
"Xxxxxxx Grantor Trust Agreement" shall mean that certain Second
Amended and Restated Grantor Trust Agreement dated April 1, 1999 among and
between NK-CR T1 Seller LLC, T-Two Partners, L.P., Midland Loan Services,
Inc., as Servicer, and LaSalle National Bank, as Grantor Trust Trustee,
all as provided therein, as amended by that certain Amendment No. 1 To
Second Amended and Restated Grantor Trust Agreement dated as of November
24, 2003, as same may be amended, modified, supplemented, or replaced from
time to time.
"Xxxxxxx Intercompany Loan" shall mean any advances made by T-Two
Partner, L.P. to Xxxxxxx.
"Xxxxxxx Liquid Assets" shall mean the sum of the following
unencumbered (other than by liens held by the administrative agent on
behalf of the lenders under the Xxxxxxx Master Loan Agreement, dated
August 11, 2005) assets of Xxxxxxx and any subsidiaries thereof whose
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obligations are fully guaranteed by Newkirk: (i) all cash (denominated in
United States dollars), (ii) any demand deposits, (iii) marketable
securities consisting of short-term (maturity of one year or less)
obligations issued or guaranteed as to principal and interest by the
United States of America, (iv) short-term certificates of deposit, with a
maturity of one year or less, issued by any bank organized under the laws
of the United States of America having total assets in excess of
$1,000,000,000.00, and (v) any other securities acceptable to Buyer as
evidenced by Buyer's written approval.
"Xxxxxxx/T-Two Loans" shall mean the loans granted under the Xxxxxxx
Master Loan Agreement, dated August 11, 2005 among Xxxxxxx, T-Two
Partners, L.P., Key Bank National Association, Bank of America, N.A., La
Salle Bank, National Association, and Key Bank Capital Markets.
"Non-Permitted Transferee" shall mean any of the Persons listed on
Exhibit XI hereto, as the same may be amended from time to time by mutual
agreement of Buyer and Seller.
"Originated Asset" shall mean any asset that is an Eligible Asset
and whose Purchased Asset Documents were prepared by or on behalf of
Seller or Buyer.
"Outstanding Purchase Price" shall mean, with respect to any
Transaction, the original Purchase Price reduced by all principal payments
and paydowns received by Buyer (other than payments with respect to
accrued Price Differential) and plus any additional amounts advanced by
Buyer in accordance with the terms of this Agreement with respect to the
related Eligible Assets.
"Participation Agreement" shall mean the agreement creating the
Participation Interest in the related Whole Loan, Mezzanine Loan or B
Note.
"Participation Certificate" shall mean a certificate evidencing a
Participation Interest.
"Participation Interest" shall mean an undivided interest in a Whole
Loan, a Mezzanine Loan or a B Note and which is senior to, junior to or
pari passu with other interests created pursuant to the related
Participation Agreement.
"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.
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"Pre-Existing Asset" shall mean any asset that is an Eligible Asset
and is not an Originated Asset.
"Preliminary Due Diligence Package" shall mean with respect to any
New Asset, a summary memorandum outlining the proposed transaction,
including potential transaction benefits and material underwriting risks,
all Underwriting Issues and all other characteristics of the proposed
transaction that a reasonable buyer would consider material, together with
due diligence information relating to the New Asset to be provided by
Seller to Buyer pursuant to this Agreement, including, but not limited to:
With respect to each Eligible Asset:
(i) the Underlying Loan Information;
(ii) description of the Mortgaged Property or Mortgaged Properties;
(iii) description of the Mortgagor, including experience with other
projects (real estate owned) and net worth and liquidity
statements if available; in the event that such statements are
not available, evidence of the credit strength of the
Mortgagor acceptable to Buyer;
(iv) description of the ownership structure of the Mortgagor
(including, without limitation, independent
director(s)/member(s));
(v) term sheet outlining the transaction generally, including
description of existing or proposed senior debt;
(vi) debt service coverage and loan to value ratios;
(vii) Seller's relationship with the Mortgagor, if any;
(viii) with respect to any New Asset that is a Pre-Existing Asset, a
list that specifically and expressly identifies any Purchased
Asset Documents that relate to such New Asset but are not in
Seller's possession;
(ix) any exceptions to the representations and warranties;
(x) asset summary books which include, to the extent provided to
Seller, the following:
(A) loan detail and asset description, including market
information on competing properties, terrorism and other
insurance coverage;
(B) map, photo;
(C) current rent roll;
(D) historical, current and pro forma cash flow and
operating information;
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(E) appraisal, environmental, engineering summary;
(F) information relating to valuation, security or
underwriting issues, special or unique loan features and
structural issues;
(xi) Securitization Documents, Intercreditor Agreements, if any,
and Participation Agreements;
(xii) legal opinions delivered with respect to the Eligible Asset in
Seller's possession; and
(xiii) closing binder in respect of the Purchased Asset (or if not
yet prepared, an execution copy of the Participation
Agreement).
"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 Outstanding Purchase Price for
such Transaction on a 360-day-per-year basis for the actual number of days
during the period commencing on (and including) the Purchase Date for such
Transaction and ending on (but excluding) the Repurchase Date (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 with respect
to any Transaction, an annual rate equal to LIBOR for such Pricing Rate
Period plus the relevant spread for such Transaction as set forth in the
Confirmation.
"Pricing Rate Determination Date" shall mean (i) in the case of the
first Pricing Rate Period with respect to any Transaction, the first day
on which the Pricing Rate Period begins and (ii) in the case of each
subsequent Pricing Rate Period with respect to such Transaction, the
related Reset Date.
"Pricing Rate Period" shall mean, (a) in the case of the first
Pricing Rate Period with respect to any Transaction, the period commencing
on and including the Purchase Date for such Transaction and ending on and
including the last day of the month in which the Purchase Date occurs and
(b) in the case of any subsequent Pricing Rate Period, the period
commencing on the first calendar day of each month and ending on and
including the last calendar day of such month; provided, however, that in
no event shall any Pricing Rate Period end subsequent to the Repurchase
Date.
"Principal Payment" shall mean, with respect to any Purchased
Assets, any payment or prepayment of principal or any proceeds of
redemption which are applied to principal and received by the Depository
in respect thereof.
"Prohibited Contact Person" shall have the meaning assigned in
Section 23 hereof.
"Purchase Agreement" shall mean the agreement pursuant to which
Seller acquired the Purchased Asset.
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"Purchase Date" shall mean the date on which Eligible Assets are to
be transferred by Seller to Buyer.
"Purchase Price" shall mean, with respect to any Purchased Assets,
the price at which such Purchased Assets are sold by Seller to Buyer on
the applicable Purchase Date as set forth in the Confirmation.
"Purchased Asset" or "Purchased Assets" shall mean (i) with respect
to any Transaction, the Eligible Assets sold by Seller to Buyer in such
Transaction until such Eligible Assets are repurchased by Seller pursuant
to this Agreement and (ii) with respect to the Transactions in general,
all Eligible Assets sold by Seller to Buyer and any Additional Assets
delivered by Seller to Buyer pursuant to Section 3(a) of this Agreement
until (x) such Eligible Assets are repurchased by Seller pursuant to this
Agreement or (y) such Additional Assets are re-delivered to Seller by
Buyer pursuant to Section 3 of this Agreement.
"Purchased Asset Documents" shall mean, with respect to a Purchased
Asset, the documents comprising the Purchased Asset File for such
Purchased Asset.
"Purchased Asset File" shall mean the documents specified as the
"Purchased Asset File" in Section 6(b), together with any additional
documents and information required to be delivered to Buyer or its
designee (including the Custodian) pursuant to this Agreement.
"Purchased Asset Schedule" shall mean a schedule of Purchased Assets
attached to each Custodial Delivery, Trust Receipt and Bailee Letter
containing information in the form set forth in Attachment 1 to Exhibit
XIII hereto.
"Remittance Date" shall mean the eleventh (11th) calendar day of
each month, or the next succeeding Business Day, if such calendar day
shall not be a Business Day or such other day of the month as shall be
agreed upon by both Buyer and Seller.
"Repurchase Date" shall mean the date on which Seller is to
repurchase the Purchased Assets from Buyer, which shall be the date
specified in the related Confirmation or determined by application of the
provisions hereof but which shall not be later than three hundred and
sixty-four (364) days after the date of the first Transaction under this
Agreement.
"Repurchase Price" shall mean, with respect to any Purchased Assets
as of any date, the price at which such Purchased Assets 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
Outstanding Purchase Price of such Purchased Assets and the accrued but
unpaid Price Differential with respect to such Purchased Assets as of the
date of such determination.
"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.
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"Reset Date" shall mean, with respect to any Pricing Rate Period
other than the first Pricing Rate Period with respect to any Transaction,
the second Business Day preceding the first day of such Pricing Rate
Period with respect to any Transaction.
"Securitization Document" shall mean, with respect to any Eligible
Assets, any pooling and servicing agreement or other agreement governing
the issuance and administration of such Eligible Asset.
"Securitized Notes" shall mean any and all the individual notes
which from time to time are held by the Xxxxxxx Grantor Trust.
"Seller" shall mean 111 Debt Acquisition -- Two, LLC, a Delaware
limited liability company.
"Servicing Agreement" has the meaning specified in Section 21(b).
"Servicing Records" has the meaning specified in Section 21(b).
"Subsidiary" shall mean, with respect to any Person, any
corporation, association, limited liability company, partnership or other
business entity of which securities or other ownership interests
representing more than 50% of either (x) the beneficial ownership interest
or (y) ordinary voting power are, at the time as of which any
determination is being made, owned or Controlled, directly or indirectly,
by such Person.
"Supplemental Due Diligence List" shall mean, with respect to any
New Assets, information or deliveries concerning the New Assets that Buyer
shall reasonably request in addition to the Preliminary Due Diligence
Package.
"Survey" shall mean a certified ALTA/ACSM (or applicable state
standards for the state in which the Eligible Assets are located) survey
of a Mortgaged Property prepared by a registered independent surveyor and
in form and content satisfactory to Buyer and the company issuing the
Title Policy for such Mortgaged Property.
"Table Funded Asset" shall mean a Purchased Asset, designated in the
related Confirmation as a Table Funded Asset, where the Purchased Asset
File is in the custody of the Bailee or en route to the Custodian.
"Tangible Net Worth" shall mean the excess of stockholder equity
over goodwill, each as determined in accordance with GAAP.
"Title Policy" shall have the meaning specified in paragraph 8 of
Exhibit VI.
"Total Asset Value" shall mean, as of the date of determination, the
total assets of Winthrop and its Subsidiaries, on a consolidated basis,
each as determined in accordance with GAAP, but, as to the assets subject
to the Repo Agreement, including only the value of such assets in excess
of the debt outstanding under the Repo Agreement.
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"Total Liabilities" shall mean with respect to any Person at any
date, the total liabilities of such Person and its consolidated
Subsidiaries determined in accordance with GAAP.
"Transaction Conditions Precedent" shall have the meaning specified
in Section 2(b) of this Agreement.
"Transaction Documents" shall mean, collectively, this Agreement,
the Custodial Agreement, the Servicing Agreement and all Confirmations
executed pursuant to this Agreement in connection with specific
Transactions.
"Trust Receipt" shall mean a trust receipt issued by Custodian to
Buyer confirming the Custodian's possession of certain Purchased Asset
Files which are the property of and held by Custodian for the benefit of
Buyer (or any other holder of such trust receipt).
"UCC" shall have the meaning specified in Section 5 of this
Agreement.
"Underlying Asset" shall mean the Whole Loan, B Note, Mezzanine Loan
or other asset approved by Buyer that underlies a Participation Interest.
"Underlying Loan Information" shall mean, with respect to each
Purchased Asset, the information substantially in the form set forth in
Exhibit IX attached hereto.
"Underwriting Issues" shall mean, with respect to any New Assets 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 good
faith inquiries and the exercise of good faith 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 Asset Document(s)), to an institutional
Buyer in determining whether to originate or acquire the New Assets in
question.
"Whole Loan" shall mean a commercial mortgage loan or note secured
by a first lien on multifamily and commercial real property.
"Winthrop" shall mean Winthrop Realty Trust, Inc.
"Winthrop Consolidated Leverage Ratio" has the meaning as specified
in Section 11(aa) of this Agreement.
"Winthrop Liquid Assets" shall mean the sum of the following
unencumbered assets of Winthrop and any subsidiaries thereof whose
obligations are fully guaranteed by Winthrop: (i) all cash, (ii) any
demand deposits, (iii) marketable securities consisting of short-term
(maturity of one year or less) obligations issues or guaranteed as to
principal and interest by the United States of America, (iv) short-term
CDs with a maturity of one year or less, issued by any bank organized
under the laws of the United States of America having total assets in
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excess of one billion dollars ($1,000,000,000), and (v) any other
securities acceptable to Buyer as evidenced by the Buyer's written
approval.
"Winthrop Loan" shall mean each advance under the revolving loan
facility of up to one hundred million dollars ($100,000,000.00) agreed
upon between Winthrop and Keybank, National Association.
2. INITIATION; CONFIRMATION; TERMINATION; FEES
(a) On or after the date hereof and subject to the terms and conditions
set forth in this Agreement (including, without limitation, the "Transaction
Conditions Precedent" specified in Section 2(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 entering into any Transaction shall
be in Buyer's sole and absolute discretion and that the aggregate Outstanding
Purchase Price for all Transactions shall not exceed the Maximum Aggregate
Purchase Price. Seller shall give Buyer written notice of each proposed
Transaction and Buyer shall inform Seller of its determination with respect to
any assets proposed to be sold to Buyer by Seller solely in accordance with
Exhibit X attached hereto. Buyer shall have the right to review all Eligible
Assets proposed to be sold to Buyer in any Transaction and to conduct its own
due diligence investigation of such Eligible Assets as Buyer determines. The
expenses of any such due diligence review shall be paid in accordance with
Section 20 of this Agreement. Upon receipt of all Diligence Materials and other
required documentation, Buyer shall complete its due diligence review and
financial modeling with respect to the assets proposed to be sold to Buyer by
Seller. Buyer shall be entitled to make a determination, in the exercise of its
sole discretion, that it shall not purchase any or all of the assets proposed to
be sold to Buyer by Seller, such determination to be made in accordance with
Exhibit X attached hereto. On the Purchase Date for the Transaction which shall
be not less than one (1) Business Day following the approval of an Eligible
Asset by Buyer in accordance with Exhibit X hereto, the Purchased Assets shall
be transferred to Buyer or its agent against the transfer of the Purchase Price
in immediately available funds to an account designated by Seller. To the extent
Buyer enters into a Transaction with Seller with respect to a Purchased Asset
which is an Eligible Asset of the type described in clause (ii) of the
definition thereof (i.e., such Eligible Asset does not satisfy the
characteristics described in clause (i) of the definition thereof), then such
asset shall be deemed to be an Eligible Asset for all purposes of this
Agreement.
(b) Upon 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 substantially in the form of Exhibit I attached hereto of each
Transaction (a "Confirmation"). In the absence of execution and delivery by
Buyer of a Confirmation for a proposed Transaction, Buyer shall under no
circumstance be deemed to have agreed to enter into such Transaction. Such
Confirmation shall describe the Purchased Asset(s) (and, in this connection,
shall set forth (a) the name of the counterparty with respect to the Purchased
Asset, (b) a description (including the date) of the participation agreement or
other document, agreement or instrument pursuant to which the related Purchased
Asset is made or governed and (c) the initial or then outstanding principal
amount of the related Purchased Asset) which shall be the subject of the
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proposed Transaction, shall identify Buyer and Seller, and shall set forth (i)
the Purchase Date, (ii) the Purchase Price for such Purchased Asset(s), (iii)
the Repurchase Date, (iv) the Pricing Rate applicable to the Transaction and (v)
any additional terms or conditions not inconsistent with this Agreement. Each
Confirmation shall be deemed incorporated herein by reference with the same
effect as if set forth herein at length. With respect to any Transaction, the
Pricing Rate shall be determined initially on the Pricing Rate Determination
Date applicable to the first Pricing Rate Period for such Transaction, and shall
be reset on each Reset Date for the next succeeding Pricing Rate Period for such
Transaction. Buyer or its agent shall determine 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 2(b),
the "Transaction Conditions Precedent" shall be deemed to have been satisfied
with respect to any proposed Transaction if:
(1) no Default or Event of Default under this Agreement shall have
occurred and be continuing as of the Purchase Date for such proposed
Transaction;
(2) Seller shall have certified to Buyer in writing the acquisition
cost of such Purchased Assets (including therein reasonable supporting
documentation required by Buyer, if any);
(3) the representations, warranties and covenants made by Seller in
any of the Transaction Documents shall be true and correct in respect of
the Eligible Asset in question in all material respects as of the Purchase
Date for such Transaction;
(4) Buyer shall have received the Diligence Materials and completed
to Buyer's satisfaction its due diligence review and financial modeling
with respect to the assets proposed to be sold to Buyer by Seller;
(5) Buyer or the Custodian on behalf of Buyer shall have received
the applicable Transaction documents and other documents and opinions
specified in Section 6 of this Agreement. The Custodian shall have
delivered a trust receipt satisfactory to Buyer no later than 3 p.m. on
the Purchase Date;
(6) Buyer shall have determined, in accordance with the applicable
provisions of Section 2(a) of this Agreement, that the assets proposed to
be sold to Buyer by Seller in such Transaction are Eligible Assets;
(7) after giving effect to the requested Transaction, the sum of the
Outstanding Purchase Prices of the Transactions under this Agreement shall
not exceed the Maximum Aggregate Purchase Price;
(8) none of the following shall have occurred and be continuing:
(i) an event or events shall have occurred resulting in the
effective absence of a "securities market" for securities backed by
mortgage loans; or
(ii) there shall have occurred a material adverse change in
the "repo market" or comparable "lending market";
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(9) on or prior to the Purchase Date for the initial Transaction
hereunder and from time to time thereafter as Buyer shall reasonably
request, Seller shall have delivered to Buyer an opinion of Seller's
counsel, in form and substance reasonably acceptable to Buyer, addressing
the matters set forth at Exhibit XII, items 1 through 7; and
(10) if Seller is unable to make the representation set forth in
Section 9(b)(xxii)(1) hereof on the Purchase Date for any Transaction,
Seller shall have delivered on or prior to the related Purchase Date an
opinion of Seller's counsel, in form and substance reasonably acceptable
to Buyer, addressing the matters set forth at Exhibit XII, item 8, unless,
upon request by Seller to Buyer, Buyer shall have waived such opinion with
respect to such transaction (for the avoidance of doubt, failure to
provide such opinion or receive a waiver from Buyer shall constitute a
representation and warranty by Seller that the statement set forth in
Section 9(b)(xxii)(1) hereof is true and correct with respect to such
Transaction).
Notwithstanding anything to the contrary contained in this Agreement, in no
event shall any Transaction hereunder be consummated until such time as Buyer
has received all of the following, each in form and substance reasonably
satisfactory to Buyer: (i) the fully executed Custodial Agreement and related
Trust Receipt; (ii) a Depository Agreement with respect to the Collection
Account executed by the Depository; (iii) such legal opinions as Buyer may
reasonably require; (iv) a Direction Letter, (v) Seller's organizational
documents, to the extent not delivered as of the date hereof, and (vi) an
executed Servicing Agreement.
(c) Each Confirmation shall, together with this Agreement, shall be
conclusive evidence of the terms of the Transaction(s) covered thereby.
(d) Seller may, at its option so long as an Event of Default shall not
have occurred and be continuing, increase or decrease the Outstanding Purchase
Price with respect to any Transaction subsequent to the Purchase Date; provided,
however, that (i) any decrease in the Outstanding Purchase Price shall be
subject to an Exit Fee in accordance with Section 2(g) below and (ii) such
action on the part of Seller shall not be permitted if it would create a Margin
Deficit.
(e) Each Transaction entered into between Buyer and Seller shall remain
outstanding from the initial Purchase Date until the related Repurchase Date,
subject however to the provisions of Section 27(o) hereof.
(f) Seller shall be entitled to terminate a Transaction and repurchase any
or all of the related Purchased Assets from Buyer on two (2) Business Days'
notice on any Business Day prior to the Repurchase Date (an "Early Repurchase
Date"). If Seller terminates any Transaction pursuant to the preceding sentence,
Seller shall pay to Buyer, in addition to the related Repurchase Price, an
amount equal to the Exit Fee on the Early Repurchase Date. Such notice shall set
forth the Early Repurchase Date and shall identify with particularity the
Purchased Assets to be repurchased on such Early Repurchase Date. Such notice
may be withdrawn by Seller by written notice of such withdrawal to Buyer not
later than one (1) Business Day prior to the designated Early Repurchase Date.
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(i) No Exit Fee will be payable for the early repurchase of
Purchased Assets resulting from (a) the sale of the Purchased Assets
to Buyer, or any of its Affiliates, (b) the sale of the Purchased
Assets to Buyer, or any of its Affiliates, under a Master Repurchase
Agreement, (c) the sale of the Purchased Assets to a securitization
vehicle, including a CDO, for which Buyer, or any of its Affiliates,
are acting as part of the underwriting group in a lead or co-manager
role or for which Buyer maintains, solely or together with another
lead manager, the books related to the underwriting of such
securitization (conventionally known as a "book runner" or
"co-bookrunner") and with respect to which there is no more than one
other lead manager, (d) maturity of the Purchased Assets, (e)
contractual defaults by either party to the underlying loan
documents and agreements, (f) any paydowns, prepayments or defaults
on the Purchased Assets, (g) pay offs resulting from a Margin Call
or Market Value calculation dispute between Seller and Buyer
including, without limitation, for a Margin Call in accordance with
Section 13(ix) hereof or (h) Seller's termination of a Transaction
in response to a demand by Buyer pursuant to Sections 2(g) or (h)
hereof.
(ii) Additional Purchased Assets acceptable to Buyer may be
substituted and no Exit Fee will be payable in connection with such
substitutions.
On the Repurchase Date, termination of the Transactions will be effected
by transfer to Seller or its agent of the Purchased Asset(s) and any Income in
respect thereof received by Buyer (and not previously credited or transferred
to, or applied to the obligations of, Seller pursuant to Section 4 of this
Agreement) free and clear of all liens, encumbrances, security interests and
claims created by Buyer or its Affiliates against the simultaneous transfer in
immediately available funds of the Repurchase Price to an account designated by
Buyer. Buyer agrees upon receipt of the Repurchase Price to execute and deliver
from time to time upon Seller's request, such reassignments and other
documentation reasonably requested by Seller to give effect to the forgoing
transfers.
(g) 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 Asset or any
Transaction, or change the basis of taxation of payments to Buyer in
respect thereof (except for any taxes on Buyer's overall net
income); or
(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 Buyer which is not otherwise
included in the determination of the LIBOR hereunder;
19
and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems 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 which is
actually incurred by Buyer. If Buyer becomes entitled to claim any additional
amounts pursuant to this Section 2(g), it shall promptly notify Seller of the
event by reason of which it has become so entitled. In the event that Seller
elects to terminate a Transaction in response to a demand by Buyer pursuant to
this Section 2(g), no Exit Fee with respect to such termination shall be due by
Seller. A certificate as to the calculation of any additional amounts payable
pursuant to this subsection shall be submitted by Buyer to Seller and shall be
conclusive and binding upon Seller in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the repurchase by
Seller of any or all of the Purchased Assets.
(h) 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 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 which is actually
incurred by Buyer. A certificate as to the calculation of any additional amounts
payable pursuant to this subsection shall be submitted by Buyer to Seller and
shall be conclusive and binding upon Seller in the absence of manifest error.
This covenant shall survive the termination of this Agreement and the repurchase
by Seller of any or all of the Purchased Assets.
(i) Any provision hereof to the contrary notwithstanding other than the
limitations set forth in Section 20 hereof, Seller shall pay all reasonable fees
and expenses of Buyer (including all reasonable legal fees) associated with the
purchase of any Eligible Asset under this Agreement and shall pay the fees and
expenses of counsel to Buyer in connection with the preparation and execution of
this Agreement and all other Transaction Documents.
(j) Any provision hereof to the contrary notwithstanding, Transactions
entered into hereunder shall be at the sole discretion of Buyer. Buyer is not
required to enter into any Transaction and Buyer may, in its sole discretion,
reject for inclusion in any Transaction any Eligible Assets offered for sale
hereunder by Seller.
3. MARGIN MAINTENANCE
(a) If at any time the product of the aggregate Market Value of all
Purchased Assets and Buyer's Margin Ratio shall be less than the aggregate
outstanding Repurchase Price for such Purchased Assets, (a "Margin Deficit"),
then Buyer may by notice to Seller on a Business Day (a "Margin Call") require
Seller to transfer to Buyer (A) cash or (B) Additional Assets acceptable to
Buyer in its sole and absolute discretion (such cash or Additional Assets paid
20
by Seller to Buyer are herein referred to as "Additional Assets"), so that the
sum of cash plus the product of (i) the aggregate Market Value of the Purchased
Assets and such Additional Assets and (ii) Buyer's Margin Ratio shall at least
equal the aggregate outstanding Repurchase Price; provided, however, that unless
the Margin Deficit is greater than an amount equal to 3% of the Market Value of
all Purchased Assets, the Margin Deficit shall be satisfied only from Seller's
aggregate share of Income on all Purchased Assets and, to such extent, shall be
payable on the next succeeding Remittance Date and on each Remittance Date
thereafter until fully satisfied. Any cash received by Buyer pursuant to a
Margin Call shall be applied to reduce the Outstanding Purchase Price upon
Buyer's receipt thereof. Seller's failure to cure any Margin Deficit as required
by the preceding sentence prior to expiration of one (1) Business Day after
notice 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(iv) of this Agreement).
(b) If any Margin Call is given by Buyer under Section 3(a) of this
Agreement prior to 10:00 a.m. New York City time, Seller shall transfer cash or
Additional Assets as provided in Section 3(a) by no later than 5:00 p.m. New
York City time on the day of such notice. If such notice is given by Buyer at or
after 10:00 a.m. New York City time, Seller shall transfer such cash or
Additional Assets by no later than 5:00 p.m. New York City time on the next
succeeding Business Day. Notice required pursuant to Section 3(a) of this
Agreement may be given by any means, including by telephone, telecopier or
telegraphic transmission. The failure of Buyer on any one or more occasions, to
exercise its rights under Section 3(a) of this Agreement shall not constitute a
waiver of such default or 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 3(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.
(c) If at any time the product of the aggregate Market Value of all
Purchased Assets and Buyer's Margin Ratio shall be greater than the aggregate
outstanding Repurchase Price for such Purchased Assets (a "Margin Excess"), then
Seller may by notice to Buyer require Buyer to transfer to Seller (1) cash or
(2) Purchased Assets that become subject to this Agreement as Additional Assets
so that the product of (i) the aggregate Market Value of the Purchased Assets
and such Additional Assets and (ii) Buyer's Margin Ratio shall not exceed the
aggregate outstanding Repurchase Price. In no event shall any Purchased Assets
that did not become subject to this Agreement in the form of Additional Assets
be released from the lien of this Agreement due to a Margin Excess.
(d) If any notice is given by Seller under Section 3(c) of this Agreement,
Buyer shall transfer cash or Additional Assets as provided in Section 3(c) by no
later than one (1) Business Day after the giving of such notice. Notice required
pursuant to Section 3(c) of this Agreement may be given by any means, including
by telephone, telecopier or telegraphic transmission. Buyer and Seller agree
that any failure or delay by Seller on any one or more occasions to exercise its
rights under Section 3(c) of this Agreement shall not constitute a waiver of
such rights or limit such party's rights under Section 3(c) of this Agreement or
21
otherwise existing by law or in any way create additional rights for such party.
In addition, in no event shall Buyer be required to create a Margin Deficit in
order to comply with Section 3(d) of this Agreement.
(e) Any cash transferred to Buyer pursuant to Section 3(a) of this
Agreement shall be used to reduce the Repurchase Price.
(f) Buyer's determination of Market Value shall not be affected by any
knowledge qualifiers in Seller's representations and warranties relating to the
Purchased Assets.
(g) The parties agree, for the avoidance of doubt, that Buyer may
determine the Market Value of Purchased Assets with such frequency as Buyer
elects in its sole discretion exercised in good faith and may be determined on
each Business Day during the term of this Agreement, or less frequently from
time to time if Buyer elects in its sole discretion.
4. INCOME PAYMENTS AND PRINCIPAL PAYMENTS
(a) The Collection 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 Collection Account.
Seller shall instruct the servicer to deposit all Income in respect of the
Purchased Assets, as well as any payments in respect of associated Hedging
Transactions, into the Collection Account within one (1) Business Day of
receipt. The amounts on deposit in the Collection Account shall be remitted by
the Depository in accordance with the Depository Agreement and the applicable
provisions of Sections 4(b), 4(c), 4(d), 4(e) and 14 of this Agreement. Seller
shall direct the servicer to remit all payments to Depository until such time as
Buyer directs the related payor otherwise. If any payments are made by the
related payor to Seller after the Purchase Date, or in the event that Seller
receives any payments in respect of associated Hedging Transactions after the
Purchase Date, Seller shall wire such payments to the Collection Account with
the Depository within one (1) Business Day of receipt.
(b) So long as an Event of Default hereunder shall not have occurred and
be continuing and so long as such action would not result in the creation of a
Margin Deficit, all Income received by the Depository in respect of the
Purchased Assets and the associated Hedging Transactions shall be paid on the
Business Day next following the Business Day on which such funds are deposited
in the Collection Account, (i) first, to Buyer in an amount equal to the Buyer's
Pro Rata Amount thereof, (ii) second, to Buyer in an amount equal to the Price
Differential which has accrued and is outstanding and (iii) third, subject to
Section 3(a) hereof, to Seller in an amount equal to the remainder of such
Income on such Business Day.
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(c) So long as no Event of Default shall have occurred and be continuing,
and in the event that a Margin Deficit exists with respect to the Purchased
Assets, then until Seller cures such Margin Deficit, all Income received by the
Depository in respect of the Purchased Assets and the associated Hedging
Transactions shall be applied by the Depository, pursuant to written
instructions provided by Buyer to the Depository (with a copy to Seller), on the
Business Day next following the Business Day on which such funds are deposited
in the Collection Account as follows:
(i) first, if requested by Buyer in its instructions to the
Depository, to remit to Buyer an amount equal to the Price
Differential which has accrued and is outstanding in respect of all
of the Purchased Assets as of such Business Day;
(ii) second, to transfer cash to Buyer, so that the product of
the aggregate Market Value of the Purchased Assets (including any
Additional Assets) and Buyer's Margin Ratio will at least equal the
aggregate Outstanding Purchase Price; and
(iii) third, to remit to Seller the remainder, if any.
(d) If an Event of Default shall have occurred and be continuing, all
Income (including all Principal Payments) received by the Depository in respect
of the Purchased Assets and the associated Hedging Transactions shall be applied
by the Depository, pursuant to written instructions provided by Buyer to the
Depository (with a copy to Seller), on the Business Day next following the
Business Day on which such funds are deposited in the Collection 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 Assets as of such Business Day;
(ii) second, to make a payment to Buyer on account of the
Outstanding Purchase Price of the Purchased Assets until the
Outstanding Purchase Price for all of the Purchased Assets has been
reduced to zero; and
(iii) third, to remit to Buyer an amount equal to any costs or
expenses due and owing by Seller as of such Business Day; and
(iv) fourth, to remit to Seller the remainder.
(e) Buyer is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all funds of
Seller (but not those of any Affiliate of Seller) held by Buyer or any of its
Affiliates against any other obligations at any time owing to Buyer, or an
Affiliate of Buyer, to or for the credit of the account of Seller against any of
or all the obligations of Seller then due and payable under this Agreement, or
under any other contract or agreement of Seller with Buyer or an Affiliate of
Buyer, irrespective of whether or not Buyer shall have made any demand under
this Agreement (but only upon prior notice to Seller), whereupon such
obligations owing by Buyer or its Affiliates to Seller shall, to the extent (and
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only to the extent) of such set off actually made by Buyer, be discharged. The
rights of Buyer under this Section are in addition to other rights and remedies
(including other rights of setoff) which Buyer may have.
5. SECURITY INTEREST
Buyer and Seller intend that all Transactions hereunder be sales to Buyer
of the Purchased Assets and not loans from Buyer to Seller secured by the
Purchased Assets. 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 Buyer
to secure the payment and performance of all amounts or obligations owing to
Buyer pursuant to this Agreement and the related documents described herein:
(a) the Purchased Assets, including those identified in the
Confirmations, Servicing Agreements, Servicing Records, Hedging
Transactions, insurance relating to the Purchased Assets, and all
"deposit accounts" (as defined in the UCC, including, without
limitation, collection and escrow accounts) relating to the
Purchased Assets;
(b) the Collection Account and all monies from time to time on deposit
in the Collection Account;
(c) all "general intangibles" (including "payment intangibles"),
"accounts," "chattel paper," "documents" and "instruments" as
defined in the UCC relating to or constituting any and all of the
foregoing;
(d) all "supporting obligations" and "letter of credit rights" as
defined in the UCC relating to or constituting any and all of the
foregoing;
(e) all replacements, substitutions or distributions on or proceeds,
payments, Income and profits of, tort claims, insurance claims and
other rights to payments, and records (but excluding any financial
models or other proprietary information) and files relating to any
and all of any of the foregoing; and
(f) all proceeds of the foregoing.
Buyer's security interest in the Collateral shall terminate only upon
termination of a Transaction with respect to such Collateral under this
Agreement, the Seller's obligations relating to such Transaction and the
documents delivered in connection herewith and therewith. For purposes of the
grant of the security interest pursuant to this Section 5 of this Agreement,
this Agreement shall be deemed to constitute a security agreement under the
Uniform Commercial Code as in effect in any applicable jurisdiction (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 any applicable
jurisdiction, including the State of New York. In furtherance of the foregoing,
(i) Buyer shall cause to be filed as a protective filing with respect to the
Purchased Assets and as a UCC filing with respect to the security interests
granted in this Section 5 (i) a UCC financing statement in the form of Schedule
1-A attached hereto (to be filed in the filing office indicated therein), (ii)
amendments to such UCC financing statement in the form of Schedule 1-B attached
hereto and having attached to each such UCC financing statement amendment a
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description of the Purchased Assets which identifies the Purchased Assets by
setting forth (a) the name of the Mortgagor with respect to each Purchased
Asset, (b) the Participation Agreement (including the date) or other document,
agreement or instrument pursuant to which each Purchased Asset was made or is
governed, and (c) the initial or then outstanding principal amount of each
Purchased Asset, and (iii) such other UCC filings, in such locations as may be
necessary to perfect and maintain perfection and priority of the outright
transfer and the security interest granted hereby and, in each case,
continuation statements and any amendments thereto (collectively, the
"Filings"), and shall forward copies of such Filings to Seller upon completion
thereof, and (b) Seller shall from time to time, at its own expense, deliver and
cause to be duly filed all such further filings, instruments and documents and
take all such further actions as may be reasonably necessary or desirable or as
may be reasonably requested by Buyer with respect to the perfection and priority
of the outright transfer of the Purchased Assets and the security interest
deemed granted hereunder and in the Purchased Assets and the rights and remedies
of the Buyer with respect to the Purchased Assets (including the payments of any
fees and taxes required in connection with the execution and delivery of the
Agreement).
6. PAYMENT, TRANSFER AND CUSTODY
(a) On the Purchase Date for each Transaction, ownership of the Purchased
Assets shall be transferred to Buyer or its designee (including the Custodian)
against the simultaneous transfer of the Purchase Price in immediately available
funds to an account of Seller specified in the Confirmation relating to such
Transaction. Buyer shall have the right to request Seller to provide an
officer's certificate of Seller with respect to any copy of a document required
to be delivered certifying that to its knowledge such represents a true and
correct copy of the original.
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(b) 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. In connection with each sale, transfer, conveyance and
assignment of a Purchased Asset, on or prior to each Purchase Date with respect
to such Purchased Asset, Seller shall deliver or cause to be delivered and
released to Buyer or its designee (i) the original Participation Certificate
representing the related Participation Interest, (ii) all endorsements and
transfer documents sufficient to have the related Participation Interest
registered in the name of Buyer or its designee without any further action by
Buyer (other than the delivery of such documentation to the appropriate transfer
agent), (iii) a copy of the notice from the registered holder of the
Participation Certificate to the related senior participant advising such senior
participant of the pledge of the Participation Certificate to Buyer hereunder
(together with any other documents required in order for Buyer to avail itself
of the rights of a pledge under the related Participation Agreement) and (iv) to
the extent not otherwise already delivered, the original Participation
Agreement. In addition, in connection with each sale, transfer, conveyance and
assignment of a Purchased Asset, on or prior to each Purchase Date, Seller shall
deliver or cause to be delivered to the Custodian copies of the following
documents (collectively, the "Purchased Asset File") pertaining to the
Underlying Assets relating to each of the Purchased Assets identified in the
related Custodial Delivery to the extent such documents exist and are available
to Seller:
With respect to each Underlying Asset which is a Whole Loan or a B
Note, the documents in Clauses (i) through (xxv) below:
(i) A copy of the original Mortgage Note bearing all
intervening endorsements, if any, 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
Underlying Asset 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
Underlying Asset 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) A copy of any guarantee executed in connection with the
Mortgage Note (if any) together with an officer's certificate of
Seller certifying that such represents a true and correct copy of
the original.
(iii) Except with respect to MERS Underlying Assets, a copy of
the 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 Property
is located.
(iv) Copies 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 Property is located.
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(v) Except with respect to MERS Underlying Assets, a copy of
the original Assignment of Mortgage, in blank, in form and substance
acceptable for recording and signed in the name of the Last Endorsee
(in the event that the related Underlying Asset 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 such Purchased Asset 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]").
(vi) Except with respect to MERS Underlying Assets, copies 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 Property is located.
(vii) Copies of any 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 together with an
officer's certificate of Seller certifying that such represent true
and correct copies of the originals.
(viii) A copy of any security agreement, chattel mortgage or
equivalent document executed in connection with the Purchased Asset
together with an officer's certificate of Seller certifying that
such represent true and correct copies of the originals.
(ix) A copy of any 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 Property is located.
(x) Copies 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 from Seller
to Buyer or its designee, which UCC assignments shall be in form and
substance acceptable for filing.
(xii) A copy of any environmental indemnity agreement (if
any).
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(xiii) A copy of any omnibus assignment in blank (if any).
(xiv) A copy of the disbursement letter from the Mortgagor to
the original mortgagee (if any).
(xv) A copy of the 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 and a copy of
the Title Policy.
(xvii) A copy of the Mortgagor's opinion of counsel (if any).
(xviii) A copy of any assignment of permits, contracts and
agreements (if any).
(xix) A copy of any assignment of any interest rate cap
agreement or other interest rate protection agreement entered into
by the Mortgagor or its Affiliates.
(xx) A copy of the fully executed intercreditor agreement or
any other agreement that allocates assets among the parties, if any.
(xxi) A copy of any estoppel letter from the Mortgagor.
(xxii) A copy of any executed servicing agreement.
(xxiii) A copy of the Purchase Agreement.
(xxiv) A copy of any loan agreement.
(xxv) Any other documents or instruments necessary in the
reasonable opinion of Buyer to consummate the sale of such Purchased
Asset to Buyer subject to the terms of this Agreement or required to
be delivered pursuant to the terms of this Agreement, 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 Asset.
With respect to each Underlying Asset which is a Mezzanine Loan:
(i) A copy of the original Mezzanine Note signed in connection
with the Purchased Asset bearing all intervening endorsements, if
any, 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 Asset 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]").
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(ii) A copy of the original of the loan agreement and the
guarantee, if any, executed in connection with the Purchased Asset.
(iii) A copy of the original intercreditor or loan
coordination agreement, if any, executed in connection with the
Purchased Asset.
(iv) A copy of the original security agreement executed in
connection with the Purchased Asset.
(v) Copies of all documents relating to the formation and
organization of the Mortgagor of such Purchased Asset, together with
all consents and resolutions delivered in connection with such
Mortgagor's obtaining the Purchased Asset.
(vi) Copies of all other documents and instruments evidencing,
guaranteeing, insuring or otherwise constituting or modifying or
otherwise affecting such Purchased Asset, or otherwise executed or
delivered in connection with, or otherwise relating to, such
Purchased Asset, including all documents establishing or
implementing any lockbox pursuant to which Seller is entitled to
receive any payments from cash flow of the Underlying Asset.
(vii) Except with respect to MERS Underlying Assets, a copy of
the assignment of the Underlying Asset (in blank) from the Last
Endorsee sufficient to transfer all of such Last Endorsee's rights,
title and interest in and to the Underlying Asset.
(viii) A copy of the Mortgagor's opinion of counsel (if any).
(ix) 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 from Seller
to Buyer or its designee, which UCC assignments shall be in form and
substance acceptable for filing.
(x) A copy of the pledge agreement and original certificates
representing the pledged equity interests (if any).
(xi) A copy of the stock powers relating to each pledged
equity interest, executed in blank, if an original stock certificate
is provided.
(xii) A copy of the assignment of any management agreements,
agreements among equity interest holders or other material
contracts.
(xiii) Evidence satisfactory to Buyer that the pledged
ownership interests have been transferred to, or otherwise made
subject to a first priority security interest in favor of, Seller.
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(xiv) Copies of all loan documents and related closing
documents pertaining to the closing of the senior indebtedness
incurred or owed by the owner of the real property with respect to
which the Mortgagor of the Mezzanine Loan has pledged its ownership
interests, whether directly or indirectly through intermediate
entities, including without limitation the organizational documents
of such owner together with an officer's certificate of Seller
certifying that such represent true and correct copies of the
originals.
(xv) A copy of an assignment of any interest rate cap
agreement or other interest rate protection agreement entered into
by the Mortgagor under the Purchased Asset or its Affiliates with
respect to the Purchased Asset.
(xvi) A copy of the original servicing agreement, if any,
executed in connection with the Purchased Asset.
(xvii) A copy of the Purchase Agreement (if any).
(xviii) A copy of the Mortgagor's fee title insurance policy
in respect of the mezzanine loan and a copy of the related survey.
With respect to each Purchased Asset which is of the type described in
clause (ii) of the definition of Eligible Asset, Seller shall deliver or cause
to be delivered to Buyer such documentation as is determined by Buyer to be
necessary to effectuate the sale, transfer, conveyance and assignment of such
Purchased Asset subject to the terms of this Agreement.
In addition, with respect to each Purchased Asset, Seller shall deliver an
instruction letter from Seller to the servicer with respect to such Purchased
Asset, instructing the servicer to remit all sums required to be remitted to the
holder of such Purchased Asset under the loan documents to the Depository for
deposit in the Collection Account.
From time to time, Seller shall forward to the Custodian copies of
additional documents evidencing any assumption, modification, consolidation or
extension of any Purchased Asset 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
copies thereof to be delivered hereunder at the time required, in lieu of
delivering such original documents, Seller shall deliver to Buyer a true copy
thereof with an officer's certificate certifying that such copy is a true,
correct and complete copy of the original, which has been transmitted for
recordation. Seller shall deliver copies of such documents to the Custodian with
recording information thereon promptly when they are received. With respect to
all of the Purchased Assets, 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 endorse the
Purchased Asset and any transfer documents relating thereto and (ii) take such
other steps as may be necessary or desirable to enforce Buyer's rights against
such Purchased Assets, in each case to the extent permitted by the terms and
30
conditions of this Agreement. Buyer shall deposit the Purchased Asset Files
representing the Purchased Assets, or direct that the Purchased Asset Files be
deposited directly, with the Custodian. The Purchased Asset Files shall be
maintained in accordance with the Custodial Agreement. Any Purchased Asset 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 Asset
File. The possession of the Purchased Asset File by Seller or its designee is at
the will of Buyer for the sole purpose of servicing the related Purchased Asset,
and such retention and possession by Seller or its designee is in a custodial
capacity only. Seller or its designee (including the Custodian) shall release
its custody of the Purchased Asset File only in accordance with written
instructions from Buyer, unless such release is required as incidental to the
servicing of the Purchased Assets or is in connection with a repurchase of any
Purchased Asset by Seller.
(c) Notwithstanding the provisions of Section 6(b) above requiring the
execution of the Custodial Delivery and corresponding delivery of the Purchased
Asset File to the Custodian on or prior to the related Purchase Date, with
respect to each Transaction involving a Purchased Asset which is identified in
the related Confirmation as a Table Funded Asset, Seller shall, in lieu of
effectuating the delivery of all or a portion of the Purchased Asset File on or
prior to the related Purchase Date, (i) deliver the Purchased Asset File (or the
portion thereof not then delivered to the Custodian) to Buyer on or prior to the
Purchase Date by means of delivery of the same to the Bailee, (ii) cause the
Bailee to deliver to Seller, Buyer and the Custodian by facsimile on or before
the related Purchase Date for the Transaction (A) a fully executed Bailee
Agreement and Trust Receipt issued by the Bailee thereunder, (B) the promissory
note(s) or Participation Certificate(s) in favor of Seller evidencing the making
of the Purchased Asset, with Seller's endorsement to Buyer of such note or
Participation Certificate, (C) such other components of the Purchased Asset File
as Buyer may reasonably require on a case by case basis with respect to the
particular Transaction and (D) evidence reasonably satisfactory to Buyer that
all documents necessary to perfect Seller's (and, by means of assignment to
Buyer on the Purchase Date, Buyer's) interest in the Collateral for the
Purchased Asset, and (iii) not later than the third (3rd) Business Day following
the Purchase Date, deliver to Buyer the Custodial Delivery and to the Custodian
the entire Purchased Asset File.
(d) Unless an Event of Default shall have occurred and be continuing,
Seller shall exercise all voting, corporate and servicing rights with respect to
the Purchased Assets. 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 Purchased Assets without regard to Seller's
instructions (including, but not limited to, if an Act of Insolvency shall occur
with respect to Seller, 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).
7. SALE, TRANSFER, HYPOTHECATION, HEDGE OR PLEDGE OF PURCHASED ASSETS
(a) Title to all Purchased Assets shall pass to Buyer on the applicable
Purchase Date, and Buyer shall have free and unrestricted use of all Purchased
Assets. Nothing in this Agreement or any other Transaction Document shall
preclude Buyer from engaging in repurchase or financing transactions with the
Purchased Assets or otherwise hedging, selling, transferring, pledging,
repledging, hypothecating, or rehypothecating the Purchased Assets, but no such
transaction shall relieve Buyer of its obligations to transfer the Purchased
Assets to Seller pursuant to Sections 2 or 11 of this Agreement or of Buyer's
31
obligation to credit or pay Income to, or apply Income to the obligations of,
Seller pursuant to Section 4 hereof. Any provision hereof to the contrary
notwithstanding, Buyer agrees not to engage in repurchase or financing
transactions with the Purchased Assets or otherwise hedge, sell, transfer,
pledge, repledge, hypothecate, or rehypothecate the Purchased Assets, to any
Non-Permitted Transferee.
(b) Nothing contained in this Agreement or any other Transaction Document
shall obligate Buyer to segregate any Purchased Assets delivered to Buyer by
Seller. Notwithstanding anything to the contrary in this Agreement or any other
Transaction Document, no Purchased Asset shall remain in the custody of Seller
or an Affiliate of Seller.
8. SUBSTITUTION; SEGREGATION OF DOCUMENTS RELATING TO ELIGIBLE ASSETS
(a) Substitution of Eligible Assets is subject to satisfaction of the
conditions to the acquisition of the Purchased Assets.
(b) All documents relating to Purchased Assets in the possession of Seller
shall be segregated from other documents and securities in its possession and
shall be identified as being subject to this Agreement.
9. REPRESENTATIONS
(a) Buyer and Seller each represents and warrants, and shall on and as of
the Purchase Date of any Transaction be deemed to represent and warrant, to the
other that:
(i) it is duly authorized to execute and deliver this
Agreement, to enter into the 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 advance of any Transaction by the other party
hereto, as agent for a disclosed principal);
(iii) the person signing this Agreement on its behalf is duly
authorized to do so on its behalf (or on behalf of any such
disclosed principal);
(iv) it has obtained all authorizations of any governmental
body required in connection with this Agreement and the Transactions
hereunder and such authorizations are in full force and effect; and
(v) the execution, delivery and performance of this Agreement
and the Transactions hereunder will not violate any law, ordinance,
charter, by-law or rule applicable to it or any agreement by which
it is bound or by which any of its assets are affected.
32
(b) Seller represents and warrants to Buyer that, except as otherwise
disclosed to Buyer in writing, as of the Purchase Date for the purchase of any
Purchased Assets 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 of Seller. Seller is duly organized, validly
existing and in good standing as a Delaware limited liability
company 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 duly executed and delivered by Seller, for good and
valuable consideration. The Transaction Documents constitute the
legal, valid and binding obligations of Seller enforceable against
Seller in accordance with their respective terms subject to
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 formation, organizational or other
governing documents of Seller, (ii) any contractual obligation to
which such party is now a party or the rights under which have been
assigned to such party or the obligations under which have been
assumed by such party or to which the assets of such party are
subject or constitute a default thereunder, or result thereunder in
the creation or imposition of any lien upon any of the assets of
such party, other than pursuant to the Transaction Documents, (iii)
any judgment or order, writ, injunction, decree or demand of any
court applicable to such party, or (iv) any applicable Requirement
of Law. Seller has all necessary licenses, permits and other
consents from Governmental Authorities necessary to acquire, own and
sell the Purchased Assets 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 or any of its
assets, nor is there any action, suit, proceeding, investigation, or
arbitration pending or, to the best knowledge of Seller, threatened
against Seller which may result in any material adverse change in
the business, operations, financial condition, properties, or assets
of Seller, or which may have an adverse effect on the validity of
the Transaction Documents or the Purchased Assets 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
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all material respects with all Requirements of Law. Seller is not in
default in any material respect with respect to any judgment, order,
writ, injunction, decree, rule or regulation of any arbitrator or
Governmental Authority.
(v) No Broker. Seller has not dealt with any broker,
investment banker, agent, or other Person (other than Buyer or an
Affiliate of Buyer) who may be entitled to any commission or
compensation in connection with the sale of Purchased Assets
pursuant to any of the Transaction Documents.
(vi) Good Title to Purchased Assets. Immediately prior to the
purchase of any Purchased Assets by Buyer from Seller, such
Purchased Assets are free and clear of any lien, encumbrance or
impediment to transfer (including any "adverse claim" as defined in
Section 8-102(a)(l) 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 Assets to Buyer and, upon
transfer of such Purchased Assets to Buyer, Buyer shall be the owner
of such Purchased Assets free of any adverse claim (other than any
adverse claims or liens created by Buyer). In the event the related
Transaction is recharacterized as a secured financing of the
Purchased Assets, the provisions of this Agreement are effective to
create in favor of Buyer a valid security interest in all rights,
title and interest of Seller in, to and under the Purchased Assets
and Buyer shall have a valid, perfected first priority security
interest in the Purchased Assets.
(vii) No Default. No Default or Event of Default exists under
or with respect to the Transaction Documents.
(viii) Eligibility Criteria Regarding Underlying Assets and
Representations and Warranties Regarding the Purchased Assets;
Delivery of Purchased Asset File. Seller represents and warrants to
Buyer that each Underlying Asset relating to a Purchased Asset sold
in a Transaction hereunder, as of each Purchase Date for such
Transaction, conforms to the applicable representations and
warranties set forth in Exhibits VI and VII hereto and that each
Purchased Asset conforms to the representations and warranties set
forth in Exhibit VIII and, in the case of both the Underlying Asset
and the Purchased Asset, any representations and warranties made by
Seller pursuant to Section 9(d). It is understood and agreed that
the representations and warranties made by Seller set forth in
Exhibits VI, VII and VIII and any representations and warranties
made by Seller pursuant to Section 9(d) hereof shall survive
delivery of the related Purchased Asset File to Buyer or its
designee (including the Custodian). Any provision of this Agreement
to the contrary notwithstanding, with respect to any Purchased Asset
purchased by Seller from Buyer or its Affiliates, Seller shall make
to Buyer only those representations and warranties with respect to
such Purchased Asset as were made to Seller in connection with its
acquisition thereof. Seller or its designee is in possession of a
complete, true and accurate Purchased Asset File with respect to
each Purchased Asset, except for such documents as have been
34
delivered to Buyer. Any provision hereof to the contrary
notwithstanding, Buyer's remedy for a breach of any representation
and warranty with respect to any Purchased Asset or related
Underlying Asset, notwithstanding any knowledge qualifier, shall be
to determine the Market Value of such Purchased Asset in light of
such breach (without regard to any knowledge qualifiers) and such
breach, in and of itself, shall not constitute an Event of Default
or be, in and of itself, the basis of a suit for damages against
Seller (for the avoidance of doubt this does not include the
possibility of an Event of Default for failure to satisfy a Margin
Call by Buyer pursuant to Section 3(a) of this Agreement); provided,
however, that in the event that a breach of any representation and
warranty causes a breach of some other covenant of Seller hereunder
(such as to maintain adequate margin), then Buyer shall be entitled
to exercise all rights and remedies granted to it hereunder.
(ix) Adequate Capitalization: No Fraudulent Transfer. Seller
has, as of such Purchase Date, adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations.
Seller is generally able to pay, and as of the date hereof is
paying, its debts as they come due. Seller has not become, or is
presently, financially insolvent nor will Seller be made insolvent
by virtue of Seller's execution of or performance under any of the
Transaction Documents within the meaning of the bankruptcy laws or
the insolvency laws of any jurisdiction. Seller has not entered into
any Transaction Document or any Transaction pursuant thereto in
contemplation of insolvency or with intent to hinder, delay or
defraud any creditor.
(x) 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).
(xi) Organizational Documents. Seller has delivered to Buyer
certified copies of its formation, organizational and other
governing documents, together with all amendments thereto.
(xii) No Encumbrances. There are (i) no outstanding rights,
options, warrants or agreements on the part of Seller for a
purchase, sale or issuance, in connection with the Purchased Assets
and (ii) no agreements on the part of Seller to issue, sell or
distribute the Purchased Assets.
(xiii) Federal Regulations. Seller is not (A) required to
register as an "investment company," or a company "controlled by 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.
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(xiv) 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; 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.
(xv) ERISA. Seller does not have any Plans.
(xvi) Judgments/Bankruptcy. Except as disclosed in writing to
Buyer, there are no judgments in excess of $100,000 against Seller
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.
(xvii) Full and Accurate Disclosure. No information contained
in the Transaction Documents, or any written statement furnished by
or on behalf of Seller pursuant to the terms of the Transaction
Documents, contains any untrue statement of a material fact or 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.
(xviii) Financial Information. All financial data concerning
Seller and to Seller's knowledge the Purchased Assets that has been
delivered by or on behalf of Seller to Buyer is true, complete and
correct in all material respects as of the date of the related
financial statement 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, Xxxxxxx or Winthrop or to Seller's knowledge the
Purchased Assets, or in the results of operations of Seller, which
change is reasonably likely to have in a material adverse effect on
Seller.
(xix) Chief Executive Office. On the date of this Agreement,
Seller's chief executive office and principal place of business is
located at 0 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxxxxx
00000. The location where Seller keeps its books and records,
including all computer tapes and records relating to the Eligible
Assets is its chief executive office.
(xx) Purchase Agreement Representations and Warranties. Seller
has provided Buyer with a copy of the Purchase Agreement (to the
extent applicable) containing representations and warranties made to
Seller by the party designated as seller under such Purchase
Agreement.
(xxi) True Sale. With respect to each Transaction, either (1)
Seller has acquired the related Purchased Assets for fair value in
an arms length transaction with a third-party unrelated to Seller or
any of its Affiliates or (2) Seller acquired the related Purchased
Assets from a related party in a transaction that constitutes a true
sale for legal, tax and accounting purposes.
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(c) On the Purchase Date for any Transaction and except as otherwise
disclosed to Buyer in writing, Seller shall be deemed to have made all of the
representations set forth in Section 9(b) of this Agreement as of such Purchase
Date.
(d) Seller agrees to make to Buyer the representations and warranties
regarding each Purchased Asset that were made to Seller in connection with
Seller's acquisition of such Purchased Asset (if any); provided, however, that a
breach of any such representation and warranty shall entitle Buyer to the same
rights and remedies as would a breach of any of the representations and
warranties set forth in Exhibits VI, VII and VIII hereto, and no others.
10. 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 Buyer:
(a) take any action which would directly or indirectly impair or adversely
affect Buyer's title to or security interest in the Purchased Assets;
(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 Assets (or any of them) to any Person other than
Buyer, or engage in repurchase transactions or similar transactions with respect
to the Purchased Assets with any Person other than Buyer;
(c) create, incur or permit to exist any lien, encumbrance or security
interest in or on the Purchased Assets or create, incur or consent to any lien,
encumbrance or security interest in or on the related Underlying Assets, except
as described in Section 5 of this Agreement;
(d) consent or assent to any material amendment or supplement to, or
termination of, any Securitization Document, any note, loan agreement, mortgage
or guaranty relating to the Purchased Assets or other material agreement or
instrument relating to the Purchased Assets or the related Underlying Assets
other than in accordance with Section 6(d);
(e) use any of the Purchase Price for any Purchased Asset either directly
or indirectly to acquire any security, as that term is defined in Regulation T
of the Regulations of the Board of Governors of the Federal Reserve System, or
take any action that might cause any Transaction to violate any regulation of
the Federal Reserve Board;
(f) 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 any equity or ownership interest of Seller, or 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 to any equity
or ownership interest of Seller, either directly or indirectly, whether in cash
or property or in obligations of Seller; provided, however, that the foregoing
37
shall not restrict Seller from making distributions, from assets other than the
Purchased Assets, required to maintain the Seller's status under the Code as a
real estate investment trust ("REIT") within the meaning of Section 856 through
860 of the Code, in the event Seller then qualifies as a REIT under the Code; or
(g) file a UCC financing statement, with respect to a Purchased Asset, or
an amendment or termination statement with respect to a UCC financing statement
with respect to such Purchased Asset, except as approved by Buyer in each
instance.
11. 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 11 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 9.
(c) Seller (1) shall defend the right, title and interest of Buyer in and
to the Purchased Assets against, and take such other action as is necessary to
remove, the liens, security interests, claims and demands of all Persons (other
than liens, security interests, claims and demands by or through Buyer) and (2)
shall, at Buyer's request, take all action necessary to ensure that Buyer will
have a first priority security interest in the Purchased Assets 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 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 or required to be
delivered 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 Purchased Assets as may be reasonably requested
by Buyer from time to time.
(f) Seller will permit Buyer or its designated representative to inspect
Seller's records with respect to the Purchased Assets and the Underlying Assets
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 Buyer and Seller.
(g) If 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 Purchased Assets, or otherwise in respect thereof,
Seller shall accept the same as Buyer's agent, hold the same in trust for Buyer
and deliver the same forthwith to Buyer in the exact form received, duly
endorsed by Seller to Buyer, if required, together with an undated bond power
covering such certificate duly executed in blank to be held by Buyer hereunder
38
as additional collateral security for the Transactions. If any sums of money or
property so paid or distributed in respect of the Purchased Assets shall be
received by Seller, Seller shall, until such money or property is paid or
delivered to Buyer or to the Depository on behalf of Buyer, hold such money or
property in trust for the benefit of Buyer, segregated from the other funds of
Seller, as additional collateral security for the Transactions.
(h) At any time from time to time upon 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 Uniform Commercial Code 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, negotiable document, certificated security or chattel paper, such
note, instrument, document, security or chattel paper shall be immediately
delivered to Buyer, duly endorsed in a manner satisfactory to Buyer, to be held
as Collateral pursuant to this Agreement, and the documents delivered in
connection herewith. Seller hereby irrevocably authorizes Buyer at any time and
from time to time to file in any filing office in any jurisdiction any initial
financing statements and amendments thereto that (1) indicate the Collateral (i)
as all Purchased Assets, regardless of whether any particular asset comprised in
the Collateral falls within the scope of Article 9 of the UCC or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (2) contain any other information required by part 5 of Article 9 of
the UCC for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether Seller is an organization, the
type of organization and any organization identification number issued to
Seller, and (ii) in the case of a financing statement filed as a fixture filing
or indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates. Seller
agrees to furnish any such information to Buyer promptly upon request. Seller
also ratifies its authorization for Buyer to have filed in any jurisdiction any
initial financing statements or amendments thereto if filed prior to the date
hereof.
(i) Seller shall provide Buyer with the following financial and reporting
information:
(i) Within 60 days after the last day of the first three
fiscal quarters in any fiscal year, Xxxxxxx'x and Winthrop'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 (which statements and balance sheets shall
separately break out the statements of income and changes in cash
flow and balance sheets of Xxxxxxx and Winthrop), in each case
presented in Xxxxxxx'x and Winthrop's usual form as previously
approved by Buyer;
(ii) Within 90 days after the last day of its fiscal year,
Xxxxxxx'x and Winthrop'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 (which statements and balance
sheets shall separately break out the statements of income and
changes in cash flow and balance sheets of Xxxxxxx and Winthrop), in
each case presented in Xxxxxxx'x and Winthrop's usual form as
previously approved by Buyer;
39
(iii) Within 60 days after the last day of each calendar
quarter in any fiscal year, an officer's certificate from Seller
addressed to Buyer certifying that, as of such calendar month, (x)
Seller is in compliance with all of the terms, conditions and
requirements of this Agreement, and (y) no Event of Default exists;
(iv) Within 20 days after the last day of each calendar month
in any fiscal year, any and all property level financial information
with respect to the Purchased Assets that is in the possession of
Seller or an Affiliate, or such other information as may be mutually
determined and agreed upon in writing by both Buyer and Seller,
including, without limitation, rent rolls and income statements; and
(v) Within 10 Business Days of receipt by Seller, a monthly
reporting package with respect to the Purchased Assets containing
all information set forth on Exhibit III attached hereto; provided,
however, that if such information is not received by Seller, it
shall have no obligation under this clause (v).
(j) 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.
(k) Seller, Xxxxxxx and Winthrop 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.
(l) 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 or cause to be paid and
discharge all taxes, levies, liens and other charges on its assets and on the
Purchased Assets that, in each case, in any manner would create any lien or
charge upon the Purchased Assets, 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.
(m) 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
Assets are held not less than fifteen (15) Business Days prior to taking any
such action.
(n) Seller will maintain records with respect to the Purchased Assets and
the conduct and operation of its business with no less a degree of prudence than
if the Purchased Assets were held by Seller for its own account and will furnish
40
Buyer, upon request by Buyer or its designated representative, with information
reasonably obtainable by Seller with respect to the Purchased Assets and the
conduct and operation of its business.
(o) Seller shall provide Buyer with access to operating statements, the
occupancy status and other property level information with respect to the
Mortgaged Properties that are either in Seller's possession or reasonably
obtainable by Seller, plus any such additional reports as Buyer may reasonably
request.
(p) Seller hereby covenants and agrees that all interest and original
issue discount received or accrued with respect to the Purchased Assets shall be
treated as portfolio interest within the meaning of Sections 871(h) and 881(c)
of the Internal Revenue Code, as amended, and no amount will be required to be
deducted from any remittance on the Purchased Assets on account of withholding
tax or otherwise.
(q) Seller shall notify Buyer in writing of any proposed extension or
material modification of any Purchased Asset not less than ten (10) Business
Days prior to taking any such action and shall reasonably provide Buyer with any
documentation required for such Purchased Asset to be modified or extended after
any such action has been taken.
(r) Seller shall be solely responsible for the fees and expenses of
Custodian.
(s) Seller shall, and shall cause each entity servicing any Purchased
Assets to, promptly notify Buyer in writing of any payment in full or reasonably
anticipated payment in full of a Purchased Asset.
(t) Seller shall, if so requested by Buyer, cooperate in good faith with
Buyer in order to have any Purchased Asset registered in the name of Buyer or
its designee.
(u) Seller, from and after the initial Purchase Date, shall maintain in
immediately available funds as of any date of determination an amount equal to
the excess of (1) $20,000,000 over (2) the Consolidated Aggregate Margin.
(v) Xxxxxxx'x and Winthrop's investment policies and objectives shall not
be materially changed, altered or modified, either formally or in practice from
directly and indirectly acquiring, holding, financing, managing and disposing of
loans and other investments related to real estate assets and real estate
operating companies primarily located in the United States, including but not
limited to first mortgage loans, junior participations in first mortgage loans,
mezzanine loans, equity investments and preferred equity at the property,
property holding company or corporate levels and to engage in such activities as
are related or incidental to the foregoing.
(w) The Tangible Net Worth of Xxxxxxx shall not at any time be less than
the sum of $400,000,000 plus 75% of the amount received by Xxxxxxx in respect of
any equity issuance after the date hereof.
41
(x) The Tangible Net Worth of Winthrop shall not at any time be less than
the sum of $200,000,000 plus 75% of the amount received by Winthrop in respect
of any equity issuance after the date hereof.
(y) The Tangible Net Worth at Xxxxxxx and Winthrop shall not decline more
than 15% during any calendar quarter, and may not decline more than 30% during
any trailing twelve consecutive month period.
(z) The Xxxxxxx Consolidated Leverage Ratio, i.e. the quotient resulting
from dividing (i) the sum of (1) Xxxxxxx'x Debt relating to its Investments and
(2) the aggregate amount of T-Two Partner, L.P.'s Debt (including, without
limitation, the outstanding balance of the Xxxxxxx/T-Two Loans, but excluding
the outstanding balance of the Securitized Notes and the Xxxxxxx Intercompany
Loan) by (ii) the aggregate of (1) Aggregate Investment Capitalization of
Xxxxxxx'x Investments, plus (2) all cash and cash equivalents of Xxxxxxx and the
Xxxxxxx Subsidiaries all as reasonably determined by Buyer prior to May 24,
2006, shall at all times be less than seventy five (75%) percent.
(aa) The Winthrop Consolidated Leverage Ratio, i.e. the quotient resulting
from dividing (i) the sum of (1) the Winthrop's and the Winthrop Realty Trust's
Debt relating to its Investments (including, without limitation, the outstanding
balance of the Winthrop Loan, but excluding the Debt under the BS Repo
Agreements) by (ii) the Winthrop Realty Trust's Total Asset Value, all as
reasonably determined by Buyer prior to May 24, 2006 shall at all times be less
than sixty (60%) percent.
(bb) The sum of all Xxxxxxx'x Liquid Assets must at all times be at least
$10,000,000, as evidenced by Xxxxxxx'x annual and quarterly SEC filings. If such
minimum liquidity is not satisfied on any date of testing, Xxxxxxx shall arrange
for an infusion of Xxxxxxx Liquid Assets in an amount necessary to satisfy the
requirement within a period of 10 Business Days.
(cc) The sum of all of Winthrop's Liquid Assets must at all times be at
least $5,000,000, as evidenced by Winthrop's annual and quarterly SEC filings.
If such minimum liquidity is not satisfied on any date of testing, Winthrop
shall arrange for an infusion of Winthrop's Liquid Assets in an amount necessary
to satisfy the requirement within a period of 10 Business Days.
(dd) The consolidated net income of Xxxxxxx and Winthrop for the period of
any 4 consecutive calendar quarters, determined in accordance with GAAP, shall
not be less than one dollar ($1.00).
(ee) Compliance with the covenants in clauses (u), (w), (x), (y), (z),
(aa), (bb), (cc) and (dd) above shall be tested at the end of each of the first
three fiscal quarters and after the end of the fourth fiscal quarter (i.e., the
end of the fiscal year). Seller shall document compliance with such covenants by
delivering a compliance certificate to Buyer not more than 45 days after the end
of each quarter and not more than 90 days after the end of the fiscal year.
42
12. SPECIAL 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 formation,
organizational and other governing documents.
(c) It has done or caused to be done and will do all things necessary to
observe constitutive 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 partners and any other Person (except to the extent consolidation is
required under GAAP or as a matter of law) and file its own tax returns (except
to the extent consolidation is required or permitted under GAAP or permitted
under applicable 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 and
shall not hold itself out or its Subsidiaries as a division or part of the
other.
(f) It has not owned and will not own any property or any other asset
other than the Eligible Assets, cash and its interest under the Transaction
Documents.
(g) It has not engaged and will not engage in any business other than the
acquisition, ownership, financing and disposition of Eligible Assets 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
intrinsically fair and substantially similar to those that would be available on
an arm's-length basis with Persons other than such Affiliate.
13. EVENTS OF DEFAULT
Each of the following shall constitute an "Event of Default" under this
Agreement:
(i) both (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 Assets, and (B) the
related Transaction is not characterized as a secured financing (or
if such Transaction is recharacterized as a secured financing, the
Transaction Documents with respect to such Transaction shall for any
reason cease to create a valid first priority security interest in
favor of Buyer in any of the related Purchased Assets);
43
(ii) in the event that Buyer or any of its Affiliates is a
party to any Hedging Transaction and a default or breach occurs
thereunder on the part of Seller which results in the early
termination of such Hedging Transaction or otherwise is not cured
within the cure period for such default or breach provided under the
terms and conditions of such Hedging Transaction;
(iii) failure of Buyer to receive no later than one (1)
Business Day following any Remittance Date the accrued, but unpaid
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 Assets is insufficient to make such payment and Seller
does not make such payment or cause such payment to be made);
(iv) failure of Buyer to receive the Repurchase Price for any
Purchased Assets on the date the same is due under this Agreement
(whether on the Repurchase Date, Early Repurchase Date or otherwise
as provided herein);
(v) failure of Seller to make any other payment (i.e., a
payment of a type not specified in any other clause of this Section
13) owing to 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 in the case of a failure
pursuant to Section 3 of this Agreement or three (3) Business Days
in the case of any other such failure;
(vi) 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 removal, limitation, restriction, suspension or
termination has continued unremedied for five (5) Business Days and
has a material adverse effect on the financial condition or business
operations of Seller, taken as a whole;
(vii) Buyer shall have determined, in good faith, (A) that
there has been a material adverse change in the business,
operations, corporate structure, financial condition or
creditworthiness, taken as a whole, of Seller; (B) that Seller has
breached any of its obligations in any material respect under any
Transaction pursuant to any of the Transaction Documents and such
breach continues without cure beyond the applicable cure period
provided in such Transaction Documents; or (C) that a material
adverse change in the financial condition of Seller has occurred due
to the pendency of a material legal action against Seller;
(viii) a Change of Control shall have occurred with respect to
Seller or an Act of Insolvency shall have occurred with respect to
Seller, Xxxxxxx or Winthrop;
44
(ix) any (A) representation or warranty made by Seller shall
have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated (except as
specifically provided in Section 9(b)(viii) hereof) and, except in
the case of a representation or warranty involving the payment of
funds to Buyer or a representation and warranty contemplated by
Section 9(b)(xxii), such breach shall have continued unremedied for
five (5) Business Days; or (B) covenant made by Seller shall have
been breached in a material respect and, except in the case of a
covenant involving the payment of funds to Buyer, such breach shall
have continued for five (5) Business Days;
(x) a final judgment by any competent court in the United
States of America for the payment of money in an amount greater than
$100,000 shall have been rendered against Seller, and remained
undischarged or unpaid for a period forty-five (45) days, during
which period execution of such judgment is not effectively stayed;
(xi) Seller shall breach or fail to perform any of the terms,
covenants, obligations or conditions of this Agreement (except as
specifically provided in Section 9(b)(viii) hereof) and, except in
the case of terms, covenants, obligations or conditions involving
the payment of funds to Buyer, such breach or failure to perform
shall have continued for five (5) Business Days;
(xii) Seller shall have defaulted, such default having not
previously occurred, (beyond applicable notice and cure period) or
failed to perform under any other note, indenture, loan agreement,
guaranty, swap agreement or any other contract, agreement or
transaction to which it is a party, which default (A) results in a
final judgment by any competent court in the United States of
America and involves the failure to pay an obligation in excess of
$1,000,000, or (B) results in a final judgment by any competent
court in the United States of America and permits the acceleration
of the maturity of obligations in excess of $1,000,000 by any other
party to or beneficiary of such note, indenture, loan agreement,
guaranty, swap agreement or other contract agreement or transaction;
(xiii) Seller shall be in default in any material respect
under any other contract or agreement with Buyer or an Affiliate of
Buyer and any applicable grace or cure periods shall have expired;
or
(xiv) Xxxxxxx or Winthrop shall have defaulted or failed to
perform beyond any applicable notice and cure period under any note,
indenture, loan agreement, guaranty, swap agreement or any other
contract, agreement or transaction to which it is a party, which
default or defaults, in aggregate, (A) results in a final judgment
by any competent court in the United States of America and involves
the failure to pay an obligation in excess of $1,000,000, or (B)
results in a final judgment by any competent court in the United
States of America and permits the acceleration of the maturity of
obligations in excess of $1,000,000 by any other party to or
beneficiary of such note, indenture, loan agreement, guaranty, swap
agreement or other contract agreement or transaction.
45
14. REMEDIES
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 with respect to Seller), 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(i) of this Agreement:
(A) Seller's obligations hereunder to repurchase all
Purchased Assets shall become immediately due and
payable on and as of the Accelerated Repurchase
Date; and
(B) to the extent permitted by applicable law, the
Pricing Rate with respect to each Transaction
(determined as of the Accelerated Repurchase Date)
shall be the Pricing Rate prior to the date of the
Event of Default plus 200 basis points; 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 Assets,
(iii) Unless Seller has tendered the Repurchase Price, upon
the occurrence and during the continuance of an Event of Default
which has not previously occurred with respect to Seller (with
respect to which Buyer has not agreed to forbearance or accepted a
workout arrangement), Buyer may (A) immediately sell, at a public or
private sale at such price or prices as Buyer may in good xxxxx xxxx
satisfactory any or all of the Purchased Assets or (B) in its sole
discretion elect, in lieu of selling all or a portion of such
Purchased Assets, to give Seller credit for such Purchased Assets in
an amount determined by Buyer in good faith to be equal to the
Market Value of such Purchased Assets against the aggregate unpaid
Repurchase Price for such Purchased Assets and any other amounts
owing by Seller under the Transaction Documents. The proceeds of any
disposition of Purchased Assets effected pursuant to this Section
14(iii) shall be applied, (w) first, to the costs and expenses,
including reasonable legal expenses, incurred by Buyer in connection
with Seller's default; (x) second, to the Repurchase Price, (y)
third, without duplication, to any other outstanding obligation of
Seller to Buyer or its Affiliates and (z) fourth, any remainder to
Seller.
46
(iv) The parties recognize that it may not be possible to
purchase or sell all of the Purchased Assets on a particular
Business Day, or in a transaction with the same purchaser, or in the
same manner because the market for such Purchased Assets may not be
liquid. In view of the nature of the Purchased Assets, the parties
agree that liquidation of a Transaction or the Purchased Assets 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 Assets,
and nothing contained herein shall (A) obligate Buyer to liquidate
any Purchased Assets on the occurrence and during the continuance of
an Event of Default or to liquidate all of the Purchased Assets in
the same manner or on the same Business Day or (B) constitute a
waiver of any right or remedy of Buyer or its Affiliates.
(v) Seller shall be liable to Buyer for 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.
(vi) Buyer shall have, in addition to its rights and remedies
under the Transaction Documents, all of the rights and remedies
provided by applicable federal, state, foreign, 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, 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
Assets against all of Seller's obligations to Buyer or its
Affiliates, whether or not such obligations are then due, without
prejudice to Buyer's right to recover any deficiency.
(vii) Buyer may exercise any or all of the remedies available
to Buyer immediately upon the occurrence of an Event of Default with
respect to Seller (with respect to which Buyer has not agreed to
forbearance or accepted a workout arrangement) 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
Assets, or from any other election of remedies, in each case in
accordance with the terms of this Agreement. 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.
47
(ix) To the extent that applicable law imposes duties on Buyer
to exercise remedies in a commercially reasonable manner, Seller
acknowledges and agrees that it is not commercially unreasonable for
Buyer (i) to fail to incur expenses reasonably deemed significant by
Buyer to prepare the Purchased Assets for disposition or otherwise
to complete raw material or work in process into finished goods or
other finished products for disposition, (ii) to fail to obtain
third party consents for access to Purchased Assets to be disposed
of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or
disposition of the Purchased Assets to be collected or disposed of,
(iii) to fail to exercise collection remedies against Persons
obligated on the Purchased Assets or to remove liens on or any
adverse claims against the Purchased Assets, (iv) to exercise
collection remedies against Persons obligated on the Purchased
Assets directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of the
Purchased Assets through publications or media of general
circulation, whether or not the Purchased Assets are of a
specialized nature, (vi) to contact other Persons, whether or not in
the same business as Seller, for expressions of interest in
acquiring all or any portion of such Purchased Assets, (vii) to hire
one or more professional auctioneers to assist in the disposition of
the Purchased Assets, whether or not the Purchased Assets are of a
specialized nature, (viii) to dispose of the Purchased Assets by
utilizing internet sites that provide for the auction of assets of
the types included in the Purchased Assets or that have the
reasonable capacity of doing so, or that match buyers and sellers of
assets, (ix) to dispose of assets in wholesale rather than retail
markets, (x) to disclaim disposition warranties, such as title,
possession or quiet enjoyment, (xi) to purchase, at Buyer's expense,
insurance or credit enhancements to insure Buyer against risks of
loss, collection or disposition of the Purchased Assets or to
provide to Buyer a guaranteed return from the collection or
disposition of the Purchased Assets, or (xii) to the extent deemed
appropriate by Buyer, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist
Buyer in the collection or disposition of any of the Purchased
Assets. Seller acknowledges that the purpose of this Section 14(ix)
is to provide non-exhaustive indications of what actions or
omissions by Buyer would not be commercially unreasonable in Buyer's
exercise of remedies against the Purchased Assets and that other
actions or omissions by Buyer shall not be deemed commercially
unreasonable solely on account of not being indicated in this
Section 14(ix). Without limitation upon the foregoing, nothing
contained in this Section 14(ix) shall be construed to grant any
rights to Seller or to impose any duties on Buyer that would not
have been granted or imposed by this Agreement or by applicable law
in the absence of this Section 14(ix).
(x) Buyer shall not be required to make any demand upon, or
pursue or exhaust any of its rights or remedies against, Seller, any
other obligor, guarantor, pledgor or any other Person with respect
to the payment of the obligations of Seller hereunder or to pursue
or exhaust any of its rights or remedies with respect to any
Purchased Assets therefor or any direct or indirect guarantee
thereof. Buyer shall not be required to marshal the Purchased Assets
48
or any guarantee of the obligations of Seller hereunder or to resort
to the Purchased Assets or any such guarantee in any particular
order, and all of its rights hereunder or under any other document
or instrument executed in connection herewith shall be cumulative.
To the extent it may lawfully do so, Seller absolutely and
irrevocably waives and relinquishes the benefit and advantage of,
and covenants not to assert against Buyer, any valuation, stay,
appraisement, extension, redemption or similar laws and any and all
rights or defenses it may have as a surety now or hereafter existing
which, but for this provision, might be applicable to the sale of
any Purchased Assets made under the judgment, order or decree of any
court, or privately under the power of sale conferred by this
Agreement, or otherwise.
(xi) Seller hereby appoints Buyer as attorney-in-fact of
Seller for the purpose, after the occurrence and during the
continuance of an Event of Default, 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-in-fact is irrevocable and coupled with an interest.
15. NOTICES AND OTHER COMMUNICATIONS
All notices, consents, approvals and requests required or permitted
hereunder shall be given in writing and shall be effective for all purposes if
hand delivered or sent by (a) hand delivery, with proof of attempted delivery,
(b) certified or registered United States mail, postage prepaid, (c) expedited
prepaid delivery service, either commercial or United States Postal Service,
with proof of attempted delivery, (d) by telecopier (with answerback
acknowledged) or (e) by email, provided that such telecopied or emailed notice
must also be delivered by one of the means set forth in (a), (b) or (c) above,
to the address specified below or at such other address and person as shall be
designated from time to time by any party hereto, as the case may be, in a
written notice to the other parties hereto in the manner provided for in this
Section:
if to Buyer: Bear, Xxxxxxx International Limited
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Sidley Austin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
49
if to Seller: 111 Debt Acquisition -- Two, LLC
0 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with copies to:
c/o Winthrop Realty Partners L.P.
Xxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
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, (c) in the case of expedited prepaid delivery, when
delivered, 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.
16. NON-ASSIGNABILITY
(a) The rights and obligations of the parties under the Transaction
Documents and under any Transaction shall not be assigned by either party
without the prior written consent of the other party; provided, however, that
Buyer may assign its rights and obligations under the Transaction Documents
and/or under any Transaction to any Affiliate of Buyer without the prior written
consent of Seller; and provided further, however, that upon the occurrence and
during the continuation of an Event of Default, the non-defaulting party shall
have an unfettered right to assign its rights and obligations without the
consent of the defaulting party.
(b) The transferring party pursuant to subsection (a) above shall be
responsible for the payment of all fees and expenses relating to such transfer
of its rights and obligations.
50
(c) Buyer shall be entitled to issue one or more participation interests
with respect to any or all of the Transactions.
(d) Subject to the foregoing, the Transaction Documents and any
Transactions shall be binding upon and shall inure to the benefit of the parties
and their respective successors and 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.
17. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
(a) This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of laws principles thereof.
(b) 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.
(c) Each party hereby irrevocably waives, to the fullest extent they 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 via certified mail, return
receipt requested of copies of such process to them at their respective address
specified herein. Each party hereby agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Section 17 shall affect the right of either party to serve legal
process in any other manner permitted by law or affect the right of either party
to bring any action or proceeding against the other party 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.
18. 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.
51
(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;
(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.
19. INDEMNITY
Seller hereby agrees to indemnify Buyer, Buyer's designee and each of its
officers, directors, employees and agents ("Indemnified Parties") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, taxes (including stamp, excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Purchased Assets or in connection with any of the transactions contemplated by
this Agreement and the documents delivered in connection herewith, other than
income taxes, franchise taxes or other similar taxes of Buyer), fees, costs,
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,
however, 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 Assets 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
52
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 Asset for
any sum owing thereunder, or to enforce any provisions of any Purchased Asset,
Seller will save, indemnify and hold Buyer harmless from and against all expense
(including, without limitation, reasonable attorneys' fees and expenses), 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
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.
20. DUE DILIGENCE
Seller acknowledges that Buyer has the right to perform reasonable due
diligence reviews or re-underwriting with respect to the Purchased Assets and
the related Underlying Assets 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 Asset Files, Servicing Records and any and all documents,
records, agreements, instruments or information relating to such Purchased
Assets and Underlying Assets 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 Asset Files, the
Purchased Assets and Underlying Assets. Without limiting the generality of the
foregoing, Seller acknowledges that Buyer may enter into Transactions with
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 or re-underwriting on some or all of the Purchased Assets and
Underlying Assets. Any provision hereof to the contrary not withstanding, the
costs and expenses of Buyer and its counsel incurred in connection with its
initial due diligence review or re-underwriting of each Purchased Asset and each
Underlying Asset and all other costs and expenses incurred by Buyer in
connection with the consummation of any Transaction shall be borne by Seller in
an amount not to exceed $7,500.00 with respect to each Purchased Asset. Except
as provided in Section 27(g) hereof, all other costs and expenses incurred by
Buyer in connection with the consummation of any Transaction shall be borne by
Buyer. Any such due diligence review or re-underwriting may be conducted by
Buyer or a third party appointed by Buyer. Seller agrees to reasonably cooperate
with Buyer and any third party appointed by Buyer in connection with such due
diligence review or re-underwriting.
21. SERVICING
To the extent it has control over the servicing of the Purchased Assets
and/or the Underlying Assets, Seller agrees as follows:
(a) Notwithstanding the purchase and sale of the Purchased Assets hereby,
Seller shall continue to cause the Purchased Assets and the Underlying Assets to
be serviced for the benefit of Buyer and, if Buyer shall exercise its rights to
pledge or hypothecate the Purchased Assets prior to the Repurchase Date pursuant
53
to Section 7, Buyer's assigns. Seller shall service or cause the servicer to
service the Purchased Assets and the Underlying Assets in accordance with
Accepted Servicing Practices reasonably approved by Buyer and maintained by
other prudent mortgage and/or mezzanine lenders with respect to assets similar
to the Purchased Assets and the Underlying Assets.
(b) Seller agrees that Buyer is the owner of all servicing records,
including but not limited to any and all servicing agreements (the "Servicing
Agreements"), files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Purchased Assets (the "Servicing
Records") so long as the Purchased Assets are subject to this Agreement. Seller
grants Buyer a security interest in all servicing fees and rights of Seller
relating to the Purchased Assets and all Servicing Records to secure the
obligation of 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) Seller shall provide to Buyer, periodically at the request of Buyer,
any and all information that is pertinent or related to the assessment and
valuation of Underlying Assets that are included in Purchased Assets, as or when
received or available from Seller. Such information includes, but is not limited
to, property operating statements, rent rolls, financial statements and other
financial reports for each Purchased Asset, as well as any other information or
events affecting the interests in or valuation of the Purchased Assets.
(d) Upon the occurrence and continuance of an Event of Default, Buyer may,
in its sole discretion, (i) sell its right to the Purchased Assets on a
servicing released basis or (ii) terminate Seller or any sub-servicer of the
Purchased Assets with or without cause, in each case without payment of any
termination fee.
(e) Seller shall not employ sub-servicers to service the Purchased Assets
without the prior written approval of Buyer which approval shall not be
unreasonably withheld. If the Purchased Assets are serviced by a sub-servicer,
Seller shall irrevocably assign all rights, title and interest in the Servicing
Agreements in the Purchased Assets to Buyer.
(f) 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 Assets in the
Collection Account.
(g) To the extent permitted under the servicing agreement the payment of
servicing fees shall be subordinate to payment of amounts outstanding under any
Transaction and this Agreement.
(h) The servicer and Seller may not enter into any modification or
extension agreement without the written consent or approval of Buyer.
54
22. WIRE INSTRUCTIONS
(a) Any amounts to be transferred by Buyer to Seller hereunder shall be
sent by wire transfer in immediately available funds to the account of Seller
at:
Bank Name: KeyBank NA
Account Name: 111 Debt Acquisition - Two LLC
Acct Number: 359681193397
ABA Number: 000000000
(b) Any amounts to be transferred by Seller to Buyer hereunder shall be
sent by wire transfer in immediately available funds to the account of Buyer at:
Acct.: For the A/C of Bear Xxxxxxx MBS, FNB Chicago
Acct. No.: 5801230
ABA No.: 000000000
Attn: Xxxxxx Xxxxx
(c) Amounts other than the Purchase Price for a Purchased Asset received
after 3:00 p.m., New York City time, on any Business Day shall be deemed to have
been paid and received on the next succeeding Business Day.
23. CONFIDENTIALITY
Each of the parties acknowledges that this Agreement, the Custodial
Agreement and the terms of each Transaction (including information disclosed in
due diligence) are confidential in nature and each such party agrees that,
unless an Event of Default shall occur and be continuing, or as otherwise
directed by a court or regulatory entity of competent jurisdiction or as may be
required by federal or state law (which determination as to federal or state law
shall be based upon written advice of counsel), it shall limit the distribution
of such documents and the disclosure of such information to its officers,
employees, attorneys, accountants, investors and agents as required in order to
conduct its business with the other parties hereto. Notwithstanding the
foregoing, Buyer shall be permitted to provide a copy of this Agreement and the
Custodial Agreement, and shall be permitted to describe the terms of each
Transaction, in connection with the re-hypothecation or hedging of the Eligible
Assets subject to the terms of this Agreement. This Section shall not apply to
information which has entered the public domain through means other than a
breach of the foregoing covenant by the party seeking to distribute such
documents or which the other party has given written permission to disclose.
Seller hereby acknowledges and agrees that any and all information
concerning Seller (the "Information") that is furnished by Seller to Buyer and
any of its Affiliates may be used and relied upon by any other of Buyer's
Affiliates without any liability to Seller to the extent such information is
obtained by Buyer or an Affiliate from another of its Affiliates without any
liability to Seller, provided, however, that no Information will be used by a
Buyer or an Affiliate in violation of federal or state securities laws. Buyer
agrees for itself, its Affiliates and its assigns that unless an Event of
Default shall have occurred and be continuing, it will not use any Information
for any purpose whatsoever other than the transactions contemplated hereunder
and it will not contact, directly or indirectly, any Mortgagor for any Purchased
55
Asset or any of such Mortgagor's officers, directors, employees, agents or
Affiliates (each a "Prohibited Contact Person") without the prior written
consent of Seller unless such contact is due solely to a prior relationship
between Buyer and such Prohibited Contact Person or due to a general
non-targeted solicitation of a category of similar persons or entities.
Seller further acknowledges and agrees that any confidentiality agreement
that may now or hereafter exist between Seller and Buyer or an Affiliate shall
not preclude the disclosure of any Information between or among Buyer and any of
its Affiliates.
24. SINGLE TRANSACTION
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.
25. 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 3(a) hereof will not constitute a waiver of any
right to do so at a later date.
26. 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 subsection (a) of this Section 26, 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.
56
(c) By entering into a Transaction pursuant to this Section 26, Seller
shall be deemed 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 which would affect,
in any material respect, Seller's ability to perform its obligations hereunder.
27. NO PERSONAL LIABILITY; FURTHER ASSURANCES; MISCELLANEOUS; FINAL
REPURCHASE DATE
(a) None of the officers, members, shareholders or directors of Seller or
any direct or indirect member or equity owner thereof shall be liable for the
payment or performance of the Seller hereunder.
(b) Seller agrees that, from time to time upon the prior written request
of Buyer, it shall (i) execute and deliver such further documents, provide such
additional information and reports and perform such other acts as Buyer may
reasonably request in order to insure compliance with the provisions hereof
(including, without limitation, compliance with the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot Act) Act of 2001) and to fully effectuate the purposes of
this Agreement and (ii) provide such opinions of counsel concerning matters
reasonably relating to the substance and intent of this Agreement as Buyer may
reasonably request; provided, however, that nothing in this Section 27(b) shall
be construed as requiring Buyer to conduct any inquiry or decreasing Seller's
responsibility for its statements, representations, warranties or covenants
hereunder.
(c) Time is of the essence under the Transaction Documents and all
Transactions thereunder and all references to a time shall mean New York time in
effect on the date of the action unless otherwise expressly stated in the
Transaction Documents.
(d) 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, Buyer shall have all rights, remedies and
responsibilities of a secured party under the Uniform Commercial Code.
(e) 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
(f) The headings in the Transaction Documents are for convenience of
reference only and shall not affect the interpretation or construction of the
Transaction Documents.
(g) Without limiting the rights and remedies of Buyer under the
Transaction Documents, Seller shall pay Buyer's reasonable out-of-pocket costs
and expenses, including the reasonable fees and expenses of accountants,
attorneys and advisors, incurred in connection with the initial preparation,
negotiation, execution and consummation of the Transaction Documents (which
attorneys' fees are expected to be $50,000 plus disbursements). This amount
shall be in addition to the due diligence, re-underwriting and Transaction
expenses of Buyer to be paid by Seller pursuant to Section 20 of this Agreement.
In addition to the foregoing, Seller agrees to pay Buyer on demand (i) all costs
57
and expenses incurred after the occurrence and during the continuation of an
Event of Default (including reasonable expenses for legal services of every
kind) of any subsequent enforcement of any of the provisions hereof, or of the
performance by Buyer of any obligations of Seller in respect of the Purchased
Assets, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement in respect of any of the Purchased Assets
and for the custody, care or preservation of the Purchased Assets (including
insurance costs) and defending or asserting rights and claims of Buyer in
respect thereof, by litigation or otherwise (provided, however, that costs and
expenses incurred in anticipation of an Event of Default shall be paid by Seller
to Buyer on demand if an Event of Default does in fact occur) and (ii) all
reasonable costs and expenses (including reasonable expenses for legal services)
incurred in connection with the maintenance of the Collection Account and
registering the Purchased Assets in the name of Buyer or its nominee. All such
expenses shall be recourse obligations of Seller to Buyer under this Agreement.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
(l) 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.
(m) Any notice, acknowledgment, statement or certificate (including,
without limitation, any Confirmation) given by Buyer to any Seller shall be
effective as, and shall be deemed to be, a notice, acknowledgment, statement or
certificate given to each and every Seller. Buyer may, without necessity of any
inquiry, rely solely upon any notice, acknowledgment, statement or certificate
of any of (1) any Seller or (2) any authorized representative of Seller set
forth on Exhibit II or otherwise designated by any Seller from time to time, as
constituting the joint and several statement and certificate of Seller fully
58
authorized by Seller. Any disbursements of funds to Seller provided for in
Section 4 of this Agreement or otherwise in this Agreement or the Transaction
Documents shall be deemed properly made to Seller if disbursed to any Seller or
its designee.
(n) The Repurchase Date for all Transactions outstanding hereunder shall
be deemed to occur automatically without any requirement for notice on the date
occurring three hundred and sixty-four (364) days after the date of the first
Transaction under this Agreement is entered into and no other Transactions shall
be entered into after such date; provided, however, that this Agreement and any
Transaction outstanding hereunder may be extended and additional Transactions
may occur by mutual agreement of Buyer and Seller; and provided further,
however, that no such party shall be obligated to agree to such an extension or
additional Transactions.
28. 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.
59
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
24th day of May, 2006.
BUYER:
BEAR, XXXXXXX INTERNATIONAL LIMITED
By: _______________________________
Name:
Title:
SELLER:
111 DEBT ACQUISITION -- TWO, LLC
By: _______________________________
Name:
Title:
EXHIBITS
EXHIBIT I Confirmation Statement -- Bear, Xxxxxxx International
Limited
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 Each Underlying
Asset Which Is a Whole Loan or B Note
EXHIBIT VII Representations and Warranties Regarding Each Underlying
Asset Which Is a Mezzanine Loan
EXHIBIT VIII Representations and Warranties Regarding Each
Participation Interest
EXHIBIT IX Underlying Loan Information
EXHIBIT X Transaction Procedure
EXHIBIT XI List of Non-Permitted Transferees
EXHIBIT XII Form of Opinion of Counsel to Seller
EXHIBIT XIII Form of Bailee Agreement
EXHIBIT XIV [RESERVED]
SCHEDULE 1-A Form of UCC Financing Statement
SCHEDULE 1-B Form of UCC Financing Statement Amendment
EXHIBIT I
CONFIRMATION STATEMENT
BEAR, XXXXXXX INTERNATIONAL LIMITED
Ladies and Gentlemen:
Bear, Xxxxxxx International Limited, is pleased to deliver our written
Confirmation of our agreement to enter into the Transaction pursuant to which
Bear, Xxxxxxx International Limited, shall purchase from you the Purchased
Assets identified in the Master Repurchase Agreement between Bear, Xxxxxxx
International Limited (the "Buyer") and 111 Debt Acquisition -- Two, LLC, a
Delaware limited liability company ("Seller"), dated as of May 24, 2006 (the
"Agreement"; capitalized terms used herein without definition have the meanings
given in the Agreement), as follows below:
Purchase Date:
Purchased Assets:
Aggregate Principal Amount of Purchased
Assets
Repurchase Date:
Purchase Price: $
Pricing Rate: one month LIBOR plus ____%
[ ]
Buyer's Margin Ratio:
Original Principal Amount:
Current Principal Amount:
Original Market Value:
Due Date:
Name and address for communications: Buyer:
Bear, Xxxxxxx International Limited
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
I-1
Seller:
111 Debt Acquisition -- Two, LLC
0 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
BEAR, XXXXXXX INTERNATIONAL LIMITED
By: _______________________________
Name:
Title:
I-2
EXHIBIT II
AUTHORIZED REPRESENTATIVES OF SELLER
Name Specimen Signature
---- ------------------
_____________________________________ _______________________________________
_____________________________________ _______________________________________
_____________________________________ _______________________________________
II-1
EXHIBIT III
MONTHLY REPORTING PACKAGE
FORM OF SERVICING REPORT
1. Loan Number
2. Position
3. Borrower Name
4. UPB
5. Late Charge Balance
6. Next Payment Date
7. Current DSCR
8. Tenant Occupying > 25% has vacated
9. Borrower, or affiliate, subject to Bankruptcy
10. If Yes to Bankruptcy, provide details
11. Maturity Date
12. Asset subject to Litigation
13. Interest Reserves Balance
14. Subject to Significant Covenant Violation
15. Material Damage to Property
16. Borrower is 30 days or more Delinquent on Payment
17. Minimum Escrow Pmts/Balances have not been remitted or maintained
18. Comments
III-1
EXHIBIT IV
FORM OF CUSTODIAL DELIVERY
On this ____ of _____, 200_, 111 Debt Acquisition -- Two, LLC, a Delaware
limited liability company ("Seller"), as Seller under that certain Master
Repurchase Agreement, dated as of May 24, 2006 (the "Repurchase Agreement")
between Seller and Bear, Xxxxxxx International Limited ("Buyer"), does hereby
deliver to LaSalle Bank National Association, as custodian ("Custodian"), as
custodian under that certain Custodial Agreement, dated as of May 24, 2006,
between Buyer and Custodian, the Purchased Asset Files with respect to the
Purchased Assets to be purchased by Buyer pursuant to the Repurchase Agreement,
which Purchased Assets are listed on the Purchased Asset Schedule attached
hereto and which Purchased Assets shall be subject to the terms of the Custodial
Agreement on the date hereof.
With respect to the Purchased Asset Files delivered hereby, for the
purposes of issuing the Trust Receipt, the Custodian shall review the Purchased
Asset Files to ascertain delivery of the documents listed in Section 3 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, Seller has caused its name to be signed hereto by its
officer thereunto duly authorized as of the day and year first above written.
__________________, a ______________
By:_________________________________
Its:
IV-1
EXHIBIT V
FORM OF POWER OF ATTORNEY
"Know All Men by These Presents, that 111 Debt Acquisition -- Two, LLC, a
Delaware limited liability company ("Seller"), does hereby appoint Bear, Xxxxxxx
International Limited ("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) complete
and endorse the Purchased Asset and any transfer documents relating thereto and
(ii) the enforcement of Seller's rights under the Purchased Assets purchased by
Buyer pursuant to the Master Repurchase Agreement, dated as of May 24, 2006 (the
"Master Repurchase Agreement"), between Seller and Buyer and to take such other
steps as may be necessary or desirable to enforce Buyer's rights against such
Purchased Assets, the related Purchased Asset Files and the Servicing Records to
the extent that Seller is permitted by law to act through an agent and to the
extent permitted by the Master Repurchase Agreement.
TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY
THIRD PARTY RECEIVING A DULY EXECUTED COPY OR 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.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Master Repurchase Agreement.
IN WITNESS WHEREOF Seller has caused this Power of Attorney to be executed
and Seller's seal to be affixed this ___ day of _______, 2006.
__________________, a ______________
By:_________________________________
Its:
V-1
EXHIBIT VI
REPRESENTATIONS AND WARRANTIES
REGARDING EACH UNDERLYING ASSET
WHICH IS A WHOLE LOAN OR B NOTE
1. Purchased Asset Schedule and Underlying Loan Information. The
information set forth in the Purchased Asset Schedule and the Underlying Loan
Information is complete, true and correct in all material respects.
2. Ownership of Purchased Assets. Each Purchased Asset is a
participation interest in a whole loan. Immediately prior to the transfer to
Buyer of the Purchased Assets, Seller had good and marketable title to, and was
the sole owner of, each Purchased Asset. Seller has full right, power and
authority to transfer and assign each of the Purchased Assets to or at the
direction of Buyer and has validly and effectively conveyed (or caused to be
conveyed) to Buyer or its designee all of Seller's legal and beneficial interest
in and to the Purchased Assets free and clear of any and all pledges, liens,
charges, security interests, participation interests and/or other encumbrances.
The sale of the Purchased Assets to Buyer or its designee does not require
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 Asset was 30 days or more past due as of the Purchase Date
without giving effect to any applicable grace period, and no Purchased Asset 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 Asset constitutes a valid and, subject to the
exceptions set forth in paragraph 13 below, enforceable first priority lien upon
the related Property, prior to all other liens and encumbrances and there are no
liens or encumbrances pari passu with the lien of the Mortgage, 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 clause
(b), (c) or (d) individually or in the aggregate materially interferes with the
security intended to be provided by such Mortgage or the marketability or
current use of the Property or the current ability of the Property to generate
operating income sufficient to service the Underlying Asset 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 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 Property. A Uniform Commercial Code financing
statement has been filed and/or recorded in all places necessary to perfect a
VI-1
valid security interest in such personal property, and such security interest is
a first 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 Asset
establishes and creates a valid, subsisting and, subject to the exceptions set
forth in paragraph 13 below, enforceable first priority perfected lien and
together with the Mortgage, first priority perfected security interest in the
related Mortgagor's interest in all leases, subleases, 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 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. If an Assignment of Leases exists with respect to any Mortgage Loan
(whether as part of the related Mortgage or separately), then the related
Mortgage or related Assignment of Leases, subject to applicable law, provides
for, upon an event of default under the Mortgage Loan, the appointment of a
receiver for the collection of rents or for the related mortgagee to enter into
possession to collect the rents or for rents to be paid directly to the
mortgagee.
6. Mortgage Status; Waivers and Modifications. In the case of each
Mortgage Loan, (a) no Mortgage has been satisfied, canceled, rescinded or
subordinated in whole or in material part, (b) the related Property has not been
released from the lien of such Mortgage, in whole or in material part, (c) no
instrument has been executed 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, and (d) no Mortgagor has been released from
its obligations under the related Mortgage in whole or in material part. 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 Asset and dated not more than 12 months prior to the Purchase Date,
each Property is, free and clear of any damage that would materially and
adversely affect its value as security for the related Purchased Asset (normal
wear and tear excepted). There is no pending or threatened proceeding for the
condemnation of all or any material portion of any Property. As of the date of
the origination of each Underlying Asset (based on surveys and/or title
insurance obtained in connection with the origination of the Underlying Assets)
(a) all of the improvements on the related Property which were considered
material in determining the appraised value of the Property lay wholly within
the boundaries and building restriction lines of such property, except for
encroachments that are insured against by the Title Policy referred to in
paragraph 8 herein or that do not materially and adversely affect the value,
principal use, or marketability of such Property, and (b) no improvements on
adjoining properties encroached upon such Property so as to materially and
adversely affect the value, principal use, or marketability of such Property,
except those encroachments that are insured against by the Title Policy referred
to in paragraph 8 herein.
VI-2
8. Title Insurance. Each Property is covered by an American Land
Title Association (or an equivalent form thereof approved for use in the
applicable jurisdiction) lender's title insurance policy (the "Title Policy") in
the original principal amount of the related Underlying Asset after all advances
of principal. Each Title Policy insures that the related Mortgage is a valid
first priority lien on such Property, subject only to the exceptions stated
therein (or a preliminary title policy with escrow instructions or a marked up
title insurance commitment on which the required premium has been paid exists
which is binding on the title insurer and 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, insures the originator of the Mortgage Loan, its successors and
assigns and (i) no material claims have been made thereunder and no claims have
been paid thereunder and (ii) was issued by a title insurance company qualified
at origination to do business in the jurisdiction in which the Property is
located to the extent such qualification was required in order for the Title
Policy to be enforceable. 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 Asset to Buyer, such Title Policy (or, if it has yet to be issued, the
coverage to be provided thereby) will inure to the benefit of Buyer without the
consent of or notice to the insurer. Such Title Policy contains no exclusion
for, or it affirmatively insures (unless the related Property is located in a
jurisdiction where such affirmative insurance is not available), the following:
(a) access to a public road; and (b) that if a survey was reviewed or prepared
in connection with the origination of the related Mortgage Loan, the area shown
on such survey is the same as the property legally described in the related
Mortgage.
9. No Holdbacks. The proceeds of each Underlying Asset have been
fully disbursed and there is no obligation for future advances with respect
thereto. With respect to each Underlying Asset, 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. The Mortgage Note or Mortgage for each
Underlying Asset, 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 to render the
rights and remedies of the holder thereof adequate for the practical realization
against the related Property of the principal benefits of the security intended
to be provided thereby, including, without limitation, foreclosure or similar
proceedings as applicable for the jurisdiction in which the related Property is
located.
11. Buyer under Deed of Trust. If any Mortgage is a deed of trust,
(a) a trustee, duly qualified under applicable law to serve as such, is properly
designated and serving under such Mortgage, and (b) no fees or expenses are
payable to such trustee by Seller, 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 Property or related
security for the related Underlying Asset.
VI-3
12. Environmental Conditions. With respect to each Property (a) an
environmental site assessment (or an update of a previous assessment) was
performed by an independent third party environmental consultant with respect to
each Property in connection with the origination of the related Underlying
Asset, (b) a report of each such assessment (an "Environmental Report") is dated
no earlier than 12 months prior to the Purchase Date and has been delivered to
Buyer, and (c) there is no violation of applicable environmental laws and
regulations with respect to, or any material and adverse environmental condition
or circumstance affecting any Property that was not disclosed in such report.
Each Mortgage requires the related Mortgagor to comply with all applicable
federal, state and local environmental laws and regulations. Where such
Environmental Report disclosed a violation of applicable environmental laws and
regulations or the existence of a material and adverse environmental condition
or circumstance affecting any 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 satisfactory to the originator of such Mortgage Loan that
applicable federal, state or local governmental authorities would not take any
action, or require the taking of any action, in respect of such violation,
condition or circumstance. The related Purchased Asset Documents contain
provisions pursuant to which the related Mortgagor or a principal of such
Mortgagor 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 an Underlying Asset 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 Property is, and is required pursuant to the
related Mortgage to be, insured by (a) an all risk insurance policy issued by an
insurer meeting the requirements of such Underlying Asset 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 Underlying Asset consistent with its normal commercial
mortgage lending practices, against other risks insured against by persons
operating like properties in the locality of the Property in an amount not less
than the lesser of the principal balance of the related Underlying Asset and
100% of the replacement cost (not allowing reduction in insurance proceeds for
depreciation) of the Property, and not less than the amount necessary to avoid
the operation of any co-insurance provisions with respect to the Property; (b) a
business interruption or rental loss insurance policy; providing coverage for at
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least twelve months (other than for manufactured housing communities) and for
eighteen months of coverage if the Property is a special purpose property or if
the Mortgage Loan is in excess of $25 million; (c) a flood insurance policy (if
any portion of the Property is located in an area identified by the Federal
Emergency Management Agency as having special flood hazards) and (d) a
comprehensive general liability insurance policy in amounts as are generally
required by commercial mortgage lenders, and in any event not less than $1
million per occurrence. Such insurance policy contains a standard mortgagee
clause that names the holder of the Mortgage, its successors and assigns as
mortgagee as an additional insured in the case of liability insurance policies
or as a loss payee in the case of property insurance policies. Such insurance
policy is not terminable (nor may the amount of coverage provided thereunder be
reduced) without prior written 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 purchase and 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 Property or to the reduction or defeasance
of the principal amount of the Underlying Asset.
15. Taxes and Assessments. There are no delinquent or unpaid taxes
or assessments (including assessments payable in future installments), or other
outstanding charges affecting any Property which are or may become a lien of
priority equal to or higher than the lien of the related Mortgage. 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. No Mortgagor, non-recourse carve-out
guarantor or tenant physically occupying 25% or more (by square feet) of the net
rentable area of a Property is a debtor in any state or federal bankruptcy or
insolvency proceeding.
17. Leasehold Estate. Each Property consists of the related
Mortgagor's fee simple estate in real estate or, if the related Underlying Asset
is secured in whole or in part by the interest of a Mortgagor as a lessee under
a ground lease of a Property (a "Ground Lease"), by the related Mortgagor's
interest in the Ground Lease but not by the related fee interest in such
Property (the "Fee Interest"). With respect to any Underlying Asset 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 holder of the related
Mortgage and related lessor) permits the current use of the
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 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 terms of such Ground Lease since the origination of the
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related Underlying Asset, 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 the related Fee
Interest and Permitted Encumbrances;
c. The Mortgagor's interest in such Ground Lease is assignable to
Buyer and is further assignable by Buyer, 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 Buyer and its
successors and assigns upon notice to, but without the need to
obtain the consent of, such lessor. If required by the Ground
Lease, the lessor has received notice of the lien of the
related Mortgage in accordance with the provisions of the
Ground Lease;
d. In connection with the origination of such Mortgage Loan, the
related ground lessor provided an estoppel to the originator
confirming that the related Mortgagor was not then in default
under such Ground Lease. The Ground Lease provides that no
material amendment to the Ground Lease is effective against
the mortgagee under such Mortgage Loan unless the mortgagee
has consented thereto. Such Ground Lease is in full force and
effect, and Seller and any servicer acting on Seller's behalf
have received no notice that an event of default has occurred
thereunder or that the Ground lease has terminated, and 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 by foreclosure
or otherwise if possession is necessary to effect a cure) 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;
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g. Such Ground Lease has an original term (including any
extension options set forth therein which, under all
circumstances, may be exercised, and will be enforceable, by
the mortgagee if it takes possession of such leasehold
interest) which extends not less than twenty years beyond the
stated maturity date of the related Underlying Asset and ten
years beyond the amortization period for the related
Underlying Asset;
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 Property, with the mortgagee or a trustee 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 Underlying Asset together with any accrued
interest thereon;
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 Property is located and such Ground Lease contains a
covenant that the ground lessor is not permitted, in the
absence of an uncured default, to disturb the possession,
interest or quiet enjoyment of the lessee thereunder for any
reason or in any manner which would materially adversely
affect the security provided by the related Mortgage; and
j. Such Ground Lease provides, or the lessor has otherwise
agreed, that such Ground Lease may not be amended or modified
or any such amendment or modification will not be effective
against the mortgagee without the prior written consent of the
mortgagee under such Underlying Asset any such action without
such consent is not binding on such mortgagee, its successors
and assigns, provided such mortgagee has provided the ground
lessor with notice of its lien in accordance with the terms of
the Ground Lease.
18. Escrow Deposits. All escrow deposits and payments (including
capital improvements, environmental remediation reserves and other reserve
deposits, if any) relating to each Underlying Asset that are, as of the Purchase
Date, required to be deposited or paid to the lender under the terms of the
related Mortgage Loan documents have been so deposited or paid and, to the
extent of any remaining balances of such escrow deposits, are in the possession
or under the control of Seller or its agents (which shall include the applicable
servicer of the Mortgage Loan). Any and all material requirements under each
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Mortgage Loan as to completion of any material improvements and as to
disbursement of any funds escrowed for such purpose, which requirements were to
have been complied with on or before the Purchase Date, have been complied with
in all material respects or, if and to the extent not so complied with, the
escrowed funds (or an allocable portion thereof) have not been released except
in accordance with the terms of the related loan documents.
19. LTV Ratio. The gross proceeds of each Underlying Asset to the
related Mortgagor at origination did not exceed the non-contingent principal
amount of the Underlying Asset and either: (a) such Underlying Asset is secured
by an interest in real property having a fair market value (i) at the date the
Underlying Asset was originated at least equal to 80 percent of the original
principal balance of the Underlying Asset or (ii) at the Purchase Date at least
equal to 80 percent of the principal balance of the Underlying Asset on such
date; provided that for purposes hereof, the fair market value of the real
property interest must first be reduced by (x) the amount of any lien on the
real property interest that is senior to the Underlying Asset and (y) a
proportionate amount of any lien that is in parity with the Underlying Asset
(unless such other lien secures an Underlying Asset that is cross-collateralized
with such Underlying Asset, in which event the computation described in clauses
(a)(i) and (a)(ii) of this paragraph 19 shall be made on a pro rata basis in
accordance with the fair market values of the Properties securing such
cross-collateralized Underlying Assets; or (b) substantially all the proceeds of
such Underlying Asset were used to acquire, refinance, improve or protect the
real property which served as the only security for such Underlying Asset (other
than a recourse feature or other third party credit enhancement within the
meaning of Treasury Regulations Section 1.860G-2(a)(l)(ii)).
20. Qualified Mortgage; Underlying Asset Modifications. Each
Mortgage Loan is a "qualified mortgage" within the meaning of Section 860G(a)(3)
of the Code and Treasury regulation section 1.860G-2(a) (but without regard to
the rule in Treasury regulation section 1.860G-2(f)(2)). Any Underlying Asset
that was "significantly modified" prior to the Purchase Date for the related
Purchased Asset 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 Underlying Asset 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 Underlying Asset was originated) or clause (a)(ii)
of paragraph 19, including the proviso thereto.
21. Advancement of Funds by Seller. No holder of a Purchased Asset
has advanced funds or induced, solicited or knowingly received any advance of
funds from a party other than the owner of the related Property, directly or
indirectly, for the payment of any amount required by such Purchased Asset.
22. No Mechanics' Liens. As of the date of the Mortgage, and as of
the Purchase Date, each 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.
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23. Compliance with Usury Laws. Each Underlying Asset complied with,
or is exempt from, all applicable usury laws in effect at its date of
origination.
24. Cross-collateralization; Cross-default. No Underlying Asset is
cross-collateralized or cross-defaulted with any loan other than one or more
other Underlying Assets.
25. Releases of 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 Property from the lien of the related Mortgage
except upon payment in full or defeasance of all amounts due under the related
Underlying Asset. The Mortgages relating to those Underlying Assets identified
on the Purchased Asset Schedule require the mortgagee to grant releases of
portions of the related Properties upon (a) the satisfaction of certain legal
and underwriting requirements and (b) except where the portion of the Property
permitted to be released was not considered by, Seller to be material in the
underwriting of the Underlying Asset, either (1) the payment of a release price
set forth therein and prepayment consideration in connection therewith or (2)
the partial defeasance of such Underlying Asset.
No Underlying Asset permits the release or substitution of collateral if such
release or substitution (a) would create a "significant modification" of such
Underlying Asset within the meaning of Treas. Reg. ss. 1.1001 3 or (b) would
cause such Underlying Asset 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).
26. No Equity Participation or Contingent Interest. No Underlying
Asset 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 Property, or is convertible by its
terms into an equity ownership interest in the related Property or the related
Mortgagor.
27. No Material Default. There exists no monetary default and there
exists no material non-monetary 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 Underlying Asset, in any such case to the extent the
same materially and adversely affects the value of the Underlying Asset and the
related Property. Neither the Mortgage Loan Seller nor any servicer acting on
its behalf has issued any notice of default, breach or violation related to the
Mortgage Loan, accelerated the Mortgage Loan or commenced judicial or
non-judicial foreclosure proceedings with respect to the Mortgage Loan.
28. Inspections. Seller (or if Seller is not the originator, the
originator of the Underlying Asset) has inspected or caused to be inspected each
Property in connection with, and during the 12 month period prior to, the
origination of the related Underlying Asset.
29. Local Law Compliance. Based on due diligence considered
reasonable by prudent commercial mortgage lenders in the lending area where each
Property is located the improvements located on or forming part of each Property
complies in all material respects with applicable zoning laws and ordinances, or
constitutes a legal non-conforming use or structure or, if any such improvement
does not so comply and does not constitute a legal non-conforming use or
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structure, such non-compliance and failure does not materially and adversely
affect (i) the value of the related Property as determined by the appraisal
performed at origination or (ii) the principal use of the Property as of the
date of the origination of such Mortgage Loan. As of the date of origination,
with respect to each legal non-conforming use or structure, the originator
determined based on due diligence considered reasonable by prudent commercial
mortgage lenders in the lending area where the subject Property is located that
if a casualty occurred at that time, the Property could have been restored or
repaired to such an extent that the use or structure of the restored or repaired
property would be substantially the same use or structure, or law and ordinance
insurance has been obtained, or a holdback was established and the Mortgagor is
required to cause the Property to become a conforming use or structure.
30. Junior Liens. None of the Underlying Assets permits the related
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. Each Underlying Asset contains a "due on sale" clause that
provides for the acceleration of the payment of the unpaid principal balance of
the Underlying Asset if, without the prior written consent of the holder of the
Underlying Asset, the related Property, or any material portion thereof, or a
controlling interest in the direct or indirect ownership interests in the
Mortgagor is directly or indirectly transferred, sold or pledged.
31. Actions Concerning Underlying Assets. There are no actions,
suits, governmental investigations or proceedings pending or threatened before
any court, governmental authority, administrative agency or arbitrator
concerning any Underlying Asset or related Mortgagor or Property that, if
determined adversely to the Underlying Asset, Mortgagor, or Property, would
adversely affect title to the Underlying Asset or the validity or enforceability
of the related Mortgage or that might materially and adversely affect the value
of the Property, the current ability of the Property to generate net operating
income to service the Mortgage Loan, the principal benefit of the security
intended to be provided for the Underlying Asset, or the current use of the
Property.
32. Servicing. The servicing and collection practices used by Seller
and any servicer of the Mortgage Loan have been in all material respects legal,
proper and prudent and have met customary industry standards for servicing of
commercial Underlying Assets for conduit programs.
33. Licenses and Permits. As of the date of origination of each
Underlying Asset, 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 Property as it was then operated and, as of the
Purchase Date, the Mortgage Loan Seller has no written notice that the related
Mortgagor was not in possession of such licenses, permits and franchises or that
such licenses, permits and franchises have not otherwise been issued. The
Mortgage Loan requires the related Property to be in material compliance with
laws and regulations applicable to the Property, in each case to the extent
required by law.
34. Assisted Living Facility Regulation. If any Property is operated
as an assisted living facility (a) the related Mortgagor and operator, if
different, is in compliance in all material respects with all federal and state
laws applicable to the use and operation of the related Property and (b) if the
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operator of the Property participates in Medicare or Medicaid programs, the
facility is in compliance in all material respects with the requirements for
participation in such programs.
35. Non-Recourse Exceptions. The related Mortgage Loan documents
contain provisions providing for recourse against the related Mortgagor, a
principal of such Mortgagor or an entity controlled by a principal of such
Mortgagor, or a natural person, for damages sustained in connection with the
Mortgagor's (i) fraud, (ii) intentional misrepresentation, (iii)
misappropriation or misapplication of rents or amounts due lender, insurance
proceeds or condemnation proceeds, (iv) voluntary bankruptcy, (v) failure to
obtain prior consent to any encumbrance of the pledged equity under the
Mezzanine Loan Documents and (vi) willful misconduct resulting in waste of a
Property. The related Mortgage Loan documents contain provisions pursuant to
which the related Mortgagor, a principal of such Mortgagor or an entity
controlled by a principal of such Mortgagor, or a natural person, has agreed to
indemnify the mortgagee for damages resulting from violations of any applicable
environmental covenants.
36. Single Purpose Entity. The Mortgagor on each Underlying Asset
was, as of the origination of the Underlying Asset, 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 Properties securing the Underlying Assets and prohibit it from
engaging in any business unrelated to such Property or Properties, and whose
organizational documents further provide, or which entity represented in the
related Underlying Asset documents, substantially to the effect that it does not
have any assets other than those related to its interest in and operation of
such Property or Properties, or any indebtedness other than as permitted by the
related Mortgage or the other related Underlying Asset documents, that it has
its own books and records and accounts separate and apart from any other person,
that it will not guarantee or assume the debts of any other person, that it will
not commingle assets with Affiliates, and that it will not transact business
with Affiliates except on an arm's length basis. Each Mortgagor of an Underlying
Asset is an entity which has represented in connection with the origination of
the Underlying Asset, or whose organizational documents as of the date of
origination of the Underlying Asset provide that so long as the Underlying Asset
is outstanding it will have at least one independent director. There are
Insolvency/Non-Consolidation opinions with respect to the Mortgagor and all of
the assumptions made in each such opinion are true and correct.
37. Separate Tax Parcels. Each Property constitutes one or more
complete separate tax lots or is subject to an endorsement under the related
title insurance policy.
38. Defeasance. Each Underlying Asset containing provisions for
defeasance of mortgage collateral either (i) requires the prior written consent
of, and compliance with the conditions set by, the holder of the Underlying
Asset, or (ii) requires that (A) defeasance may not occur prior to the time
permitted by applicable "real estate mortgage investment conduit" rules and
regulations (if applicable), (B) the replacement collateral consist of U.S.
governmental securities in an amount sufficient to make all scheduled payments
under the Mortgage Note when due, (C) independent public accountants certify
that the collateral is sufficient to make such payments, (D) counsel provide an
opinion that Buyer has a perfected security interest in such collateral prior to
any other claim or interest, and (E) all costs and expenses arising from the
defeasance of the mortgage collateral shall be borne by the Mortgagor.
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39. Operating or Financial Statement. The related Purchased Asset
Documents require the related Mortgagor to furnish to the mortgagee at least
quarterly and annually an operating statement and rent roll (if there is more
than one tenant) with respect to the related Property and at least annually
financial statements of the Mortgagor.
40. Letters of Credit. No Underlying Asset consists of or is secured
by a Letter of Credit.
41. Security Interests in Hospitality Properties. If any Property
securing a Mortgage Loan is operated as a hospitality property then (a) the
security agreements, financing statements or other instruments, if any, related
to the Mortgage Loan secured by such Property establish and create a valid and
enforceable (subject to the exceptions set forth in Paragraph 13 above) first
priority security interest in all items of personal property owned by the
related Mortgagor which are material to the conduct in the ordinary course of
the Mortgagor's business on the related Property, subject only to purchase money
security interests, personal property leases and security interests to secure
revolving lines of credit and similar financing; and (b) one or more Uniform
Commercial Code financing statements covering such personal property have been
filed or recorded (or have been sent for filing or recording) wherever necessary
to perfect under applicable law such security interests (to the extent a
security interest in such personal property can be perfected by the filing of a
Uniform Commercial Code financing statement under applicable law).
42. Prepayment Premiums. Prepayment Premiums payable with respect to
each Mortgage Loan, if any, constitute "customary prepayment penalties" within
meaning of Treasury Regulation Section 1.860G-1(b)(2).
43. Assignment of Collateral. There is no material collateral
securing any Mortgage Loan that has not been assigned to the Mortgagee.
44. Fee Simple or Leasehold Interests. The interest of the related
Mortgagor in the Property securing each Mortgage Loan includes a fee simple
and/or leasehold estate or interest in real property and the improvements
thereon.
45. Appraisals. An appraisal of the related Property was conducted
in connection with the origination of the Mortgage Loan, which appraisal is
signed by an appraiser, who had no interest, direct or indirect, in the Property
or the Mortgagor or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan; in connection with the origination of the Mortgage Loan, each appraiser
has represented in such appraisal or in a supplemental letter that the appraisal
satisfies the requirements of the "Uniform Standards of Professional Appraisal
Practice" as adopted by the Appraisal Standards Board of the Appraisal
Foundation.
46. No Capital Contributions. The mortgagee has no obligation to
make any capital contributions to the related Mortgagor under the Mortgage Loan.
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47. Due Dates and Grace Periods. The related Mortgage or Mortgage
Note provides for Monthly Payments to be made on the first day of each month
("Due Date") and a grace period for Monthly Payments no longer than ten (10)
days from the related Due Date.
48. Terrorism Insurance. With respect to each Mortgage Loan, either
(i) the related all risk insurance policy and business interruption policy did
not as of the date of origination of the Mortgage Loan, and does not as of the
date hereof, specifically exclude acts of terrorism from coverage or (ii) a
separate insurance policy covering acts of terrorism is in full force and
effect. With respect to each of the Mortgage Loans, the related Mortgage Loan
documents do not expressly waive or prohibit the mortgagee from requiring
coverage for acts of terrorism or damages related thereto, except to the extent
that any right to require such coverage may be limited by commercially
reasonable availability.
49. Fraud. No Mortgagor is guilty of defrauding or making an
intentional material misrepresentation to the Mortgage Loan Seller in connection
with the origination of the Mortgage Loan.
50. Management Agreement. The Management Agreement is in full force
and effect and there is no default thereunder by any party thereto and no event
has occurred that, with the passage of time and/or the giving of notice, would
constitute a default thereunder.
51. Illegal Activity. No portion of any Property has been or will be
purchased with proceeds of any illegal activity.
52. Embargoed Person. With respect to each Underlying Asset, (a)
none of the funds or other assets of Mortgagor, Mezzanine borrower, Principal
and Guarantor constitute property of, or are beneficially owned, directly or
indirectly, by any person, entity or government subject to trade restrictions
under U.S. law, including but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. xx.xx. 1701 et seq., The Trading with the Enemy
Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder with the result that the investment in Mortgagor,
Principal or Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Mortgage Loan or Underlying Asset made by the Lender is
in violation of law ("Embargoed Person"); (b) no Embargoed Person has any
interest of any nature whatsoever in Mortgagor, Mezzanine borrower, Principal or
Guarantor, as applicable, with the result that the investment in Mortgagor,
Mezzanine borrower, Principal or Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Mortgage Loan or Underlying Asset is in
violation of law; and (c) none of the funds of Mortgagor, Mezzanine borrower,
Principal or Guarantor, as applicable, have been derived from any unlawful
activity with the result that the investment in Mortgagor, Mezzanine borrower,
Principal or Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Mortgage Loan or Underlying Asset is in violation of
law.
53. Franchise Agreement. The franchise agreement, if any, and the
license granted thereby are in full force and effect and there is no default
thereunder by any party thereto and no event has occurred that, with the passage
of time and/or giving of notice, would constitute a default thereunder.
Mortgagor has all rights to use the license granted under the franchise
agreement.
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54. Lockbox. Any agreements executed in connection with the creation
of a Collection Account create a valid and continuing security interest (as
defined in the Uniform Commercial Code in effect in the State of New York) in
each of such Collection Accounts in favor of Buyer, which security interest is
prior to all other liens, and is enforceable as such against creditors of and
purchasers from Mortgagor. Each Collection Account constitutes a "deposit
account" within the meaning of the Uniform Commercial Code in effect in the
State of New York. Seller has directed the Servicer to cause each Depository to
agree to comply with all written instructions originated by Buyer, without
further consent by Mortgagor, directing disposition of all sums at any time
held, deposited or invested in the Collection Accounts, together with any
interest or other earnings thereon, and all proceeds thereof (including proceeds
of sales and other dispositions), whether accounts, general intangibles, chattel
paper, deposit accounts, instruments, documents or securities. The Collection
Accounts are not in the name of any Person other than Mortgagor, as pledgor, or
Lender, as pledgee. Seller has not consented to the Depository complying with
instructions with respect to the Collection Account from any Person other than
Buyer.
55. MERS Underlying Asset. With respect to each Mortgage Loan that
is a MERS Underlying Asset, the related Mortgagor is registered with MERS and
each assignment of the MERS Underlying Asset has been registered with MERS.
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EXHIBIT VII
REPRESENTATIONS AND WARRANTIES
REGARDING EACH UNDERLYING ASSET
WHICH IS A MEZZANINE LOAN
(1) Mezzanine Underlying Loan Information. The information set forth in
the Purchased Asset Schedule is complete, true and correct in all material
respects.
(2) No Default or Dispute Under Mezzanine Loan Documents. 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
Mortgage Loan or Mezzanine Loan, in any such case to the extent the same
materially and adversely affects the value of the Mezzanine Loan and the related
underlying real property.
(3) No Offsets, Defenses or Counterclaims. There is no valid right of
offset or rescission, defense or counterclaim to such Mortgage Loan or Mezzanine
Loan.
(4) Equity Pledges. The pledge of ownership interests securing such
Mezzanine Loan relates to all or substantially 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 the originator of the Mezzanine
Loan ("Mezzanine Lender").
(5) Depository Agreement The collection account administrator, if any, is
not an Affiliate of Seller. Mezzanine Lender has a perfected security interest
in the cash management Agreement relating to the Mezzanine Loan.
(6) Enforceability. Mortgage Lender and Mezzanine Lender can rely on
opinions from Mortgagor's and Mezzanine borrower's counsel to the effect that
the Mortgage Loan and Mezzanine Loan Documents have been duly and properly
executed by the parties thereto, 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 Mezzanine Loan is not usurious. Mezzanine Lender has fully and
validly perfected all security interests created or intended to be created
pursuant to the Mezzanine Loan Documents.
(7) Waivers and Modifications. The terms and provisions of the related
Mortgage Loan and Mezzanine Loan Documents have not been impaired, waived,
altered, supplemented, restated or modified in any material respect (other than
by a written instrument which is included in the related Mortgage Loan and
Purchased Asset File).
(8) Valid Assignment. The assignment of Purchased Asset constitutes the
legal, valid and binding assignment of such Purchased Asset from Seller to or
for the benefit of Buyer. No consent or approval by any third party is required
VII-1
for any such assignment of such Purchased Asset, for Buyer's exercise of any
rights or remedies under the assignment of Purchased Asset, or for Buyer's sale
or other disposition of such Purchased Asset 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. All representations and
warranties in the Mortgage Loan and Mezzanine Loan 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 Mezzanine 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 Mezzanine Loan to the extent necessary to
ensure the validity and enforceability of such Mezzanine Loan.
(11) No Advances of Funds. No party to the Mortgage or Mezzanine Loan
Documents has advanced funds on account of any default under the Mortgage or
Mezzanine Loan Documents.
(12) Servicing. The servicing and collection practices used by Seller for
the Mezzanine Loan have complied with applicable law in all material respects
and are consistent with those employed by prudent servicers of comparable
Mezzanine 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 Mezzanine Loan Document, except in connection with this
Agreement.
(14) No Bankruptcy. None of the following parties is a debtor in any state
or federal bankruptcy or insolvency proceeding: Seller; underlying real property
owner; mortgage loan property owner principal/sponsor, underlying real property
mortgagee, mezzanine loan borrower, or mezzanine loan principal/sponsor.
(15) Mezzanine Loan Documents. A complete list of all material loan
documents has been delivered by the mezzanine borrower in connection with the
Mezzanine Loan Agreement and true counterpart originals of the Mezzanine Loan
Documents and true and correct copies of the Mortgage Loan Documents have been
delivered by Seller to Buyer.
(16) Ownership of Mezzanine Loans. Each Mezzanine Loan is a whole loan.
(17) Payment Record. No scheduled payment of principal and interest under
any Mezzanine Loan or related Mortgage Loan was 30 days or more past due as of
the Purchase Date without giving effect to any applicable grace period, and no
Mezzanine Loan or related Mortgage Loan was 30 days or more delinquent in the
twelve-month period immediately preceding the Purchase Date.
VII-2
(18) Lien. The Mortgage and pledge or security agreement ("Pledge")
related to and delivered in connection with each Mortgage Loan and Mezzanine
Loan constitutes a valid and enforceable first priority security interest on the
related Property and pledged equity, prior to all other liens and encumbrances
and there are no liens or encumbrances pari passu with the lien of the Mortgage
and Pledge. A Uniform Commercial Code financing statement has been filed and/or
recorded in all places necessary to perfect a valid security interest in such
pledged equity, and such security interest is a first priority security
interest. Mezzanine Lender, its successors and assigns is the beneficiary of an
Eagle 9 policy or a title policy endorsement insuring that the UCC financing
statement encumbering the Mezzanine Loan Collateral has been filed properly so
as perfect Mezzanine Lender's security interest in the Mezzanine Loan
Collateral.
(19) Mortgage and Pledge Status; Waivers and Modifications. In the case of
each Mortgage and related Mezzanine Loan, (a) no Pledge or related Mortgage has
been satisfied, canceled, rescinded or subordinated in whole or in material
part, (b) the related pledged equity or Property has not been released from the
lien of such pledge or Mortgage, in whole or in material part, (c) no instrument
has been executed that would effect any such satisfaction, cancellation,
subordination, rescission or release, and (d) no pledgor or Mortgagor has been
released from its obligations under the related Pledge or Mortgage in whole or
in material part. None of the terms of any note or Pledge has been impaired,
waived, altered or modified in any respect, except by written instruments, all
of which are included in the related loan file.
(20) Condition of Property; Condemnation. Except as set forth in an
engineering report prepared in connection with the origination of the related
Mortgage Loan and dated not more than 12 months prior to the Purchase Date, each
related Mortgaged Property is free and clear of any damage that would materially
and adversely affect its value as security for the related Mortgage Loan (normal
wear and tear excepted). There are no pending or threatened proceeding for the
condemnation of all or any material portion of any related Mortgaged Property.
(21) Title Insurance. Each Mortgaged Property is covered by an American
Land Title Association (or an equivalent form thereof approved for use in the
applicable jurisdiction) lender's title insurance policy (the "Title Policy") in
the original principal amount of the related Mortgage 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 a preliminary title policy with escrow instructions or a marked up
title insurance commitment on which the required premium has been paid exists
which is binding on the title insurer and 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, insures the originator of the Mortgage Loan, its successors and
assigns and (i) no material claims have been made thereunder and no claims have
been paid thereunder and (ii) was issued by a title insurance company qualified
at origination to do business in the jurisdiction in which the Mortgaged
Property is located to the extent such qualification was required in order for
the Title Policy to be enforceable..
(22) No Holdbacks. The proceeds of each Mezzanine Loan have been fully
disbursed and there is no obligation for future advances with respect thereto.
VII-3
(23) Pledge and Mortgage Provisions. The note and Pledge for each Mortgage
Loan and related Mezzanine Loan, together with applicable state law, contains
customary and enforceable provisions for comparable mortgaged properties and
equity interests similarly situated (subject to customary bankruptcy and equity
exceptions) such as to render the rights and remedies of the holder thereof
adequate for the practical realization against the related Mortgaged Property
and pledged equity of the principal benefits of the security intended to be
provided thereby.
(24) Environmental Conditions. With respect to each Mortgaged Property (a)
an environmental site assessment (or an update of a previous assessment) was
performed by an independent third party environmental consultant with respect to
each Mortgaged Property in connection with the origination of the related
Mortgage Loan or Mezzanine Loan, (b) a report of each such assessment (an
"Environmental Report") is dated no earlier than 12 months prior to the Purchase
Date and has been delivered to Buyer, and (c) there is no violation of
applicable environmental laws and regulations with respect to, or any material
and adverse environmental condition or circumstance affecting, any Mortgaged
Property that was not disclosed in such report. Each Mortgage requires the
related Mortgagor to comply with all applicable federal, state and local
environmental laws and regulations. Where such Environmental Report disclosed a
violation of applicable environmental laws and regulations or 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
satisfactory to the originator of such Mortgage Loan that applicable federal,
state or local governmental authorities would not take any action, or require
the taking of any action, in respect of such violation, condition or
circumstance. The related Mezzanine Loan Documents contain provisions pursuant
to which the related Mortgagor or a principal of such Mortgagor has agreed to
indemnify the mortgagee for damages resulting from violations of any applicable
Environmental Laws.
(25) Loan Document Status. Each Mortgage Note, Mortgage, Mezzanine Note,
Pledge and other agreement that evidences or secures a Mortgage Loan or related
Mezzanine Loan and that was executed by or on behalf of the related Mortgagor or
pledgor 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
or Pledgor respect to such Mortgage Note, Mortgage, Mezzanine Note, Pledge, or
other agreements.
(26) Insurance. Each Mortgaged Property is, and is required pursuant to
the related Mortgage to be, insured by (a) an all risk insurance policy issued
by an insurer meeting the requirements of such Mortgage Loan and, to the extent
required as of the date of origination by the originator of such Mezzanine 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
VII-4
balance of the related Mezzanine Loan and 100% of the replacement cost (not
allowing reduction in insurance proceeds 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 business
interruption or rental loss insurance policy providing coverage for at least
twelve months (other than for manufactured housing communities); (c) a flood
insurance policy (if any portion of the Mortgaged Property is located in an area
identified by the Federal Emergency Management Agency as having special flood
hazards); and (d) a comprehensive general liability insurance policy in amounts
as are generally required by commercial mortgage lenders, and in any event not
less than $1 million per occurrence. Such insurance policy contains a standard
mortgagee clause that names the holder of the Mortgage, its successors and
assigns as mortgagee as an additional insured in the case of liability insurance
policies or as a loss payee in the case of property insurance policies. Such
insurance policy is not terminable (nor may the amount of coverage provided
thereunder be reduced) without prior written 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 purchase and maintain
such insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from such Mortgagor. 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 Mortgage Loan.
(27) Taxes and Assessments. 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. 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.
(28) Mortgagor Bankruptcy. No Mortgagor, Pledgor, non-recourse carve-out
guarantor or tenant physically occupying 25% or more (by square feet) of the net
rentable area of a Mortgaged Property is a debtor in any state or federal
bankruptcy or insolvency proceeding.
(29) Leasehold Estate. Each Mortgaged Property consists of the related
Mortgagor's fee simple estate in real estate or, if the related Mezzanine Loan
is secured in whole or in part by the interest of a Mortgagor that is a lessee
under a ground lease of a Mortgaged Property (a "Ground Lease"), such Mortgaged
Property consists of 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 Mezzanine Loan indirectly 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 holder of the related Mortgage 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
VII-5
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 terms of such Ground Lease since the origination of the related
Mezzanine 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 the related Fee Interest and Permitted Encumbrances;
(c) The Mortgagor's interest in such Ground Lease is assignable to the
holder of the related Mortgage and is further assignable by the holder of the
related Mortgage, 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 holder of the related Mortgage and its successors
and assigns upon notice to, but without the need to obtain the consent of, such
lessor. If required by the Ground Lease, the lessor has received notice of the
lien of the related Mortgage in accordance with the provisions of the Ground
Lease;
(d) In connection with the origination of such Mortgage Loan, the related
ground lessor provided an estoppel to the originator confirming that the related
Mortgagor was not then in default under such Ground Lease. The Ground Lease
provides that no material amendment to the Ground lease is effective against the
mortgagee under such Mortgage Loan unless the mortgagee has consented thereto.
Such Ground Lease is in full force and effect, and Seller and any servicer
acting on Seller's behalf have received no notice that an event of default has
occurred thereunder or that the Ground lease has terminated, and 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 by foreclosure or otherwise if possession is necessary
to effect a cure) 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, under all circumstances, may be exercised, and
will be enforceable, by the mortgagee if it takes possession of such leasehold
interest) which extends not less than twenty years beyond the stated maturity
date of the related Mezzanine Loan and ten years beyond the amortization period
for the related Mezzanine Loan;
VII-6
(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 trustee
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 Mortgage Loan together with any accrued interest thereon;
(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 such
Ground Lease contains a covenant that the ground lessor is not permitted, in the
absence of an uncured default, to disturb the possession, interest or quiet
enjoyment of the lessee thereunder for any reason or in any manner which would
materially adversely affect the security provided by the related Mortgage; and
(j) Such Ground Lease provides, or the lessor has otherwise agreed, that
such Ground Lease may not be amended or modified or any such amendment or
modification will not be effective against the mortgagee without the prior
written consent of the mortgagee under such Mortgage Loan and any such action
without such consent is not binding on such mortgagee, its successors and
assigns, provided such mortgagee has provided the ground lessor with notice of
its lien in accordance with the terms of the Ground Lease.
(30) Escrow Deposits. All escrow deposits and payments (including capital
improvements, environmental remediation reserves and other reserve deposits, if
any) relating to each Mortgage Loan and related Mezzanine Loan that are, as of
the Purchase Date required to be deposited or paid to the lender under the terms
of the related Mortgage Loan Documents have been so deposited or paid and, to
the extent of any remaining balances of such escrow deposits, are in the
possession or under the control of mortgagee or its agents (which shall include
the applicable servicer of the Mortgage Loan). Any and all material requirements
under each Mortgage Loan as to completion of any material improvements and as to
disbursement of any funds escrowed for such purpose, which requirements were to
have been complied with on or before the Purchase Date, have been complied with
in all material respects or, if and to the extent not so complied with, the
escrowed funds (or an allocable portion thereof) have not been released except
in accordance with the terms of the related loan documents.
(31) No Mechanics' Liens. As of the date of the Mortgage, 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.
VII-7
(32) 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 Mezzanine Loan. The Mortgages relating to the Mezzanine Loans
identified on the Mezzanine 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, Seller to be material in the underwriting of the Mezzanine 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
Mortgage Loan.
(33) No Material Default. There exists no monetary default and no material
non-monetary 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
Mortgage Loan or the related Mezzanine Loan, in any such case to the extent the
same materially and adversely affects the value of the Mezzanine Loan and the
related Mortgaged Property. Neither the Mortgage Loan seller nor any servicer
acting on its behalf has issued any notice of default, breach or violation
related to the Mortgage Loan, accelerated the Mortgage Loan or commenced
judicial or non-judicial foreclosure proceedings with respect to the Mortgage
Loan. Neither the Mezzanine Loan seller nor any servicer acting on its behalf
has issued any notice of default, breach or violation related to the Mezzanine
Loan, accelerated the Mezzanine Loan or commenced judicial or non-judicial
foreclosure proceedings with respect to the Mezzanine Loan.
(34) Local Law Compliance. The improvements located on or forming part of
each Mortgaged Property complies in all material respects with applicable zoning
laws and ordinances, or constitutes a legal non-conforming use or structure or,
if any such improvement does not so comply and does not constitute a legal
non-conforming use or structure, such non-compliance and failure does not
materially and adversely affect (i) the value of the related Mortgaged Property
as determined by the appraisal performed at origination or (ii) the principal
use of the Mortgaged Property as of the date of the origination of such Mortgage
Loan. As of the date of origination of the Mortgage Loan, with respect to each
legal non-conforming use or structure, if a casualty occurred at that time, the
Mortgaged Property could have been restored or repaired to such an extent that
the use or structure of the restored or repaired property would be substantially
the same use or structure, or law and ordinance insurance has been obtained, or
a holdback was established and the Mortgagor is required to cause the Mortgaged
Property to become a conforming use or structure.
(35) Junior Liens. None of the Mortgage Loans or related Mezzanine Loans
permits the related Mortgaged Property or pledged equity to be encumbered by any
lien junior to or of equal priority with the lien of the related Mortgage or
Pledge without the prior written consent of the holder thereof or the
satisfaction of debt service coverage or similar criteria specified therein. The
pledged equity is not, and none of the Mortgaged Properties is, encumbered by
any lien junior to the lien of the related Mortgage. Each Mezzanine Loan
contains a "due on sale" clause that provides for the acceleration of the
payment of the unpaid principal balance of the Mezzanine Loan or Mortgage Loan
if, without the prior written consent of the holder thereof, the related
Mortgaged Property, or any material portion thereof, or pledged equity or a
controlling interest in the direct or indirect ownership interests in the
Mortgagor is directly or indirectly transferred, sold, or pledged.
VII-8
(36) Actions Concerning Mezzanine Loans. There are no actions, suits,
governmental investigations or proceedings pending or threatened before any
court, governmental authority, administrative agency or arbitrator concerning
any Mezzanine Loan or Mortgage Loan or the related pledgor or Mortgagor or
pledged equity or Mortgaged Property that, if determined adversely, would
adversely affect title to the Mezzanine Loan or Mortgage Loan or the validity or
enforceability of the related Pledge or Mortgage or that might materially and
adversely affect the value of the pledged equity or Mortgaged Property, the
current ability of the Mortgaged Property to generate net operating income to
service the Mortgage Loan, the principal benefit of the security intended to be
provided for the Mezzanine Loan or Mortgage Loan, or the current use of the
Mortgaged Property.
(37) Servicing. The servicing and collection practices used by Seller and
any servicer of the Mortgage Loan or related Mezzanine Loan have been in all
material respects legal, proper and prudent and have met customary industry
standards for servicing of commercial Mortgage or Mezzanine Loans.
(38) Licenses and Permits. The related Mortgagor is 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 and, as of the Purchase Date, the Seller has no written notice that the
related Mortgagor was not in possession of such licenses, permits and franchises
or that such licenses, permits and franchises have not otherwise been issued.
The Mortgage Loan requires the related Mortgaged Property to be in material
compliance with laws and regulations applicable to the Mortgaged Property, in
each case to the extent required by law.
(39) Non-Recourse Exceptions. The related Mezzanine Loan and Mortgage Loan
documents contain provisions providing for recourse against the related Pledgor
or Mortgagor, a principal of such Pledgor or Mortgagor or an entity controlled
by a principal of such Pledgor or Mortgagor, or a natural person, for damages
sustained in connection with the Pledgor's or Mortgagor's (i) fraud, (ii)
intentional misrepresentation, (iii) misappropriation or misapplication of rents
or amounts due lender, insurance proceeds or condemnation proceeds, (iv)
voluntary bankruptcy, (v) failure to obtain prior consent to any encumbrance of
the pledged equity under the Mezzanine Loan Documents, (vi) willful misconduct
resulting in waste of a Mortgaged Property. The related Mezzanine Loan and
Mortgage Loan documents contain provisions pursuant to which the related pledgor
or Mortgagor, a principal of such pledgor or Mortgagor or an entity controlled
by a principal of such pledgor or Mortgagor, or a natural person, has agreed to
indemnify the pledgee or mortgagee for damages resulting from violations of any
applicable environmental covenants.
(40) Single Purpose Entity. The pledgor and Mortgagor on each Mezzanine
Loan and related Mortgage Loan were, as of the origination of the Mezzanine
Loan, Single Purpose Entities. 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 the pledged equity or the Mortgaged Properties securing the
Mezzanine Loans or Mortgage Loans and prohibit it from engaging in any business
unrelated to such pledged equity or Mortgaged Property or Properties, and whose
VII-9
organizational documents further provide, or which entity represented in the
related Mezzanine Loan or Mortgage Loan documents, substantially to the effect
that it does not have any assets other than those related to its interest in
such pledged equity or interest in and operation of such Mortgaged Property or
Properties, or any indebtedness other than as permitted by the related Pledge or
Mortgage or the other related Mezzanine Loan or Mortgage 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, that it will not guarantee or assume the debts of any other
person, that it will not commingle assets with Affiliates, and that it will not
transact business with Affiliates except on an arm's length basis. Each Pledgor
and Mortgagor of a Mezzanine Loan and Mortgage Loan is an entity which has
represented in connection with the origination of the Mezzanine Loan or Mortgage
Loan, or whose organizational documents as of the date of origination of the
Mezzanine Loan or Mortgage Loan provide that so long as the Mezzanine Loan is
outstanding it will have at least one independent director. There are
Insolvency/Non-Consolidation opinions with respect to each of the Pledgor and
Mortgagor and all of the assumptions made in each such opinion are true and
correct.
(41) 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.
(42) Operating or Financial Statements. The related Mortgage Loan
Documents require the related Mortgagor to furnish to the mortgagee at least
quarterly and annually an operating statement and rent roll (if there is more
than one tenant) with respect to the related Mortgaged Property and at least
annually financial statements of the Mortgagor.
(43) Security Interests in Hospitality Properties. If any Mortgaged
Property securing a Mortgage Loan is operated as a hospitality property then (a)
the security agreements, financing statements or other instruments, if any,
related to the Mortgage Loan secured by such Mortgaged Property establish and
create a valid and enforceable (subject to the exceptions set forth in Paragraph
25 above) first priority security interest in all items of personal property
owned by the related Mortgagor which are material to the conduct in the ordinary
course of the Mortgagor's business on the related Mortgaged Property, subject
only to purchase money security interests, personal property leases and security
interests to secure revolving lines of credit and similar financing; and (b) one
or more Uniform Commercial Code financing statements covering such personal
property have been filed or recorded (or have been sent for filing or recording)
wherever necessary to perfect under applicable law such security interests (to
the extent a security interest in such personal property can be perfected by the
filing of a Uniform Commercial Code financing statement under applicable law).
(44) Assignment of Collateral. There is no material collateral securing
any Mortgage Loan that has not been assigned to the Mortgagee.
(45) Fee Simple or Leasehold Interests. The interest of the related
Mortgagor in the Mortgaged Property securing each Mortgage Loan includes a fee
simple and/or leasehold estate or interest in real property and the improvements
thereon.
VII-10
(46) Assignment of Collateral. There is no material collateral securing
any Mezzanine Loan that has not been assigned to the holder of the Mezzanine
Loan.
(47) Terrorism Insurance. With respect to each Mortgage Loan, the related
all risk insurance policy and business interruption policy did not as of the
date of origination of the Mortgage Loan, and does not as of the date hereof,
specifically exclude acts of terrorism from coverage. With respect to each of
the Mortgage Loans, the related Mortgage Loan documents do not expressly waive
or prohibit the mortgagee from requiring coverage for acts of terrorism or
damages related thereto, except to the extent that any right to require such
coverage may be limited by commercially reasonable availability.
(48) Transfers and Pledges. The Mezzanine Loan Collateral consists of the
pledge of all of the ownership interests of the Mortgagor. Transfer and pledge
restrictions under the Mezzanine Loan Documents apply to the sponsoring entity,
Mortgagor, principal, Mortgagor and mortgage principal.
(49) Management Agreement. The management agreement relating to the
Mezzanine Loan is in full force and effect and there is no default thereunder by
any party thereto and no event has occurred that, with the passage of time
and/or the giving of notice, would constitute a default thereunder.
(50) Illegal Activity. No portion of any Mortgaged Property has been or
will be purchased with proceeds of any illegal activity.
(51) Embargoed Person. With respect to each Underlying Asset, (a) none of
the funds or other assets of Mortgagor, mezzanine borrower, principal and
guarantor constitute property of, or are beneficially owned, directly or
indirectly, by any person, entity or government subject to trade restrictions
under U.S. law, including but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. xx.xx. 1701 et seq., The Trading with the Enemy
Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder with the result that the investment in Mortgagor,
principal or guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Mortgage Loan or Mezzanine Loan made by the Lender is
in violation of law ("Embargoed Person"); (b) no Embargoed Person has any
interest of any nature whatsoever in Mortgagor, mezzanine borrower, principal or
guarantor, as applicable, with the result that the investment in Mortgagor,
mezzanine borrower, principal or guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Mortgage Loan or Mezzanine Loan is in
violation of law; and (c) none of the funds of Mortgagor, mezzanine borrower,
principal or guarantor, as applicable, have been derived from any unlawful
activity with the result that the investment in Mortgagor, mezzanine borrower,
principal or guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Mortgage Loan or Mezzanine Loan is in violation of law.
(52) Franchise Agreement. The Franchise Agreement and the License granted
thereby are in full force and effect and there is no default thereunder by any
party thereto and no event has occurred that, with the passage of time and/or
giving of notice, would constitute a default thereunder. Mortgagor has all
rights to use the License granted under the Franchise Agreement.
VII-11
(53) Lockbox. Any agreements executed in connection with the creation of a
Collection Account create a valid and continuing security interest (as defined
in the Uniform Commercial Code in effect in the State of New York) in each of
such Collection Accounts in favor of Buyer, which security interest is prior to
all other liens, and is enforceable as such against creditors of and purchasers
from Mortgagor. Each Collection Account constitutes a "deposit account" within
the meaning of the Uniform Commercial Code in effect in the State of New York.
Seller has directed the Servicer to cause each Depository to agree to comply
with all written instructions originated by Buyer, without further consent by
Mortgagor, directing disposition of all sums at any time held, deposited or
invested in the Collection Accounts, together with any interest or other
earnings thereon, and all proceeds thereof (including proceeds of sales and
other dispositions), whether accounts, general intangibles, chattel paper,
deposit accounts, instruments, documents or securities. The Collection Accounts
are not in the name of any Person other than Mortgagor, as pledgor, or Lender,
as pledgee. Seller has not consented to the Depository complying with
instructions with respect to the Collection Account from any Person other than
Buyer.
(54) Compliance with Usury and Other Laws. The Mezzanine Loan, and each
party involved in the origination of the Mezzanine Loan, complied as of the date
of origination with, or is exempt from, applicable state or federal laws,
regulations and other requirements pertaining to usury. Any and all other
requirements of any federal, state or local laws applicable to the Mezzanine
Loan have been complied with.
(55) Authorized to do Business. To the extent required under applicable
law, Seller is authorized to transact and do business in each jurisdiction in
which a Mortgaged Property is located at all times when it held the Mezzanine
Loan.
(56) Mezzanine Loan Documents. The Mezzanine Loan Documents contain
provisions for the acceleration of the payment of the unpaid principal balance
of the Mezzanine Loan if (A) the Mezzanine borrower voluntarily transfers or
encumbers all or any portion of any related Mezzanine collateral, or (B) any
direct or indirect interest in Mortgagor is voluntarily transferred or assigned,
other than, in each case, as permitted under the terms and conditions of the
Mezzanine Loan Documents.
(57) Collateral Secures Mezzanine Loans Only. The Mezzanine collateral
does not secure any mezzanine loan other than the Mezzanine Loan in which an
interest is being transferred and assigned to the Buyer hereunder (except for
Mezzanine Loans, if any, which are cross-collateralized with other Mezzanine
Loans in which interests are being conveyed to the Buyer or subsequent
transferee hereunder and identified on the Asset Schedule).
(58) MERS Underlying Asset. With respect to each Mezzanine Loan that is a
MERS Underlying Asset, the related Mortgagor is registered with MERS and each
assignment of the MERS Underlying Asset has been registered with MERS.
VII-12
EXHIBIT VIII
REPRESENTATIONS AND WARRANTIES REGARDING
EACH PARTICIPATION INTEREST
1. Validity of Documents. The Participation Agreement and any other
agreement executed and delivered by the Seller in connection with a
Participation Interest are genuine, and each is the legal, valid and binding
obligation of the maker thereof enforceable in accordance with its terms. Seller
had legal capacity to enter into the Participation Agreement and the legal
capacity to execute and deliver the Participation Agreement, and the
Participation Agreement has been duly and properly executed by the maker thereof
and any other signatory thereto. The Participation Agreement is in full force
and effect, and the enforceability of the Participation Agreement has not been
contested by any person or entity.
2. Original Terms Unmodified. The terms of the Participation Agreement
have not been impaired, altered or modified in any material respect.
3. No Defenses. The Participation Interest is not subject to any right of
rescission, set-off, counterclaim or defense nor will the operation of any of
the terms of the Participation Agreement, or the exercise of any right
thereunder, render the Participation Agreement unenforceable in whole or in part
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto.
4. No Defaults. To Seller's knowledge there is no default, breach,
violation or event of acceleration existing under the Participation Agreement
and to Seller's knowledge 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.
5. Delivery of Participation Documents. The Participation Agreement has
been delivered to the Buyer or the Custodian.
6. No Conflicts. The execution, delivery and performance of the
Participation Agreement by the Seller do not conflict with or constitute a
default under, or result in the creation or imposition of any lien (other than
pursuant to the Participation Agreement) under, any mortgage, deed of trust,
agreement, partnership agreement, or other agreement or instrument to which
Seller is a party or to which any of its property is subject, nor will such
action result in any violation of the provisions of any statute of any
jurisdiction over Seller, and any qualification of or with any governmental
authority required for the execution, delivery, and performance by Seller of the
Participation Agreement has been obtained and is in full force and effect.
7. Participation Interest Assignable. The Participation Interest is
assignable to the Buyer. The Participation Agreement permits Seller and Buyer to
freely sell, assign, pledge, transfer or rehypothecate such Participation
Interest subject to the terms of the Participation Agreement.
VIII-1
8. No Satisfaction or Prepayment of Participation Interest. The
Participation Interest has not been satisfied, canceled, subordinated, released
or rescinded, in whole or in part, in any material respect.
9. Ownership. Seller is the sole owner and holder of the Participation
Interest. The Participation Interest has not been assigned or pledged by Seller,
and Seller has good, indefeasible and marketable title to the Participation
Interest, and has full right, subject to the terms of the Participation
Agreement, to transfer, pledge and assign the Participation Interest to the
Buyer free and clear of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest, and has full right and authority,
subject to the terms of the Participation Agreement but subject to no interest
or participation of, or agreement with, any other party, to assign, transfer and
pledge the Participation Interest pursuant to this Agreement, and following the
pledge of the Participation Interest, the Buyer will hold such Participation
Interest free and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest except any such security
interest created pursuant to the terms of this Agreement.
10. Financial Information. To Seller's knowledge and based upon the
related participant's representations and warranties, all financial data,
including, without limitation the statements of cash flow and income and
operating expense, that have been delivered to Seller (i) are true, complete,
and correct in all material respects, and (ii) accurately represent the
financial condition of such participant as of the date of such reports.
VIII-2
EXHIBIT IX
Underlying Loan Information
Investment & Loan Set-Up
I. Investment Background
Investment name and location:
Mortgagor and principals: .
Type of investment:
Deal team:
Closing Attorney:
Closing Date:
Funding Date:
Investment Amount:
Premium/discount (% and $ amount):
Adjusted gross investment commitment:
Participants:
Repo Advance Rate:
Net investment commitment:
Net investment funded at closing:
Net investment unfunded commitment:
Accrued interest acquired ($):
II. Rate/Term/Fees/Guarantees/Reserves
Interest rate (floating/fixed):
LIBOR in place at funding date:
LIBOR Floor:
Amount of LIBOR Floor:
Interest due date:
Interest rate re-set date:
Interest Accrual Period:
1st Interest Payment Due Date:
Rate if fixed:
Index if floating:
Rounding factor for index:
IX-1
Spread if floating:
Calculation basis:
Pay/accrual:
Contingent interest:
Amortization:
Stub Interest (days):
Stub Interest ($):
Lock Box:
Servicing Fee:
Special Servicing Fee:
Trustee Servicing Fee:
Initial term:
Maturity date:
Origination/Commitment Fee:
Due Diligence Deposit:
Application Fee:
Additional Interest (Exit):
Extension Term:
Extended Maturity date:
Additional Interest (Extension):
Prepayment/Defeasance:
Reserves:
Initial Tax Escrow:
Required Repairs Reserve:
Liquidity Reserve:
Tax escrows:
Insurance escrows:
Total Reserves:
Payment Guarantee (amount):
Guarantor:
Guaranty Collateral:
Lock-Out/Call Protection:
Financial Reporting Requirements:
Monthly Statements:
Quarterly Statements:
Annual Statements:
Annual Budget:
IX-2
III. Seller/Repo Financing
Firm:
Advance Rate:
Cost of Financing:
Contact:
IV. Senior / Junior Financing
First Mortgage Loan:
Senior Mezzanine Loan:
Junior Mezzanine Loan:
V. Summary of Participation Rights:
1)
VI. Hedging Information
Senior Loan Interest Rate Cap:
Date of Agreement:
Notional Amount:
Strike Prices:
Cost:
Beneficiary:
Counterparty:
Placement Agent:
Senior Mezzanine Loan Interest Rate Cap:
Date of Agreement:
Notional Amount:
Strike Prices:
Cost:
Beneficiary:
Counterparty:
Placement Agent:
IX-3
Junior Mezzanine Loan Interest Rate Cap:
Date of Agreement:
Notional Amount:
Strike Prices:
Cost:
Beneficiary:
Counterparty:
Placement Agent:
VII. Non-Reimbursable Transaction Expenses
Legal Fees
Meals
Travel/Airfare
Insurance Review
Total
IX-4
EXHIBIT X
TRANSACTION PROCEDURE
Preliminary Approval of New Asset Which is an Eligible Asset.
(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 Asset that Seller proposes to be
included as an Eligible Asset under this Agreement.
(b) Buyer shall have the right to request additional due 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 shall following receipt of internal credit
approval, either (i) notify Seller of the Purchase Price and the Market
Value for the New Asset, subject to documentation satisfactory to Buyer,
or (ii) deny, in Buyer's sole and absolute discretion, Seller's request
for a Transaction. Buyer shall use its best efforts to make a
determination about entering into a Transaction as soon as possible after
receiving the aforementioned Diligence Materials, but if Buyer shall not
have responded to Seller within ten (10) Business Days of its receipt of
such Diligence Materials, the parties agree that Buyer shall be deemed on
the tenth (10th) Business Day to have given a negative response.
Final Approval of New Asset which is an Eligible Asset. Upon Buyer's
notification to Seller of the Purchase Price and the Market Value for any New
Asset which is an Eligible Asset, Seller shall, if Seller desires to enter into
a Transaction with respect to such New Asset, satisfy the conditions set forth
below except to the extent waived by Buyer (in addition to satisfying the
conditions precedent to obtaining each advance, as set forth in Section 2(b) of
this Agreement) as a condition precedent to Buyer's approval of such New Asset
as an Eligible Asset, all in a manner reasonably satisfactory to Buyer and
subject to documentation satisfactory to Buyer:
(a) Delivery of Purchased Asset Documents. Seller shall deliver to
Buyer: (i) with respect to a New Asset that is a Pre-Existing Asset, each
of the Purchased Asset Documents, except Purchased Asset 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 a New Asset that is an Originated Asset, each of the Purchased Asset
Documents.
(b) Environmental and Engineering. Buyer shall have received a
satisfactory "Phase 1" (and, if necessary, a satisfactory "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, if Buyer approves such Draft
Appraisal in lieu of a final 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.
X-1
(d) Insurance. Buyer shall have received certificates or other
evidence of insurance demonstrating insurance coverage in respect of the
Property of types, in amounts, with insurers and otherwise in compliance
with the terms, provisions and conditions set forth in the Purchased Asset
Documents. Such certificates or other evidence shall indicate that Seller
will be named as an additional insured under liability policies as its
interest may appear and shall contain a loss payee endorsement under
casualty policies in favor of Seller with respect to the policies required
to be maintained under the Purchased Asset Documents.
(e) Survey. Buyer shall have received all surveys of the 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 Asset, Property, Seller and Mortgagor, such searches to be
conducted in each location Buyer shall designate.
(g) Opinions of Counsel. Buyer shall have received copies of all
legal opinions in Seller's possession with respect to the Eligible Asset
which shall be in form and substance 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 Property is in compliance
with all applicable zoning laws issued by the appropriate Governmental
Authority of evidence that the related Title Policy includes a zoning
endorsement and (ii) copies of all leases in effect at the Property and
estoppel certificates that were required in the origination of the
applicable loan from any ground lessor and from any tenants .
(i) Other Documents. Buyer shall have received such other documents
as Buyer or its counsel shall reasonably deem necessary.
X-2
EXHIBIT XI
LIST OF NON-PERMITTED TRANSFEREES
Cap Lease Funding
Northstar
Arbor Financial
Lexington Property Trust
American Financial Realty Trust
iStar
Gramercy Capital
XI-1
EXHIBIT XII
FORM OF OPINION OF COUNSEL TO SELLER
1. Seller is duly organized and validly existing as a limited liability
company in good standing under the laws of the State of Delaware and has power
and authority to enter into and perform its obligations under this Agreement and
the Custodial Agreement. Seller is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the business transacted
by it requires such qualification and in which the failure so to qualify would
have a material adverse effect on the business, properties, assets or condition
(financial or other) of Seller and its subsidiaries, considered as a whole.
2. This Agreement and the Custodial Agreement have each been duly
authorized, executed and delivered by Seller, and each constitutes a valid and
legally binding obligation of Seller enforceable against Seller in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights generally and to general equity principles.
3. No consent, approval, authorization or order of any state or federal
court or government agency or body is required to be obtained by Seller for the
consummation of the transactions contemplated by this Agreement or the Custodial
Agreement.
4. The consummation of any of the transactions contemplated by this
Agreement and the Custodial Agreement will not conflict with, result in a breach
of, or constitute a default under the certificate of incorporation or bylaws of
Seller or the terms of any indenture or other agreement or instrument known to
us to which Seller is party or bound, or any order known to such counsel to be
applicable to Seller or any regulations applicable to Seller, of any state or
federal court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over Seller.
5. There is no pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any arbitrator involving
Seller or relating to the transaction contemplated by this Agreement or the
Custodial Agreement which, if adversely determined, would have a material
adverse effect on Seller.
6. In the event that the transactions are deemed "Loans" instead of
"Sales," the Agreement, together with the delivery of the Purchased Assets to
the Custodian, creates a valid, perfected first-priority security interest in
such Purchased Assets in favor of Buyer.
7. In the event of an insolvency of Seller's parent, Seller's assets
(including the Purchased Assets and proceeds thereof) would not be consolidated
in the parent's bankruptcy estate.
8. The transaction by which Seller acquired each Eligible Asset was a
legal true sale.
XII-1
EXHIBIT XIII
FORM OF BAILEE AGREEMENT
111 DEBT ACQUISITION -- TWO, LLC
XIII-1
0 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
________________ __, 20_
[BAILEE]
[ADDRESS]
Re: Bailee Agreement (the "Bailee Agreement") in connection with the
sale under a Master Repurchase Agreement by 111 Debt Acquisition --
Two, LLC (the "Seller") to Bear, Xxxxxxx International Limited (the
"Buyer")
Ladies and Gentlemen:
In consideration of the mutual promises set forth herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller, the Buyer and [BAILEE] (the "Bailee") hereby agree as
follows:
1. The Seller shall deliver to the Bailee in connection with any Purchased
Assets delivered to the Bailee hereunder an Identification Certificate in the
form of Attachment 1 attached hereto to which shall be attached a Purchased
Asset Schedule identifying which Purchased Assets are being delivered to the
Bailee hereunder. Such Purchased Asset Schedule shall contain the following
fields of information with respect to the Purchased Assets: (a) the loan
identifying number; (b) the Mortgagor's name; (c) the xxxxxx xxxxxxx, xxxx,
xxxxx and zip code for the applicable real property; (d) the original balance;
and (e) the current principal balance if different from the original balance and
such other information as the Seller and Buyer shall require.
2. On or prior to the date indicated on the Custodial Delivery delivered
by the Seller (the "Purchase Date"), the Seller shall have delivered to the
Bailee, as bailee for hire, the original documents set forth on Schedule A
attached hereto (collectively, the "Purchased Asset File") for each of the
Purchased Assets (each a "Purchased Asset" and collectively, the "Purchased
Assets") listed in Exhibit A to Attachment 1 attached hereto (the "Purchased
Asset Schedule").
3. The Bailee shall issue and deliver to the Buyer and the Custodian on or
prior to the Purchase Date by facsimile (a) in the name of the Buyer, an initial
trust receipt and certification in the form of Attachment 2 attached hereto (the
"Trust Receipt") which Trust Receipt shall state that the Bailee has received
the documents comprising the Purchased Asset File as set forth in the Custodial
Delivery (as defined in that certain Custodial Agreement dated as of May 24,
2006, among Seller, Buyer and Custodian (as defined in Section 5 below), in
addition to such other documents required to be delivered to Buyer and/or
Custodian pursuant to the Master Repurchase Agreement dated as of May 24, 2006,
among Seller and Buyer (the "Master Repurchase Agreement").
XIII-2
4. On the applicable Purchase Date, in the event that the Buyer fails to
purchase any New Asset from the Seller that is identified in the related
Custodial Delivery- Certificate, the Buyer shall deliver by facsimile to the
Bailee at [FAX NUMBER] to the attention of [BAILEE], an authorization (the
"Facsimile Authorization") to release the Purchased Asset Files with respect to
the Purchased Assets identified therein to the Seller. Upon receipt of such
Facsimile Authorization, the Bailee shall release the Purchased Asset Files to
the Seller in accordance with the Seller's instructions.
5. Following the Purchase Date, the Bailee shall forward the Purchased
Asset Files to LaSalle Bank National Association, 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxx (the "Custodian")
by insured overnight courier for receipt by the Custodian no later than 1:00
p.m. on the third Business Day following the applicable Purchase Date (the
"Delivery Date").
6. From and after the applicable Purchase Date until the time of receipt
of the Facsimile Authorization or the applicable Delivery Date, as applicable,
the Bailee (a) shall maintain continuous custody and control of the related
Purchased Asset Files as bailee for the Buyer and (b) is holding the related
Purchased Assets as sole and exclusive bailee for the Buyer unless and until
otherwise instructed in writing by the Buyer.
7. The Seller agrees to indemnify and hold the Bailee and its partners,
directors, officers, agents and employees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
reasonable attorney's fees, that may be imposed on, incurred by, or asserted
against it or them in any way relating to or arising out of this Bailee
Agreement or any action taken or not taken by it or them hereunder unless such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (other than special, indirect, punitive or
consequential damages, which shall in no event be paid by the Bailee) were
imposed on, incurred by or asserted against the Bailee because of the breach by
the Bailee of its obligations hereunder, which breach was caused by negligence,
lack of good faith or willful misconduct on the part of the Bailee or any of its
partners, directors, officers, agents or employees. The foregoing
indemnification shall survive any resignation or removal of the Bailee or the
termination or assignment of this Bailee Agreement.
8. (a) In the event that the Bailee fails to produce a certificate
representing a Participation Interest or a Mortgage Note, Mezzanine Note,
assignment of a Purchased Asset or any other document related to a Purchased
Asset that was in its possession within ten (10) business days after required or
requested by the Seller or Buyer (a "Delivery Failure"), the Bailee shall
indemnify the Seller or Buyer in accordance with the succeeding paragraph of
this Section 8.
(b) The Bailee agrees to indemnify and hold the Buyer and Seller,
and their respective Affiliates and designees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever,
including reasonable attorney's fees, that may be imposed on, incurred by,
or asserted against it or them in any way relating to or arising out of a
Custodial Delivery Failure or the Bailee's gross negligence, lack of good
faith or willful misconduct. The foregoing indemnification shall survive
any termination or assignment of this Bailee Agreement.
XIII-3
9. The Seller hereby represents, warrants and covenants that the Bailee is
not an Affiliate of or otherwise controlled by the Seller. Notwithstanding the
foregoing, the parties hereby acknowledge that the Bailee hereunder may act as
Counsel to the Seller in connection with a proposed loan and [BAILEE], if acting
as Bailee, has represented Seller in connection with negotiation, execution and
delivery of the Master Repurchase Agreement.
10. In connection with a pledge of the Purchased Assets as collateral for
an obligation of the Buyer, the Buyer may pledge its interest in the
corresponding Purchased Asset Files held by the Bailee for the benefit of the
Buyer from time to time by delivering written notice to the Bailee that the
Buyer has pledged its interest in the identified Purchased Assets and Purchased
Asset Files, together with the identity of the party to whom the Purchased
Assets have been pledged (such party, the "Pledgee"). Upon receipt of such
notice from the Buyer, the Bailee shall xxxx its records to reflect the pledge
of the Purchased Assets by the Buyer to the Pledgee. The Bailee's records shall
reflect the pledge of the Purchased Assets by the Buyer to the Pledgee until
such time as the Bailee receives written instructions from the Buyer that the
Purchased Assets are no longer pledged by the Buyer to the Pledgee, at which
time the Bailee shall change its records to reflect the release of the pledge of
the Purchased Assets and that the Bailee is holding the Purchased Assets as
custodian for, and for the benefit of, the Buyer.
11. From time to time, subject to the acceptance and approval of Buyer,
Seller may request pursuant to a request substantially in the form of Annex 6 to
the Custodial Agreement the delivery by the Custodian to the Bailee of some or
all of the Purchased Asset File for the purposes set forth in such request. Upon
receipt of the Purchased Asset File or such portions thereof, Bailee shall hold
the same as sole and exclusive bailee for the Buyer until such time as the
Purchased Asset File, or such portions thereof, are redelivered to the Custodian
or to such other Persons, as otherwise directed by Buyer, subject in either case
to the provisions set forth herein governing standards of care and
indemnification and except as otherwise provided by any document specifically
amending, supplementing or modifying the terms hereof which is executed and
delivered by all parties hereto in connection with such delivery of the
Purchased Asset File, or such portions thereof, to Bailee. Notwithstanding
anything to the contrary contained in this Section 11, Bailee shall have the
right to deliver such Purchased Asset File, or portions thereof, to Buyer upon
five (5) days' written notice to Buyer.
12. The agreement set forth in this Bailee Agreement may not be modified,
amended or altered, except by written instrument, executed by all of the parties
hereto.
13. This Bailee Agreement may not be assigned by the Seller or the Bailee
without the prior written consent of the Buyer.
14. For the purpose of facilitating the execution of this Bailee Agreement
as herein provided and for other purposes, this Bailee Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute and be one
and the same instrument.
XIII-4
15. This Bailee Agreement shall be construed in accordance with the laws
of the State of New York, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
16. Capitalized terms used herein and defined herein shall have the
meanings ascribed to them in the Master Repurchase Agreement.
[signatures begin on next page]
XIII-5
Very truly yours,
111 DEBT ACQUISITION -- TWO, LLC, a
Delaware limited liability company
By: _______________________________
Name:
Title:
ACCEPTED AND AGREED:
[BAILEE],
Bailee
By: _______________________________
Name: [BAILEE]
ACCEPTED AND AGREED:
BEAR, XXXXXXX INTERNATIONAL LIMITED
By: _______________________________
Name:
Title:
XIII-6
Schedule A
[List of Documents in the Purchased Asset File]
XIII-7
Attachment 1
IDENTIFICATION CERTIFICATE
On this _____ day of ____________, 2006, 111 Debt Acquisition -- Two, LLC
(the "Seller"), under that certain Bailee Agreement of even date herewith (the
"Bailee Agreement"), among the Seller, [BAILEE], (the "Bailee"), and BEAR,
XXXXXXX INTERNATIONAL LIMITED, as Buyer, does hereby instruct the Bailee to
hold, in its capacity as Bailee, the Purchased Asset Files with respect to the
Purchased Assets listed on Exhibit A hereto, which Purchased Assets shall be
subject to the terms of the Bailee Agreement as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Bailee Agreement.
IN WITNESS WHEREOF, the Seller has caused this Identification Certificate
to be executed and delivered by its duly authorized officer as of the day and
year first above written.
111 DEBT ACQUISITION -- TWO, LLC,
Seller
By: _____________________________
Name:
Title:
XIII-8
Exhibit A to Attachment 1
PURCHASED ASSET SCHEDULE
Loan name;
Structure of Transaction: Senior Tranche, Juniors and Mezz, if any;
Type of eligible asset (participation/b note/mezz loan);
Mortgagors name and address;
Principal/sponsor's name and address;
Whether such mortgage loan has a guarantor;
Guarantor's name and address;
Property type of each mortgaged property;
Address of each mortgaged property;
Original balance;
Current principal balance;
Origination date of loan:
(a) original term to stated maturity or anticipated repayment date,
(b) remaining term to stated maturity or anticipated repayment date, and
(c) maturity or anticipated repayment date;
Current Interest Rate;
Interest calculation method (e.g. 30/360, actual/360);
Due date for monthly payments;
Debt service coverage ratio at origination, if available, and at the cut-off
date;
Property appraised value at origination and at the cut-off date;
Loan to value ratio of the mortgaged property at origination and at any later
date for which an appraised value was determined;
Any loans cross-defaulted or cross-collateralized with a mortgage loan;
Originator of such mortgage loan
XIII-9
Attachment 2
FORM OF TRUST RECEIPT
________________ __, 200_
Bear, Xxxxxxx International Limited
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Bailee Agreement, dated as of ___________ __, 2006 (the "Bailee
Agreement") among 111 Debt Acquisition -- Two, LLC (the "Seller"),
Bear, Xxxxxxx International Limited (the "Buyer") and [BAILEE] (the
"Bailee")
Ladies and Gentlemen:
In accordance with the provisions of Paragraph 3 of the above-referenced
Bailee Agreement, the undersigned, as the Bailee, hereby certifies that as to
each Purchased Asset described in the Purchased Asset Schedule (Exhibit A to
Attachment 1), a copy of which is attached hereto, it has reviewed the Purchased
Asset File and has determined that (1) all documents listed in Schedule A
attached to the Bailee Agreement are in its possession and (ii) such documents
have been reviewed by it and appear regular on their face and relate to such
Purchased Asset, and (iii) based on its examination, the foregoing documents on
their face satisfy the requirements set forth in Paragraph 2 of the Bailee
Agreement.
The Bailee hereby confirms that it is holding each such Purchased Asset
File as agent and bailee for the exclusive use and benefit of the Buyer pursuant
to the terms of the Bailee Agreement.
All initially capitalized terms used herein shall have the meanings
ascribed to them in the above-referenced Bailee Agreement.
[BAILEE], BAILEE
By: ____________________________
Name: [BAILEE]
XIII-10
EXHIBIT XIV
[RESERVED]
XIV-1
SCHEDULE 1-A
Form of UCC Financing Statement
Debtor: Secured Party:
111 Debt Acquisition -- Two, LLC Bear, Xxxxxxx International Limited
0 Xxxxxxxxx Xxxxx 000 Xxxxxxx Xxxxxx
Xxxxx 000 Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx, Xxxxxxxxxxxxx 00000
ATTACHMENT A TO UCC FINANCING STATEMENT
This filing is for protective purposes only with respect to the Purchased
Assets in case the sale of any Purchased Asset under the Repurchase Agreement is
re-characterized as a grant of a security interest in any such Purchased Asset.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned in the Repurchase Agreement (defined below).
The collateral covered by this financing statement is all of the Debtor's
right, title and interest in, to and under the following property, whether now
owned or existing, hereafter acquired or arising, or in which the Debtor now or
hereafter has any rights, and wheresoever located (the "Collateral"):
(a) all of the Purchased Assets including those identified in Schedule I hereto,
all Income from such Purchased Assets and all proceeds of all of the foregoing,
and
(b) all Hedging Transactions relating to Purchased Assets entered into by Seller
and all proceeds thereof.
The following terms shall have the following meanings. Such definition
shall be equally applicable to the singular and plural forms of the terms
defined.
"Buyer" means Secured Party.
"Custodian" means LaSalle Bank National Association or any successor
Custodian appointed by Buyer.
"Eligible Assets" means any of the following types of loans listed below:
(i) Participation Interests in Whole Loans, B Notes or Mezzanine Loans that are
performing (i.e., current and not in monetary or material non-monetary default
such that remedies can be exercised by any Person) commercial mortgage loans
secured by first liens on multifamily and commercial real property with respect
to which the ratio of loan to value as determined by Buyer, in the exercise of
its commercially reasonable judgment, for the real property securing directly
such loan (including for purposes of this calculation, such loan and any loan
senior to or pari passu with such loan and secured, directly or indirectly, by
the related property) does not exceed the percentage stated in the Confirmation.
1-A-1
(ii) any other investment presented to and approved by Buyer in its sole
discretion which does not conform to the criteria set forth in clause (i) above
and which Buyer elects in its sole discretion to purchase.
"Hedging Transactions" means, with respect to any or all of the Purchased
Assets, any short sale of U.S. Treasury Securities or mortgage-related
securities, futures contract (including Eurodollar futures) or options contract
or any interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by Seller, with Buyer or its Affiliates as
counterparties or one or more other counterparties acceptable to Buyer.
"Income" means, with respect to any Purchased Asset at any time, any
principal (including any principal prepayments) thereof and all interest,
dividends or other distributions thereon and with respect to any associated
Hedging Transaction, all proceeds thereof.
"Person" means an individual, corporation, limited liability company,
business trust, partnership, joint tenant or tenant-in-common, trust,
unincorporated organization, or other entity, or a federal, state or local
government or any agency or political subdivision thereof.
"Purchased Asset Documents" shall mean, with respect to a Purchased Asset,
the documents comprising the Purchased Asset File for such Purchased Asset.
"Purchased Asset File" shall mean the documents specified as the
"Purchased Asset File" in Section 6(b) of the Repurchase Agreement, together
with any additional documents and information required to be delivered to Buyer
or its designee (including the Custodian) pursuant to the Repurchase Agreement.
"Purchased Assets" means (i) with respect to any Transaction, the Eligible
Assets sold by Seller to Buyer in such Transaction until such Eligible Assets
are repurchased by Seller pursuant to this Agreement and (ii) with respect to
the Transactions in general, all Eligible Assets sold by Seller to Buyer and any
Additional Assets delivered by Seller to Buyer pursuant to Section 3(a) of the
Repurchase Agreement until (x) such Eligible Assets are repurchased by Seller
pursuant to the Repurchase Agreement or (y) such Additional Assets are
re-delivered to Seller by Buyer pursuant to Section 3 of the Repurchase
Agreement.
"Repurchase Agreement" means that certain Master Repurchase Agreement
dated as of May 24, 2006, between Bear, Xxxxxxx International Limited and 111
Debt Acquisition -- Two, LLC, (together such other annexes and schedules
attached thereto) as the same may be amended, restated or otherwise modified
from time to time.
"Seller" means Debtor.
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SCHEDULE 1
Participation Interest, dated _____ issued to __________ in the amount of
$__________, in that certain Mortgage Loan [(in the original principal amount of
$__________)], dated as of _______, made by ___________ to _________ under and
pursuant to that certain Loan Agreement dated as of ________ between _________
and _________ and secured by that certain property located in _________, [as
such Participation Interest was assigned by _________ to 111 Debt Acquisition --
Two, LLC pursuant to that certain Assignment and Assumption Agreement dated as
of _________].
1-A-3
SCHEDULE 1-B
Form of UCC Financing Statement Amendment
Debtor: Secured Party:
111 Debt Acquisition -- Two, LLC Bear, Xxxxxxx International Limited
0 Xxxxxxxxx Xxxxx 000 Xxxxxxx Xxxxxx
Xxxxx 000 Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx, Xxxxxxxxxxxxx 00000
ATTACHMENT A TO UCC FINANCING STATEMENT AMENDMENT
his filing is for protective purposes only with respect to the Purchased
Assets in case the sale of any Purchased Asset under the Repurchase Agreement is
re-characterized as a grant of a security interest in any such Purchased Asset.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned in the Repurchase Agreement (defined below).
The collateral covered by this financing statement is all of the Debtor's
right, title and interest in, to and under the following property, whether now
owned or existing, hereafter acquired or arising, or in which the Debtor now or
hereafter has any rights, and wheresoever located (the "Collateral"):
(a) all of the Purchased Assets including those identified in Schedule I hereto,
all Income from such Purchased Assets and all proceeds of all of the foregoing,
and
(b) all Hedging Transactions relating to Purchased Assets entered into by Seller
and all proceeds thereof.
The following terms shall have the following meanings. Such definition
shall be equally applicable to the singular and plural forms of the terms
defined.
"Buyer" means Secured Party.
"Custodian" means LaSalle Bank National Association or any successor
Custodian appointed by Buyer.
"Eligible Assets" means any of the following types of loans listed in (i)
through (iv) below:
(i) Participation Interests in Whole Loans, B Notes or Mezzanine Loans that are
performing (i.e., current and not in monetary or material non-monetary default
such that remedies can be exercised by any Person) commercial mortgage loans
secured by first liens on multifamily and commercial real property with respect
1-B-1
to which the ratio of loan to value as determined by Buyer, in the exercise of
its commercially reasonable judgment, for the real property securing directly
such loan (including for purposes of this calculation, such loan and any loan
senior to or pari passu with such loan and secured, directly or indirectly, by
the related property) does not exceed the percentage stated in the Confirmation.
(ii) any other investment presented to and approved by Buyer in its sole
discretion which does not conform to the criteria set forth in clause (i) above
and which Buyer elects in its sole discretion to purchase.
"Hedging Transactions" means, with respect to any or all of the Purchased
Assets, any short sale of U.S. Treasury Securities or mortgage-related
securities, futures contract (including Eurodollar futures) or options contract
or any interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, entered into by Seller, with Buyer or its Affiliates as
counterparties or one or more other counterparties acceptable to Buyer.
"Income" means, with respect to any Purchased Asset at any time, any
principal (including any principal prepayments) thereof and all interest,
dividends or other distributions thereon and with respect to any associated
Hedging Transaction, all proceeds thereof.
"Person" means an individual, corporation, limited liability company,
business trust, partnership, joint tenant or tenant-in-common, trust,
unincorporated organization, or other entity, or a federal, state or local
government or any agency or political subdivision thereof.
"Purchased Asset Documents" shall mean, with respect to a Purchased Asset,
the documents comprising the Purchased Asset File for such Purchased Asset.
"Purchased Asset File" shall mean the documents specified as the
"Purchased Asset File" in Section 6(b) of the Repurchase Agreement, together
with any additional documents and information required to be delivered to Buyer
or its designee (including the Custodian) pursuant to the Repurchase Agreement.
"Purchased Assets" means (i) with respect to any Transaction, the Eligible
Assets sold by Seller to Buyer in such Transaction until such Eligible Assets
are repurchased by Seller pursuant to this Agreement and (ii) with respect to
the Transactions in general, all Eligible Assets sold by Seller to Buyer and any
Additional Assets delivered by Seller to Buyer pursuant to Section 3(a) of the
Repurchase Agreement until (x) such Eligible Assets are repurchased by Seller
pursuant to the Repurchase Agreement or (y) such Additional Assets are
re-delivered to Seller by Buyer pursuant to Section 3 of the Repurchase
Agreement.
"Repurchase Agreement" means that certain Master Repurchase Agreement
dated as of May 24, 2006, between Bear, Xxxxxxx International Limited and 111
Debt Acquisition -- Two, LLC, (together such other annexes and schedules
attached thereto) as the same may be amended, restated or otherwise modified
from time to time.
"Seller" means Debtor.
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SCHEDULE 1
Participation Interest, dated _____ issued to __________ in the amount of
$__________, in that certain Mortgage Loan [(in the original principal amount of
$__________)], dated as of _______, made by ___________ to _________ under and
pursuant to that certain Loan Agreement dated as of ________ between _________
and _________ and secured by that certain property located in _________, [as
such Participation Interest was assigned by _________ to 111 Debt Acquisition --
Two, LLC pursuant to that certain Assignment and Assumption Agreement dated as
of _________].
1-B-3
