Exhibit 10.1
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MASTER REPURCHASE AGREEMENT
FOR A REPURCHASE FACILITY
IN AN AMOUNT UP TO $75,000,000
Dated as of July 29, 2005
CAPITAL TRUST, INC.,
as Seller
MORGAN STANLEY BANK,
as Buyer
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TABLE OF CONTENTS
Page
RECITALS ................................................................1
Section 1. Applicability...................................................1
Section 2. Definitions and Accounting Matters..............................1
2.01. Certain Defined Terms...........................................1
2.02. Accounting Terms and Determinations............................15
Section 3. Transactions, Note and Prepayments.............................15
3.01. Transactions...................................................15
3.02. Confirmations..................................................16
3.03. Procedures for Transactions....................................16
3.04. Margin Maintenance.............................................21
Section 4. Payments; Computations; Etc....................................22
4.01. Repurchase of Transaction Assets; Periodic Advance
Repurchase Payments............................................22
4.02. Payments.......................................................24
4.03. Computations...................................................24
4.04. [Intentionally Omitted.].......................................24
4.05. Booking of Transactions........................................24
4.06. Buyer's Funding of Eurodollar Rate Transactions................24
4.07. Income Payments................................................24
4.08. Compensation for Increased Costs...............................25
4.09. Limitation on Types of Transactions; Illegality................25
Section 5. Precautionary Collateral Security..............................26
5.01. Transaction Assets; Precautionary Security Interest............26
5.02. Further Assurances.............................................27
5.03. Changes in Locations, Name, etc................................27
5.04. Buyer's Appointment as Attorney-in-Fact........................28
5.05. Performance by Buyer of Seller's Obligations...................29
5.06. Proceeds.......................................................29
5.07. Remedies.......................................................29
5.08. Limitation on Duties Regarding Preservation of
Transaction Asset Items........................................30
5.09. Powers Coupled with an Interest................................30
5.10. Release of Security Interest...................................30
5.11. Release of Transaction Assets..................................30
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TABLE OF CONTENTS
(continued)
Page
5.12. Substitution of Eligible Transaction Assets....................30
Section 6. Conditions Precedent...........................................31
6.01. Initial Transaction............................................31
6.02. Initial and Subsequent Transactions............................31
6.03. Additional Requirements........................................33
Section 7. Representations and Warranties.................................34
7.01. Existence......................................................34
7.02. Action.........................................................34
7.03. Litigation.....................................................34
7.04. No Breach......................................................34
7.05. Approvals......................................................35
7.06. Use of Proceeds; Margin Regulations............................35
7.07. Taxes..........................................................35
7.08. Investment Company Act.........................................35
7.09. Transaction Assets; Transfer of Ownership and Precautionary
Collateral Security............................................35
7.10. Chief Executive Office.........................................36
7.11. Location of Books and Records..................................36
7.12. True and Complete Disclosure...................................36
7.13. ERISA..........................................................37
Section 8. Covenants of Seller............................................37
8.01. Financial Statements, Reports, etc.............................37
8.02. Litigation.....................................................38
8.03. Existence, etc.................................................38
8.04. Prohibition of Fundamental Changes.............................39
8.05. Aggregate Margin Maintenance Asset Value Deficiency............39
8.06. Notices........................................................39
8.07. Reports........................................................40
8.08. Transactions with Affiliates...................................40
8.09. Foreclosure or Other Remediation by Seller.....................40
8.10. Limitation on Liens............................................40
8.11. Limitation on Distributions....................................40
8.12. Maintenance of Ratio of Earnings Before Interest,
Taxes, Depreciation and Amortization to Interest and
Preferred Dividends............................................40
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TABLE OF CONTENTS
(continued)
Page
8.13. Maintenance of Ratio of Total Indebtedness to Tangible
Net Worth......................................................40
8.14. Servicer; Servicing Tape.......................................41
8.15. Remittance of Prepayments......................................41
Section 9. Events of Default..............................................41
Section 10. Remedies Upon Default..........................................43
Section 11. No Duty of Buyer...............................................43
Section 12. Miscellaneous..................................................43
12.01. Waiver.........................................................43
12.02. Notices........................................................43
12.03. Indemnification and Expenses...................................44
12.04. Amendments.....................................................45
12.05. Successors and Assigns.........................................45
12.06. Survival.......................................................45
12.07. Captions.......................................................45
12.08. Counterparts...................................................45
12.09. Agreement Constitutes Security Agreement; Governing Law........45
12.10. Submission to Jurisdiction; Waivers............................45
12.11. Waiver of Jury Trial...........................................46
12.12. Acknowledgments................................................46
12.13. Hypothecation or Pledge of Transactions........................46
12.14. Servicing......................................................46
12.15. Periodic Due Diligence Review..................................47
12.16. Intent.........................................................48
12.17. Change of Seller's State of Formation..........................48
12.18. Set-Off........................................................48
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TABLE OF CONTENTS
(continued)
SCHEDULES
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SCHEDULE 1 Filing Jurisdictions and Offices
SCHEDULE 2 Approved Appraisers
SCHEDULE 3 Approved Engineers
SCHEDULE 4 Approved Environmental Consultants
SCHEDULE 5 Organizational Structure Chart of Seller
EXHIBITS
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EXHIBIT A Form of Confirmation
EXHIBIT B Form of Custodial Agreement
EXHIBIT C [Intentionally Omitted]
EXHIBIT D-1 Form of Existing Lender's Release Letter
EXHIBIT D-2 Form of Seller's Release Letter
EXHIBIT E Form of Bailee Agreement
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MASTER REPURCHASE AGREEMENT (as the same may be amended, supplemented or
otherwise modified from time to time, this "Agreement"), dated as of July 29,
2005, between CAPITAL TRUST, INC., a Maryland corporation ("Seller"), and MORGAN
STANLEY BANK, a Utah industrial bank ("Buyer").
RECITALS
WHEREAS, Seller has requested that Buyer from time to time
purchase Transaction Assets (as defined below) owned by Seller, and Buyer is
prepared to enter into such Transactions (as defined below) upon the terms and
conditions hereof.
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
Section 1. Applicability. From time to time, the parties hereto
may enter into transactions in which Seller agrees to transfer to Buyer certain
Eligible Transaction Assets (as defined below) owned by Seller against the
transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer
to Seller such Eligible Transaction Assets at a date certain or on demand,
against the transfer of funds by Seller. Each such transaction shall be referred
to as a "Transaction" and, unless otherwise agreed in writing, shall be governed
by this Agreement.
Section 2. Definitions and Accounting Matters.
2.01. Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section or in other
provisions of this Agreement in the singular will have the same meanings when
used in the plural and vice versa):
"Affiliate" shall mean (i) with respect to Buyer, any entity
which controls, is controlled by, or is under common control with Buyer, and
(ii) with respect to Seller, any affiliate of Seller as such term is defined in
the Bankruptcy Code.
"Aggregate Margin Maintenance Asset Value" shall mean the
aggregate Margin Maintenance Asset Value of all Eligible Transaction Assets
subject to all Transactions outstanding under this Agreement.
"Aggregate Margin Maintenance Asset Value Deficiency" shall have
the meaning provided in Section 3.04 hereof.
"Agreement" shall have the meaning provided in the heading
hereto.
"Appraisal" means an appraisal of any Property prepared by a
licensed appraiser listed on Schedule 2 attached hereto, as such schedule may be
amended from time to time by Seller or Buyer upon approval by Buyer in its
reasonable discretion, in accordance with the Uniform Standards of Professional
Appraisal Practice of the Appraisal Foundation, in compliance with the
requirements of Title 11 of the Financial Institution Reform, Recovery and
Enforcement Act and utilizing customary valuation methods such as the income,
sales/market or cost approaches, as any of the same may be updated by
recertification from time to time by the appraiser performing such Appraisal.
"Asset File" shall mean, as to each Transaction Asset, those
documents set forth in a schedule to be delivered by Seller to Custodian and
which are delivered to the Custodian pursuant to the terms of this Agreement or
the Custodial Agreement including, without limitation, all documents required by
Buyer to transfer a valid ownership to Buyer and to grant and perfect a
precautionary first priority security interest in such Transaction Asset.
"Asset-Specific Transaction Balance" means a portion of the
Purchase Price of the Transaction allocable to a specific Transaction Asset.
Such portion initially consists of the sum of all Purchase Price payments with
respect to the Transaction entered into on account of such Transaction Asset,
without subtracting from such Purchase Price payments Buyer's Transaction Costs
and other costs and fees to the extent advanced to Seller hereunder. Wherever
this Agreement states that Repurchase Price prepayments on account of the
Transaction are to be allocated or applied to or against the Asset-Specific
Transaction Balance of a specific Transaction Asset, the Asset-Specific
Transaction Balance of such Transaction Asset shall be deemed reduced
accordingly by the amount of the Repurchase Price prepayments so applied.
"Asset Value" shall mean, as of any date in respect of any
Eligible Transaction Asset, the price at which such Eligible Transaction Assets
could readily be sold as determined in the sole good faith of Buyer, which price
may be determined to be zero, provided that, so long as no Event of Default
shall have occurred and be continuing, the Asset Value of the Eligible
Transaction Asset shall be reduced or increased, as the case may be, by the
aggregate net Hedge Value in respect of any Interest Rate Protection Agreements
as to which Buyer has a perfected security interest in all of Seller's right,
title and interest therein; provided, further that the Asset Value, without
giving effect to such increase, shall in no event exceed one hundred percent
(100%) of the outstanding principal balance of the related Eligible Transaction
Asset.
Buyer's determination of Asset Value, which may be made at any time and from
time to time, shall be conclusive upon the parties. Whenever an Asset Value
determination is required under this Agreement, Seller shall cooperate with
Buyer in its determination of the Asset Value of each Eligible Transaction Asset
(including, without limitation, providing all information and documentation in
the possession of Seller regarding such Eligible Transaction Asset or otherwise
required by Buyer in its sole good faith business discretion).
"B Note" shall mean the original executed subordinated promissory
note or other evidence (including a participation certificate and/or
participation agreement) of a subordinated participation interest owned by
Seller with respect to a Subordinate Mortgage Loan, Whole Loan or Mezzanine
Loan.
"Bailee" shall mean Paul, Hastings, Janofsky & Walker LLP or such
other third party as Buyer may approve.
"Bailee Agreement" shall mean the Bailee Agreement among Seller,
Buyer and Bailee in the form of Exhibit E hereto.
"Bailee's Trust Receipt and Certification" shall mean a Trust
Receipt and Certification in the form annexed to the Bailee Agreement as
Attachment 2.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform
Act of 1978, as amended from time to time.
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"Base Rate" means, as determined by Buyer on a daily basis, the
lesser of (a) the rate per annum established by JPMorgan Chase from time to time
as its "Prime" Rate or "reference" rate (which Seller acknowledges is not
necessarily such bank's lowest rate) and (b) one-half percentage point (0.5%)
(50 basis points) over the Federal Funds Rate, as determined by Buyer in its
sole discretion.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday or (ii) a day on which the New York Stock Exchange, the Federal Reserve
Bank of New York or Custodian is authorized or obligated by law or executive
order to be closed.
"Buyer" shall have the meaning provided in the heading hereto.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"CDO" shall mean a collateral debt obligation transaction or a
collateral loan obligation transaction, involving the issuance of classes of
notes pursuant to an indenture, some of which classes of notes are rated by
Fitch and Moody's or S&P or by Moody's and S&P.
"CDO-1 Asset" shall mean a Transaction Asset or an Eligible
Transaction Asset which is eligible to be placed in the Capital Trust RE CDO
2004-1.
"CDO-2 Asset" shall mean a Transaction Asset or an Eligible
Transaction Asset which is eligible to be placed in the Capital Trust RE CDO
2005-1.
"CDO Pipeline Asset" shall mean, collectively, the CDO-1 Assets
and the CDO-2 Assets.
"CMBS" shall mean, in the singular or plural as the context
requires, securities backed by mortgages and other liens on commercial real
estate and related collateral or by securities, interests or other obligations
backed directly or indirectly by such mortgages.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Collection Account" shall mean one or more accounts established
by the Servicer subject to a security interest in favor of Buyer, into which all
Collections shall be deposited by the Servicer.
"Collections" shall mean all collections and proceeds on or in
respect of any Transaction Asset, excluding collections required to be paid to
the Servicer or a Transaction Asset Obligor on the Transaction Asset.
"Confirmation" shall have the meaning provided in Section 3.02(a)
hereof.
"control" shall mean possession of the power, directly or
indirectly, to (a) vote more than fifty percent (50%) of the voting securities
having ordinary power for the election of directors of an entity, or (b) direct
or cause the direction of the management and policies of such entity, whether by
contract or otherwise.
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"Custodial Agreement" shall mean the Custodial Agreement, dated
as of the date hereof, among Seller, Custodian and Buyer, substantially in the
form of Exhibit B hereto, as the same shall be modified and supplemented and in
effect from time to time.
"Custodial Identification Certificate" shall mean the certificate
executed by Seller in connection with the sale of Eligible Transaction Assets to
Buyer in the form of Annex 3 to the Custodial Agreement.
"Custodian" shall mean Deutsche Bank National Trust Company as
custodian under the Custodial Agreement, and its successors and permitted
assigns thereunder.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Diligence Materials" means the Preliminary Due Diligence Package
together with the materials requested in the Supplemental Due Diligence List.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"Due Diligence Review" shall mean the performance by Buyer of any
or all of the reviews permitted under Section 12.15 hereof with respect to any
or all of the Transaction Asset, as desired by Buyer from time to time.
"Effective Date" shall mean the date upon which the conditions
precedent set forth in Section 6.01 shall have been satisfied.
"Eligible Transaction Assets" shall mean Subordinate Mortgage
Loans, Whole Loans, Mezzanine Loans, B Notes, Preferred Equity Interests, CMBS,
participation interests in any of the foregoing, and Other Approved Assets as to
which the representations and warranties in Section 7.09 are correct and is
eligible to be included in a "CDO" of which some classes of securities are rated
by S&P and Moody's.
"Equity Interest" shall mean any interest in a Person
constituting a share of stock or a partnership or membership interest
(including, without limitation, a Preferred Equity Interest) or other right or
interest in a Person that is not characterized as indebtedness under GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which Seller is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which Seller is a
member.
"Eurocurrency Reserve Requirements" shall mean, for any day as
applied to a Transaction, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including without limitation basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect
thereto), dealing with reserve requirements
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prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of such
Governmental Authority.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Contract Period, the rate per annum equal to the rate appearing at page 3750 of
the Telerate Screen as 30 day LIBOR on the second Business Day prior to the
commencement of any Eurodollar Contract Period, and if such rate shall not be so
quoted, the rate per annum at which Buyer is offered Dollar deposits at or about
10:00 A.M., New York City time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency exchange operations
in respect of its loans are then being conducted for delivery on such day for a
period of 30 days and in an amount comparable to the amount of the loans to be
outstanding on such day.
"Eurodollar Contract Period" means, with respect to each
Transaction Asset, a period of thirty (30) days subject to adjustment as
follows: (a) in no event shall a Eurodollar Contract Period extend beyond the
Termination Date; (b) each such period shall end on the 15th day of each month,
or, if such 15th day is not a Business Day, the Business Day immediately prior
to such day; and (c) the initial Eurodollar Contract Period with respect to each
Asset-Specific Transaction Balance shall commence on the related Purchase Date
and each succeeding Eurodollar Contract Period shall commence on the day on
which the immediately preceding Eurodollar Contract Period shall expire.
"Eurodollar Rate" shall mean, with respect to each Eurodollar
Contract Period pertaining to a Transaction, a rate per annum determined by
Buyer in its sole discretion in accordance with the following formula (rounded
upwards to the nearest 1/100th of one percent), which rate as determined by
Buyer shall be conclusive absent manifest error by Buyer:
Eurodollar Base Rate
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1.00 minus Eurocurrency Reserve
Requirements
"Eurodollar Rate Spread" means as to each Purchase Rate the
applicable Eurodollar Rate Spread set forth below opposite such Purchase Rate
for the applicable Transaction Asset Type, or such other Eurodollar Rate Spread
as may be mutually agreed to by Seller and Buyer:
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Eurodollar Rate Spread
(expressed as percentage points per annum and
Advance Rate as basis points)
- ------------------------- ----------------------- -----------------------------------------------
CDO Pipeline Asset [****] [****] [****]
- ------------------------- ----------------------- ----------------------- -----------------------
CDO-1 Asset [****] [****] [****]
- ------------------------- ----------------------- ----------------------- -----------------------
CDO-2 Asset [****] [****] [****]
- ------------------------- ----------------------- ----------------------- -----------------------
In the event that any CDO Pipeline Asset is not included in a CDO
within 12 months from the Purchase Date of the applicable CDO Pipeline Asset,
the Advance Rate and Eurodollar Rate Spread shall, upon the expiration of such
12 month period, be automatically modified to the corresponding Advance Rate and
Eurodollar Rate set forth below:
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****Material omitted pursuant to a request for confidential treatment under Rule
24b-2. Material filed separately with the Securities Exchange Commission.
-5-
- --------------------------------------------- ------------- ----------------------------
Eurodollar Rate Spread
(expressed as percentage
Purchase points per annum and as
Transaction Asset Type Rate basis points)
- ---------------------- ---- -------------
- --------------------------------------------- ------------- ----------------------------
Whole Loans [****] [****] [****]
- --------------------------------------------- ------------- -------------- -------------
B Notes, Preferred Equity Interests and [****] [****] [****]
Mezzanine Loans and participation interests
in any of the foregoing*
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(50% - 55% LTV maximum) [****] [****] [****]
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(56% - 60% LTV maximum) [****] [****] [****]
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(61% - 70% LTV maximum) [****] [****] [****]
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(71% - 75% LTV maximum) [****] [****] [****]
- --------------------------------------------- ------------- -------------- -------------
(76% - 80% LTV maximum) [****] [****] [****]
------------- -------------- -------------
(81% - 85% LTV maximum) [****] [****] [****]
------------- -------------- -------------
(86% - 90% LTV maximum) [****] [****] [****]
- --------------------------------------------- ------------- -------------- -------------
CMBS [****] [****] [****]
Rating: [****] [****] [****]
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BBB [****] [****] [****]
------------- -------------- -------------
BBB- [****] [****] [****]
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BB+ [****] [****] [****]
------------- -------------- -------------
BB [****] [****] [****]
------------- -------------- -------------
BB- [****] [****] [****]
- --------------------------------------------- ------------- -------------- -------------
B+ [****] [****] [****]
------------- -------------- -------------
B [****] [****] [****]
------------- -------------- -------------
B- [****] [****] [****]
------------- -------------- -------------
Unrated [****] [****] [****]
- --------------------------------------------- ------------- -------------- -------------
* B Notes, Preferred Equity Interests and Mezzanine Loans and participations
in any of the foregoing, in each case relating to hotel and other
hospitality properties shall have a maximum LTV as determined by the Buyer
in its sole discretion.
"Eurodollar Substitute Rate" means a rate of interest equal to
(a) the Base Rate minus (b) one percent (1%) per annum (100 basis points).
"Event of Default" shall have the meaning provided in Section 9
hereof.
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by Buyer from three
federal funds brokers of recognized standing selected by Buyer.
"GAAP" shall mean tax basis accounting accrual method with
amortizing expense modifications according to generally accepted accounting
principles consistently applied. No other modifications to the cash basis
accounting methodology shall be permitted except with the prior written approval
of Buyer in its sole and absolute discretion.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over any obligor
on any underlying loan, Seller, any of its Subsidiaries or any of their
properties.
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****Material omitted pursuant to a request for confidential treatment under Rule
24b-2. Material filed separately with the Securities Exchange Commission.
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"Guarantee" shall mean, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay or otherwise);
provided that the term "Guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii) obligations to
make servicing advances for delinquent taxes and insurance or other obligations
in respect of an Underlying Property, to the extent required by Buyer. The
amount of any Guarantee of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith. The terms "Guarantee" and "Guaranteed" used as verbs shall have
correlative meanings.
"Income" shall mean, with respect to any Transaction Asset at any
time, any principal thereof and all interest, dividends or other distributions
thereon.
"Indebtedness" shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within ninety (90) days of the date the respective
goods are delivered or the respective services are rendered; (c) Indebtedness of
others secured by a Lien on the Property of such Person, whether or not the
respective Indebtedness so secured has been assumed by such Person; (d)
obligations (contingent or otherwise) of such Person in respect of letters of
credit or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of such
Person; (f) obligations of such Person under repurchase agreements or like
arrangements; (g) Indebtedness of others Guaranteed by such Person; (h) all
obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; and (i) Indebtedness of general
partnerships of which such Person is a general partner; provided that
indebtedness that is non-recourse to such Person shall not be included in
Indebtedness.
"Installment Date" shall have the meaning set forth in Section
4.01(a) hereof.
"Interest Rate Protection Agreement" shall mean, with respect to
any or all of the Subordinate Mortgage Loans, CMBS, Whole Loans and Mezzanine
Loans, any short sale of U.S. Treasury Securities, or futures contract, or
mortgage related security, or Eurodollar futures contract, or options related
contract, or 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 any obligor on any underlying loan or Seller
(specifically with respect to such Transaction Asset) and acceptable to Buyer.
"Late Fee" shall have the meaning set forth in Section 4.01(b)
hereof.
"Late Fee Rate" shall mean, in respect of any Repurchase Price
amount of any Transaction or any other amount under this Agreement, that is not
paid when due to Buyer (whether at stated maturity, by acceleration, by optional
or mandatory prepayment or otherwise), a rate per annum during the period from
and including the due date to but excluding the date on which such amount is
paid in full equal to 4% per annum plus the Base Rate.
-7-
"Lien" shall mean any mortgage, lien, pledge, charge,
encumbrance, security interest or adverse claim.
"Loan Asset" shall mean, as applicable, a Subordinate Mortgage
Loan, Whole Loan or a Mezzanine Loan.
"Loan-to-Value Ratio" or "LTV" shall mean, as to any Eligible
Transaction Asset or Transaction Asset, as applicable, the ratio that (x) the
aggregate (or individual) outstanding principal balances of any or all senior
and pari passu loans and preferred equity interests secured in whole or in part
by real property or direct or indirect beneficial interests therein relating to
such Eligible Transaction Asset bears to (y) the value, determined by an
Appraisal reasonably acceptable to Buyer, of the real property (together with
all applicable appurtenant interests and subject to all applicable liens,
encumbrances and tenancies), or direct or indirect beneficial interests which
form the basis of such Eligible Transaction Asset.
"Margin Maintenance Asset Value" shall mean, with respect to
Eligible Transaction Assets, the Asset Value of such Eligible Transaction Assets
multiplied by the applicable Purchase Rate set forth in the definition of
"Eurodollar Rate Spread" set forth herein or as otherwise defined or limited
herein; provided that Margin Maintenance Asset Value may be deemed to be zero
(or such greater amount as determined by Buyer in its sole discretion) with
respect to each Eligible Transaction Asset (1) in respect of which there is a
breach of a representation and warranty by a Transaction Asset Obligor, (2) in
respect of which there is a delinquency in the payment of principal and/or
interest which continues for a period in excess of thirty (30) days (such period
to include any applicable grace periods) unless otherwise approved by Buyer, (3)
which has been released from the possession of the Custodian under the Custodial
Agreement for a period in excess of that permitted under the Custodial
Agreement, or (4) which exceeds the limitations on Margin Maintenance Asset
Value set forth in the definition thereof.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the Property, business, operations, financial condition or prospects of
Seller taken as a whole, (b) the ability of Seller to perform its obligations
under any of the Transaction Documents to which it is a party, (c) the validity
or enforceability of any of the Transaction Documents, (d) the rights and
remedies of Buyer under any of the Transaction Documents, (e) the timely payment
of the principal of or interest on the Transactions or other amounts payable in
connection therewith or (f) the aggregate value of the Transaction Asset.
"Maximum Purchase Amount" shall mean Seventy Five Million Dollars
($75,000,000); provided that if Seller elects to reduce the Maximum Purchase
Amount hereunder, any subsequent increase in the Maximum Purchase Amount
following such reduction shall be within the sole discretion of the Buyer.
"Maximum Purchase Rate" shall mean, as to Eligible Transaction
Asset, the maximum Purchase Rate that shall be determined by Buyer in Buyer's
sole and absolute discretion; provided that, with respect to the specific
categories of Eligible Transaction Assets referred to in the definition of
Eurodollar Rate Spread, the Maximum Purchase Rate shall not exceed the
respective Purchase Rates set forth in such definition.
"Mezzanine Loan" shall mean a loan secured by a pledge of Equity
Interests in one or more entities holding direct or indirect beneficial
interests in an entity owning (or having a ground lease interest in) a
commercial or multi-family residential property, preferred equity interests or a
second mortgage.
-8-
"Monthly Statement" shall mean, for each calendar month during
which this Agreement shall be in effect, Seller's reconciliation in arrears of
beginning balances, interest, principal, paid-to-date and ending balances for
each Transaction Asset, together with (a) a written report of any developments
or events that are reasonably likely to have a Material Adverse Effect, (b) a
written report of any and all written modifications to any documents underlying
any Transaction Asset and (c) such other internally prepared reports as mutually
agreed by Seller and Buyer which reconciliation, Officer's Certificate and
reports shall be delivered to Buyer for each calendar month during the term of
this Agreement within ten (10) days following the end of each such calendar
month.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument securing a Mortgage Note, which creates a valid lien on the fee or
leasehold interest in real property securing the Mortgage Note and the
assignment of rents and leases related thereto.
"Mortgage Note" shall mean the original executed promissory note
or other evidence of the indebtedness of a mortgagor with respect to a
Subordinate Mortgage Loan or Whole Loan, as applicable.
"Mortgaged Property" shall mean the real property (including all
improvements, buildings, fixtures, building equipment and personal property
thereon and all additions, alterations and replacements made at any time with
respect to the foregoing) and all other Transaction Asset securing repayment of
the debt evidenced by a Mortgage Note.
"MS & Co." shall mean Morgan Stanley & Co. Incorporated, a
registered broker-dealer.
"MS Indebtedness" shall mean all Indebtedness from time to time
owed by Seller to Buyer or any Affiliate of Buyer including, without limitation,
under this Agreement or any repurchase, loan or other agreement between Buyer,
or an Affiliate of Buyer, and Seller.
"Multiemployer Plan" shall mean a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been or are required
to be made by Seller or any ERISA Affiliate and that is covered by Title IV of
ERISA.
"Officer's Certificate" shall mean the certificate of a
Responsible Officer as set forth in Section 6.02(b) hereof.
"Other Approved Assets" shall mean such Transaction Assets as
approved on a case-by-case basis by Buyer in its sole discretion.
"Periodic Advance Repurchase Payments" shall have the meaning set
forth in Section 4.01(b) hereof.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established
or maintained by Seller or any ERISA Affiliate during the five-year period ended
immediately before 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 before
the date of this Agreement, been required to make contributions and that is
covered Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code,
other than a Multiemployer Plan.
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"Preferred Equity Interest" shall mean any interest in a Person
constituting a preferred share of stock or a preferred partnership or membership
interest or other preferred right or interest in a Person that is not
characterized as indebtedness under GAAP.
"Preliminary Due Diligence Package" means with respect to any
proposed Transaction Asset, the following due diligence information relating to
such proposed Transaction Asset to be provided by Seller to Buyer pursuant to
this Agreement:
(i) a summary memorandum outlining the proposed transaction,
including potential transaction benefits and all material
underwriting risks, all Underwriting Issues and all other
characteristics of the proposed transaction that a prudent
lender would consider material;
(ii) current rent roll, if applicable;
(iii) cash flow pro-forma, plus historical information, if
available;
(iv) description of the property (real property, pledged loan
or other Transaction Asset);
(v) indicative debt service coverage ratios;
(vi) indicative Loan-to-Value Ratio;
(vii) Seller's or any Affiliate's relationship with its
potential underlying borrower or any affiliate;
(viii) if applicable, Phase I environmental report (including
asbestos and lead paint report);
(ix) if applicable, engineering and structural reports;
(x) third party reports, to the extent available and
applicable, including:
(a) current Appraisal;
(b) Phase II or other follow-up environmental report if
recommended in Phase I;
(c) seismic reports; and
(d) operations and maintenance plan with respect to
asbestos-containing materials;
(xi) in the case of a B Note, Mezzanine Loan or Preferred
Equity Interest, all information which would otherwise be
provided for the underlying Loan Asset, and in addition,
all documentation evidencing or otherwise relating to the
B Note, Mezzanine Loan or Preferred Equity Interest,
including, without limitation, intercreditor agreements,
participation agreements, and shareholder agreements, as
applicable;
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(xii) in the case of CMBS, (a) a copy of the applicable pooling
and servicing agreement, trust agreement, participation
agreement or similar document governing the issuance and
administration of the CMBS; (b) a copy of any new issue
asset summary books; (c) copy of the applicable prospectus
or offering memorandum; (d) to the extent that the CMBS is
certificated, an original of the relevant certificate duly
endorsed in blank to Buyer; (e) to the extent that the
CMBS is not certificated, all documents requested by Buyer
to confirm that the CMBS is being held in a security
account under the control of Buyer, or such other evidence
of confirmation of the sale to Buyer as Buyer shall
require; (f) a copy of the documents specified above
relating to, directly or indirectly, the subject
Transaction Asset, to the extent obtained by the
originating lender and available to Seller; and (g) a copy
of any other agreement or instrument evidencing or
otherwise governing the CMBS;
(xiii) analyses and reports with respect to such other matters
concerning the Transaction Asset as Buyer may in its sole
discretion require;
(xiv) documents comprising such Transaction Asset, or current
drafts thereof, including, without limitation, underlying
debt and security documents, intercreditor agreements,
participation agreements, shareholder agreements,
guaranties, underlying borrower's organizational
documents, warrant agreements, and loan and collateral
pledge agreements, as applicable; and
(xv) a list that specifically and expressly identifies any
Transaction Asset Documents that relate to such
Transaction Asset but are not in Seller's possession.
"Price Differential" shall mean, with respect to any Transaction
hereunder as of any date, the aggregate amount obtained by daily application of
the applicable Pricing Rate in effect from time to time for such Transaction to
the Purchase Price for such Transaction on each day 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, including
any amounts paid in respect of such Price Differential pursuant to Section 3.04
or any other partial repayments).
"Pricing Rate" shall have the meaning provided in Section 4.01(b)
hereof.
"Property" shall mean any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Date" shall mean, with respect to an Eligible
Transaction Asset, the date on which such Eligible Transaction Asset is
transferred by Seller to Buyer, or its designee.
"Purchase Documents" means this Agreement, the related
Confirmation and all other agreements, instruments, certificates and documents
delivered by or on behalf of Seller to evidence the Transaction(s) or otherwise
in satisfaction of the requirements of this Agreement, or the other documents
listed above as same may be amended or modified from time to time.
"Purchase Period" shall mean the period commencing on the date
hereof and expiring on, and excluding, July 29, 2007, as the same may be
extended pursuant to Section 4.01(a) hereof.
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"Purchase Price" means the price at which Transaction Assets are
transferred by Seller to Buyer, or its designee, as specified in the related
Confirmation.
"Purchase Rate" means, for any Eligible Transaction Asset, the
ratio, expressed as a percentage, set forth opposite the collateral type in the
chart provided in the definition of Eurodollar Rate Spread or as otherwise
defined or limited herein.
"Regulations T, U and X" shall mean Regulations T, U and X of the
Board of Governors of the Federal Reserve System (or any successor), as the same
may be modified and supplemented and in effect from time to time.
"Repurchase Date" shall mean, with respect to a Transaction, the
date on which Seller is to repurchase the related Transaction Assets from Buyer,
which date, unless otherwise specified in the related Confirmation, shall be the
Termination Date.
"Repurchase Obligations" shall have the meaning provided in
Section 5.01(a) hereof.
"Repurchase Period" shall mean, if the Termination Date shall not
be extended in accordance with the terms hereof, the period from and after July
29, 2007 through and including July 29, 2008; provided, however, that if the
Purchase Period is extended in accordance with the terms hereof, "Repurchase
Period" shall mean the period commencing on the day immediately following the
day on of the expiration of the Purchase Period and expiring on the first
anniversary of the date of its commencement.
"Repurchase Price" shall mean the price at which a Transaction
Asset is to be transferred from Buyer, or its designee, to Seller upon
termination of the related Transaction, which will be determined in each case
(including Transactions terminable upon demand) as the sum of (i) the Purchase
Price and (ii) the Price Differential, in each case as of the date of such
determination, decreased by all cash, Income and Periodic Advance Repurchase
Payments (including Late Fees, if any) actually received by Buyer.
"Responsible Officer" shall mean, as to any Person, the chief
executive officer, chairman, the chief operating officer and the chief financial
officer of such Person.
"Seller" shall have the meanings provided in the heading hereof.
"Servicer" shall have the meaning provided in Section 12.14(c)
hereof.
"Servicing Agreement" shall have the meaning provided in Section
12.14(c) hereof.
"Servicing Records" shall have the meaning provided in Section
12.14(b) hereof.
"Subordinate Mortgage Loan" shall mean a performing mortgage loan
secured by a second lien position and encumbering one or more commercial or
multi-family residential properties which Custodian has been instructed to hold
for Buyer pursuant to the Custodial Agreement, and which Subordinate Mortgage
Loan includes, without limitation (i) the indebtedness evidenced by a Mortgage
Note and secured by a related Mortgage, and (ii) all right, title and interest
of Seller in and to the Mortgaged Property covered by such Mortgage.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms
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thereof ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions of such corporation, partnership or
other entity (irrespective of whether or not at the time securities or other
ownership interests of any other class or classes of such corporation,
partnership or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person or one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person. Notwithstanding the
foregoing, solely for purposes of Section 9 hereof, a Subsidiary of Seller shall
only include a direct wholly-owned Subsidiary of Seller.
"Supplemental Due Diligence List" means, with respect to any
proposed Transaction Asset, information or deliveries concerning such proposed
Transaction Asset, such items that Buyer shall request in addition to the
Preliminary Due Diligence Package including, without limitation, a credit
approval memorandum representing the final terms of the underlying transaction,
a final LTV ratio computation and a final debt service coverage ratio
computation for such proposed Transaction Asset.
"Tangible Net Worth" shall mean, as of a particular date,
(a) all amounts which would be included under capital of Seller
and its consolidated Subsidiaries on a balance sheet of Seller and its
consolidated Subsidiaries at such date, determined in accordance with
GAAP, less
(b) intangible assets of Seller and its consolidated
Subsidiaries.
"Termination Date" shall mean July 29, 2008 or such earlier date
on which this Agreement shall terminate in accordance with the provisions hereof
or by operation of law; provided, however, that in the event that (i) this
Agreement shall not have been earlier terminated and (ii) no Default shall have
occurred and be continuing on July 29, 2008, the Termination Date may be
extended pursuant to Section 4.01(a) of this Agreement.
"Title Insurance Policy" shall mean, with respect to any real
property underlying a Loan Asset, a mortgagee's title insurance policy or
policies issued to Buyer and Buyer's successors and assigns (or, subject to the
written approval of Buyer, an endorsement to Seller's title insurance policy
insuring the assignment to Buyer of the applicable mortgage) by one or more
title companies reasonably satisfactory to Buyer, which policy or policies shall
be in form and substance reasonably acceptable to Buyer, with such endorsements
as Buyer shall reasonably require and, with respect to any Loan Asset, a
mortgagee's title insurance policy or policies issued to Buyer and Buyer's
successors and/or assigns by one or more title companies reasonably satisfactory
to Buyer reflecting Buyer's interest in such Loan Asset.
"Total Indebtedness" shall mean, for any period, the aggregate
Indebtedness of Seller and its consolidated Subsidiaries during such period less
the amount of any nonspecific balance sheet reserves maintained in accordance
with GAAP.
"Transaction" shall have the meaning provided in Section 1
hereof.
"Transaction Asset" shall mean any Eligible Transaction Asset
which has been sold by Seller to Buyer in a Transaction hereunder, but which has
not been repurchased by Seller. The term "Transaction Asset" shall include any
additional asset delivered pursuant to Section 3.04 hereof.
"Transaction Asset Documents" shall mean with respect to any
Transaction Asset, the documents comprising the Asset File for such Transaction
Asset.
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"Transaction Asset Items" shall have the meaning provided in
Section 5.01(b) hereof.
"Transaction Asset Note" shall mean the original executed
Mortgage Note in respect of a Subordinate Mortgage Loan or Whole Loan or such
other promissory note or other evidence of the indebtedness of a Transaction
Asset Obligor with respect to a Mezzanine Loan or B Note.
"Transaction Asset Obligor" shall mean any obligor under any
Eligible Transaction Asset or Transaction Asset, as applicable, any issuer of
any security comprising any portion of the Transaction Asset and any entity in
which an Equity Interest comprises any portion of such Eligible Transaction
Asset or Transaction Asset.
"Transaction Asset Schedule" shall mean a list of Eligible
Transaction Assets to be sold in a Transaction hereunder, attached to a
Custodial Identification Certificate setting forth, as to each Eligible
Transaction Asset, the applicable information for such Transaction Asset Type
specified on Annex 1 to the Custodial Agreement.
"Transaction Asset Schedule and Exception Report" shall mean the
Transaction Asset schedule and exception report prepared by Custodian pursuant
to the Custodial Agreement.
"Transaction Asset Type" shall mean a Subordinate Mortgage Loan,
Whole Loan, Mezzanine Loan, B Note, Preferred Equity Interest, CMBS,
participation interest in any of the foregoing and Other Approved Asset.
"Transaction Costs" shall mean, with respect to any Transaction,
all actual out-of-pocket reasonable costs and expenses paid or incurred by Buyer
and payable by Seller relating to the making of such Transaction (including
legal fees and other fees described in Section 12.03 hereof). Transaction Costs
shall not include costs incurred by Buyer for overhead and general
administrative expenses.
"Transaction Documents" shall mean, collectively, this Agreement,
the related Confirmations, the Servicing Agreement and the Custodial Agreement.
"Trust Receipt" shall mean the receipt delivered by Custodian
pursuant to the provisions of Section 4 of the Custodial Agreement acknowledging
receipt of a Asset File in connection with a Transaction hereunder in the form
of Annex 2 to the Custodial Agreement.
"Underlying Property" means any Property owned by a direct or
indirect issuer of (a) Equity Interests that have been pledged to Seller as
collateral for a Mezzanine Loan or (b) a Preferred Equity Interest.
"Underwriting Issues" means with respect to any Transaction Asset
as to which Seller intends to request a Transaction, all information that has
come to Seller's attention, based on the making of reasonable inquiries and the
exercise of reasonable care and diligence under the circumstances, which 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 Transaction Asset
Document(s)), to a reasonable institutional lender in determining whether to
originate or acquire the Transaction Asset in question.
"Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect on the date hereof in the State of New York; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the ownership interest or security interest in
any Transaction Asset is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than New York, "Uniform Commercial Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
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"Whole Loan" shall mean a mortgage loan secured by a first
mortgage lien on the Mortgaged Property encumbered thereby and satisfying in all
respects (other than lien priority) the definition of a Subordinate Mortgage
Loan as defined herein.
2.02. Accounting Terms and Determinations. Except as otherwise expressly
provided herein, all accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to financial matters
required to be delivered to Buyer hereunder shall be prepared, in accordance
with GAAP.
Section 3. Transactions, Note and Prepayments.
3.01. Transactions.
(a) Buyer agrees to enter from time to time upon Seller's
request, on a committed basis and on the terms and conditions of this Agreement,
into Transactions with Seller, to be funded in Dollars, during the Purchase
Period (but not during the Repurchase Period), in an aggregate Purchase Price at
any one time outstanding up to but not exceeding the Maximum Purchase Amount as
in effect from time to time. Nothing in this Agreement shall be interpreted as a
commitment by Buyer to enter into any Transaction, but rather sets forth the
procedures to be used in connection with periodic requests for Transactions and
the conditions to the entering into any Transactions. Seller hereby acknowledges
that Buyer is under no obligation to agree to enter into, or to enter into, any
Transaction pursuant to this Agreement.
(b) Subject to the terms and conditions of this Agreement, during
the term of this Agreement, Seller may sell (in whole or in part), repurchase
(in whole or in part) and resell (in whole or in part) Transaction Assets
hereunder.
3.02. Confirmations
(a) At the time specified in Section 3.03(d), Seller shall
execute and deliver to Buyer a confirmation of the related Transaction,
substantially in the form attached as Exhibit A hereto (a "Confirmation"). The
Confirmation shall specify any additional terms or conditions of the Transaction
agreed to by Buyer and not inconsistent with this Agreement. Each Confirmation,
together with this Agreement, shall constitute conclusive evidence of the terms
agreed between Buyer and Seller with respect to the Transaction to which the
Confirmation relates, and Buyer's payment of the Purchase Price and Seller's
acceptance of the Purchase Price shall constitute the parties' agreement to the
terms of such Confirmation. It is the intention of the parties that each
Confirmation shall not be separate from this Agreement but shall be made a part
of this Agreement. In the event that any terms or conditions of any Confirmation
are inconsistent, or in direct conflict, with this Agreement, the terms of this
Agreement shall prevail; provided that the Confirmation and this Agreement shall
be construed to be cumulative to the extent possible.
(b) The date, Repurchase Price and Purchase Rate of each
Transaction entered into by Buyer and Seller, and each payment made on account
of the Repurchase Price thereof, shall be recorded by Buyer from time to time on
its internal books and records (whether electronic or otherwise). Failure of
Buyer to make such notation shall not affect the obligations of Seller to make a
payment when due of any amount owing hereunder in respect of the Transactions.
Seller agrees that Buyer's books and records showing the MS Indebtedness
pursuant to this Agreement and the other Transaction Documents shall be
admissible in any action or proceeding arising therefrom, and shall constitute
rebuttably presumptive proof thereof, irrespective of whether any MS
Indebtedness is also evidenced by a Confirmation or other instrument. Buyer will
provide to Seller a monthly statement of Transactions, payments, and other
transactions pursuant to this Agreement. Failure by Buyer to provide such
monthly statement shall not
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affect the obligations of Seller to make a payment when due of any amount owing
hereunder in respect of the Transactions. Such statement shall be deemed
correct, accurate, and binding on Seller absent manifest error.
3.03. Procedures for Transactions.
(a) Preliminary Approval of Proposed Transaction Asset.
(i) Seller may, from time to time, submit to Buyer
a Preliminary Due Diligence Package for Buyer's review and
approval in order to request a Transaction hereunder with respect
to any proposed Transaction Asset that Seller proposes to sell to
Buyer and to be included in the Aggregate Margin Maintenance
Asset Value in connection with such Transaction.
(ii) Upon Buyer's receipt of a complete
Preliminary Due Diligence Package, Buyer within two (2) Business
Days shall have the right to request, in Buyer's sole and
absolute discretion, additional diligence materials and
deliveries that Buyer shall specify on a Supplemental Due
Diligence List. Upon Buyer's receipt of all of the Diligence
Materials or Buyer's waiver thereof, Buyer, within five (5)
Business Days, shall either (A) notify Seller of the Maximum
Purchase Rate (which may be less than the Purchase Rate set forth
in the definition of Eurodollar Rate Spread) and the Asset Value
for the proposed Transaction Asset or (B) deny, in Buyer's sole
and absolute discretion, Seller's request for a Transaction.
Buyer's failure to respond to Seller within five (5) Business
Days following receipt of all Diligence Materials or Buyer's
written waiver thereof shall be deemed to be a denial of Seller's
request for a Transaction, unless Buyer and Seller have agreed
otherwise in writing. Nothing in this Section 3.03(a)(ii) or
elsewhere in this Agreement shall, or be deemed to, prohibit
Buyer from determining in its sole discretion the adequacy,
correctness and appropriateness of, or from disapproving, any and
all financial and other underwriting data required to be supplied
by Seller under this Agreement.
(b) Final Approval of Proposed Transaction Asset. Upon Buyer's
notification to Seller of the Maximum Purchase Rate and the Asset Value for any
proposed Transaction Asset, Seller shall, if Seller desires to obtain one or
more Purchase Price payments with respect to such proposed Transaction Asset,
satisfy the conditions (unless waived in writing by Buyer) set forth below (in
addition to satisfying the conditions precedent to obtaining each Purchase Price
payment, as set forth in Section 6 of this Agreement) as conditions precedent to
Buyer's approval of such proposed Transaction Asset as an Eligible Transaction
Asset, all in a manner, and pursuant to documentation, satisfactory in all
respects to Buyer and its counsel:
(i) Environmental and Engineering. If applicable,
Buyer shall have received an Environmental Report and an
Engineering Report, each in form and substance satisfactory to
Buyer, by an Engineer and Environmental Consultant listed on
Schedules 3 and 4 attached hereto, respectively, as each such
schedule may be amended from time to time by Buyer in its
reasonable discretion.
(ii) Appraisal. If applicable, Buyer shall have
received an Appraisal.
(iii) Insurance. With respect to a Whole Loan,
Subordinate Mortgage Loan or B Note encumbering real property,
Buyer shall have received (to the extent available to Seller)
certificates or other evidence of insurance demonstrating
insurance coverage in respect of such real property of types, in
amounts, with insurers and otherwise in compliance with the
terms, provisions and conditions set forth in the Transaction
Asset Documents or the Purchase
-16-
Documents. Such certificates or other evidence shall indicate
that Seller will be named as an additional insured as its
interest may appear (or shall run to the original lender's
successors and assigns) and shall contain a loss payee
endorsement in favor of such additional insured with respect to
the property policies required to be maintained under the
Transaction Asset Documents.
(iv) Survey. With respect to a Loan Asset, a B
Note, or a Preferred Equity Interest, to the extent obtained by
Seller from the Transaction Asset Obligor with respect to any
Transaction Asset at the origination of the underlying loan or
equity interest, as the case may be, relating thereto, Buyer
shall have received with respect to proposed Transaction Asset
that is real property, a current survey of such real property in
a form satisfactory to Buyer.
(v) 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 reports and updates, as applicable, conducted
by search firms and/or title companies acceptable to Buyer with
respect to the Transaction Asset, Seller and the related
underlying obligor, such searches to be conducted in each
location Buyer shall reasonably designate.
(vi) Title Insurance Policy.
(A) With respect to a Whole Loan or
Subordinate Mortgage Loan, Seller shall have
delivered to Buyer (1) an unconditional commitment
to issue title insurance policies in favor of
Buyer and Buyer's successors and/or assigns with
respect to Seller's interest in the related real
property with an amount of insurance that shall be
not less than the related Asset-Specific
Transaction Balance (taking into account the
proposed Purchase Price) or such other amount as
Buyer shall require in its sole discretion or (2)
an endorsement or confirmatory letter from the
existing title company to the existing Title
Insurance Policy in favor of Buyer and Buyer's
successors and/or assigns that amends the existing
title insurance policy by stating that the amount
of the insurance is no less than the related
Asset-Specific Transaction Balance (taking into
account the proposed Purchase Price) or such other
amount of title coverage as Buyer shall require in
its sole discretion.
(B) With respect to a Mezzanine
Loan, a B Note, a Preferred Equity Interest, CMBS
or Other Approved Asset, Seller shall have
delivered to Buyer such evidence as Buyer on a
case-by-case basis, in its sole discretion, shall
require of the ownership of the real property
underlying such Transaction Asset, including,
without limitation, a copy of a title insurance
policy dated a date, and by a title insurer, in
each case acceptable to Buyer in its sole
discretion, showing that title is vested in the
related Transaction Asset Obligor or in an entity
in whom such Transaction Asset Obligor holds a
beneficial interest.
(vii) Purchase Documents. Seller shall have
executed and delivered to Buyer, in form and substance
satisfactory to Buyer and its counsel, all Purchase Documents
conveying a valid ownership interest in the proposed Eligible
Transaction Asset(s) to Buyer and perfecting a precautionary
first priority security interest of Buyer in the proposed
Eligible Transaction Asset(s) (and, in each case, in any Interest
Rate Protection Agreements held by Seller with respect thereto)
which shall be subject to no Liens except as expressly permitted
by Buyer. Each of the Purchase Documents shall contain such
representations and warranties concerning the proposed
Transaction Asset and such other terms as shall be reasonably
satisfactory to Buyer.
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(viii) Opinions of Counsel. Buyer shall have
received from counsel to Seller its legal opinion as to
enforceability of this Agreement and all documents executed and
delivered hereunder in connection with such Transaction, (at
Buyer's option) an opinion from local counsel where the
applicable property is located and an opinion to, or for the
benefit of, Seller and its successors and assigns from counsel to
the underlying obligor on the underlying loan transaction, as
applicable, as to enforceability of the loan documents governing
such transaction and such other matters as Buyer shall require
(including, without limitation, opinions as to due formation,
authority, choice of law and perfection of security interests).
Such legal opinions shall be addressed to, or run to the benefit
of, Buyer and its successors and assigns, and in a form and
substance reasonably satisfactory to Buyer.
(ix) Additional Real Estate Matters. To the extent
obtained by Seller from the Transaction Asset Obligor relating to
any Transaction Asset at the origination of the underlying loan
or equity interest relating thereto, Seller shall have delivered
to Buyer such other real estate related certificates and
documentation as may have been requested by Buyer, such as (i)
certificates of occupancy and letters certifying that the
property is in compliance with all applicable zoning laws, each
issued by the appropriate Governmental Authority and (ii)
abstracts of all Leases in effect at the real property relating
to such Transaction Asset.
(x) B Notes, Mezzanine Loans and Preferred Equity
Interests. In the case of a B Note, Mezzanine Loan or Preferred
Equity Interest, Buyer shall have received all documentation
specified herein as if the underlying mortgage loan were the
direct Transaction Asset and, in addition, all documentation
evidencing or otherwise relating to the B Note, the Mezzanine
Loan or the Preferred Equity Interest, as applicable.
(xi) CMBS. In the case of CMBS, Buyer shall have
received (a) a copy of the applicable pooling and servicing
agreement, trust agreement, participation agreement or similar
document governing the issuance and administration of the CMBS;
(b) a copy of any new issue asset summary books; (c) a copy of
the applicable prospectus or offering memorandum; (d) to the
extent that the CMBS is certificated, an original of the relevant
certificate duly endorsed in blank to Buyer; (e) to the extent
that the CMBS is not certificated, all documents requested by
Buyer to confirm that the CMBS is being held in a security
account under the control of Buyer, or such other evidence of
confirmation of the sale to Buyer as Buyer shall require; (f) a
copy of the documents specified above relating to, directly or
indirectly, the subject Transaction Asset, to the extent obtained
by the originating lender and available to Seller; and (g) a copy
of any other agreement or instrument evidencing or otherwise
governing the CMBS.
(xii) Other Documents. Buyer shall have received
such other documents as Buyer or its counsel shall request with
respect to each or any Transaction Asset.
(c) Transaction Asset Approval or Disapproval. Within two (2)
Business Days following the date upon which Seller has tendered performance of
the conditions enumerated in Sections 3.03(b)(i) through (xii), or has delivered
such items or documents fully executed, if applicable, in final form, Buyer
shall either (i) if the Transaction Asset Documents or the Purchase Documents
with respect to the proposed Transaction Asset are not reasonably satisfactory
in form and substance to Buyer, notify Seller that Buyer has not approved the
proposed Transaction Asset as Transaction Asset or (ii) notify Seller and Bailee
that Buyer has approved the proposed Transaction Asset as Transaction Asset and
such notice shall identify the documents to be delivered to Custodian in
connection with such proposed Transaction Asset pursuant to Section 3.03 and
Section 6 of this Agreement and shall identify the party whom Buyer shall
designate to record and/or file, as the case may be, any security documents
necessary to convey a valid ownership interest to Buyer and to perfect Buyer's
precautionary security
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interest in the Eligible Transaction Assets. The terms of delivery and filing
and/or recordation of such security documents shall be set forth in a separate
agreement between Buyer and its designee. Buyer's failure to respond to Seller
within two (2) Business Days shall be deemed to be a denial of Seller's request
that Buyer approve the proposed Transaction Asset, unless Buyer and Seller have
agreed otherwise in writing.
(d) Procedure for Purchase of Eligible Transaction Assets. Once
Buyer has approved the Transaction Asset in accordance with Section 3.03(c)
above, Seller may request a Transaction hereunder, on any Business Day during
the Purchase Period, by delivering to Buyer, with a copy to Custodian, a
Confirmation, which Confirmation must be received by Buyer prior to 12:00 p.m.,
New York City time, one (1) Business Day prior to the requested Purchase Date.
Such Confirmation shall attach an Officer's Certificate signed by a Responsible
Officer of Seller as required by Section 6.02(b) hereof. Contemporaneously with
the delivery of the Confirmation, Seller shall deliver to Buyer with a copy to
Custodian, a Custodial Identification Certificate along with the accompanying
Transaction Asset Schedule with respect to all proposed Eligible Transaction
Assets to be sold to Buyer on the applicable Purchase Date.
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(e) Delivery of Asset Files and Purchase Documents.
"Non-Table Funded" Eligible Transaction Assets: By no
later than 1:00 p.m., New York City time, one (1) Business
Day prior to any Purchase Date, unless otherwise agreed by
Buyer, Seller and/or the Bailee shall deliver to the
Custodian as to any Eligible Transaction Asset on a
case-by-case basis and to the extent applicable (i)
original counterparts of (A) the Transaction Asset Note
evidencing such Eligible Transaction Asset, including any
power of attorney related to the execution thereof,
together with any and all intervening endorsements
thereon, endorsed, in blank, on its face or by allonge
attached thereto (without recourse, representation or
warranty, express or implied) (provided, an original note
shall not be required for a Preferred Equity Interest or a
B Note evidenced by a participation certificate or a
non-certificated participation interest rather than a
Transaction Asset Note), (B) any participation certificate
or share certificate relating to the Eligible Transaction
Asset together with any and all intervening endorsements
thereon, endorsed, in blank, on its face or by endorsement
or stock power attached thereto (without recourse,
representation or warranty, express or implied), (C) any
participation agreement relating to uncertificated
Eligible Transaction Asset that is not evidenced by a
Transaction Asset Note (other than a Preferred Equity
Interest), (D) an original executed assignment, in blank,
in recordable form (except for the name of the assignee
and any missing recording information), and otherwise in
form and substance reasonably satisfactory to Buyer, of
(x) the Mortgage, (y) any related assignment of leases and
rents (if such item is a document separate from the
Mortgage) and (z) any other recorded document relating to
the Eligible Transaction Asset otherwise included in the
Asset File, and (E) an original assignment of all
unrecorded documents relating to the Eligible Transaction
Asset (to the extent not already assigned pursuant to
clause (D) above), in blank, and original counterparts or
copies of all the Transaction Asset Documents comprising
the Asset File, (ii) the security documents described in
Section 3.03(b)(vii) above, and (iii) to the extent
applicable, any other documents, reports or updated
information as Buyer shall request pursuant to Section
3.03(b)(i)-(xii) and Section 6.03(b) not heretofore
finally approved by Buyer.
"Table Funded" Eligible Transaction Assets:
1) By no later than 1:00 p.m., New York City time,
on the Purchase Date, Seller shall cause the Bailee to deliver to
the Custodian and Buyer by facsimile or e-mail (i) as to each
Eligible Transaction Asset, the original note, if applicable,
evidencing the making of a loan secured by such Transaction Asset
(provided, an original note shall not be required for a Preferred
Equity Interest or a B Note evidenced by a participation
certificate or a non-certificated participation interest rather
than a Transaction Asset Note), and a fully executed Bailee
Agreement and Bailee's Trust Receipt and Certification issued by
the Bailee thereunder, and (ii) evidence satisfactory to Buyer
that all documents necessary to perfect Seller's interest in the
Eligible Transaction Assets have been delivered to a party
acceptable to Buyer for recordation and filing.
2) By no later than 1:00 p.m., New York City time,
on the third (3rd) Business Day following the applicable Purchase
Date, Seller shall cause the Bailee to deliver to the Custodian
the Asset File.
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(f) Custodial Identification Certificates and Trust Receipts. By
no later than 12:00 p.m., New York City time, two (2) Business Days prior to any
Purchase Date with respect to "Non-Table Funded" Eligible Transaction Assets and
by no later than 12:00 p.m., New York City time, on each Purchase Date with
respect to "Table Funded" Eligible Transaction Assets, Seller shall provide
Buyer and Custodian with a final Custodial Identification Certificate and
related Transaction Asset Schedule with respect to the Transaction Asset to be
sold to Buyer on such Purchase Date, indicating any changes, if any, from the
Custodial Identification Certificate and related Transaction Asset Schedule
heretofore delivered to Buyer and Custodian pursuant to Section 3.03(d) above.
With respect to "Table Funded" Eligible Transaction Assets, by 12:00 p.m. New
York City time on each Purchase Date, Custodian shall provide to Buyer a
proposed Transaction Asset Schedule for the applicable Eligible Transaction
Assets. With respect to "Non-Table Funded" Eligible Transaction Assets, by no
later than 1:00 p.m., New York City time, on the Purchase Date, Custodian shall
deliver to Seller and Buyer a Trust Receipt with a Transaction Asset Schedule in
respect of all of the Transaction Asset sold to Buyer on such Purchase Date.
With respect to "Table Funded" Eligible Transaction Assets, by no later than
1:00 p.m. New York City time on the third (3rd) Business Day following the
applicable Purchase Date, the Custodian shall deliver to Buyer a Trust Receipt
with a Transaction Asset Schedule in respect of all of the Transaction Assets
sold to Buyer on the applicable Purchase Date.
(g) If Seller shall deliver a Confirmation pursuant to Section
3.03(d) hereof and all conditions precedent set forth in Sections 3.03(a),
3.03(b), 3.03(c), 6.01 and 6.02 have been met, and provided no Default or Event
of Default shall have occurred and be continuing, Buyer shall enter into a
Transaction with Seller on the requested Purchase Date, with a Purchase Price in
the amount so requested and approved by Buyer.
(h) Subject to the timely receipt by Buyer of a Trust Receipt
with a Transaction Asset Schedule as provided above, and subject further to the
provisions of Section 6 hereof, such Purchase Price payment will then be made
available to Seller by Buyer transferring, via wire transfer, to the following
account of Seller: JPMorgan Chase Bank, 380 Madison Ave, 11th Floor, New York,
NY 10017-2591, ABA #: 021-000021, Account #: 230254632, Account Name: Capital
Trust, Inc., Attention: Geoffrey G. Jervis ((212)-655-0247), the aggregate
Purchase Price amount of such Transaction in funds immediately available to
Seller. Buyer may consider on a case-by-case basis in its sole, absolute
discretion alternative funding arrangements requested by Seller.
(i) From time to time, Seller shall forward to Custodian
additional original documents or additional documents evidencing any (i)
assumption, modification, consolidation or extension of a Loan Asset, or (ii)
any amendment to the operative documents with respect to an Equity Interest, in
each case approved by Buyer 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.
(j) With respect to any documents which have been delivered or
are being delivered to recording offices for recording and have not been
returned to Seller in time to permit their delivery hereunder at the time
required, in lieu of delivering such original documents, Seller shall deliver to
Buyer a true copy thereof with an Officer's Certificate certifying that such
copy is a true, correct and complete copy of the original, which has been
transmitted for recordation. Seller shall deliver such original documents to
Custodian promptly when they are received.
3.04. Margin Maintenance.
(a) Buyer may determine and re-determine the Aggregate Margin
Maintenance Asset Value on any Business Day and on as many Business Days as it
may elect. If at any time (i) the aggregate Purchase Price with respect to all
Transaction Assets exceeds the Aggregate Margin
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Maintenance Asset Value (an "Aggregate Margin Maintenance Asset Value
Deficiency"), as determined by Buyer in its sole discretion and notified to
Seller on any Business Day, or (ii) Seller shall have received a prepayment of
the principal of any loan or preferred equity interest comprising a portion of
the Transaction Assets (including, without limitation, the payment of casualty
or condemnation proceeds), Seller shall, in the case of (i) above, not later
than one (1) Business Day after receipt of such notice, or in the case of (ii)
above, not later than one (1) Business Day after receipt of such prepayment,
either repurchase Transaction Assets at the Repurchase Price, make a prepayment
in reduction of the Repurchase Price, or sell additional Transaction Asset(s)
(which Transaction Asset(s) shall be in all respects acceptable to Buyer) to
Buyer for no additional consideration, such that after giving effect to such
repurchase, prepayment or sale, the aggregate Purchase Price with respect to all
Transaction Assets does not exceed the Aggregate Margin Maintenance Asset Value
as re-determined by Buyer after such repurchase, prepayment or sale. So long as
no Default or Event of Default has occurred and is then continuing, all
prepayments in reduction of the Repurchase Price shall be applied against the
Asset-Specific Transaction Balance relating to the Transaction being repaid.
(b) If at any time under any Transaction Asset Document
evidencing Eligible Transaction Assets (x) there is an Event of Default, or
event with which the giving of notice or lapse of time or both would become an
Event of Default, or (y) any representation or warranty made by or on behalf of
the relevant Transaction Asset Obligor becomes false or misleading in any
material respect or (z) the relevant Transaction Asset Obligor fails to perform
or observe any material covenant or other obligation, Buyer may, in its sole
discretion and without regard to any determination of the Asset Value of such
Eligible Transaction Assets, notify Seller of such occurrence and may require by
giving notice to Seller that the relevant Eligible Transaction Asset be
repurchased at the Repurchase Price or a prepayment in reduction of the Purchase
Price be made, as determined by Buyer in its sole discretion. Not later than one
(1) Business Day after the receipt of such notice, Seller shall prepay the
Asset-Specific Transaction Balance related to such Eligible Transaction Asset.
Buyer may, in its sole discretion, determine and re-determine the amount to be
prepaid irrespective of whether or not either (i) any statement of fact
contained in any Officer's Certificate delivered pursuant to Section 6.02(b) or
(ii) any representation of Seller set forth in Section 7.12 was true to Seller's
actual knowledge.
Section 4. Payments; Computations; Etc.
4.01. Repurchase of Transaction Assets; Periodic Advance
Repurchase Payments.
(a) Seller hereby promises to pay in full on the Termination Date
the aggregate Repurchase Price with respect to all Transaction Assets then held
by Buyer; provided, however, in the event the Purchase Period shall be extended
pursuant to the terms hereof, Seller promises to pay such aggregate Repurchase
Price with respect to the Transaction Assets held by Buyer as of the expiration
date of the Purchase Period in four (4) quarterly installments commencing on the
first Business Day of the month immediately following the expiration of the
Purchase Period and continuing on the first Business Day of each calendar
quarter thereafter, with a final payment on the Termination Date, as extended
(each, an "Installment Date") of an amount equal to the quotient of (x) the
aggregate Repurchase Price of the Transaction Assets held by Buyer as of the
expiration of the Purchase Period, divided by (y) four (4) (such schedule of
payments, the "Repurchase Schedule"); provided, further, that in the event that
Seller shall make a Repurchase Price payment in excess of the Repurchase Price
amount then due and payable in accordance with the Repurchase Schedule, the
Repurchase Schedule shall be recalculated such that Seller shall pay the
Repurchase Price of the Transaction Assets held by Buyer as of the date of such
repayment (after taking such payment into account) by payment on each
Installment Date remaining in the Repurchase Period of an amount equal to the
quotient of (x) the aggregate repurchase price with respect to the Transaction
Assets held by Buyer as of the date of such repayment (after taking such
repayment into account) divided by (y) the number of Installment Dates remaining
during the Repurchase
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Period. Any Repurchase Price payments made by Seller to Buyer subsequent to an
Installment Date shall be credited at the time of such payment and be applied to
the payment due and payable on the next succeeding Installment Date.
Notwithstanding anything to the contrary contained herein, at any time following
the date that is thirty (30) days prior to the first anniversary of the date of
this Agreement, Seller may request in writing that Buyer consider extending the
Purchase Period for further additional periods of one (1) year; provided that no
Default or Event of Default shall have occurred and be continuing at the time of
such request. Such request shall be subject to Buyer's approval in its sole
discretion. Within ten (10) Business Days of Buyer's receipt of Seller's
request, Buyer shall notify Seller whether such request has been approved.
Buyer's failure to so notify Seller shall be deemed to constitute Buyer's denial
of such request.
(b) Notwithstanding that Buyer and Seller intend all Transactions
hereunder to be sales of the related Transaction Assets to Buyer, Seller hereby
promises to pay to Buyer an amount equal to the accreted value of the Price
Differential of each Transaction (a "Periodic Advance Repurchase Payment") for
the period from and including the date of such Transaction to but excluding the
date on which the Repurchase Price with respect to such Transaction shall be
paid in full, at a rate per annum (the "Pricing Rate") equal to the Eurodollar
Rate plus the applicable Eurodollar Rate Spread. Notwithstanding the foregoing,
Seller hereby promises to pay to Buyer, to the extent permitted by applicable
law, a late fee (the "Late Fee") at the applicable Late Fee Rate with respect to
any Repurchase Price Amount and to any other amount payable by Seller hereunder
that shall not be paid in full when due for the period from and including the
due date thereof to but excluding the date the same is paid in full. Payment and
acceptance of late fees pursuant to this subsection shall not constitute a
waiver of any Default and shall not otherwise limit or prejudice any right of
Buyer hereunder.
(c) Any Periodic Advance Repurchase Payment with respect to a
Transaction shall be made monthly in arrears on the first Business Day of each
month and for the last month of this Agreement on the first Business Day of such
last month and on the Termination Date. Any late fee payable at the Late Fee
Rate shall accrue daily and shall be payable upon such accrual.
(d) Any Transaction Asset may be repurchased and prepayments in
reduction of the Repurchase Price for any Transaction Asset may be made at any
time upon two (2) Business Days prior written notice, without any penalty or
premium; provided, however, that any such payment or prepayment of the
Repurchase Price shall be accompanied by an amount representing any accrued but
unpaid Periodic Advance Repurchase Payments, any accrued but unpaid Late Fees
and all other amounts then due under the Transaction Documents (including,
without limitation, all amounts due under Section 4 hereof). Each prepayment in
reduction of the Repurchase Price of a Transaction Asset that is voluntary (as
opposed to mandatory under the terms of this Agreement) shall be in an amount of
not less than One Hundred Thousand Dollars ($100,000.00). So long as no Default
or Event of Default has occurred and is then continuing, each voluntary
prepayment shall be applied to reduce any Asset-Specific Transaction Balance as
designated by Seller to Buyer in writing.
(e) With respect to any Transaction Asset, Seller shall repay to
Buyer an amount equal to the product of (i) the amount of casualty or
condemnation proceeds paid to, or for the benefit of, Seller or any underlying
obligor in respect of such Transaction Asset to the extent that Seller is not
required under the underlying loan documents with Seller's obligor to reserve,
escrow, re-advance or apply such proceeds for the benefit of such obligor or the
Underlying Property and (ii) the Purchase Rate applicable to such Transaction
Asset. So long as no Default or Event of Default has occurred and is then
continuing, such amounts paid to Buyer shall be applied in reduction of the
Asset-Specific Transaction Balance relating to such Transaction Asset.
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4.02. Payments.
(a) Except to the extent otherwise provided herein, all
Repurchase Price payments, Periodic Advance Repurchase Payments, Late Fees and
other amounts to be paid by Seller under this Agreement shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to Buyer at the following account maintained by Buyer: Account No.
30463591, for the account of Morgan Stanley Bank, Citibank, N.A., ABA No.
021000089, Attn: Whole Loan Operations, Mortgage-Backed Securities Department,
Fixed Income Division, not later than 1:00 p.m., New York City time, on the date
on which such payment shall become due (and each such payment made after such
time on such due date shall be deemed to have been made on the next succeeding
Business Day). Seller acknowledges that it has no rights of withdrawal from the
foregoing account. Buyer shall endeavor to send Seller a detailed bill on the
date which is two (2) Business Days prior to the date on which payment is due;
provided, however, that the failure of Buyer to send, or of Seller to receive,
such bill shall in no way affect Seller's obligation to pay amounts due under
this Agreement.
(b) Except to the extent otherwise expressly provided herein, if
the due date of any payment under this Agreement would otherwise fall on a day
that is not a Business Day, such date shall be extended to the next succeeding
Business Day, and interest shall be payable for any principal so extended for
the period of such extension.
4.03. Computations. The amount of Periodic Advance Repurchase
Payments and Late Fees shall be computed on the basis of a 360-day year for the
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable. Buyer shall determine any Pricing
Rate or Late Fee Rate payable with respect to Transactions hereunder, and such
determination shall be conclusive and binding, absent manifest error.
4.04. [Intentionally Omitted.].
4.05. Booking of Transactions. Without limitation of Buyer's
rights to sell, assign or transfer a Transaction or any interest therein,
including any participation interest therein, at any time and from time to time,
Buyer may make, carry or transfer such Transaction at, to, or for the account of
any of its branch offices or the office of an Affiliate of Buyer.
4.06. Buyer's Funding of Eurodollar Rate Transactions. Seller
hereby expressly acknowledges and agrees that Buyer may fund a Transaction in
any manner it sees fit, including (i) through the actual purchase of a
Eurodollar deposit bearing interest at the rate obtained pursuant to the
definition of Eurodollar Rate in an amount equal to the Purchase Price of such
Transaction and having a maturity comparable to the relevant payment period or
(ii) through Buyer's entering into or purchase of repurchase agreements,
interest rate agreements, swap agreements or other arrangements in such amounts
as Buyer shall determine (and which amounts may or may not, in Buyer's sole
discretion, be "match funded" to such Transaction). Calculation of all amounts
payable to Buyer under this Section 4.06 shall be made as though Buyer had
actually funded such Transaction through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to the definition of Eurodollar
Rate in an amount equal to the amount of such Transaction and having a maturity
comparable to the relevant payment period and through the transfer of such
Eurodollar deposit from an off-shore office of Buyer to a domestic office of
Buyer in the United States of America; provided, however, that Buyer may fund
such Transaction in any manner it sees fit and the foregoing assumptions shall
be utilized only for purposes of calculating amounts payable under this Section
4.06.
4.07. Income Payments.
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(a) Subject to Section 5.06 hereof, Seller shall be entitled to
receive an amount equal to all Income paid or distributed on or in respect of
the Transaction Assets that is not otherwise received by Seller, to the full
extent it would be so entitled if the Transaction Assets had not been sold to
Buyer; provided that in no event shall Buyer be entitled to receive any proceeds
received from any Transaction Asset Obligor in connection with the refinancing
and/or final distribution to Seller with respect to any Eligible Transaction
Assets to the extent same exceeds the sums provided to be paid to Buyer under
Section 8.15 of this Agreement.
(b) Provided no Event of Default has occurred and is continuing,
and subject to the terms of the Transaction Documents, Seller shall retain the
right to take all actions under the Transaction Documents and to retain all
contact with each Transaction Asset Obligor, to the full extent it would be had
the Transaction Assets not been sold to Buyer.
4.08. Compensation for Increased Costs. If Buyer shall in good
faith determine that any change in any law, treaty or governmental rule,
regulation or order, or in the interpretation, administration or application
thereof, or any determination of a court or governmental authority, or
compliance with any guideline, request or directive issued or made by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(a) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against assets
held by, or deposits or other liabilities in or for the account of, or advances
or loans by, or other credit extended by, or any other acquisition of funds by,
any office of Buyer; or
(b) imposes any other condition on or affecting Buyer or its
obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to Buyer of
agreeing to enter into or remain a party to, the Transactions hereunder or to
reduce any amount received or receivable by Buyer with respect thereto; then, in
any such case, Seller shall promptly (but in any event no later than five (5)
Business Days following any notice from Buyer of the same) pay to Buyer, upon
receipt of the statement referred to in the next sentence, such additional
amount or amounts as may be necessary to compensate Buyer for any such increased
cost or reduction in amounts received or receivable hereunder. Buyer shall
deliver to Seller a written statement, setting forth in reasonable detail the
basis for calculating the additional amounts owed to Buyer under this Section
4.08, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
4.09. Limitation on Types of Transactions; Illegality. Anything
herein to the contrary notwithstanding, if:
(a) Buyer determines, which determination shall be conclusive,
that quotations of interest rates for the relevant deposits referred to in the
definition of "Eurodollar Base Rate" in Section 2.01 hereof are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining the amounts of Periodic Advance Repurchase Amounts or of Late Fees
for Transactions as provided herein; or
(b) Buyer determines, which determination shall be conclusive,
that the relevant rate of interest referred to in the definition of "Eurodollar
Base Rate" in Section 2.01 hereof upon the basis of which the Pricing Rate for
Transactions is to be determined is not likely adequate to cover the cost to
Buyer of making or maintaining Transactions; or
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(c) Buyer determines, which determination shall be conclusive,
that it is or will be unlawful for Buyer to honor its obligation to make or
maintain Transactions hereunder using a Eurodollar Rate as a result of
compliance by Buyer in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful);
then Buyer shall give Seller prompt notice thereof and, so long
as such condition remains in effect, Buyer shall be under no obligation to enter
into additional Transactions, and Seller shall either repurchase all such
Transaction Assets as may be held by Buyer or pay Periodic Advance Repurchase
Payments on such Transactions at a Pricing Rate per annum equal to the
Eurodollar Substitute Rate.
Section 5. Precautionary Collateral Security.
5.01. Transaction Assets; Precautionary Security Interest.
(a) The parties intend that the Transactions hereunder be sales
and purchases and not loans; provided that in order to preserve the rights of
Buyer under this Agreement in the event that any court or other forum
re-characterizes any Transaction hereunder as a loan, Seller shall be deemed to
have assigned, pledged and granted a security interest in all of its right,
title and interest in, to and under the Transaction Assets and the related
Transaction Asset Items described in Section 5.01(b) below to Buyer, as security
for the prompt repayment and performance by Seller of its obligations under the
Transaction Documents and the Transactions entered into under this Agreement,
including, without limitation, Seller's obligation to repurchase Transaction
Assets at the Repurchase Price, or if such obligation were to be
re-characterized as a loan, to repay such loan, and to pay any and all other
amounts owing hereunder and any and all MS Indebtedness from time to time
outstanding (collectively, the "Repurchase Obligations"). Seller agrees to mark
its computer records to evidence the interests granted to Buyer hereunder.
(b) All of Seller's right, title and interest in, to and under
each of the following items of property transferred pursuant to the terms of
this Agreement by Seller to Buyer from time to time and whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, is
hereinafter collectively referred to as a "Transaction Asset Items":
(i) all Subordinate Mortgage Loans, Mezzanine
Loans, B Notes, Whole Loans, Preferred Equity Interests, CMBS,
participation interests in any of the foregoing and Other
Approved Assets;
(ii) all Transaction Asset Documents, including
without limitation all promissory notes, all securities, any
collateral pledged or otherwise relating to such Transaction
Asset, all representations and warranties made to, or for the
benefit of, Seller by any Transaction Asset Obligor, all
Servicing Records (as defined in Section 12.14(b) below) and
servicing agreements, together with all files, documents,
instruments, surveys, certificates, correspondence, appraisals,
computer programs, computer storage media, accounting records and
other books and records relating thereto, in each case subject to
prior liens and encumbrances permitted by Buyer;
(iii) all guaranties and insurance (issued by
governmental agencies or otherwise) and any insurance certificate
or other document evidencing such guaranties or insurance
relating to any Transaction Asset and all claims and payments
thereunder;
(iv) all other insurance policies and insurance
proceeds relating to any Transaction Asset or the related
Underlying Property;
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(v) all Interest Rate Protection Agreements;
(vi) the Collection Account and all monies from
time to time on deposit in the Collection Account;
(vii) all "general intangibles", "accounts" and
"chattel paper" as defined in the Uniform Commercial Code
relating to or constituting any and all of the foregoing; and
(viii) any and all replacements, substitutions,
distributions on, or proceeds (including, without limitation,
condemnation proceeds) of, any and all of the foregoing set forth
in items (i) through (vii) of this Section 5.01(b), whether now
owned or hereafter acquired, now existing or hereafter created
and wherever located.
(c) Pursuant to the Custodial Agreement, Custodian shall hold the
Transaction Asset Documents as exclusive bailee and agent for Buyer pursuant to
terms of the Custodial Agreement and shall deliver to Buyer Trust Receipts each
to the effect that it has reviewed such Transaction Asset Documents in the
manner and to the extent required by the Custodial Agreement and identifying any
deficiencies in such Transaction Asset Documents as so reviewed.
5.02. Further Assurances.
(a) Seller shall undertake, with respect to each Transaction
Asset sold to Buyer and deemed to be pledged hereunder as security for a
Transaction pursuant to Section 5.01(a), any and all actions deemed necessary by
Buyer for the transfer by Seller to Buyer of a valid ownership interest and the
granting of a precautionary first priority security interest, as the case may
be, in such Transaction Asset. Without limiting the generality of the foregoing,
Seller shall take such steps as are necessary for the transfer of a valid
ownership interest and the granting and perfection of a precautionary first
priority security interest in securities and related Transaction Assets.
(b) At any time and from time to time, upon the written request
of Buyer, and at the sole expense of Seller, Seller will promptly and duly
execute and deliver, or will promptly cause to be executed and delivered, such
further instruments and documents and take such further action as Buyer may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted, including,
without limitation, the filing of any financing or continuation statements under
the Uniform Commercial Code in effect in any jurisdiction with respect to the
Liens created hereby or an assignment of any of the Transaction Asset Documents.
Seller also hereby authorizes Buyer to file any such financing or continuation
statement without the signature of Seller to the extent permitted by applicable
law. A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any jurisdiction.
5.03. Changes in Locations, Name, etc. Seller shall not (i)
change the location of its chief executive office/chief place of business from
that specified in Section 7 hereof or (ii) change its name, identity or
organizational structure (or the equivalent) or change the location where it
maintains its records with respect to the Transaction Assets unless it shall
have given Buyer at least ten (10) days prior written notice thereof and shall
have delivered to Buyer all Uniform Commercial Code financing statements and
amendments thereto as Buyer shall request and taken all other actions deemed
necessary by Buyer to continue its perfected status in the Transaction Assets
with the same or better priority.
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5.04. Buyer's Appointment as Attorney-in-Fact.
(a) Seller hereby irrevocably constitutes and appoints Buyer and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Seller and in the name of Seller or in its own name, from time to
time in Buyer's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality of the
foregoing, Seller hereby gives Buyer the power and right, on behalf of Seller,
without assent by, but with notice to, Seller, if an Event of Default shall have
occurred and be continuing, to do the following:
(i) in the name of Seller or its own name, or
otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any mortgage insurance or with
respect to any other Transaction Asset and to file any claim or
to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by Buyer for the purpose
of collecting any and all such moneys due under any such mortgage
insurance or with respect to any other Transaction Asset whenever
payable;
(ii) to pay or discharge taxes and Liens levied or
placed on or threatened against the Transaction Asset; and
(iii) (A) to direct any party liable for any
payment under any Transaction Asset to make payment of any and
all moneys due or to become due thereunder directly to Buyer or
as Buyer shall direct; (B) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising
out of any Transaction Asset; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents
in connection with any of the Transaction Asset; (D) to commence
and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Transaction Asset or any part thereof and to enforce any other
right in respect of any Transaction Asset; (E) to defend any
suit, action or proceeding brought against Seller with respect to
any Transaction Asset; (F) to settle, compromise or adjust any
suit, action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as
Buyer may deem appropriate; and (G) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal
with any of the Transaction Assets as fully and completely as
though Buyer were the absolute owner thereof for all purposes,
and to do, at Buyer's option and Seller's expense, at any time,
and from time to time, all acts and things which Buyer deems
reasonably necessary to protect, preserve or realize upon the
Transaction Asset and Buyer's Liens thereon and to effect the
intent of this Agreement, all as fully and effectively as Seller
might do.
Seller hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable until the repayment in full of all Repurchase
Obligations hereunder.
(b) Seller also authorizes Buyer, at any time and from time to
time, to execute, in connection with any sale provided for in Section 5.07
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Transaction Assets.
(c) The powers conferred on Buyer pursuant to this Section 5.04
are solely to protect Buyer's interests in the Transaction Asset and shall not
impose any duty upon Buyer to exercise any such
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powers. Buyer shall be accountable only for amounts that it actually receives as
a result of the exercise of such powers, and neither Buyer nor any of its
officers, directors, or employees shall be responsible to Seller for any act or
failure to act hereunder, except for its own gross negligence or willful
misconduct.
5.05. Performance by Buyer of Seller's Obligations. If Seller
fails to perform or comply with any of its agreements contained in the
Transaction Documents and Buyer may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of Buyer incurred
in connection with such performance or compliance, together with Late Fees
thereon at a rate per annum equal to the Late Fee Rate, shall be payable by
Seller to Buyer on demand and shall constitute Repurchase Obligations.
5.06. Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of any Transaction Asset received by Seller
consisting of cash, checks and other near-cash items shall be held by Seller in
trust for Buyer, segregated from other funds of Seller, and, within two (2)
Business Days of receipt by Seller, shall be turned over to Buyer in the exact
form received by Seller (duly endorsed by Seller to Buyer, if required, in order
to be negotiated by Buyer) and (b) any and all such proceeds received by Buyer
(whether from Seller or otherwise) may, in the sole discretion of Buyer, be held
by Buyer as collateral security for, and/or then or at any time thereafter may
be applied by Buyer against, the Repurchase Obligations (whether matured or
unmatured), such application to be in such order as Buyer shall elect. Any
balance of such proceeds remaining after the Repurchase Obligations shall have
been paid in full and this Agreement shall have been terminated shall be paid
over to Seller or to whomsoever may be lawfully entitled to receive the same.
For purposes hereof, proceeds shall include, but not be limited to, all
principal and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Transaction Asset.
5.07. Remedies. If an Event of Default shall occur and be
continuing, Buyer may, at its option, enter into one or more Interest Rate
Protection Agreements covering all or a portion of the Transaction Assets sold
to Buyer hereunder, and Seller shall be responsible for all damages, judgments,
costs and expenses of any kind which may be imposed on, incurred by or asserted
against Buyer relating to or arising out of such Interest Rate Protection
Agreements; including without limitation any losses resulting from such Interest
Rate Protection Agreements. If an Event of Default shall occur and be
continuing, Buyer may exercise, in addition to all other rights and remedies
granted to it in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Repurchase Obligations, all rights and
remedies of a secured party under the Uniform Commercial Code. Without limiting
the generality of the foregoing, Buyer without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon Seller or any other Person
(each and all of which demands, presentments, protests, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Transaction Assets, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Transaction Asset or any part
thereof (or contract to do any of the foregoing), in one or more parcels or as
an entirety at public or private sale or sales, at any exchange, broker's board
or office of Buyer or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. Buyer shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of the
Transaction Asset so sold, free of any right or equity of redemption in Seller,
which right or equity is hereby waived or released. Seller further agrees, at
Buyer's request, to assemble the Transaction Asset Items and make them available
to Buyer at places which Buyer shall reasonably select, whether at Seller's
premises or elsewhere. Buyer shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and
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expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Transaction Asset or in any way relating to the Transaction Asset
or the rights of Buyer hereunder, including without limitation reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Repurchase Obligations, in such order as Buyer may elect, and only after such
application and after the payment by Buyer of any other amount required or
permitted by any provision of law, including without limitation Section
9-608(a)(1)(c) of the Uniform Commercial Code, need Buyer account for the
surplus, if any, to Seller. To the extent permitted by applicable law, Seller
waives all claims, damages and demands it may acquire against Buyer arising out
of the exercise by Buyer of any of its rights hereunder, other than those
claims, damages and demands arising from the gross negligence or willful
misconduct of Buyer. If any notice of a proposed sale or other disposition of
Transaction Asset shall be required by law, such notice shall be deemed
reasonable and proper if given at least ten (10) days before such sale or other
disposition. Seller shall remain liable for any deficiency (plus accrued
interest thereon as contemplated pursuant to Section 4.01(b) hereof) if the
proceeds of any sale or other disposition of the Transaction Asset (net of costs
incurred in connection with such sale or other disposition) are insufficient to
pay the Repurchase Obligations and the fees and disbursements of any attorneys
employed by Buyer to collect such deficiency.
5.08. Limitation on Duties Regarding Preservation of Transaction
Asset Items. Buyer's duty with respect to the custody, safekeeping and physical
preservation of the Transaction Asset Items in its possession, under Section
9-207 of the Uniform Commercial Code or otherwise, shall be to deal with it in
the same manner as Buyer deals with similar property for its own account.
Neither Buyer nor any of its directors, officers or employees shall be liable
for failure to demand, collect or realize upon all or any part of the
Transaction Assets or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Transaction Assets upon the request of
Seller or otherwise.
5.09. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Transaction Asset are irrevocable
and powers coupled with an interest.
5.10. Release of Security Interest. Upon termination of this
Agreement and repayment to Buyer of all Repurchase Obligations and the
performance of all obligations under the Transaction Documents, Buyer shall
release its security interest in any remaining Transaction Assets.
5.11. Release of Transaction Assets. Provided that no Default or
Event of Default shall exist (other than one that (a) relates solely to the
Transaction Assets to be released and (b) will be cured simultaneously with such
release) and that Seller shall have paid all sums then due under the Transaction
relating thereto, upon (i) Seller's payment in full of the Asset-Specific
Transaction Balance with respect to a portion of the Transaction Assets, and
(ii) receipt by Buyer of a written request from Seller for the release of such
Transaction Asset, Buyer shall as soon as practicable release (and Buyer shall
reasonably cooperate with Seller to facilitate reasonable escrow arrangements to
facilitate a simultaneous release of) the related Transaction Asset Documents
and the related Transaction Asset and any liens related thereto to Seller or, to
the extent necessary to facilitate future savings of mortgage tax in states that
impose mortgage taxes, assign such liens as Seller shall request; provided that
any such assignments shall be without recourse, representation or warranty of
any kind except that Buyer shall represent and warrant that such Transaction
Asset has not been previously assigned by Buyer. Buyer shall with reasonable
promptness, after a written request from Seller, execute any document or
instrument necessary to effectuate such release or assignment.
5.12. Substitution of Eligible Transaction Assets. From time to
time until the Custodian is otherwise notified by Buyer, which notice shall be
given by Buyer only during the existence of an Event of Default, and with the
prior written consent of Buyer, Seller may substitute one or more Transaction
Assets with one or more substitute Eligible Transaction Assets having an
aggregate Margin
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Maintenance Asset Value equal to or greater than the Margin Maintenance Asset
Value of the Transaction Asset(s) being substituted for, or obtain the release
of one or more Transaction Assets; provided that, after giving effect to such
substitution or re-transfer, the Repurchase Obligations then outstanding shall
not exceed the Aggregate Margin Maintenance Asset Value, which determination
shall be made solely by Buyer. In connection with any such requested
substitution or re-transfer, Seller will provide notice to the Custodian and
Buyer no later than 3:00 p.m. New York City time, on the date of such request,
specifying the Transaction Asset(s) to be substituted for or re-transferred and
the substitute Transaction Asset(s) to be sold hereunder in substitution
thereof, if any, and shall deliver with such notice a Custodial Identification
Certificate and a revised Transaction Asset Schedule indicating any substitute
Transaction Assets.
Section 6. Conditions Precedent.
6.01. Initial Transaction. The obligation of Buyer to enter into
the initial Transaction hereunder is subject to the satisfaction, immediately
prior to or concurrently with the entering into such Transaction, of the
condition precedent that Buyer shall have received all of the following items
and documents, each of which shall be satisfactory to Buyer and its counsel in
form and substance:
(a) Transaction Documents.
(i) This Agreement, duly completed and executed;
(ii) A Confirmation; and
(iii) The Custodial Agreement, duly executed and
delivered by Seller and Custodian. In addition, Seller shall have
taken such other action as Buyer shall have requested in order to
perfect the security interests created pursuant to the Agreement.
(b) Organizational Documents. A good standing certificate and
certified copies of articles of incorporation and by-laws of Seller and
certificates evidencing all requisite authority for Seller with respect to the
execution, delivery and performance of the Transaction Documents and each other
document to be delivered by Seller from time to time in connection herewith (and
Buyer may conclusively rely on such certified copies and certificates until it
receives notice in writing from Seller to the contrary);
(c) Legal Opinion. A legal opinion of counsel to Seller in form
and substance satisfactory to Buyer in its sole discretion;
(d) Trust Receipt and Transaction Asset Schedule and Exception
Report. A Trust Receipt, substantially in the form of Annex 2 of the Custodial
Agreement, dated the Effective Date, from Custodian, duly completed, with a
Transaction Asset Schedule and Exception Report attached thereto;
(e) Servicing Agreement(s). Any Servicing Agreement, certified as
a true, correct and complete copy of the original, with the letter of the
applicable Servicer (i) consenting to termination of such Servicing Agreement
upon the occurrence of an Event of Default and (ii) agreeing to hold all moneys
received in respect of each Transaction Asset for the benefit of Buyer,
attached; and
(f) Other Documents. Such other documents as Buyer may reasonably
request.
6.02. Initial and Subsequent Transactions. The entering into each
Transaction with Seller (including the initial Transaction) on any Business Day
is subject to the delivery of all Transaction
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Asset Documents pertaining to the Eligible Transaction Assets to be sold for
such Transaction, together with all documents set forth in Section
3.03(b)(i)-(xii) and the satisfaction of the following further conditions
precedent, both immediately prior to the making of such Transaction and also
after giving effect thereto and to the intended use thereof:
(a) No Event of Default or Default shall have occurred and be
continuing on such date either before or after giving effect to the making of
the Purchase Price payment;
(b) Buyer shall have received from Seller, and Seller shall have
received from each Transaction Asset Obligor such representations and warranties
as Buyer shall, in its sole discretion, deem satisfactory. The representations
and warranties made by Seller in Section 7, elsewhere in each of the Transaction
Documents, shall be true and complete on and as of the date of the making of
such Transaction in all material respects (in the case of the representations
and warranties in Section 7.09, solely with respect to Eligible Transaction
Assets included in the Aggregate Margin Maintenance Asset Value) with the same
force and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date). Buyer shall have received an officer's
certificate signed by a Responsible Officer of Seller certifying as to the truth
and accuracy of the above, which certificate shall also include a representation
that (i) Seller is in compliance with all governmental licenses and
authorizations, (ii) Seller is qualified to do business, validly existing and,
to the extent determinable, in good standing, in all required jurisdictions,
(iii) the facts set forth in the Diligence Materials related to the Transaction
Asset(s) for such Transaction are, to the best knowledge of Seller after
diligent inquiry, true and correct (or shall fully explain all adverse changes
from the information previously supplied to Buyer), (iv) there has been no
change in the organizational and authority documents provided to Buyer pursuant
to Section 6.01(b) hereof since the date of the most recent certification
thereof to Buyer, and (v) there has been no Material Adverse Effect since the
date of the last Purchase Price payment to Seller hereunder;
(c) The aggregate Purchase Price of the Transaction Assets shall
not exceed the Aggregate Margin Maintenance Asset Value;
(d) Subject to Buyer's right to perform one or more Due Diligence
Reviews pursuant to Section 12.15 hereof, Buyer shall have completed its due
diligence review of the Transaction Asset Documents for the Transaction Asset
and such other documents, records, agreements, instruments, mortgaged properties
or information relating to such Transaction Asset as Buyer in its sole
discretion deems appropriate to review and such review shall be satisfactory to
Buyer in its sole discretion;
(e) Buyer shall have received from Custodian a Trust Receipt,
together with a Transaction Asset Schedule and Exception Report with Exceptions
(as defined in the Custodial Agreement) as are acceptable to Buyer in its sole
discretion, in respect of the Eligible Transaction Assets to be sold hereunder
on such Business Day;
(f) Buyer shall have received from Seller a Lender's Release
Letter from an existing lender (if applicable) substantially in the form of
Exhibit D-1 hereto (or such other form acceptable to Buyer) or a Seller's
Release Letter substantially in the form of Exhibit D-2 hereto (or such other
form acceptable to Buyer) covering each Transaction Asset to be sold to Buyer;
(g) None of the following shall have occurred and/or be
continuing:
(i) an event or events shall have occurred
resulting in the effective absence of a "repo market" or
comparable "lending market" for financing debt obligations
secured by mortgage loans or securities for a period of (or
reasonably expected to be) at least thirty (30)
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consecutive days or an event or events shall have occurred
resulting in Buyer not being able to finance any Transactions
through the "repo market" or "lending market" with traditional
counterparties at rates which would have been reasonable prior to
the occurrence of such event or events;
(ii) an event or events shall have occurred
resulting in the effective absence of a "securities market" for
securities backed by mortgage loans for a period of (or
reasonably expected to be) at least thirty (30) consecutive days
or an event or events shall have occurred resulting in Buyer not
being able to sell securities backed by mortgage loans at prices
which would have been reasonable prior to such event or events;
or
(iii) there shall have occurred a material adverse
change in the financial condition of Buyer which effects (or can
reasonably be expected to effect) materially and adversely the
ability of Buyer to fund its obligations under this Agreement;
(h) Transaction Costs. Seller shall have paid Buyer from the
proceeds of the Purchase Price to be paid in connection with such Transaction,
all Transaction Costs for which bills have been submitted; provided, however,
that nothing herein shall be deemed to waive Seller's obligation to pay all
Transaction Costs whether billed before or after the entering into a Transaction
pursuant to which such Transaction Costs were incurred;
(i) Other Documents. Buyer shall have received such other
documents, and Seller shall have taken such other action in order to perfect the
ownership interest transferred hereunder and the security interests created
hereunder, as Buyer or its counsel shall deem necessary; and
(j) No Morgan Stanley Downgrade. MS & Co.'s corporate bond rating
as calculated by S&P or Moody's shall not have been lowered or downgraded to a
rating below A- as indicated by S&P or below A3 as indicated by Moody's.
Each Confirmation by Seller hereunder shall constitute a
certification by Seller that all the conditions set forth in this Section 6 have
been satisfied (both as of the date of such notice, request or confirmation and
as of the date of such Transaction).
6.03. Additional Requirements.
(a) Seller and Buyer recognize and agree that the categories of
Transaction Assets defined herein as categories of assets which may be submitted
by Seller to Buyer for review by Buyer as Eligible Transaction Assets hereunder
are general in nature and that the full scope of such Transaction Asset
categories may be unknown. Consequently, the appropriate requirements are not
fully known for (i) the documents to be provided by Seller for underwriting and
due diligence review by Buyer and (ii) submittals by Seller in order to transfer
ownership and to create and perfect a precautionary first priority security
interest in the Transaction Asset, as the case may be. Therefore, Seller and
Buyer agree that, as a further condition precedent to funding a Transaction in
respect of any Transaction Asset hereunder, Seller shall have delivered to Buyer
all information and documents determined by Buyer in good faith to be required
for its underwriting and examination of such Transaction Asset and for the
transfer of ownership or the granting and perfection of a precautionary first
priority security interest therein, as the case may be.
(b) Without limiting the generality of the foregoing Section
6.03(a), Seller shall execute and deliver all documents necessary for transfer
of a valid ownership interest and the granting of a precautionary first priority
security interest in any Transaction Asset, as the case may be, determined by
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Buyer to be Eligible Transaction Assets hereunder, including without limitation
(i) all instruments evidencing indebtedness payable to Seller or pledged to
Seller as precautionary security for a Transaction, (ii) all instruments
granting or perfecting a security interest for the benefit of Seller or pledged
to Seller as precautionary security for a Transaction (including, without
limitation, assignments, pledge agreements and UCC financing statements), (iii)
all instruments evidencing an interest in an entity pledged to Seller as
precautionary security for a Transaction (including, without limitation,
partnership interests, shares of corporate stock, participation interests, and
other beneficial interests of any kind), (iv) all instruments guaranteeing the
repayment of indebtedness owed to Seller, or pledged to Seller for the repayment
of a Repurchase Price and (v) all agreements among holders of debt or equity
interests providing for a priority among such parties of interests in related
assets forming the basis of a Transaction Asset.
Section 7. Representations and Warranties.
Seller represents and warrants to Buyer that throughout the term
of this Agreement:
7.01. Existence. Seller (a) is a corporation duly organized and
validly existing under the laws of the jurisdiction of its organization, (b) has
all requisite corporate power, and has all governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted, except where the lack
of such licenses, authorizations, consents and approvals would not be reasonably
likely to have a Material Adverse Effect on its Property, business or financial
condition or prospects; and (c) is qualified to do business, validly existing
and is, to the extent determinable, in good standing, in all other jurisdictions
in which the nature of the business conducted by it makes such qualification
necessary, except where failure so to qualify would not be reasonably likely
(either individually or in the aggregate) to have a Material Adverse Effect on
its Property, business or financial condition or prospects.
7.02. Action. Seller has all necessary power, authority and legal
right to execute, deliver and perform its obligations under each of the
Transaction Documents; the execution, delivery and performance by Seller of each
of the Transaction Documents have been duly authorized by all necessary action
on its part; and each Transaction Document has been duly and validly executed
and delivered by Seller and constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
7.03. Litigation. There are no actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
pending or threatened) or other legal or arbitrable proceedings affecting Seller
or any of its Subsidiaries or affecting any of the Property of any of them
before any Governmental Authority that (i) questions or challenges the validity
or enforceability of any of the Transaction Documents or any action to be taken
in connection with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $5,000,000.00, (iii) which,
individually or in the aggregate, if adversely determined, could reasonably be
likely to have a Material Adverse Effect, or (iv) requires filing with the
Securities and Exchange Commission in accordance with the 1934 Act or any rules
thereunder.
7.04. No Breach. Neither (a) the execution and delivery of the
Transaction Documents nor (b) the consummation of the transactions therein
contemplated in compliance with the terms and provisions thereof will conflict
with or result in a breach of the articles of incorporation or by-laws of
Seller, or any applicable law, rule or regulation, or any order, writ,
injunction or decree of any Governmental Authority, or any Servicing Agreement
or other material agreement or instrument to which Seller or any of its
Subsidiaries is a party or by which any of them or any of their Property is
bound or to which any of them is subject, or constitute a default under any such
material agreement or instrument or result in the creation or imposition of any
Lien (except for the Liens created pursuant to this Agreement)
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upon any Property of Seller or any of its Subsidiaries pursuant to the terms of
any such agreement or instrument.
7.05. Approvals. No authorizations, approvals or consents of, and
no filings or registrations with, any Governmental Authority or any securities
exchange are necessary for the execution, delivery or performance by Seller of
the Transaction Documents or for the legality, validity or enforceability
thereof, except for filings and recordings in respect of the Liens created
pursuant to this Agreement.
7.06. Use of Proceeds; Margin Regulations. Neither the making of
any Transaction hereunder, nor the use of the proceeds thereof, will violate or
be inconsistent with any provisions of Regulation T, U or X. In addition, no
part of the proceeds of any Transaction will be used, whether directly,
indirectly, immediately, incidentally or ultimately (i) to purchase or carry any
"margin stock" within the meaning of Regulation U or to refund indebtedness
originally incurred for such purpose, or (ii) for any purpose which entails a
violation of, or is inconsistent with, such Regulation U or any other
regulations of the Board of Governors of the Federal Reserve System, or (iii)
for any purposes prohibited by any applicable law, order, rule, regulation,
ordinance or similar code or restriction. If requested by Buyer, Seller, any
applicable Affiliate or Subsidiary of Seller and the recipient of any portion of
the proceeds all or any portion of any Transaction shall furnish to Buyer a
statement on Federal Reserve Form G-3 referred to in Regulation U.
7.07. Taxes. Seller and its consolidated Subsidiaries have filed
all Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by any of them, except for any
such taxes as are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of Seller
and its consolidated Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of Seller, adequate.
7.08. Investment Company Act. Seller is not required to register
as an "investment company" under the Investment Company Act of 1940, as amended.
7.09. Transaction Assets; Transfer of Ownership and Precautionary
Collateral Security.
(a) Seller has not assigned, pledged, or otherwise conveyed or
encumbered any Eligible Transaction Asset to any other Person, and immediately
prior to the sale and precautionary pledge of such Eligible Transaction Asset to
Buyer, unless otherwise approved by Buyer in writing, Seller was the sole owner
of such Eligible Transaction Asset and had good and marketable title thereto,
free and clear of all Liens, in each case except for Liens to be released
simultaneously with the transfer of ownership and granting of the precautionary
Liens in favor of Buyer hereunder.
(b) The provisions of this Agreement are effective to either
constitute a sale of the Transaction Assets or create in favor of Buyer a valid
security interest in all right, title and interest of Seller in, to and under
the Transaction Asset.
(c) (i) Upon (x) receipt by Custodian of each Mortgage Note
evidencing a Subordinate Mortgage Loan or Whole Loan, as applicable, endorsed in
blank by a duly authorized officer of Seller, (y) the recordation of the
mortgage to Buyer securing such Subordinate Mortgage Loan or Whole Loan, as
applicable, and an assignment of such mortgage and (z) the filing of a UCC
financing statement with respect to such assignment of mortgage, Buyer shall
either be the owner of the Subordinate Mortgage
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Loan or Whole Loan or have a fully perfected first priority security interest in
the Mortgage Note, subject only to prior liens and encumbrances permitted by
Buyer, in the Subordinate Mortgage Loan or Whole Loan, as applicable, evidenced
thereby and in Seller's interest in the related Property.
(ii) Upon (x) receipt by Custodian of each note
evidencing a Mezzanine Loan, endorsed in blank by a duly
authorized officer of Seller, (y) the delivery of a duly executed
pledge to Seller of direct or indirect beneficial interests in
the Underlying Property and the filing of UCC financing
statements with respect thereto, and (z) the delivery by Seller
of a duly executed pledge of such pledged interests and the
filing of UCC assignment statements with respect thereto, Buyer
shall either be the owner of the Mezzanine Loan or have a fully
perfected first priority security interest in such note, in the
Mezzanine Loan evidenced thereby, and in Seller's interest in the
related Property.
(iii) Upon (i) the delivery to Buyer or its
designee of CMBS or other Transaction Assets constituting
securities (as defined in Article 8 of the Uniform Commercial
Code) in accordance with Section 6.02 hereof and (ii) the filing
of UCC financing statements naming Buyer as "Secured Party" and
Seller as "Debtor", and describing the Transaction Asset, in the
jurisdictions and recording offices for which security interests
may be perfected in the Transaction Asset by the filing of UCC
financing statements, either Buyer will have a valid ownership
interest or the security interests granted hereunder in the
Transaction Asset will constitute fully perfected first priority
security interests under the Uniform Commercial Code in all
right, title and interest of Seller in, to and under such
Transaction Asset, and, without limiting the foregoing, Buyer
will have a "securities entitlement" (as defined in Article 8 of
the Uniform Commercial Code) in the Transaction Asset referenced
in the foregoing clause (i).
(iv) As to all other Eligible Transaction Assets
(including, but not limited to, a B Note, a Mezzanine Loan or a
Preferred Equity Interest), upon receipt by Custodian of all
documents set forth in Buyer's notice to Seller pursuant to
Section 3.03(c) hereof, Buyer shall have either a valid ownership
interest or a fully perfected first priority security interest
therein and in Seller's interest in the related Property.
(d) Upon the filing of UCC financing statements naming Buyer as
"Secured Party" and Seller as "Debtor", and describing the Transaction Asset, in
the jurisdictions and recording offices for which security interests may be
perfected in the Transaction Asset by the filing of UCC financing statements,
the security interests granted hereunder in the Transaction Asset will
constitute either a valid ownership interest or a fully perfected first priority
security interests under the Uniform Commercial Code in all right, title and
interest of Seller in, to and under such Transaction Asset which can be
perfected by filing under the Uniform Commercial Code.
7.10. Chief Executive Office. Seller's chief executive office on
the Effective Date is located at 410 Park Avenue, 14th Floor, New York, New York
10022.
7.11. Location of Books and Records. The location where Seller
keeps its books and records, including all computer tapes and records relating
to the Transaction Assets is its chief executive office.
7.12. True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of Seller to Buyer in connection with the negotiation, preparation or
delivery of this Agreement and the other Transaction Documents or included
herein or therein or delivered pursuant hereto or thereto, when taken as a
whole, (x) do not contain any untrue statement of material fact or (y) omit to
state any material fact necessary to make the statements
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herein or therein, in light of the circumstances under which they were made,
true. All written information furnished after the date hereof by or on behalf of
Seller to Buyer in connection with this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby, will be true,
complete and accurate in every material respect, or (in the case of projections)
based on reasonable estimates, on the date as of which such information is
stated or certified. There is no fact known to the actual knowledge of a
Responsible Officer of Seller, after due inquiry, that could reasonably be
expected to have a Material Adverse Effect that has not been disclosed herein,
in the other Transaction Documents or in a report, financial statement, exhibit,
schedule, disclosure letter or other writing furnished to Buyer for use in
connection with the transactions contemplated hereby or thereby.
7.13. ERISA. Each Plan to which Seller or its Subsidiaries make
direct contributions, and, to the knowledge of Seller, each other Plan and each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law. No event or
condition has occurred and is continuing as to which Seller would be under an
obligation to furnish a report to Buyer under Section 8.01(e) hereof assuming a
request therefor has been made by Buyer.
Section 8. Covenants of Seller. Seller covenants and agrees with
Buyer that, so long as any Transaction is outstanding and until payment in full
of all Repurchase Obligations:
8.01. Financial Statements, Reports, etc. Seller shall, or, to
the extent applicable, shall cause Servicer to, deliver to Buyer:
(a) the Monthly Statement;
(b) as soon as available and in any event within sixty (60) days
after the end of each of the first three quarterly fiscal periods of each fiscal
year of Seller, a status report with respect to such period which describes the
cumulative sources and uses of funds for the immediately preceding calendar
quarter on each asset sold under this Agreement and a detailed report in a form
reasonably satisfactory to Buyer, together with the unaudited, consolidated
balance sheets of Seller and its consolidated Subsidiaries as at the end of such
period and the related unaudited, consolidated statements of income and retained
earnings and of cash flows of Seller and its consolidated Subsidiaries for such
period and the portion of the fiscal year through the end of such period,
setting forth in each case in comparative form the figures for the previous
year, accompanied by a certificate of a Responsible Officer of Seller, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of Seller
and its consolidated Subsidiaries in accordance with GAAP, consistently applied,
as at the end of, and for, such period (subject to normal year-end audit
adjustments);
(c) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of Seller, the consolidated balance sheets of
Seller and its consolidated Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income and retained earnings and of cash
flows for Seller and its consolidated Subsidiaries for such year, setting forth
in each case in comparative form the figures for the previous year, accompanied
by an opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of Seller
and its consolidated Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP, and a certificate of such accountants stating that, in
making the examination necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default or Event of Default;
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(d) within sixty (60) days following the end of each of the first
three calendar quarters in any fiscal year, or within ninety (90) days following
the end of each fiscal year, as the case may be, a certificate from a
Responsible Officer of Seller in form and substance reasonably satisfactory to
Buyer that Seller during such fiscal period or year has observed or performed
all of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Transaction Documents to be observed,
performed or satisfied by them, and that there has been no Event of Default and
no Material Adverse Effect;
(e) within fifteen (15) Business Days after Buyer's request, such
further information with respect to the operation of any real property, the
Transaction Asset, the financial affairs of Seller and any Plan and
Multiemployer Plan as may be requested by Buyer, including all business plans
prepared by or for Seller; provided, however, that with respect to information
not previously known to, or in the possession of, Seller relating to any
Multiemployer Plan, Seller shall only be required to provide such information as
may be obtained through good faith efforts;
(f) upon Buyer's request, a copy of any financial or other report
Seller shall receive from any underlying obligor with respect to a Transaction
Asset within fifteen (15) days after Seller's receipt thereof; and
(g) such other reports as Buyer shall reasonably require.
8.02. Litigation. Seller will promptly, and in any event within
10 days after service of process on any of the following, give to Buyer notice
of all litigation, actions suits, arbitrations, investigations (including,
without limitation, any of the foregoing which are pending or threatened) or
other legal or arbitrable proceedings affecting Seller or any of its
Subsidiaries or affecting any of the Property of any of them before any
Governmental Authority that (i) questions or challenges the validity or
enforceability of any of the Transaction Documents or any action to be taken in
connection with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $1,000,000.00, or (iii) which,
individually or in the aggregate, if adversely determined could reasonably be
likely to have a Material Adverse Effect.
8.03. Existence, etc. Seller will:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided that nothing in
this Section 8.03(a) shall prohibit any transaction expressly permitted under
Section 8.04 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect on its Property, business or financial condition, or
prospects;
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(d) not move its chief executive office from the address referred
to in Section 7.10 unless it shall have provided Buyer ten (10) days' prior
written notice of such change;
(e) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach
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thereto, except for any such tax, assessment, charge or levy the payment of
which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained; and
(f) permit representatives of Buyer, during normal business
hours, to examine, copy and make extracts from its books and records, to inspect
any of its Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by Buyer.
8.04. Prohibition of Fundamental Changes. Seller shall not enter
into any transaction of merger or consolidation or amalgamation, or liquidate,
wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided that
Seller may enter into a merger or consolidation if (a) the surviving or
resulting entity shall be a corporation or partnership organized under the laws
of the United States or any state thereof; (b) such entity shall expressly
assume by written agreement, in form and substance satisfactory to Buyer in
Buyer's sole discretion, the performance of all of Seller's duties and
obligations under this Agreement and the Transaction Documents; and (c) such
entity shall be at least as creditworthy as Seller, as determined by Buyer in
Buyer's sole and absolute discretion; and, provided, further, that if after
giving effect thereto, no Default would exist hereunder.
8.05. Aggregate Margin Maintenance Asset Value Deficiency. If at
any time there exists an Aggregate Margin Maintenance Asset Value Deficiency,
Seller shall cure same in accordance with Section 3.04 hereof.
8.06. Notices. Seller shall give notice to Buyer:
(a) promptly upon receipt of notice or knowledge of the
occurrence of any Default or Event of Default;
(b) with respect to any Transaction Asset sold to Buyer
hereunder, immediately upon receipt of any principal payment (in full or
partial) or payment in respect of an Equity Interest;
(c) with respect to any Transaction Asset sold to Buyer
hereunder, immediately upon receipt of notice or knowledge that the Underlying
Property has been damaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty, or otherwise damaged so as to
affect adversely the Asset Value of such Transaction Asset;
(d) promptly upon receipt of notice or knowledge of (i) any
default related to any Transaction Asset unless otherwise specifically approved
by Buyer in writing, (ii) any Lien or security interest (other than security
interests created hereby or by the other Transaction Documents) on, or claim
asserted against, any of the Transaction Asset, (iii) any event or change in
circumstances has or could reasonably be expected to have an adverse affect on
the Margin Maintenance Asset Value of the Transaction Asset for a Transaction or
(iv) any event or change in circumstances which could reasonably be expected to
have a Material Adverse Effect;
(e) with respect to any Transaction Asset sold to Buyer
hereunder, promptly upon entering into a modification of any documents
pertaining to such Transaction Asset which would have a material adverse effect
on such Transaction Asset; and
(f) with respect to any Transaction Asset, immediately upon the
acquisition or receipt by Seller or any Affiliate of Seller of any interest of
any kind in respect of such Transaction Asset which interest has not been sold
to Buyer as Transaction Asset Item under this Agreement.
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Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of Seller setting forth details of the
occurrence referred to therein and stating what action Seller has taken or
proposes to take with respect thereto.
8.07. Reports. Seller shall provide Buyer with a quarterly
report, which report shall include, among other items, a summary of Seller's
delinquency and loss experience with respect to any Transaction Asset serviced
by Seller, any Servicer or any designee of either, plus any such additional
reports as Buyer may reasonably request with respect to Seller's or any
Servicer's servicing portfolio or pending originations of Transaction Assets.
8.08. Transactions with Affiliates. Seller will not, except as
approved by Buyer in writing, enter into any transaction in any manner relating
to any Transaction Asset hereunder, including without limitation any purchase,
sale, lease or exchange of property or the rendering of any service, with any
Affiliate; provided, however, that Buyer may consider for approval any such
transaction which is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of Seller's business and (c) upon fair and reasonable terms no
less favorable to Seller than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate, or make a payment under
such transactions that is not otherwise permitted by this Section 8.08 to any
Affiliate.
8.09. Foreclosure or Other Remediation by Seller. Seller may
propose, and Buyer will consider but shall be under no obligation to approve,
strategies for the foreclosure or other realization upon the security for
underlying loans held by Seller relating to any Transaction Asset hereunder.
8.10. Limitation on Liens. Seller will defend the Transaction
Asset against, and will take such other action as is necessary to remove, any
Lien, security interest or claim on or to the Transaction Assets, other than the
security interests created, or otherwise specifically permitted in writing by
Buyer under this Agreement, and Seller will defend the right, title and interest
of Buyer's in and to any Transaction Asset against the claims and demands of all
persons whomsoever. Seller may request from time to time, subject to Buyer's
approval in Buyer's sole determination, to sell participation interests in its
interests in Transaction Assets, the sale of which participation interests shall
be arm's length transactions and subject to such terms and conditions as Buyer
in its sole discretion shall require.
8.11. Limitation on Distributions. After the occurrence and
during the continuation of any Event of Default, Seller shall not make any
payment on account of, or set apart assets for, a sinking or other analogous
fund for the purchase, redemption, defeasance, retirement or other acquisition
of any equity or partnership interest of Seller, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Seller; provided
that Seller shall make such distributions which shall be sufficient to maintain
REIT rule compliance.
8.12. Maintenance of Ratio of Earnings Before Interest, Taxes,
Depreciation and Amortization to Interest and Preferred Dividends. Seller shall
not permit the ratio of (a) earnings before interest, taxes, depreciation and
amortization (excluding dividends) of Seller and its consolidated Subsidiaries
to (b) the sum of (i) interest expense and (ii) preferred dividends of Seller
and its consolidated Subsidiaries, to be less than 1.20:1.
8.13. Maintenance of Ratio of Total Indebtedness to Tangible Net
Worth. Seller shall not permit the ratio of Total Indebtedness to Tangible Net
Worth at any time to be greater than 5:1. Buyer may consider waiving the
foregoing requirements under certain circumstances if requested by Seller;
however, Buyer shall be under no obligation to do so.
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8.14. Servicer; Servicing Tape. Seller shall provide to Buyer on
the fifteenth (15th) calendar day of each month, or if such day is not a
Business Day then on the first Business Day immediately following such day, a
computer readable file containing servicing information, including without
limitation those fields specified by Buyer from time to time, on a loan-by-loan
basis and in the aggregate, with respect to the Loan Assets, B Notes, CMBS,
Preferred Equity Interests, participation interests in any of the foregoing and
Other Approved Assets serviced hereunder by Seller or any Servicer. Seller shall
not cause any Transaction Asset to be serviced by any servicer other than a
servicer expressly approved in writing by Buyer.
8.15. Remittance of Prepayments. Seller shall remit, with
sufficient detail to enable Buyer to appropriately identify the Transaction, or
Transactions, to which any amount remitted applies, to Buyer on each Business
Day an amount equal to the product of (i) all principal prepayments that the
Seller has received during the previous Business Day and (ii) the Purchase Rate
for the related Transaction Asset, together with all Periodic Advance Repurchase
Payments and Late Fees due with respect to such Transaction or Transactions
through the date of such remittance, any and all charges due with respect to
such Transactions and any and all costs and expenses incurred by Buyer (as
provided in this Agreement) in connection with such Transactions and the
prepayment of the Repurchase Price in respect thereof.
Section 9. Events of Default. Each of the following events shall
constitute an event of default (an "Event of Default") hereunder:
(a) Seller shall default in the payment of any Repurchase Price
or Periodic Advance Repurchase Price Payment with respect to any Transaction
when due; or
(b) Seller shall default in the payment of any repurchase price
or periodic payments with respect to, or principal of or interest on, any MS
Indebtedness when due (whether at stated maturity, upon acceleration or at
mandatory or optional prepayment, if applicable) or
(c) Seller shall default in the payment of any other amount
payable by it hereunder or under any other Transaction Document after
notification by Buyer of such default, and such default shall have continued
unremedied for seven (7) Business Days; or
(d) any representation, warranty or certification made or deemed
made herein, or in any other Transaction Document by Seller or any certificate
furnished to Buyer pursuant to the provisions hereof or thereof shall prove to
have been false or misleading in any material respect as of the time made or
furnished (other than the representations and warranties set forth in Section
7.09 hereof which shall be considered solely for the purpose of Section 3.04(b)
hereof unless Seller shall have made any such representations and warranties
with knowledge that they were materially false or misleading at the time made);
or
(e) Seller shall fail to comply with the requirements of Section
8.03(a), Section 8.04, Section 8.05, Section 8.06, or Sections 8.08 through 8.15
hereof; or Seller shall otherwise fail to comply with the requirements of
Section 8.03 hereof and such default shall continue unremedied for a period of
ten (10) Business Days; or Seller shall fail to observe or perform any other
covenant or agreement contained in this Agreement or any other Transaction
Document and such failure to observe or perform shall continue unremedied for a
period of ten (10) Business Days; or
(f) a final judgment or judgments for the payment of money in
excess of $5,000,000.00 in the aggregate shall be rendered against Seller or any
of its Subsidiaries by one or more courts, administrative tribunals or other
bodies having jurisdiction and the same shall not be satisfied, discharged
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(or provision shall not be made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within thirty (30) days from the date
of entry thereof, and Seller or any such Subsidiary shall not, within said
period of thirty (30) days, or such longer period during which execution of the
same shall have been stayed or bonded, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(g) Seller shall admit in writing its inability to pay its debts
as such debts become due; or
(h) Seller or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator or the like of itself or of all or a
substantial part of its property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (vi) take any
corporate or other action for the purpose of effecting any of the foregoing; or
(i) a proceeding or case shall be commenced, without the
application or consent of Seller or any of its Subsidiaries, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner, liquidator or the like of Seller or any such
Subsidiary or of all or any substantial part of its property, or (iii) similar
relief in respect of Seller or any such Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of thirty (30) or more days; or an order for relief against
Seller or any such Subsidiary shall be entered in an involuntary case under the
Bankruptcy Code; or
(j) the Custodial Agreement or any Transaction Document shall for
whatever reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by Seller; or
(k) Seller shall grant, or suffer to exist, any Lien on any
Transaction Asset except the Liens contemplated hereby; or the Liens
contemplated hereby shall cease to be first priority perfected Liens on the
Transaction Asset in favor of Buyer or shall be Liens in favor of any Person
other than Buyer; or
(l) Seller or any of its respective Subsidiaries shall be in
default under any note, indenture, loan agreement, guaranty, swap agreement or
any other contract to which it is a party (other than MS Indebtedness), which
default (i) involves the failure to pay a matured obligation, or (ii) permits
the acceleration of the maturity of obligations by any other party to or
beneficiary of such note, indenture, loan agreement, guaranty, swap agreement or
other contract, in any such case in which the amount of such obligation or
obligations, in the aggregate, exceed $10,000,000.00;
(m) any materially adverse change in the business or financial
condition of Seller or any of its Subsidiaries shall occur, in each case as
determined by Buyer in its sole discretion, or any other condition shall exist
which, in Buyer's sole discretion, constitutes a material impairment of Seller's
ability to perform its obligations under this Agreement or any other Transaction
Document;
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(n) MS & Co.'s corporate bond rating has been lowered or
downgraded to a rating below A- by S&P or A3 by Moody's and Seller shall have
failed to repay all amounts owing to Buyer under this Agreement and the other
Transaction Documents within ninety (90) days following such downgrade; or
(o) the matters set forth in the certificate delivered by Seller
pursuant to paragraph 6.01(c) shall at any time cease to be true.
Section 10. Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default other
than those referred to in Section 9(g) or Section 9(h), Buyer may immediately
declare the Repurchase Price of the Transactions then outstanding to be
immediately due and payable, together with all interest thereon and fees and
expenses accruing under this Agreement. Upon the occurrence of an Event of
Default referred to in Section 9(g) or Section 9(h), the Repurchase Price shall
immediately and automatically become due and payable without any further action
by any Person.
(b) Upon the occurrence of one or more Events of Default, Buyer
shall have the right to obtain physical possession of the Servicing Records and
all other files of Seller relating to the Transaction Assets and all documents
relating to the Transaction Assets which are then or may thereafter come in to
the possession of Seller or any third party acting for Seller and Seller shall
deliver to Buyer such assignments as Buyer shall request. Buyer shall be
entitled to specific performance of all agreements of Seller contained in this
Agreement.
(c) Upon the occurrence of an Event of Default, without limiting
any other rights or remedies of Buyer, Buyer shall have the right to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by or for account of Buyer or Buyer's Affiliates to any
indebtedness at any time owing to Buyer to the credit or for the account of
Seller against any and all of the Indebtedness of Seller, irrespective of
whether Buyer shall have made any demand under this Agreement, the Note, any
other Security Document or any other document executed in connection with any
other MS Indebtedness.
Section 11. No Duty of Buyer. The powers conferred on Buyer
hereunder are solely to protect Buyer's interests in the Transaction Assets and
shall not impose any duty upon it to exercise any such powers. Buyer shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to Seller for any act or failure to act
hereunder, except for its or their own gross negligence or willful misconduct.
Section 12. Miscellaneous.
12.01. Waiver. No failure on the part of Buyer to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Transaction Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Transaction Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law.
12.02. Notices. Except as otherwise expressly permitted by this
Agreement, all notices, requests and other communications provided for herein
and under the Custodial Agreement (including without limitation any
modifications of, or waivers, requests or consents under, this Agreement) shall
be given or made in writing (including without limitation by telex or telecopy)
delivered to the intended
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recipient at the "Address for Notices" specified below its name on the signature
pages hereof or thereof; or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. Except as
otherwise provided in this Agreement and except for notices given under Section
3 (which shall be effective only on receipt), all such communications shall be
deemed to have been duly given when transmitted by telex or telecopy or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
12.03. Indemnification and Expenses.
(a) Seller agrees to hold Buyer, and its Affiliates and their
officers, directors, employees, agents and advisors (each an "Indemnified
Party") harmless from and indemnify any Indemnified Party against all
liabilities, losses, damages, judgments, costs and expenses of any kind which
may be imposed on, incurred by or asserted against such Indemnified Party
(collectively, the "Costs") relating to or arising out of this Agreement, any
Confirmations, any other Transaction Document or any transaction contemplated
hereby or thereby, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Agreement, any Confirmations, any
other Transaction Document or any transaction contemplated hereby or thereby,
that, in each case, results from anything other than any Indemnified Party's
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, Seller agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to all
Transaction 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 the Truth in Lending Act and/or the Real
Estate Settlement Procedures Act, that, in each case, results from anything
other than such Indemnified Party's gross negligence or willful misconduct. In
any suit, proceeding or action brought by an Indemnified Party in connection
with any Transaction Asset for any sum owing thereunder, or to enforce any
provisions of any Transaction Asset Document, Seller will save, indemnify and
hold such Indemnified Party harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by Seller of any obligation thereunder or arising out of
any other agreement, indebtedness or liability at any time owing to or in favor
of such account debtor or obligor or its successors from Seller. Seller also
agrees to reimburse an Indemnified Party as and when billed by such Indemnified
Party for all such Indemnified Party's costs and expenses incurred in connection
with the enforcement or the preservation of such Indemnified Party's rights
under this Agreement, the Confirmation, any other Transaction Document or any
transaction contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel. In the event the sale of a
Transaction Asset is re-characterized as a loan, Seller hereby acknowledges
that, notwithstanding the fact that the obligations of Seller are secured by
such Transaction Asset, all obligations of Seller hereunder are recourse
obligations of Seller.
(b) Seller agrees to pay as and when billed by Buyer all of the
out-of-pocket costs and expenses incurred by Buyer in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, any Confirmation, any other Transaction
Document or any other documents prepared in connection herewith or therewith.
Seller agrees to pay as and when billed by Buyer all of the out-of-pocket costs
and expenses incurred in connection with the consummation and administration of
the transactions contemplated hereby and thereby including without limitation
(i) all the reasonable fees, disbursements and expenses of counsel to Buyer and
(ii) all the due diligence, inspection, testing and review costs and expenses
incurred by Buyer with respect to Transaction Asset under this Agreement,
including, but not limited to, those costs and expenses incurred by Buyer
pursuant to Sections 12.03(a), 12.14 and 12.15 hereof.
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12.04. Amendments. Except as otherwise expressly provided in this
Agreement, any provision of this Agreement may be modified or supplemented only
by an instrument in writing signed by Seller and Buyer and any provision of this
Agreement may be waived by Buyer.
12.05. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
12.06. Survival. The obligations of Seller under Sections 4.04
and 12.03 hereof shall survive the repayment of the Transactions and the
termination of this Agreement. In addition, each representation and warranty
made or deemed to be made by delivery of a Confirmation by Seller, herein or
pursuant hereto shall survive the entering into of such representation and
warranty, and Buyer shall not be deemed to have waived, by reason of making any
Transaction, any Default that may arise because any such representation or
warranty shall have proved to be false or misleading, notwithstanding that Buyer
may have had notice or knowledge or reason to believe that such representation
or warranty was false or misleading at the time such Transaction was made.
12.07. Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.08. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
12.09. Agreement Constitutes Security Agreement; Governing Law.
This Agreement shall be governed by the internal laws of the State of New York,
and shall constitute a security agreement within the meaning of the Uniform
Commercial Code.
12.10. SUBMISSION TO JURISDICTION; WAIVERS. SELLER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE
CONFIRMATIONS AND THE OTHER TRANSACTION DOCUMENTS, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF,
TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING
MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY
LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR
THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM
OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH
-45-
UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH BUYER
SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
12.11. WAIVER OF JURY TRIAL. EACH OF SELLER AND BUYER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
12.12. Acknowledgments. Seller hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Transaction Documents;
(b) Buyer has no fiduciary relationship to Seller; and
(c) no joint venture exists between Buyer and Seller.
12.13. Hypothecation or Pledge of Transactions. Buyer shall have
free and unrestricted use of all Transaction Assets and nothing in this
Agreement shall preclude Buyer from engaging in repurchase transactions with the
Transaction Assets or otherwise pledging, re-pledging, hypothecating, or
re-hypothecating the Transaction Assets or pledging or otherwise transferring
its rights to payment hereunder in respect of any Transaction made hereunder;
provided that (i) no action by Buyer referred to in this sentence shall confer
on any Person other than Buyer any right against Seller to require any
prepayment of the Purchase Price under Section 3.04 hereof, the right to
determine the Purchase Price or Asset Value with respect to any Transaction
Asset or any right to enforce against Seller any other provision of this
Agreement, but may grant to any Person the right to require Buyer to enforce any
such provisions and (ii) in no event shall Buyer be permitted to assign or
transfer (but shall be permitted to participate or pledge) any interest in any
Transaction Asset or this Agreement without the prior notice to Seller. Nothing
contained in this Agreement shall obligate Buyer to segregate any Transaction
Asset delivered to Buyer by Seller.
12.14. Servicing.
(a) Seller covenants to maintain or cause the servicing of the
Transaction Asset to be maintained with respect to each type of Transaction
Asset transferred to Buyer hereunder in conformity with accepted and prudent
servicing practices in the industry for such same type of Transaction Asset and
in a manner at least equal in quality to the servicing Seller provides for
assets similar to such Transaction Asset which it owns. In the event that the
preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) an Event of Default, (ii) the date on which all the Repurchase
Obligations have been paid in full or (iii) the transfer of servicing approved
by Seller and Buyer, which Buyer's approval shall not be unreasonably withheld.
Midland Loan Services, Inc. shall be the initial servicer.
(b) If the Transaction Assets, or any portion thereof, are
serviced by Seller, (i) Seller agrees that Buyer is the owner and precautionary
collateral assignee of all servicing records, including but
-46-
not limited to any and all 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 such
Transaction Asset (the "Servicing Records"), and (ii) Seller transfers to Buyer
a valid ownership interest and grants Buyer a precautionary security interest in
all servicing fees and rights relating to such Transaction Asset 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 Custodian) at Buyer's request.
(c) If the Transaction Assets, or any portion thereof, are
serviced by a third party servicer (such third party servicer, the "Servicer"),
Seller (i) shall provide a copy of the servicing agreement to Buyer, which shall
be in form and substance acceptable to Buyer (the "Servicing Agreement") and
(ii) hereby irrevocably assigns to Buyer and Buyer's successors and assigns all
right, title, interest of Seller in, to and under, and the benefits of, any
Servicing Agreement with respect to such Transaction Asset. Any successor to the
Servicer shall be approved in writing by Buyer prior to such successor's
assumption of servicing obligations with respect to such Transaction Asset.
(d) Seller shall provide to Buyer a letter from Seller (if Seller
is the Servicer) or the Servicer, as the case may be, to the effect that upon
the occurrence of an Event of Default, Buyer may terminate any Servicing
Agreement and transfer servicing to its designee, at no cost or expense to
Buyer, it being agreed that Seller will pay any and all fees required to
terminate the Servicing Agreement and to effectuate the transfer of servicing to
the designee of Buyer.
(e) After the Purchase Date, until the rights to any Transaction
Assets under the Transaction Documents are relinquished by Custodian, Seller
will have no right to modify or alter the terms of any of the documents
pertaining to such Transaction Asset and Seller will have no obligation or right
to repossess such Transaction Asset or substitute other Transaction Asset,
except as provided in the Custodial Agreement; provided, however, that so long
as no Default or Event of Default has occurred and is continuing, Seller may
enter into such modifications of the terms of such documents as do not, as to
any specific Transaction Asset, (i) result in a negative monetary effect or (ii)
constitute a material adverse effect.
(f) In the event Seller or its Affiliate is servicing any
Transaction Asset, Seller shall permit Buyer to inspect Seller's or its
Affiliate's servicing facilities, as the case may be, for the purpose of
satisfying Buyer that Seller or its Affiliate, as the case may be, has the
ability to service such Transaction Asset as provided in this Agreement.
(g) Seller shall cause the Servicer to provide a copy of each
report and notice sent to Seller to be sent to Buyer concurrently therewith.
12.15. Periodic Due Diligence Review. Seller acknowledges that
Buyer has the right to perform continuing due diligence reviews with respect to
any Transaction Asset, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or determining
and re-determining the Aggregate Margin Maintenance Asset Value under Section
3.04(a) hereof, or otherwise, and Seller agrees that Buyer, at its option, has
the right at any time to conduct a partial or complete due diligence review on
any or all of the Transaction Assets securing the Transactions, including,
without limitation, ordering new credit reports and Appraisals on the applicable
Transaction Asset and otherwise regenerating the information used to originate
such Transaction Asset(s). Upon reasonable (but no less than one (1) Business
Day) prior notice to Seller, Buyer or its authorized representatives will be
permitted during normal business hours to examine, inspect, and make copies and
-47-
extracts of, the Asset Files and any and all documents, records, agreements,
instruments or information relating to such Transaction Asset in the possession
or under the control of Seller and/or Custodian. Seller also shall make
available to Buyer a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Asset Files and the Transaction
Assets. Seller agrees to cooperate with Buyer and any third party underwriter
designated by Buyer in connection with such underwriting, including, but not
limited to, providing Buyer and any third party underwriter with access to any
and all documents, records, agreements, instruments or information relating to
such Transaction Asset in the possession, or under the control, of Seller.
Seller further agrees that Seller shall reimburse Buyer for any and all
out-of-pocket costs and expenses incurred by Buyer in connection with Buyer's
activities pursuant to this Section 12.15.
12.16. Intent.
(a) The parties hereto recognize that each Transaction is a
"repurchase agreement" as that term is defined in Section 101 of Bankruptcy Code
(except insofar as the type of Transaction Assets subject to such Transaction or
the term of such Transaction would render such definition inapplicable), or a
"securities contract" as that term is defined in Section 741 of the Bankruptcy
Code (except insofar as the type of Transaction Assets subject to such
Transaction would render such definition inapplicable).
(b) It is understood that either party's right to liquidate
Transaction Assets delivered to it in connection with Transactions hereunder or
to exercise any other remedies pursuant to Section 5 hereof is a contractual
right to liquidate such Transaction as described in Sections 555 and 559 of the
Bankruptcy Code.
(c) The parties agree and acknowledge that if a party hereto is
an "insured depository institution," as such term is defined in the Federal
Deposit Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a
"qualified financial contract," as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of
Transaction Assets subject to such Transaction would render such definition
inapplicable).
(d) It is understood that this Agreement constitutes a "netting
contract" as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a "covered
contractual payment entitlement" or "covered contractual payment obligation",
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a "financial institution" as that term is defined in
FDICIA or regulations promulgated thereunder).
12.17. Change of Seller's State of Formation. If Seller shall
change the State under whose laws Seller shall be organized, Seller shall
promptly provide Buyer with a copy of its new articles of organization, articles
of incorporation or similar document, certified by the Secretary of State or
other appropriate official of Seller's new State of formation, if applicable,
together with such opinions of counsel regarding such change as Buyer, in its
sole discretion, shall require.
12.18. Set-Off. In addition to any rights and remedies of Buyer
provided by this Agreement and by law, Buyer shall have the right, without prior
notice to Seller, any such notice being expressly waived by Seller to the extent
permitted by applicable law, upon any amount becoming due and payable by Seller
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by Buyer or any Affiliate thereof to or for the credit or the
account of Seller. Buyer agrees
-48-
promptly to notify Seller after any such set-off and application made by Buyer;
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
[SIGNATURE PAGE FOLLOWS]
-49-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
CAPITAL TRUST, INC.,
as Seller
By: /s/ Geoffrey G. Jervis
Name: Geoffrey G. Jervis
Title: Chief Financial Officer
Address for Notices:
--------------------
410 Park Avenue, 14th floor
New York, New York 10022
Attention: Geoffrey G. Jervis
Telecopier No.: (212) 655-0044
Telephone No.: (212) 655-0247
With a copy to:
Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, New York 10022
Attention: Robert J. Grados, Esq.
Telecopier No.: (212) 230-7830
Telephone No.: (212) 318-6923
MORGAN STANLEY BANK,
as Buyer
By: /s/ Andrew Neuberger
Name: Andrew Neuberger
Title: Vice President
Address for Notices:
--------------------
Morgan Stanley Bank
2500 Lake Park Boulevard, Suite 3C
West Valley City, Utah 84120
Attention: Richard Felix
Telephone: 801-902-4055
Facsimile: 801-902-4087
E-mail: richard.felix@morganstanley.com
and
wltapes@morganstanley.com
[SIGNATURE PAGE TO MASTER REPURCHASE AGREEMENT]
with copies to:
---------------
SPG Warehouse Group
1221 Avenue of Americas, 27th Floor
New York, New York 10020
Attention: Andrew Neuberger
Telephone: 212-762-6401
Facsimile: 212-507-4137
E-mail: andrew.neuberger@morganstanley.com
and
Morgan Stanley Law Division
1221 Avenue of the Americas, 5th Floor
New York, New York 10020
Attention: Su Sun Bai, Esq.
Telephone: 212-761-4729
Facsimile: 212-296-3146
E-mail: su.bai@morganstanley.com
and
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
Attention: David C. Djaha, Esq.
Telephone: 212-878-8158
Facsimile: 212-878-8375
E-mail: david.djaha@cliffordchance.com
[SIGNATURE PAGE TO MASTER REPURCHASE AGREEMENT]
SCHEDULE 1
FILING JURISDICTIONS AND OFFICES
Maryland Secretary of State
SCHEDULE 2
APPROVED APPRAISERS
1. KTR Appraisal Services
2. Cushman & Wakefield, Inc.
3. CB Richard Ellis
4. The Weitzman Group
5. Greenwich Group
6. Joseph Blake
7. Grubb & Ellis
8. HVS International
9. PWC
S2-1
SCHEDULE 3
APPROVED ENGINEERS
1. EMG
2. KTR Realty Services
3. Merritt & Harris, Inc.
4. C.A. Rich, Inc.
5. IVI
6. Dames & Moore
7. Law Environmental
8. Eckland
9. EM&CA
10. Acqua Terra
11. ATC (BCM Engineers)
12. Horn Chandler & Thomas
13. National Assessment Corporation
14. Property Solutions Inc.
15. PSI
16. Aaron & Wright
S3-1
SCHEDULE 4
APPROVED ENVIRONMENTAL CONSULTANTS
1. Acqua Terra
2. Law Environmental
3. KTR Realty Services
4. EMG
5. Clayton
6. Dames & Moore
7. Brown & Root
8. C.A. Rich, Inc.
9. Eckland
10. EM&CA
11. ATC (BCM Engineers)
12. Front Royal
13. IVI
14. Aaron & Wright
15. Certified Environmental Inc.
16. Environ Business, Inc.
17. Property Solutions, Inc.
18. PSI
19. National Assessment Corporation
20. Hillman Environmental Group
S4-1
SCHEDULE 5
ORGANIZATIONAL STRUCTURE CHART OF SELLER
S5-1
EXHIBIT A
---------
[FORM OF CONFIRMATION]
Master Repurchase Agreement, dated as of July __, 2005 (the
"Repurchase Agreement"), by and between Seller and Morgan Stanley Bank (the
"Buyer"),
Buyer: Morgan Stanley Bank
Seller: CTMP III MS Finance Sub, LLC
Requested Fund Date: ___________________________________________
Transmission Date: ___________________________________________
Transmission Time: ___________________________________________
Type of Funding: Table-Funded:______________________________
Non-Table Funded:__________________________
Eligible Transaction Assets to be Pledged: See Attached
Unpaid Principal Balance: $__________________________________________
Requested Wire Amount: $__________________________________________
Purchase Rate: __________________________________________
Maximum Purchase Rate _________________________________________
Eurodollar Rate Spread: __________________________________________
Wire Instructions:
Requested by:
Capital Trust, Inc.
By:
----------------------------------------------
Name:
Title:
A-1
Attachment 1
------------
SCHEDULE OF ELIGIBLE TRANSACTIION ASSETS PROPOSED TO BE SOLD
A-2
Attachment 2
------------
OFFICER'S CERTIFICATE
The undersigned hereby certifies to Buyer on behalf of Seller, as of the
requested Purchase Date, that:
(a) no Default or Event of Default has occurred and is continuing on the date
hereof nor will occur after giving effect to such Transaction as a result of
such Transaction;
(b) each of the representations and warranties made by Seller in or pursuant to
the Transaction Documents is true and correct in all material respects on and as
of such date (in the case of the representations and warranties in Section 7.09
of the Agreement solely with respect to Eligible Transaction Assets being
included the Aggregate Margin Maintenance Asset Value on such Purchase Date) as
if made on and as of the date hereof (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such specific
date); and
(c) Seller (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite corporate power, and has all governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted, except where the lack of such
licenses, authorizations, consents and approvals would not be reasonably likely
to have a Material Adverse Effect; and (c) is qualified to do business and is in
good standing in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to
qualify would not be reasonably likely (either individually or in the aggregate)
to have a Material Adverse Effect.
Responsible Officer Certification:
By:
----------------------------------------------
Name:
Title:
A-3
EXHIBIT B
---------
[FORM OF CUSTODIAL AGREEMENT]
B-1
EXHIBIT C
---------
[Intentionally Omitted]
C-1
EXHIBIT D-1
-----------
[FORM OF EXISTING LENDER'S RELEASE LETTER]
(Date)
Morgan Stanley Bank
1221 Avenue of the Americas
New York, New York 10020
Attention:
-----------------
Facsimile:
-----------------
Re: Certain Transaction Assets Identified on Schedule A hereto and owned by
Capital Trust, Inc.
The undersigned hereby releases all right, interest, lien or
claim of any kind with respect to the Transaction Assets described in the
attached Schedule A, such release to be effective automatically without any
further action by any party upon payment in one or more installments, in
immediately available finds of $__________, in accordance with the following
wire instructions:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Very truly yours,
[EXISTING LENDER]
By:
-------------------------------
Name:
Title:
D-1-1
EXHIBIT D-2
-----------
[FORM OF SELLER'S RELEASE LETTER]
(Date)
Morgan Stanley Bank
1221 Avenue of the Americas
New York, New York 10020
Attention:
--------------------------------
Facsimile:
--------------------------------
Re: Master Repurchase Agreement, dated as of _______, 2005 (the
"Repurchase Agreement"), by and between Capital Trust, Inc. (the
"Seller") and Morgan Stanley Bank (the "Buyer")
Ladies and Gentlemen:
With respect to the Transaction Assets described in the attached Schedule A (the
"Transaction Assets") (a) we hereby certify to you that the Transaction Assets
are not subject to a lien of any third party and (b) we hereby release all
right, interest or claim of any kind with respect to such Transaction Assets
(other than the repurchase right pursuant to the terms of the Repurchase
Agreement), such release to be effective automatically without further action by
any party upon payment from Morgan Stanley Bank of the amount of the Purchase
Price contemplated under the Repurchase Agreement (calculated in accordance with
the terms thereof) in accordance with the wiring instructions set forth in the
Repurchase Agreement.
Very truly yours,
Capital Trust, Inc.
By:
--------------------------------
Name:
Title:
D-2-1
EXHIBIT E
---------
[FORM OF BAILEE AGREEMENT]
[SELLER'S NAME AND ADDRESS]
_______________ __, 20__
Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, New York 10022
Re: Bailee Agreement (the "Bailee Agreement") in connection with the
sale by Capital Trust, Inc. ("Seller") to Morgan Stanley Bank
("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, Seller, Buyer and Paul, Hastings, Janofsky & Walker LLP ("Bailee")
hereby agree as follows:
1. Seller shall deliver to Bailee in connection with any Transaction
Assets delivered to Bailee hereunder an Identification Certificate in the form
of Attachment 1 attached hereto to which shall be attached a Transaction Asset
Schedule identifying which Eligible Transaction Assets are being delivered to
Bailee hereunder. Such Transaction Asset Schedule shall contain the following
fields of information: (a) the loan identifying number; (b) the Transaction
Asset Obligor's name; (c) the street address, city, state and zip code for the
applicable real property; (d) the original balance; and (e) the current
principal balance if different from the original balance.
2. On or prior to the date indicated on the Custodial Identification
Certificate delivered by Seller (the "Purchase Date"), Seller shall have
delivered to Bailee, as bailee for hire, the original documents set forth on
Schedule A attached hereto (collectively, the "Asset File") for each of the
Eligible Transaction Assets (each a "Transaction Asset" and collectively, the
"Transaction Assets") listed in Exhibit A to Attachment 1 attached hereto (the
"Transaction Asset Schedule").
3. Bailee shall issue and deliver to Buyer and Custodian on or prior to
the Purchase Date by facsimile in the name of Buyer, an initial trust receipt
and certification in the form of Attachment 2 attached hereto (the "Bailee's
Trust Receipt and Certification") which Bailee's Trust Receipt and Certification
shall state that Bailee has received the documents comprising the Asset File as
set forth in the Custodial Identification Certificate (as defined in that
certain Custodial Agreement dated as of July __, 2005, 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 July __, 2005, among Seller and Buyer (the
"Agreement").
4. On the applicable Purchase Date, in the event that Buyer fails to
enter into a Transaction with Seller with respect to the Transaction Assets
identified in the related Custodial Identification Certificate, Buyer shall
deliver by facsimile to the Bailee at (212) 230-7830 to the attention of Robert
J. Grados, Esq., an authorization (the "Facsimile Authorization") to release the
Asset Files with respect to
E-1
the Transaction Assets identified therein to Seller. Upon receipt of such
Facsimile Authorization, the Bailee shall release the Asset Files to Seller in
accordance with Seller's instructions.
5. Following the Purchase Date, Bailee shall forward the Asset Files to
Deutsche Bank Trust Company Americas, 1761 East St. Andrew Place, Santa Ana,
California 92705, Attention: Mortgage Custody-[_________________] (the
"Custodian") by insured overnight courier for receipt by Custodian no later than
12:00 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,
Bailee (a) shall maintain continuous custody and control of the related Asset
Files as bailee for Buyer and (b) is holding the related Loan Assets as sole and
exclusive bailee for Buyer unless and until otherwise instructed in writing by
Buyer.
7. Seller agrees to indemnify and hold 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 Bailee) were imposed
on, incurred by or asserted against Bailee because of the breach by Bailee of
its obligations hereunder, which breach was caused by negligence, lack of good
faith or willful misconduct on the part of 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 Bailee fails to produce a Transaction Asset
Note, assignment of collateral or any other document related to a Transaction
Asset that was in its possession within ten (10) business days after required or
requested by Seller or Buyer (a "Delivery Failure"), the Bailee shall indemnify
Seller or Buyer in accordance with the succeeding paragraph of this Section 8.
(b) Bailee agrees to indemnify and hold 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 Bailee's negligence, lack of good faith or willful misconduct. The
foregoing indemnification shall survive any termination or assignment of this
Bailee Agreement.
9. Seller hereby represents, warrants and covenants that Bailee is not
an affiliate of or otherwise controlled by Seller. Notwithstanding the
foregoing, the parties hereby acknowledge that Bailee hereunder may act as
Counsel to Seller in connection with a proposed loan and Paul, Hastings,
Janofsky & Walker LLP, if acting as Bailee, has represented Seller in connection
with negotiation, execution and delivery of the Agreement.
10. In connection with a pledge of the Transaction Assets as collateral
for an obligation of Buyer, Buyer may pledge its interest in the corresponding
Asset Files held by Bailee for the benefit of Buyer from time to time by
delivering written notice to Bailee that Buyer has pledged its interest in the
identified Transaction Assets and Asset Files, together with the identity of the
party to whom the Transaction Assets have been pledged (such party, the
"Pledgee"). Upon receipt of such notice from
E-2
Buyer, Bailee shall mark its records to reflect the pledge of the Transaction
Assets by Buyer to the Pledgee. Bailee's records shall reflect the pledge of the
Transaction Assets by Buyer to the Pledgee until such time as the Bailee
receives written instructions from Buyer that the Transaction Assets are no
longer pledged by Buyer to the Pledgee, at which time the Bailee shall change
its records to reflect the release of the pledge of the Loan Assets and that
Bailee is holding the Transaction Assets as custodian for, and for the benefit
of, 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 5-B
to the Custodial Agreement the delivery by Custodian to Bailee of some or all of
the Asset File for the purposes set forth in such request, provided that such
request shall include an agreement (a "Disposition Agreement") in execution
form, among Buyer, Seller and Bailee, providing for the disposition of such
Asset File or portion thereof. Upon receipt of the Asset File or such portions
thereof, Bailee shall hold the same as sole and exclusive bailee for Buyer until
such time as the Asset File, or such portions thereof, are delivered to others
in accordance with the fully executed Disposition Agreement, or, if the
Disposition Agreement has not been fully executed, 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 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 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 Seller or Bailee
without the prior written consent of 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.
15. This Bailee Agreement shall be governed by construed in accordance
with the internal laws of the State of New York.
16. Capitalized terms used herein and defined herein shall have the
meanings ascribed to them in the Agreement.
[SIGNATURES BEGIN ON NEXT PAGE]
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Very truly yours,
CAPITAL TRUST, INC.
Seller
By: ___________________________
Name:
Title:
ACCEPTED AND AGREED:
PAUL, HASTINGS, JANOFSKY & WALKER LLP,
Bailee
By: __________________________
Name:
ACCEPTED AND AGREED:
MORGAN STANLEY BANK,
Buyer
By: __________________________
Name:
Title:
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Schedule A
[List of Pledged Documents]
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Attachment 1
IDENTIFICATION CERTIFICATE
On this ____ day of ____________, 200_, ________________________ (the
"________"), under that certain Bailee Agreement of even date herewith (the
"Bailee Agreement"), among Seller, PAUL, HASTINGS, JANOFSKY & WALKER LLP
("Bailee"), and MORGAN STANLEY BANK, as Buyer, does hereby instruct Bailee to
hold, in its capacity as Bailee, the Asset Files with respect to the Transaction
Assets listed on Exhibit A hereto, which Transaction 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, 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.
--------------------------------,
Seller
By: ______________________________
Name:
Title:
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Exhibit A to Attachment 1
TRANSACTION ASSET SCHEDULE
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Attachment 2
FORM OF BAILEE'S TRUST RECEIPT AND CERTIFICATION
____________, 200_
Morgan Stanley Bank
1221 Avenue of the Americas, 27th Floor
New York, New York 10020
Attention: Mr. Andrew B. Neuberger
Re: Bailee Agreement, dated as of ____________ __, 200_ (the "Bailee
Agreement") among Capital Trust, Inc. ("Seller"), Morgan Stanley
Bank ("Buyer") and Paul, Hastings, Janofsky & Walker LLP
("Bailee")
Ladies and Gentlemen:
In accordance with the provisions of Paragraph 3 of the above-referenced
Bailee Agreement, the undersigned, as Bailee, hereby certifies that as to each
Transaction Asset described in the Transaction Asset Schedule (Exhibit A to
Attachment 1), a copy of which is attached hereto, it has reviewed the Asset
File and has determined that (i) 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 Transaction
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.
Bailee hereby confirms that it is holding each such Asset File as agent
and bailee for the exclusive use and benefit of 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.
PAUL, HASTINGS, JANOFSKY & WALKER
LLP, BAILEE
By:___________________________
Name:
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